-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OhvmfiaFKiwjH3OIuI2jKhDT0W4sD+2SSJzqGLy5n5nFslZXhuS4+5m7tCJUjTh5 1HjeOkaa+yd9l8Hu0hWOZw== 0000950156-04-000142.txt : 20040602 0000950156-04-000142.hdr.sgml : 20040602 20040602144923 ACCESSION NUMBER: 0000950156-04-000142 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040602 EFFECTIVENESS DATE: 20040602 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MFS MUNICIPAL SERIES TRUST CENTRAL INDEX KEY: 0000751656 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04096 FILM NUMBER: 04844110 BUSINESS ADDRESS: STREET 1: 500 BOYLSTON ST STREET 2: 15TH FL CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 18006372929 MAIL ADDRESS: STREET 1: 500 BOYLSTON STREET STREET 2: 15TH FL CITY: BOSTON STATE: MA ZIP: 02116 FORMER COMPANY: FORMER CONFORMED NAME: MFS MANAGED MULTI STATE MUNICIPAL BOND TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MFS MANAGED MULTI STATE TAX EXEMPT TRUST DATE OF NAME CHANGE: 19890410 N-CSR 1 d608451.txt MFS MUNICIPAL SERIES TRUST UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4096 - ------------------------------------------------------------------------------- MFS MUNICIPAL SERIES TRUST - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 500 Boylston Street, Boston, Massachusetts 02116 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) James R. Bordewick, Jr. Massachusetts Financial Services Company 500 Boylston Street Boston, Massachusetts 02116 - ------------------------------------------------------------------------------- (Name and address of agents for service) Registrant's telephone number, including area code: (617) 954-5000 - ------------------------------------------------------------------------------- Date of fiscal year end: March 31, 2004 - ------------------------------------------------------------------------------- Date of reporting period: March 31, 2004 - ------------------------------------------------------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. MFS(R) Mutual Funds ANNUAL REPORT 3/31/04 MFS(R) MUNICIPAL INCOME FUND A path for pursuing opportunity [graphic omitted] [logo] M F S(R) INVESTMENT MANAGEMENT - ------------------------------------------------------------------------------- MFS(R) PRIVACY POLICY: A COMMITMENT TO YOU - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Privacy is a concern for every investor today. At MFS Investment Management(R) and the MFS funds, we take this concern very seriously. We want you to understand our policies about every MFS investment product and service that we offer and how we protect the nonpublic personal information of investors who have a direct relationship with us and our wholly owned subsidiaries. Throughout our business relationship, you provide us with personal information; we maintain information and records about you, your investments, and the services you use. Examples of the nonpublic personal information we maintain include o data from investment applications and other forms o share balances and transactional history with us, our affiliates, or others o facts from a consumer reporting agency We do not disclose any nonpublic personal information about our customers or former customers to anyone except as permitted by law. We may share information with companies or financial institutions that perform marketing services on our behalf or to other financial institutions with which we have joint marketing arrangements. Access to your nonpublic personal information is limited to appropriate personnel who provide products, services, or information to you. We maintain physical, electronic, and procedural safeguards that comply with applicable federal regulations. If you have any questions about MFS' privacy policy, please call 1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time. Note: If you own MFS products or receive MFS services in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY - ------------------------------------------------------------------------------- MFS(R) MUNICIPAL INCOME FUND The fund seeks as high a level of current income exempt from federal income tax as is consistent with prudent investing, while seeking protection of shareholders' capital. TABLE OF CONTENTS - ---------------------------------------------------- MFS PRIVACY POLICY - ---------------------------------------------------- LETTER FROM THE CEO 1 - ---------------------------------------------------- MFS ORIGINAL RESEARCH(R) 5 - ---------------------------------------------------- MANAGEMENT REVIEW 6 - ---------------------------------------------------- PERFORMANCE SUMMARY 10 - ---------------------------------------------------- PORTFOLIO OF INVESTMENTS 13 - ---------------------------------------------------- FINANCIAL STATEMENTS 32 - ---------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 39 - ---------------------------------------------------- INDEPENDENT AUDITORS' REPORT 51 - ---------------------------------------------------- TRUSTEES AND OFFICERS 52 - ---------------------------------------------------- MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS 56 - ---------------------------------------------------- FEDERAL TAX INFORMATION 57 - ---------------------------------------------------- CONTACT INFORMATION 58 - ---------------------------------------------------- ASSET ALLOCATION 59 - -------------------------------------------------------------------------------- LETTER FROM THE CEO - -------------------------------------------------------------------------------- Dear Shareholders, [Photo of Robert J. Manning] Our firm was built on the strength of MFS Original Research(R), our in-depth analysis of every security we consider for our portfolios. We've been honing this process since 1932, when we created one of the mutual fund industry's first research departments. And we continue to fine-tune this process so that we can provide strong and consistent long-term investment performance to help you achieve your financial goals. While we have achieved strong investment performance in many of our portfolios, our goal is to achieve the same strong results across all asset classes. To ensure that our portfolio teams are doing the best possible job for our firm's clients and shareholders, I am focusing the vast majority of my time on the three key elements that I believe truly differentiate MFS from its competitors: people, process, and culture. PEOPLE Our people have always been our most valuable resource. Our philosophy is to deliver consistent, repeatable investment results by hiring the most talented investors in our industry. We recruit from the nation's top business schools and hire experienced analysts, both domestically and around the globe. Our analysts are the engine that powers our entire investment team because their recommendations have a direct impact on the investment performance of our portfolios. To demonstrate our ongoing commitment in this area, we increased the number of equity analysts at MFS from less than 40 at the end of 2000 to over 50 in April 2004. During that same period, we doubled the average investment experience of our new domestic equity analysts, from 2.6 years to 5.3 years, by recruiting more seasoned analysts to the firm. Moreover, our international network of investment personnel now spans key regions of the world with offices in London, Mexico City, Singapore, and Tokyo, as well as Boston. One of the major advantages that MFS has over many of its competitors is that the position of research analyst is a long-term career for many members of our team, not simply a steppingstone toward becoming a portfolio manager. We have worked to elevate the stature of the analyst position to be on par with that of a portfolio manager. In fact, an exceptional research analyst has the opportunity to earn more at MFS than some portfolio managers. At the same time, we look within the firm to promote talented analysts who choose a path toward becoming a portfolio manager. We rarely hire portfolio managers from our competitors because we believe the best investors are those steeped in the MFS process and culture. In the past few months, we have identified four senior research analysts who will assume roles on the management teams of several of our larger portfolios. MFS is fortunate to have a deep bench of talented investment personnel, and we welcome the opportunity to put their skills to work for our clients. PROCESS MFS was built on the strength of its bottom-up approach to researching securities. We have enhanced the mentoring process for our research analysts by calling on several of our most seasoned portfolio managers to supplement the work of Director of Global Equity Research David A. Antonelli. These portfolio managers will be taking a special interest in developing the careers of our research analysts and strengthening our investment process. Kenneth J. Enright of our value equity group will work with a team of domestic analysts; David E. Sette-Ducati of our small- and mid-cap equity team will work with analysts concentrating on small- and mid-cap companies; and Barnaby Wiener of our international equity team in London heads the European equity research team. We have combined the bottom-up approach of our research process with a top-down approach to risk controls on portfolio composition. We have a very strong quantitative team under the leadership of industry veteran Deborah H. Miller, who represents the equity management department on the Management Committee of the firm. Quantitative analysis helps us generate investment ideas and, more importantly, assess the appropriate level of risk for each portfolio. The risk assessment is designed to assure that each portfolio operates within its investment objectives. Additionally, we have increased the peripheral vision of our investment personnel across asset classes through the collaboration of our Equity, Fixed Income, Quantitative Analysis, and Risk Management teams. We recently codified this key aspect of our culture by forming an Investment Management Committee, composed of key members of these teams. This Committee will work to ensure that all teams are sharing information, actively debating investment ideas, and creating a unified investment team. CULTURE Teamwork is at the heart of our ability to deliver consistent and competitive investment performance over time. At MFS, each member of our team is involved in our success; we have no superstars. The collaborative nature of our process works to assure a consistent investment approach across all of our products and provides a high level of continuity in portfolio management because our investment performance never depends on the contributions of just a single individual. Our culture is based on an environment of teamwork that allows our investment personnel to be successful. In turn, we demand superior investment results from every member of our team. We have created a meritocracy at our firm based on investment results. We hold all of our portfolio managers accountable for the performance of their portfolios and their contributions to the team. We also track the equity and fixed-income ratings of our analysts so we can evaluate them based on the performance of their recommendations. We align bonus compensation to investment performance by weighting rewards to those who have created the greatest long-term benefit for our shareholders and who contribute most successfully to the Original Research(SM) process. The strength of our culture has resulted in a tremendous amount of stability, both in terms of people and assets under management. Although we have dismissed members of our team whose performance did not meet MFS' high standards, only one member of our investment team has voluntarily left the firm over the past six months, based on a decision to retire from the industry. Similarly, our firm's assets under management have remained remarkably steady. We began the year with $140 billion in assets and ended the first quarter with $142 billion in assets. We are very proud to have experienced growth during this period despite the difficult regulatory environment and the relatively flat performance of the stock market. In short, we can help you achieve your financial goals by hiring talented people, following a disciplined process, and maintaining our firm's unique culture. The recent enhancements described in this letter reflect the collaborative spirit and the depth of resources in our investment teams. As always, we appreciate your confidence in MFS and welcome any questions or comments you may have. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer MFS Investment Management(R) April 19, 2004 Note to Shareholders: On February 6, 2004, Jeffrey L. Shames retired as Chairman of MFS. Robert Pozen was named as non-executive Chairman. Also, on February 6, 2004, Robert J. Manning was appointed Chief Executive Officer, President, and Chief Investment Officer. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. - ------------------------------------------------------------------------------- MFS ORIGINAL RESEARCH(R) - ------------------------------------------------------------------------------- THE MFS(R) DIFFERENCE For 80 years MFS has been offering investors clear paths to pursuing specific investment objectives. Today, millions of individuals and thousands of institutions all over the world look to MFS to manage their assets with insight and care. Our success, we believe, has to do with the fact that we see investors as people with plans, not just dollars to invest. When you invest with MFS, you invest with a company dedicated to helping you realize your long-term financial goals. INVESTORS CHOOSE MFS FOR OUR o global asset management expertise across all asset classes o time-tested money management process for pursuing consistent results o full spectrum of investment products backed by MFS Original Research(R) o resources and services that match real-life needs TURNING INFORMATION INTO OPPORTUNITY Sound investments begin with sound information. MFS has been doing its own research and analyzing findings in-house for decades. The process we use to uncover opportunity is called MFS Original Research(R). MFS ORIGINAL RESEARCH INVOLVES: o meeting with the management of 3,000 companies each year to assess their business plans and the managers' ability to execute those plans o making onsite visits to more than 2,000 companies annually to gain first-hand knowledge of their operations and products o analyzing financial statements and balance sheets o talking extensively with companies' customers and competitors o developing our own proprietary estimates of companies' earnings - ------------------------------------------------------------------------------- MANAGEMENT REVIEW - ------------------------------------------------------------------------------- MARKET ENVIRONMENT For the one year period ended March 31, 2004, long-term U.S. Treasury bond yields were virtually unchanged. High-grade municipal bond yields declined slightly, allowing municipal bonds in general to modestly outperform Treasuries. Those facts, however, belie the tremendous volatility in the bond market over the same 12 month period. In early 2003 and into the first half of the period, we saw a confluence of factors that were positive for bond prices. Geopolitical uncertainty, the hangover from corporate scandals in 2002, and a weak U.S. economy were among the factors that prompted a "flight to quality" by many investors and pushed interest rates down to four-decade lows by June of 2003. In late June, however, the bond market reversed direction as fixed-income investors became concerned that the economic recovery was accelerating faster than expected. Although stocks had been rising since late March, the catalyst for the bond market appeared to be the Federal Reserve Board's decision on June 25, 2003 to lower rates by one-quarter percent rather than one-half percent as many investors had expected. From that date through early September, bond prices sold off as rates rose sharply. In the second half of the period, however, bond prices revived as several factors combined to drive rates down again. Economic reports indicated that inflation was well contained while job growth remained weak. Although most other measures indicated the U.S. economy was improving, we believe investors were concerned that consumer spending might falter because laid-off workers were not finding new jobs. Statistics indicated that a significant portion of U.S. production capacity remained idle. The Fed appeared to sum up the situation in its statements that interest rates could remain low for the foreseeable future. By period-end, interest rates for 10- and 30-year Treasuries were within just four basis points of where they had started the period. (A basis point is 0.01% of interest.) Municipal bonds generally followed the path of Treasury bonds over the period, but with somewhat smaller swings in yield. However, long-term municipal bonds ended the period yielding about 20 basis points (a basis point is 0.01% of interest) less than they had at the start of the period. Long-term municipal bonds in general saw some price appreciation over the period and outperformed long-term Treasuries. (The principal value and interest on U.S. Treasury securities, however, are guaranteed by the U.S. government if held to maturity.) We believe the outperformance of municipals was caused by two main factors. First, municipal bonds appreciated from historically low valuations, relative to Treasuries, to more normal valuations. This was in part the result of a growing national debt that put downward pressure on long-term Treasury prices. Second, we believe a decrease in the supply of new municipal issues late in the period put upward pressure on municipal prices. PORTFOLIO CONCENTRATION AS OF 3/31/04 QUALITY RATINGS "AAA" 43.8% "AA" 8.5% "A" 12.7% "BBB" 17.2% "BB" 3.3% "B" 0.9% "CCC" 0.1% Not rated 13.5% The portfolio is actively managed, and current holdings may be different. PERFORMANCE RELATIVE TO THE FUND'S BENCHMARK For the 12-month period ended March 31, 2004, the fund outperformed its benchmark, the Lehman Brothers Municipal Bond Index (the Lehman Index). That outperformance resulted from a combination of several factors: credit quality, yield curve positioning, and sector and security selection. In the area of credit quality, performance benefited from the fund's relative overweighting in high-yield bonds during a period in which high yield outperformed. The fund had a larger position in "BBB"-rated debt than the Lehman Index. In addition, the fund had significant holdings in below- investment-grade debt (bonds rated lower than "BBB"), whereas the index does not contain bonds rated below "BBB". Positioning on the yield curve also helped relative performance. Compared with the Lehman Index, the fund was more heavily weighted in bonds on the long end of the yield curve - bonds with 10 to 30 years remaining to maturity. That overweighting helped during the period because long-term municipal rates came down more than short-term rates, so longer-term bonds experienced more price appreciation. Sector and security selection helped results during a period when investors, in our view, sought out riskier, lower-rated bonds as they became more confident in the U.S. economic recovery. Our overweighting in health care bonds, for example, helped performance as that sector outperformed during the period. One area of opportunity has been debt issued by rural hospitals that have limited competition and a dominant market share. An overweighting in industrial-backed debt also aided performance. That sector recovered over the period from corporate scandals that we believe made investors wary of the sector in 2002 and early 2003. The fund's exposure to the housing sector also helped relative outperformance. As mortgage rates fell for much of the period, the risk of prepayment - from homeowners refinancing their mortgages at lower rates - caused the housing sector as a whole to underperform the broad market. However, our allocation to the sector was largely in PAC ("planned amortization class") issues that were protected from prepayments, and our preference for PAC issues helped us perform well in the sector. However, duration - a measure of our holdings' sensitivity to interest rate changes - detracted modestly from the fund's relative performance. Coming into the period, we had believed that interest rates, which were then at near-four- decade lows, were poised to rise modestly over the period. Consequently, we had positioned the fund with a slightly lower sensitivity to rising or falling rates - a shorter average duration - than our benchmark. While Treasury rates were virtually stable over the period, municipal rates fell, and our relatively shorter duration proved somewhat negative for performance. Respectfully, /s/ Michael L. Dawson /s/ Geoffrey L. Schechter Michael L. Dawson Geoffrey L. Schechter Portfolio Manager Portfolio Manager The views expressed in this report are those of the portfolio managers only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market and other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS Fund. References to specific securities are not recommendations of such securities, and may not be representative of any MFS Fund's current or future investments. - ------------------------------------------------------------------------------- Visit mfs.com for our latest economic and investment outlook. o Under Updates & Announcements, click Week in Review for a summary of recent investment-related news. o From Week in Review, link to MFS Global Perspective for our current view of the world. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 - ------------------------------------------------------------------------------- The following information illustrates the historical performance of the fund's original share class in comparison to its benchmark. Performance results include the deduction of the contingent deferred sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. Benchmark comparisons are unmanaged and do not reflect any fees or expenses. The performance of other share classes will be greater than or less than the line shown. (See Notes to Performance Summary.) VISIT MFS.COM FOR THE MOST RECENT MONTH-END PERFORMANCE RESULTS. MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) Lehman Brothers MFS Muncicpal Municipal Income Fund Bond Index 3/94 $10,000 $10,000 3/96 11,151 11,644 3/98 12,776 13,593 3/00 13,084 14,425 3/02 14,445 16,610 3/04 16,454 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Class Share class inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 9/7/1993 6.94% 5.88% 5.06% 5.93% - ------------------------------------------------------------------------------ B 12/29/1986 6.27% 5.13% 4.29% 5.11% - ------------------------------------------------------------------------------ C 1/3/1994 6.27% 5.12% 4.29% 5.13% - ------------------------------------------------------------------------------ - ---------------------- Average annual - ---------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average general municipal debt fund+ 5.46% 5.46% 4.70% 5.74% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------ - ---------------------- Average annual with sales charge - ---------------------- Share class - ------------------------------------------------------------------------------ A 1.86% 4.18% 4.04% 5.41% - ------------------------------------------------------------------------------ B 2.27% 4.22% 3.96% 5.11% - ------------------------------------------------------------------------------ C 5.27% 5.12% 4.29% 5.13% - ------------------------------------------------------------------------------ - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------ A 6.94% 18.71% 27.97% 77.87% - ------------------------------------------------------------------------------ B 6.27% 16.19% 23.39% 64.54% - ------------------------------------------------------------------------------ C 6.27% 16.17% 23.36% 64.97% - ------------------------------------------------------------------------------ + Source: Lipper Inc., an independent firm that reports mutual fund performance. # Source: Standard & Poor's Micropal, Inc. INDEX DEFINITION THE LEHMAN BROTHERS MUNICIPAL BOND INDEX - a broad measure of the municipal bond market. It is not possible to invest directly in an index. NOTES TO PERFORMANCE SUMMARY Class A results, including sales charge, reflect the deduction of the maximum 4.75% sales charge. Class B results, including sales charge, reflect the deduction of the applicable contingent deferred sales charge (CDSC), which declines over six years from 4% to 0%. Class C results, including sales charge, redeemed within one year from the end of the calendar month of purchase, reflect the deduction of the 1% CDSC. Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers, the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details. KEY RISK CONSIDERATIONS: A portion of income may be subject to state, federal, and/or alternative minimum tax. Capital gains, if any, are subject to a capital gains tax. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline significantly in value. Investments in high yield or lower-rated securities may provide greater returns but are subject to greater-than-average risk. These risks may increase share price volatility. Please see the prospectus for further information regarding these and other risk considerations. This 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. - ---------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - 3/31/04 - ---------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes. Municipal Bonds - 98.9%
- ---------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - ---------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.2% - ---------------------------------------------------------------------------------------------- Chicago, IL (O'Hare International Airport), RITES, FSA, 9.916%, 2022+(+) $1,500 $1,809,030 - ---------------------------------------------------------------------------------------------- Chicago, IL, O'Hare International Airport Rev. (2nd Lien Passenger Facility D), AMBAC, 5.5%, 2019 350 381,665 - ---------------------------------------------------------------------------------------------- Connecticut Airport Rev. (Bradley International Airport), FGIC, 7.65%, 2012 695 716,156 - ---------------------------------------------------------------------------------------------- Connecticut Airport Rev. (Bradley International Airport), FGIC, 7.65%, 2012(++) 305 315,019 - ---------------------------------------------------------------------------------------------- Louisville & Jeff County, KY, Regional Airport Authority, "A", MBIA, 6.5%, 2017 3,000 3,398,100 - ---------------------------------------------------------------------------------------------- Oklahoma City, OK, Airport Trust, "B", FSA, 5.75%, 2017 1,080 1,182,643 - ---------------------------------------------------------------------------------------------- $7,802,613 - ---------------------------------------------------------------------------------------------- Chemicals - 0.6% - ---------------------------------------------------------------------------------------------- Brazos River, TX, Harbor Navigation District (Dow Chemical Co.), 5.7%, 2033 $1,000 $1,101,830 - ---------------------------------------------------------------------------------------------- Sweetwater County, WY, Solid Waste Disposal Rev. (FMC Corp.), 7%, 2024 1,000 1,015,400 - ---------------------------------------------------------------------------------------------- $2,117,230 - ---------------------------------------------------------------------------------------------- General Obligations - General Purpose - 6.5% - ---------------------------------------------------------------------------------------------- Chicago, IL (Lakefront Millennium Parking Facilities), MBIA, 5%, 2018 $4,000 $4,250,080 - ---------------------------------------------------------------------------------------------- Commonwealth of Massachusetts, 5.875%, 2017(++) 3,205 3,785,618 - ---------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, FGIC, 9.896%, 2015+(+) 3,000 4,044,300 - ---------------------------------------------------------------------------------------------- Cranston, RI, FGIC, 6.375%, 2014 200 241,004 - ---------------------------------------------------------------------------------------------- Houston County, AL, AMBAC, 6.25%, 2019 850 1,017,578 - ---------------------------------------------------------------------------------------------- Indianapolis, IN, Public Improvement Bond Bank, "C", AMBAC, 6%, 2017 500 582,105 - ---------------------------------------------------------------------------------------------- Mobile County, AL, 6%, 2014 800 934,216 - ---------------------------------------------------------------------------------------------- New York City, NY, "B", 5.75%, 2015 1,650 1,856,745 - ---------------------------------------------------------------------------------------------- New York, NY, "J", MBIA, 5%, 2017 2,000 2,145,680 - ---------------------------------------------------------------------------------------------- San Antonio, TX, 5%, 2020 700 730,688 - ---------------------------------------------------------------------------------------------- Southlake, TX, AMBAC, 0%, 2022 - 2023 6,335 2,147,635 - ---------------------------------------------------------------------------------------------- Wisconsin State, "C", 6%, 2019 1,200 1,422,600 - ---------------------------------------------------------------------------------------------- $23,158,249 - ---------------------------------------------------------------------------------------------- General Obligations - Improvement - 2.6% - ---------------------------------------------------------------------------------------------- Birmingham, AL, "A", 5.75%, 2017 $1,000 $1,159,270 - ---------------------------------------------------------------------------------------------- Mesa, AZ, FGIC, 5%, 2018(++) 3,625 4,086,245 - ---------------------------------------------------------------------------------------------- Worcester, MA, FSA, 6%, 2017 3,475 4,109,257 - ---------------------------------------------------------------------------------------------- $9,354,772 - ---------------------------------------------------------------------------------------------- General Obligations - Schools - 8.6% - ---------------------------------------------------------------------------------------------- Columbia & Brazoria, TX, Independent School District, School Building, PSF, 5%, 2029 $535 $554,067 - ---------------------------------------------------------------------------------------------- Detroit, MI, City School District, "B", FGIC, 5%, 2021 2,000 2,106,680 - ---------------------------------------------------------------------------------------------- Dudley-Charlton, MA, Regional School District, RITES, FGIC, 9.031%, 2017+(+) 1,495 1,917,637 - ---------------------------------------------------------------------------------------------- Florida State Board of Education Capital Outlay, Public Education, "A", 5%, 2019 1,000 1,049,430 - ---------------------------------------------------------------------------------------------- Forsyth County, GA, School District, 6%, 2015 400 470,348 - ---------------------------------------------------------------------------------------------- Fresno, CA, Unified School District, MBIA, 6.55%, 2020 1,225 1,494,022 - ---------------------------------------------------------------------------------------------- Goose Creek, TX, Consolidated School District, 5%, 2020 2,500 2,623,700 - ---------------------------------------------------------------------------------------------- Houston, TX, Independent School District, RITES, PSF, 8.985%, 2017+(+) 2,325 2,723,180 - ---------------------------------------------------------------------------------------------- Keller, TX, Independent School District, PSF, 6%, 2017 1,980 2,354,059 - ---------------------------------------------------------------------------------------------- Leander, TX, Independent School District, PSF, 0%, 2018 2,500 1,160,275 - ---------------------------------------------------------------------------------------------- Manistee, MI, Area Public Schools, FGIC, 5.75%, 2019(++) 700 813,162 - ---------------------------------------------------------------------------------------------- Marshall, MI, Public School District, 5.5%, 2018 500 562,200 - ---------------------------------------------------------------------------------------------- Phenix City, AL, AMBAC, 5.65%, 2021 1,500 1,668,255 - ---------------------------------------------------------------------------------------------- Philadelphia, PA, School District, MBIA, 6%, 2016 750 877,058 - ---------------------------------------------------------------------------------------------- Pierre, SD, School District, FSA, 5.7%, 2017(++) 1,000 1,168,820 - ---------------------------------------------------------------------------------------------- Roma, TX, Indpendent School District, PSF, 5.875%, 2020 1,705 1,979,386 - ---------------------------------------------------------------------------------------------- Warren Township, IN (Vision 2005 School Building Corp.), FGIC, 5.5%, 2020 2,600 2,901,288 - ---------------------------------------------------------------------------------------------- Williamson County, TN, Rural School, 6.125%, 2016 - 2017 3,430 4,063,110 - ---------------------------------------------------------------------------------------------- $30,486,677 - ---------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 18.5% - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), 9.25%, 2022 $350 $387,947 - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), 9.25%, 2030 650 720,473 - ---------------------------------------------------------------------------------------------- Baldwin County, AL, Eastern Shore Health Care Authority Rev. (Thomas Hospital), 5.75%, 2027 600 577,746 - ---------------------------------------------------------------------------------------------- Baxter County, AR, Hospital Rev., 5.375%, 2014 1,000 1,036,110 - ---------------------------------------------------------------------------------------------- Chemung County, NY, Civic Facilities Rev. (St. Joseph's Hospital-Elmira), 6%, 2013 730 734,059 - ---------------------------------------------------------------------------------------------- Colorado Health Facilities Authority Rev. (Parkview Medical Center), 6%, 2016 1,000 1,044,820 - ---------------------------------------------------------------------------------------------- Colorado Health Facilities Authority Rev. (Portercare Adventist Health Systems), 6.625%, 2026 500 556,425 - ---------------------------------------------------------------------------------------------- Cullman, AL, Cullman Medical Park South, Medical Clinic Board Rev. (Cullman Regional Medical Center), 6.5%, 2013 360 364,133 - ---------------------------------------------------------------------------------------------- Cuyahoga County, OH, Hospital Facilities Rev. (Canton, Inc.), 7.5%, 2030 900 1,004,094 - ---------------------------------------------------------------------------------------------- Delaware Health Facilities Authority Rev. (Nanticoke Memorial Hospital), 5.625%, 2032 465 484,497 - ---------------------------------------------------------------------------------------------- Denver, CO, Health & Hospital Authority Rev., 5.375%, 2018 300 301,335 - ---------------------------------------------------------------------------------------------- Denver, CO, Health & Hospital Authority Rev., 6%, 2023 500 513,215 - ---------------------------------------------------------------------------------------------- District of Columbia, Health & Hospital Authority Rev. (Medstar University Hospital), 6.875%, 2031(++) 700 800,611 - ---------------------------------------------------------------------------------------------- Farmington, NM, Hospital Rev. (San Juan Regional Medical Center), "A", 5%, 2023 665 666,975 - ---------------------------------------------------------------------------------------------- Fulton County, NY, Industrial Development Agency, Civic Facility Rev. (Nathan Littauer Hospital), 5.75%, 2009 250 250,780 - ---------------------------------------------------------------------------------------------- Gainsville & Hall County, GA, Hospital Authority Rev. (Northeast Georgia Health System), 5.5%, 2031 445 457,042 - ---------------------------------------------------------------------------------------------- Gulfport, MS, Healthcare Authority Rev. (Memorial Hospital at Gulfport), 5.75%, 2031 500 516,335 - ---------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority Rev. (Bon Secours), FSA, 10.61%, 2027(+) 5,000 7,000,800 - ---------------------------------------------------------------------------------------------- Highlands County, FL, Health Facilities Authority Rev. (Adventist/Sunbelt Hospital), 6%, 2031 350 373,209 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Condell Medical Center), 6.35%, 2015 1,000 1,095,640 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Decatur Memorial Hospital), 5.75%, 2024 350 362,037 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Passavant Memorial Area Hospital Associates), 6%, 2024 335 348,923 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Riverside Health Systems), 5.75%, 2022 650 670,163 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Sinai Health), FHA, 5.15%, 2037 640 650,739 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Community Foundation of NW Indiana), 6.375%, 2021 - 2031 2,200 2,257,464 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Riverview Hospital), 5.25%, 2014 400 416,576 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Riverview Hospital), 6.125%, 2031 250 258,968 - ---------------------------------------------------------------------------------------------- Kentucky Economic Development Finance Authority, Health Systems Rev. (Norton Healthcare, Inc.), 6.5%, 2020 1,250 1,333,675 - ---------------------------------------------------------------------------------------------- Kentucky Economic Development Finance Authority, Health Systems Rev. (Norton Healthcare, Inc.), 6.625%, 2028 250 264,560 - ---------------------------------------------------------------------------------------------- Kentucky Economic Development Finance Authority, Refunding & Improvement, "A", MBIA, 5%, 2018 2,400 2,563,464 - ---------------------------------------------------------------------------------------------- Knox County, TN, Health Educational Hospital Facility (Baptist Health Systems, East Tennessee), 6.375%, 2022 1,000 1,038,870 - ---------------------------------------------------------------------------------------------- Lauderdale County & Florence, AL (Coffee Health Group), "A", MBIA, 5.25%, 2019 1,100 1,191,443 - ---------------------------------------------------------------------------------------------- Lufkin, TX, Health Facilities Rev. (Memorial Health System of East Texas), 6.875%, 2026 325 331,728 - ---------------------------------------------------------------------------------------------- Macomb County, MI, Hospital Finance Authority Rev. (Mount Clemens General Hospital), 5.75%, 2025 1,000 949,950 - ---------------------------------------------------------------------------------------------- Marion County, FL, Hospital District Rev. (Monroe Hospital), 5.625%, 2019 750 783,548 - ---------------------------------------------------------------------------------------------- Marshall County, AL, Health Care Rev., "A", 6.25%, 2022 500 536,485 - ---------------------------------------------------------------------------------------------- Martin County, FL, Health Facilities Rev. (Martin Memorial Medical Center), "B", 5.75%, 2022 850 867,340 - ---------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Medstar Health), 5.5%, 2033 305 307,577 - ---------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (University of Maryland Medical System), 6.75%, 2030 1,000 1,143,810 - ---------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Anna Jaques Hospital), 6.875%, 2012 280 284,172 - ---------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), 6.5%, 2012 400 450,592 - ---------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), 5.7%, 2015 1,000 1,030,270 - ---------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare), 5.75%, 2021 400 433,240 - ---------------------------------------------------------------------------------------------- Mecosta County, MI, General Hospital Rev., 6%, 2018 300 295,299 - ---------------------------------------------------------------------------------------------- Miami Beach, FL, Health Facilities (Mt. Sinai Medical Center), 5.5%, 2035 295 292,950 - ---------------------------------------------------------------------------------------------- Michigan Hospital Finance Authority Rev. (Memorial Healthcare Center), 5.75%, 2015 800 831,064 - ---------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Rev. (Rush Medical Foundation) CONNIE LEE, 6.7%, 2018 1,000 1,003,960 - ---------------------------------------------------------------------------------------------- Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial Hospital), 5.625%, 2032 375 380,576 - ---------------------------------------------------------------------------------------------- Nassau County, NY, Industrial Development Agency, Civic Facilities Rev. (North Shore Health Systems), 5.875%, 2011 420 471,992 - ---------------------------------------------------------------------------------------------- New Hampshire Health & Educational Facilities Authority Rev. (Covenant Health), 6.5%, 2017 960 1,077,898 - ---------------------------------------------------------------------------------------------- New Hampshire Health & Educational Facilities Authority Rev. (Exeter Hospital), 6%, 2024 500 531,180 - ---------------------------------------------------------------------------------------------- New Jersey Health Care Facilities (Palisades Medical Center), 6.5%, 2021 500 522,360 - ---------------------------------------------------------------------------------------------- North Texas Health Facilities Development Corp. Rev. (United Regional Health Care System, Inc.), 6%, 2023 1,000 1,060,950 - ---------------------------------------------------------------------------------------------- Ohio County, WV, County Commission Health System Rev. (Ohio Valley Medical Center), 5.75%, 2013 900 830,556 - ---------------------------------------------------------------------------------------------- Oklahoma Development Finance Authority Rev. (Comanche County Hospital), 6%, 2014 600 646,572 - ---------------------------------------------------------------------------------------------- Oklahoma Development Finance Authority Rev. (Comanche County Hospital), 6.6%, 2031 405 424,225 - ---------------------------------------------------------------------------------------------- Palm Beach County, FL, Health Facilities Rev. (Boca Raton Hospital), 5.5%, 2021 500 520,390 - ---------------------------------------------------------------------------------------------- Rhode Island Health & Education Building Rev., Hospital Financing (Lifespan Obligated Group), 6.5%, 2032 1,500 1,578,105 - ---------------------------------------------------------------------------------------------- Richardson, TX, Hospital Authority Rev. (Baylor- Richardson), 5.25%, 2013 600 620,004 - ---------------------------------------------------------------------------------------------- Rio Grande, TX, Health Facilities Development Corp. (Golden Palms), MBIA, 6.4%, 2015 2,800 2,837,660 - ---------------------------------------------------------------------------------------------- Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare Systems, Inc.), 6.5%, 2027 290 276,866 - ---------------------------------------------------------------------------------------------- Shelby County, TN, Health Educational Hospital Rev. (Methodist Healthcare), 6%, 2016 800 872,976 - ---------------------------------------------------------------------------------------------- South Carolina Jobs Economic Development Authority, Hospital Facililties Rev. (Palmetto Health Alliance), 6.25%, 2031 500 528,385 - ---------------------------------------------------------------------------------------------- Steubenville, OH, Hospital Rev. (Trinity Hospital), 6.375%, 2020 300 321,525 - ---------------------------------------------------------------------------------------------- Stillwater, OK, Medical Center Authority (Stillwater Medical Center), 6.5%, 2019 1,000 1,056,540 - ---------------------------------------------------------------------------------------------- Suffolk County, NY, Industrial Development Agency Rev. (Huntington Hospital), 5.875%, 2032 1,000 1,026,940 - ---------------------------------------------------------------------------------------------- Suffolk County, NY, Industrial Development Agency Rev. (Southampton Hospital), 7.25%, 2020 750 748,883 - ---------------------------------------------------------------------------------------------- Suffolk County, NY, Industrial Development Agency Rev. (Southampton Hospital), 7.625%, 2030 250 252,895 - ---------------------------------------------------------------------------------------------- Tallahasse, FL, Health Facilities Rev. (Tallahassee Memorial Healthcare), 6.25%, 2020 1,000 1,003,880 - ---------------------------------------------------------------------------------------------- Tom Green County, TX, Health Facilities Rev. (Shannon Health System), 6.75%, 2021 400 427,376 - ---------------------------------------------------------------------------------------------- Upper Illinois River Valley Development, Health Facilities Rev. (Morris Hospital), 6.625%, 2031 500 535,145 - ---------------------------------------------------------------------------------------------- Valley, AL, Special Care Facilities Financing (Lanier Memorial Hospital), 5.5%, 2007 500 505,945 - ---------------------------------------------------------------------------------------------- Wapello County, IA, Hospital Authority Rev. (Ottumwa Regional Health Center), 6.375%, 2031 750 784,898 - ---------------------------------------------------------------------------------------------- Weirton, WV, Municipal Hospital Building Commission Rev. (Weirton Hospital Medical Center), 6.375%, 2031 500 491,980 - ---------------------------------------------------------------------------------------------- West Plains, MO, Industrial Development Authority Rev. (Ozarks Medical Center), 6.75%, 2024 195 199,286 - ---------------------------------------------------------------------------------------------- West Shore, PA, Hospital Authority (Holy Spirit Hospital), 6.25%, 2032 1,000 1,035,220 - ---------------------------------------------------------------------------------------------- Wichita, KS, Hospital Authority Rev. (Via Christi Health System), 6.25%, 2019 1,500 1,695,180 - ---------------------------------------------------------------------------------------------- Wisconsin Health & Educational Facilities Authority Rev. (Asgenesian Healthcare, Inc.), 6%, 2017 325 350,867 - ---------------------------------------------------------------------------------------------- Wisconsin Health & Educational Facilities Authority Rev. (Aurora HealthCare), 6.875%, 2030 750 848,693 - ---------------------------------------------------------------------------------------------- Wisconsin Health & Educational Facilities Authority Rev. (Wheaton Franciscan Services), 6.25%, 2022 1,000 1,096,270 - ---------------------------------------------------------------------------------------------- Yonkers, NY, Industrial Development Agency, Civic Facilities Rev. (St. John's Riverside Hospital), 6.8%, 2016 460 476,689 - ---------------------------------------------------------------------------------------------- $65,824,020 - ---------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 2.3% - ---------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 7.75%, 2006 $90 $84,855 - ---------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 8.125%, 2016 505 418,090 - ---------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 8.5%, 2026 1,130 896,531 - ---------------------------------------------------------------------------------------------- Colorado Health Facilities Authority Rev. (Evangelical Lutheran Good Samaritan), 6.9%, 2025 500 549,250 - ---------------------------------------------------------------------------------------------- Cumberland County, PA, Retirement Community Rev. (Wesley Affiliated Services), 7.25%, 2035 375 382,403 - ---------------------------------------------------------------------------------------------- Eden Prairie, MN, Multi-Family Housing Rev. (SE-Rolling Hills), "A", GNMA, 6%, 2021 200 217,182 - ---------------------------------------------------------------------------------------------- Goldsboro, NC, Housing Authority Rev. (North Carolina Housing Foundation, Inc.), 7.25%, 2029 960 834,134 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority Rev. (Hoosier Care), 7.125%, 2034 825 681,912 - ---------------------------------------------------------------------------------------------- Iowa Finance Authority, Health Care Facilities Rev. (Care Initiatives), 9.25%, 2025 495 589,248 - ---------------------------------------------------------------------------------------------- Jefferson County, KY, Health Care Authority Rev. (Beverly Enterprises, Inc.), 5.875%, 2007 160 157,691 - ---------------------------------------------------------------------------------------------- Luzerne County, PA, Industrial Development Authority Rev. (Beverly Enterprise, Inc.), 6.75%, 2008 300 301,029 - ---------------------------------------------------------------------------------------------- Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae), 7.375%, 2027 970 1,017,074 - ---------------------------------------------------------------------------------------------- New Hampshire Bussiness Finance Authority, Health Care Facilities Rev. (Metro Health Foundation, Inc.), 6.55%, 2028 950 906,310 - ---------------------------------------------------------------------------------------------- Tennessee Veterans Home Board Rev. (Humboldt), 6.75%, 2021(++) 1,000 1,115,400 - ---------------------------------------------------------------------------------------------- $8,151,109 - ---------------------------------------------------------------------------------------------- Human Services - 0.4% - ---------------------------------------------------------------------------------------------- Nassau County, NY, Industrial Development Civic (Special Needs Facilities), 6.1%, 2012 $295 $307,422 - ---------------------------------------------------------------------------------------------- Orange County, FL, Health Facilities Authority Rev. (GF/ Orlando), 9%, 2031 1,000 1,023,690 - ---------------------------------------------------------------------------------------------- $1,331,112 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Airlines - 0.5% - ---------------------------------------------------------------------------------------------- Cleveland, OH, Airport Special Rev. (Continental Airlines, Inc.), 5.7%, 2019 $1,000 $775,470 - ---------------------------------------------------------------------------------------------- Los Angeles, CA, Regional Airport Lease Rev. (American Airlines, Inc.), 7%, 2012 300 269,250 - ---------------------------------------------------------------------------------------------- Tulsa, OK, Municipal Airport Trust Rev. (American Airlines, Inc.), "B", 5.65%, 2035 1,000 897,500 - ---------------------------------------------------------------------------------------------- $1,942,220 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Chemicals - 0.3% - ---------------------------------------------------------------------------------------------- Red River Authority, TX, Pollution Control Rev. (Celanese), 6.7%, 2030 $1,000 $1,076,530 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - 1.9% - ---------------------------------------------------------------------------------------------- Carbon County, UT, Solid Waste Disposal Rev. (Allied Waste), 7.45%, 2017 $2,500 $2,569,525 - ---------------------------------------------------------------------------------------------- Charles City County, VA, Industrial Development Authority, Solid Waste Disposal Facility Rev. (Waste Management, Inc.), 6.25%, 2027 500 566,250 - ---------------------------------------------------------------------------------------------- Gloucester County, NJ, Improvement Authority, Solid Waste Resource Recovery Rev. (Waste Management, Inc.), 6.85%, 2029 150 174,861 - ---------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority Rev. (Browning Ferris, Inc.), 5.3%, 2011 1,000 1,013,360 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Resource Recovery Rev. (Waste Management, Inc.), 6.9%, 2029 300 350,487 - ---------------------------------------------------------------------------------------------- Nevada Department of Business (Republic Services, Inc.), 5.625%, 2026 450 477,131 - ---------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Solid Waste Disposal Rev. (Waste Management), 4%, 2012 1,000 1,001,730 - ---------------------------------------------------------------------------------------------- State of Ohio, Air Quality Development Authority Rev. (USX Corp.), 5%, 2015 500 555,075 - ---------------------------------------------------------------------------------------------- $6,708,419 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Metals - 0% - ---------------------------------------------------------------------------------------------- Burns Harbor, IN, Solid Waste Disposal Facilities Rev. (Bethlehem Steel), 8%, 2024** $3,000 $3,750 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Other - 2.8% - ---------------------------------------------------------------------------------------------- Bucks County, PA, Industrial Development Authority Rev. (USX Corp.), 5.4%, 2017 $500 $568,295 - ---------------------------------------------------------------------------------------------- Gulf Coast, Industrial Development Authority (Valero Energy Corp.), 5.6%, 2031 500 504,670 - ---------------------------------------------------------------------------------------------- Hardeman County, TN, Correctional Facilities Corp. (Corrections Corp. of America), 7.375%, 2017 500 516,740 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency, Resource Recovery Rev. (Flour Corp.), 5.625%, 2019 2,895 3,041,516 - ---------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.), 5.6%, 2017 1,300 1,397,253 - ---------------------------------------------------------------------------------------------- Park Creek Metropolitan District, Colorado Rev., 7.875%, 2032 400 413,296 - ---------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority Rev. (Amtrak), 6.125%, 2021 550 563,195 - ---------------------------------------------------------------------------------------------- Port of New Orleans, LA, Industrial Development Authority Rev. (Avondale Industries), 8.5%, 2014(++) 1,845 1,916,992 - ---------------------------------------------------------------------------------------------- Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific Corp.), 5.7%, 2026 980 999,737 - ---------------------------------------------------------------------------------------------- $9,921,694 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 2.2% - ---------------------------------------------------------------------------------------------- Beauregard Parish, LA (Boise Cascade Corp.), 6.8%, 2027 $500 $514,750 - ---------------------------------------------------------------------------------------------- Butler, AL, Solid Waste Disposal Rev. (James River Corp.), 8%, 2028 850 873,834 - ---------------------------------------------------------------------------------------------- Delta County, MI, Economic Development Corp., Environmental Improvements Rev. (Mead Westvaco Escanaba), 6.25%, 2027 900 961,551 - ---------------------------------------------------------------------------------------------- Mobile, AL, Industrial Development Board Improvement Rev. (International Paper Co.), "B", 6.45%, 2019 2,000 2,173,940 - ---------------------------------------------------------------------------------------------- Navajo County, AZ, Industrial Development Authority (Stone Container Corp.), 7.4%, 2026 1,500 1,529,400 - ---------------------------------------------------------------------------------------------- Navajo County, AZ, Industrial Development Authority (Stone Container Corp.), 7.2%, 2027 500 509,870 - ---------------------------------------------------------------------------------------------- Onondaga County, NY, Industrial Development Authority Rev., Solid Waste Disposal Rev. (Solvay Paperboard LLC), 6.8%, 2014 1,000 1,065,400 - ---------------------------------------------------------------------------------------------- $7,628,745 - ---------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 1.0% - ---------------------------------------------------------------------------------------------- Capital Trust Agency of Florida Rev. (Seminole Tribe Convention), 10%, 2033 $1,000 $1,237,700 - ---------------------------------------------------------------------------------------------- Hamilton County, OH, Convention Facilities Authority Rev., FGIC, 5.25%, 2022 1,310 1,425,581 - ---------------------------------------------------------------------------------------------- Nevada Department of Bussiness & Industry Rev. (Las Vegas Monorail), 7.375%, 2040 1,000 998,210 - ---------------------------------------------------------------------------------------------- $3,661,491 - ---------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.6% - ---------------------------------------------------------------------------------------------- Austin, TX, Convention Center (Convention Enterprises, Inc.), 6.6%, 2021 $300 $321,279 - ---------------------------------------------------------------------------------------------- Austin, TX, Convention Center (Convention Enterprises, Inc.), 6.7%, 2028 400 430,144 - ---------------------------------------------------------------------------------------------- Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013 775 785,641 - ---------------------------------------------------------------------------------------------- Rockbridge County, VA, Industrial Development Authority Rev. (Virginia Horse Center), 6.85%, 2021 500 474,435 - ---------------------------------------------------------------------------------------------- $2,011,499 - ---------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 2.0% - ---------------------------------------------------------------------------------------------- California Statewide Community Development Authority Rev. (Irvine Apartments), 5.25%, 2025 $1,000 $1,041,050 - ---------------------------------------------------------------------------------------------- Charter Mac Equity Issuer Trust, 6.625%, 2009## 2,000 2,263,800 - ---------------------------------------------------------------------------------------------- Eaglebend, CO, Affordable Housing Corp., 6.2%, 2012 1,000 997,330 - ---------------------------------------------------------------------------------------------- Panhandle, TX, Regional Housing Finance Rev., 6.625%, 2020 330 344,919 - ---------------------------------------------------------------------------------------------- Panhandle, TX, Regional Housing Finance Rev., 6.75%, 2031 1,670 1,747,805 - ---------------------------------------------------------------------------------------------- Ridgeland, MS, Urban Renewal (Northbrook I & II Apartments), 6.15%, 2019** 1,250 603,950 - ---------------------------------------------------------------------------------------------- $6,998,854 - ---------------------------------------------------------------------------------------------- Parking - 0.1% - ---------------------------------------------------------------------------------------------- Rail Connections, Inc., MA Rev., 0%, 2016 - 2018(++) $610 $316,529 - ---------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 2.0% - ---------------------------------------------------------------------------------------------- Austin, TX, Town Community Events Center Venue, FGIC, 6%, 2019 $1,015 $1,177,836 - ---------------------------------------------------------------------------------------------- Metropolitan Pier & Exposition Authority, IL, MBIA, 0%, 2016 8,400 4,918,368 - ---------------------------------------------------------------------------------------------- Midwest City, OK, Municipal Authority Capital, FSA, 5.125%, 2018(++) 825 940,220 - ---------------------------------------------------------------------------------------------- $7,036,424 - ---------------------------------------------------------------------------------------------- Single Family Housing - Local - 2.8% - ---------------------------------------------------------------------------------------------- Adams County, CO, Single Family Mortgage Rev., 8.875%, 2011(++) $2,510 $3,468,770 - ---------------------------------------------------------------------------------------------- Brevard County, FL, Housing Finance Authority, "B", GNMA, 6.5%, 2022 327 341,676 - ---------------------------------------------------------------------------------------------- Calcasieu Parish, LA, Public Trust Authority, Single Family Mortgage Rev. "A", GNMA, 6.05%, 2032 540 574,609 - ---------------------------------------------------------------------------------------------- California Rural Home Mortgage Finance Authority Rev., GNMA, 6.55%, 2030 295 312,850 - ---------------------------------------------------------------------------------------------- Chicago, IL, Single Family Mortgage Rev., GNMA, 7.05%, 2030 35 36,197 - ---------------------------------------------------------------------------------------------- Cook County, IL, Single Family Mortgage Rev., "A", 0%, 2015 715 207,858 - ---------------------------------------------------------------------------------------------- De Kalb, IL, Single Family Mortgage Rev., GNMA, 7.45%, 2009 5 5,004 - ---------------------------------------------------------------------------------------------- Jefferson Parish, LA, Single Family Mortgage Rev., GNMA, 6.625%, 2023 510 563,958 - ---------------------------------------------------------------------------------------------- Jefferson Parish, LA, Single Family Mortgage Rev., GNMA, 6.75%, 2030 205 216,105 - ---------------------------------------------------------------------------------------------- Lee County, FL, Housing Finance Authority Rev., GNMA, 7%, 2031 50 51,612 - ---------------------------------------------------------------------------------------------- Maricopa County, AZ, Single Family Mortgage Rev. "B", GNMA, 6.2%, 2034 420 461,051 - ---------------------------------------------------------------------------------------------- Pima County, AZ, Industrial Development Authority, GNMA, 7.05%, 2030 465 482,898 - ---------------------------------------------------------------------------------------------- San Bernardino County, CA, Single Family Mortgage Rev., GNMA, 7.375%, 2020 30 31,048 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "B", GNMA, 3.25%, 2027 415 453,425 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., GNMA, 6.875%, 2026 340 355,399 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., GNMA, 6.45%, 2029 - 2033 1,660 1,813,992 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., GNMA, 4%, 2035 500 537,725 - ---------------------------------------------------------------------------------------------- $9,914,177 - ---------------------------------------------------------------------------------------------- Single Family Housing - State - 3.0% - ---------------------------------------------------------------------------------------------- California Housing Finance Agency Rev., Home Mortgage, MBIA, 0%, 2027 - 2028 $3,055 $874,147 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 7.15%, 2014 22 22,590 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 7.45%, 2016 70 71,189 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.75%, 2021 85 86,807 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 5.9%, 2023 275 290,381 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.1%, 2023 150 156,857 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 7.4%, 2027 65 65,391 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.875%, 2028 225 232,549 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.8%, 2030 170 175,214 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.6%, 2032 305 319,448 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.375%, 2033 175 187,430 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.55%, 2033 170 179,508 - ---------------------------------------------------------------------------------------------- Louisiana Housing Finance Agency, Single Family Mortgage Rev., GNMA, 7.55%, 2031 225 243,101 - ---------------------------------------------------------------------------------------------- Louisiana Housing Finance Agency, Single Family Mortgage Rev., GNMA, 6.4%, 2032 320 335,219 - ---------------------------------------------------------------------------------------------- Minnesota Housing Finance Agency Rev., Residential Housing Finance "B", 4.8%, 2023 290 298,059 - ---------------------------------------------------------------------------------------------- Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.7%, 2030 430 450,739 - ---------------------------------------------------------------------------------------------- Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.35%, 2032 390 412,913 - ---------------------------------------------------------------------------------------------- Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.85%, 2032 335 372,969 - ---------------------------------------------------------------------------------------------- Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.75%, 2034 210 226,321 - ---------------------------------------------------------------------------------------------- Nebraska Investment Finance Authority Rev., GNMA, 5.6%, 2020 40 41,258 - ---------------------------------------------------------------------------------------------- New Hampshire Housing Finance Authority Rev., 5.875%, 2030 190 198,793 - ---------------------------------------------------------------------------------------------- New Hampshire Housing Finance Authority Rev., 6.3%, 2031 200 217,166 - ---------------------------------------------------------------------------------------------- New Mexico Mortgage Finance Authority Rev., 7.1%, 2030 150 162,566 - ---------------------------------------------------------------------------------------------- New Mexico Mortgage Finance Authority Rev., GNMA, 6.25%, 2032 595 633,306 - ---------------------------------------------------------------------------------------------- New Mexico Mortgage Finance Authority Rev., GNMA, 6.35%, 2033 295 317,004 - ---------------------------------------------------------------------------------------------- North Dakota Housing Finance Agency Rev., Housing Finance, 5%, 2033 555 563,297 - ---------------------------------------------------------------------------------------------- Oklahoma Housing Finance Agency, 6.65%, 2029 1,485 1,601,573 - ---------------------------------------------------------------------------------------------- Phoenix, AZ, Single Family Mortgage Rev., GNMA, 6.1%, 2028 125 133,758 - ---------------------------------------------------------------------------------------------- Texas Housing & Community Affairs, Residential Mortgage Rev., GNMA, 7.1%, 2021 1,070 1,124,613 - ---------------------------------------------------------------------------------------------- Vermont Housing Finance Agency Rev., FSA, 4.95%, 2032 410 426,781 - ---------------------------------------------------------------------------------------------- West Virginia State, Housing Development Fund Rev., 0%, 2037 1,330 227,457 - ---------------------------------------------------------------------------------------------- $10,648,404 - ---------------------------------------------------------------------------------------------- Solid Waste Revenue - 1.1% - ---------------------------------------------------------------------------------------------- Delaware County, PA, Industrial Development Authority Rev. (American Ref-fuel Co.), 6.2%, 2019 $500 $520,465 - ---------------------------------------------------------------------------------------------- Delaware County, PA, Industrial Development Authority Rev. (American Ref-fuel Co.), "A", 6.1%, 2005 875 890,426 - ---------------------------------------------------------------------------------------------- Hudson County, NJ, Solid Waste System Rev., 5.9%, 2015 880 878,126 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Ogden Haverhill Associates), 6.7%, 2014 700 748,489 - ---------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Resource Recovery Rev. (Odgen Haverhill Associates), 5.6%, 2019 1,000 994,320 - ---------------------------------------------------------------------------------------------- $4,031,826 - ---------------------------------------------------------------------------------------------- State & Local Appropriation - 3.6% - ---------------------------------------------------------------------------------------------- Alabama Building Renovation Authority, AMBAC, 6%, 2018 $760 $890,804 - ---------------------------------------------------------------------------------------------- Alabama State Public School & College, Capital Improvement, "D", 6%, 2015 2,850 3,320,421 - ---------------------------------------------------------------------------------------------- Chicago, IL, Public Building Commission Rev., RITES, FGIC, 8.836%, 2016 - 2017+(+) 2,750 3,497,325 - ---------------------------------------------------------------------------------------------- Massachusetts State Development Finance Agency (Visual & Performing Arts), 6%, 2021 1,000 1,204,830 - ---------------------------------------------------------------------------------------------- Michigan State Certificates of Participation, AMBAC, 5.5%, 2020 1,250 1,394,538 - ---------------------------------------------------------------------------------------------- New Mexico Finance Authority Rev., Court Facilities Fee Rev., MBIA, 5.5%, 2020 475 531,454 - ---------------------------------------------------------------------------------------------- New York State Urban Development Corp., Correctional Facilities Service Contract C, AMBAC, 5.875%, 2019 1,000 1,168,570 - ---------------------------------------------------------------------------------------------- Stafford, TX, Economic Development Corp., FGIC, 6%, 2015 525 630,961 - ---------------------------------------------------------------------------------------------- $12,638,903 - ---------------------------------------------------------------------------------------------- Student Loan Revenue - 0.9% - ---------------------------------------------------------------------------------------------- Access to Loans for Learning, California Student Loan Rev., 7.95%, 2030 $650 $681,460 - ---------------------------------------------------------------------------------------------- Arizona Student Loan Acquisition Authority Rev., 5.8%, 2016 675 728,035 - ---------------------------------------------------------------------------------------------- Arizona Student Loan Acquisition Authority Rev., 5.85%, 2017 700 752,745 - ---------------------------------------------------------------------------------------------- Massachusetts Educational Financing Authority, Refunding Issue G, "A", MBIA, 6.1%, 2018 835 873,418 - ---------------------------------------------------------------------------------------------- $3,035,658 - ---------------------------------------------------------------------------------------------- Tax - Other - 1.0% - ---------------------------------------------------------------------------------------------- Houston, TX, Certificate of Participation, 6.3%, 2020 $1,000 $1,103,310 - ---------------------------------------------------------------------------------------------- New York, NY, Transitional, Future Tax Secured, "A", 6%, 2017(++) 2,000 2,383,280 - ---------------------------------------------------------------------------------------------- $3,486,590 - ---------------------------------------------------------------------------------------------- Tax Assessment - 1.6% - ---------------------------------------------------------------------------------------------- Broadview, IL, Tax Increment Rev., 5.25%, 2012 $1,000 $1,047,790 - ---------------------------------------------------------------------------------------------- Capital Region Community Development District of Florida, Capital Improvement Rev., 5.95%, 2006 165 167,653 - ---------------------------------------------------------------------------------------------- Greyhawk Landing Community Development, 6.25%, 2009 410 421,673 - ---------------------------------------------------------------------------------------------- Katy, TX, Development Authority Rev., 5.8%, 2011 970 1,018,122 - ---------------------------------------------------------------------------------------------- Katy, TX, Development Authority Rev., 6%, 2018 1,500 1,539,555 - ---------------------------------------------------------------------------------------------- Panther Trace, FL, Community Development District Rev., 6.5%, 2009 370 379,479 - ---------------------------------------------------------------------------------------------- Preserve At Wilderness Lake, "B", 5%, 2009 525 522,659 - ---------------------------------------------------------------------------------------------- Renaissance Community Development, "B", 6.25%, 2008 605 623,816 - ---------------------------------------------------------------------------------------------- $5,720,747 - ---------------------------------------------------------------------------------------------- Tobacco - 1.6% - ---------------------------------------------------------------------------------------------- Badger Tobacco, WI (Asset Securitization Corp.), 6.125%, 2027 $1,000 $968,010 - ---------------------------------------------------------------------------------------------- District of Columbia, Tobacco Settlement, 6.25%, 2024 435 425,652 - ---------------------------------------------------------------------------------------------- Golden State Tobacco Securization, CA, 5.375%, 2028 1,500 1,514,835 - ---------------------------------------------------------------------------------------------- Guam Economic Development Authority, 5%, 2022 215 217,668 - ---------------------------------------------------------------------------------------------- Iowa Tobacco Settlement Authority, 5.3%, 2025 750 654,090 - ---------------------------------------------------------------------------------------------- Louisana Tobacco Settlement Authority, 5.5%, 2030 350 313,891 - ---------------------------------------------------------------------------------------------- New Jersey Tobacco Settlement Authority, 5.75%, 2032 600 557,436 - ---------------------------------------------------------------------------------------------- Rhode Island Tobacco Settlement Authority, 6%, 2023 250 240,043 - ---------------------------------------------------------------------------------------------- South Carolina Tobacco Settlement Rev. Management Authority, 6.375%, 2028 500 480,025 - ---------------------------------------------------------------------------------------------- Washington Tobacco Settlement Authority, 6.5%, 2026 200 196,456 - ---------------------------------------------------------------------------------------------- $5,568,106 - ---------------------------------------------------------------------------------------------- Toll Roads - 1.8% - ---------------------------------------------------------------------------------------------- New Jersey Turnpike Authority Rev., MBIA, 6.5%, 2016 $1,450 $1,796,231 - ---------------------------------------------------------------------------------------------- Northwest Parkway Public Highway Authority Co. Rev., Capital Appreciation "B", AMBAC, 0%, 2018 750 369,203 - ---------------------------------------------------------------------------------------------- San Joaquin Hills, CA, Transportation Corridor Agency, Toll Road Rev., 0%, 2009(++) 1,000 877,530 - ---------------------------------------------------------------------------------------------- Triborough Bridge & Tunnel Authority, NY, 5.5%, 2017(++) 3,000 3,518,550 - ---------------------------------------------------------------------------------------------- $6,561,514 - ---------------------------------------------------------------------------------------------- Transportation - Special Tax - 3.0% - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Port Authority Special Rev., MBIA, 6.25%, 2017(++) $1,000 $1,188,600 - ---------------------------------------------------------------------------------------------- Dallas, TX, Rapid Transit, AMBAC, 5.375%, 2016 - 2017 1,000 1,107,735 - ---------------------------------------------------------------------------------------------- New Jersey Economic Development Authority Rev., Transportation Project Sublease "A", FSA, 6%, 2016(++) 325 381,404 - ---------------------------------------------------------------------------------------------- Pennsylvania State Turnpike Commission Oil, "A", AMBAC, 5.25%, 2018 850 928,727 - ---------------------------------------------------------------------------------------------- Pennsylvania State Turnpike Commission Oil, "A", AMBAC, 5.25%, 2018(++) 1,150 1,267,013 - ---------------------------------------------------------------------------------------------- Regional Transportation Authority, IL, FSA, 5.75%, 2017 5,000 5,915,600 - ---------------------------------------------------------------------------------------------- $10,789,079 - ---------------------------------------------------------------------------------------------- Universities - Colleges - 5.1% - ---------------------------------------------------------------------------------------------- Amherst, NY, Industrial Development Agency Rev. (Daemen College), 6%, 2021 $1,000 $1,059,600 - ---------------------------------------------------------------------------------------------- California Education Facilities Authority Rev. (L.A. College of Chiropractic), 5.6%, 2017 250 240,503 - ---------------------------------------------------------------------------------------------- Houston, TX, Community College Systems, MBIA, 7.875%, 2025 1,650 2,166,500 - ---------------------------------------------------------------------------------------------- Islip, NY, Community Development Agency Rev. (New York Institute of Technology), 7.5%, 2026(++) 2,000 2,265,480 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Boston University), XLCA, 6%, 2059 1,250 1,482,813 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), 6.625%, 2020 100 109,319 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., College Issue, "B", XLCA, 5.25%, 2033 2,000 2,105,080 - ---------------------------------------------------------------------------------------------- Northern Illinois University Rev., Auxiliary Facilities Systems, AMBAC, 5.875%, 2018 1,370 1,559,060 - ---------------------------------------------------------------------------------------------- Savannah, GA, Economic Development Authority Rev. (College of Art & Design, Inc.), 6.5%, 2013(++) 500 560,305 - ---------------------------------------------------------------------------------------------- St. Joseph County, IN, Educational Facilities Rev. (University of Notre Dame), 6.5%, 2026 1,000 1,273,830 - ---------------------------------------------------------------------------------------------- Tulsa, OK, Industrial Authority Rev. (University of Tulsa), "A", MBIA, 6%, 2016 1,250 1,518,475 - ---------------------------------------------------------------------------------------------- Upland, IN, Economic Development Rev. (Taylor University), 6%, 2018 435 486,643 - ---------------------------------------------------------------------------------------------- Upland, IN, Economic Development Rev. (Taylor University), 6.25%, 2023 520 568,844 - ---------------------------------------------------------------------------------------------- Virginia College Building Authority, VA, Public Higher Education Financing, "A", 5.75%, 2019 2,295 2,622,060 - ---------------------------------------------------------------------------------------------- $18,018,512 - ---------------------------------------------------------------------------------------------- Universities - Secondary Schools - 1.7% - ---------------------------------------------------------------------------------------------- California Statewide Community Development Authority (Escondido Charter High School), 7.5%, 2036 $500 $508,430 - ---------------------------------------------------------------------------------------------- Clark County, NV, Economic Development Rev. (Alexander Dawson School), 5.5%, 2020 1,500 1,568,715 - ---------------------------------------------------------------------------------------------- Maine Finance Authority, Educational Rev. (Waynflete School), 6.4%, 2019 1,000 1,085,710 - ---------------------------------------------------------------------------------------------- Maine Finance Authority, Educational Rev. (Waynflete School), 6.5%, 2029 1,000 1,073,750 - ---------------------------------------------------------------------------------------------- Michigan Municipal Bond Authority Rev. (Detroit Academy of Arts & Sciences), 8%, 2031 300 295,959 - ---------------------------------------------------------------------------------------------- Michigan Municipal Bond Authority Rev. (YMCA Service Learning Academy), 7.625%, 2021 400 405,932 - ---------------------------------------------------------------------------------------------- New Hampshire Health & Education (Derryfield School), 6.5%, 2010 425 436,730 - ---------------------------------------------------------------------------------------------- Pima County, AZ, Industrial Development Authority, 6.75%, 2031 500 508,985 - ---------------------------------------------------------------------------------------------- $5,884,211 - ---------------------------------------------------------------------------------------------- Utilities - Cogeneration - 1.5% - ---------------------------------------------------------------------------------------------- Carbon County, PA, Industrial Development Authority Rev. (Panther Creek Partners), 6.65%, 2010 $700 $766,248 - ---------------------------------------------------------------------------------------------- Klamath Falls, OR, Electric Rev. (Klamath Cogeneration), 6%, 2025 2,000 1,996,980 - ---------------------------------------------------------------------------------------------- Mecklenburg County, VA, Industrial Development Authority Rev. (UAE Mecklenburg, LP), 6.5%, 2017 700 719,446 - ---------------------------------------------------------------------------------------------- Pittsylvania County, VA, Industrial Development Authority Rev. (Multi-trade of Pittsylvania), 7.5%, 2014 2,000 2,007,480 - ---------------------------------------------------------------------------------------------- $5,490,154 - ---------------------------------------------------------------------------------------------- Utilities - Investor Owned - 4.1% - ---------------------------------------------------------------------------------------------- Apache County, AZ, Industrial Development Authority, Pollution Control Rev. (Tuscon Electric Power Co.), 5.875%, 2033 $1,000 $977,680 - ---------------------------------------------------------------------------------------------- Brazos River Authority, Pollution Control Rev. (TXU Corp.), 6.3%, 2032 250 262,645 - ---------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Pollution Control Rev. (Pacific Gas & Electric Co.), 5.85%, 2023 350 350,077 - ---------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Pollution Control Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 1,600 1,749,728 - ---------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Pollution Control Rev. (Southern California Edison Co.), 6.4%, 2024 500 507,535 - ---------------------------------------------------------------------------------------------- Connecticut Development Authority, Pollution Control Rev. (Connecticut Light & Power Co.), 5.85%, 2028 1,000 1,055,190 - ---------------------------------------------------------------------------------------------- Farmington, NM, Pollution Control Rev. (New Mexico Public Service), 6.3%, 2016 565 590,617 - ---------------------------------------------------------------------------------------------- Farmington, NM, Pollution Control Rev. (New Mexico Public Service), 5.8%, 2022 500 511,250 - ---------------------------------------------------------------------------------------------- Farmington, NM, Pollution Control Rev. (New Mexico Public Service), 6.375%, 2022 1,000 1,058,420 - ---------------------------------------------------------------------------------------------- Matagorda County, TX, Pollution Control Rev. (Central Power & Light Co.), 4.55%, 2029 1,000 1,044,890 - ---------------------------------------------------------------------------------------------- Matagorda County, TX, Pollution Control Rev. (Reliant Energy), 5.95%, 2030 750 743,175 - ---------------------------------------------------------------------------------------------- New Hampshire Industrial Development Authority, Pollution Control (CT Light and Power), 5.9%, 2016 500 535,250 - ---------------------------------------------------------------------------------------------- Pima County, AZ, Industrial Development Authority Rev. (Tucson Electric Power Co.), 6.1%, 2025 2,000 1,955,100 - ---------------------------------------------------------------------------------------------- Port Morrow, OR, Pollution Control Rev. (Portland General Electric), 5.2%, 2033 350 378,749 - ---------------------------------------------------------------------------------------------- Sabine River Authority, TX, Pollution Control Rev. (TXU Electric Co.) "A", 5.5%, 2022 500 543,905 - ---------------------------------------------------------------------------------------------- West Feliciana Parish, LA, Pollution Control Rev. (Energy Gulf States), 6.6%, 2028 1,665 1,699,998 - ---------------------------------------------------------------------------------------------- West Feliciana Parish, LA, Pollution Control Rev. (Gulf States Utilities), 7.7%, 2014 450 459,581 - ---------------------------------------------------------------------------------------------- $14,423,790 - ---------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.4% - ---------------------------------------------------------------------------------------------- Austin, TX, Utility Systems Rev., AMBAC, 6.75%, 2011 $1,500 $1,847,265 - ---------------------------------------------------------------------------------------------- California State, Department of Water Resources Power Supply Rev., "A", 5.125%, 2018 750 788,775 - ---------------------------------------------------------------------------------------------- Georgia Municipal Electric Power Authority Rev., MBIA, 6.375%, 2016 2,000 2,477,120 - ---------------------------------------------------------------------------------------------- Georgia Municipal Electric Power Authority Rev., MBIA, 6.5%, 2020 7,350 9,272,739 - ---------------------------------------------------------------------------------------------- Intermountain Power Agency, UT, "A", MBIA, 5%, 2019 2,050 2,149,118 - ---------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., 6.375%, 2013 750 855,878 - ---------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 7%, 2007 3,250 3,694,860 - ---------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, ROLs, MBIA, 9.358%, 2019+(+) 1,500 1,761,090 - ---------------------------------------------------------------------------------------------- $22,846,845 - ---------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 4.6% - ---------------------------------------------------------------------------------------------- Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 9.4853%, 2016+(+) $1,000 $1,341,340 - ---------------------------------------------------------------------------------------------- Forsyth County, GA, Water & Sewage Authority, 6.25%, 2020(++) 1,170 1,406,785 - ---------------------------------------------------------------------------------------------- Las Vegas Valley, NV, Water District Refunding & Water Improvement, "A", FGIC, 5%, 2032 575 594,251 - ---------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, 6.5%, 2019 5,965 7,366,298 - ---------------------------------------------------------------------------------------------- New York State Environmental Facilities, 5%, 2016(++) 1,000 1,085,184 - ---------------------------------------------------------------------------------------------- Pittsburgh, PA, Water & Sewer Authority Rev., "C", FSA, 5.25%, 2022 2,000 2,095,380 - ---------------------------------------------------------------------------------------------- Pittsburgh, PA, Water & Sewer Authority Rev., FGIC, 0%, 2017 - 2018 4,600 2,465,439 - ---------------------------------------------------------------------------------------------- $16,354,677 - ---------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $321,955,038) $350,945,130 - ---------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.5% - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), due 4/07/04 $100 $100,000 - ---------------------------------------------------------------------------------------------- Bay Area Toll Authority, CA, Toll Bridge Rev. "A", due 4/07/04 900 900,000 - ---------------------------------------------------------------------------------------------- Illinois Development Finance Authority Rev. (Jewish Fed Met Chicago), due 4/01/04 700 700,000 - ---------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, due 4/07/04 200 200,000 - ---------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, due 4/01/04 100 100,000 - ---------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $2,000,000) $2,000,000 - ---------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $323,955,038) $352,945,130 - ---------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.6% 1,954,477 - ---------------------------------------------------------------------------------------------- Net Assets - 100.0% $354,899,607 - ---------------------------------------------------------------------------------------------- + Restricted security. (+) Inverse floating rate security. (++) Refunded bond. ## SEC Rule 144A restriction. ** Non-income producing security - in default. The following abbreviations for insurers and inverse floater are used in the Portfolio of Investments and are defined: Insurers Inverse Floaters AMBAC = AMBAC Indemnity Corp. RITES = Residual Interest Tax-Exempt Security CONNIE LEE = Connie Lee Insurance Co. ROLS = Residual Option Longs FGIC = Financial Guaranty Insurance Co. FSA = Financial Security Assurance Inc. GNMA = Government National Mortgage Assn. MBIA = Municipal Bond Investors Corp. PSF = Permanent School Fund XLCA = XL Capital Insurance Co. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------------------------- This statement represents your fund's balance sheet, which details the assets and liabilities composing the total value of your fund. AT 3/31/04 ASSETS Investments, at value (identified cost, $323,955,038) $352,945,130 - -------------------------------------------------------------------------------------------------- Cash 126,734 - -------------------------------------------------------------------------------------------------- Receivable for investments sold 391,114 - -------------------------------------------------------------------------------------------------- Receivable for fund shares sold 429,029 - -------------------------------------------------------------------------------------------------- Interest receivable 5,192,874 - -------------------------------------------------------------------------------------------------- Other assets 5,093 - -------------------------------------------------------------------------------------------------- Total assets $359,089,974 - -------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $1,347,887 - -------------------------------------------------------------------------------------------------- Payable for investments purchased 523,096 - -------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 1,173,275 - -------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swap agreements 410,275 - -------------------------------------------------------------------------------------------------- Unrealized depreciation on rate lock swap agreements 604,465 - -------------------------------------------------------------------------------------------------- Payable to affiliates - -------------------------------------------------------------------------------------------------- Management fee 2,911 - -------------------------------------------------------------------------------------------------- Shareholder servicing costs 6,925 - -------------------------------------------------------------------------------------------------- Distribution and service fee 4,283 - -------------------------------------------------------------------------------------------------- Administrative fee 160 - -------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 117,090 - -------------------------------------------------------------------------------------------------- Total liabilities $4,190,367 - -------------------------------------------------------------------------------------------------- Net assets $354,899,607 - -------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $333,565,802 - -------------------------------------------------------------------------------------------------- Unrealized appreciation on investments 27,975,352 - -------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (6,065,645) - -------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (575,902) - -------------------------------------------------------------------------------------------------- Total $354,899,607 - -------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding 40,755,722 - --------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued Class A shares Net assets $264,797,121 - -------------------------------------------------------------------------------------------------- Shares outstanding 30,423,660 - -------------------------------------------------------------------------------------------------- Net asset value per share $8.70 - -------------------------------------------------------------------------------------------------- Offering price per share (100/95.25X$8.70) $9.13 - -------------------------------------------------------------------------------------------------- Class B shares Net assets $52,594,210 - -------------------------------------------------------------------------------------------------- Shares outstanding 6,034,345 - -------------------------------------------------------------------------------------------------- Net asset value and offering price per share $8.72 - -------------------------------------------------------------------------------------------------- Class C shares Net assets $37,508,276 - -------------------------------------------------------------------------------------------------- Shares outstanding 4,297,717 - -------------------------------------------------------------------------------------------------- Net asset value and offering price per share $8.73 - -------------------------------------------------------------------------------------------------- On sales of $100,000 or more, the price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A shares. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------------------------- This statement describes how much your fund received in investment income and paid in expenses. It also describes any gains and/or losses generated by fund operations. FOR YEAR ENDED 3/31/04 NET INVESTMENT INCOME (LOSS) Interest income $20,967,048 - -------------------------------------------------------------------------------------------------- Expenses - -------------------------------------------------------------------------------------------------- Management fee $2,023,439 - -------------------------------------------------------------------------------------------------- Trustees' compensation 15,444 - -------------------------------------------------------------------------------------------------- Shareholder servicing costs 523,400 - -------------------------------------------------------------------------------------------------- Service fee (Class A) 677,531 - -------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 568,149 - -------------------------------------------------------------------------------------------------- Distribution and service fee (Class C) 396,835 - -------------------------------------------------------------------------------------------------- Administrative fee 36,295 - -------------------------------------------------------------------------------------------------- Custodian fee 128,905 - -------------------------------------------------------------------------------------------------- Printing 47,014 - -------------------------------------------------------------------------------------------------- Postage 18,187 - -------------------------------------------------------------------------------------------------- Auditing fees 37,724 - -------------------------------------------------------------------------------------------------- Legal fees 4,452 - -------------------------------------------------------------------------------------------------- Miscellaneous 82,241 - -------------------------------------------------------------------------------------------------- Total expenses $4,559,616 - -------------------------------------------------------------------------------------------------- Fees paid indirectly (3,458) - -------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (583,761) - -------------------------------------------------------------------------------------------------- Net expenses $3,972,397 - -------------------------------------------------------------------------------------------------- Net investment income $16,994,651 - -------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized loss (identified cost basis) - -------------------------------------------------------------------------------------------------- Investment transactions $(768,107) - -------------------------------------------------------------------------------------------------- Swap transactions (914,106) - -------------------------------------------------------------------------------------------------- Net realized loss on investments $(1,682,213) - -------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - -------------------------------------------------------------------------------------------------- Investments $8,952,464 - -------------------------------------------------------------------------------------------------- Swap transactions (168,327) - -------------------------------------------------------------------------------------------------- Net unrealized gain on investments $8,784,137 - -------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments $7,101,924 - -------------------------------------------------------------------------------------------------- Increase in net assets from operations $24,096,575 - -------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------------------------- This statement describes the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
FOR YEAR ENDED 3/31 2004 2003 INCREASE IN NET ASSETS OPERATIONS Net investment income $16,994,651 $17,698,859 - ------------------------------------------------------------------------------------------------- Net realized loss on investments (1,682,213) (2,870,156) - ------------------------------------------------------------------------------------------------- Net unrealized gain on investments 8,784,137 13,724,621 - --------------------------------------------------------- ------------ ------------ Increase in net assets from operations $24,096,575 $28,553,324 - --------------------------------------------------------- ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income - ------------------------------------------------------------------------------------------------- Class A $(13,264,818) $(14,303,373) - ------------------------------------------------------------------------------------------------- Class B (2,354,471) (2,694,683) - ------------------------------------------------------------------------------------------------- Class C (1,644,710) (1,663,610) - --------------------------------------------------------- ------------ ------------ Total distributions declared to shareholders $(17,263,999) $(18,661,666) - --------------------------------------------------------- ------------ ------------ Net decrease in net assets from fund share transactions $(25,385,914) $(10,929,973) - --------------------------------------------------------- ------------ ------------ Total decrease in net assets $(18,553,338) $(1,038,315) - --------------------------------------------------------- ------------ ------------ NET ASSETS At beginning of period $373,452,945 $374,491,260 - ------------------------------------------------------------------------------------------------- At end of period (including accumulated distributions in excess of net investment income of $575,902 and $729,715, respectively) $354,899,607 $373,452,945 - ------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------------------------------------------------------ The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years (or, if shorter, the period of the fund's operation). 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 (assuming reinvestment of all distributions) held for the entire period. This information has been audited by the fund's independent auditors, whose report, together with the fund's financial statements, are included in this report. FOR YEAR ENDED 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $8.54 $8.32 $8.54 $8.33 $8.97 - ------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS(S)(S)# Net investment income(S) $0.41 $0.41 $0.44 $0.46 $0.48 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 0.17 0.25 (0.20) 0.27 (0.59) - ---------------------------------------------- ------ ------ ------ ------ ------- Total from investment operations $0.58 $0.66 $0.24 $0.73 $(0.11) - ---------------------------------------------- ------ ------ ------ ------ ------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.42) $(0.44) $(0.46) $(0.47) $(0.47) - ------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- -- (0.02) (0.06) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gain on investments -- -- -- (0.03) -- - ---------------------------------------------- ------ ------ ------ ------ ------- Total distributions declared to shareholders $(0.42) $(0.44) $(0.46) $(0.52) $(0.53) - ---------------------------------------------- ------ ------ ------ ------ ------- Net asset value, end of period $8.70 $8.54 $8.32 $8.54 $8.33 - ---------------------------------------------- ------ ------ ------ ------ ------- Total return (%)(+) 6.94 8.00 2.78 9.06 (1.15) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA(S): Expenses## 0.88 0.90 0.91 0.89 0.88 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.80 4.85 5.12 5.55 5.66 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 9 13 15 15 57 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $264,797 $274,442 $276,719 $255,799 $217,880 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.40 $0.40 $0.41 $0.44 $0.45 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS): Expenses## 1.04 1.05 1.15 1.20 1.20 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.64 4.70 4.88 5.24 5.34 - ------------------------------------------------------------------------------------------------------------------------------ (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002 was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by $0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued FOR YEAR ENDED 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $8.55 $8.33 $8.55 $8.34 $8.98 - ------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS(S)(S)# Net investment income(S) $0.35 $0.35 $0.37 $0.40 $0.42 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 0.18 0.24 (0.20) 0.27 (0.59) - ---------------------------------------------- ------ ------ ------ ------ ------- Total from investment operations $0.53 $0.59 $0.17 $0.67 $(0.17) - ---------------------------------------------- ------ ------ ------ ------ ------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.36) $(0.37) $(0.39) $(0.41) $(0.41) - ------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- -- (0.02) (0.06) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gain on investments -- -- -- (0.03) -- - ---------------------------------------------- ------ ------ ------ ------ ------- Total distributions declared to shareholders $(0.36) $(0.37) $(0.39) $(0.46) $(0.47) - ---------------------------------------------- ------ ------ ------ ------ ------- Net asset value, end of period $8.72 $8.55 $8.33 $8.55 $8.34 - ---------------------------------------------- ------ ------ ------ ------ ------- Total return (%) 6.27 7.19 2.00 8.24 (1.89) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA(S): Expenses## 1.63 1.65 1.66 1.64 1.63 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.05 4.10 4.37 4.82 4.89 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 9 13 15 15 57 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $52,594 $59,591 $61,627 $75,858 $93,656 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.34 $0.34 $0.35 $0.38 $0.39 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS): Expenses## 1.79 1.80 1.90 1.95 1.95 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.89 3.95 4.13 4.51 4.57 - ------------------------------------------------------------------------------------------------------------------------------ (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by $0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued FOR YEAR ENDED 3/31
CLASS C 2004 2003 2002 2001 2000 Net asset value, beginning of period $8.56 $8.34 $8.56 $8.35 $8.99 - ------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS(S)(S)# Net investment income(S) $0.35 $0.35 $0.37 $0.40 $0.42 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 0.18 0.24 (0.20) 0.27 (0.59) - ---------------------------------------------- ------ ------ ------ ------ ------- Total from investment operations $0.53 $0.59 $0.17 $0.67 $(0.17) - ---------------------------------------------- ------ ------ ------ ------ ------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.36) $(0.37) $(0.39) $(0.41) $(0.41) - ------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- -- (0.02) (0.06) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gain on investments -- -- -- (0.03) -- - ---------------------------------------------- ------ ------ ------ ------ ------- Total distributions declared to shareholders $(0.36) $(0.37) $(0.39) $(0.46) $(0.47) - ---------------------------------------------- ------ ------ ------ ------ ------- Net asset value, end of period $8.73 $8.56 $8.34 $8.56 $8.35 - ---------------------------------------------- ------ ------ ------ ------ ------- Total return (%) 6.27 7.18 2.00 8.23 (1.89) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA(S): Expenses## 1.63 1.65 1.66 1.64 1.63 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.05 4.10 4.37 4.80 4.89 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 9 13 15 15 57 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $37,508 $39,420 $36,146 $29,257 $26,037 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.34 $0.34 $0.35 $0.37 $0.39 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS): Expenses## 1.79 1.80 1.90 1.95 1.95 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.89 3.95 4.13 4.49 4.57 - ------------------------------------------------------------------------------------------------------------------------------ (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002 was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by $0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- (1) BUSINESS AND ORGANIZATION MFS Municipal Income Fund (the fund) is a diversified series of MFS Municipal Series Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. (2) SIGNIFICANT ACCOUNTING POLICIES GENERAL - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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, interest from the security could become taxable and the security could decline in value. INVESTMENT VALUATIONS - The fund uses independent pricing services approved by the Board of Trustees wherever possible to value its portfolio securities. Portfolio securities are valued at current market prices where current market prices are readily available, or the fund may fair value portfolio securities under the direction of the Board of Trustees when a determination is made that current market prices are not readily available. Bonds and other fixed income securities (other than short-term obligations) in the fund's portfolio are valued at an evaluated bid price as reported by an independent pricing service, or to the extent a valuation is not reported by a pricing service, such securities are valued on the basis of quotes from brokers and dealers. Prices obtained from pricing services utilize both dealer-supplied valuations and electronic data processing techniques which take into account appropriate 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 without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Bonds and other fixed income securities for which it is determined that current market prices are not readily available will be fair valued under the direction of the Board of Trustees. Short-term obligations with a remaining maturity in excess of 60 days will be valued upon dealer-supplied valuations. All other short-term obligations in the fund's portfolio are valued at amortized cost, which constitutes market value as determined by the Board of Trustees. SWAP AGREEMENTS - The fund may enter into swap agreements. A swap is an exchange of cash payments between the fund and another party, which is based on a specific financial index. Cash payments are exchanged at specified intervals and the expected income or expense is recorded on the accrual basis. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation. Risks may arise upon entering into these agreements from the potential inability of counterparties to meet the terms of their contract and from unanticipated changes in the value of the financial index on which the swap agreement is based. The fund uses swaps for both hedging and non-hedging purposes. For hedging purposes, the fund may use swaps to reduce its exposure to interest rate fluctuations. For non-hedging purposes, the fund may use swaps to take a position on anticipated changes in the underlying financial index. INTEREST RATE SWAP AGREEMENTS - Interest rate swaps are agreements to exchange cash flows periodically based on a notional principal amount, for example the exchange of fixed rate interest payments for floating rate interest payments which are based on a specific financial index or the exchange of two distinct floating rate payments. The net receivable or payable associated with these payments is accrued daily and is recorded as net interest income or expense. For financial statement purposes, the net interest income or expense periodically recognized for an interest rate swap is recorded in the same line item as any unrealized and realized gains or losses recognized for that instrument. The primary risk associated with interest rate swaps is that unfavorable changes in the fluctuation of interest rates could adversely impact the fund. RATE LOCK SWAP AGREEMENTS - The fund may enter into rate lock swaps, which are used to reduce the interest rate risk of the portfolio. A rate lock swap is a payment or receipt of cash on a specified future date, calculated as the difference between the strike rate and a specific index yield on that date. The payment received or made at the end of the measurement period is 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 is recorded as unrealized appreciation or depreciation. 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 accounting principles generally accepted in the United States of America. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. 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 year ended March 31, 2004, is shown as a reduction of total expenses on the Statement of Operations. TAX MATTERS AND DISTRIBUTIONS - The fund's policy is to comply with the provisions of the Internal Revenue Code (the Code) applicable to regulated investment companies and to distribute to shareholders all of its net tax- exempt and taxable net income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is provided. Distributions paid by the fund from net interest received on tax-exempt municipal bonds are not includable by shareholders as gross income for federal income tax purposes because the fund intends to meet certain requirements of the Code applicable to regulated investment companies, which will enable the fund to pay exempt-interest dividends. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986 may be considered a tax-preference item to shareholders. Distributions to shareholders are recorded on the ex-dividend date. The fund distinguishes between distributions on a tax basis and a financial reporting basis and only distributions in excess of tax basis earnings and profits are reported in the financial statements as distributions from paid-in capital. Differences in the recognition or classification of income between the financial statements and tax earnings and profits, which result in temporary over-distributions for financial statement purposes, are classified as distributions in excess of net investment income or net realized gains. Common types of book and tax differences that could occur include differences in accounting for derivatives, capital losses, and amortization and accretion on debt securities. The tax character of distributions declared for the years ended March 31, 2004 and March 31, 2003 was as follows: 3/31/04 3/31/03 Distributions declared from tax exempt income $17,263,999 $18,661,666 -------------------------------------------------------------- During the year ended March 31, 2004, accumulated distributions in excess of net investment income decreased by $423,161, accumulated net realized loss on investments increased by $394,539, and paid-in capital decreased by $28,622 due to differences between book and tax accounting for amortization and accretion on debt securities, market discount, defaulted bonds, capital losses, interest rate swaps, and a net operating loss. This change had no effect on the net assets or net asset value per share. At March 31, 2004, accumulated distributions in excess of net investment income and realized loss on investments under book accounting were different from tax accounting due to temporary differences in accounting for capital losses, amortization and accretion on debt securities, and defaulted bonds. As of March 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows: Undistributed ordinary income $987,656 -------------------------------------------------------------- Capital loss carryforward (6,386,266) -------------------------------------------------------------- Unrealized appreciation 28,233,998 -------------------------------------------------------------- Other temporary differences (1,501,583) -------------------------------------------------------------- For federal income tax purposes, the capital loss carryforward may be applied against any net taxable realized gains of each succeeding year until the earlier of its utilization or expiration on March 31, 2010, ($1,199,142), March 31, 2011 ($1,101,451), and March 31, 2012 ($4,085,673). 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 due to differences in separate class expenses charged. Class B shares will convert to Class A shares approximately eight years after purchase. (3) TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISER - The fund has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to provide overall investment advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at an annual rate of 0.55% of the fund's average daily net assets. The investment adviser has contractually agreed to waive a portion of its fee, which is shown as a reduction of total expenses in the Statement of Operations. From April 1, 2003 to March 1, 2004, MFS reduced the fund's management fee to 0.40% of average daily net assets. As part of the settlement agreement with the New York Attorney General concerning market timing and related matters, MFS has agreed to reduce the fund's management fee to 0.30% of average daily net assets for the period March 1, 2004 through February 28, 2009. During this time period, the Board of Trustees will continue to review the appropriateness of all advisory fees in accordance with their oversight responsibilities. After February 28, 2009 the management fee will be determined in accordance with then existing review policies approved by the Board of Trustees overseeing the fund. Management fees incurred for the year ended March 31, 2004 were 0.39% of average daily net assets on an annualized basis. The fund pays compensation to the Independent Trustees ("Trustees") in the form of both a retainer and attendance fees, and pays no compensation directly to its Trustees who are officers of the investment adviser, or to officers of the fund, 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, MFS Fund Distributors, Inc. (MFD), and MFS Service Center, Inc. (MFSC). The fund has an unfunded, defined benefit plan for retired independent Trustees. Included in Trustees' compensation is a pension expense of $4,850 for retired independent Trustees for the year ended March 31, 2004. ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to certain funds for which MFS acts as investment adviser. Under an administrative services agreement between the funds and MFS, MFS is entitled to partial reimbursement of the costs MFS incurs to provide these services, subject to review and approval by the Board of Trustees. Each fund is allocated a portion of these administrative costs based on its size and relative average net assets, subject to a maximum amount, (i.e., each fund will pay the lesser of its allocated costs or a maximum amount based on its average daily net assets). For the year ended March 31, 2004, the maximum amount is based on the following annual percentages of the fund's average daily net assets: First $2 billion 0.0175% -------------------------------------------------------------- Next $2.5 billion 0.0130% -------------------------------------------------------------- Next $2.5 billion 0.0005% -------------------------------------------------------------- In excess of $7 billion 0.0000% -------------------------------------------------------------- For the year ended March 31, 2004, the fund paid MFS $36,295, equivalent to 0.0098% of average daily net assets, to partially reimburse MFS for the costs of providing administrative services. The maximum amount that could have been charged to the fund during the period for administrative costs equaled $64,665 or 0.0175 % of average daily net assets. Effective April 1, 2004 the maximum amount is based on the following annual percentages of the fund's average daily net assets: First $2 billion 0.01120% -------------------------------------------------------------- Next $2.5 billion 0.00832% -------------------------------------------------------------- Next $2.5 billion 0.00032% -------------------------------------------------------------- In excess of $7 billion 0.0000% -------------------------------------------------------------- DISTRIBUTOR - MFD, a wholly owned subsidiary of MFS, as distributor, received $71,437 for the year ended March 31, 2004, as its portion of the sales charge on sales of Class A shares of the fund. The Trustees have adopted a distribution plan for Class A, Class B, and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows: The fund's distribution plan provides that the fund will pay MFD an annual percentage of its average daily net assets attributable to certain share classes in order that MFD may pay expenses on behalf of the fund related to the distribution and servicing of its shares. These expenses include a service fee paid to each securities dealer that enters into a sales agreement with MFD based on the average daily net assets of accounts attributable to such dealers. These fees are calculated based on each class' average daily net assets. The maximum distribution and service fees for each class of shares are as follows: CLASS A CLASS B CLASS C Distribution Fee 0.10% 0.75% 0.75% - ------------------------------------------------------------------------------- Service Fee 0.25% 0.25% 0.25% - ------------------------------------------------------------------------------- Total Distribution Plan 0.35% 1.00% 1.00% - ------------------------------------------------------------------------------- MFD retains the service fee for accounts not attributable to a securities dealer, which for the year ended March 31, 2004, amounted to: CLASS A CLASS B CLASS C Service Fee Retained by MFD $23,019 $548 $131 - ------------------------------------------------------------------------------- Payment of the 0.10% per annum Class A distribution fee will be implemented on such a date as the Trustees of the Trust may determine. Fees incurred under the distribution plan during the year ended March 31, 2004, were as follows: CLASS A CLASS B CLASS C Effective Annual Percentage Rates 0.25% 1.00% 1.00% - ------------------------------------------------------------------------------- Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within, for Class A shares, 12 months following the purchase, and, for Class C shares, the first year from the end of the calendar month of purchase. A contingent deferred sales charge is imposed on shareholder redemptions of Class B shares in the event of a shareholder redemption within six years from the end of the calendar month of purchase. MFD receives all contingent deferred sales charges. Contingent deferred sales charges imposed during the year ended March 31, 2004, were as follows: CLASS A CLASS B CLASS C Contingent Deferred Sales Charges Imposed $200 $89,676 $13,532 - ------------------------------------------------------------------------------- SHAREHOLDER SERVICING AGENT - Included in shareholder servicing costs is a fee paid to MFSC, a wholly owned subsidiary of MFS, for its services as shareholder servicing agent. The fee, which is calculated as a percentage of the fund's average daily net assets is set periodically under the supervision of the funds' Trustees. As of March 31, 2004, the fee is set at 0.11% of the fund's average daily net assets. Effective April 1, 2004, the fee is set at 0.10% of the fund's average daily net assets. For the year ended March 31, 2004, the fund paid MFSC a fee of $404,262 for shareholder services which amounted to 0.11% of the fund's average net assets. Also included in shareholder servicing costs are out-of-pocket expenses, paid to MFSC, which amounted to $38,784 for the year ended March 31, 2004 as well as other expenses paid to unaffiliated vendors. (4) PORTFOLIO SECURITIES Purchases and sales of investments, other than U.S. government securities, purchased option transactions, and short-term obligations, aggregated $31,386,264 and $57,641,056, respectively. 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 $323,696,392 -------------------------------------------------------------- Gross unrealized appreciation $34,185,694 -------------------------------------------------------------- Gross unrealized depreciation (4,936,956) -------------------------------------------------------------- Net unrealized appreciation $29,248,738 -------------------------------------------------------------- (5) SHARES OF BENEFICIAL INTEREST The fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
Year ended 3/31/04 Year ended 3/31/03 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Shares sold 3,923,574 $33,678,836 4,450,257 $37,896,886 - ---------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 867,292 7,450,143 945,048 8,059,984 - ---------------------------------------------------------------------------------------------------------- Shares reacquired (6,505,143) (55,872,881) (6,507,096) (55,624,477) - ---------------------------------------------------------------------------------------------------------- Net decrease (1,714,277) $(14,743,902) (1,111,791) $(9,667,607) - ---------------------------------------------------------------------------------------------------------- CLASS B SHARES Shares sold 534,325 $4,621,956 1,268,027 $10,847,882 - ---------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 133,556 1,149,141 158,423 1,354,185 - ---------------------------------------------------------------------------------------------------------- Shares reacquired (1,602,274) (13,788,797) (1,853,374) (15,811,734) - ---------------------------------------------------------------------------------------------------------- Net decrease (934,393) $(8,017,700) (426,924) $(3,609,667) - ---------------------------------------------------------------------------------------------------------- CLASS C SHARES Shares sold 1,083,331 $9,355,388 1,278,255 $10,973,927 - ---------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 125,956 1,084,943 127,218 1,087,463 - ---------------------------------------------------------------------------------------------------------- Shares reacquired (1,515,353) (13,064,643) (1,133,632) (9,714,089) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) (306,066) $(2,624,312) 271,841 $2,347,301 - ----------------------------------------------------------------------------------------------------------
(6) LINE OF CREDIT The fund and other affiliated funds participate in an $800 million unsecured line of credit provided by a syndication of banks under a line of credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the bank's base rate plus 0.50%. In addition, a commitment fee, based on the average daily, unused portion of the line of credit, is allocated among the participating funds at the end of each calendar quarter. The commitment fee allocated to the fund for the year ended March 31, 2004, was $2,445. The fund had no borrowings during the year. (7) FINANCIAL INSTRUMENTS The fund trades financial instruments with off-balance-sheet risk in the normal course of its investing activities in order to manage exposure to market risks such as interest rates. These financial instruments include swap agreements. The notional or contractual amounts of these instruments represent the investment the fund has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. Swap Agreements Interest Rate Swap Agreements
NOTIONAL PRINCIPAL CASH FLOWS UNREALIZED AMOUNT OF CASH FLOWS PAID RECEIVED APPRECIATION EXPIRATION CONTRACT (000) BY THE FUND BY THE FUND (DEPRECIATION) - ----------------------------------------------------------------------------------------------------------- 11/15/04 4,000 Fixed - 1.945% Floating - 7 Day $(24,923) BMA Swap Index - ----------------------------------------------------------------------------------------------------------- 10/31/12 3,750 Floating - 7 Day Floating - 3M $(18,674) BMA Swap Index LIBOR X 78.875% - ----------------------------------------------------------------------------------------------------------- 12/18/12 7,600 Floating - 7 Day Floating - 3M $(40,930) BMA Swap Index LIBOR X 78.75% - ----------------------------------------------------------------------------------------------------------- 10/27/14 5,985 Fixed - 3.444% Floating - 7 Day $82,408 BMA Swap Index - ----------------------------------------------------------------------------------------------------------- 11/9/14 5,985 Fixed - 3.73% Floating - 7 Day $(54,991) BMA Swap Index - ----------------------------------------------------------------------------------------------------------- 6/23/19 3,000 Fixed - 4.23% Floating - 7 Day $(123,190) BMA Swap Index - ----------------------------------------------------------------------------------------------------------- 7/14/19 2,000 Fixed - 4.137% Floating - 7 Day $(50,653) BMA Swap Index - ----------------------------------------------------------------------------------------------------------- 8/4/19 2,500 Fixed - 4.039% Floating - 7 Day $(31,405) BMA Swap Index - ----------------------------------------------------------------------------------------------------------- 4/7/24 4,000 Fixed - 4.159% Floating - 7 Day $(72,093) BMA Swap Index - ----------------------------------------------------------------------------------------------------------- 10/27/34 3,150 Floating - 7 Day Fixed - 4.132% $(79,677) BMA Swap Index - ----------------------------------------------------------------------------------------------------------- 11/9/34 3,150 Floating - 7 Day Fixed - 4.322% $3,853 BMA Swap Index - ----------------------------------------------------------------------------------------------------------- $(410,275) - ----------------------------------------------------------------------------------------------------------- Rate Lock Swap Agreements NOTIONAL PRINCIPAL AMOUNT OF UNREALIZED CONTRACT (000) DESCRIPTION DEPRECIATION - ---------------------------------------------------------------------------------------------------- 4,000 Agreement with Merrill Lynch terminating April 7, $(233,505) 2004 to pay the difference between the notional value and the market value of a bond with a 4.842% coupon maturing on April 7, 2024 priced at a yield to maturity equal to the MMD general obligation yeild curve rate for the designated maturity year as of the close of business on the termination date, if negative (receive if positive). - ---------------------------------------------------------------------------------------------------- 2,500 Agreement with Merrill Lynch terminating April 13, $(229,392) 2004 to pay the difference between the notional value and the market value of a bond with a 5.106% coupon maturing on April 13, 2025 priced at a yield to maturity equal to the MMD general obligation yeild curve rate for the designated maturity year as of the close of business on the termination date, if negative (receive if positive). - ---------------------------------------------------------------------------------------------------- 1,600 Agreement with Goldman Sachs terminating April 14, $(141,568) 2004 to pay the difference between the notional value and the market value of a bond with a 5.10% coupon maturing on April 14, 2025 priced at a yield to maturity equal to the MMD general obligation yeild curve rate for the designated maturity year as of the close of business on the termination date, if negative (receive if positive). - ---------------------------------------------------------------------------------------------------- Total $(604,465) - ----------------------------------------------------------------------------------------------------
At March 31, 2004, the fund had sufficient cash and/or securities to cover any commitments under these contracts. (8) RESTRICTED SECURITIES The fund may invest not more than 15% of its total assets in securities, which are subject to legal or contractual restrictions on resale. At March 31, 2004, the fund owned the following restricted securities, excluding securities issued under Rule 144A, constituting 4.8% of net assets which may not be publicly sold without registration under the Securities Act of 1933. The fund does not have the right to demand that such securities be registered. The value of these securities is determined by valuations furnished by dealers or by an independent pricing service, or if not available, at fair value under the direction of the Trustees.
SHARE/ PRINCIPAL DATE OF AMOUNT DESCRIPTION ACQUISITION (000 OMITTED) COST VALUE Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 9.4853%, 2016 4/20/1999 1,000 $1,167,100 $1,341,340 - --------------------------------------------------------------------------------------------------------- Chicago, IL (O'Hare International Airport), RITES, FSA, 9.916%, 2022 8/21/2003 1,500 1,599,660 1,809,030 - --------------------------------------------------------------------------------------------------------- Chicago, IL Public Building Commission Rev., RITES, FGIC, 8.836%, 2016-2017 3/10/1999 2,750 2,957,100 3,497,325 - --------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, FGIC, 9.896%, 2015 7/15/2001 3,000 3,878,760 4,044,300 - --------------------------------------------------------------------------------------------------------- Dudley-Charlton, MA, Regional School District, RITES, FGIC, 9.031%, 2017 5/05/1999 1,495 1,615,945 1,917,637 - --------------------------------------------------------------------------------------------------------- Houston, TX, Independent School District, RITES, PSF, 8.985%, 2017 2/26/1999 2,325 2,440,831 2,723,180 - --------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, ROLs, MBIA, 9.358%, 2019 10/28/1996 1,500 1,717,980 1,761,090 - --------------------------------------------------------------------------------------------------------- Total $17,093,902 - ---------------------------------------------------------------------------------------------------------
(9) CONCENTRATION OF CREDIT RISK At March 31, 2004, 42.0% of securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 15.2% of total investments. (10) LEGAL PROCEEDINGS On March 31, 2004, MFS settled an administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales. Under the terms of the settlement, in which MFS neither admitted nor denied any wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50 million in penalty to certain MFS funds, pursuant to a plan to be approved by an independent distribution consultant. The agreement with the SEC is reflected in an order of the SEC. The settlement order states that MFS failed to adequately disclose to the Boards of Trustees and to shareholders of the MFS funds the specifics of its preferred arrangements with certain brokerage firms selling MFS fund shares. The settlement order states that MFS had in place policies designed to obtain best execution of all fund trades. As part of the settlement, MFS has retained an independent compliance consultant to review the completeness of its disclosure to fund trustees and to fund shareholders of strategic alliances between MFS or its affiliates and broker- dealers and other financial advisers who support the sale of fund shares. The brokerage allocation practices which were the subject of this proceeding were discontinued by MFS in November 2003. In addition, in February, 2004, MFS reached agreement with the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG") and the Bureau of Securities Regulation of the State of New Hampshire ("NH") to settle administrative proceedings alleging false and misleading information in certain MFS fund prospectuses regarding market timing and related matters (the "February Settlements"). These regulators alleged that prospectus language for certain MFS funds was false and misleading because, although the prospectuses for those funds in the regulators' view indicated that the funds prohibited market timing, MFS did not limit trading activity in 11 domestic large cap stock, high grade bond and money market funds. MFS' former Chief Executive Officer, John W. Ballen, and former President, Kevin R. Parke, also reached agreement with the SEC in which they agreed to, among other terms, monetary fines and temporary suspensions from association with any investment adviser or registered investment company. Messrs. Ballen and Parke have resigned their positions with, and will not be returning to, MFS and the MFS funds. Under the terms of the February Settlements, MFS and the executives neither admit nor deny wrongdoing. Under the terms of the February Settlements, a $225 million pool has been established for distribution to shareholders in certain of the MFS funds offered to retail investors ("Retail Funds"), which has been funded by MFS and of which $50 million is characterized as a penalty. This pool will be distributed in accordance with a methodology developed by an independent distribution consultant in consultation with MFS and the Boards of Trustees of the Retail Funds, and acceptable to the SEC. MFS has further agreed with the NYAG to reduce its management fees in the aggregate amount of approximately $25 million annually over the next five years, and not to increase certain management fees during this period. MFS has also paid an administrative fine to NH in the amount of $1 million, which will be used for investor education purposes (NH will retain $250,000 and $750,000 will be contributed to the North American Securities Administrators Association's Investor Protection Trust). In addition, under the terms of the February Settlements, MFS is in the process of adopting certain governance changes and reviewing its policies and procedures. Since December 2003, MFS, Sun Life Financial Inc., various MFS funds, the Trustees of these MFS funds, and certain officers of MFS have been named as defendants in multiple lawsuits filed in federal and state courts. The lawsuits variously have been commenced as class actions or individual actions on behalf of investors who purchased, held or redeemed shares of the funds during specified periods, as class actions on behalf of participants in certain retirement plan accounts, or as derivative actions on behalf of the MFS funds. The lawsuits generally allege that some or all of the defendants (i) permitted or acquiesced in market timing and/or late trading in some of the MFS funds, inadequately disclosed MFS' internal policies concerning market timing and such matters, and received excessive compensation as fiduciaries to the MFS funds, or (ii) permitted or acquiesced in the improper use of fund assets by MFS to support the distribution of fund shares and inadequately disclosed MFS' use of fund assets in this manner. The actions assert that some or all of the defendants violated the federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, as well as fiduciary duties and other violations of common law. The lawsuits seek unspecified compensatory damages. Insofar as any of the actions is appropriately brought derivatively on behalf of any of the MFS funds, any recovery will inure to the benefit of the funds. The defendants are reviewing the allegations of the multiple complaints and will respond appropriately. Additional lawsuits based on similar allegations may be filed in the future. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against MFS, the MFS funds, or any other named defendant. As noted above, as part of the regulatory settlements, MFS has established a restitution pool in the amount of $225 million to compensate certain shareholders of the Retail Funds for damages that they allegedly sustained as a result of market timing or late trading in certain of the funds, and will pay $50 million to compensate certain MFS funds based upon the amount of brokerage commissions allocated in recognition of fund sales. It is not clear whether these amounts will be sufficient to compensate shareholders for all of the damage they allegedly sustained, whether certain shareholders or putative class members may have additional claims to compensation, or whether the damages that may be awarded in any of the actions will exceed these amounts. In the event the MFS funds incur any losses, costs or expenses in connection with such lawsuits, the Boards of Trustees of the affected funds may pursue claims on behalf of such funds against any party that may have liability to the funds in respect thereof. Review of these matters by the independent Trustees of the MFS funds and their counsel is continuing. There can be no assurance that these regulatory actions and lawsuits, or the adverse publicity associated with these developments, will not result in increased fund redemptions, reduced sales of fund shares, or other adverse consequences to the funds. - ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - ------------------------------------------------------------------------------- To the Trustees of Muncipal Series Trust and the Shareholders of MFS Municipal Income Fund: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of MFS Municipal Income Fund (one of the series constituting MFS Municipal Series Trust) as of March 31, 2004, the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at March 31, 2004 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of MFS Municipal Income Fund as of March 31, 2004, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated periods in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts May 14, 2004 - ---------------------------------------------------------------------------------------------------------------------------- TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND - ---------------------------------------------------------------------------------------------------------------------------- The Trustees and officers of the Trust are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The business address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS & OTHER POSITION(s) HELD TRUSTEE/OFFICER DIRECTORSHIPS(2) DURING NAME, DATE OF BIRTH WITH FUND SINCE(1) THE PAST FIVE YEARS - ------------------- ---------------- --------------- ----------------------------- INTERESTED TRUSTEES John W. Ballen(3) Trustee and President August 2001 until Massachusetts Financial Services Company, (born 09/12/59) February 2004 Chief Executive Officer and Director (until February 2004) Robert J. Manning(3) Trustee and President February 2004 Massachusetts Financial Services Company, (born 10/20/63) Chief Executive Officer, President, Chief Investment Officer and Director Kevin R. Parke(3) Trustee January 2002 until Massachusetts Financial Services Company, (born 12/14/59) February 2004 President, Chief Investment Officer and Director (until February 2004) Robert C. Pozen(3) Trustee February 2004 Massachusetts Financial Services Company, (born 08/08/46) Chairman (since February 2004); Harvard Law School (education), John Olin Visiting Professor (since July 2002); Secretary of Economic Affairs, The Commonwealth of Massachusetts (January 2002 to December 2002); Fidelity Investments, Vice Chairman (June 2000 to December 2001); Fidelity Management & Research Company (investment adviser), President (March 1997 to July 2001); The Bank of New York (financial services), Director; Bell Canada Enterprises (telecommunications), Director; Telesat (satellite communications), Director Jeffrey L.Shames(3) Trustee October 1993 until Massachusetts Financial Services Company, (born 06/02/55) February 2004 Chairman (until February 2004) INDEPENDENT TRUSTEES J. Atwood Ives Chairman February 1992 Private investor; KeySpan Corporation (energy (born 05/01/36) related services), Director; Eastern Enterprises (diversified services company), Chairman, Trustee and Chief Executive Officer (until November 2000) Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Chief of (born 03/11/37) Cardiac Surgery; Harvard Medical School, Professor of Surgery David H. Gunning Trustee January 2004 Cleveland-Cliffs, Inc. (mining products and (born 05/30/42) service provider), Vice Chairman/ Director (since April 2001); Encinitos Ventures (private investment company), Principal (1997 to April 2001); Lincoln Electric Holdings, Inc. (welding equipment manufacturer), Director; Southwest Gas Corporation (natural gas distribution company), Director William R. Gutow Trustee December 1993 Private investor and real estate consultant; (born 09/27/41) Capitol Entertainment Management Company (video franchise), Vice Chairman Amy B. Lane Trustee January 2004 Retired; Merrill Lynch & Co., Inc., Managing (born 02/08/53) Director, Investment Banking Group (1997 to February 2001); Borders Group, Inc. (book and music retailer), Director; Federal Realty Investment Trust (real estate investment trust), Trustee Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys), Partner (born 06/23/35) William J. Poorvu Trustee August 1982 Private investor; Harvard University Graduate (born 04/10/35) School of Business Administration, Class of 1961 Adjunct Professor in Entrepreneurship Emeritus; CBL & Associates Properties, Inc. (real estate investment trust), Director J. Dale Sherratt Trustee August 1993 Insight Resources, Inc. (acquisition planning (born 09/23/38) specialists), President; Wellfleet Investments (investor in health care companies), Managing General Partner (since 1993); Cambridge Nutraceuticals (professional nutritional products), Chief Executive Officer (until May 2001) Elaine R. Smith Trustee February 1992 Independent health care industry consultant (born 04/25/46) Ward Smith Trustee October 1992 Private investor (born 09/13/30) OFFICERS Robert J. Manning(3) President and Trustee February 2004 Massachusetts Financial Services Company, (born 10/20/63) Chief Executive Officer, President, Chief Investment Officer and Director. John W. Ballen(3) President and Trustee August 2001 until Massachusetts Financial Services Company, (born 09/12/59) February 2004 Chief Executive Officer and Director (until February 2004) James R. Bordewick, Jr.(3) Assistant Secretary September 1990 Massachusetts Financial Services Company, (born 03/06/59) and Assistant Clerk Senior Vice President and Associate General Counsel Stephen E. Cavan(3) Secretary and Clerk December 1989 until Massachusetts Financial Services Company, (born 11/06/53) March 2004 Senior Vice President, General Counsel and Secretary (until March 2004) Stephanie A. DeSisto(3) Assistant Treasurer May 2003 Massachusetts Financial Services Company, (born 10/01/53) Vice President (since April 2003); Brown Brothers Harriman & Co., Senior Vice President (November 2002 to April 2003); ING Groep N.V./Aeltus Investment Management, Senior Vice President (prior to November 2002) Robert R. Flaherty(3) Assistant Treasurer August 2000 Massachusetts Financial Services Company, (born 09/18/63) Vice President (since August 2000); UAM Fund Services, Senior Vice President (prior to August 2000) Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial Services Company, (born 08/29/58) Senior Vice President (since July 2002); The Bank of New York, Senior Vice President (September 2000 to July 2002); Lexington Global Asset Managers, Inc., Executive Vice President and Chief Financial Officer (prior to September 2000); Lexington Funds, Chief Financial Officer (prior to September 2000) Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial Services Company, (born 11/13/57) Vice President James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial Services Company, (born 06/12/60) Senior Vice President - ------------------ (1) Date first appointed to serve as Trustee/Officer of an MFS fund. Each Trustee has served continuously since appointment unless indicated otherwise. (2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public companies"). (3) "Interested person" of MFS within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act) which is the principal federal law governing investment companies like the series/the fund. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. The Trust does not hold annual shareholder meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. The Trust will hold a shareholders' meeting in 2005 and at least once every five years thereafter to elect Trustees. Each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. Each Trustee serves as a board member of 109 funds within the MFS Family of Funds. The Statement of Additional Information contains further information about the Trustees and is available without charge upon request by calling 1-800-225-2606. - ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER CUSTODIANS Massachusetts Financial Services Company State Street Bank and Trust Company 500 Boylston Street, Boston, MA 02116-3741 225 Franklin Street, Boston, MA 02110 AUDITORS DISTRIBUTOR Deloitte & Touche LLP MFS Fund Distributors, Inc. 200 Berkeley Street, Boston, MA 02116 500 Boylston Street, Boston, MA 02116-3741 PORTFOLIO MANAGERS Michael L. Dawson Geoffrey L. Schechter
- ------------------------------------------------------------------------------- MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS - ------------------------------------------------------------------------------- YOUR GOALS ARE IMPORTANT MFS offers a complete range of investments and investment services to address specific financial needs over time. When your investing goals change, you can easily stay with MFS for the products you need, when you need them. Whether you're investing for college or retirement expenses or for tax management or estate planning, MFS will be there. Ask your investment professional how MFS can help you move toward the goals you've set. MFS FAMILY OF FUNDS(R) More than 50 portfolios offer domestic and international equity and fixed-income investment across the full risk spectrum VARIABLE ANNUITIES A selection of annuity products with advantages for building and preserving wealth MFS 401(k) AND IRA SUITES Retirement plans for businesses and individuals MFS COLLEGE SAVINGS PLANS Investment products to help meet education expenses MFS PRIVATE PORTFOLIO SERVICES Investment advisory services that provide custom products for high-net-worth individuals A prospectus for any MFS product can be obtained from your investment professional. You should read the prospectus carefully before investing as it contains complete information on the fund's investment objective(s), the risks associated with an investment in the fund, and the fees, charges, and expenses involved. These elements, as well as other information contained in the prospectus, should be considered carefully before investing. Variable annuities are offered through MFS/Sun Life Financial Distributors, Inc. - ------------------------------------------------------------------------------- FEDERAL TAX INFORMATION In January 2005, shareholders will be mailed a Form 1099-DIV reporting the federal tax status of all distributions paid during the calendar year 2004. For federal income tax purposes, approximately 100% of the total dividends paid by the fund from net investment income during the year ended March 31, 2004, is designated as an exempt-interest dividend. The fund has the option to use equalization, which is a tax basis dividends paid deduction from earnings and profits distributed to shareholders upon redemption shares. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CONTACT INFORMATION - ------------------------------------------------------------------------------- INVESTOR INFORMATION For information on MFS mutual funds, call your investment professional or, for an information kit, call toll free: 1-800-225-2606 any business day from 8 a.m. to 8 p.m. Eastern time. A general description of the fund's proxy voting policies and procedures is available without charge, upon request, by calling 202-547-7071, extension 201, by visiting www.jmr-financial.com/MFS or by visiting the SEC's website at http://www.sec. gov. INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 2281 Boston, MA 02107-9906 Type of Information Phone number Hours, Eastern Time - -------------------------------------------------------------------------------- General information 1-800-225-2606 8 a.m. to 8 p.m., any business day - -------------------------------------------------------------------------------- Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any business day - -------------------------------------------------------------------------------- Shares prices, account 1-800-MFS-TALK balances exchanges (1-800-637-8255) 24 hours a day, 365 days a or stock and bond outlooks touch-tone required year - -------------------------------------------------------------------------------- WORLD WIDE WEB Go to MFS.COM for a clear view of market events, investor education, account access, and product and performance insights. Go paperless with EDELIVERY: Join your fellow shareholders who are already taking advantage of this great new benefit from MFS. With eDelivery, we send you prospectuses, reports, and proxies electronically. You get timely information without mailbox clutter (and help your fund save printing and postage costs). SIGN-UP instructions: If your account is registered with us, 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 through a retirement plan, MFS Talk, MFS Access, and eDelivery may not be available to you. [logo] M F S(R) INVESTMENT MANAGEMENT 500 Boylston Street Boston, MA 02116-3741 (C) 2004 MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc. 500 Boylston Street, Boston, MA 02116 MMI-ANN-5/04 21M [graphic omitted] MFS(R) Mutual Funds ANNUAL REPORT 3/31/04 MFS(R) MUNICIPAL SERIES TRUST For the States of: Alabama, Arkansas, California, Florida, Georgia, Maryland, Massachusetts A path for pursuing opportunity [logo] M F S(R) INVESTMENT MANAGEMENT - -------------------------------------------------------------------------------- MFS(R) PRIVACY POLICY: A COMMITMENT TO YOU - -------------------------------------------------------------------------------- Privacy is a concern for every investor today. At MFS Investment Management(R) and the MFS funds, we take this concern very seriously. We want you to understand our policies about every MFS investment product and service that we offer and how we protect the nonpublic personal information of investors who have a direct relationship with us and our wholly owned subsidiaries. Throughout our business relationship, you provide us with personal information; we maintain information and records about you, your investments, and the services you use. Examples of the nonpublic personal information we maintain include o data from investment applications and other forms o share balances and transactional history with us, our affiliates, or others o facts from a consumer reporting agency We do not disclose any nonpublic personal information about our customers or former customers to anyone except as permitted by law. We may share information with companies or financial institutions that perform marketing services on our behalf or to other financial institutions with which we have joint marketing arrangements. Access to your nonpublic personal information is limited to appropriate personnel who provide products, services, or information to you. We maintain physical, electronic, and procedural safeguards that comply with applicable federal regulations. If you have any questions about MFS' privacy policy, please call 1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time. Note: If you own MFS products or receive MFS services in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. - -------------------------------------------------------------------------------- MFS(R) MUNICIPAL SERIES TRUST The investment objective of each fund is to seek current income exempt from federal income tax and personal income tax, if any, of the state to which its name refers. TABLE OF CONTENTS MFS PRIVACY POLICY - ----------------------------------------------------- LETTER FROM THE CEO 1 - ----------------------------------------------------- MFS ORIGINAL RESEARCH(R) 3 - ----------------------------------------------------- MANAGEMENT REVIEW 4 - ----------------------------------------------------- PERFORMANCE SUMMARY 7 - ----------------------------------------------------- PORTFOLIO OF INVESTMENTS 15 - ----------------------------------------------------- FINANCIAL STATEMENTS 50 - ----------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 75 - ----------------------------------------------------- INDEPENDENT AUDITORS' REPORT 93 - ----------------------------------------------------- TRUSTEES AND OFFICERS 94 - ----------------------------------------------------- MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS 96 - ----------------------------------------------------- FEDERAL TAX INFORMATION 97 - ----------------------------------------------------- CONTACT INFORMATION 98 - ----------------------------------------------------- ASSET ALLOCATION 99 - -------------------------------------------------------------------------------- NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE NOT A DEPOSIT NOT INSURED BY ANY GOVERNMENT AGENCY - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- LETTER FROM THE CEO - ------------------------------------------------------------------------------- Dear Shareholders, [Photo of Robert J. Manning] Our firm was built on the strength of MFS Original Research(R), our in-depth analysis of every security we consider for our portfolios. We've been honing this process since 1932, when we created one of the mutual fund industry's first research departments. And we continue to fine-tune this process so that we can provide strong and consistent long-term investment performance to help you achieve your financial goals. While we have achieved strong investment performance in many of our portfolios, our goal is to achieve the same strong results across all asset classes. To ensure that our portfolio teams are doing the best possible job for our firm's clients and shareholders, I am focusing the vast majority of my time on the three key elements that I believe truly differentiate MFS from its competitors: people, process, and culture. PEOPLE Our people have always been our most valuable resource. Our philosophy is to deliver consistent, repeatable investment results by hiring the most talented investors in our industry. We recruit from the nation's top business schools and hire experienced analysts, both domestically and around the globe. Our analysts are the engine that powers our entire investment team because their recommendations have a direct impact on the investment performance of our portfolios. To demonstrate our ongoing commitment in this area, we increased the number of equity analysts at MFS from less than 40 at the end of 2000 to over 50 in April 2004. During that same period, we doubled the average investment experience of our new domestic equity analysts, from 2.6 years to 5.3 years, by recruiting more seasoned analysts to the firm. Moreover, our international network of investment personnel now spans key regions of the world with offices in London, Mexico City, Singapore, and Tokyo, as well as Boston. One of the major advantages that MFS has over many of its competitors is that the position of research analyst is a long-term career for many members of our team, not simply a steppingstone toward becoming a portfolio manager. We have worked to elevate the stature of the analyst position to be on par with that of a portfolio manager. In fact, an exceptional research analyst has the opportunity to earn more at MFS than some portfolio managers. At the same time, we look within the firm to promote talented analysts who choose a path toward becoming a portfolio manager. We rarely hire portfolio managers from our competitors because we believe the best investors are those steeped in the MFS process and culture. In the past few months, we have identified four senior research analysts who will assume roles on the management teams of several of our larger portfolios. MFS is fortunate to have a deep bench of talented investment personnel, and we welcome the opportunity to put their skills to work for our clients. PROCESS MFS was built on the strength of its bottom-up approach to researching securities. We have enhanced the mentoring process for our research analysts by calling on several of our most seasoned portfolio managers to supplement the work of Director of Global Equity Research David A. Antonelli. These portfolio managers will be taking a special interest in developing the careers of our research analysts and strengthening our investment process. Kenneth J. Enright of our value equity group will work with a team of domestic analysts; David E. Sette-Ducati of our small- and mid-cap equity team will work with analysts concentrating on small- and mid-cap companies; and Barnaby Wiener of our international equity team in London heads the European equity research team. We have combined the bottom-up approach of our research process with a top- down approach to risk controls on portfolio composition. We have a very strong quantitative team under the leadership of industry veteran Deborah H. Miller, who represents the equity management department on the Management Committee of the firm. Quantitative analysis helps us generate investment ideas and, more importantly, assess the appropriate level of risk for each portfolio. The risk assessment is designed to assure that each portfolio operates within its investment objectives. Additionally, we have increased the peripheral vision of our investment personnel across asset classes through the collaboration of our Equity, Fixed Income, Quantitative Analysis, and Risk Management teams. We recently codified this key aspect of our culture by forming an Investment Management Committee, composed of key members of these teams. This Committee will work to ensure that all teams are sharing information, actively debating investment ideas, and creating a unified investment team. CULTURE Teamwork is at the heart of our ability to deliver consistent and competitive investment performance over time. At MFS, each member of our team is involved in our success; we have no superstars. The collaborative nature of our process works to assure a consistent investment approach across all of our products and provides a high level of continuity in portfolio management because our investment performance never depends on the contributions of just a single individual. Our culture is based on an environment of teamwork that allows our investment personnel to be successful. In turn, we demand superior investment results from every member of our team. We have created a meritocracy at our firm based on investment results. We hold all of our portfolio managers accountable for the performance of their portfolios and their contributions to the team. We also track the equity and fixed-income ratings of our analysts so we can evaluate them based on the performance of their recommendations. We align bonus compensation to investment performance by weighting rewards to those who have created the greatest long-term benefit for our shareholders and who contribute most successfully to the Original Research(SM) process. The strength of our culture has resulted in a tremendous amount of stability, both in terms of people and assets under management. Although we have dismissed members of our team whose performance did not meet MFS' high standards, only one member of our investment team has voluntarily left the firm over the past six months, based on a decision to retire from the industry. Similarly, our firm's assets under management have remained remarkably steady. We began the year with $140 billion in assets and ended the first quarter with $142 billion in assets. We are very proud to have experienced growth during this period despite the difficult regulatory environment and the relatively flat performance of the stock market. In short, we can help you achieve your financial goals by hiring talented people, following a disciplined process, and maintaining our firm's unique culture. The recent enhancements described in this letter reflect the collaborative spirit and the depth of resources in our investment teams. As always, we appreciate your confidence in MFS and welcome any questions or comments you may have. Respectfully, /s/ Robert J. Manning Robert J. Manning CEO, President, and Chief Investment Officer MFS Investment Management(R) April 19, 2004 Note to Shareholders: On February 6, 2004, Jeffrey L. Shames retired as Chairman of MFS. Robert Pozen was named as non-executive Chairman. Also, on February 6, 2004, Robert J. Manning was appointed Chief Executive Officer, President, and Chief Investment Officer. The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. - ------------------------------------------------------------------------------- MFS ORIGINAL RESEARCH(R) - ------------------------------------------------------------------------------- THE MFS(R) DIFFERENCE For 80 years MFS has been offering investors clear paths to pursuing specific investment objectives. Today, millions of individuals and thousands of institutions all over the world look to MFS to manage their assets with insight and care. Our success, we believe, has to do with the fact that we see investors as people with plans, not just dollars to invest. When you invest with MFS, you invest with a company dedicated to helping you realize your long-term financial goals. INVESTORS CHOOSE MFS FOR OUR o global asset management expertise across all asset classes o time-tested money management process for pursuing consistent results o full spectrum of investment products backed by MFS Original Research(R) o resources and services that match real-life needs TURNING INFORMATION INTO OPPORTUNITY Sound investments begin with sound information. MFS has been doing its own research and analyzing findings in-house for decades. The process we use to uncover opportunity is called MFS Original Research(R). MFS ORIGINAL RESEARCH INVOLVES: o meeting with the management of 3,000 companies each year to assess their business plans and the managers' ability to execute those plans o making onsite visits to more than 2,000 companies annually to gain first-hand knowledge of their operations and products o analyzing financial statements and balance sheets o talking extensively with companies' customers and competitors o developing our own proprietary estimates of companies' earnings - ------------------------------------------------------------------------------- MANAGEMENT REVIEW - ------------------------------------------------------------------------------- MARKET ENVIRONMENT For the one year period ended March 31, 2004, as a whole, long-term U.S. Treasury bond yields were virtually unchanged. High-grade municipal bond yields declined slightly, allowing municipal bonds in general to modestly outperform Treasuries. Those facts, however, belie the tremendous volatility in the bond market over the 12 months ended March 31, 2004. In early 2003 and into the first half of the period, we saw a confluence of factors that were positive for bond prices. Geopolitical uncertainty, the hangover from corporate scandals in 2002, and a weak U.S. economy were among the factors that prompted a "flight to quality" by many investors and pushed interest rates down to four-decade lows by June of 2003. In late June, however, the bond market reversed direction as fixed-income investors became concerned that the economic recovery was accelerating faster than expected. Although stocks had been rising since late March, the catalyst for the bond market appeared to be the Federal Reserve Board's decision on June 25 to lower rates by one-quarter percent rather than one-half percent as many investors had expected. From that date through early September, bond prices fell as rates rose sharply. In the second half of the period, however, bond prices revived as several factors combined to drive rates down again. Economic reports indicated that inflation was well contained while job growth remained weak. Although most other measures indicated the U.S. economy was improving, we believe investors were concerned that consumer spending might falter because laid-off workers were not finding new jobs. Statistics indicated that a significant portion of U.S. production capacity remained idle. The Fed appeared to sum up the situation in its statements that interest rates could remain low for the foreseeable future. By period-end, interest rates for 10- and 30-year Treasuries were within just four basis points of where they had started the period. (A basis point is 0.01% of interest.) Municipal bonds generally followed the path of Treasury bonds over the period, but with somewhat smaller swings in yield. However, long-term municipal bonds ended the period yielding about 20 basis points less than they had at the start of the period. Long-term municipal bonds in general saw some price appreciation over the period and outperformed long-term Treasuries. (The principal value and interest on U.S. Treasury securities, however, are guaranteed by the U.S. government if held to maturity.) We believe the outperformance of municipals was caused by two main factors. First, municipal bonds appreciated from historically low valuations, relative to Treasuries, to more normal valuations. This was in part the result of a growing national debt that put downward pressure on long-term Treasury prices. Second, we believe a decrease in the supply of new municipal issues late in the period put upward pressure on municipal prices. As the economy improved over the period, it also appeared to us that investors became willing to take on more risk, and the municipal bond market rotated to favor lower-rated, higher-yielding issues. For the period as a whole, lower- quality municipal bonds generally outperformed higher-rated bonds. HOW WE MANAGE THE FUNDS All of the MFS state municipal funds are managed with a common investment strategy. There are four key elements to our management strategy: duration, yield curve positioning, credit quality, and sector allocation. DURATION is a measure of a fund's sensitivity to changes in interest rates. In most market environments, we strive to be neutral in duration relative to our Lipper peers, as we believe that trying to predict the direction of interest rates is a relatively risky investment strategy. However, at times when we believe that interest rates have become excessively low - as we felt they did over the period - and may be about to reverse direction, we may try to protect a fund's principal by making the fund modestly short on duration relative to its Lipper peers. (Shorter duration makes a fund less sensitive to changes in interest rates.) A YIELD CURVE for bonds shows the relationship between yield and time to maturity. In a majority of market environments, longer-maturity bonds offer higher yields but are more exposed to duration risk - the risk that a change in interest rates may adversely affect a bond's price. In managing the funds, we try to pick what we believe is the optimal spot on the yield curve - a time to maturity that optimizes the combination of yield and risk. Our research for some time has indicated that the 15- to 20-year part of the yield curve is that optimal spot. For example, in our experience a 20-year bond typically has paid 98% of the yield of a similar 30-year bond but carried only 75%-80% of the duration risk of that 30-year bond. For that reason, the funds have tended to be overweighted in bonds with maturities in the 15- to 20-year range. CREDIT QUALITY refers to the perceived ability of a bond issuer to make interest payments and repay a bond's principal. Major credit-rating agencies rate bonds on a scale that usually runs from "AAA" down to "BBB" for investment-grade bonds, and "BB" and below for lower-quality, noninvestment-grade or so-called "junk" bonds. In general, lower-rated bonds pay higher rates of interest to compensate investors for taking on additional risk. The funds historically have focused on using our bottom-up research to seek out bonds that offer higher yields than average "AAA"-rated insured bonds, yet also offer what we believe is reasonable safety of principal and interest payments to maturity. SECTOR ALLOCATION refers to a fund's weightings in various types of municipal bond issues, including bonds from industries such as health care, utilities, and airlines. Our research analysts constantly seek out sectors, and individual bonds within those sectors, that we believe will benefit in a given market environment. FACTORS THAT AFFECTED PERFORMANCE For the 12-month period ended March 31, 2004, the following charts indicate the effects of the four factors mentioned above on individual fund performance. These factors may affect fund performance in different ways during other periods, depending on market conditions. The chart below depicts performance relative to each fund's benchmark, the Lehman Brothers Municipal Bond Index (the Lehman Index). o The DURATION column indicates that the fund's duration had a positive effect ("pos"), a negative effect ("neg"), or no meaningful contribution to relative performance ("neutral"). For the period, all of the funds were short on duration, relative to the Lehman Index, in anticipation of rising rates. However, long-term municipal interest rates declined over the period. Being short on duration thus hurt performance of all of the funds. For most of the funds, duration was the most significant performance detractor over the period. o YIELD CURVE indicates the effect of the fund's yield curve positioning on performance. Compared with the Lehman Index, all funds were more heavily weighted in bonds on the long end of the yield curve -- bonds with 10 to 30 years remaining to maturity. That overweighting helped during the period because long-term municipal rates came down more than short-term rates, so longer-term bonds experienced more price appreciation. Yield curve positioning therefore helped relative performance of all funds over the period. o The average CREDIT QUALITY of several of the funds was similar to that of the Lehman Index over the period. The effect of credit quality on relative performance was therefore neutral for those funds. The California fund had a relatively higher level of exposure to areas of the credit spectrum that outperformed over the period, and lower exposure to weaker- performing areas. (Exposure, defined as portfolio weight times duration, is a measure of a sector's contribution to the portfolio's overall sensitivity to interest rate shifts.) The Massachusetts fund had higher exposure to "AAA"-rated and "BB"-rated bonds, which outperformed over the period. For those two funds, credit quality thus had a positive effect on relative performance. KEY FACTORS IN FUND PERFORMANCE RELATIVE TO BENCHMARK (THE LEHMAN BROTHERS MUNICIPAL BOND INDEX) YIELD CREDIT SECTOR STATE FUND DURATION CURVE QUALITY ALLOCATION Alabama neg pos neutral neutral - ----------------------------------------------------------------------------- Arkansas neg pos neutral neg - ----------------------------------------------------------------------------- California neg pos pos neutral - ----------------------------------------------------------------------------- Florida neg pos neutral neutral - ----------------------------------------------------------------------------- Georgia neg pos neutral neg - ----------------------------------------------------------------------------- Maryland neg pos neutral neg - ----------------------------------------------------------------------------- Massachusetts neg pos pos neg - ----------------------------------------------------------------------------- o Funds for which SECTOR ALLOCATION was a negative factor were generally underweighted in one or more sectors that outperformed over the period. An underweighting in tobacco bonds, for example, hurt relative performance of the Arkansas fund. Tobacco bonds are state bonds backed by payments under the Master Settlement Agreement (MSA) between the states and the major tobacco companies, in which the states agreed to drop their lawsuits against the firms in return for a series of payments. For much of 2003, tobacco bonds underperformed as other lawsuits raised concerns about the tobacco firms' ability to continue MSA payments. In late 2003 and early 2004, however, those litigation concerns appeared to subside and tobacco bonds rallied; for the one-year period ended March 31, 2004, tobacco bonds outperformed the broad municipal market. An underweighting in tobacco bonds and an overweighting in housing bonds detracted from relative results for the Georgia, Maryland, and Massachusetts funds. As mortgage rates remained low for much of the period, the increased risk of prepayment -- from homeowners refinancing their mortgages at lower rates -- caused the housing sector as a whole to underperform the broad market. (Prepayments are generally bad for investors in housing bonds because they are forced to reinvest their proceeds at lower prevailing rates.) Respectfully, /s/ Michael L. Dawson /s/ Geoffrey L. Schechter Michael L. Dawson Geoffrey L. Schechter Portfolio Manager Portfolio Manager The views expressed in this report are those of the portfolio managers only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market and other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any MFS Fund. References to specific securities are not recommendations of such securities, and may not be representative of any MFS Fund's current or future investments. - ------------------------------------------------------------------------------- Visit mfs.com for our latest economic and investment outlook. o Under Updates & Announcements, click Week in Review for a summary of recent investment-related news. o From Week in Review, link to MFS Global Perspective for our current view of the world. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) ALABAMA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- The following information illustrates the historical performance of each fund's original share class in comparison to various market indicators. Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. Each fund's results have been compared to the average relevant state municipal debt fund tracked by Lipper Inc., an independent firm that reports mutual fund performance. For those states where Lipper does not track state-specific fund performance, we have provided the average "other state" municipal debt fund returns. Each fund's results have also been compared to the Lehman Brothers Municipal Bond Index, a broad measure of the municipal bond market. However, while this index is considered the benchmark for the performance of municipal bond funds, it is comprised of municipal bonds issued nationwide, while each of the funds is limited to investing in the bonds of a particular state. Benchmark comparisons are unmanaged and do not reflect any fees or expenses. The performance of other share classes will be greater than or less than the line shown. (See Notes to Performance Summary.) It is not possible to invest directly in an index. VISIT MFS.COM FOR THE MOST RECENT MONTH-END PERFORMANCE RESULTS. MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN THE DEDUCTION OF TAXES, IF ANY, THAT REDEEMED, MAY BE WORTH MORE OR LESS A SHAREHOLDER WOULD PAY ON FUND THAN THEIR ORIGINAL COST. THE DISTRIBUTIONS OR THE REDEMPTION OF PERFORMANCE SHOWN DOES NOT REFLECT FUND SHARES. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Alabama Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index - ---------------------------------------- 3/94 $ 9,525 $10,000 3/96 10,869 11,644 3/98 12,622 13,593 3/00 13,149 14,425 3/02 15,041 16,610 3/04 17,400 19,322 TOTAL RETURNS - -------------------- Average annual without sales charge - -------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 2/1/1990 5.11% 6.03% 5.59% 6.21% - ------------------------------------------------------------------------------ B 9/7/1993 4.32% 5.24% 4.80% 5.40% - ------------------------------------------------------------------------------ - -------------------- Average annual - -------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average Alabama municipal debt fund+ 5.26% 5.85% 4.90% 5.62% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------ - -------------------- Average annual with sales charge - -------------------- - ------------------------------------------------------------------------------ A 0.11% 4.33% 4.57% 5.70% - ------------------------------------------------------------------------------ B 0.32% 4.33% 4.47% 5.40% - ------------------------------------------------------------------------------ - -------------------- Cumulative without sales charge - -------------------- - ------------------------------------------------------------------------------ A 5.11% 19.22% 31.25% 82.68% - ------------------------------------------------------------------------------ B 4.32% 16.57% 26.42% 69.16% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) ARKANSAS MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Arkansas Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index - ---------------------------------------- 3/94 $ 9,525 $10,000 3/96 10,712 11,644 3/98 12,363 13,593 3/00 12,901 14,425 3/02 14,828 16,610 3/04 16,972 19,322 TOTAL RETURNS - -------------------- Average annual without sales charge - -------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 2/3/1992 4.53% 6.00% 5.59% 5.95% - ------------------------------------------------------------------------------ B 9/7/1993 3.68% 5.15% 4.75% 5.09% - ------------------------------------------------------------------------------ - -------------------- Average annual - -------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average "other state" municipal debt fund+ 4.24% 4.98% 4.48% 5.46% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------ - -------------------- Average annual with sales charge - -------------------- - ------------------------------------------------------------------------------ A -0.44% 4.30% 4.57% 5.43% - ------------------------------------------------------------------------------ B -0.32% 4.24% 4.42% 5.09% - ------------------------------------------------------------------------------ - -------------------- Cumulative without sales charge - -------------------- - ------------------------------------------------------------------------------ A 4.53% 19.11% 31.24% 78.19% - ------------------------------------------------------------------------------ B 3.68% 16.27% 26.12% 64.28% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) CALIFORNIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS California Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index - ---------------------------------------- 3/94 $ 9,525 $10,000 3/96 10,772 11,644 3/98 12,559 13,593 3/00 13,197 14,425 3/02 15,074 16,610 3/04 17,413 19,322 TOTAL RETURNS - -------------------- Average annual without sales charge - -------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 6/18/1985 5.22% 6.00% 5.40% 6.22% - ------------------------------------------------------------------------------ B 9/7/1993 4.38% 5.17% 4.57% 5.33% - ------------------------------------------------------------------------------ C 1/3/1994 4.27% 5.04% 4.48% 5.23% - ------------------------------------------------------------------------------ - -------------------- Average annual - -------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average California municipal debt fund+ 5.25% 5.28% 4.77% 6.02% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------ - -------------------- Average annual with sales charge - -------------------- - ------------------------------------------------------------------------------ A 0.22% 4.30% 4.38% 5.70% - ------------------------------------------------------------------------------ B 0.38% 4.25% 4.23% 5.33% - ------------------------------------------------------------------------------ C 3.27% 5.04% 4.48% 5.23% - ------------------------------------------------------------------------------ - -------------------- Cumlative without sales charge - -------------------- - ------------------------------------------------------------------------------ A 5.22% 19.11% 30.09% 82.82% - ------------------------------------------------------------------------------ B 4.38% 16.31% 25.04% 68.14% - ------------------------------------------------------------------------------ C 4.27% 15.89% 24.52% 66.43% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) FLORIDA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Florida Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index - ---------------------------------------- 3/94 $ 9,525 $10,000 3/96 10,893 11,644 3/98 12,411 13,593 3/00 12,883 14,425 3/02 14,765 16,610 3/04 16,993 19,322 TOTAL RETURNS - -------------------- Average annual without sales charge - -------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 2/3/1992 5.20% 6.01% 5.40% 5.96% - ------------------------------------------------------------------------------ B 9/7/1993 4.36% 5.16% 4.58% 5.09% - ------------------------------------------------------------------------------ - -------------------- Average annual - -------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average Florida municipal debt fund+ 4.61% 5.32% 4.62% 5.90% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------ - -------------------- Average annual with sales charge - -------------------- - ------------------------------------------------------------------------------ A 0.20% 4.30% 4.38% 5.45% - ------------------------------------------------------------------------------ B 0.36% 4.25% 4.24% 5.09% - ------------------------------------------------------------------------------ - -------------------- Cumulative without sales charge - -------------------- - ------------------------------------------------------------------------------ A 5.20% 19.14% 30.09% 78.41% - ------------------------------------------------------------------------------ B 4.36% 16.31% 25.10% 64.23% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) GEORGIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Georgia Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index - ---------------------------------------- 3/94 $ 9,525 $10,000 3/96 10,716 11,644 3/98 12,428 13,593 3/00 12,865 14,425 3/02 14,687 16,610 3/04 16,948 19,322 TOTAL RETURNS - -------------------- Average annual without sales charge - -------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 6/6/1988 4.93% 5.94% 5.39% 5.93% - ------------------------------------------------------------------------------ B 9/7/1993 4.15% 5.14% 4.60% 5.13% - ------------------------------------------------------------------------------ - -------------------- Average annual - -------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average Georgia municipal debt fund+ 4.91% 5.41% 4.84% 5.84% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------ - -------------------- Average annual with sales charge - -------------------- - ------------------------------------------------------------------------------ A -0.05% 4.23% 4.37% 5.42% - ------------------------------------------------------------------------------ B 0.15% 4.23% 4.26% 5.13% - ------------------------------------------------------------------------------ - -------------------- Cumulative without sales charge - -------------------- - ------------------------------------------------------------------------------ A 4.93% 18.89% 30.00% 77.93% - ------------------------------------------------------------------------------ B 4.15% 16.24% 25.20% 64.90% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) MARYLAND MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Maryland Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index - ---------------------------------------- 3/94 $ 9,525 $10,000 3/96 10,771 11,644 3/98 12,356 13,593 3/00 12,801 14,425 3/02 14,621 16,610 3/04 16,761 19,322 Total Returns - -------------------- Average annual without sales charge - -------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 10/31/1984 4.96% 5.89% 5.27% 5.81% - ------------------------------------------------------------------------------ B 9/7/1993 4.37% 5.24% 4.61% 5.12% - ------------------------------------------------------------------------------ - -------------------- Average annual - -------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average Maryland municipal debt fund+ 4.59% 5.34% 4.67% 5.64% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------ - -------------------- Average annual with sales charge - -------------------- - ------------------------------------------------------------------------------ A -0.02% 4.19% 4.25% 5.30% - ------------------------------------------------------------------------------ B 0.37% 4.33% 4.27% 5.12% - ------------------------------------------------------------------------------ - -------------------- Cumulative without sales charge - -------------------- - ------------------------------------------------------------------------------ A 4.96% 18.75% 29.27% 75.97% - ------------------------------------------------------------------------------ B 4.37% 16.57% 25.26% 64.79% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Massachusetts Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index - ---------------------------------------- 3/94 $ 9,525 $10,000 3/96 10,787 11,644 3/98 12,383 13,593 3/00 12,811 14,425 3/02 14,564 16,610 3/04 16,857 19,322 TOTAL RETURNS - -------------------- Average annual without sales charge - -------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 4/9/1985 4.82% 6.01% 5.31% 5.87% - ------------------------------------------------------------------------------ B 9/7/1993 4.14% 5.35% 4.64% 5.18% - ------------------------------------------------------------------------------ - -------------------- Average annual - -------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average Massachusetts municipal debt fund+ 5.11% 5.69% 4.91% 5.93% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------ - -------------------- Average annual with sales charge - -------------------- - ------------------------------------------------------------------------------ A -0.16% 4.31% 4.29% 5.36% - ------------------------------------------------------------------------------ B 0.14% 4.44% 4.30% 5.18% - ------------------------------------------------------------------------------ - -------------------- Cumulative without sales charge - -------------------- - ------------------------------------------------------------------------------ A 4.82% 19.14% 29.51% 76.98% - ------------------------------------------------------------------------------ B 4.14% 16.93% 25.45% 65.77% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- NOTES TO PERFORMANCE SUMMARY AND RISK CONSIDERATIONS - ------------------------------------------------------------------------------- NOTES TO PERFORMANCE SUMMARY Class A share performance, including sales charge, reflects the deduction of the maximum 4.75% sales charge. Class B share performance, including sales charge, reflects the deduction of the applicable contingent deferred sales charge (CDSC), which declines over six years from 4% to 0%. For those funds that offer Class C shares, Class C results, including sales charge, redeemed within one year from the end of the calendar month of purchase reflects the deduction of the 1% CDSC. Performance results reflect any applicable subsidies and waivers in effect during the periods shown. Without such subsidies and waivers each fund's performance would be less favorable. Please see the prospectus and financial statements for complete details. RISK CONSIDERATIONS A small portion of income may be subject to state, federal, and/or alternative minimum tax. Capital gains, if any, are subject to a capital gains tax. If you are not a resident of the state to which a particular fund is targeted, the state tax exemption will not apply. Investments in high yield or lower-rated securities may provide greater returns but are subject to greater-than-average risk. By concentrating in one state, the funds are more susceptible to adverse economic, political or regulatory developments affecting that state than are funds that invest more broadly. Because the funds invest in a limited number of companies a change in one security's value may have a more significant effect on fund values. These risks may increase share price volatility. Please see the prospectus for further information regarding these and other risk considerations. This 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. - ---------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/04 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 - 96.8% - ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - ---------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 3.3% Alabama Docks Department Facilities Rev., AMBAC, 5.375%, 2017 $1,000 $1,086,040 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Docks Department Facilities Rev., MBIA, 5.5%, 2022 1,000 1,110,220 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Port Authority Docks Facility MBIA, 5.25%, 2026 1,000 1,040,820 - ---------------------------------------------------------------------------------------------------------------------------------- $3,237,080 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 12.3% Gadsden, AL, Warrants, "B", 5.125%, 2028 $1,500 $1,573,500 - ---------------------------------------------------------------------------------------------------------------------------------- Hoover, AL, "B", 6%, 2017 500 569,600 - ---------------------------------------------------------------------------------------------------------------------------------- Houston County, AL, AMBAC, 6.25%, 2019 750 897,862 - ---------------------------------------------------------------------------------------------------------------------------------- Huntsville, AL, "A", 5.5%, 2020 1,000 1,042,170 - ---------------------------------------------------------------------------------------------------------------------------------- Huntsville, AL, School Warrants, "F", 5%, 2012 1,000 1,105,620 - ---------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, School Warrants, FSA, 5.5%, 2020 1,750 1,943,498 - ---------------------------------------------------------------------------------------------------------------------------------- Mobile County, AL, 6%, 2014 1,345 1,570,651 - ---------------------------------------------------------------------------------------------------------------------------------- Russell County, AL, Warrants, "A", AMBAC, 5%, 2017 1,000 1,091,420 - ---------------------------------------------------------------------------------------------------------------------------------- Saraland, AL, Warrants, MBIA, 5.25%, 2012 1,000 1,125,620 - ---------------------------------------------------------------------------------------------------------------------------------- Scottsboro, AL, School Warrants, "A", AMBAC, 5%, 2022 1,090 1,150,539 - ---------------------------------------------------------------------------------------------------------------------------------- $12,070,480 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 7.4% Birmingham, AL, 5.75%, 2019 $2,000 $2,274,440 - ---------------------------------------------------------------------------------------------------------------------------------- Birmingham, AL, "A", 5.75%, 2017 1,000 1,159,270 - ---------------------------------------------------------------------------------------------------------------------------------- Birmingham, AL, Refunding & Capital Improvement, "B", AMBAC, 5.25%, 2022 1,000 1,079,510 - ---------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Capital Improvement & Refunding Warrants, "A", MBIA, 5%, 2023 1,000 1,040,840 - ---------------------------------------------------------------------------------------------------------------------------------- Montgomery, AL, Warrants, MBIA, 5.1%, 2021 1,005 1,062,526 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017+(+) 500 636,780 - ---------------------------------------------------------------------------------------------------------------------------------- $7,253,366 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.2% Bessemer, AL, School Warrants, AMBAC, 5.5%, 2020 $2,015 $2,258,190 - ---------------------------------------------------------------------------------------------------------------------------------- Phenix City, AL, AMBAC, 5.65%, 2021 1,500 1,668,255 - ---------------------------------------------------------------------------------------------------------------------------------- Tuscaloosa, AL, Warrants, 5.7%, 2018 1,000 1,139,980 - ---------------------------------------------------------------------------------------------------------------------------------- $5,066,425 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Alabama Special Care Facilities Financing Authority (Daughters of Hospitals - 15.6% Charity), AMBAC, 5%, 2025(++) $1,500 $1,527,255 - ---------------------------------------------------------------------------------------------------------------------------------- Baldwin County, AL, Eastern Shore Health Care Authority Rev. (Thomas Hospital), 6.75%, 2015 500 518,855 - ---------------------------------------------------------------------------------------------------------------------------------- Birmingham Medical Center, East Alabama, Special Health Care Facilities, Eastern Health Systems, "B", 5%, 2018 500 494,690 - ---------------------------------------------------------------------------------------------------------------------------------- Birmingham, AL, Baptist Health Systems, "A", (Baptist Medical Center), 5.625%, 2015 300 323,727 - ---------------------------------------------------------------------------------------------------------------------------------- Birmingham, AL, Special Care Facilities (Children's Hospital), "B", 5%, 2016 1,005 1,099,410 - ---------------------------------------------------------------------------------------------------------------------------------- Cullman, AL, Medical Park, South Clinic, "A", 6.5%, 2023 1,000 1,008,040 - ---------------------------------------------------------------------------------------------------------------------------------- DCH Health Care Authority, Alabama Facilities Rev., 5.25%, 2016 1,000 1,060,930 - ---------------------------------------------------------------------------------------------------------------------------------- Houston County, AL, Health Care Authority, AMBAC, 6.125%, 2022 1,000 1,162,100 - ---------------------------------------------------------------------------------------------------------------------------------- Huntsville, AL, Health Care Authority Rev., 5.625%, 2026 950 986,927 - ---------------------------------------------------------------------------------------------------------------------------------- Huntsville, AL, Health Care Authority Rev., "A", MBIA, 5%, 2023 1,000 1,041,560 - ---------------------------------------------------------------------------------------------------------------------------------- Lauderdale County & Florence, AL, Health Care Authority Rev. (Eliza Coffee Memorial Hospital), MBIA, 5.75%, 2008(++) 1,000 1,149,010 - ---------------------------------------------------------------------------------------------------------------------------------- Lauderdale County & Florence, AL, Health Care Authority Rev., "A", (Coffee Health Group), MBIA, 5.75%, 2014 1,000 1,143,850 - ---------------------------------------------------------------------------------------------------------------------------------- Marshall County, AL, Health Care Authority Rev., "A", 5.75%, 2032 1,000 1,032,090 - ---------------------------------------------------------------------------------------------------------------------------------- Montgomery, AL, Medical Clinic Board Rev. (Jackson Hospital & Clinic), AMBAC, 5.875%, 2016 1,000 1,089,750 - ---------------------------------------------------------------------------------------------------------------------------------- Montgomery, AL, Special Care Facilities Financing Authority Rev., "C" (Baptist Medical Center), FSA, 5.375%, 2019 1,150 1,255,397 - ---------------------------------------------------------------------------------------------------------------------------------- Valley, AL, Special Care Facilities Financing Authority Rev., "A" (Lanier Memorial Hospital), 5.65%, 2022 425 397,898 - ---------------------------------------------------------------------------------------------------------------------------------- $15,291,489 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Mobile County, AL, Industrial Development Authority Rev. (Ipsco, Metals - 0.5% Inc.), 6.875%, 2030 $500 $516,600 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 0.5% Fairfield, AL, Environment Improvement Rev. (USX Corp.), 5.4%, 2016 $400 $454,636 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 3.2% Butler, AL, Solid Waste Disposal Rev. (James River Corp.), 8%, 2028 $150 $154,206 - ---------------------------------------------------------------------------------------------------------------------------------- Camden, AL, Industrial Development Board Exempt Rev., "B", (Weyerhaeuser), 6.375%, 2024 500 530,370 - ---------------------------------------------------------------------------------------------------------------------------------- Mobile, AL, Industrial Development Board Improvement Rev., "A" (International Paper Co.), 6.35%, 2016 650 710,418 - ---------------------------------------------------------------------------------------------------------------------------------- Mobile, AL, Industrial Development Board Improvement Rev., "B" (International Paper Co.), 6.45%, 2019 350 380,440 - ---------------------------------------------------------------------------------------------------------------------------------- Phenix City, AL, Environmental Improvement Rev., 6.35%, 2035 750 793,867 - ---------------------------------------------------------------------------------------------------------------------------------- Selma, AL, Industrial Development Board, "A" (International Paper Co.), 6.7%, 2018 500 554,020 - ---------------------------------------------------------------------------------------------------------------------------------- $3,123,321 - ---------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Birmingham, AL, Downtown Redevelopment Authority Rev. (Social Other - 3.6% Security Administrative Building), 12.5%, 2010(++) $1,830 $2,427,806 - ---------------------------------------------------------------------------------------------------------------------------------- East Cental, AL, Industrial Development Authority Rev., AMBAC, 5.4%, 2015 1,000 1,103,600 - ---------------------------------------------------------------------------------------------------------------------------------- $3,531,406 - ---------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Alabama Housing Finance Authority, Multi-Family Residential Revenue - 2.5% Development Rev., "K", (South Bay Apartments), FNMA, 5.875%, 2021 $960 $1,015,046 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Housing Finance Authority, Multi-Family Residential Development Rev., FHA, 7.25%, 2023 1,185 1,196,542 - ---------------------------------------------------------------------------------------------------------------------------------- Birmingham, AL, Multi-Family Housing Rev., "C" (Beaconview Apartments), 8%, 2030 395 78,577 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Corp., Multi-Family Mortgage Rev., LOC, 7.5%, 2015 200 200,714 - ---------------------------------------------------------------------------------------------------------------------------------- $2,490,879 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Alabama Housing Finance Authority, Collateral Home Mortgage Bond State - 2.5% Program II, "B", 5.15%, 2019 $400 $408,824 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program I, "B", GNMA, 5.7%, 2015 675 705,314 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program II, "A", 5.4%, 2022 895 913,777 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program II, "B", 5.15%, 2019 410 419,045 - ---------------------------------------------------------------------------------------------------------------------------------- $2,446,960 - ---------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 8.2% Alabama Building Renovation Authority, AMBAC, 6%, 2014 $1,515 $1,782,443 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Public School & College, Capital Improvement, FGIC, 5.125%, 2013 1,000 1,105,470 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Public School & College, Capital Improvement, "A", 5%, 2019 500 528,635 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Public School & College, Capital Improvement, "C", 5.75%, 2017 - 2018 2,035 2,328,939 - ---------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Board of Education, "A", FSA, 5.8%, 2020 865 967,632 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013 - 2016+ (+) 1,000 1,321,080 - ---------------------------------------------------------------------------------------------------------------------------------- $8,034,199 - ---------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.1% Virgin Islands Public Finance Authority, "A", ASST GTY, 5.5%, 2018 $1,000 $1,051,750 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $480 $473,400 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Alabama Board of Education Rev. (Shelton State Community College), MBIA, 3.9% 6%, 2004(++) $1,000 $1,044,730 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Board of Education Rev., Refunding & Improvement (Southern Union State Community College), MBIA, 5%, 2022 1,000 1,050,720 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama State Board of Education, Tuition Rev. John C. Calhoun Community College, "A", FGIC, 5.25%, 2023 300 321,537 - ---------------------------------------------------------------------------------------------------------------------------------- Auburn University, AL, General Fee Rev., AMBAC, 5.25%, 2016 750 833,572 - ---------------------------------------------------------------------------------------------------------------------------------- University of Alabama, University Rev., General Fee, FGIC, 5%, 2021 525 557,802 - ---------------------------------------------------------------------------------------------------------------------------------- $3,808,361 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 10.6% Alabama Municipal Electric Power Authority, "A", MBIA, 5%, 2023 $1,000 $1,050,930 - ---------------------------------------------------------------------------------------------------------------------------------- DeKalb & Cherokee County, AL, Gas Rev., AMBAC, 5.4%, 2016 2,000 2,171,320 - ---------------------------------------------------------------------------------------------------------------------------------- Guam Power Authority Rev., RITES, AMBAC, 9.0426%, 2013+(+) 500 619,790 - ---------------------------------------------------------------------------------------------------------------------------------- Guam Power Authority Rev., RITES, AMBAC, 8.5426%, 2018+(+) 4,500 5,051,070 - ---------------------------------------------------------------------------------------------------------------------------------- Southeastern Alabama Gas District Systems Rev., "A", AMBAC, 5.5%, 2020 1,000 1,120,000 - ---------------------------------------------------------------------------------------------------------------------------------- Tuskegee, AL, Utilities Board, AMBAC, 5.5%, 2022 400 441,340 - ---------------------------------------------------------------------------------------------------------------------------------- $10,454,450 - ---------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Alabama Drinking Water Finance Authority, Revolving Fund Loan, "A", Revenue - 15.9% AMBAC, 6%, 2021 $725 $850,084 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Drinking Water Finance Authority, Revolving Fund Loan, "C", AMBAC, 5.75%, 2018 1,000 1,146,710 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Water Pollution Control Authority, Revolving Fund Loan, "A", AMBAC, 5%, 2009 500 561,180 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Water Pollution Control Authority, Revolving Fund Loan, "B", AMBAC, 5.5%, 2016 - 2020 2,380 2,575,136 - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Water Pollution Control Authority, Revolving Fund Loan, AMBAC, 5.75%, 2019 1,000 1,133,430 - ---------------------------------------------------------------------------------------------------------------------------------- Bessemer, AL, Water Rev., Warrants, "A", 5.75%, 2026 1,000 1,095,450 - ---------------------------------------------------------------------------------------------------------------------------------- Jasper, AL, Waterworks & Sewer Board, "A", AMBAC, 5.2%, 2020 750 804,383 - ---------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A", FGIC, 5.375%, 2009(++) 1,000 1,143,590 - ---------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., Warrants, "D", FGIC, 5.7%, 2007(++) 1,000 1,118,980 - ---------------------------------------------------------------------------------------------------------------------------------- Limestone County, AL, Water Authority, FGIC, 5.5%, 2026 2,650 2,893,270 - ---------------------------------------------------------------------------------------------------------------------------------- Madison, AL, Water & Wastewater Board, MBIA, 5.5%, 2019 1,000 1,099,940 - ---------------------------------------------------------------------------------------------------------------------------------- Mobile, AL, Water & Sewer Commission, FGIC, 5.25%, 2016 1,000 1,106,430 - ---------------------------------------------------------------------------------------------------------------------------------- Ozark, AL, Utilities Board Water & Sewer Rev. AMBAC, 5%, 2031 100 103,197 - ---------------------------------------------------------------------------------------------------------------------------------- $15,631,780 - ---------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $86,354,522) $94,936,582 - ---------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.1% - ---------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), due 4/07/04 $200 $200,000 - ---------------------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, CA, Toll Bridge Rev. "A", due 4/07/04 100 100,000 - ---------------------------------------------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (University of Chicago Hospital), due 4/01/04 600 600,000 - ---------------------------------------------------------------------------------------------------------------------------------- Jackson County, MS, Pollution Control Rev. (Chevron U.S.A., Inc.), due 4/01/04 50 50,000 - ---------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., due 4/07/04 1,115 1,115,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $2,065,000) $2,065,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $88,419,522) $97,001,582 - ---------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.1% 1,041,279 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $98,042,861 - ---------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/04 MFS(R) ARKANSAS MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Municipal Bonds - 95.3% - ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - ---------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 1.3% Little Rock, AR, Airport Rev., "A", FSA, 5.25%, 2019 $800 $853,424 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Island Authority Marine Rev., "A", FSA, 5.25%, 2018 1,000 1,071,220 - ---------------------------------------------------------------------------------------------------------------------------------- $1,924,644 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 7.2% Arkansas College Savings, "A", 0%, 2017 $1,840 $1,055,847 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Federal Highway, Grant Anticipation Tax Rev., 5%, 2014 1,500 1,660,425 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Federal Highway, Grant Anticipation Tax Rev., "A", 5.5%, 2011 850 969,187 - ---------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Infrastructure, RITES, 9.5771%, 2019+ (+) 1,250 1,575,025 - ---------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, RITES, MBIA, 10.0771%, 2020+(+) 3,000 3,991,500 - ---------------------------------------------------------------------------------------------------------------------------------- Sebastian County, AR, Community Refunding & Improvement, AMBAC, 5.6%, 2007(++) 1,500 1,683,570 - ---------------------------------------------------------------------------------------------------------------------------------- $10,935,554 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017 - Improvement - 3.3% 2018+(+) $3,985 $5,068,247 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Arkansas, Capital Appreciation, College Savings, "B", 0%, 2012 - Schools - 4.5% 2015 $4,450 $3,074,248 - ---------------------------------------------------------------------------------------------------------------------------------- Little Rock, AR, School District Construction, "C", FSA, 5%, 2017 1,000 1,067,120 - ---------------------------------------------------------------------------------------------------------------------------------- Little Rock, AR, School District, "A", FSA, 5.5%, 2005 490 507,963 - ---------------------------------------------------------------------------------------------------------------------------------- Little Rock, AR, School District, "A", FSA, 5.4%, 2017 1,000 1,089,740 - ---------------------------------------------------------------------------------------------------------------------------------- Rogers, AR, School District, Number 030, Refunding & Construction, "A", AMBAC, 5%, 2007(++) 1,000 1,105,790 - ---------------------------------------------------------------------------------------------------------------------------------- $6,844,861 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Arkansas Development Finance Authority, Health Care Facilities Rev. Hospitals - 11.6% (Sisters of Mercy), "A", MBIA, 5%, 2019 $4,000 $4,047,360 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Health Refunding (Sister of Mercy), "A", MBIA, 5%, 2013 4,340 4,836,973 - ---------------------------------------------------------------------------------------------------------------------------------- Batesville, AR, Medical District Rev. (White River Medical Center), 5.5%, 2024 750 765,555 - ---------------------------------------------------------------------------------------------------------------------------------- Baxter County, AR, Hospital Rev., Refunding & Improvement, "B", 5.6%, 2021 1,500 1,536,195 - ---------------------------------------------------------------------------------------------------------------------------------- Crittenden County, AR, 7.15%, 2025 750 744,765 - ---------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AR, Hospital Rev., Refunding & Improvement (Regional Medical Center), 5.8%, 2021 1,000 1,057,390 - ---------------------------------------------------------------------------------------------------------------------------------- Little Rock, AR, Health Facilities Board, Baptist Health-Bri Project, 5%, 2014 500 537,415 - ---------------------------------------------------------------------------------------------------------------------------------- Little Rock, AR, Health Facilities Hospital Board Rev. (Baptist Medical Center), 6.9%, 2009 400 471,736 - ---------------------------------------------------------------------------------------------------------------------------------- North Little Rock, AR, Baptist Health Facilities, 5.7%, 2022 500 523,470 - ---------------------------------------------------------------------------------------------------------------------------------- Pulaski County, AR, Hospital Rev. (Arkansas Children's Hospital), "B", 5.25%, 2015 - 2016 1,500 1,573,810 - ---------------------------------------------------------------------------------------------------------------------------------- Sebastian County, AR, Health Facilities Improvement (Sparks Regional Medical Center), "A", 5.25%, 2021 1,000 1,025,950 - ---------------------------------------------------------------------------------------------------------------------------------- State of Arkansas, Development Finance Authority Rev. (Washington Regional Medical Center), 7.25%, 2020 500 559,210 - ---------------------------------------------------------------------------------------------------------------------------------- $17,679,829 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Arkansas Development Finance Authority Rev., Evangelical Lutheran Term Care - 0.9% Project, "B", AMBAC, 5.375%, 2019 $1,315 $1,442,976 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Jonesboro, AR, Industrial Development Rev., Anheuser Busch Project, Other - 0.7% 4.6%, 2012 $1,000 $1,072,480 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Arkansas State Development Finance Authority, Industrial Facilities Paper - 1.3% Rev. (Potlatch Corp.), 7.75%, 2025 $250 $270,402 - ---------------------------------------------------------------------------------------------------------------------------------- Camden, AR, Environmental Improvement (International Paper Co.), "A", 7.625%, 2018 1,000 1,051,950 - ---------------------------------------------------------------------------------------------------------------------------------- Pine Bluff, AR, Environmental Improvement (International Paper Co.), "A", 5.55%, 2022 250 255,678 - ---------------------------------------------------------------------------------------------------------------------------------- Pine Bluff, AR, Environmental Refunding (International Paper Co.), "A", 6.7%, 2020 300 333,063 - ---------------------------------------------------------------------------------------------------------------------------------- $1,911,093 - ---------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Fort Smith, AR, Residential Housing (Gorman Towers), "A", GNMA, Revenue - 2.0% 5.45%, 2037 $1,000 $1,033,310 - ---------------------------------------------------------------------------------------------------------------------------------- Pulaski County, AR, Public Facilities Board, "A", GNMA, 5.75%, 2034 1,910 1,975,761 - ---------------------------------------------------------------------------------------------------------------------------------- $3,009,071 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Harrison, AR, Residential Housing Facilities Board, Single Family Local - 5.6% Mortgage Rev., FGIC, 7.4%, 2011(++) $4,000 $5,108,840 - ---------------------------------------------------------------------------------------------------------------------------------- Lonoke County, AR, Residential Housing Facilities, FNMA, 7.9%, 2011 195 204,399 - ---------------------------------------------------------------------------------------------------------------------------------- Pulaski County, AR, Public Facilities Board Rev., "C", FNMA, 0%, 2014 2,750 1,686,988 - ---------------------------------------------------------------------------------------------------------------------------------- Sherwood, AR, Residential Housing Facilities Board, Single Family Rev., MBIA, 7.5%, 2010(++) 1,250 1,588,863 - ---------------------------------------------------------------------------------------------------------------------------------- $8,589,090 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 9.8% Arkansas Development Finance Authority Rev., "1", 0%, 2011 $955 $546,289 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority Rev., "A", GNMA, 4.7%, 2024 1,625 1,614,405 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Mortgage Backed Securities Program, "B", 5%, 2029 330 331,135 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Mortgage Backed Securities Program, "C", GNMA, 5.35%, 2027 1,980 2,008,631 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Mortgage Backed Securities Program, "E", GNMA, 5.4%, 2034 1,000 1,017,870 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Mortgage Backed Securities Program, "B", GNMA, 4.45%, 2034 1,780 1,820,228 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, "F", GNMA, 7.45%, 2027 488 495,485 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, 5.3%, 2023 840 863,596 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, "B", GNMA, 6.7%, 2027 1,355 1,404,403 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, "D", 5.85%, 2024 1,520 1,606,579 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, "I", GNMA, 5.3%, 2033 750 762,420 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Housing Development Agency, Single Family Mortgage Program, 8.375%, 2011(++) 1,000 1,345,790 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Authority, Mortgage Backed Securities, "A", 4.375%, 2017 1,000 1,005,200 - ---------------------------------------------------------------------------------------------------------------------------------- $14,822,031 - ---------------------------------------------------------------------------------------------------------------------------------- State & Local Arkansas Development Finance Authority, Economic Development Rev., "B", Appropriation - 3.6% 5%, 2018 $175 $181,549 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Economic Development Rev., "B", AMBAC, 5.8%, 2020 500 549,125 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Park Mt. Magazine Project, FSA, 5%, 2019 1,715 1,844,225 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Public Health, Laboratory Project, AMBAC, 5%, 2018 580 621,957 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority Rev. (State Office Building), XCLA, 5.25%, 2025 2,000 2,266,240 - ---------------------------------------------------------------------------------------------------------------------------------- $5,463,096 - ---------------------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 1.4% Arkansas Student Loan Authority, "B", 6.25%, 2010 $2,000 $2,196,220 - ---------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 3.0% Little Rock, AR, Hotel & Restaurant, 7.375%, 2015 $2,790 $3,542,128 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., 5.5%, 2022 1,000 1,034,380 - ---------------------------------------------------------------------------------------------------------------------------------- $4,576,508 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.2% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $245 $241,631 - ---------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico Highway & Transportation Authority, "B", Tax - 2.4% MBIA, 5.875%, 2021 $2,000 $2,340,200 - ---------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, "G", 5%, 2023 750 781,140 - ---------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, "G", FGIC, 5%, 2022 500 532,870 - ---------------------------------------------------------------------------------------------------------------------------------- $3,654,210 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Arkansas State University, Student Fee-ASU Newport Campus, ABAC, 5%, 10.3% 2028 $700 $719,075 - ---------------------------------------------------------------------------------------------------------------------------------- Conway, AR, Public Facilities Rev. (Hendrix College), 5.85%, 2016 1,000 1,063,400 - ---------------------------------------------------------------------------------------------------------------------------------- Siloam Springs, AR, Public Education Facilities, Capital Improvement (John Brown University), AMBAC, 5.35%, 2020 500 539,965 - ---------------------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Facilities Rev. (Fayetteville Campus), FGIC, 5.5%, 2020 2,870 3,212,047 - ---------------------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Facilities Rev. (Fayetteville Campus), FGIC, 5%, 2027 - 2032 5,655 5,853,510 - ---------------------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Revs. (Fayetteville Campus), FGIC, 5.5%, 2016 1,765 2,024,349 - ---------------------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Revs. (Fort Smith Campus), FGIC, 5%, 2021 1,000 1,062,110 - ---------------------------------------------------------------------------------------------------------------------------------- University of Central Arkansas, "A", AMBAC, 5%, 2023 1,100 1,142,867 - ---------------------------------------------------------------------------------------------------------------------------------- $15,617,323 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Dormitories - 2.2% Arkansas State University Rev., Housing Systems, AMBAC, 5.15%, 2021 $1,240 $1,311,424 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Tech University Rev., Housing Systems, AMBAC, 5.2%, 2026 1,000 1,055,990 - ---------------------------------------------------------------------------------------------------------------------------------- Pope County, AR, Residential Housing, Arkansas Tech University Project, "A", 6%, 2027 1,000 973,080 - ---------------------------------------------------------------------------------------------------------------------------------- $3,340,494 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Jefferson County, AR, Pollution Control Rev. (Arkansas Power & Light Owned - 0.7% Co.), 6.3%, 2018 $1,050 $1,073,163 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 7.4% Benton, AR, Utilities Rev., AMBAC, 5%, 2030 $470 $486,022 - ---------------------------------------------------------------------------------------------------------------------------------- North Little Rock, AR, Electric Rev., "A", MBIA, 6.5%, 2010 - 2015 8,000 9,767,040 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,000 1,050,910 - ---------------------------------------------------------------------------------------------------------------------------------- $11,303,972 - ---------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 15.9% Arkansas Community Public Water Systems, "B", MBIA, 5%, 2017 $1,400 $1,513,890 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority Waste, Revolving Loan Fund, "A", 5%, 2011 - 2012 1,000 1,121,170 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority Waste, Revolving Loan Fund, "A", 5.5%, 2015 1,500 1,736,370 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Economic Development Rev., "I", AMBAC, 5.65%, 2014 375 407,074 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Revolving Loan Fund, "A", 5.85%, 2006(++) 2,130 2,351,200 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Revolving Loan Fund, "A", 5.5%, 2018 1,750 2,026,115 - ---------------------------------------------------------------------------------------------------------------------------------- Beaver, AR, Water District Rev., AMBAC, 5%, 2016 - 2017 2,000 2,168,460 - ---------------------------------------------------------------------------------------------------------------------------------- Fort Smith, AR, Water & Sewer Rev., "C", FSA, 5.25%, 2020 1,315 1,435,625 - ---------------------------------------------------------------------------------------------------------------------------------- Fort Smith, AR, Water & Sewer Rev., AMBAC, 5.65%, 2019 1,000 1,126,010 - ---------------------------------------------------------------------------------------------------------------------------------- Fort Smith, AR, Water & Sewer Rev., Refunding & Construction, "A", FSA, 5%, 2019 - 2021 4,875 5,146,911 - ---------------------------------------------------------------------------------------------------------------------------------- Little Rock, AR, Sewer Rev., Refunding & Construction, 5%, 2022 1,750 1,808,398 - ---------------------------------------------------------------------------------------------------------------------------------- Paragould, AR, Water Sewer & Electric Rev., AMBAC, 5.6%, 2020 765 869,354 - ---------------------------------------------------------------------------------------------------------------------------------- South Sebastian County, AR, Water Refunding, MBIA, 5%, 2038 1,000 1,024,310 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 1,250 1,347,600 - ---------------------------------------------------------------------------------------------------------------------------------- $24,082,487 - ---------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $131,347,386) $144,848,980 - ---------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.6% - ---------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), due 4/07/04 $1,900 $1,900,000 - ---------------------------------------------------------------------------------------------------------------------------------- California State, Department of Water Resources, Power Supply Rev., due 4/07/04 200 200,000 - ---------------------------------------------------------------------------------------------------------------------------------- New York City, NY, due 4/01/04 100 100,000 - ---------------------------------------------------------------------------------------------------------------------------------- Oklahoma Industries Authority, Health System Rev. & Refunding (Integris Baptist Medical Center), "B", due 4/01/04 200 200,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $2,400,000) $2,400,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $133,747,386) $147,248,980 - ---------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 3.1% 4,638,184 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $151,887,164 - ---------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/04 MFS(R) CALIFORNIA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Municipal Bonds - 98.8% - ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - ---------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 4.6% Long Beach, CA, Harbor Rev., "A" FGIC, 5.25%, 2018 $3,500 $3,813,740 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Department of Airports Rev. (Ontario International Airport), "A", FGIC, 6%, 2017 4,100 4,420,620 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Harbor Department Rev., "B", 5.375%, 2023 3,000 3,108,240 - ---------------------------------------------------------------------------------------------------------------------------------- Port Oakland, CA, "K", 5.75%, 2020 4,000 4,414,280 - ---------------------------------------------------------------------------------------------------------------------------------- San Francisco, CA, International Airport Rev., Second Series Issue 5, FGIC, 6.5%, 2019 4,000 4,095,720 - ---------------------------------------------------------------------------------------------------------------------------------- $19,852,600 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Commonwealth of Puerto Rico, ROLS, Series II R 124B, XLCA, 9.806%, General Purpose - 8.0% 2017+(+) $1,500 $1,998,930 - ---------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, Series II R 184C, FGIC, 8.4853%, 2020+(+) 3,300 4,445,034 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, RITES, 9.0197%, 2014+(+) 5,405 7,029,094 - ---------------------------------------------------------------------------------------------------------------------------------- Oakland, CA, "A" Measure DD, MBIA, 5%, 2025 2,845 2,960,223 - ---------------------------------------------------------------------------------------------------------------------------------- State of California, 10%, 2007 1,055 1,316,577 - ---------------------------------------------------------------------------------------------------------------------------------- State of California, 7%, 2010 2,000 2,478,000 - ---------------------------------------------------------------------------------------------------------------------------------- State of California, 5.5%, 2016 3,000 3,292,680 - ---------------------------------------------------------------------------------------------------------------------------------- State of California, 5%, 2022 2,000 2,029,380 - ---------------------------------------------------------------------------------------------------------------------------------- State of California, 5.125%, 2025 2,000 2,029,000 - ---------------------------------------------------------------------------------------------------------------------------------- State of California, AMBAC, 7.2%, 2008 1,600 1,899,200 - ---------------------------------------------------------------------------------------------------------------------------------- State of California, AMBAC, 6.3%, 2010 3,000 3,586,590 - ---------------------------------------------------------------------------------------------------------------------------------- State of California, RITES, "B", 9.9967%, 2017+(+) 1,250 1,624,475 - ---------------------------------------------------------------------------------------------------------------------------------- $34,689,183 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 17.8% Antelope Valley, CA (Union High School), "A", MBIA, 5%, 2027 $1,500 $1,560,420 - ---------------------------------------------------------------------------------------------------------------------------------- Butte Glenn Community College District, "A", MBIA, 5%, 2026 1,885 1,962,398 - ---------------------------------------------------------------------------------------------------------------------------------- Campbell, CA, Union High School District, FSA, 5%, 2021 1,280 1,364,339 - ---------------------------------------------------------------------------------------------------------------------------------- Capistrano, CA, Union High School District, "A", FGIC, 5.875%, 2020 1,185 1,347,736 - ---------------------------------------------------------------------------------------------------------------------------------- Centinela Valley, CA, Union High School Election, "C", FGIC, 5.2%, 2032 1,000 1,050,370 - ---------------------------------------------------------------------------------------------------------------------------------- Chaffey, CA, Union High School District, "C", FSA, 5%, 2027 1,000 1,039,400 - ---------------------------------------------------------------------------------------------------------------------------------- Colton, CA, Joint Union School District, "A", FGIC, 5.375%, 2026 1,200 1,305,600 - ---------------------------------------------------------------------------------------------------------------------------------- Coronada, CA, Union School District, "A", 5.7%, 2020 1,285 1,441,076 - ---------------------------------------------------------------------------------------------------------------------------------- Escondido, CA, Union School District, "A", FSA, 5%, 2026 1,000 1,037,300 - ---------------------------------------------------------------------------------------------------------------------------------- Fresno, CA, Union School District, "C", MBIA, 5.9%, 2019 1,960 2,353,686 - ---------------------------------------------------------------------------------------------------------------------------------- Glendale, CA, Union School District, "B", FSA, 5.5%, 2018 4,275 4,797,790 - ---------------------------------------------------------------------------------------------------------------------------------- Inglewood, CA, Union School District, "A", FGIC, 6%, 2019 1,695 1,956,335 - ---------------------------------------------------------------------------------------------------------------------------------- Little Lake, CA, City School District, "A", FSA, 6.125%, 2025 1,035 1,172,510 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Union School District Election of 1997, "E", MBIA, 5.125%, 2027 5,000 5,241,650 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Union School District, RITES, FSA, 9.0197%, 2020+(+) 5,000 5,904,100 - ---------------------------------------------------------------------------------------------------------------------------------- Manhattan Beach, CA, Union High School, Election of 2000, Capital Appreciation, "A", FGIC, 0%, 2020 2,415 1,096,724 - ---------------------------------------------------------------------------------------------------------------------------------- Manhattan Beach, CA, Union School Election of 2000, "A", FGIC, 5.625%, 2018 - 2019 3,570 4,066,734 - ---------------------------------------------------------------------------------------------------------------------------------- Morgan Hill, CA, Union School District, FGIC, 5.5%, 2020 2,545 2,818,002 - ---------------------------------------------------------------------------------------------------------------------------------- Oak Grove, CA, School District Election of 1995, FGIC, 5.25%, 2025 700 744,093 - ---------------------------------------------------------------------------------------------------------------------------------- Oceanside, CA, Union School District Election of 2000, "C", MBIA, 5.2%, 2025 500 533,430 - ---------------------------------------------------------------------------------------------------------------------------------- Oceanside, CA, Union School District Election of 2000, "C", MBIA, 5.25%, 2032 1,940 2,065,246 - ---------------------------------------------------------------------------------------------------------------------------------- Rowland, CA, Union School District, "A", FSA, 5.5%, 2020 1,250 1,385,550 - ---------------------------------------------------------------------------------------------------------------------------------- Sacramento, CA, City Union School District, "A", 5.875%, 2009(++) 2,075 2,487,323 - ---------------------------------------------------------------------------------------------------------------------------------- San Diego, CA, Union School District, "C", FSA, 5%, 2026 2,150 2,237,591 - ---------------------------------------------------------------------------------------------------------------------------------- San Gabriel, CA, Union School District, "A", FSA, 5%, 2024 2,000 2,081,660 - ---------------------------------------------------------------------------------------------------------------------------------- San Jose, CA, Evergreen Community College District, "B", FGIC, 5.5%, 2020 1,425 1,568,255 - ---------------------------------------------------------------------------------------------------------------------------------- San Ysidro, CA, School District, AMBAC, 6.125%, 2021 960 1,146,931 - ---------------------------------------------------------------------------------------------------------------------------------- Santa Clara, CA, Union School District, FGIC, 5.5%, 2019 2,210 2,454,934 - ---------------------------------------------------------------------------------------------------------------------------------- Santa Maria, CA, Joint Union High School District, "A", FSA, 5.375%, 2020 - 2021 2,330 2,607,154 - ---------------------------------------------------------------------------------------------------------------------------------- Sweetwater, CA, Union High School, FSA, 5%, 2021 - 2022 6,245 6,626,398 - ---------------------------------------------------------------------------------------------------------------------------------- Tehachapi, CA, Union School District, "A", FGIC, 5.625%, 2020 1,100 1,234,574 - ---------------------------------------------------------------------------------------------------------------------------------- Visalia, CA, Union School District, Certificate Participants, MBIA, 0%, 2005 4,655 4,554,685 - ---------------------------------------------------------------------------------------------------------------------------------- Vista, CA, Union School District, "A", FSA, 5%, 2023 1,000 1,048,660 - ---------------------------------------------------------------------------------------------------------------------------------- Walnut Valley, CA, Union School District, "B", AMBAC, 6%, 2011 1,600 1,934,416 - ---------------------------------------------------------------------------------------------------------------------------------- Washington, CA, Union School District Election of 1999, "A", FGIC, 5.625%, 2021 1,000 1,123,350 - ---------------------------------------------------------------------------------------------------------------------------------- $77,350,420 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 7.6% Abag Finance Authority Rev. (San Diego Hospital), "C", 5.375%, 2020 $1,000 $1,015,510 - ---------------------------------------------------------------------------------------------------------------------------------- California Health Facilities Financing Authority Rev. (Marshall Hospital), "A", 5.25%, 2018 1,000 1,049,150 - ---------------------------------------------------------------------------------------------------------------------------------- California Health Facilities Financing Authority Rev., Health Facilities (Adventist Health Systems), "A", 5%, 2033 2,000 2,000,600 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Henry Mayo Newhall Memorial Hospital), "A", 5%, 2018 2,000 2,068,020 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Kaiser Permanente), "A", 5.5%, 2032 2,000 2,080,940 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Los Angeles Children's Hospital), 5.125%, 2019 4,000 4,158,600 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (St. Joseph Health Systems Group), 6.625%, 2004(++) 2,000 2,067,140 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev., CHFC, 0%, 2007 - 2008(++) 9,990 9,065,396 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev., Health Facilities (Memorial Health Services), "A", 6%, 2023 1,500 1,627,545 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development, "B", 5.625%, 2042 4,000 4,158,880 - ---------------------------------------------------------------------------------------------------------------------------------- Central California Joint Powers Health Financing (Community Hospitals of Central California), 5.625%, 2021 1,000 1,019,930 - ---------------------------------------------------------------------------------------------------------------------------------- Corona, CA, Certificate of Participants, Corona Community Mand Tnr, 8%, 2005(++) 585 621,703 - ---------------------------------------------------------------------------------------------------------------------------------- Tahoe Forest, CA, Hospital District Rev., "A", 5.85%, 2022 1,000 1,031,940 - ---------------------------------------------------------------------------------------------------------------------------------- Washington Township, CA, Health Care Rev., 5%, 2018 1,000 1,028,650 - ---------------------------------------------------------------------------------------------------------------------------------- $32,994,004 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long California Health Facilities Financing Authority Rev. (Paradise Term Care - 0.6% Valley Estates), 5.125%, 2022 $1,000 $1,017,360 - ---------------------------------------------------------------------------------------------------------------------------------- La Verne, CA, Certificate Participants (Brethren Hillcrest Homes), "B", 6.625%, 2025 1,000 1,030,630 - ---------------------------------------------------------------------------------------------------------------------------------- Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae), 7.375%, 2027 485 508,537 - ---------------------------------------------------------------------------------------------------------------------------------- $2,556,527 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Abag Finance Authority for Non-Profit Corporations (Rhoda Haas Other - 0.5% Goldman Plaza), CALIF HL, 5.125%, 2015 $2,000 $2,109,840 - ---------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.4% California Statewide Communities Development Authority Rev. (Prides Industries), 7.125%, 2016 $1,820 $1,878,113 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - California Pollution Control, Financing Authority, Solid Waste 0.5% Disposal Rev. (Browning Ferris, Inc.), 5.8%, 2016 $2,000 $1,894,280 - ---------------------------------------------------------------------------------------------------------------------------------- California Pollution Control, Financing Authority Rev. (Laidlaw, Inc.), "A", 6.7%, 2007 2,750 123,750 - ---------------------------------------------------------------------------------------------------------------------------------- $2,018,030 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - California Pollution Control, Financing Authority Rev. (Frito-Lay, Inc.), Other - 0.2% 6.375%, 2004 $1,025 $1,029,715 - ---------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 0.6% Del Mar, CA, Race Track Authority Rev., 6.2%, 2011 $1,365 $1,462,898 - ---------------------------------------------------------------------------------------------------------------------------------- Del Mar, CA, Race Track Authority Rev., 6.45%, 2013 1,350 1,356,615 - ---------------------------------------------------------------------------------------------------------------------------------- $2,819,513 - ---------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - California Infrastruture & Economic Development Rev., MBIA, 5.5%, Other - 1.0% 2019 $1,000 $1,118,440 - ---------------------------------------------------------------------------------------------------------------------------------- South Coast Air Quality Management District Building Corp., California Rev., "B" AMBAC, 0.01%, 2005 3,480 3,424,946 - ---------------------------------------------------------------------------------------------------------------------------------- $4,543,386 - ---------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing California Housing Finance Agency Rev., Multi-Unit Rental Housing, Revenue - 3.5% "B II", 6.7%, 2015 $2,750 $2,763,283 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Irvine Apartments), 5.25%, 2025 6,000 6,246,300 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Irvine Apartments), "A3", 5.1%, 2025 2,000 2,104,080 - ---------------------------------------------------------------------------------------------------------------------------------- Palmdale, CA, Multi-Family Housing Rev., "A", FNMA, 7.375%, 2024 1,000 1,023,040 - ---------------------------------------------------------------------------------------------------------------------------------- San Bernardino County, CA, Multi-Family Housing Rev. (Equity Residential/Redlands), "A", 5.2%, 2028 3,000 3,210,720 - ---------------------------------------------------------------------------------------------------------------------------------- $15,347,423 - ---------------------------------------------------------------------------------------------------------------------------------- Parking - 0.3% San Francisco, CA, Union Square, 6%, 2020 $1,000 $1,146,510 - ---------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Contra Costa, CA, Transportation & Sales Tax Rev., "A", 6.875%, 2007 Revenue - 0.3% (++) $1,350 $1,467,369 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - California Rural Home Mortgage Finance Authority Rev., GNMA, 7.3%, Local - 1.2% 2031 $150 $164,010 - ---------------------------------------------------------------------------------------------------------------------------------- California Rural Home Mortgage Finance Authority Rev., Mortgage Backed Securities Program, "B4", GNMA, 6.35%, 2029 250 255,977 - ---------------------------------------------------------------------------------------------------------------------------------- Pomona, CA, Single Family Mortgage Rev., GNMA, 7.375%, 2010(++) 1,705 1,978,465 - ---------------------------------------------------------------------------------------------------------------------------------- Pomona, CA, Single Family Mortgage Rev., GNMA, 7.5%, 2023(++) 2,000 2,848,460 - ---------------------------------------------------------------------------------------------------------------------------------- San Bernardino County, CA, Single Family Mortgage Rev., GNMA, 7.375%, 2020 90 93,144 - ---------------------------------------------------------------------------------------------------------------------------------- San Bernardino County, CA, Single Family Mortgage Rev., GNMA, 7.65%, 2023 5 5,009 - ---------------------------------------------------------------------------------------------------------------------------------- $5,345,065 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 1.0% California Housing Finance Agency Rev., Home Mortgage, FSA, 0%, 2019 $4,710 $1,961,244 - ---------------------------------------------------------------------------------------------------------------------------------- California Housing Finance Agency Rev., Home Mortgage, MBIA, 0%, 2028 8,005 2,297,995 - ---------------------------------------------------------------------------------------------------------------------------------- $4,259,239 - ---------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 1.0% California Pollution Control Financing Authority, Solid Waste Disposal Rev. (West County Resource Recovery), "A", 5.125%, 2014 $1,000 $1,032,460 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority, Solid Waste Facilities Rev. (Republic Services, Inc.), "A", 4.95%, 2012 1,000 1,019,330 - ---------------------------------------------------------------------------------------------------------------------------------- South Bayside Waste Management Authority, California Solid Waste System Rev., AMBAC, 5.75%, 2020 2,100 2,379,720 - ---------------------------------------------------------------------------------------------------------------------------------- $4,431,510 - ---------------------------------------------------------------------------------------------------------------------------------- State & Local Anaheim, CA, Public Financing Authority Lease Rev., "A", FSA, 6%, Appropriation - 12.3% 2024 $1,000 $1,183,450 - ---------------------------------------------------------------------------------------------------------------------------------- Banning, CA, Certificate Participants, Water Systems Improvement Project, AMBAC, 8%, 2019 1,000 1,342,210 - ---------------------------------------------------------------------------------------------------------------------------------- California Public Works Board Lease Rev., Department of Corrections State Prison, "A", 7.4%, 2010 5,000 6,123,150 - ---------------------------------------------------------------------------------------------------------------------------------- California Public Works Board, Department of Justice, "D", 5.25%, 2020 1,565 1,629,447 - ---------------------------------------------------------------------------------------------------------------------------------- Fortuna, Parlier, & Susanville, CA, Certificate of Participants, "B", 7.375%, 2017 720 737,172 - ---------------------------------------------------------------------------------------------------------------------------------- Grossmont, CA, Union High School District, MBIA, 0%, 2006 6,000 5,745,000 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Certificate Participants, Antelope Valley Courthouse, "A", AMBAC, 5.25%, 2027 3,000 3,174,720 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Certificate Participants, Real Property Program, AMBAC, 5.3%, 2027 3,000 3,228,780 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Convention & Exhibition Center Authority, Certificate Participants, 9%, 2005(++) 1,900 2,143,846 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Convention & Exhibition Center Authority, Certificate Participants, AMBAC, 0%, 2005 2,400 2,360,904 - ---------------------------------------------------------------------------------------------------------------------------------- Pasadena CA, Certificate Participants, Old Pasadena Parking Facilities Project, 6.25%, 2018 3,315 3,864,992 - ---------------------------------------------------------------------------------------------------------------------------------- Pomona, CA, Public Financing Authority Rev., "P", 6.25%, 2010 4,020 4,644,145 - ---------------------------------------------------------------------------------------------------------------------------------- Sacramento County, CA, Certificate Participants, Capital Projects, AMBAC, 5.75%, 2018 1,500 1,717,680 - ---------------------------------------------------------------------------------------------------------------------------------- Sacramento, CA, City Financing Authority Rev., Capital Improvement, 5.5%, 2021 1,635 1,784,880 - ---------------------------------------------------------------------------------------------------------------------------------- Sacramento, CA, City Financing Authority Rev., City Hall & Redevelopment Projects, "A", FSA, 5%, 2032 2,000 2,061,180 - ---------------------------------------------------------------------------------------------------------------------------------- Salinas, CA, Certificate Participants, Capital Improvement Projects, "A", 5.7%, 2028 2,200 2,355,254 - ---------------------------------------------------------------------------------------------------------------------------------- San Francisco, CA, City & County Certificate Participants (San Bruno Jail No 3), AMBAC, 5.25%, 2033 3,930 4,180,852 - ---------------------------------------------------------------------------------------------------------------------------------- Santa Ana, CA, Financing Authority Rev. (South Harbor Boulevard), "B", MBIA, 5.125%, 2019 4,815 5,193,941 - ---------------------------------------------------------------------------------------------------------------------------------- $53,471,603 - ---------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 3.0% Glendale, CA, Redevelopment Agency Tax Allocation, Central Glendale Redevelopment Project, MBIA, 5.25%, 2021 $2,605 $2,830,411 - ---------------------------------------------------------------------------------------------------------------------------------- Irvine, CA, School District Special Tax Rev., Community Facilities District No. 86-1, AMBAC, 5.8%, 2020 3,500 3,979,640 - ---------------------------------------------------------------------------------------------------------------------------------- Livermore, CA, Redevelopment Agency (Livermore Redev PJ Area), "A", MBIA, 5%, 2032 920 944,325 - ---------------------------------------------------------------------------------------------------------------------------------- Santa Cruz County, CA, Redevelopment Agency Tax Allocation (Oak/ Soquel Community), 5.6%, 2017 1,455 1,586,459 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., 5.875%, 2018 1,600 1,663,856 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., 5.5%, 2022 2,000 2,068,760 - ---------------------------------------------------------------------------------------------------------------------------------- $13,073,451 - ---------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 7.3% Brea, CA, Public Finance Authority Rev., MBIA, 0%, 2005 - 2006 $4,650 $4,517,801 - ---------------------------------------------------------------------------------------------------------------------------------- Concord, CA, Redevelopment Agency Tax Allocation, "3", MBIA, 8%, 2018 40 40,646 - ---------------------------------------------------------------------------------------------------------------------------------- Duarte, CA, Redevelopment Agency Tax Allocation, Davis Addition Project Area, 6.7%, 2014 650 715,156 - ---------------------------------------------------------------------------------------------------------------------------------- Fontana, CA, Redevelopment Agency Tax Allocation, Jurupa Hills Redevelopment Project, "A", 5.5%, 2027 3,350 3,441,522 - ---------------------------------------------------------------------------------------------------------------------------------- Huntington Park, CA, Public Financing Rev. Wastewater Systems Project, "A", 6.2%, 2025 2,000 2,050,340 - ---------------------------------------------------------------------------------------------------------------------------------- La Mirada, CA, Redevelopment Agency, Special Tax Rev., Community Facilities District No. 89-1, 5.7%, 2020 1,500 1,504,905 - ---------------------------------------------------------------------------------------------------------------------------------- Modesto, CA, Irrigation District, Certificate Participants, Refunding & Capital Improvements, "B", 5.3%, 2022 1,845 1,851,162 - ---------------------------------------------------------------------------------------------------------------------------------- Modesto, CA, Public Financing Authority (John Thurman Field Renovation), 6.125%, 2016 1,405 1,511,583 - ---------------------------------------------------------------------------------------------------------------------------------- Orange County, CA, Community Facilities District, Special Tax (Rancho Santa Margarita), "A", 5.55%, 2017 1,000 1,070,000 - ---------------------------------------------------------------------------------------------------------------------------------- Poway, CA, Community Facilities District, Special Tax (Parkway Business Center), 6.5%, 2010 715 782,782 - ---------------------------------------------------------------------------------------------------------------------------------- Poway, CA, Community Facilities District, Special Tax (Parkway Business Center), 6.75%, 2015 775 844,773 - ---------------------------------------------------------------------------------------------------------------------------------- Redwood City, CA, Redevelopment Agency Tax Rev. Capital Appreciation, Redevelopment Project Area 2 A, AMBAC, 0%, 2021 2,500 1,065,050 - ---------------------------------------------------------------------------------------------------------------------------------- Redwood City, CA, Redevelopment Agency, Capital Appreciation, AMBAC, 0%, 2020 2,500 1,142,325 - ---------------------------------------------------------------------------------------------------------------------------------- Riverside County, CA, Public Financing Authority, Tax Allocation Rev., Redevelopment Projects, "A", 5.25%, 2016 3,120 3,256,687 - ---------------------------------------------------------------------------------------------------------------------------------- San Diego, CA, Redevelopment Agency, Tax Allocation (Centre City), "B", AMBAC, 5.3%, 2020 1,250 1,363,937 - ---------------------------------------------------------------------------------------------------------------------------------- Torrance, CA, Redevelopment Agency, Tax Allocation, "C", MBIA, 5.45%, 2018 5,740 6,474,950 - ---------------------------------------------------------------------------------------------------------------------------------- $31,633,619 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco - 1.9% Golden State Tobacco Securitization, "B", 5.625%, 2038 $5,000 $5,095,500 - ---------------------------------------------------------------------------------------------------------------------------------- Golden State Tobacco Securitization, Asset Backed, "A1", 6.25%, 2033 800 783,152 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco Securitization Authority, "B", 5%, 2028 1,500 1,308,465 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco Securitization Authority, Northern California Tobacco Settlement Rev., Asset Backed Bonds, "A", 5.25%, 2031 1,500 1,272,075 - ---------------------------------------------------------------------------------------------------------------------------------- $8,459,192 - ---------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 0.7% Foothill/Eastern Corridor Agency, California Toll Road Rev., Capital Appreciation, "A", 1%, 2010(++) $2,500 $2,962,000 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 7.0% California Educational Facilities Authority Rev., 5%, 2023 $1,000 $1,021,100 - ---------------------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (Fresno Pacific University), "A", 6.75%, 2019 2,000 2,207,740 - ---------------------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (L.A. College of Chiropractic), 5.6%, 2017 2,100 2,020,221 - ---------------------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (Pomona College), "B", 5.875%, 2019 2,000 2,347,720 - ---------------------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (Santa Clara University), "A", MBIA, 5%, 2027 1,340 1,386,485 - ---------------------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev., Pooled College & University Projects, "B", 6%, 2012 1,400 1,495,354 - ---------------------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev., Pooled College & University Projects, "B", 6.625%, 2020 1,000 1,099,600 - ---------------------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev., Pooled College & University Projects, "B", 6.3%, 2021 1,000 1,089,360 - ---------------------------------------------------------------------------------------------------------------------------------- California Infrastructure & Economic Development Rev. (Claremont University Consortium), 5.125%, 2024 1,595 1,669,566 - ---------------------------------------------------------------------------------------------------------------------------------- California Statewide Communities, Notre Dame De Namur University, 6.625%, 2033 1,000 1,004,970 - ---------------------------------------------------------------------------------------------------------------------------------- Foothill-De Anza, CA, Community College District, Election of 1999, "B", FGIC, 0%, 2024 - 2025 7,500 2,605,455 - ---------------------------------------------------------------------------------------------------------------------------------- Long Beach, CA, Industrial Development Rev. (CSU Foundation), "A", 5.25%, 2023 1,450 1,482,364 - ---------------------------------------------------------------------------------------------------------------------------------- San Diego County, CA, Certificate Participants, (Burnham Institute), 6.25%, 2029 2,300 2,430,295 - ---------------------------------------------------------------------------------------------------------------------------------- University of California Rev., RITES, MBIA, 8.7697%, 2016+(+) 5,705 6,743,709 - ---------------------------------------------------------------------------------------------------------------------------------- University of California, Certificate Participants, San Diego Campus Projects, "A", 5.25%, 2032 1,840 1,935,257 - ---------------------------------------------------------------------------------------------------------------------------------- $30,539,196 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Secondary California Statewide Communities Development Authority Rev. Schools - 0.7% (Escondido Charter High School), 7.5%, 2036 $1,000 $1,016,860 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Certificate Participants, 5.7%, 2018 1,900 2,036,154 - ---------------------------------------------------------------------------------------------------------------------------------- $3,053,014 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor California Pollution Control Financing Authority, Pollution Control Owned - 1.5% Rev. (Pacific Gas & Electric Co.), 5.85%, 2023 $400 $400,088 - ---------------------------------------------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Pollution Control Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 3,500 3,827,530 - ---------------------------------------------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Pollution Control Rev. (Southern California Edison Co.), 6.4%, 2024 500 507,535 - ---------------------------------------------------------------------------------------------------------------------------------- Chula Vista, CA, Industrial Development Rev. (San Diego Gas & Electric Co.), "A", 4.9%, 2023 2,000 1,987,580 - ---------------------------------------------------------------------------------------------------------------------------------- $6,722,733 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.5% Glendale, CA, Electric Works Rev., MBIA, 5.75%, 2019 - 2020 $2,580 $2,926,152 - ---------------------------------------------------------------------------------------------------------------------------------- Northern California Power Agency Public Power Rev., 5.85%, 2010 880 994,902 - ---------------------------------------------------------------------------------------------------------------------------------- Sacramento, CA, Power Authority, Cogeneration Project Rev., MBIA, 5.875%, 2015 5,500 6,123,645 - ---------------------------------------------------------------------------------------------------------------------------------- San Diego, CA, Industrial Development Rev. (San Diego Gas & Electric Co.), "A", MBIA, 6.1%, 2018 6,000 6,098,760 - ---------------------------------------------------------------------------------------------------------------------------------- Shasta, CA, Joint Powers Financing Authority, County Administration Building Project, "A", MBIA, 5.25%, 2023 1,000 1,066,650 - ---------------------------------------------------------------------------------------------------------------------------------- Southern California Public Power Authority, Transmission Project Rev., "A", 0%, 2005 4,205 4,143,649 - ---------------------------------------------------------------------------------------------------------------------------------- Southern California Public Power Authority, Transmission Project Rev., "A", 0%, 2005(++) 3,795 3,740,542 - ---------------------------------------------------------------------------------------------------------------------------------- Vernon, CA, Electric Systems Rev., Malburg Generating Station Project, 5.5%, 2033 1,000 1,035,030 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., 5.5%, 2017 800 834,960 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., 5.3%, 2018 250 252,178 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., "A", 5.125%, 2013 1,000 1,032,400 - ---------------------------------------------------------------------------------------------------------------------------------- $28,248,868 - ---------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility California Department of Water Resources, Central Valley Project Revenue - 8.8% Rev., "X", FGIC, 5%, 2029 $2,000 $2,072,780 - ---------------------------------------------------------------------------------------------------------------------------------- California Department of Water Resources, Water Systems Rev., 7%, 2012 1,090 1,386,306 - ---------------------------------------------------------------------------------------------------------------------------------- California Department of Water Resources, Water Systems Rev., 7%, 2012(++) 405 525,512 - ---------------------------------------------------------------------------------------------------------------------------------- Castalic Lake Water Agency, California Rev., Water Systems Improvement Project, AMBAC, 5.125%, 2030 1,725 1,807,610 - ---------------------------------------------------------------------------------------------------------------------------------- Culver City, CA, Wastewater Facilities Rev, "A", FGIC, 5.6%, 2019 1,000 1,140,820 - ---------------------------------------------------------------------------------------------------------------------------------- El Monte, CA, Water Authority Rev., Water Systems Project, AMBAC, 6%, 2019 1,065 1,231,619 - ---------------------------------------------------------------------------------------------------------------------------------- Fairfield-Suisun, CA, Sewer District Rev., "A", MBIA, 0%, 2006 2,080 2,007,470 - ---------------------------------------------------------------------------------------------------------------------------------- Livermore Amador Valley Water Management Rev., "A", AMBAC, 5%, 2031 4,875 5,022,274 - ---------------------------------------------------------------------------------------------------------------------------------- Long Beach, CA, Water Rev., "B", MBIA, 5%, 2024 5,135 5,357,140 - ---------------------------------------------------------------------------------------------------------------------------------- Los Angeles County, CA, Public Works Rev., Multiple Capital Facilities Project, "A", AMBAC, 5.5%, 2020 2,970 3,297,205 - ---------------------------------------------------------------------------------------------------------------------------------- Mojave, CA, Water Agency, Improvement District (M Morongo Basin), FGIC, 5.75%, 2015 2,625 2,939,554 - ---------------------------------------------------------------------------------------------------------------------------------- San Diego, CA, Public Facilities Financing Authority Rev., MBIA, 5%, 2023 1,560 1,630,340 - ---------------------------------------------------------------------------------------------------------------------------------- Southern California Metropolitan Water District Rev., RITES, 10.0197%, 2018+(+) 5,000 6,919,000 - ---------------------------------------------------------------------------------------------------------------------------------- West Sacramento, CA, Financing Authority Rev., Water Systems Improvement Project, FGIC, 5%, 2032 2,750 2,847,433 - ---------------------------------------------------------------------------------------------------------------------------------- $38,185,063 - ---------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $398,109,886) $430,187,186 - ---------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.7% - ---------------------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, CA, Toll Bridge Rev. "A", due 4/07/04 $100 $100,000 - ---------------------------------------------------------------------------------------------------------------------------------- California State, Department of Water Resources, Power Supply Rev., due 4/07/04 600 600,000 - ---------------------------------------------------------------------------------------------------------------------------------- MSR Public Power Agency, CA, due 4/07/04 2,300 2,300,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $3,000,000) $3,000,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $401,109,886) $433,187,186 - ---------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.5% 2,390,439 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $435,577,625 - ---------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/04 MFS(R) FLORIDA MUNICIPAL BOND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Municipal Bonds - 98.8% - ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - ---------------------------------------------------------------------------------------------------------------------------------- Airport & Port Florida Capital Projects Finance Authority Rev., AAAE Airports Revenue - 4.5% Project, "I", MBIA, 5%, 2020 $500 $528,500 - ---------------------------------------------------------------------------------------------------------------------------------- Greater Orlando Aviation Authority Rev., "A", FGIC, 5.25%, 2018 1,000 1,056,680 - ---------------------------------------------------------------------------------------------------------------------------------- Hillsborough County, FL, Aviation Authority Rev. (Tampa International Airport), "A", FGIC, 5.875%, 2015 750 819,638 - ---------------------------------------------------------------------------------------------------------------------------------- Lee County, FL, Airport Rev., "A", FSA, 5.875%, 2018 1,000 1,129,840 - ---------------------------------------------------------------------------------------------------------------------------------- Miami-Dade County, FL, Aviation Rev., "C", GNMA, 5.25%, 2018 500 527,530 - ---------------------------------------------------------------------------------------------------------------------------------- Pensacola, FL, Airport Rev., "B", MBIA, 5.625%, 2014 500 548,850 - ---------------------------------------------------------------------------------------------------------------------------------- $4,611,038 - ---------------------------------------------------------------------------------------------------------------------------------- Chemicals - 0.7% Brazos River, TX, Brazoria County Environmental Rev. (Dow Chemical, Co.), "A", 6.625%, 2033 $500 $546,245 - ---------------------------------------------------------------------------------------------------------------------------------- Sweetwater County, WY, Solid Waste Disposal Rev. (FMC Corp.), 7%, 2024 200 203,080 - ---------------------------------------------------------------------------------------------------------------------------------- $749,325 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 6.2% Commonwealth of Puerto Rico, RITES, 10.0771%, 2019+(+) $1,000 $1,330,500 - ---------------------------------------------------------------------------------------------------------------------------------- Maimi-Dade County, FL, Educational Facilities Authority, "A", AMBAC, 5.5%, 2018 1,400 1,578,332 - ---------------------------------------------------------------------------------------------------------------------------------- State of Florida, RITES, MBIA, 8.4853%, 2017+(+) 3,000 3,404,160 - ---------------------------------------------------------------------------------------------------------------------------------- $6,312,992 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 7.2% Florida Board of Education, Capital Outlay, 9.125%, 2014 $2,600 $3,556,098 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Board of Education, Capital Outlay, 9.125%, 2014(++) 400 557,024 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Board of Education, Capital Outlay, "A", 5.25%, 2024 1,000 1,073,010 - ---------------------------------------------------------------------------------------------------------------------------------- Osceola County, FL, School Board Certificate, "A", AMBAC, 5.25%, 2027 1,950 2,074,274 - ---------------------------------------------------------------------------------------------------------------------------------- $7,260,406 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Brevard County, FL, Health Facilities Authority Rev., "A", MBIA, Hospitals - 15.2% 6.5%, 2007 $640 $641,696 - ---------------------------------------------------------------------------------------------------------------------------------- Citrus County, FL, Hospital Development Authority Rev. (Citrus Memorial Hospital), 6.25%, 2023 500 520,285 - ---------------------------------------------------------------------------------------------------------------------------------- Denver, CO, Health & Hospital Authority Rev., 6%, 2023 250 256,608 - ---------------------------------------------------------------------------------------------------------------------------------- District of Columbia, Health & Hospital Authority Rev. (Medstar University Hospital), 6.875%, 2031(++) 225 257,339 - ---------------------------------------------------------------------------------------------------------------------------------- Highlands County, FL, Health Facilities Authority Rev. (Adventist Health Systems), 5.25%, 2013 500 531,365 - ---------------------------------------------------------------------------------------------------------------------------------- Hillsborough County, FL, Industrial Development Rev. (Tampa General Hospital), "A", 5%, 2018 500 506,680 - ---------------------------------------------------------------------------------------------------------------------------------- Hillsborough County, FL, Industrial Development Rev. (University Community Hospital), MBIA, 6.5%, 2019 1,000 1,262,340 - ---------------------------------------------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Munster Medical Research Foundation, Inc.), 6.375%, 2031 500 510,510 - ---------------------------------------------------------------------------------------------------------------------------------- Jacksonville, FL, Health Facilities, Ascension Health, "A", 5.25%, 2032 1,000 1,025,560 - ---------------------------------------------------------------------------------------------------------------------------------- Lakeland, FL, Hospital Systems Rev., Lakeland Regional Health Systems, 5.5%, 2032 1,000 1,022,950 - ---------------------------------------------------------------------------------------------------------------------------------- Leesburg, FL, Hospital Rev. (Leesburg Regional Medical Center), 5.5%, 2032 1,000 1,017,310 - ---------------------------------------------------------------------------------------------------------------------------------- Marion County, FL, Hospital District Rev., Refunding & Improvement, Health Systems (Monroe Regional Health System), 5.5%, 2014 1,000 1,070,630 - ---------------------------------------------------------------------------------------------------------------------------------- Marshall County, AL, Health Care Rev., "A", 6.25%, 2022 500 536,485 - ---------------------------------------------------------------------------------------------------------------------------------- Martin County, FL, Health Facilities Rev. (Martin Memorial Medical Center), "B", 5.75%, 2022 500 510,200 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Medstar Health), 5.5%, 2033 200 201,690 - ---------------------------------------------------------------------------------------------------------------------------------- New Hampshire Health & Higher Educational Facilities Authority Rev. (Exeter Hospital), 6%, 2024 500 531,180 - ---------------------------------------------------------------------------------------------------------------------------------- Orange County, FL, Health Facilities Authority Hospital Rev. (Orlando Regional Healthcare), 5.75%, 2032 1,000 1,045,300 - ---------------------------------------------------------------------------------------------------------------------------------- Rhode Island Health & Educational Building Rev., Hospital Financing (Lifespan Obligated Group), 6.5%, 2032 500 526,035 - ---------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Bon Secours Health Systems, Inc.), "A", 5.625%, 2030 500 509,490 - ---------------------------------------------------------------------------------------------------------------------------------- South Dakota Health & Educational Facilities Authority Rev. (Prairie Lakes Health Care System), 5.625%, 2032 500 506,675 - ---------------------------------------------------------------------------------------------------------------------------------- Steubenville, OH, Hospital Rev. (Trinity Hospital), 6.375%, 2020 500 535,875 - ---------------------------------------------------------------------------------------------------------------------------------- Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Healthcare), 6.25%, 2020 300 301,164 - ---------------------------------------------------------------------------------------------------------------------------------- Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Regional Medical Center), MBIA, 6.625%, 2013 1,000 1,053,360 - ---------------------------------------------------------------------------------------------------------------------------------- Wisconsin Health & Educational Facilities (Aurora Health Care, Inc.), "A", 5.6%, 2029 500 503,430 - ---------------------------------------------------------------------------------------------------------------------------------- $15,384,157 - ---------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.3% Orange County, FL, Health Facilities Authority Rev. (GF/Orlando), 8.875%, 2021 $300 $304,749 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Red River Authority, TX, Pollution Control Rev. (Celanese), 6.7%, Chemicals - 0.4% 2030 $375 $403,699 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - Nevada Department of Business (Republic Services, Inc.), 5.625%, 0.3% 2026 $300 $318,087 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 1.7% Hernando County, FL, Water & Sewer Rev., MBIA, 5%, 2029 - 2034 $1,000 $1,048,240 - ---------------------------------------------------------------------------------------------------------------------------------- Park Creek Metropolitan District, Colorado Rev., 7.875%, 2032 160 165,318 - ---------------------------------------------------------------------------------------------------------------------------------- Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific Corp.), 5.7%, 2026 500 510,070 - ---------------------------------------------------------------------------------------------------------------------------------- $1,723,628 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Delta County, MI, Economic Development Corp., Environmental Paper - 1.3% Improvements Rev. (Mead Westvaco Escanaba), 6.25%, 2027 $500 $534,195 - ---------------------------------------------------------------------------------------------------------------------------------- Escambia County, FL, Industrial Development Rev. (Champion International Corp.), 6.8%, 2012 750 764,220 - ---------------------------------------------------------------------------------------------------------------------------------- $1,298,415 - ---------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Capital Trust Agency of Florida Rev. (Seminole Tribe Convention), Tourism - 1.3% 10%, 2033 $200 $247,540 - ---------------------------------------------------------------------------------------------------------------------------------- Palm Beach County, FL, Industrial Development Rev., South Florida Fair Project, MBIA, 5.5%, 2020 1,000 1,115,630 - ---------------------------------------------------------------------------------------------------------------------------------- $1,363,170 - ---------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Collier County, FL, Housing Finance Authority Rev., Goodlette Arms Revenue - 3.5% Housing Project, "A", FNMA, 4.9%, 2032 $500 $538,260 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Housing Finance Corp., Housing Rev. (Augustine Club Apartments), "D", MBIA, 5.5%, 2020 500 527,730 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Housing Finance Corp., Housing Rev. (Crossing At University Apartments), AMBAC, 5.1%, 2018 1,240 1,270,839 - ---------------------------------------------------------------------------------------------------------------------------------- Palm Beach County, FL, Housing Finance Rev. (Malibu Bay Apartments), "A", FSA, 4.9%, 2023 1,000 1,011,450 - ---------------------------------------------------------------------------------------------------------------------------------- Palm Beach County, FL, Housing Finance Rev. (Westlake Apartments Project), Phase II, FSA, 4.3%, 2012 170 175,834 - ---------------------------------------------------------------------------------------------------------------------------------- $3,524,113 - ---------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 2.8% Escambia County, FL, Sales Tax Rev., AMBAC, 5%, 2022 $1,160 $1,222,188 - ---------------------------------------------------------------------------------------------------------------------------------- Pasco County, FL, Sales Tax Rev., Half Central, AMBAC, 5%, 2023 1,000 1,055,960 - ---------------------------------------------------------------------------------------------------------------------------------- Taylor County, FL, Sales Tax Rev., FGIC, 5.5%, 2020 500 562,225 - ---------------------------------------------------------------------------------------------------------------------------------- $2,840,373 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Local - 3.9% Brevard County, FL, Housing Finance Authority, "B", GNMA, 6.5%, 2022 $81 $84,635 - ---------------------------------------------------------------------------------------------------------------------------------- Lee County, FL, Housing Finance Authority Rev., GNMA, 7%, 2031 275 283,863 - ---------------------------------------------------------------------------------------------------------------------------------- Lee County, FL, Housing Finance Authority, Multi-County Program, "A", GNMA, 7.2%, 2033 95 96,786 - ---------------------------------------------------------------------------------------------------------------------------------- Manatee County, FL, Housing Finance Mortgage Rev., Single Family, Subordinated Series 3, GNMA, 5.3%, 2028 180 195,241 - ---------------------------------------------------------------------------------------------------------------------------------- Miami-Dade County, FL, Housing Finance Authority Rev. (Home Ownership Mortgage), "A", 5.2%, 2031 630 657,348 - ---------------------------------------------------------------------------------------------------------------------------------- Palm Beach County, FL, Single Family Rev., "B", GNMA, 5.5%, 2022 520 526,614 - ---------------------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Housing Finance Authority Rev., Multi-County Program, "A", GNMA, 5.45%, 2034 1,000 1,084,050 - ---------------------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Housing Finance Authority Rev., Multi-County Program, "B", GNMA, 7.25%, 2029 405 415,141 - ---------------------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Housing Finance Authority Rev., Multi-County Program, "B", GNMA, 6.2%, 2031 580 604,812 - ---------------------------------------------------------------------------------------------------------------------------------- $3,948,490 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Florida Housing Finance Corp. Rev., Homeowner Mortgage, "4", FSA, State - 1.9% 5.85%, 2031 $795 $828,311 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Housing Finance Corp. Rev., Homeowner Mortgage, "5", 5%, 2034 1,000 1,068,140 - ---------------------------------------------------------------------------------------------------------------------------------- $1,896,451 - ---------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.2% Delaware County, PA, Industrial Development Authority Rev., 6.2%, 2019 $200 $208,186 - ---------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 4.1% Florida Municipal Loan Council Rev., "A", MBIA, 5.625%, 2020 $1,000 $1,133,540 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Municipal Loan Council Rev., "B", MBIA, 5.625%, 2019 1,000 1,133,810 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Municipal Loan Council Rev., "C", MBIA, 5.25%, 2022 1,000 1,077,510 - ---------------------------------------------------------------------------------------------------------------------------------- Palm Beach County, FL, School Board, "A", AMBAC, 5.5%, 2021 750 840,653 - ---------------------------------------------------------------------------------------------------------------------------------- $4,185,513 - ---------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.6% Orange County, FL, Tourist Development Tax Rev., Subordinated, AMBAC, 5.25%, 2027 $1,500 $1,590,480 - ---------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 2.2% Arbor Greene, FL, Community Development District, 5.75%, 2006 $81 $82,356 - ---------------------------------------------------------------------------------------------------------------------------------- Concorde Estates Community Development District, "B", 5%, 2011 350 345,418 - ---------------------------------------------------------------------------------------------------------------------------------- Fishawk Community Development District II, "B", 5%, 2007 180 182,572 - ---------------------------------------------------------------------------------------------------------------------------------- Greyhawk Landing Community Development, 6.25%, 2009 165 169,698 - ---------------------------------------------------------------------------------------------------------------------------------- Heritage Harbor South Community, Capital Improvement, 5.4%, 2008 385 392,295 - ---------------------------------------------------------------------------------------------------------------------------------- Heritage Isles, FL, Community Development District, "A", 5.75%, 2005 315 315,992 - ---------------------------------------------------------------------------------------------------------------------------------- Middle Village Community Development District, "B", 5%, 2009 200 200,434 - ---------------------------------------------------------------------------------------------------------------------------------- Middle Village, FL, Community Development District Rev., 5.8%, 2022 100 100,516 - ---------------------------------------------------------------------------------------------------------------------------------- Panther Trace, FL, Community Development District Rev., 5.4%, 2008 170 171,210 - ---------------------------------------------------------------------------------------------------------------------------------- Panther Trace, FL, Community Development District Rev., 6.5%, 2009 90 92,306 - ---------------------------------------------------------------------------------------------------------------------------------- Renaissance Community Development, "B", 6.25%, 2008 145 149,509 - ---------------------------------------------------------------------------------------------------------------------------------- $2,202,306 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.4% Iowa Tobacco Settlement Authority, 5.3%, 2025 $250 $218,030 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco Settlement Financing Corp., Asset Backed, "B", 5.875%, 2039 250 226,585 - ---------------------------------------------------------------------------------------------------------------------------------- $444,615 - ---------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 4.0% Florida Mid Bay Bridge Authority Rev., "A", AMBAC, 0%, 2018 $1,000 $503,850 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Turnpike Authority Rev., Department of Transportation, "A", 5.75%, 2018 2,000 2,319,860 - ---------------------------------------------------------------------------------------------------------------------------------- Miami-Dade County, FL, Expressway Authority, FGIC, 6%, 2010(++) 1,000 1,195,450 - ---------------------------------------------------------------------------------------------------------------------------------- $4,019,160 - ---------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation, ROLS, Tax - 4.4% Railroad II R 227 1, MBIA, 9.896%, 2020+(+) $2,500 $3,363,150 - ---------------------------------------------------------------------------------------------------------------------------------- Polk County, FL, Transportation Improvement Rev., FSA, 5.625%, 2017 1,000 1,152,430 - ---------------------------------------------------------------------------------------------------------------------------------- $4,515,580 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Illinois Educational Facilities Authority Rev. (Augustana College), 1.3% 5.625%, 2022 $300 $313,098 - ---------------------------------------------------------------------------------------------------------------------------------- Miami-Dade County, FL, Educational Rev. (University of Miami), "A", AMBAC, 5%, 2025 1,000 1,055,100 - ---------------------------------------------------------------------------------------------------------------------------------- $1,368,198 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Florida Board Regents, Housing Rev. (University of Central Florida), Dormitories - 2.9% FGIC, 5.25%, 2020 $1,185 $1,280,132 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Board Regents, Housing Rev., MBIA, 5.3%, 2020 610 660,886 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Finance Authority, Capital Loan Projects, "F", MBIA, 5.125%, 2021 1,000 1,050,830 - ---------------------------------------------------------------------------------------------------------------------------------- $2,991,848 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Secondary Michigan Municipal Bond Authority Rev. (YMCA Service Learning Schools - 0.1% Academy), 7.625%, 2021 $100 $101,483 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Brazos River Authority, Pollution Control Rev. (TXU Corp.), 6.3%, Owned - 0.7% 2032 $120 $126,070 - ---------------------------------------------------------------------------------------------------------------------------------- Brazos River Authority, Pollution Control Rev. (TXU Corp.), 6.75%, 2038 300 325,920 - ---------------------------------------------------------------------------------------------------------------------------------- Port Morrow, OR, Pollution Control Rev. (Portland General Electric), 5.2%, 2033 200 216,428 - ---------------------------------------------------------------------------------------------------------------------------------- $668,418 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 11.5% Deltona, FL, Utility Systems Rev., MBIA, 5%, 2024 - 2033 $2,500 $2,613,025 - ---------------------------------------------------------------------------------------------------------------------------------- Escambia County, FL, Utility Systems Rev., "B", FGIC, 6.25%, 2016 1,500 1,843,455 - ---------------------------------------------------------------------------------------------------------------------------------- Marion County, FL, Utility Systems Rev., "A", MBIA, 5%, 2023 1,000 1,055,960 - ---------------------------------------------------------------------------------------------------------------------------------- Palm Coast, FL, Utility Systems Rev., MBIA, 5%, 2024 250 262,608 - ---------------------------------------------------------------------------------------------------------------------------------- Port St. Lucie, FL, Utility Rev., Capital Appreciation, "A", FGIC, 0%, 2021(++) 1,405 552,404 - ---------------------------------------------------------------------------------------------------------------------------------- Port St. Lucie, FL, Utility Rev., MBIA, 5%, 2022 1,000 1,053,190 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., FSA, 6%, 2004(++) 2,000 2,064,160 - ---------------------------------------------------------------------------------------------------------------------------------- Tampa, FL, Utility Tax & Special Rev., "A", AMBAC, 5.25%, 2020 - 2021 2,000 2,181,190 - ---------------------------------------------------------------------------------------------------------------------------------- $11,625,992 - ---------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 14.2% Bay County, FL, Water Systems Rev., AMBAC, 5.625%, 2019 $1,000 $1,145,700 - ---------------------------------------------------------------------------------------------------------------------------------- Florida Community Services Corp., AMBAC, 5.5%, 2018 1,125 1,274,558 - ---------------------------------------------------------------------------------------------------------------------------------- Jupiter, FL, Water Rev., AMBAC, 5%, 2024 520 546,224 - ---------------------------------------------------------------------------------------------------------------------------------- Lee County, FL, Industrial Development Authority (Bonita Springs Utilities Project), MBIA, 6.05%, 2015 1,000 1,101,490 - ---------------------------------------------------------------------------------------------------------------------------------- Lee County, FL, Industrial Development Authority (Bonita Springs Utilities Project), MBIA, 5%, 2027 2,465 2,539,418 - ---------------------------------------------------------------------------------------------------------------------------------- Miami Beach, FL, Stormwater Rev., FGIC, 5.25%, 2020 1,000 1,079,440 - ---------------------------------------------------------------------------------------------------------------------------------- Miramar, FL, Wastewater Improvement Rev., FGIC, 6.75%, 2004(++) 955 991,701 - ---------------------------------------------------------------------------------------------------------------------------------- Polk County, FL, Utility Systems Rev., FGIC, 5%, 2023 1,000 1,055,210 - ---------------------------------------------------------------------------------------------------------------------------------- Seminole County, FL, Water & Sewer Rev., MBIA, 6%, 2019 940 1,133,123 - ---------------------------------------------------------------------------------------------------------------------------------- Seminole County, FL, Water & Sewer Rev., MBIA, 6%, 2019(++) 2,060 2,501,726 - ---------------------------------------------------------------------------------------------------------------------------------- Tohopekaliga Water Authority, Florida Utility System Rev., "A", FSA, 5%, 2024 1,000 1,050,430 - ---------------------------------------------------------------------------------------------------------------------------------- $14,419,020 - ---------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $92,956,788) $100,279,892 - ---------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.3% - ---------------------------------------------------------------------------------------------------------------------------------- Gulf Breeze, FL, Rev. Local Government, due 4/07/04 $150 $150,000 - ---------------------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, due 4/01/04 140 140,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $290,000) $290,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $93,246,788) $100,569,892 - ---------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.9% 897,165 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $101,467,057 - ---------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/04 MFS(R) GEORGIA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Municipal Bonds - 96.0% - ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 4.9% Columbia County, GA (Courthouse Detention Center), 5.625%, 2020 $1,490 $1,650,473 - ---------------------------------------------------------------------------------------------------------------------------------- Macon Bibb County, GA, Urban Development Rev., Bibb County Public Facilities Project, 5.5%, 2022 1,000 1,121,210 - ---------------------------------------------------------------------------------------------------------------------------------- Oconee County, GA, Industrial Development Authority, Oiit Project, XLCA, 5.25%, 2023 750 801,090 - ---------------------------------------------------------------------------------------------------------------------------------- $3,572,773 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Elberton, GA, Combined Utility Systems, Refunding & Improvement, Improvement - 2.9% AMBAC, 5.5%, 2019 $550 $613,025 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 10.6246%, 2016+(+) 500 679,780 - ---------------------------------------------------------------------------------------------------------------------------------- Suwanee, GA, MBIA, 5.25%, 2032 750 792,960 - ---------------------------------------------------------------------------------------------------------------------------------- $2,085,765 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 9.6% Forsyth County, GA, School District, 6%, 2015 $750 $881,903 - ---------------------------------------------------------------------------------------------------------------------------------- Fulton County, GA, School District, 6.375%, 2010 - 2016 4,000 4,879,990 - ---------------------------------------------------------------------------------------------------------------------------------- Wilkes County, GA, School District, 5%, 2024 1,115 1,163,246 - ---------------------------------------------------------------------------------------------------------------------------------- $6,925,139 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Athens Clarke County, GA (United Catholic Health East Issue), 5.5%, Hospitals - 6.4% 2032 $500 $513,220 - ---------------------------------------------------------------------------------------------------------------------------------- Chatham County, GA, Hospital Authority Rev. (Memorial Health Medical Center), "A", 6%, 2017 350 381,493 - ---------------------------------------------------------------------------------------------------------------------------------- Cobb County, GA, Hospital Authority Revolving, Refunding & Improvement Rev., Anticipation Certificates, AMBAC, 5.25%, 2023 750 803,993 - ---------------------------------------------------------------------------------------------------------------------------------- Gainesville & Hall County, GA, Hospital Authority Rev. (Northeast Georgia Health System), 5.5%, 2031 500 513,530 - ---------------------------------------------------------------------------------------------------------------------------------- Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare System, Inc.), 6.125%, 2009 330 336,164 - ---------------------------------------------------------------------------------------------------------------------------------- Tift County, GA, Hospital Authority Rev., Anticipation Certificates, AMBAC, 5%, 2022 2,000 2,090,960 - ---------------------------------------------------------------------------------------------------------------------------------- $4,639,360 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Fulton County, GA, Residential Care, Canterbury Court Project, "A", Term Care - 1.9% 6.125%, 2034 $150 $145,901 - ---------------------------------------------------------------------------------------------------------------------------------- Richmond County, GA, Development Authority, Nursing Home Rev. (Beverly Enterprises Georgia, Inc.), 8.75%, 2011 1,190 1,206,362 - ---------------------------------------------------------------------------------------------------------------------------------- $1,352,263 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Cartersville, GA, Development Authority Waste, Anheuser Busch Other - 1.8% Project, 5.95%, 2032 $750 $798,728 - ---------------------------------------------------------------------------------------------------------------------------------- De Kalb County, GA, Development Authority (General Motors Corp.), 6%, 2021 500 525,280 - ---------------------------------------------------------------------------------------------------------------------------------- $1,324,008 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Effingham County, GA, Development Authority (Fort James), 5.625%, Paper - 2.1% 2018 $150 $143,444 - ---------------------------------------------------------------------------------------------------------------------------------- Savannah, GA, Economic Development Authority Rev. (Stone Container Corp.), 7.4%, 2026 300 305,880 - ---------------------------------------------------------------------------------------------------------------------------------- Savannah, GA, Economic Development Pollution (Union Camp Corp.), 6.15%, 2017 1,000 1,109,880 - ---------------------------------------------------------------------------------------------------------------------------------- $1,559,204 - ---------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Clayton County, GA, Housing Authority, Multi-family Housing Rev. Revenue - 4.7% (Vineyard Pointe), "A", GNMA, 5.5%, 2032 $995 $1,042,004 - ---------------------------------------------------------------------------------------------------------------------------------- De Kalb County, GA, Housing Authority Multi-family Housing Rev. (Castaways Apartments), "A", GNMA, 5.4%, 2029 595 620,853 - ---------------------------------------------------------------------------------------------------------------------------------- Hinesville, GA, Leased Housing Corp., "A", FHA, 6.7%, 2017 900 913,626 - ---------------------------------------------------------------------------------------------------------------------------------- Savannah, GA, Housing Authority, Chatham Gardens Project, FNMA, 5.625%, 2031 745 806,671 - ---------------------------------------------------------------------------------------------------------------------------------- $3,383,154 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 5.5% Georgia Housing & Finance Authority Rev., 5.5%, 2032 $1,000 $1,020,060 - ---------------------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, 5.2%, 2020 545 556,325 - ---------------------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, 5.8%, 2021 750 778,987 - ---------------------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, 5.1%, 2022 750 763,605 - ---------------------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, 5.6%, 2032 745 762,619 - ---------------------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, "B", 6.05%, 2019 85 85,728 - ---------------------------------------------------------------------------------------------------------------------------------- $3,967,324 - ---------------------------------------------------------------------------------------------------------------------------------- State & Local Athens, GA, Student Housing Authority, University of Georgia East Appropriation - 7.1% Campus, AMBAC, 5.25%, 2022 $1,000 $1,081,780 - ---------------------------------------------------------------------------------------------------------------------------------- Clayton County, GA, Development Authority Rev., "A", 6.25%, 2020 500 592,175 - ---------------------------------------------------------------------------------------------------------------------------------- County Commissioners of Georgia Assoc., Leasing Program, Rockdale County, GA, Public Purpose Project, AMBAC, 5.625%, 2020 500 565,165 - ---------------------------------------------------------------------------------------------------------------------------------- Fayette County, GA, Public Facilities Authority, Criminal Justice Center Project, 6.25%, 2010(++) 755 911,481 - ---------------------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Facilities Corp., Fulton County, GA, Public Purpose Project, AMBAC, 5.5%, 2018 695 790,722 - ---------------------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Facilities Corp., Fulton County, GA, Public Purpose Project, AMBAC, 5.9%, 2019 1,000 1,178,760 - ---------------------------------------------------------------------------------------------------------------------------------- $5,120,083 - ---------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.5% Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 $1,000 $1,094,520 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Children's Trust Fund, Settlement Rev., PR, 5.375%, 2033 $390 $384,637 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 9.1% Fulton County, GA (Morehouse College), AMBAC, 6.25%, 2021 $980 $1,182,252 - ---------------------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation), "A", 5.75%, 2017 1,000 1,160,970 - ---------------------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation), "A", 5%, 2031 265 275,181 - ---------------------------------------------------------------------------------------------------------------------------------- Private Colleges & University Authority (Emory University), "A", 5.75%, 2016 - 2018 2,000 2,311,370 - ---------------------------------------------------------------------------------------------------------------------------------- Private Colleges & University Authority (Mercer University), 5.75%, 2021 500 538,400 - ---------------------------------------------------------------------------------------------------------------------------------- Private Colleges & University Authority (Spellman College), 5.25%, 2021 500 543,670 - ---------------------------------------------------------------------------------------------------------------------------------- Savannah, GA, Economic Development Authority Rev. (College of Art & Design, Inc.), 6.2%, 2009 500 556,225 - ---------------------------------------------------------------------------------------------------------------------------------- $6,568,068 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Georgia Private College & University Authority Rev. (Mercer Housing Dormitories - 3.7% Corp.), 6%, 2021 $500 $522,195 - ---------------------------------------------------------------------------------------------------------------------------------- Marietta, GA, Development Authority Rev., Student Housing (Southern Polytech University), "A", 6.25%, 2027(++) 1,000 1,169,750 - ---------------------------------------------------------------------------------------------------------------------------------- Milledgeville Baldwin County, GA, Georgia College & State University Foundation, 5%, 2032 1,000 1,014,820 - ---------------------------------------------------------------------------------------------------------------------------------- $2,706,765 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Georgia Municipal Electric Authority Power Rev., "A", MBIA, 6.5%, Owned - 6.5% 2020 $1,250 $1,577,000 - ---------------------------------------------------------------------------------------------------------------------------------- Griffin, GA, Combined Public Utility Rev., Refunding & Improvement, AMBAC, 5%, 2025 500 513,150 - ---------------------------------------------------------------------------------------------------------------------------------- Griffin, GA, Combined Public Utility Rev., Refunding & Improvement, 5%, 2021 1,000 1,065,480 - ---------------------------------------------------------------------------------------------------------------------------------- Monroe County, GA, Pollution Control Rev. (Oglethorpe Power Corp.), "A", 6.8%, 2012 1,000 1,224,020 - ---------------------------------------------------------------------------------------------------------------------------------- Summerville, GA, Public Utility Rev., Refunding & Improvement, 5.75%, 2026 350 370,986 - ---------------------------------------------------------------------------------------------------------------------------------- $4,750,636 - ---------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 27.8% Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 9.4853%, 2016+(+) $4,000 $5,365,360 - ---------------------------------------------------------------------------------------------------------------------------------- Atlanta, GA, Water & Wastewater Rev., "A", MBIA, 5%, 2033 500 516,125 - ---------------------------------------------------------------------------------------------------------------------------------- Clayton County, GA, Water Authority, Water & Sewer Rev., 6.25%, 2017 1,000 1,196,110 - ---------------------------------------------------------------------------------------------------------------------------------- Columbia County, GA, Water & Sewer Rev., FGIC, 6.25%, 2010(++) 470 563,431 - ---------------------------------------------------------------------------------------------------------------------------------- Coweta County, GA, Development Authority Rev., Newnan Water Sewer & Light Commission Project, AMBAC, 5.75%, 2016 1,000 1,152,840 - ---------------------------------------------------------------------------------------------------------------------------------- De Kalb County, GA, Water & Sewer Rev., "A", 5%, 2035 1,500 1,563,765 - ---------------------------------------------------------------------------------------------------------------------------------- Fairburn, GA, Utility Rev., 5.75%, 2020 500 548,605 - ---------------------------------------------------------------------------------------------------------------------------------- Forsyth County, GA, Water & Sewer Authority, 6.25%, 2010(++) 1,105 1,328,630 - ---------------------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Water & Sewer Rev., FGIC, 6.375%, 2014 100 120,625 - ---------------------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Water & Sewer Rev., FGIC, 6.375%, 2014(++) 2,150 2,583,548 - ---------------------------------------------------------------------------------------------------------------------------------- Gainesville, GA, Water & Sewer Rev., FGIC, 5.625%, 2019 1,000 1,135,700 - ---------------------------------------------------------------------------------------------------------------------------------- Jackson County, GA, Water & Sewer Authority, "A", AMBAC, 5.75%, 2017 1,000 1,168,030 - ---------------------------------------------------------------------------------------------------------------------------------- Milledgeville, GA, Water & Sewer Rev., FSA, 6%, 2021 1,500 1,832,280 - ---------------------------------------------------------------------------------------------------------------------------------- Monroe County, GA, Development Authority Rev., Refunding & Improvement Water & Sewer Project, "A", MBIA, 5%, 2023 1,000 1,046,270 - ---------------------------------------------------------------------------------------------------------------------------------- $20,121,319 - ---------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $62,959,573) $69,555,018 - ---------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.5% - ---------------------------------------------------------------------------------------------------------------------------------- Atlanta, GA, Water & Wastewater Rev., "C", due 4/01/04, at Identified Cost $1,050 $1,050,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $64,009,573) $70,605,018 - ---------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 2.5% 1,813,390 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $72,418,408 - ---------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/04 MFS(R) MARYLAND MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Municipal Bonds - 98.7% - ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - ---------------------------------------------------------------------------------------------------------------------------------- Airport & Port Maryland Transportation Authority, Baltimore/Washington Revenue - 0.6% International Airport, "A", AMBAC, 5%, 2027 $1,000 $1,043,450 - ---------------------------------------------------------------------------------------------------------------------------------- Chemicals - 0.9% Baltimore, MD, Port Facilities Rev., Consolidated Coal Sales, "B", 6.5%, 2011 $1,500 $1,518,975 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 7.0% Baltimore, MD, "B", 7.15%, 2009 $2,120 $2,591,064 - ---------------------------------------------------------------------------------------------------------------------------------- Baltimore, MD, UT, Public Improvement, "A", MBIA, 7%, 2009 1,000 1,232,050 - ---------------------------------------------------------------------------------------------------------------------------------- Frederick County, MD, Public Facilities, 5.25%, 2016 2,000 2,219,860 - ---------------------------------------------------------------------------------------------------------------------------------- Frederick County, MD, Public Facilities, 5.2%, 2019 1,700 1,861,381 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland, State & Local Facilities Loan, First Series, 5.75%, 2014 1,550 1,813,438 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., Commonwealth Appropriations, "A", MBIA, 5.5%, 2018 1,000 1,140,770 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., Commonwealth Appropriations, "A", MBIA, 5%, 2021 1,000 1,065,550 - ---------------------------------------------------------------------------------------------------------------------------------- $11,924,113 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 15.9% Anne Arundel County, MD, 5%, 2015 $2,000 $2,183,640 - ---------------------------------------------------------------------------------------------------------------------------------- Howard County, MD, "B", 0%, 2008 1,000 901,880 - ---------------------------------------------------------------------------------------------------------------------------------- Howard County, MD, Consolidated Public Improvement, "A", 5.5%, 2008(++) 3,000 3,408,780 - ---------------------------------------------------------------------------------------------------------------------------------- Montgomery County, MD, Consolidated Public Improvement, 5%, 2020 - 2021 1,500 1,609,135 - ---------------------------------------------------------------------------------------------------------------------------------- Montgomery County, MD, Consolidated Public Improvement, "A", 5.75%, 2010(++) 2,000 2,342,840 - ---------------------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, 0%, 2007 5,110 4,777,237 - ---------------------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Consolidated Public Improvement, "A", 5%, 2020 - 2023 3,550 3,788,147 - ---------------------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Consolidated Public Improvement, FSA, 5.375%, 2015 1,500 1,676,175 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2019+(+) 1,000 1,260,860 - ---------------------------------------------------------------------------------------------------------------------------------- Washington, MD, Suburban Sanitation District, General Construction, "A", 5.25%, 2005(++) 865 906,918 - ---------------------------------------------------------------------------------------------------------------------------------- Worcester County, MD, Public Improvement, 5.625%, 2013 - 2015 3,650 4,187,398 - ---------------------------------------------------------------------------------------------------------------------------------- $27,043,010 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Maryland Health & Higher Educational Facilities Authority Rev., Hospitals - 21.0% 5.5%, 2021(++) $4,000 $4,072,520 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Carroll County General Hospital), 6%, 2037 1,000 1,056,650 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Doctors Community Hospital), 5.5%, 2024 1,000 987,060 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Frederick Memorial Hospital), 5.125%, 2035 1,000 1,015,920 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Frederick Memorial Hospital), FGIC, 5.25%, 2013 2,850 3,263,763 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Good Samaritan Hospital), 5.7%, 2009(++) 1,085 1,254,444 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins University), 5%, 2021 750 779,498 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Medstar Health), 5.5%, 2033 800 806,760 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Mercy Medical Center), FSA, 5.625%, 2017 1,800 1,966,086 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (North Arundel Hospital), 6.5%, 2026 500 558,970 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (University of Maryland Medical Systems), 6.625%, 2020 1,000 1,146,510 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., "A" (Anne Arundel Health Systems), FSA, 5%, 2034 1,585 1,656,642 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., "A" (Lifebridge Health), 5.125%, 2034 1,000 1,006,200 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., "A" (Upper Chesapeake Hospital), FSA, 5.5%, 2020 2,000 2,149,940 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., "B" (Medalantic/Helix Issue), AMBAC, 5.25%, 2038 3,145 3,503,876 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., "B" (University of Maryland Medical Systems), AMBAC, 5%, 2024 1,000 1,048,480 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., Adventist Healthcare, "A", 5.75%, 2025 1,000 1,016,060 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., Anne Arundel Health Systems, "A", FSA, 5%, 2023 1,000 1,056,170 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., Catholic Health Initiatives, "A", 6%, 2020 1,000 1,141,690 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., Union Hospital of Cecil County Issue, 5.625%, 2032 1,000 1,037,140 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Rev., Helix Health Issue, AMBAC, 5%, 2027(++) 2,500 2,683,775 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Industrial Development Authority, Economic Development Rev., FSA, RIBS, 10.641%, 2022(+) 1,400 2,005,346 - ---------------------------------------------------------------------------------------------------------------------------------- Montgomery County, MD, Economic Development (Trinity Health Credit Group), 5.125%, 2022 500 520,745 - ---------------------------------------------------------------------------------------------------------------------------------- $35,734,245 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Maryland Health & Higher Educational Facilities Authority Rev. Term Care - 0.7% (Bradford Oaks Nursing & Rehabilitation Center), 6.375%, 2027 $1,000 $977,870 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., "A" (Mercy Ridge), 6%, 2035 150 150,631 - ---------------------------------------------------------------------------------------------------------------------------------- $1,128,501 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - Northeast Maryland Waste Disposal Authority, Resources Recovery 0.4% Rev., Baltimore Resco Retrofit Project, 5%, 2012 $690 $714,695 - ---------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Maryland Industrial Authority, Economic Development, Baltimore Tourism - 0.6% Aquarium Project, 5.2%, 2026 $1,000 $1,036,520 - ---------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Harford County MD, Economic Development Rev. Battelle Mem Institute Other - 2.9% PJ, 5.25%, 2034 $1,600 $1,653,312 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Industrial Authority, Economic Development Rev., 8%, 2012(++) 2,825 3,293,441 - ---------------------------------------------------------------------------------------------------------------------------------- $4,946,753 - ---------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 5.3% Baltimore, MD, City Housing Corp. Rev., "A", FHA, 7.25%, 2023 $1,095 $1,097,497 - ---------------------------------------------------------------------------------------------------------------------------------- Baltimore, MD, City Housing Corp. Rev., FHA, 7.75%, 2009 580 580,354 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, "A", 5%, 2034 940 947,144 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, "A", 5.1%, 2044 1,000 1,011,400 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Housing, "D", 5%, 2032 1,000 1,004,330 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Multi-Family Housing Insured Mortgage, "B", 5.6%, 2032 1,250 1,301,125 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Waters Landing II, "A", GNMA, 5.875%, 2033 1,500 1,590,570 - ---------------------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Housing Authority, Fairview & Hillside Projects, "A", GNMA, 4.85%, 2032 1,500 1,511,490 - ---------------------------------------------------------------------------------------------------------------------------------- $9,043,910 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Prince George's County, MD, Housing, Single Family Collateral, "A", Local - 0.6% 7.4%, 2032 $275 $278,399 - ---------------------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Housing, Single Family Collateral, "A", GNMA, 5.6%, 2034 230 246,358 - ---------------------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Housing, Single Family Step Coupon, "A", GNMA, 5.375%, 2018 485 501,796 - ---------------------------------------------------------------------------------------------------------------------------------- $1,026,553 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Maryland Community Development Administration, Housing, "A", 5.875%, State - 6.0% 2016 $1,285 $1,350,933 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Residential, "B", 4.75%, 2019 1,500 1,518,420 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Residential, "B", 6.05%, 2020 2,045 2,127,925 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Single Family Program, First Series, 5.15%, 2018 2,000 2,054,280 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Single Family Program, Second Series, 4.5%, 2024 1,025 1,047,632 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Authority, 4.75%, 2023 500 500,340 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Authority, Mortgage Backed Securities, "A", 4.375%, 2017 1,500 1,507,800 - ---------------------------------------------------------------------------------------------------------------------------------- $10,107,330 - ---------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 1.9% Northeast Maryland Waste Disposal Authority Rev. (Southwest County Resource Recovery), MBIA, 7.2%, 2005 $1,000 $1,025,700 - ---------------------------------------------------------------------------------------------------------------------------------- Northeast Maryland Waste Disposal Solid, 6%, 2006 1,100 1,187,021 - ---------------------------------------------------------------------------------------------------------------------------------- Northeast Maryland Waste Disposal Solid, AMBAC, 5.5%, 2016 1,000 1,080,460 - ---------------------------------------------------------------------------------------------------------------------------------- $3,293,181 - ---------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 9.9% Howard County, MD, Certificates of Participation, 8%, 2019 $1,870 $2,695,380 - ---------------------------------------------------------------------------------------------------------------------------------- Howard County, MD, Certificates of Participation, 8.15%, 2021 450 657,054 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Stadium Authority, Lease RV Convention Center Expansion, AMBAC, 5.875%, 2012 1,000 1,052,410 - ---------------------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Certificates of Participation, "A", MBIA, 0%, 2005 - 2006 4,985 4,853,698 - ---------------------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Lease Development Authority Rev., MBIA, 0%, 2004 - 2009 2,480 2,276,723 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., 5.7%, 2025 1,235 1,358,302 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., Commonwealth Appropriations, "A", AMBAC, 5.375%, 2018 1,000 1,159,170 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013 - 2016+(+) 2,020 2,668,337 - ---------------------------------------------------------------------------------------------------------------------------------- $16,721,074 - ---------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.2% Virgin Islands Public Finance Authority Rev., 5.875%, 2018 $1,000 $1,039,910 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., 5.5%, 2022 1,000 1,034,380 - ---------------------------------------------------------------------------------------------------------------------------------- $2,074,290 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Children's Trust Fund, Settlement Rev., PR, 5.375%, 2033 $245 $241,631 - ---------------------------------------------------------------------------------------------------------------------------------- Guam Economic Development Authority, 5.5%, 2041 400 387,180 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco Settlement Financing Corp., 5%, 2021 260 250,900 - ---------------------------------------------------------------------------------------------------------------------------------- $879,711 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Annapolis, MD, Economic Development Rev. (St. John's College), 5.5%, 11.8% 2018 $750 $788,887 - ---------------------------------------------------------------------------------------------------------------------------------- Anne Arundel County, MD, Economic Development, Community College Project, 5.25%, 2028 1,600 1,671,040 - ---------------------------------------------------------------------------------------------------------------------------------- Frederick County, MD, Educational Facilities Rev., "A" (Mount St. Mary's College), 5.7%, 2020 850 887,315 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins University), 5.125%, 2020 1,500 1,630,380 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins University), 5.625%, 2027 1,400 1,516,186 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., "A" (Johns Hopkins University), 5%, 2032 3,000 3,117,210 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev., "A" (Loyola College), MBIA, 5.5%, 2016 3,000 3,312,360 - ---------------------------------------------------------------------------------------------------------------------------------- Morgan State University, MD, Academic, "A", FGIC, 5%, 2020 500 534,060 - ---------------------------------------------------------------------------------------------------------------------------------- Morgan State University, MD, Academic, "A", MBIA, 0%, 2006 - 2008 (++) 2,535 2,356,174 - ---------------------------------------------------------------------------------------------------------------------------------- Morgan State University, MD, Academic, "B", FGIC, 5%, 2022 350 369,975 - ---------------------------------------------------------------------------------------------------------------------------------- Morgan State University, MD, Academic, MBIA, 6.05%, 2015 1,500 1,790,400 - ---------------------------------------------------------------------------------------------------------------------------------- University of Maryland, Auxiliary Facilities & Tuition Rev., "B", 0%, 2004 1,000 994,650 - ---------------------------------------------------------------------------------------------------------------------------------- Westminster, MD, Educational Facilities Rev. (McDaniel College), 5.5%, 2032 1,000 1,028,800 - ---------------------------------------------------------------------------------------------------------------------------------- $19,997,437 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Maryland Economic Development Corp., Collegiate Housing Rev. (Towson Dormitories - 3.0% University), 5.75%, 2029 $1,000 $1,007,410 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Economic Development Corp., Collegiate Housing, "A", 6%, 2019 1,000 1,050,260 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Economic Development Corp., Morgan State University Project, "A", 6%, 2034 1,000 1,031,530 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Economic Development Corp., University of Maryland College Park Project, AMBAC, 5%, 2019 1,850 1,968,844 - ---------------------------------------------------------------------------------------------------------------------------------- $5,058,044 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 3.2% Guam Power Authority Rev., RITES, AMBAC, 9.0426%, 2015+(+) $1,680 $2,050,037 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,500 1,576,365 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., RITES, FSA, 9.0063%, 2015+(+) 1,400 1,706,796 - ---------------------------------------------------------------------------------------------------------------------------------- $5,333,198 - ---------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Baltimore, MD, Project Revenue., Refunding Water Projects, "A", Revenue - 5.3% FGIC, 5.125%, 2032 $1,000 $1,049,740 - ---------------------------------------------------------------------------------------------------------------------------------- Baltimore, MD, Rev., MBIA, LEVRRS, 10.183%, 2020(+) 3,000 4,032,690 - ---------------------------------------------------------------------------------------------------------------------------------- Baltimore, MD, Wastewater Rev. Project, "A", FGIC, 6%, 2015 1,000 1,218,920 - ---------------------------------------------------------------------------------------------------------------------------------- Baltimore, MD, Wastewater Rev. Project, "A", MBIA, 5.65%, 2020 2,000 2,341,740 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., 10.25%, 2009(++) 335 415,926 - ---------------------------------------------------------------------------------------------------------------------------------- $9,059,016 - ---------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $152,881,796) $167,684,006 - ---------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.1% - ---------------------------------------------------------------------------------------------------------------------------------- California State, Department of Water Resources, Power Supply Rev., due 4/07/04 $800 $800,000 - ---------------------------------------------------------------------------------------------------------------------------------- New Castle, PA, Area Hospital Authority (Jameson Memorial Hospital), due 4/07/04 100 100,000 - ---------------------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, due 4/01/04 100 100,000 - ---------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority, due 4/07/04 750 750,000 - ---------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority, Government Public Improvement II, "B", due 4/07/04 100 100,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $1,850,000) $1,850,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $154,731,796) $169,534,006 - ---------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.2% 363,445 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $169,897,451 - ---------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF FUND INVESTMENTS 3/31/04 MFS(R) MASSACHUSETTS MUNICIPAL BOND - ---------------------------------------------------------------------------------------------------------------------------------- Municipal Bonds - 97.7% - ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - ---------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.5% Massachusetts Port Authority Rev., 13%, 2013(++) $745 $1,129,673 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., 6.125%, 2017 1,460 1,696,710 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., "A", 5.125%, 2017 1,275 1,366,507 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., "A", FSA, 5%, 2033 1,500 1,551,915 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., "C", 6%, 2015 1,000 1,159,610 - ---------------------------------------------------------------------------------------------------------------------------------- $6,904,415 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 19.6% Boston, MA, "A", 5.75%, 2010(++) $3,645 $4,246,498 - ---------------------------------------------------------------------------------------------------------------------------------- Brookline, MA, 5.375%, 2019 1,800 1,989,180 - ---------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Massachusetts, 5.875%, 2009(++) 1,000 1,181,160 - ---------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Massachusetts, FGIC, 7%, 2009 1,150 1,397,975 - ---------------------------------------------------------------------------------------------------------------------------------- Greater Lawrence, MA, San District, MBIA, 5.625%, 2020 1,640 1,865,270 - ---------------------------------------------------------------------------------------------------------------------------------- Lynn, MA, AMBAC, 5.125%, 2018 3,690 3,987,599 - ---------------------------------------------------------------------------------------------------------------------------------- Mansfield, MA, FSA, 5.375%, 2017 1,170 1,290,931 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts State Ref, "B", 5.25%, 2028 2,500 2,752,550 - ---------------------------------------------------------------------------------------------------------------------------------- Middleborough, MA, FGIC, 5.6%, 2014 75 84,529 - ---------------------------------------------------------------------------------------------------------------------------------- Salisbury, MA, MBIA, 5.25%, 2031 2,790 2,962,366 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, "A", MBIA, 7.5%, 2004(++) 105 106,073 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Capital Appreciation Consolidated Loan, "C", 0%, 2004 1,080 1,071,911 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Capital Appreciation Consolidated Loan, "C", 0%, 2004(++) 8,170 8,111,421 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Capital Appreciation Consolidated Loan, "C", 0%, 2005(++) 2,000 1,951,760 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "A", 7.5%, 2004(++) 920 929,402 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "A" MBIA, 6%, 2010(++) 3,000 3,560,970 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "B", 5.625%, 2010(++) 2,000 2,321,040 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "B", 5.75%, 2010(++) 1,000 1,167,540 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "C", 5.75%, 2019(++) 2,000 2,338,800 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "D", MBIA, 5%, 2021 1,380 1,553,742 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "E", FSA, 5.25%, 2013(++) 1,000 1,134,750 - ---------------------------------------------------------------------------------------------------------------------------------- State of Massachusetts, MBIA, 5%, 2022 1,000 1,048,660 - ---------------------------------------------------------------------------------------------------------------------------------- Sutton, MA, MBIA, 5.5%, 2017 - 2019 2,000 2,254,180 - ---------------------------------------------------------------------------------------------------------------------------------- Westford, MA, FGIC, 5.25%, 2020 2,250 2,439,675 - ---------------------------------------------------------------------------------------------------------------------------------- Weymouth, MA, MBIA, 5.375%, 2020 1,250 1,369,063 - ---------------------------------------------------------------------------------------------------------------------------------- $53,117,045 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Massachusetts Bay Transportation Authority (General Transportation Improvement - 7.8% Systems), XLCA, 7%, 2021 $5,000 $6,487,150 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Bay Transportation Authority, RITES, 10.7967%, 2016+ (+) 4,835 6,863,959 - ---------------------------------------------------------------------------------------------------------------------------------- Maynard, MA, MBIA, 5.5%, 2021 1,000 1,116,320 - ---------------------------------------------------------------------------------------------------------------------------------- Springfield, MA, FSA, 6.25%, 2019 2,600 3,084,198 - ---------------------------------------------------------------------------------------------------------------------------------- Worcester, MA, "A", FSA, 6%, 2016 2,955 3,499,754 - ---------------------------------------------------------------------------------------------------------------------------------- $21,051,381 - ---------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 4.5% Belmont, MA, 5%, 2015 $2,165 $2,261,776 - ---------------------------------------------------------------------------------------------------------------------------------- Dudley-Charlton, MA, Regional School District, RITES, FGIC, 9.0312%, 2015 - 2018+(+) 4,360 5,613,891 - ---------------------------------------------------------------------------------------------------------------------------------- Narragansett, MA, Regional School District, AMBAC, 6%, 2019 1,720 2,023,339 - ---------------------------------------------------------------------------------------------------------------------------------- Tantasquama, MA, Regional School District, FSA, 5.375%, 2016 2,000 2,228,060 - ---------------------------------------------------------------------------------------------------------------------------------- $12,127,066 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Massachusetts Development Finance Agency, Massachusetts Biomedical Hospitals - 11.6% Research, "C", 6.375%, 2016 $50 $57,200 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Anna Jacques Hospital), 6.875%, 2012 685 695,207 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Baystate Medical Center), "F", 5.75%, 2033 2,000 2,096,480 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Berkshire Health Systems), 6.25%, 2031 1,350 1,405,256 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), 6.5%, 2012 500 563,240 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), 5.7%, 2015 500 515,135 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), "B", 6.25%, 2022 20 20,876 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Covenant Health Systems, Inc.), 6.5%, 2017 75 83,434 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Covenant Health Systems, Inc.), 6%, 2031 1,000 1,048,040 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Jordan Hospital), 5.25%, 2018 1,330 1,215,341 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Milford-Whitinsville Hospital), 6.35%, 2032 50 50,994 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Milford-Whitinsville Regional Hospital), "C", 5.25%, 2018 1,500 1,456,470 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Milton Hospital), "C", 5.5%, 2016 800 830,848 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (New England Medical Center Hospital), "H", FGIC, 5.375%, 2018 - 2019 1,815 1,989,022 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Newton-Wellesley Hospital), "G", MBIA, 6.125%, 2015 1,000 1,137,930 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (North Adams Regional Hospital), 6.625%, 2018 1,010 1,005,041 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare Systems), 5.75%, 2021 100 108,310 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare Systems), "A", MBIA, 5.375%, 2018 2,000 2,155,260 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (South Shore Hospital), "F", 5.625%, 2019 2,000 2,084,180 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), 6.5%, 2021 1,000 1,054,610 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (New England Medical Center Hospital), "H", FGIC, 5%, 2025 1,135 1,168,619 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Higher Educational Facilities Authority Rev., Catholic Health East Issue, 5.5%, 2032 1,575 1,601,239 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Capital Appreciation (Mass Biomedical Research), 0%, 2004 5,000 4,979,800 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Capital Appreciation (Mass Biomedical Research), "A", 0%, 2010 5,300 4,260,034 - ---------------------------------------------------------------------------------------------------------------------------------- $31,582,566 - ---------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Boston, MA, Industrial Development Finance Authority, Alzheimer's Term Care - 1.0% Center Project, FHA, 5.5%, 2012 $370 $399,644 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., First Mortgage Loomis Communities Project, "A", 6.9%, 2032 530 552,997 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Beverly Enterprises), 8.375%, 2009 1,725 1,751,893 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Evanswood 1st Mortgage), "A", 7.625%, 2015 497 50 - ---------------------------------------------------------------------------------------------------------------------------------- $2,704,584 - ---------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.4% Massachusetts Health & Educational Facilities Authority Rev. (Learning Center for Deaf Children), 6.1%, 2019 $1,000 $1,010,210 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Massachusetts Port Authority Rev. (Delta Air Lines, Inc.), "A", Airlines - 2.0% AMBAC, 5.5%, 2019 $2,000 $2,116,120 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev. (U.S. Airways), MBIA, 5.875%, 2016 1,900 2,029,048 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., Special Facilities (U.S. Airways), "A", MBIA, 5.625%, 2023 1,140 1,225,990 - ---------------------------------------------------------------------------------------------------------------------------------- $5,371,158 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - Massachusetts Development Finance Agency Rev., Resource Recovery 0.4% Rev. (Waste Management, Inc.), 6.9%, 2029 $1,000 $1,168,290 - ---------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Massachusetts Development Finance Agency Rev., Resource Recovery Other - 1.5% Rev. (Flour Corp.), 5.625%, 2019 $1,675 $1,759,772 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.), 5.6%, 2017 2,100 2,257,101 - ---------------------------------------------------------------------------------------------------------------------------------- $4,016,873 - ---------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Massachusetts Development Finance Agency Rev. (Comb Jewish Other - 1.6% Philanthropies), "A", 5.25%, 2022 $1,000 $1,070,100 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., (WHGH Educational Foundation), "A", AMBAC, 5.375%, 2042 3,000 3,197,370 - ---------------------------------------------------------------------------------------------------------------------------------- $4,267,470 - ---------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Massachusetts Development Finance Agency Rev. (Morville House Revenue - 3.1% Apartments), "A" LOC, 4.95%, 2023 $2,500 $2,484,275 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency Rev., "P", 5%, 2023 1,240 1,251,718 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency Rev., "P", 5.1%, 2033 1,565 1,580,869 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency Rev., "P", 5.2%, 2045 1,445 1,449,075 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Housing Rev., Rental Mortgage, "A", AMBAC, 5.7%, 2020 1,515 1,564,419 - ---------------------------------------------------------------------------------------------------------------------------------- $8,330,356 - ---------------------------------------------------------------------------------------------------------------------------------- Parking - 0.5% Rail Connections, Inc., Massachusetts Rev. (Rte 128 Parking Garage), "A", 6%, 2009(++) $1,200 $1,432,608 - ---------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Route 3 North Transportation Improvement Associates, MBIA, 5.625%, Revenue - 0.6% 2010(++) $1,500 $1,746,810 - ---------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Massachusetts Housing Finance Agency, Single Family Housing Rev., State - 2.4% "102", 5%, 2029 $1,500 $1,513,545 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "32", 6.6%, 2026 305 313,207 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "51", MBIA, 6.35%, 2022 900 934,074 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "79", FSA, 5.85%, 2021 330 344,470 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "91", 5.5%, 2031 2,125 2,169,901 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "93", 5.05%, 2020 1,110 1,128,737 - ---------------------------------------------------------------------------------------------------------------------------------- $6,403,934 - ---------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 1.4% Massachusetts Development Finance Agency Rev. (Ogden Haverhill Associates), 6.7%, 2014 $600 $641,562 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Semass Systems, "B", MBIA, 5.625%, 2016 1,125 1,269,281 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Resource Recovery Rev. (Ogden Haverhill Associates), 5.6%, 2019 1,925 1,914,066 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Resource Recovery Rev. (Ogden Haverhill Associates), 5.5%, 2013 25 25,171 - ---------------------------------------------------------------------------------------------------------------------------------- $3,850,080 - ---------------------------------------------------------------------------------------------------------------------------------- State & Local Massachusetts Development Finance Agency Rev., Visual & Performing Appropriation - 2.9% Arts Project, 6%, 2015 $1,235 $1,495,462 - ---------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2016+(+) 2,500 3,302,100 - ---------------------------------------------------------------------------------------------------------------------------------- University of Massachusetts, Building Authority Project, "B", AMBAC, 5.5%, 2018 1,400 1,585,934 - ---------------------------------------------------------------------------------------------------------------------------------- University of Massachusetts, Building Authority Project, "1", AMBAC, 5.25%, 2023 1,500 1,610,145 - ---------------------------------------------------------------------------------------------------------------------------------- $7,993,641 - ---------------------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 1.2% Massachusetts Educational Financing Authority, Education Loan Rev., "E", AMBAC, 5%, 2013 - 2015 $1,100 $1,160,030 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Educational Financing Authority, Education Loan Rev., Issue E, AMBAC, 5.3%, 2016 1,875 1,955,138 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Educational Financing Authority, Education Loan Rev., Issue G, "A", AMBAC, 6.05%, 2017 85 88,918 - ---------------------------------------------------------------------------------------------------------------------------------- $3,204,086 - ---------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.7% Virgin Islands Public Finance Authority Rev., 5.875%, 2018 $1,420 $1,476,672 - ---------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., 5.5%, 2022 2,950 3,051,421 - ---------------------------------------------------------------------------------------------------------------------------------- $4,528,093 - ---------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.3% Children's Trust Fund, Settlement Rev., PR, 5.375%, 2033 $720 $710,100 - ---------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Massachusetts Bay Transportation Authority Prerefunded Assessment, Tax - 2.8% "A", 5.75%, 2010(++) $3,460 $4,057,680 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Bay Transportation Authority Unrefunded Balance "A", 5.75%, 2018 320 369,315 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Bay Transportation Authority, Assessment, "A", 5.25%, 2030 2,930 3,083,591 - ---------------------------------------------------------------------------------------------------------------------------------- $7,510,586 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Massachusetts College Building Authority Project Rev., "A", MBIA, 17.1% 5.625%, 2009(++) $1,650 $1,921,590 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts College Building Authority Project Rev., Xl Capital Assurance, "A", XLCA, 5.25%, 2023 1,000 1,062,500 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Boston University), XLCA, 6%, 2059 1,500 1,779,375 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Deerfield Academy), "A", 5%, 2028 1,000 1,039,130 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Eastern Nazarene College), 5.625%, 2019 1,000 905,580 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), 6.625%, 2020 50 54,660 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), "C", 5.75%, 2033 1,000 1,023,540 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Mount Holyoke College), 5.125%, 2021 1,000 1,065,550 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Suffolk University), 5.75%, 2019 1,000 1,062,430 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Suffolk University), 5.85%, 2029 1,000 1,049,850 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Western New England College), 6.125%, 2032 1,115 1,148,762 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., College Issue, "B", XLCA, 5.25%, 2033 3,000 3,157,620 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Higher Education (Smith College), 5.5%, 2010(++) 1,210 1,411,997 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Authority Rev. (University of Massachusetts), "A", FGIC, 5.625%, 2018 2,170 2,474,646 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Boston College), "K", 5.25%, 2023 4,350 4,422,036 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Simmons College), "D", AMBAC, 6.05%, 2010(++) 1,745 2,103,161 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Simmons College), "F", FGIC, 5%, 2023 500 524,815 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts, Worcester Campus), "B", FGIC, 5.125%, 2019 1,780 1,921,795 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "A", FGIC, 5.75%, 2019 2,395 2,766,800 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "A", FGIC, 5.85%, 2020 1,200 1,397,100 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "C", MBIA, 5.25%, 2031 3,000 3,177,420 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Wellesley College), "H", 5%, 2033 1,000 1,035,370 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Wheaton College), "C", 5.25%, 2019 1,000 1,026,970 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Wheelock College), "B", MBIA, 5.5%, 2021 3,275 3,664,299 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Brandeis University), "C", MBIA, 0%, 2004 - 2010 3,000 2,660,480 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Brandeis University), "C", MBIA, 1%, 2011 500 386,955 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Lesley College), "A", CNIE LEE, 6.3%, 2025 2,000 2,157,900 - ---------------------------------------------------------------------------------------------------------------------------------- $46,402,331 - ---------------------------------------------------------------------------------------------------------------------------------- Universities - Secondary Massachusetts Development Finance Agency Rev. (Williston Northampton Schools - 4.7% School), 6.5%, 2028 $1,300 $1,370,512 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Xaverian Brothers High School), 5.55%, 2019 1,000 1,060,890 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Xaverian Brothers High School), 5.65%, 2029 1,000 1,036,020 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Middlesex School Education Project, 5.125%, 2023 500 530,595 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Belmont Hill School), 5.625%, 2020 1,150 1,234,905 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Concord Academy), 5.5%, 2027 2,000 2,060,480 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Dana Hall School), 5.9%, 2027 1,340 1,392,568 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Groton School), "A", 5%, 2018 2,960 3,134,255 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Tabor Academy), 5.4%, 2018 1,000 1,057,030 - ---------------------------------------------------------------------------------------------------------------------------------- $12,877,255 - ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Massachusetts Development Finance Agency Rev. (Devens Electric Owned - 0.3% Systems), 5.625%, 2016 $725 $787,734 - ---------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 5.8% Massachusetts Water Pollution Pool Program, "5", 5.75%, 2017 $1,000 $1,144,770 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Water Pollution Pool Program, "7", 5.25%, 2018 2,000 2,177,240 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Water Pollution Pool Program, "9", 5%, 2023 2,000 2,097,700 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, "A", FGIC, 6%, 2021 1,000 1,170,380 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, "C", MBIA, 5.25%, 2004(++) 50 52,412 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, General, "J", FSA, 5%, 2023 500 522,190 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, MBIA, 5.25%, 2020 1,535 1,593,146 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, RITES, FGIC, 11.3149%, 2019+(+) 4,010 5,935,281 - ---------------------------------------------------------------------------------------------------------------------------------- Springfield, MA, Street & Sewer Commission, General, "A", AMBAC, 5%, 2021 1,000 1,066,170 - ---------------------------------------------------------------------------------------------------------------------------------- $15,759,289 - ---------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $241,828,550) $264,857,961 - ---------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.2% - ---------------------------------------------------------------------------------------------------------------------------------- California State, Department of Water Resources, Power Supply Rev., due 4/07/04 $2,400 $2,400,000 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Higher Educational Facilities Authority Rev., Capital Assets Program, "D", due 4/01/04 995 995,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $3,395,000) $3,395,000 - ---------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $245,223,550) $268,252,961 - ---------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.1% 2,923,495 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $271,176,456 - ---------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
Portfolio of Investments - continued Portfolio Footnotes: + Restricted security. (+) Inverse floating rate security. (++) Refunded bond. The following abbreviations for insurers and inverse floaters are used in the Portfolio of Investments and are defined:
Insurers: Inverse Floaters: AMBAC -- AMBAC Indemnity Corp. RIBS -- Residual Interest Bond ASST GTY -- Asset Guaranty Insurance Co. RITES -- Residual Interest Tax-Exempt Security FGIC -- Financial Guaranty Insurance Co. ROLS -- Residual Option Long FHA -- Federal Housing Administration FNMA -- Federal National Mortgage Assn. FSA -- Financial Security Assurance Inc. GNMA -- Government National Mortgage Assn. LEVRRS -- Leveraged Reverse Rate Security LOC -- Letter of Credit MBIA -- Municipal Bond Investors Corp. XLCA -- XL Capital Insurance Co.
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES - ----------------------------------------------------------------------------------------------------------------------------------- This statement represents your fund's balance sheet, which details the assets and liabilities composing the total value of your fund.
ALABAMA ARKANSAS CALIFORNIA FLORIDA At 3/31/04 FUND FUND FUND FUND ASSETS Investments - Identified cost $88,419,522 $133,747,386 $401,109,886 $93,246,788 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation 8,582,060 13,501,594 32,077,300 7,323,104 - -------------------------------------------------------------------------------------------------------------------------------- Total, at value $97,001,582 $147,248,980 $433,187,186 $100,569,892 - -------------------------------------------------------------------------------------------------------------------------------- Cash 7,821 74,428 98,620 12,088 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for investments sold 789,400 3,971,918 10,307 505,379 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for fund shares sold 43,874 111,347 670,423 92,696 - -------------------------------------------------------------------------------------------------------------------------------- Interest receivable 1,478,816 2,166,312 5,221,726 1,842,191 - -------------------------------------------------------------------------------------------------------------------------------- Other assets 554 -- 1,779 1,282 - -------------------------------------------------------------------------------------------------------------------------------- Total assets $99,322,047 $153,572,985 $439,190,041 $103,023,528 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $346,754 $532,315 $1,626,978 $377,130 - -------------------------------------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 470,037 589,711 899,201 609,385 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swap agreements 308,937 295,010 609,316 335,653 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on rate lock swap agreements 90,119 183,514 270,355 158,118 - -------------------------------------------------------------------------------------------------------------------------------- Payable to affiliates - Management fee 808 1,246 3,578 838 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 3,096 7,458 20,864 4,307 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee 1,038 6,796 49,035 2,542 - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 45 68 198 46 - -------------------------------------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 58,352 69,703 132,891 68,452 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities $1,279,186 $1,685,821 $3,612,416 $1,556,471 - -------------------------------------------------------------------------------------------------------------------------------- Net assets $98,042,861 $151,887,164 $435,577,625 $101,467,057 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $90,148,941 $139,775,206 $407,557,406 $96,349,114 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on investments 8,183,004 13,023,070 31,197,629 6,829,333 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net realized gain (loss) on investments (79,274) (737,776) (1,901,262) (1,544,224) - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (209,810) (173,336) (1,276,148) (167,166) - -------------------------------------------------------------------------------------------------------------------------------- Net assets $98,042,861 $151,887,164 $435,577,625 $101,467,057 - --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA FUND FUND FUND FUND Shares of beneficial interest outstanding Class A 7,415,844 13,380,975 52,540,569 7,732,496 - -------------------------------------------------------------------------------------------------------------------------------- Class B 1,593,315 1,204,315 14,231,294 2,179,775 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- 6,062,123 -- - -------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 9,009,159 14,585,290 72,833,986 9,912,271 - -------------------------------------------------------------------------------------------------------------------------------- Net assets Class A $80,703,830 $139,333,437 $314,108,314 $79,154,709 - -------------------------------------------------------------------------------------------------------------------------------- Class B 17,339,031 12,553,727 85,106,002 22,312,348 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- 36,363,309 -- - -------------------------------------------------------------------------------------------------------------------------------- Total net assets $98,042,861 $151,887,164 $435,577,625 $101,467,057 - -------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $10.88 $10.41 $5.98 $10.24 - -------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25 of net asset value per share) $11.42 $10.93 $6.28 $10.75 - -------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $10.88 $10.42 $5.98 $10.24 - -------------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $-- $6.00 $-- - -------------------------------------------------------------------------------------------------------------------------------- On sales of $100,000 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
Statement of Assets and Liabilities - continued
GEORGIA MARYLAND MASSACHUSETTS At 3/31/04 FUND FUND FUND ASSETS Investments - Identified cost $64,009,573 $154,731,796 $245,223,550 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation 6,595,445 14,802,210 23,029,411 - -------------------------------------------------------------------------------------------------------------------------------- Total, at value $70,605,018 $169,534,006 $268,252,961 - -------------------------------------------------------------------------------------------------------------------------------- Cash 80,167 83,717 62,637 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for investments sold -- 2,087,666 892,125 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for fund shares sold 1,514,897 122,097 75,595 - -------------------------------------------------------------------------------------------------------------------------------- Interest receivable 1,240,636 2,229,959 3,805,155 - -------------------------------------------------------------------------------------------------------------------------------- Other assets 472 974 3,386 - -------------------------------------------------------------------------------------------------------------------------------- Total assets $73,441,190 $174,058,419 $273,091,859 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $243,759 $598,479 $972,318 - -------------------------------------------------------------------------------------------------------------------------------- Payable for investments purchased 278,500 2,687,137 -- - -------------------------------------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 77,794 369,064 87,354 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swap agreements 268,949 360,836 502,162 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on rate lock swap agreements 90,118 44,240 270,355 - -------------------------------------------------------------------------------------------------------------------------------- Payable to affiliates - Management fee 582 1,397 2,225 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 3,214 7,542 6,816 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee 830 2,195 3,419 - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 31 78 123 - -------------------------------------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 59,005 90,000 70,631 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities $1,022,782 $4,160,968 $1,915,403 - -------------------------------------------------------------------------------------------------------------------------------- Net assets $72,418,408 $169,897,451 $271,176,456 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $66,705,449 $157,218,459 $250,353,925 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on investments 6,236,378 14,397,134 22,256,894 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (320,335) (1,350,812) (855,416) - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (203,084) (367,330) (578,947) - -------------------------------------------------------------------------------------------------------------------------------- Net assets $72,418,408 $169,897,451 $271,176,456 - --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND Shares of beneficial interest outstanding Class A 4,960,925 11,769,015 19,520,368 - -------------------------------------------------------------------------------------------------------------------------------- Class B 1,492,348 2,700,792 4,007,938 - -------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 6,453,273 14,469,807 23,528,306 - -------------------------------------------------------------------------------------------------------------------------------- Net assets Class A $55,659,141 $138,200,688 $224,923,421 - -------------------------------------------------------------------------------------------------------------------------------- Class B 16,759,267 31,696,763 46,253,035 - -------------------------------------------------------------------------------------------------------------------------------- Total net assets $72,418,408 $169,897,451 $271,176,456 - -------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $11.22 $11.74 $11.52 - -------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25 of net asset value per share) $11.78 $12.33 $12.09 - -------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $11.23 $11.74 $11.54 - -------------------------------------------------------------------------------------------------------------------------------- On sales of $100,000 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 STATEMENT OF OPERATIONS - ----------------------------------------------------------------------------------------------------------------------------------- This statement describes how much your fund received in investment income and paid in expenses. It also describes any gains and/or losses generated by fund operations.
ALABAMA ARKANSAS CALIFORNIA FLORIDA FUND FUND FUND FUND For year ended 3/31/04 NET INVESTMENT INCOME Interest income $5,258,109 $7,591,690 $24,539,037 $5,673,584 - -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $547,468 $828,132 $2,500,841 $596,017 - -------------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 5,868 6,872 13,193 6,843 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 149,258 229,129 647,871 162,355 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) 205,560 137,721 322,006 -- - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 171,405 114,834 837,390 189,324 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class C) -- -- 388,832 -- - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 9,851 14,828 45,184 10,720 - -------------------------------------------------------------------------------------------------------------------------------- Custodian fee 37,156 55,583 155,128 40,477 - -------------------------------------------------------------------------------------------------------------------------------- Printing 6,727 11,707 37,425 7,957 - -------------------------------------------------------------------------------------------------------------------------------- Postage 1,138 2,335 6,891 1,382 - -------------------------------------------------------------------------------------------------------------------------------- Auditing fees 34,040 34,035 34,040 34,045 - -------------------------------------------------------------------------------------------------------------------------------- Legal fees 5,089 3,104 7,818 2,487 - -------------------------------------------------------------------------------------------------------------------------------- Miscellaneous 42,187 58,734 82,423 57,650 - -------------------------------------------------------------------------------------------------------------------------------- Total expenses $1,215,747 $1,497,014 $5,079,042 $1,109,257 - -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (1,818) (3,081) (6,575) (1,946) - -------------------------------------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (203,890) (308,500) (931,068) (221,827) - -------------------------------------------------------------------------------------------------------------------------------- Net expenses $1,010,039 $1,185,433 $4,141,399 $885,484 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income $4,248,070 $6,406,257 $20,397,638 $4,788,100 - -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) (identified cost basis) - Investment transactions $343,635 $515 $2,318,412 $1,177,082 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (349,154) (591,304) (1,655,587) (428,658) - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $(5,519) $(590,789) $662,825 $748,424 - -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $786,578 $1,147,936 $757,022 $61,822 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (219,111) (404,649) (345,604) (383,831) - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $567,467 $743,287 $411,418 $(322,009) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments $561,948 $152,498 $1,074,243 $426,415 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $4,810,018 $6,558,755 $21,471,881 $5,214,515 - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Operations - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND For year ending 3/31/04 NET INVESTMENT INCOME Interest income $3,850,603 $9,184,105 $14,892,696 - -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $401,428 $948,279 $1,527,229 - -------------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 4,857 7,614 12,886 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 110,758 243,711 459,361 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) 138,851 485,670 803,655 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 173,109 333,523 475,686 - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 7,237 16,999 27,534 - -------------------------------------------------------------------------------------------------------------------------------- Custodian fee 27,750 63,065 100,402 - -------------------------------------------------------------------------------------------------------------------------------- Printing 6,313 17,099 24,705 - -------------------------------------------------------------------------------------------------------------------------------- Postage 1,093 3,212 4,261 - -------------------------------------------------------------------------------------------------------------------------------- Auditing fees 34,062 34,040 34,040 - -------------------------------------------------------------------------------------------------------------------------------- Legal fees 6,356 5,455 10,104 - -------------------------------------------------------------------------------------------------------------------------------- Miscellaneous 35,853 76,882 52,403 - -------------------------------------------------------------------------------------------------------------------------------- Total expenses $947,667 $2,235,549 $3,532,266 - -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (1,503) (2,364) (4,742) - -------------------------------------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (149,481) (353,134) (568,746) - -------------------------------------------------------------------------------------------------------------------------------- Net expenses $796,683 $1,880,051 $2,958,778 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income $3,053,920 $7,304,054 $11,933,918 - -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) (identified cost basis)- Investment transactions $648,272 $1,239,299 $1,740,063 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (517,348) (591,893) (982,729) - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments $130,924 $647,406 $757,334 - -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $396,885 $406,377 $688,523 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (200,002) (172,981) (465,265) - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $196,883 $233,396 $223,258 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments $327,807 $880,802 $980,592 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $3,381,727 $8,184,856 $12,914,510 - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------------------------------------------------------- This statement describes 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 For year ended 3/31/04 OPERATIONS Net investment income $4,248,070 $6,406,257 $20,397,638 $4,788,100 - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (5,519) (590,789) 662,825 748,424 - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments 567,467 743,287 411,418 (322,009) - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $4,810,018 $6,558,755 $21,471,881 $5,214,515 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(3,664,883) $(5,995,855) $(15,390,933) $(3,890,452) - -------------------------------------------------------------------------------------------------------------------------------- Class B (634,171) (445,106) (3,690,150) (900,216) - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- (1,506,159) -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(4,299,054) $(6,440,961) $(20,587,242) $(4,790,668) - -------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $11,705,214 $16,469,633 $56,968,858 $15,037,651 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 2,586,798 3,872,170 11,441,724 2,205,319 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (17,397,541) (15,142,702) (106,758,985) (27,420,465) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from fund share transactions $(3,105,529) $5,199,101 $(38,348,403) $(10,177,495) - -------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets $(2,594,565) $5,316,895 $(37,463,764) $(9,753,648) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 100,637,426 146,570,269 473,041,389 111,220,705 - -------------------------------------------------------------------------------------------------------------------------------- At end of period $98,042,861 $151,887,164 $435,577,625 $101,467,057 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(209,810) $(173,336) $(1,276,148) $(167,166) - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND For year ended 3/31/04 OPERATIONS Net investment income $3,053,920 $7,304,054 $11,933,918 - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments 130,924 647,406 757,334 - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments 196,883 233,396 223,258 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $3,381,727 $8,184,856 $12,914,510 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(2,441,199) $(6,165,774) $(10,281,251) - -------------------------------------------------------------------------------------------------------------------------------- Class B (630,108) (1,264,155) (1,818,366) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(3,071,307) $(7,429,929) $(12,099,617) - -------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $8,749,566 $12,128,709 $26,173,301 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 1,959,911 4,597,281 6,120,108 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (14,314,317) (20,282,205) (43,043,815) - -------------------------------------------------------------------------------------------------------------------------------- Net decrease in net assets from fund share transactions $(3,604,840) $(3,556,215) $(10,750,406) - -------------------------------------------------------------------------------------------------------------------------------- Total decrease in net assets $(3,294,420) $(2,801,288) $(9,935,513) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 75,712,828 172,698,739 281,111,969 - -------------------------------------------------------------------------------------------------------------------------------- At end of period $72,418,408 $169,897,451 $271,176,456 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(203,084) $(367,330) $(578,947) - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA FUND FUND FUND FUND For year ended 3/31/03 OPERATIONS Net investment income $4,315,172 $6,249,872 $20,643,925 $4,654,968 - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 43,290 449,903 2,048,802 (24,359) - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain on investments 4,951,882 5,537,435 18,507,096 4,096,366 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $9,310,344 $12,237,210 $41,199,823 $8,726,975 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(3,888,526) $(6,237,037) $(15,987,815) $(3,878,441) - -------------------------------------------------------------------------------------------------------------------------------- Class B (602,448) (413,995) (3,807,377) (1,009,895) - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- (1,632,498) -- - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (88,213) -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Class B (17,098) -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(4,596,285) $(6,651,032) $(21,427,690) $(4,888,336) - -------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $17,945,102 $23,428,402 $104,546,628 $35,587,519 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 2,724,678 3,731,803 11,607,493 2,200,811 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (21,471,437) (14,204,886) (87,728,801) (22,516,757) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from fund share transactions $(801,657) $12,955,319 $28,425,320 $15,271,573 - -------------------------------------------------------------------------------------------------------------------------------- Total increase in net assets $3,912,402 $18,541,497 $48,197,453 $19,110,212 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 96,725,024 128,028,772 424,843,936 92,110,493 - -------------------------------------------------------------------------------------------------------------------------------- At end of period $100,637,426 $146,570,269 $473,041,389 $111,220,705 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(206,766) $(191,559) $(1,189,411) $(163,766) - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND For year ended 3/31/03 OPERATIONS Net investment income $3,141,171 $7,346,733 $11,932,377 - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments 423,201 173,271 111,495 - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain on investments 3,279,309 6,851,740 13,663,176 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $6,843,681 $14,371,744 $25,707,048 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(2,599,347) $(6,249,737) $(10,462,169) - -------------------------------------------------------------------------------------------------------------------------------- Class B (643,566) (1,319,733) (1,744,658) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(3,242,913) $(7,569,470) $(12,206,827) - -------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $11,386,532 $18,299,728 $51,342,873 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 2,137,662 4,625,111 6,030,522 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (11,622,400) (17,320,343) (37,517,245) - -------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from fund share transactions $1,901,794 $5,604,496 $19,856,150 - -------------------------------------------------------------------------------------------------------------------------------- Total increase in net assets $5,502,562 $12,406,770 $33,356,371 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 70,210,266 160,291,969 247,755,598 - -------------------------------------------------------------------------------------------------------------------------------- At end of period $75,712,828 $172,698,739 $281,111,969 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(187,868) $(331,899) $(721,623) - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ALABAMA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all distributions) held for the entire period. This information has been audited by the funds' independent auditors, whose report, together with each fund's financial statements, are included in this report. For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.82 $10.31 $10.53 $10.00 $10.76 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.48 $0.48 $0.51 $0.54 $0.54 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.06 0.54 (0.19) 0.53 (0.64) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.54 $1.02 $0.32 $1.07 $(0.10) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.48) $(0.50) $(0.54) $(0.54) $(0.54) - ----------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- (0.01) -- -- (0.12) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.00)+++ -- -- - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- (0.00)+++ - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.48) $(0.51) $(0.54) $(0.54) $(0.66) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.88 $10.82 $10.31 $10.53 $10.00 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 5.11 10.06 3.05 11.00 (0.82) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.88 0.88 0.88 0.86 0.89 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.38 4.49 4.87 5.25 5.28 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 10 21 20 17 44 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $80,704 $84,474 $83,146 $81,615 $72,736 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.45 $0.46 $0.49 $0.52 $0.52 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.09 1.08 1.08 1.06 1.07 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.17 4.29 4.67 5.05 5.10 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. +++ Per share amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ALABAMA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.82 $10.31 $10.53 $10.00 $10.76 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.39 $0.40 $0.43 $0.46 $0.46 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.07 0.54 (0.19) 0.53 (0.64) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.46 $0.94 $0.24 $0.99 $(0.18) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.40) $(0.42) $(0.46) $(0.46) $(0.46) - ----------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- (0.01) -- -- (0.12) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.00)+++ -- -- - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- (0.00)+++ - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.40) $(0.43) $(0.46) $(0.46) $(0.58) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.88 $10.82 $10.31 $10.53 $10.00 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.32 9.14 2.38 10.17 (1.56) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.63 1.63 1.63 1.61 1.64 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.63 3.74 4.09 4.50 4.53 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 10 21 20 17 44 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $17,339 $16,163 $13,579 $12,531 $10,926 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.37 $0.38 $0.41 $0.46 $0.44 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.83 1.83 1.83 1.81 1.82 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.43 3.54 3.89 4.30 4.35 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. +++ Per share amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ARKANSAS MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.40 $9.97 $10.08 $9.61 $10.14 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.47 $0.51 $0.51 $0.50 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.01 0.46 (0.11) 0.47 (0.53) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.46 $0.93 $0.40 $0.98 $(0.03) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.45) $(0.50) $(0.51) $(0.51) $(0.50) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.41 $10.40 $9.97 $10.08 $9.61 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 4.53 9.51 4.06 10.45 (0.24) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.72 0.73 0.72 0.70 0.72 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.31 4.59 5.05 5.25 5.14 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 19 15 15 12 28 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $139,333 $134,521 $119,328 $113,928 $107,111 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If these fees had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.43 $0.45 $0.49 $0.49 $0.48 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.92 0.93 0.92 0.90 0.90 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.11 4.39 4.85 5.05 4.96 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ARKANSAS MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.41 $9.98 $10.09 $9.62 $10.14 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.37 $0.39 $0.43 $0.44 $0.42 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.01 0.46 (0.11) 0.46 (0.53) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.38 $0.85 $0.32 $0.90 $(0.11) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.37) $(0.42) $(0.43) $(0.43) $(0.41) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.42 $10.41 $9.98 $10.09 $9.62 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%) 3.68 8.62 3.24 9.59 (1.02) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.53 1.54 1.50 1.47 1.62 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.50 3.77 4.26 4.49 4.33 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 19 15 15 12 28 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $12,554 $12,049 $8,700 $9,822 $9,227 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If these fees had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.34 $0.37 $0.41 $0.42 $0.40 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.73 1.74 1.70 1.67 1.80 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.30 3.57 4.06 4.29 4.15 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $5.96 $5.70 $5.81 $5.52 $5.89 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.28 $0.28 $0.28 $0.28 $0.29 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments and foreign currency 0.02 0.27 (0.10) 0.30 (0.38) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.30 $0.55 $0.18 $0.58 $(0.09) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.28) $(0.29) $(0.28) $(0.29) $(0.28) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.28) $(0.29) $(0.29) $(0.29) $(0.28) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.98 $5.96 $5.70 $5.81 $5.52 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 5.22 9.79 3.11 10.78 (1.41) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.67 0.67 0.67 0.62 0.51 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.71 4.73 4.87 5.08 5.21 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 8 22 12 21 40 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $314,108 $333,350 $305,699 $293,137 $196,828 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.27 $0.27 $0.27 $0.27 $0.27 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.87 0.87 0.87 0.87 0.86 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.51 4.53 4.67 4.83 4.86 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $5.96 $5.70 $5.81 $5.52 $5.89 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.23 $0.23 $0.24 $0.24 $0.25 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments and foreign currency 0.03 0.27 (0.11) 0.30 (0.38) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.26 $0.50 $0.13 $0.54 $(0.13) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.24) $(0.24) $(0.23) $(0.25) $(0.24) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.24) $(0.24) $(0.24) $(0.25) $(0.24) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.98 $5.96 $5.70 $5.81 $5.52 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.38 8.93 2.30 9.93 (2.21) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.47 1.46 1.45 1.39 1.31 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.91 3.94 4.09 4.31 4.38 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 8 22 12 21 40 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $85,106 $98,888 $84,123 $80,473 $60,367 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.22 $0.22 $0.23 $0.23 $0.23 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.67 1.66 1.65 1.64 1.66 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.71 3.74 3.89 4.06 4.03 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS C 2004 2003 2002 2001 2000 Net asset value, beginning of period $5.98 $5.72 $5.83 $5.53 $5.90 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.23 $0.23 $0.23 $0.23 $0.24 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments and foreign currency 0.02 0.27 (0.10) 0.31 (0.38) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.25 $0.50 $0.13 $0.54 $(0.14) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.23) $(0.24) $(0.23) $(0.24) $(0.23) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.23) $(0.24) $(0.24) $(0.24) $(0.23) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.00 $5.98 $5.72 $5.83 $5.53 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.27 8.78 2.17 9.96 (2.29) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.56 1.57 1.57 1.52 1.41 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.81 3.83 3.97 4.21 4.32 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 8 22 12 21 40 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $36,363 $40,804 $35,022 $33,056 $10,482 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.22 $0.22 $0.22 $0.22 $0.22 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.77 1.77 1.77 1.77 1.76 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.60 3.63 3.77 3.96 3.97 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) FLORIDA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.19 $9.78 $9.95 $9.47 $10.12 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.47 $0.48 $0.50 $0.50 $0.50 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments and foreign currency 0.05 0.44 (0.16) 0.49 (0.65) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.52 $0.92 $0.34 $0.99 $(0.15) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.47) $(0.51) $(0.51) $(0.51) $(0.50) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.24 $10.19 $9.78 $9.95 $9.47 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 5.20 9.40 3.41 10.72 (1.38) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.64 0.62 0.63 0.63 0.66 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.58 4.78 5.09 5.23 5.21 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 31 27 16 18 52 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $79,155 $86,045 $69,959 $66,807 $64,107 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.45 $0.46 $0.48 $0.48 $0.48 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.85 0.82 0.83 0.83 0.84 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.37 4.58 4.89 5.03 5.03 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) FLORIDA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.19 $9.78 $9.95 $9.47 $10.11 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.39 $0.40 $0.43 $0.42 $0.43 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments and foreign currency 0.05 0.43 (0.17) 0.49 (0.64) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.44 $0.83 $0.26 $0.91 $(0.21) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.39) $(0.42) $(0.43) $(0.43) $(0.43) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.24 $10.19 $9.78 $9.95 $9.47 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.36 8.64 2.58 9.84 (2.07) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.44 1.42 1.43 1.43 1.45 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.78 3.97 4.29 4.43 4.42 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 31 27 16 18 52 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $22,312 $25,175 $22,151 $23,820 $19,999 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.37 $0.38 $0.41 $0.41 $0.41 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.64 1.62 1.63 1.63 1.63 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.58 3.77 4.09 4.23 4.24 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) GEORGIA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.17 $10.63 $10.82 $10.26 $10.93 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.49 $0.49 $0.50 $0.52 $0.52 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.05 0.55 (0.17) 0.56 (0.67) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.54 $1.04 $0.33 $1.08 $(0.15) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.49) $(0.50) $(0.51) $(0.52) $(0.52) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.49) $(0.50) $(0.52) $(0.52) $(0.52) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.22 $11.17 $10.63 $10.82 $10.26 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 4.93 9.97 3.03 10.80 (1.32) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.91 0.92 0.93 0.90 0.93 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.35 4.43 4.67 4.95 4.98 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 12 25 19 24 39 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $55,659 $57,636 $54,179 $52,236 $48,054 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.46 $0.47 $0.48 $0.50 $0.50 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.12 1.12 1.13 1.10 1.11 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.14 4.23 4.47 4.75 4.80 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to decrease net investment income per share and increase net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets decreased by 0.03%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) GEORGIA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.18 $10.64 $10.83 $10.27 $10.93 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.40 $0.40 $0.42 $0.45 $0.44 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.06 0.56 (0.18) 0.55 (0.66) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.46 $0.96 $0.24 $1.00 $(0.22) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.41) $(0.42) $(0.42) $(0.44) $(0.44) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.41) $(0.42) $(0.43) $(0.44) $(0.44) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.23 $11.18 $10.64 $10.83 $10.27 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.15 9.15 2.26 9.97 (2.06) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.66 1.67 1.68 1.65 1.68 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.60 3.68 3.91 4.25 4.24 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 12 25 19 24 39 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $16,759 $18,077 $16,031 $17,376 $14,777 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.38 $0.38 $0.40 $0.43 $0.42 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.86 1.87 1.88 1.85 1.86 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.40 3.48 3.71 4.05 4.06 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002 was to decrease net investment income per share and increase net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets decreased by 0.03%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MARYLAND MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.69 $11.21 $11.35 $10.81 $11.49 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.51 $0.52 $0.54 $0.54 $0.53 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.06 0.50 (0.14) 0.54 (0.68) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.57 $1.02 $0.40 $1.08 $(0.15) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.52) $(0.54) $(0.54) $(0.54) $(0.53) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.74 $11.69 $11.21 $11.35 $10.81 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 4.96 9.21 3.59 10.26 (1.27) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.96 0.95 0.95 0.95 0.96 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.35 4.51 4.73 4.96 4.85 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 21 12 8 14 24 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $138,201 $138,666 $128,750 $125,316 $114,957 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.49 $0.50 $0.52 $0.52 $0.51 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.17 1.15 1.15 1.15 1.14 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.14 4.31 4.53 4.76 4.67 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. The effect of this change for the year ended March 31, 2002 was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid directly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MARYLAND MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.68 $11.20 $11.34 $10.81 $11.48 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.43 $0.45 $0.46 $0.47 $0.46 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.07 0.49 (0.13) 0.53 (0.67) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.50 $0.94 $0.33 $1.00 $(0.21) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.44) $(0.46) $(0.47) $(0.47) $(0.46) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.74 $11.68 $11.20 $11.34 $10.81 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.37 8.52 2.92 9.46 (1.82) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.61 1.60 1.60 1.60 1.61 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.70 3.86 4.08 4.30 4.21 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 21 12 8 14 24 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $31,697 $34,033 $31,542 $28,859 $26,845 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.41 $0.42 $0.44 $0.47 $0.44 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.81 1.80 1.80 1.80 1.79 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.50 3.66 3.88 4.10 4.03 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. The effect of this change for the year ended March 31, 2002 was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid directly. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.49 $10.90 $11.11 $10.60 $11.35 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.51 $0.52 $0.53 $0.55 $0.57 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.03 0.60 (0.21) 0.52 (0.76) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.54 $1.12 $0.32 $1.07 $(0.19) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.51) $(0.53) $(0.52) $(0.56) $(0.56) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.51) $(0.53) $(0.53) $(0.56) $(0.56) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.52 $11.49 $10.90 $11.11 $10.60 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 4.82 10.42 2.93 10.44 (1.57) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.95 0.92 0.92 0.92 0.92 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.39 4.56 4.73 5.10 5.29 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 14 15 13 22 35 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $224,923 $233,500 $210,269 $216,272 $207,228 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If these fees had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.48 $0.49 $0.51 $0.53 $0.55 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.16 1.12 1.12 1.12 1.10 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.18 4.36 4.53 4.90 5.11 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by $0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.51 $10.92 $11.12 $10.60 $11.35 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.43 $0.44 $0.46 $0.48 $0.50 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.04 0.60 (0.20) 0.53 (0.76) - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.47 $1.04 $0.26 $1.01 $(0.26) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.44) $(0.45) $(0.45) $(0.49) $(0.49) - ----------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.44) $(0.45) $(0.46) $(0.49) $(0.49) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.54 $11.51 $10.92 $11.12 $10.60 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.14 9.69 2.35 (9.82) (2.30) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.60 1.57 1.57 1.57 1.57 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.74 3.91 4.13 4.45 4.64 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 14 15 13 22 35 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $46,253 $47,612 $37,487 $30,057 $25,743 - ----------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If these fees had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.41 $0.42 $0.44 $0.46 $0.48 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.80 1.77 1.77 1.77 1.75 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.54 3.71 3.93 4.25 4.46 - ----------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001 have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- (1) BUSINESS AND ORGANIZATION MFS Alabama Municipal Bond Fund (Alabama Fund), MFS Arkansas Municipal Bond Fund (Arkansas Fund), MFS California Municipal Bond Fund (California Fund), MFS Florida Municipal Bond Fund (Florida Fund), MFS Georgia Municipal Bond Fund (Georgia Fund), MFS Maryland Municipal Bond Fund (Maryland Fund), and MFS Massachusetts Municipal Bond Fund (Massachusetts Fund) are each a non- diversified series of MFS Municipal Series Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. (2) SIGNIFICANT ACCOUNTING POLICIES General - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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, interest from the security could become taxable and the security could decline in value. Investment Valuations - Each fund uses independent pricing services approved by the Board of Trustees wherever possible to value its portfolio securities. Portfolio securities are valued at current market prices where current market prices are readily available, or the fund may fair value portfolio securities under the direction of the Board of Trustees when a determination is made that current market prices are not readily available. Bonds and other fixed income securities (other than short-term obligations) in each fund's portfolio are valued at an evaluated bid price as reported by an independent pricing service, or to the extent a valuation is not reported by a pricing service, such securities are valued on the basis of quotes from brokers and dealers. Prices obtained from pricing services utilize both dealer-supplied valuations and electronic data processing techniques which take into account appropriate 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 without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Bonds and other fixed income securities for which it is determined that current market prices are not readily available will be fair valued under the direction of the Board of Trustees. Futures contracts are valued at the settlement price as reported by an independent pricing service on the primary exchange on which they are traded. Short-term obligations with a remaining maturity in excess of 60 days will be valued upon dealer-supplied valuations. All other short-term obligations in each of the fund's portfolio are valued at amortized cost, which constitutes market value as determined by the Board of Trustees. Futures Contracts - Each fund may enter into futures contracts for the delayed delivery of securities or currency, or contracts based on financial indices at a fixed price on a future date. In entering such contracts, each fund is required to deposit with the broker either in cash or securities an amount equal to a certain percentage of the contract amount. Subsequent payments are made or received by the fund each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gains or losses by the fund. Each fund's investment in futures contracts is designed to hedge against anticipated future changes in interest rates or securities prices. Investments in interest rate futures for purposes other than hedging may be made to modify the duration of the portfolio without incurring the additional transaction costs involved in buying and selling the underlying securities. Investments in currency futures for purposes other than hedging may be made to change the fund's relative position in one or more currencies without buying and selling portfolio assets. Should interest rates or securities prices move unexpectedly, the fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. Swap Agreements - Each fund may enter into swap agreements. A swap is an exchange of cash payments between the fund and another party, which is based on a specific financial index. Cash payments are exchanged at specified intervals and the expected income or expense is recorded on the accrual basis. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation. Risks may arise upon entering into these agreements from the potential inability of counterparties to meet the terms of their contract and from unanticipated changes in the value of the financial index on which the swap agreement is based. The funds may use swaps for both hedging and non-hedging purposes. For hedging purposes, the fund may use swaps to reduce its exposure to interest rate fluctuations. For non- hedging purposes, the fund may use swaps to take a position on anticipated changes in the underlying financial index. Interest Rate Swap Agreements - Interest rate swap agreements are agreements to exchange cash flows periodically based on a notional principal amount, for example the exchange of fixed rate interest payments for floating rate interest payments which are based on a specific financial index or the exchange of two distinct floating rate payments. The net receivable or payable associated with these payments is accrued daily and is recorded as net interest income or expense. For financial statement purposes, the net interest income or expense periodically recognized for an interest rate swap is recorded in the same line item as any unrealized and realized gains or losses recognized for that instrument. The primary risk associated with interest rate swap agreements is that unfavorable changes in the fluctuation of interest rates could adversely impact the funds. Rate Lock Swap Agreements - Each fund may enter into rate lock swap agreements, which are used to reduce the interest rate risk of the portfolio. A rate lock swap agreement is a payment or receipt of cash on a specified future date, calculated as the difference between the strike rate and a specific index yield on that date. The payment received or made at the end of the measurement period is 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 is recorded as unrealized appreciation or depreciation. 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 accounting principles generally accepted in the United States of America. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. Interest payments received in additional securities are recorded on the ex- dividend or ex-interest date in an amount equal to the value of the security on such date. 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 the fund. This amount, for the year ended March 31, 2004, is shown as a reduction of total expenses on the Statement of Operations. Tax Matters and Distributions - Each fund's policy is to comply with the provisions of the Internal Revenue Code (the Code) applicable to regulated investment companies and to distribute to shareholders all of its net tax- exempt and taxable net income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is provided. Distributions paid by each fund from net interest received on tax-exempt municipal bonds are not includable by shareholders as gross income for federal income tax purposes because each fund intends to meet certain requirements of the Code applicable to regulated investment companies, which will enable each fund to pay exempt-interest dividends. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986 may be considered a tax-preference item to shareholders. Distributions to shareholders are recorded on the ex-dividend date. Each fund distinguishes between distributions on a tax basis and a financial reporting basis and only distributions in excess of tax basis earnings and profits are reported in the financial statements as distributions from paid-in capital. Differences in the recognition or classification of income between the financial statements and tax earnings and profits, which result in temporary over-distributions for financial statement purposes, are classified as distributions in excess of net investment income or net realized gains. Common types of book and tax differences that could occur include differences in accounting for derivatives, defaulted bonds, capital losses, and amortization and accretion on debt securities. The tax character of distributions paid for the years ended March 31, 2004 and March 31, 2003 was as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS YEAR ENDED 3/31/04 FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- Distributions declared from: Tax-exempt income $4,299,054 $6,440,961 $20,587,242 $4,790,668 $3,071,307 $7,429,929 $12,099,617 - -------------------------------------------------------------------------------------------------------------------------------- YEAR ENDED 3/31/03 - ------------------------------------------------------------------------------------------------------------------------------ Distributions declared from: Tax-exempt income $4,493,757 $6,651,032 $21,427,690 $4,888,336 $3,242,913 $7,569,470 $12,206,827 - -------------------------------------------------------------------------------------------------------------------------------- Ordinary income 59,140 -- -- -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Long-term capital gain 43,388 -- -- -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared $4,596,285 $6,651,032 $21,427,690 $4,888,336 $3,242,913 $7,569,470 $12,206,827 - -------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2004, the following amounts were reclassified due to differences between book and tax accounting for amortization and accretion on debt securities, market discount on disposal of securities, capital losses, and utilization of equalization (a tax basis dividends paid deduction from earnings and profits distributed to shareholders upon redemption of shares): ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- Increase (decrease): Paid-in-capital $36,356 $(5,673,302) $185,348 $(16,234) $(18,050) $(1,119,842) $(729,602) - -------------------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments (84,296) 5,620,375 (288,215) 17,066 15,879 1,029,398 421,227 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed distributions in excess of net investment income 47,940 52,927 102,867 (832) 2,171 90,444 308,375 - -------------------------------------------------------------------------------------------------------------------------------- These changes had no effect on the net assets or net asset value per share of the funds. As of March 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- Undistributed tax-exempt income $152,373 $369,349 $452,093 $218,278 $57,013 $248,158 $408,532 - -------------------------------------------------------------------------------------------------------------------------------- Capital loss carryforward (134,683) (815,441) (1,968,114) (1,591,545) (316,767) (1,455,666) (937,774) - -------------------------------------------------------------------------------------------------------------------------------- Unrealized gain 8,238,413 13,143,642 31,264,481 6,876,654 6,232,810 14,501,988 22,339,252 - -------------------------------------------------------------------------------------------------------------------------------- Other temporary differences (362,183) (585,592) (1,728,241) (385,444) (260,097) (615,488) (987,479) - -------------------------------------------------------------------------------------------------------------------------------- For federal income tax purposes, the capital loss carryforward may be applied against any net taxable realized gains of each succeeding year until the earlier of its utilization or expiration on: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS EXPIRATION DATE FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- March 31, 2005 $-- $(215,971) $-- $(524,124) $-- $(1,055,172) $(405,183) - -------------------------------------------------------------------------------------------------------------------------------- March 31, 2006 -- -- -- (781,761) -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- March 31, 2007 -- -- -- -- -- -- (242,062) - -------------------------------------------------------------------------------------------------------------------------------- March 31, 2008 -- (15,757) (87,023) -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- March 31, 2009 -- -- (1,881,091) -- (316,767) (400,494) -- - -------------------------------------------------------------------------------------------------------------------------------- March 31, 2010 -- -- -- (164,025) -- -- (290,529) - -------------------------------------------------------------------------------------------------------------------------------- March 31, 2011 -- -- -- (121,635) -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- March 31, 2012 (134,683) (583,713) -- -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total $(134,683) $(815,441) $(1,968,114) $(1,591,545) $(316,767) $(1,455,666) $(937,774) - -------------------------------------------------------------------------------------------------------------------------------- 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 the fund based on the value of settled and estimated shares outstanding of each class, without distinction between share classes. Dividends are declared separately for each class. Differences in per share dividend rates are due to differences in separate class expenses charged. Class B shares will convert to Class A shares approximately eight years after purchase.
(3) TRANSACTIONS WITH AFFILIATES Investment Adviser - The trust has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to provide overall investment advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at an annual rate of 0.55% of each fund's average daily net assets. The investment adviser has contractually agreed to waive a portion of its fee, which is shown as a reduction of total expenses in the Statement of Operations. From April 1, 2003 to February 29, 2004, MFS reduced each fund's management fees to 0.35% of average daily net assets. As part of the settlement agreement with the New York Attorney General concerning market timing and related matters, MFS has agreed to reduce each fund's management fee to 0.30% of average daily net assets for the period from March 1, 2004 through February 28, 2009. During this time period, the Board of Trustees will continue to review the appropriateness of all advisory fees in accordance with their oversight responsibilities. After February 28, 2009 the management fee will be determined in accordance with then existing review policies approved by the Board of Trustees overseeing the funds. Management fees incurred for the year ended March 31, 2004 were 0.35% of average daily net assets on an annualized basis for each fund. Each fund pays compensation to the Independent Trustees ("Trustees") in the form of both a retainer and attendance fees, and pays no compensation directly to its Trustees who are officers of the investment adviser, or to officers of the fund, 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, MFS Fund Distributors, Inc. (MFD), and MFS Service Center, Inc. (MFSC). The fund has an unfunded, defined benefit plan for retired Independent Trustees. Included in Trustees' compensation is a pension expense for retired Independent Trustees for the year ended March 31, 2004:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Pension Expense $2,781 $1,605 $2,535 $1,600 $1,788 $2,327 $2,360 - ---------------------------------------------------------------------------------------------------------------------------------
Administrator - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to certain funds for which MFS acts as investment adviser. Under an administrative services agreement between the funds and MFS, MFS is entitled to partial reimbursement of the costs MFS incurs to provide these services, subject to review and approval by the Board of Trustees. Each fund is allocated a portion of these administrative costs based on its size and relative average net assets, subject to a maximum amount, (i.e., each fund will pay the lesser of its allocated costs or a maximum amount based on its average daily net assets). For the year ended March 31, 2004, the maximum amount is based on the following annual percentages of the fund's average daily net assets: First $2 billion 0.0175% - -------------------------------------------------------------------------------- Next $2.5 billion 0.0130% - -------------------------------------------------------------------------------- Next $2.5 billion 0.0005% - -------------------------------------------------------------------------------- In excess of $7 billion 0.0000% - -------------------------------------------------------------------------------- For the year ended March 31, 2004, each fund paid MFS, which is listed below, that is equivalent to a percentage of average daily net assets, to partially reimburse MFS for the costs of providing administrative services.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------------------ Expenses Paid $9,851 $14,828 $45,184 $10,720 $7,237 $16,999 $27,534 - ------------------------------------------------------------------------------------------------------------------------------------ Percentage of average daily net assets 0.0099% 0.0098% 0.0099% 0.0099% 0.0099% 0.0098% 0.0099% - ------------------------------------------------------------------------------------------------------------------------------------ The maximum amount that could have been charged to the fund during the period for administrative costs equaled the following: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------- $17,483 $26,450 $79,854 $19,032 $12,819 $30,284 $48,771 - ---------------------------------------------------------------------------------------------------------------------------- Effective April 1, 2004 the maximum amount is based on the following annual percentages of each fund's average daily net assets: First $2 billion 0.01120% - -------------------------------------------------------------------------------- Next $2.5 billion 0.00832% - -------------------------------------------------------------------------------- Next $2.5 billion 0.00032% - -------------------------------------------------------------------------------- In excess of $7 billion 0.00000% - -------------------------------------------------------------------------------- Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received the following amounts as its portion of the sales charge on sales of Class A shares for the year ended March 31, 2004: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------- $38,678 $74,485 $78,359 $37,475 $19,724 $38,347 $71,117 The Trustees have adopted a distribution plan for Class A, Class B, and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows: Each fund's distribution plan provides that each fund will pay MFD up to 0.35% per annum of its average daily net assets attributable to Class A shares in order that MFS may pay expenses on behalf of the fund related to the distribution and servicing of its shares. These expenses include a service fee paid to each securities dealer that enters into a sales agreement with MFD of up to 0.25% per annum of each fund's average daily net assets attributable to Class A shares which are attributable to that securities dealer and a distribution fee to MFD of up to 0.10% per annum of each fund's average daily net assets attributable to Class A shares. For the year ended March 31, 2004, MFD retained the following service fees for accounts not attributable to a securities dealer: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------- $1,758 $1,261 $3,879 $-- $859 $6,137 $57,144 During the year ended March 31, 2004, fees incurred under the distribution plan as a percentage of each fund's average daily net assets attributable to Class A shares on an annualized basis were as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------- 0.25% 0.10% 0.10% 0.00% 0.25% 0.35% 0.35% Payments of the 0.10% per annum Class A distribution fee will be implemented on such a date as the Trustees of the trust may determine for the Alabama, Arkansas, California, Florida, and Georgia funds. Payment of the 0.25% per annum Class A service fee by the Florida Fund will commence on such date as the Trustees of the trust may determine. In the case of the Arkansas and California Funds, a portion of the service fee is currently being paid by each fund; payment of the remaining portion for the Class A service fee will become payable on such date as the Trustees of the trust may determine. Each fund's distribution plan provides that the fund will pay MFD a distribution fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the fund's average daily net assets attributable to Class B and Class C shares. MFD will pay to securities dealers that enter into a sales agreement with MFD all or a portion of the service fee attributable to Class B and Class C shares, and will pay to such securities dealers all of the distribution fee attributable to Class C shares. The service fee is intended to be consideration for services rendered by the dealer with respect to Class B and Class C shares. MFD retains the service fee for accounts not attributable to securities dealers. Class B and Class C service fees during the year ended March 31, 2004 were as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Class B $84 $7 $395 $-- $20 $122 $302 - --------------------------------------------------------------------------------------------------------------------------------- Class C N/A N/A $464 N/A N/A N/A N/A - --------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2004, fees incurred under the distribution plan as a percentage of average daily net assets attributable to Class B and Class C shares on an annualized basis were as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Class B 1.00% 0.91% 0.90% 0.80% 1.00% 1.00% 1.00% - --------------------------------------------------------------------------------------------------------------------------------- Class C N/A N/A 1.00% N/A N/A N/A N/A - --------------------------------------------------------------------------------------------------------------------------------- Except in the case of the 0.25% per annum first year Class B shares service fee, payments by the Florida Fund will be suspended until such date as the Trustees of the trust may determine. In the case of the Arkansas and California funds, the 0.25% per annum Class B service fee for the sale of Class B shares in the first year is currently 0.10%. Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within, for Class A shares, 12 months following the purchase, and, for Class C shares, the first year from the end of the calendar month of purchase. A contingent deferred sales charge is imposed on shareholder redemptions of Class B shares in the event of a shareholder redemption within six years from the end of the calendar month of purchase. MFD receives all contingent deferred sales charges. Contingent deferred sales charges (CDSC) imposed during the year ended March 31, 2004 were as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------- Class A $-- $-- $23,994 $847 $-- $-- $8,620 - ------------------------------------------------------------------------------------------------------------------------- Class B 49,063 13,626 269,727 64,261 46,749 77,542 131,590 - ------------------------------------------------------------------------------------------------------------------------- Class C -- -- 26,036 -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------- Shareholder Servicing Agent - Included in shareholder servicing costs is a fee paid to MFSC, a wholly owned subsidiary of MFS, for its services as shareholder servicing agent. The fee is calculated as a percentage of each fund's average daily net assets at an annual rate of 0.11%, for the year ended March 31, 2004. Effective April 1, 2004, the fee is set at 0.10% of each fund's average net assets. For the year ended March 31, 2004, each fund paid MFSC a fee of the following for shareholder services which amounted to 0.11% of the fund's average net assets. ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------- $109,301 $165,357 $499,229 $118,982 $80,137 $189,327 $304,902 Also included in shareholder servicing costs are out-of-pocket expenses, paid to MFSC, which amounted to the following for the year ended March 31, 2004, as well as other expenses paid to unaffiliated vendors: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------- $6,577 $17,080 $54,534 $11,034 $8,801 $18,320 $101,170 (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 $9,306,679 $33,305,857 $36,424,161 $32,167,514 $8,840,093 $35,055,583 $36,694,587 - ---------------------------------------------------------------------------------------------------------------------------- Sales 12,033,318 27,260,285 77,683,581 35,383,504 14,262,557 37,615,221 $48,328,200 - ---------------------------------------------------------------------------------------------------------------------------- The cost and unrealized appreciation or depreciation in value of the investments owned by each fund, as computed on a federal income tax basis, are as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Aggregate cost $88,364,113 $133,626,813 $401,044,179 $93,199,469 $64,013,140 $154,627,009 $245,144,077 - ----------------------------------------------------------------------------------------------------------------------------------- Gross unrealized appreciation $9,036,436 $13,697,810 $35,273,192 $7,495,348 $6,650,701 $15,207,937 $23,838,588 - ----------------------------------------------------------------------------------------------------------------------------------- Gross unrealized depreciation (398,967) (75,643) (3,130,185) (124,925) (58,823) (300,940) (729,704) - ----------------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation $8,637,469 $13,622,167 $32,143,007 $7,370,423 $6,591,878 $14,906,997 $23,108,884 - ----------------------------------------------------------------------------------------------------------------------------------- (5) SHARES OF BENEFICIAL INTEREST The Trust's Declaration permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA - -------------------------------------------------------------------------------------------------------------------------------- YEAR ENDED 3/31/04 (000 OMITTED) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Shares sold 726 $7,893 1,380 $14,370 6,490 $38,645 1,178 $12,024 - -------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 207 2,241 348 3,618 1,394 8,298 1791,822 - -------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,322) (14,349) (1,283) (13,287) (11,257) (66,990) (2,067) (21,072) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (389) $(4,215) 445 $4,701 (3,373) $(20,047) (710) $(7,226) - -------------------------------------------------------------------------------------------------------------------------------- YEAR ENDED 3/31/03 (000 OMITTED) Shares sold 1,153 $12,281 1,835 $18,905 10,049 $59,243 2,604 $26,400 - -------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 223 2,376 341 3,504 1,455 8,573 1761,772 - -------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,634) (17,350) (1,205) (12,416) (9,209) (54,405) (1,487) (15,017) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (258) $(2,693) 971 $9,993 2,295 $13,411 1,293 $13,155 - -------------------------------------------------------------------------------------------------------------------------------- ALABAMA ARKANSAS CALIFORNIA FLORIDA - -------------------------------------------------------------------------------------------------------------------------------- YEAR ENDED 3/31/04 (000 OMITTED) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CLASS B SHARES Shares sold 350 $3,812 200 $2,100 1,820 $10,917 295 $3,014 - -------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 32 346 25 254 368 2,189 38 383 - -------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (282) (3,048) (178) (1,856) (4,539) (26,957) (624) (6,349) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 100 $1,110 47 $498 (2,351) $(13,851) (291) $(2,952) - -------------------------------------------------------------------------------------------------------------------------------- YEAR ENDED 3/31/03 (000 OMITTED) Shares sold 528 $5,663 437 $4,523 4,864 $28,766 909 $9,188 - -------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 33 349 22 228 345 2,030 42 429 - -------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (385) (4,121) (174) (1,789) (3,379) (19,889) (745) (7,500) - -------------------------------------------------------------------------------------------------------------------------------- Net increase 176 $1,891 285 $2,962 1,830 $10,907 206 $2,117 - -------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA - -------------------------------------------------------------------- YEAR ENDED 3/31/04 (000 OMITTED) SHARES AMOUNT CLASS C SHARES Shares sold 1,235 $7,407 - -------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 160 955 - -------------------------------------------------------------------- Shares reacquired (2,154) (12,812) - -------------------------------------------------------------------- Net decrease (759) $(4,450) - -------------------------------------------------------------------- YEAR ENDED 3/31/03 (000 OMITTED) Shares sold 2,792 $16,538 - -------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 170 1,004 - -------------------------------------------------------------------- Shares reacquired (2,264) (13,435) - -------------------------------------------------------------------- Net increase 698 $4,107 - -------------------------------------------------------------------- GEORGIA MARYLAND MASSACHUSETTS - ------------------------------------------------------------------------------------------------------------------ YEAR ENDED 3/31/04 (000 OMITTED) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Shares sold 568 $6,339 759 $8,889 1,640 $18,843 - ------------------------------------------------------------------------------------------------------------------ Shares issued to shareholders in reinvestment of distributions 145 1,614 332 3,885 435 4,994 - ------------------------------------------------------------------------------------------------------------------ Shares reacquired (911) (10,174) (1,186) (13,849) (2,878) (33,079) - ------------------------------------------------------------------------------------------------------------------ Net decrease (198) $(2,221) (95) $(1,075) (803) $(9,242) - ------------------------------------------------------------------------------------------------------------------ YEAR ENDING 3/31/03 (000 OMITTED) Shares sold 649 $7,160 1,049 $12,130 3,172 $36,120 - ------------------------------------------------------------------------------------------------------------------ Shares issued to shareholders in reinvestment of distributions 163 1,794 337 3,890 440 4,975 - ------------------------------------------------------------------------------------------------------------------ Shares reacquired (750) (8,271) (1,005) (11,574) (2,576) (29,224) - ------------------------------------------------------------------------------------------------------------------ Net increase 62 $683 381 $4,446 1,036 $11,871 - ------------------------------------------------------------------------------------------------------------------ GEORGIA MARYLAND MASSACHUSETTS - ------------------------------------------------------------------------------------------------------------------ YEAR ENDED 3/31/04 (000 OMITTED) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CLASS B SHARES Shares sold 214 $2,410 276 $3,240 635 $7,331 - ------------------------------------------------------------------------------------------------------------------ Shares issued to shareholders in reinvestment of distributions 31 346 61 712 98 1,126 - ------------------------------------------------------------------------------------------------------------------ Shares reacquired (369) (4,140) (550) (6,433) (863) (9,965) - ------------------------------------------------------------------------------------------------------------------ Net decrease (124) $(1,384) (213) $(2,481) (130) $(1,508) - ------------------------------------------------------------------------------------------------------------------ YEAR ENDED 3/31/03 (000 OMITTED) Shares sold 384 $4,226 533 $6,170 1,340 $15,222 - ------------------------------------------------------------------------------------------------------------------ Shares issued to shareholders in reinvestment of distributions 31 344 64 735 93 1,056 - ------------------------------------------------------------------------------------------------------------------ Shares reacquired (305) (3,351) (499) (5,746) (729) (8,293) - ------------------------------------------------------------------------------------------------------------------ Net increase 110 $1,219 98 $1,159 704 $7,985 - ------------------------------------------------------------------------------------------------------------------
(6) LINE OF CREDIT The trust and other affiliated funds participate in an $800 million unsecured line of credit provided by a syndication of banks under a line of credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the bank's base rate plus 0.50%. In addition, a commitment fee, based on the average daily, unused portion of the line of credit, is allocated among the participating funds at the end of each calendar quarter. The commitment fee allocated to each fund for the year ended March 31, 2004 ranged from $669 to $3,911. None of the funds had significant borrowings during the year. (7) FINANCIAL INSTRUMENTS The trust trades financial instruments with off-balance-sheet risk in the normal course of its investing activities in order to manage exposure to market risks such as interest rates. These financial instruments include swap agreements. The notional or contractual amounts of these instruments represent the investment the fund has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. Swap Agreements Interest Rate Swap Agreements
NOTIONAL PRINCIPAL CASH FLOWS UNREALIZED AMOUNT OF CONTRACT RECEIVED BY CASH FLOWS PAID APPRECIATION FUND EXPIRATION (000 OMITTED) THE FUND BY THE FUND (DEPRECIATION) - --------------------------------------------------------------------------------------------------------------------------------- Alabama Fund Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 10/31/12 1,000 X 78.875% Index $(4,979) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 2 Year BMA Swap BMA Swap 11/15/04 2,500 Index Index (1.945%) (15,577) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 12/18/12 2,000 X 78.75% Index (10,771) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/25/19 800 Index Index (4.015%) (6,342) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 20 Year BMA Swap BMA Swap 4/7/24 1,000 Index Index (4.159%) (18,023) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 6/17/16 750 Index Index (4.09%) (30,832) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/9/14 1,900 Index Index (3.73%) (17,458) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 10/27/14 1,900 Index Index (3.444%) 26,161 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 10/27/34 1,000 Index (4.132%) Index (25,294) - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/10/34 1,000 Index (4.200%) Index (17,462) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/10/14 1,900 Index Index (3.576%) 6,529 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/9/34 1,000 Index (4.322%) Index 1,223 - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/11/19 500 Index Index (4.069%) (9,315) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/14/19 200 Index Index (4.137%) (5,065) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 6/9/19 2,000 Index Index (4.278%) (123,352) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 5/26/19 2,000 Index Index (4.152%) (63,690) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/22/14 500 Index Index (3.443%) 5,310 - --------------------------------------------------------------------------------------------------------------------------------- Total Alabama Fund $(308,937) - --------------------------------------------------------------------------------------------------------------------------------- Arkansas Fund Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 10/31/12 1,400 X 78.875% Index $(6,974) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 2 Year BMA Swap BMA Swap 11/15/04 3,200 Index Index (1.945%) (19,932) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 12/18/12 2,900 X 78.75% Index (15,621) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/25/19 1,000 Index Index (4.015%) (7,927) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 20 Year BMA Swap BMA Swap 4/7/24 1,500 Index Index (4.159%) (27,035) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 6/17/16 2,000 Index Index (4.09%) (82,218) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/9/14 2,850 Index Index (3.73%) (26,186) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 10/27/14 2,850 Index Index (3.444%) 39,242 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 10/27/34 1,500 Index (4.132%) Index (37,941) - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/10/34 1,500 Index (4.200%) Index (26,193) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/10/14 2,850 Index Index (3.576%) 9,793 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/9/34 1,500 Index (4.322%) Index 1,834 - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/11/19 1,000 Index Index (4.069%) (18,629) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/4/19 1,500 Index Index (4.039%) (18,843) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 5/26/19 2,000 Index Index (4.152%) (63,690) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/22/14 500 Index Index (3.443%) 5,310 - --------------------------------------------------------------------------------------------------------------------------------- Total Arkansas Fund $(295,010) - --------------------------------------------------------------------------------------------------------------------------------- California Fund Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 10/31/12 4,600 X 78.875% Index $(22,906) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 2 Year BMA Swap BMA Swap 11/15/04 10,500 Index Index (1.945%) (65,423) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 12/18/12 9,300 X 78.75% Index (50,086) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/25/19 4,500 Index Index (4.015%) (35,673) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 20 Year BMA Swap BMA Swap 4/7/24 4,500 Index Index (4.159%) (81,105) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 6/17/16 3,000 Index Index (4.09%) (123,328) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/9/14 9,000 Index Index (3.73%) (82,693) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 10/27/14 9,000 Index Index (3.444%) 123,922 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 10/27/34 4,500 Index (4.132%) Index (113,824) - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/10/34 4,500 Index (4.200%) Index (78,579) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/10/14 8,550 Index Index (3.576%) 29,379 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/9/34 4,500 Index (4.322%) Index 5,504 - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/28/19 4,400 Index Index (4.00%) (54,738) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/21/19 4,400 Index Index (4.0495%) (66,301) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/14/19 1,000 Index Index (4.137%) (25,326) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/22/14 3,000 Index Index (3.443%) 31,861 - --------------------------------------------------------------------------------------------------------------------------------- Total California Fund $(609,316) - --------------------------------------------------------------------------------------------------------------------------------- Florida Fund Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 10/31/12 1,000 X 78.875% Index $(4,979) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 2 Year BMA Swap BMA Swap 11/15/04 1,500 Index Index (1.945%) (9,347) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 12/18/12 2,000 X 78.75% Index (10,771) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/25/19 1,000 Index Index (4.015%) (7,927) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 20 Year BMA Swap BMA Swap 4/7/24 1,000 Index Index (4.159%) (18,023) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 6/17/16 2,000 Index Index (4.09%) (82,218) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/9/14 1,900 Index Index (3.73%) (17,457) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 10/27/14 1,900 Index Index (3.444%) 26,161 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 10/27/34 1,000 Index (4.132%) Index (25,294) - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/10/34 1,000 Index (4.200%) Index (17,462) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/10/14 1,900 Index Index (3.576%) 6,529 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/9/34 1,000 Index (4.322%) Index 1,223 - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/11/19 500 Index Index (4.069%) (9,315) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 6/23/19 1,000 Index Index (4.23%) (41,064) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/21/19 1,250 Index Index (4.0495%) (18,836) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/4/19 1,000 Index Index (4.039%) (12,562) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/14/19 1,000 Index Index (4.137%) (25,327) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 5/26/19 3,000 Index Index (4.152%) (95,535) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/22/14 2,500 Index Index (3.443%) 26,551 - --------------------------------------------------------------------------------------------------------------------------------- Total Florida Fund $(335,653) - --------------------------------------------------------------------------------------------------------------------------------- Georgia Fund Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 10/31/12 750 X 78.875% Index $(3,735) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 2 Year BMA Swap BMA Swap 11/15/04 1,750 Index Index (1.945%) (10,903) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 12/18/12 1,500 X 78.75% Index (8,078) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/25/19 700 Index Index (4.015%) (5,549) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 20 Year BMA Swap BMA Swap 4/7/24 700 Index Index (4.159%) (12,616) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 6/17/16 750 Index Index (4.09%) (30,832) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/9/14 1,425 Index Index (3.73%) (13,093) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 10/27/14 1,425 Index Index (3.444%) 19,621 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 10/27/34 750 Index (4.132%) Index (18,971) - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/10/34 800 Index (4.200%) Index (13,970) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 11/10/14 1,520 Index Index (3.576%) 5,223 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/9/34 750 Index (4.322%) Index 917 - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/11/19 500 Index Index (4.069%) (9,315) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 6/23/19 750 Index Index (4.23%) (30,798) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 5/18/19 2,000 Index Index (4.184%) (79,192) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/14/19 600 Index Index (4.137%) (15,196) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 6/9/19 1,000 Index Index (4.278%) (47,772) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/22/14 500 Index Index (3.443%) 5,310 - --------------------------------------------------------------------------------------------------------------------------------- Total Georgia Fund $(268,949) - --------------------------------------------------------------------------------------------------------------------------------- Maryland Fund Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 10/31/12 1,650 X 78.875% Index $(8,216) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 2 Year BMA Swap BMA Swap 11/15/04 2,400 Index Index (1.945%) (14,954) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 12/18/12 3,400 X 78.75% Index (18,311) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/25/19 1,300 Index Index (4.015%) (10,305) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 20 Year BMA Swap BMA Swap 4/7/24 1,700 Index Index (4.159%) (30,640) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 6/17/16 1,500 Index Index (4.09%) (61,664) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/9/14 3,325 Index Index (3.73%) (30,550) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 10/27/14 3,325 Index Index (3.444%) 45,783 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 10/27/34 1,750 Index (4.132%) Index (44,265) - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/10/34 1,800 Index (4.200%) Index (31,432) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/10/14 3,420 Index Index (3.576%) 11,752 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/9/34 1,750 Index (4.322%) Index 2,140 - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/11/19 2,000 Index Index (4.069%) (37,259) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/28/19 1,400 Index Index (4.00%) (17,417) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/21/19 1,400 Index Index (4.0495%) (21,096) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/14/19 500 Index Index (4.137%) (12,663) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/22/14 1,300 Index Index (3.443%) 13,806 - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 6/9/19 2,000 Index Index (4.278%) (95,545) - --------------------------------------------------------------------------------------------------------------------------------- Total Maryland Fund $(360,836) - --------------------------------------------------------------------------------------------------------------------------------- Massachusetts Fund Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 10/31/12 2,700 X 78.875% Index $(13,445) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 2 Year BMA Swap BMA Swap 11/15/04 6,000 Index Index (1.945%) (37,384) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 3M Floating -- 7 Day LIBOR BMA Swap 12/18/12 5,500 X 78.75% Index (29,620) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/25/19 2,300 Index Index (4.015%) (18,232) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 20 Year BMA Swap BMA Swap 4/7/24 2,700 Index Index (4.159%) (48,663) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 6/17/16 1,500 Index Index (4.09%) (61,664) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/9/14 5,225 Index Index (3.73%) (48,008) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 10/27/14 5,225 Index Index (3.444%) 71,944 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 10/27/34 2,750 Index (4.132%) Index (69,559) - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/10/34 2,750 Index (4.200%) Index (48,021) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 11/10/14 5,225 Index Index (3.576%) 17,954 - --------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 11/09/34 2,750 Index (4.322%) Index 3,363 - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/11/19 2,000 Index Index (4.069%) (37,259) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/28/19 2,700 Index Index (4.00%) (33,589) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 6/23/19 2,000 Index Index (4.23%) (82,127) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/21/19 2,700 Index Index (4.0495%) (40,685) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 8/4/19 2,000 Index Index (4.039%) (25,124) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 15 Year BMA Swap BMA Swap 7/14/19 500 Index Index (4.137%) (12,663) - --------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/22/14 1,000 Index Index (3.443%) 10,620 - --------------------------------------------------------------------------------------------------------------------------------- Total Massachusetts Fund $(502,162) - ---------------------------------------------------------------------------------------------------------------------------------
Rate Lock Swap Agreements Description - Agreement with Goldman Sachs terminating April 14, 2004 to pay the difference between the notional value and the market value of a bond with a 5.10% coupon maturing on 4/14/25 priced at a yield to maturity equal to the Municipal Market Data (MMD) general obligation yield curve rate for the designated maturity year as of the close of business on the termination date, if negative (received if positive): NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CONTRACT DEPRECIATION FUND (000 OMITTED) ($) - ------------------------------------------------------------------------- Alabama Fund 500 (44,240) - ------------------------------------------------------------------------- California Fund 1,500 (132,720) - ------------------------------------------------------------------------- Florida Fund 750 (66,360) - ------------------------------------------------------------------------- Georgia Fund 500 (44,240) - ------------------------------------------------------------------------- Maryland Fund 500 (44,240) - ------------------------------------------------------------------------- Massachusetts Fund 1,500 (132,720) - ------------------------------------------------------------------------- Description - Agreement with Merrill Lynch terminating April 13, 2004 to pay the difference between the notional value and the market value of a bond with a 5.106% coupon maturing on 4/13/25 priced at a yield to maturity equal to the MMD general obligation curve rate for the designed maturity year as of the close of business on the termination date, if negative (received if positive): NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CONTRACT DEPRECIATION FUND (000 OMITTED) ($) - ------------------------------------------------------------------------- Alabama Fund 500 (45,879) - ------------------------------------------------------------------------- Arkansas Fund 2,000 (183,514) - ------------------------------------------------------------------------- California Fund 1,500 (137,635) - ------------------------------------------------------------------------- Florida Fund 1,000 (91,758) - ------------------------------------------------------------------------- Georgia Fund 500 (45,878) - ------------------------------------------------------------------------- Massachusetts Fund 1,500 (137,635) - ------------------------------------------------------------------------- TOTAL UNREALIZED DEPRECIATION ON RATE LOCK SWAP AGREEMENTS UNREALIZED DEPRECIATION FUND ($) - ------------------------------------------------------------------------- Alabama Fund (90,119) - ------------------------------------------------------------------------- Arkansas Fund (183,514) - ------------------------------------------------------------------------- California Fund (270,355) - ------------------------------------------------------------------------- Florida Fund (158,118) - ------------------------------------------------------------------------- Georgia Fund (90,118) - ------------------------------------------------------------------------- Maryland Fund (44,240) - ------------------------------------------------------------------------- Massachusetts Fund (270,355) - ------------------------------------------------------------------------- At March 31, 2004, the funds had sufficient cash and/or securities to cover any commitments under these contracts. (8) RESTRICTED SECURITIES Each fund may invest not more than 15% of its total assets in securities, which are subject to legal or contractual restrictions on resale. At March 31, 2004, the funds owned the following restricted securities, excluding securities issued under Rule 144A, which may not be publicly sold without registration under the Securities Act of 1933. Each fund does not have the right to demand that such securities be registered. The value of these securities is determined by valuations furnished by dealers or by an independent pricing service, or if not available, at fair value under the direction of the Trustees.
DATE OF SHARE/PAR FUND DESCRIPTION ACQUISITION AMOUNT COST VALUE - ------------------------------------------------------------------------------------------------------------------------------------ Alabama Fund Guam Power Authority Rev., RITES, AMBAC, 9.0426%, 2013 5/20/99 500,000 $536,360 $619,790 Guam Power Authority Rev., RITES, AMBAC, 8.5426%, 2018 5/20/99 4,500,000 4,376,790 5,051,070 Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017 1/6/00 500,000 469,080 636,780 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013 3/31/99 500,000 509,110 660,660 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041, 2016 9/30/99 500,000 569,030 660,420 - ------------------------------------------------------------------------------------------------------------------------------------ $7,628,720 - ------------------------------------------------------------------------------------------------------------------------------------ Arkansas Fund Commonwealth of Puerto Rico, RITES, MBIA, 10.0771%, 2020 3/30/00 3,000,000 $3,067,320 $3,991,500 Commonwealth of Puerto Rico, Infrastructure, RITES, 9.5771%, 2019 10/5/00 1,250,000 1,282,225 1,575,025 Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017 1/6/00 735,000 689,548 936,067 Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2018 1/6/00 3,250,000 3,006,835 4,132,180 - ------------------------------------------------------------------------------------------------------------------------------------ $10,634,772 - ------------------------------------------------------------------------------------------------------------------------------------ California Fund Los Angeles, CA, RITES, 9.0197%, 2014 7/20/99 5,405,000 $5,672,548 $7,029,094 Los Angeles, CA, Union School District, RITES, FSA, 9.0197, 2020 3/04/03 5,000,000 5,808,100 5,904,100 Commonwealth of Puerto Rico, ROLS, Series II R 124B, XLCA, 9.8060%, 2017 10/22/01 1,500,000 1,816,140 1,998,930 Commonwealth of Puerto Rico, ROLS, Series II R 184C, FGIC, 8.4853%, 2020 8/05/02 3,300,000 4,269,738 4,445,034 Southern California Metropolitan Water District Rev., RITES, 10.0197%, 2018 5/07/01 5,000,000 5,819,300 6,919,000 State of California, RITES, "B", 9.9967%, 2017 1/3/00 1,250,000 1,273,450 1,624,475 University of California Rev., RITES, MBIA, 8.7697%, 2016 5/21/99 5,705,000 5,873,273 6,743,709 - ------------------------------------------------------------------------------------------------------------------------------------ $34,664,342 - ------------------------------------------------------------------------------------------------------------------------------------ Florida Fund Commonwealth of Puerto Rico, RITES, 10.0771%, 2019 3/30/00 1,000,000 $1,030,240 $1,330,500 Commonwealth of Puerto Rico, Highway & Transportation, ROLS, Railroad II R 227 1, MBIA, 9.896%, 2020 4/25/03 2,500,000 3,282,600 3,363,150 State of Florida, RITES, MBIA, 8.4853%, 2017 4/9/99 3,000,000 3,042,840 3,404,160 - ------------------------------------------------------------------------------------------------------------------------------------ $8,097,810 - ------------------------------------------------------------------------------------------------------------------------------------ Georgia Fund Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 9.4853%, 2016 4/20/99 4,000,000 $4,668,400 $5,365,360 Puerto Rico, Municipal Finance Agency, RITES, FSA, 10.6246, 2016 1/06/00 500,000 519,760 679,780 - ------------------------------------------------------------------------------------------------------------------------------------ $6,045,140 - ------------------------------------------------------------------------------------------------------------------------------------ Maryland Fund Guam Power Authority Rev., RITES, AMBAC, 9.0426%, 2015 5/20/99 1,680,000 $1,760,908 $2,050,037 Puerto Rico Electric Power Authority, Power Rev., RITES, FSA, 9.0063%, 2015 9/16/99 1,400,000 1,367,100 1,706,796 Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2019 1/6/00 1,000,000 905,080 1,260,860 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013 9/30/99 500,000 509,110 660,660 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2016 3/31/99 1,520,000 1,729,851 2,007,677 - ------------------------------------------------------------------------------------------------------------------------------------ $7,686,030 - ------------------------------------------------------------------------------------------------------------------------------------ Massachusetts Fund Dudley-Charlton, MA, Regional School District, RITES, FGIC, 9.0312%, 2015 5/5/99 1,365,000 $1,501,582 $1,768,030 Dudley-Charlton, MA, Regional School District, RITES, FGIC, 9.0312%, 2016 5/5/99 1,430,000 1,558,414 1,846,073 Dudley-Charlton, MA, Regional School District, RITES, FGIC, 9.0312%, 2018 10/26/84 1,565,000 1,687,884 1,999,788 Massachusetts Bay Transportation Authority, RITES, 10.7967%, 2016 4/19/00 4,835,000 5,484,534 6,863,959 Massachusetts Water Resources Authority, RITES, FGIC, 11.3149%, 2019 3/16/00 4,010,000 4,742,707 5,935,281 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041, 2016 3/31/99 2,500,000 2,845,150 3,302,100 - ------------------------------------------------------------------------------------------------------------------------------------ $21,715,231 - ------------------------------------------------------------------------------------------------------------------------------------ At March 31, 2004, restricted securities constituted the following percentages of each fund's net assets: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------- 7.78% 7.00% 7.96% 7.98% 8.35% 4.52% 8.01% (9) CONCENTRATION OF CREDIT RISK Since each fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. The risk associated with such factors is mitigated by the fact that a percentage of securities in a portfolio of investments being backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. At year end March 31, 2004, the percentage of holdings that carried such enhancements were as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- 70.91% 77.93% 57.33% 72.86% 47.73% 40.69% 45.82% - -------------------------------------------------------------------------------------------------------------------------------- For each fund, the greatest exposure to any one institution or agency did not exceed total investments as of year end March 31, 2004, were as follows: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- 38.46% 19.77% 20.00% 17.52% 17.29% 14.97% 14.08% - --------------------------------------------------------------------------------------------------------------------------------
(10) LEGAL PROCEEDINGS On March 31, 2004, MFS settled an administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales. Under the terms of the settlement, in which MFS neither admitted nor denied any wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50 million in penalty to certain MFS funds, pursuant to a plan to be approved by an independent distribution consultant. The agreement with the SEC is reflected in an order of the SEC. The settlement order states that MFS failed to adequately disclose to the Boards of Trustees and to shareholders of the MFS funds the specifics of its preferred arrangements with certain brokerage firms selling MFS fund shares. The settlement order states that MFS had in place policies designed to obtain best execution of all fund trades. As part of the settlement, MFS has retained an independent compliance consultant to review the completeness of its disclosure to fund trustees and to fund shareholders of strategic alliances between MFS or its affiliates and broker- dealers and other financial advisers who support the sale of fund shares. The brokerage allocation practices which were the subject of this proceeding were discontinued by MFS in November 2003. In addition, in February, 2004, MFS reached agreement with the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG") and the Bureau of Securities Regulation of the State of New Hampshire ("NH") to settle administrative proceedings alleging false and misleading information in certain MFS fund prospectuses regarding market timing and related matters (the "February Settlements"). These regulators alleged that prospectus language for certain MFS funds was false and misleading because, although the prospectuses for those funds in the regulators' view indicated that the funds prohibited market timing, MFS did not limit trading activity in 11 domestic large cap stock, high grade bond and money market funds. MFS' former Chief Executive Officer, John W. Ballen, and former President, Kevin R. Parke, also reached agreement with the SEC in which they agreed to, among other terms, monetary fines and temporary suspensions from association with any investment adviser or registered investment company. Messrs. Ballen and Parke have resigned their positions with, and will not be returning to, MFS and the MFS funds. Under the terms of the February Settlements, MFS and the executives neither admit nor deny wrongdoing. Under the terms of the February Settlements, a $225 million pool has been established for distribution to shareholders in certain of the MFS funds offered to retail investors ("Retail Funds"), which has been funded by MFS and of which $50 million is characterized as a penalty. This pool will be distributed in accordance with a methodology developed by an independent distribution consultant in consultation with MFS and the Boards of Trustees of the Retail Funds, and acceptable to the SEC. MFS has further agreed with the NYAG to reduce its management fees in the aggregate amount of approximately $25 million annually over the next five years, and not to increase certain management fees during this period. MFS has also paid an administrative fine to NH in the amount of $1 million, which will be used for investor education purposes (NH will retain $250,000 and $750,000 will be contributed to the North American Securities Administrators Association's Investor Protection Trust). In addition, under the terms of the February Settlements, MFS is in the process of adopting certain governance changes and reviewing its policies and procedures. Since December 2003, MFS, Sun Life Financial Inc., various MFS funds, the Trustees of these MFS funds, and certain officers of MFS have been named as defendants in multiple lawsuits filed in federal and state courts. The lawsuits variously have been commenced as class actions or individual actions on behalf of investors who purchased, held or redeemed shares of the funds during specified periods, as class actions on behalf of participants in certain retirement plan accounts, or as derivative actions on behalf of the MFS funds. The lawsuits generally allege that some or all of the defendants (i) permitted or acquiesced in market timing and/or late trading in some of the MFS funds, inadequately disclosed MFS' internal policies concerning market timing and such matters, and received excessive compensation as fiduciaries to the MFS funds, or (ii) permitted or acquiesced in the improper use of fund assets by MFS to support the distribution of fund shares and inadequately disclosed MFS' use of fund assets in this manner. The actions assert that some or all of the defendants violated the federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, as well as fiduciary duties and other violations of common law. The lawsuits seek unspecified compensatory damages. Insofar as any of the actions is appropriately brought derivatively on behalf of any of the MFS funds, any recovery will inure to the benefit of the funds. The defendants are reviewing the allegations of the multiple complaints and will respond appropriately. Additional lawsuits based on similar allegations may be filed in the future. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against MFS, the MFS funds, or any other named defendant. As noted above, as part of the regulatory settlements, MFS has established a restitution pool in the amount of $225 million to compensate certain shareholders of the Retail Funds for damages that they allegedly sustained as a result of market timing or late trading in certain of the funds, and will pay $50 million to compensate certain MFS funds based upon the amount of brokerage commissions allocated in recognition of fund sales. It is not clear whether these amounts will be sufficient to compensate shareholders for all of the damage they allegedly sustained, whether certain shareholders or putative class members may have additional claims to compensation, or whether the damages that may be awarded in any of the actions will exceed these amounts. In the event the MFS funds incur any losses, costs or expenses in connection with such lawsuits, the Boards of Trustees of the affected funds may pursue claims on behalf of such funds against any party that may have liability to the funds in respect thereof. Review of these matters by the independent Trustees of the MFS funds and their counsel is continuing. There can be no assurance that these regulatory actions and lawsuits, or the adverse publicity associated with these developments, will not result in increased fund redemptions, reduced sales of fund shares, or other adverse consequences to the funds. - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- To the Trustees of MFS Municipal Series Trust and Shareholders of the Portfolios of MFS Municipal Series Trust: We have audited the accompanying statement of assets and liabilities, including the portfolios of investments, of MFS Alabama Municipal Bond Fund, MFS Arkansas Municipal Bond Fund, MFS California Municipal Bond Fund, MFS Florida Municipal Bond Fund, MFS Georgia Municipal Bond Fund, MFS Maryland Municipal Bond Fund, and MFS Massachusetts Municipal Bond Fund (portfolios of MFS Municipal Series Trust) as of March 31, 2004, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at March 31, 2004 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of each of the aforementioned portfolios of MFS Municipal Series Trust as of March 31, 2004, the results of their operations, the changes in their net assets, and their financial highlights for the respective stated periods in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts May 14, 2004 - ---------------------------------------------------------------------------------------------------------------------------- TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND - ---------------------------------------------------------------------------------------------------------------------------- The Trustees and officers of the Trust are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The business address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS & OTHER POSITION(s) HELD TRUSTEE/OFFICER DIRECTORSHIPS(2) DURING NAME, DATE OF BIRTH WITH FUND SINCE(1) THE PAST FIVE YEARS - ------------------- ---------------- --------------- ----------------------------- INTERESTED TRUSTEES John W. Ballen(3) Trustee and President August 2001 until Massachusetts Financial Services Company, (born 09/12/59) February 2004 Chief Executive Officer and Director (until February 2004) Robert J. Manning(3) Trustee and President February 2004 Massachusetts Financial Services Company, Chief Executive Officer, President, Chief (born 10/20/63) Investment Officer and Director Kevin R. Parke(3) Trustee January 2002 until Massachusetts Financial Services Company, (born 12/14/59) February 2004 President, Chief Investment Officer and Director (until February 2004) Robert C. Pozen(3) Trustee February 2004 Massachusetts Financial Services Company, (born 08/08/46) Chairman (since February 2004); Harvard Law School (education), John Olin Visiting Professor (since July 2002); Secretary of Economic Affairs, The Commonwealth of Massachusetts (January 2002 to December 2002); Fidelity Investments, Vice Chairman (June 2000 to December 2001); Fidelity Management & Research Company (investment adviser), President (March 1997 to July 2001); The Bank of New York (financial services), Director; Bell Canada Enterprises (telecommunications), Director; Telesat (satellite communications), Director Jeffrey L. Shames(3) Trustee October 1993 until Massachusetts Financial Services Company, (born 06/02/55) February 2004 Chairman (until February 2004) INDEPENDENT TRUSTEES J. Atwood Ives Chairman February 1992 Private investor; KeySpan Corporation (energy (born 05/01/36) related services), Director; Eastern Enterprises (diversified services company), Chairman, Trustee and Chief Executive Officer (until November 2000) Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Chief of (born 03/11/37) Cardiac Surgery; Harvard Medical School, Professor of Surgery David H. Gunning Trustee January 2004 Cleveland-Cliffs, Inc. (mining products and (born 05/30/42) service provider), Vice Chairman/ Director (since April 2001); Encinitos Ventures (private investment company), Principal (1997 to April 2001); Lincoln Electric Holdings, Inc. (welding equipment manufacturer), Director; Southwest Gas Corporation (natural gas distribution company), Director William R. Gutow Trustee December 1993 Private investor and real estate consultant; (born 09/27/41) Capitol Entertainment Management Company (video franchise), Vice Chairman Amy B. Lane Trustee January 2004 Retired; Merrill Lynch & Co., Inc., Managing (born 02/08/53) Director, Investment Banking Group (1997 to February 2001); Borders Group, Inc. (book and music retailer), Director; Federal Realty Investment Trust (real estate investment trust), Trustee Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys), Partner (born 06/23/35) William J. Poorvu Trustee August 1982 Private investor; Harvard University Graduate (born 04/10/35) School of Business Administration, Class of 1961 Adjunct Professor in Entrepreneurship Emeritus; CBL & Associates Properties, Inc. (real estate investment trust), Director J. Dale Sherratt Trustee August 1993 Insight Resources, Inc. (acquisition planning (born 09/23/38) specialists), President; Wellfleet Investments (investor in health care companies), Managing General Partner (since 1993); Cambridge Nutraceuticals (professional nutritional products), Chief Executive Officer (until May 2001) Elaine R. Smith Trustee February 1992 Independent health care industry consultant (born 04/25/46) Ward Smith Trustee October 1992 Private investor (born 09/13/30) OFFICERS Robert J. Manning(3) President and Trustee February 2004 Massachusetts Financial Services Company, (born 10/20/63) Chief Executive Officer, President, Chief Investment Officer and Director. John W. Ballen(3) President and Trustee August 2001 until Massachusetts Financial Services Company, (born 09/12/59) February 2004 Chief Executive Officer and Director (until February 2004) James R. Bordewick, Jr.(3) Assistant Secretary September 1990 Massachusetts Financial Services Company, and Assistant Clerk Senior Vice President and Associate General (born 03/06/59) Counsel Stephen E. Cavan(3) Secretary and Clerk December 1989 until Massachusetts Financial Services Company, (born 11/06/53) March 2004 Senior Vice President, General Counsel and Secretary (until March 2004) Stephanie A. DeSisto(3) Assistant Treasurer May 2003 Massachusetts Financial Services Company, (born 10/01/53) Vice President (since April 2003); Brown Brothers Harriman & Co., Senior Vice President (November 2002 to April 2003); ING Groep N.V./Aeltus Investment Management, Senior Vice President (prior to November 2002) Robert R. Flaherty(3) Assistant Treasurer August 2000 Massachusetts Financial Services Company, (born 09/18/63) Vice President (since August 2000); UAM Fund Services, Senior Vice President (prior to August 2000) Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial Services Company, (born 08/29/58) Senior Vice President (since July 2002); The Bank of New York, Senior Vice President (September 2000 to July 2002); Lexington Global Asset Managers, Inc., Executive Vice President and Chief Financial Officer (prior to September 2000); Lexington Funds, Chief Financial Officer (prior to September 2000) Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial Services Company, (born 11/13/57) Vice President James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial Services Company, (born 06/12/60) Senior Vice President - ------------------ (1) Date first appointed to serve as Trustee/Officer of an MFS fund. Each Trustee has served continuously since appointment unless indicated otherwise. (2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public companies"). (3) "Interested person" of MFS within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act) which is the principal federal law governing investment companies like the series/the fund. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. The Trust does not hold annual shareholder meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. The Trust will hold a shareholders' meeting in 2005 and at least once every five years thereafter to elect Trustees. Each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. Each Trustee serves as a board member of 109 funds within the MFS Family of Funds. The Statement of Additional Information contains further information about the Trustees and is available without charge upon request by calling 1-800-225-2606. - ---------------------------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER CUSTODIAN Massachusetts Financial Services Company State Street Bank and Trust Company 500 Boylston Street, Boston, MA 02116-3741 225 Franklin Street, Boston, MA 02110 DISTRIBUTOR AUDITORS MFS Fund Distributors, Inc. Deloitte & Touche LLP 500 Boylston Street, Boston, MA 02116-3741 200 Berkeley Street, Boston, MA 02116 PORTFOLIO MANAGERS Michael L. Dawson Geoffrey L. Schechter
- ------------------------------------------------------------------------------- MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS - ------------------------------------------------------------------------------- YOUR GOALS ARE IMPORTANT MFS offers a complete range of investments and investment services to address specific financial needs over time. When your investing goals change, you can easily stay with MFS for the products you need, when you need them. Whether you're investing for college or retirement expenses or for tax management or estate planning, MFS will be there. Ask your investment professional how MFS can help you move toward the goals you've set. MFS FAMILY OF FUNDS(R) More than 50 portfolios offer domestic and international equity and fixed-income investment across the full risk spectrum VARIABLE ANNUITIES A selection of annuity products with advantages for building and preserving wealth MFS 401(k) AND IRA SUITES Retirement plans for businesses and individuals MFS COLLEGE SAVINGS PLANS Investment products to help meet education expenses MFS PRIVATE PORTFOLIO SERVICES Investment advisory services that provide custom products for high-net-worth individuals A prospectus for any MFS product can be obtained from your investment professional. You should read the prospectus carefully before investing as it contains complete information on the fund's investment objective(s), the risks associated with an investment in the fund, and the fees, charges, and expenses involved. These elements, as well as other information contained in the prospectus, should be considered carefully before investing. Variable annuities are offered through MFS/Sun Life Financial Distributors, Inc. - ------------------------------------------------------------------------------- FEDERAL TAX INFORMATION (Unaudited) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------ In January 2005, shareholders will be mailed a Tax Form Summary or Form 1099- DIV, if applicable, reporting the federal tax status of all distributions paid during the calendar year 2003. For federal income tax purposes, approximately 99% of the total dividends paid by each fund from net investment income during the year ended March 31, 2004 is designated as an exempt-interest dividend. The fund has the option to use equalization, which is a tax basis dividends paid deduction from earnings and profits distributed to shareholders upon redemption of shares. - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CONTACT INFORMATION - ------------------------------------------------------------------------------- INVESTOR INFORMATION For information on MFS mutual funds, call your investment professional or, for an information kit, call toll free: 1-800-225-2606 any business day from 8 a.m. to 8 p.m. Eastern time. A general description of the Fund's proxy voting policies and procedures is available without charge, upon request, by calling 202-547-7071, extension 201, by visiting www.jmr-financial.com/MFS or by visiting the SEC's website at http://www.sec. gov. INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 2281 Boston, MA 02107-9906 Type of Information Phone number Hours, Eastern Time - -------------------------------------------------------------------------------- General information 1-800-225-2606 8 a.m. to 8 p.m., any business day - -------------------------------------------------------------------------------- Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any business day - -------------------------------------------------------------------------------- Shares prices, account 1-800-MFS-TALK balances exchanges (1-800-637-8255) 24 hours a day, 365 days a or stock and bond outlooks touch-tone required year - -------------------------------------------------------------------------------- WORLD WIDE WEB Go to MFS.COM for a clear view of market events, investor education, account access, and product and performance insights. Go paperless with EDELIVERY: Join your fellow shareholders who are already taking advantage of this great new benefit from MFS. With eDelivery, we send you prospectuses, reports, and proxies electronically. You get timely information without mailbox clutter (and help your fund save printing and postage costs). SIGN-UP instructions: If your account is registered with us, 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 through a retirement plan, MFS Talk, MFS Access, and eDelivery may not be available to you. [logo] M F S(R) INVESTMENT MANAGEMENT 500 Boylston Street Boston, MA 02116-3741 (C) 2004 MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc. 500 Boylston Street, Boston, MA 02116 MST-A-ANN-5/04 45M MFS(R) Mutual Funds ANNUAL REPORT 3/31/04 MFS(R) MUNICIPAL SERIES TRUST For the States of: Mississippi, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia A path for pursuing opportunity [graphic omitted] [logo] M F S(R) INVESTMENT MANAGEMENT - ------------------------------------------------------------------------------- MFS(R) PRIVACY POLICY: A COMMITMENT TO YOU - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Privacy is a concern for every investor today. At MFS Investment Management(R) and the MFS funds, we take this concern very seriously. We want you to understand our policies about every MFS investment product and service that we offer and how we protect the nonpublic personal information of investors who have a direct relationship with us and our wholly owned subsidiaries. Throughout our business relationship, you provide us with personal information; we maintain information and records about you, your investments, and the services you use. Examples of the nonpublic personal information we maintain include o data from investment applications and other forms o share balances and transactional history with us, our affiliates, or others o facts from a consumer reporting agency We do not disclose any nonpublic personal information about our customers or former customers to anyone except as permitted by law. We may share information with companies or financial institutions that perform marketing services on our behalf or to other financial institutions with which we have joint marketing arrangements. Access to your nonpublic personal information is limited to appropriate personnel who provide products, services, or information to you. We maintain physical, electronic, and procedural safeguards that comply with applicable federal regulations. If you have any questions about MFS' privacy policy, please call 1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time. Note: If you own MFS products or receive MFS services in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. - ------------------------------------------------------------------------------- MFS(R) MUNICIPAL SERIES TRUST The investment objective of each fund is to seek current income exempt from federal income taxes and personal income tax, if any, of the state to which its name refers. TABLE OF CONTENTS MFS PRIVACY POLICY - --------------------------------------------------- LETTER FROM THE CEO 1 - --------------------------------------------------- MFS ORIGINAL RESEARCH(R) 3 - --------------------------------------------------- MANAGEMENT REVIEW 4 - --------------------------------------------------- PERFORMANCE SUMMARY 7 - --------------------------------------------------- PORTFOLIO OF INVESTMENTS 16 - --------------------------------------------------- FINANCIAL STATEMENTS 54 - --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 83 - --------------------------------------------------- INDEPENDENT AUDITORS' REPORT 103 - --------------------------------------------------- TRUSTEES AND OFFICERS 104 - --------------------------------------------------- MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS 106 - --------------------------------------------------- FEDERAL TAX INFORMATION 107 - --------------------------------------------------- CONTACT INFORMATION 108 - --------------------------------------------------- ASSET ALLOCATION 109 - ------------------------------------------------------------------------------- NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- LETTER FROM THE CEO - ------------------------------------------------------------------------------- Dear Shareholders, [Photo of Robert J. Manning] Dear Shareholders, Our firm was built on the strength of MFS Original Research(R), our in-depth analysis of every security we consider for our portfolios. We've been honing this process since 1932, when we created one of the mutual fund industry's first research departments. And we continue to fine-tune this process so that we can provide strong and consistent long-term investment performance to help you achieve your financial goals. While we have achieved strong investment performance in many of our portfolios, our goal is to achieve the same strong results across all asset classes. To ensure that our portfolio teams are doing the best possible job for our firm's clients and shareholders, I am focusing the vast majority of my time on the three key elements that I believe truly differentiate MFS from its competitors: people, process, and culture. PEOPLE Our people have always been our most valuable resource. Our philosophy is to deliver consistent, repeatable investment results by hiring the most talented investors in our industry. We recruit from the nation's top business schools and hire experienced analysts, both domestically and around the globe. Our analysts are the engine that powers our entire investment team because their recommendations have a direct impact on the investment performance of our portfolios. To demonstrate our ongoing commitment in this area, we increased the number of equity analysts at MFS from less than 40 at the end of 2000 to over 50 in April 2004. During that same period, we doubled the average investment experience of our new domestic equity analysts, from 2.6 years to 5.3 years, by recruiting more seasoned analysts to the firm. Moreover, our international network of investment personnel now spans key regions of the world with offices in London, Mexico City, Singapore, and Tokyo, as well as Boston. One of the major advantages that MFS has over many of its competitors is that the position of research analyst is a long-term career for many members of our team, not simply a steppingstone toward becoming a portfolio manager. We have worked to elevate the stature of the analyst position to be on par with that of a portfolio manager. In fact, an exceptional research analyst has the opportunity to earn more at MFS than some portfolio managers. At the same time, we look within the firm to promote talented analysts who choose a path toward becoming a portfolio manager. We rarely hire portfolio managers from our competitors because we believe the best investors are those steeped in the MFS process and culture. In the past few months, we have identified four senior research analysts who will assume roles on the management teams of several of our larger portfolios. MFS is fortunate to have a deep bench of talented investment personnel, and we welcome the opportunity to put their skills to work for our clients. PROCESS MFS was built on the strength of its bottom-up approach to researching securities. We have enhanced the mentoring process for our research analysts by calling on several of our most seasoned portfolio managers to supplement the work of Director of Global Equity Research David A. Antonelli. These portfolio managers will be taking a special interest in developing the careers of our research analysts and strengthening our investment process. Kenneth J. Enright of our value equity group will work with a team of domestic analysts; David E. Sette-Ducati of our small- and mid-cap equity team will work with analysts concentrating on small- and mid-cap companies; and Barnaby Wiener of our international equity team in London heads the European equity research team. We have combined the bottom-up approach of our research process with a top-down approach to risk controls on portfolio composition. We have a very strong quantitative team under the leadership of industry veteran Deborah H. Miller, who represents the equity management department on the Management Committee of the firm. Quantitative analysis helps us generate investment ideas and, more importantly, assess the appropriate level of risk for each portfolio. The risk assessment is designed to assure that each portfolio operates within its investment objectives. Additionally, we have increased the peripheral vision of our investment personnel across asset classes through the collaboration of our Equity, Fixed Income, Quantitative Analysis, and Risk Management teams. We recently codified this key aspect of our culture by forming an Investment Management Committee, composed of key members of these teams. This Committee will work to ensure that all teams are sharing information, actively debating investment ideas, and creating a unified investment team. CULTURE Teamwork is at the heart of our ability to deliver consistent and competitive investment performance over time. At MFS, each member of our team is involved in our success; we have no superstars. The collaborative nature of our process works to assure a consistent investment approach across all of our products and provides a high level of continuity in portfolio management because our investment performance never depends on the contributions of just a single individual. Our culture is based on an environment of teamwork that allows our investment personnel to be successful. In turn, we demand superior investment results from every member of our team. We have created a meritocracy at our firm based on investment results. We hold all of our portfolio managers accountable for the performance of their portfolios and their contributions to the team. We also track the equity and fixed-income ratings of our analysts so we can evaluate them based on the performance of their recommendations. We align bonus compensation to investment performance by weighting rewards to those who have created the greatest long-term benefit for our shareholders and who contribute most successfully to the Original Research(SM) process. The strength of our culture has resulted in a tremendous amount of stability, both in terms of people and assets under management. Although we have dismissed members of our team whose performance did not meet MFS' high standards, only one member of our investment team has voluntarily left the firm over the past six months, based on a decision to retire from the industry. Similarly, our firm's assets under management have remained remarkably steady. We began the year with $140 billion in assets and ended the first quarter with $142 billion in assets. We are very proud to have experienced growth during this period despite the difficult regulatory environment and the relatively flat performance of the stock market. In short, we can help you achieve your financial goals by hiring talented people, following a disciplined process, and maintaining our firm's unique culture. The recent enhancements described in this letter reflect the collaborative spirit and the depth of resources in our investment teams. As always, we appreciate your confidence in MFS and welcome any questions or comments you may have. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer MFS Investment Management(R) April 19, 2004 Note to Shareholders: On February 6, 2004, Jeffrey L. Shames retired as Chairman of MFS. Robert Pozen was named as non-executive Chairman. Also, on February 6, 2004, Robert J. Manning was appointed Chief Executive Officer, President, and Chief Investment Officer. The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. - ------------------------------------------------------------------------------- MFS ORIGINAL RESEARCH(R) - ------------------------------------------------------------------------------- THE MFS(R) DIFFERENCE For 80 years MFS has been offering investors clear paths to pursuing specific investment objectives. Today, millions of individuals and thousands of institutions all over the world look to MFS to manage their assets with insight and care. Our success, we believe, has to do with the fact that we see investors as people with plans, not just dollars to invest. When you invest with MFS, you invest with a company dedicated to helping you realize your long-term financial goals. INVESTORS CHOOSE MFS FOR OUR o global asset management expertise across all asset classes o time-tested money management process for pursuing consistent results o full spectrum of investment products backed by MFS Original Research(R) o resources and services that match real-life needs TURNING INFORMATION INTO OPPORTUNITY Sound investments begin with sound information. MFS has been doing its own research and analyzing findings in-house for decades. The process we use to uncover opportunity is called MFS Original Research(R). MFS ORIGINAL RESEARCH INVOLVES: o meeting with the management of 3,000 companies each year to assess their business plans and the managers' ability to execute those plans o making onsite visits to more than 2,000 companies annually to gain first-hand knowledge of their operations and products o analyzing financial statements and balance sheets o talking extensively with companies' customers and competitors o developing our own proprietary estimates of companies' earnings - ------------------------------------------------------------------------------- MANAGEMENT REVIEW - ------------------------------------------------------------------------------- MARKET ENVIRONMENT For the one year period ended March 31, 2004, as a whole, long-term U.S. Treasury bond yields were virtually unchanged. High-grade municipal bond yields declined slightly, allowing municipal bonds in general to modestly outperform Treasuries. Those facts, however, belie the tremendous volatility in the bond market over the 12 months ended March 31, 2004. In early 2003 and into the first half of the period, we saw a confluence of factors that were positive for bond prices. Geopolitical uncertainty, the hangover from corporate scandals in 2002, and a weak U.S. economy were among the factors that prompted a "flight to quality" by many investors and pushed interest rates down to four-decade lows by June of 2003. In late June, however, the bond market reversed direction as fixed-income investors became concerned that the economic recovery was accelerating faster than expected. Although stocks had been rising since late March, the catalyst for the bond market appeared to be the Federal Reserve Board's decision on June 25 to lower rates by one-quarter percent rather than one-half percent as many investors had expected. From that date through early September, bond prices fell as rates rose sharply. In the second half of the period, however, bond prices revived as several factors combined to drive rates down again. Economic reports indicated that inflation was well contained while job growth remained weak. Although most other measures indicated the U.S. economy was improving, we believe investors were concerned that consumer spending might falter because laid-off workers were not finding new jobs. Statistics indicated that a significant portion of U.S. production capacity remained idle. The Fed appeared to sum up the situation in its statements that interest rates could remain low for the foreseeable future. By period-end, interest rates for 10- and 30-year Treasuries were within just four basis points of where they had started the period. (A basis point is 0.01% of interest.) Municipal bonds generally followed the path of Treasury bonds over the period, but with somewhat smaller swings in yield. However, long-term municipal bonds ended the period yielding about 20 basis points less than they had at the start of the period. Long-term municipal bonds in general saw some price appreciation over the period and outperformed long-term Treasuries. (The principal value and interest on U.S. Treasury securities, however, are guaranteed by the U.S. government if held to maturity.) We believe the outperformance of municipals was caused by two main factors. First, municipal bonds appreciated from historically low valuations, relative to Treasuries, to more normal valuations. This was in part the result of a growing national debt that put downward pressure on long-term Treasury prices. Second, we believe a decrease in the supply of new municipal issues late in the period put upward pressure on municipal prices. As the economy improved over the period, it also appeared to us that investors became willing to take on more risk, and the municipal bond market rotated to favor lower-rated, higher-yielding issues. For the period as a whole, lower- quality municipal bonds generally outperformed higher- rated bonds. HOW WE MANAGE THE FUNDS All of the MFS state municipal funds are managed with a common investment strategy. There are four key elements to our management strategy: duration, yield curve positioning, credit quality, and sector allocation. DURATION is a measure of a fund's sensitivity to changes in interest rates. In most market environments, we strive to be neutral in duration relative to our Lipper peers, as we believe that trying to predict the direction of interest rates is a relatively risky investment strategy. However, at times when we believe that interest rates have become excessively low -- as we felt they did over the period -- and may be about to reverse direction, we may try to protect a fund's principal by making the fund modestly short on duration relative to its Lipper peers. (Shorter duration makes a fund less sensitive to changes in interest rates.) A YIELD CURVE for bonds shows the relationship between yield and time to maturity. In a majority of market environments, longer-maturity bonds offer higher yields but are more exposed to duration risk -- the risk that a change in interest rates may adversely affect a bond's price. In managing the funds, we try to pick what we believe is the optimal spot on the yield curve -- a time to maturity that optimizes the combination of yield and risk. Our research for some time has indicated that the 15- to 20-year part of the yield curve is that optimal spot. For example, in our experience a 20-year bond typically has paid 98% of the yield of a similar 30-year bond but carried only 75%-80% of the duration risk of that 30-year bond. For that reason, the funds have tended to be overweighted in bonds with maturities in the 15- to 20-year range. CREDIT QUALITY refers to the perceived ability of a bond issuer to make interest payments and repay a bond's principal. Major credit-rating agencies rate bonds on a scale that usually runs from "AAA" down to "BBB" for investment-grade bonds, and "BB" and below for lower-quality, noninvestment- grade or so-called "junk" bonds. In general, lower-rated bonds pay higher rates of interest to compensate investors for taking on additional risk. The funds historically have focused on using our bottom-up research to seek out bonds that offer higher yields than average "AAA"-rated insured bonds, yet also offer what we believe is reasonable safety of principal and interest payments to maturity. SECTOR ALLOCATION refers to a fund's weightings in various types of municipal bond issues, including bonds from industries such as health care, utilities, and airlines. Our research analysts constantly seek out sectors, and individual bonds within those sectors, that we believe will benefit in a given market environment. FACTORS THAT AFFECTED PERFORMANCE For the 12-month period ended March 31, 2004, the following charts indicate the effects of the four factors mentioned above on individual fund performance. These factors may affect fund performance in different ways during other periods, depending on market conditions. The chart below depicts performance relative to each fund's benchmark, the Lehman Brothers Municipal Bond Index (the Lehman Index). o The DURATION column indicates that the fund's duration had a positive effect ("pos"), a negative effect ("neg"), or no meaningful contribution to relative performance ("neutral"). For the period, all of the funds were short on duration, relative to the Lehman Index, in anticipation of rising rates. However, long-term municipal interest rates declined over the period. Being short on duration thus hurt performance of all of the funds. For most of the funds, duration was the most significant performance detractor over the period. o YIELD CURVE indicates the effect of the fund's yield curve positioning on performance. Compared with the Lehman Index, all funds were more heavily weighted in bonds on the long end of the yield curve -- bonds with 10 to 30 years remaining to maturity. That overweighting helped during the period because long-term municipal rates came down more than short-term rates, so longer-term bonds experienced more price appreciation. Yield curve positioning therefore helped relative performance of all funds over the period. o The average CREDIT QUALITY of most of the funds was similar to that of the Lehman Index over the period. The effect of credit quality on relative performance was therefore neutral. The Virginia fund, however, was underweighted in "AAA"-rated bonds, which generally underperformed during the period, and overweighted in "BB"-rated bonds, which outperformed during the period. For the Virginia fund, credit quality thus had a positive effect on relative performance. o In the area of SECTOR ALLOCATION, the North Carolina fund benefited from its relatively greater exposure to credit-enhanced, or insured, bonds, which performed well over the period. (Exposure, defined as portfolio weight times duration, is a measure of a sector's contribution to the portfolio's overall sensitivity to interest rate shifts.) Insured bonds generally pay a lower rate of interest but have a high credit rating because the payment of interest and principal is guaranteed by a highly rated insurance firm as well as by the original issuer. Most of the insured bonds in the portfolio are "AAA" rated. KEY FACTORS IN FUND PERFORMANCE RELATIVE TO BENCHMARK (THE LEHMAN BROTHERS MUNICIPAL BOND INDEX)
YIELD CREDIT SECTOR STATE FUND DURATION CURVE QUALITY ALLOCATION Mississippi neg pos neutral neutral - --------------------------------------------------------------------------------------------------------------------- New York neg pos neutral neutral - --------------------------------------------------------------------------------------------------------------------- North Carolina neg pos neutral pos - --------------------------------------------------------------------------------------------------------------------- Pennsylvania neg pos neutral neg - --------------------------------------------------------------------------------------------------------------------- South Carolina neg pos neutral neg - --------------------------------------------------------------------------------------------------------------------- Tennessee neg pos neutral neg - --------------------------------------------------------------------------------------------------------------------- Virginia neg pos pos neutral - --------------------------------------------------------------------------------------------------------------------- West Virginia neg pos neutral neg - ---------------------------------------------------------------------------------------------------------------------
Funds for which sector allocation was a negative factor were generally underweighted in one or more sectors that outperformed over the period. The Pennsylvania fund, for example, was held back by an underweighting in tobacco bonds. Tobacco bonds are state bonds backed by payments under the Master Settlement Agreement (MSA) between the states and the major tobacco companies, in which the states agreed to drop their lawsuits against the firms in return for a series of payments. For much of 2003, tobacco bonds underperformed as other lawsuits raised concerns about the tobacco firms' ability to continue MSA payments. In late 2003 and early 2004, however, those litigation concerns appeared to subside, tobacco bonds rallied, and the Pennsylvania fund's underweighting in those issues hurt performance. The South Carolina fund was hurt by its relatively lower exposure to both utility and tobacco bonds. (Exposure is defined as portfolio weight times duration). The Tennessee fund was hurt by an underweighting in tobacco bonds and an overweighting in housing issues, which underperformed during the period. The West Virginia fund was held back by an underweighting in tobacco bonds. Respectfully, /s/ Michael L. Dawson /s/ Geoffrey L. Schechter Michael L. Dawson Geoffrey L. Schechter Portfolio Manager Portfolio Manager The views expressed in this report are those of the portfolio managers only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market and other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any MFS Fund. References to specific securities are not recommendations of such securities, and may not be representative of any MFS Fund's current or future investments. - ------------------------------------------------------------------------------- Visit mfs.com for our latest economic and investment outlook. o Under Updates & Announcements, click Week in Review for a summary of recent investment-related news. o From Week in Review, link to MFS Global Perspective for our current view of the world. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) MISSISSIPPI MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- The following information illustrates the historical performance of each fund's original share class in comparison to various market indicators. Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. Each fund's results have been compared to the average relevant state municipal debt fund tracked by Lipper Inc., an independent firm that reports mutual fund performance. For those states where Lipper does not track state-specific fund performance, we have provided the average "other state" municipal debt fund returns. Each fund's results have also been compared to the Lehman Brothers Municipal Bond Index, a broad measure of the municipal bond market. However, while this index is considered the benchmark for the performance of municipal bond funds, it is comprised of municipal bonds issued nationwide, while each of the funds is limited to investing in the bonds of a particular state. Benchmark comparisons are unmanaged and do not reflect any fees or expenses. The performance of other share classes will be greater than or less than the line shown. (See Notes to Performance Summary.) It is not possible to invest directly in an index. VISIT MFS.COM FOR THE MOST RECENT MONTH-END PERFORMANCE RESULTS. MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Mississippi Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index 3/94 $ 9,525 $10,000 3/96 10,911 11,644 3/98 12,746 13,593 3/00 13,383 14,425 3/02 15,233 16,610 3/04 17,472 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------- A 8/6/1992 4.77% 5.87% 5.35% 6.25% - ------------------------------------------------------------------------------- B 9/7/1993 3.80% 5.00% 4.50% 5.39% - ------------------------------------------------------------------------------- - ---------------------- Average annual - ---------------------- Comparative Benchmarks - ------------------------------------------------------------------------------- Average "other state" municipal debt fund+ 4.24% 4.98% 4.48% 5.46% - ------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------- - ---------------------- Average annual with sales charge - ---------------------- - ------------------------------------------------------------------------------- A -0.21% 4.17% 4.33% 5.74% - ------------------------------------------------------------------------------- B -0.19% 4.08% 4.16% 5.39% - ------------------------------------------------------------------------------- - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------- A 4.77% 18.66% 29.79% 83.43% - ------------------------------------------------------------------------------- B 3.80% 15.76% 24.63% 69.04% - ------------------------------------------------------------------------------- + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) NEW YORK MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS New York Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index 3/94 $ 9,525 $10,000 3/96 10,804 11,644 3/98 12,621 13,593 3/00 13,129 14,425 3/02 15,001 16,610 3/04 17,317 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------- A 6/6/1988 4.90% 6.00% 5.47% 6.16% - ------------------------------------------------------------------------------- B 9/7/1993 4.12% 5.12% 4.61% 5.32% - ------------------------------------------------------------------------------- C 12/11/2000 4.12% 5.18% 4.65% 5.33% - ------------------------------------------------------------------------------- - ---------------------- Average annual - ---------------------- Comparative Benchmarks - ------------------------------------------------------------------------------- Average New York municipal debt fund+ 5.45% 5.52% 4.89% 5.89% - ------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------- - ---------------------- Average annual with sales charge - ---------------------- - ------------------------------------------------------------------------------- A -0.08% 4.29% 4.45% 5.64% - ------------------------------------------------------------------------------- B 0.12% 4.21% 4.28% 5.32% - ------------------------------------------------------------------------------- C 3.12% 5.18% 4.65% 5.33% - ------------------------------------------------------------------------------- - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------- A 4.90% 19.09% 30.50% 81.81% - ------------------------------------------------------------------------------- B 4.12% 16.16% 25.29% 67.86% - ------------------------------------------------------------------------------- C 4.12% 16.36% 25.51% 68.16% - ------------------------------------------------------------------------------- + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. Performance for share classes offered after class B shares includes the performance of the fund's class B shares for periods prior to their offering. Blended class performance has been adjusted to take into account differences in sales loads, if any, applicable to these share classes, but has not been adjusted to take into account differences in class-specific operating expenses (such as Rule 12b-1 fees). Compared to performance these share classes would have experienced had they been offered for the entire period, the use of blended performance generally results in higher performance for share classes with higher operating expenses than the initial share class to which it is blended, and lower performance for share classes with lower operating expenses than the initial share class to which it is blended. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS North Carolina Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index 3/94 $ 9,525 $10,000 3/96 10,745 11,644 3/98 12,461 13,593 3/00 12,836 14,425 3/02 14,581 16,610 3/04 16,798 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------- A 10/31/1984 5.01% 5.90% 5.17% 5.84% - ------------------------------------------------------------------------------- B 9/7/1993 4.33% 5.19% 4.49% 5.14% - ------------------------------------------------------------------------------- C 1/3/1994 4.33% 5.19% 4.49% 5.16% - ------------------------------------------------------------------------------- - ---------------------- Average annual - ---------------------- Comparative Benchmarks - ------------------------------------------------------------------------------- Average North Carolina municipal debt fund+ 4.77% 5.50% 4.77% 5.66% - ------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------- - ---------------------- Average annual with sales charge - ---------------------- - ------------------------------------------------------------------------------- A 0.02% 4.19% 4.15% 5.32% - ------------------------------------------------------------------------------- B 0.33% 4.27% 4.16% 5.14% - ------------------------------------------------------------------------------- C 3.33% 5.19% 4.49% 5.16% - ------------------------------------------------------------------------------- - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------- A 5.01% 18.75% 28.68% 76.35% - ------------------------------------------------------------------------------- B 4.33% 16.38% 24.59% 65.01% - ------------------------------------------------------------------------------- C 4.33% 16.38% 24.59% 65.33% - ------------------------------------------------------------------------------- + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Pennsylvania Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index 3/94 $ 9,525 $10,000 3/96 11,006 11,644 3/98 12,862 13,593 3/00 13,553 14,425 3/02 15,602 16,610 3/04 18,059 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------- A 2/1/1993 5.12% 6.33% 5.81% 6.61% - ------------------------------------------------------------------------------- B 9/7/1993 4.38% 5.45% 4.97% 5.76% - ------------------------------------------------------------------------------- - ---------------------- Average annual - ---------------------- Comparative Benchmarks - ------------------------------------------------------------------------------- Average Pennsylvania municipal debt fund+ 5.24% 5.69% 4.71% 5.78% - ------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------- - ---------------------- Average annual with sales charge - ---------------------- - ------------------------------------------------------------------------------- A 0.12% 4.61% 4.79% 6.09% - ------------------------------------------------------------------------------- B 0.38% 4.54% 4.63% 5.76% - ------------------------------------------------------------------------------- - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------- A 5.12% 20.20% 32.65% 89.60% - ------------------------------------------------------------------------------- B 4.38% 17.25% 27.42% 75.03% - ------------------------------------------------------------------------------- + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS South Carolina Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index 3/94 $ 9,525 $10,000 3/96 10,816 11,644 3/98 12,498 13,593 3/00 12,743 14,425 3/02 14,568 16,610 3/04 16,799 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------- A 10/31/1984 5.30% 6.14% 5.20% 5.84% - ------------------------------------------------------------------------------- B 9/7/1993 4.62% 5.45% 4.52% 5.14% - ------------------------------------------------------------------------------- - ---------------------- Average annual - ---------------------- Comparative Benchmarks - ------------------------------------------------------------------------------- Average South Carolina municipal debt fund+ 5.36% 5.57% 4.79% 5.77% - ------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------- - ---------------------- Average annual with sales charge - ---------------------- - ------------------------------------------------------------------------------- A 0.30% 4.43% 4.18% 5.32% - ------------------------------------------------------------------------------- B 0.62% 4.55% 4.18% 5.14% - ------------------------------------------------------------------------------- - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------- A 5.30% 19.56% 28.84% 76.37% - ------------------------------------------------------------------------------- B 4.62% 17.27% 24.74% 65.00% - ------------------------------------------------------------------------------- + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) TENNESSEE MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Tennessee Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index 3/94 $ 9,525 $10,000 3/96 10,754 11,644 3/98 12,484 13,593 3/00 12,855 14,425 3/02 14,598 16,610 3/04 16,727 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------- A 8/12/1988 4.80% 5.80% 5.04% 5.79% - ------------------------------------------------------------------------------- B 9/7/1993 4.12% 5.12% 4.36% 5.08% - ------------------------------------------------------------------------------- - ---------------------- Average annual - ---------------------- Comparative Benchmarks - ------------------------------------------------------------------------------- Average Tennessee municipal debt fund+ 4.75% 5.57% 4.85% 5.75% - ------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------- - ---------------------- Average annual with sales charge - ---------------------- - ------------------------------------------------------------------------------- A -0.18% 4.10% 4.02% 5.28% - ------------------------------------------------------------------------------- B 0.12% 4.21% 4.02% 5.08% - ------------------------------------------------------------------------------- - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------- A 4.80% 18.43% 27.85% 75.61% - ------------------------------------------------------------------------------- B 4.12% 16.16% 23.78% 64.16% - ------------------------------------------------------------------------------- + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) VIRGINIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS Virginia Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index 3/94 $ 9,525 $10,000 3/96 10,721 11,644 3/98 12,296 13,593 3/00 12,736 14,425 3/02 14,352 16,610 3/04 16,551 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------- A 10/31/1984 5.70% 5.86% 5.15% 5.68% - ------------------------------------------------------------------------------- B 9/7/1993 5.02% 5.18% 4.46% 4.98% - ------------------------------------------------------------------------------- C 1/3/1994 4.93% 5.14% 4.45% 5.00% - ------------------------------------------------------------------------------- - ---------------------- Average annual - ---------------------- Comparative Benchmarks - ------------------------------------------------------------------------------- Average Virginia municipal debt fund+ 5.08% 5.39% 4.76% 5.76% - ------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------- - ---------------------- Average annual with sales charge - ---------------------- - ------------------------------------------------------------------------------- A 0.68% 4.15% 4.13% 5.17% - ------------------------------------------------------------------------------- B 1.02% 4.26% 4.12% 4.98% - ------------------------------------------------------------------------------- C 3.93% 5.14% 4.45% 5.00% - ------------------------------------------------------------------------------- - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------- A 5.70% 18.62% 28.54% 73.76% - ------------------------------------------------------------------------------- B 5.02% 16.35% 24.36% 62.59% - ------------------------------------------------------------------------------- C 4.93% 16.24% 24.34% 62.85% - ------------------------------------------------------------------------------- + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/04 MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/04) MFS West Virginia Lehman Municipal Bond Brothers Fund -- Municipal Class A Bond Index 3/94 $ 9,525 $10,000 3/96 10,768 11,644 3/98 12,395 13,593 3/00 12,737 14,425 3/02 14,547 16,610 3/04 16,630 19,322 TOTAL RETURNS - ---------------------- Average annual without sales charge - ---------------------- Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------- A 10/31/1984 4.84% 5.87% 5.08% 5.73% - ------------------------------------------------------------------------------- B 9/7/1993 4.25% 5.21% 4.42% 5.03% - ------------------------------------------------------------------------------- - ---------------------- Average annual - ---------------------- Comparative Benchmarks - ------------------------------------------------------------------------------- Average "other state" municipal debt fund+ 4.24% 4.98% 4.48% 5.46% - ------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index# 5.86% 6.49% 6.00% 6.81% - ------------------------------------------------------------------------------- - ---------------------- Average annual with sales charge - ---------------------- A -0.14% 4.16% 4.06% 5.22% - ------------------------------------------------------------------------------- B 0.25% 4.30% 4.08% 5.03% - ------------------------------------------------------------------------------- - ---------------------- Cumulative without sales charge - ---------------------- - ------------------------------------------------------------------------------- A 4.84% 18.65% 28.11% 74.59% - ------------------------------------------------------------------------------- B 4.25% 16.47% 24.12% 63.32% - ------------------------------------------------------------------------------- + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- NOTES TO PERFORMANCE SUMMARY AND RISK CONSIDERATIONS - ------------------------------------------------------------------------------- NOTES TO PERFORMANCE SUMMARY Class A share performance, including sales charge, reflects the deduction of the maximum 4.75% sales charge. Class B share performance, including sales charge, reflects the deduction of the applicable contingent deferred sales charge (CDSC), which declines over six years from 4% to 0%. For those funds that offer Class C shares, Class C results, including sales charge, redeemed within one year from the end of the calendar month of purchase reflects the deduction of the 1% CDSC. Performance results reflect any applicable subsidies and waivers in effect during the periods shown. Without such subsidies and waivers each fund's performance would be less favorable. Please see the prospectus and financial statements for complete details. RISK CONSIDERATIONS A small portion of income may be subject to state, federal, and/or alternative minimum tax. Capital gains, if any, are subject to a capital gains tax. If you are not a resident of the state to which a particular fund is targeted, the state tax exemption will not apply. Investments in high yield or lower-rated securities may provide greater returns but are subject to greater-than-average risk. By concentrating in one state, the funds are more susceptible to adverse economic, political or regulatory developments affecting that state than are funds that invest more broadly. Because the funds invest in a limited number of companies a change in one security's value may have a more significant effect on fund values. These risks may increase share price volatility. Please see the prospectus for further information regarding these and other risk considerations. This 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. - --------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - 3/31/04 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 - 95.7%
- --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 12.1% Commonwealth of Puerto Rico, Public Improvement, 5.25%, 2023 $1,000 $1,068,120 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, FGIC, 9.996%, 2016+(+) 3,110 4,189,108 - --------------------------------------------------------------------------------------------------------------------------------- Hinds County, MS, MBIA, 6.25%, 2010 - 2011 2,945 3,493,131 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Jackson, Mississippi) FSA, 5.25%, 2018 - 2020 2,480 2,791,306 - --------------------------------------------------------------------------------------------------------------------------------- $11,541,665 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 7.5% Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017+(+) $750 $955,170 - --------------------------------------------------------------------------------------------------------------------------------- State of Mississippi, "B", 6.75%, 2014(++) 1,800 1,868,040 - --------------------------------------------------------------------------------------------------------------------------------- State of Mississippi, Capital Improvement, 5.5%, 2015(++) 750 874,688 - --------------------------------------------------------------------------------------------------------------------------------- State of Mississippi, Capital Improvement, 5.25%, 2017(++) 2,000 2,302,600 - --------------------------------------------------------------------------------------------------------------------------------- State of Mississippi, Capital Improvements, "I", 6%, 2018(++) 1,000 1,186,700 - --------------------------------------------------------------------------------------------------------------------------------- $7,187,198 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 7.9% Biloxi, MS, Public School District, MBIA, 5%, 2021 $1,000 $1,044,920 - --------------------------------------------------------------------------------------------------------------------------------- Hinds County, MS, Michigan School District, FSA, 5%, 2018 1,200 1,277,736 - --------------------------------------------------------------------------------------------------------------------------------- Jackson, MS, Public School District, "B", AMBAC, 5.75%, 2017 1,000 1,157,250 - --------------------------------------------------------------------------------------------------------------------------------- Jackson, MS, Public School District, "B", AMBAC, 0%, 2022 - 2023 3,000 1,121,180 - --------------------------------------------------------------------------------------------------------------------------------- Madison County, MS, School District, "A", MBIA, 5.875%, 2016 1,500 1,729,605 - --------------------------------------------------------------------------------------------------------------------------------- Madison County, MS, School District, FSA, 5%, 2016 1,105 1,199,743 - --------------------------------------------------------------------------------------------------------------------------------- $7,530,434 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Alcorn County, MS, Corinth Hospital Rev. (Magnolia Regional Health Hospitals - 17.0% Center), AMBAC, 5.75%, 2013 $1,000 $1,078,480 - --------------------------------------------------------------------------------------------------------------------------------- Corinth & Alcorn County, MS, Hospital Rev. (Magnolia Regional Health Center), 5.5%, 2021 400 402,036 - --------------------------------------------------------------------------------------------------------------------------------- Gulfport, MS, Healthcare Authority Rev. (Memorial Hospital at Gulfport), 5.75%, 2031 1,000 1,032,670 - --------------------------------------------------------------------------------------------------------------------------------- Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital) MBIA, 6.125%, 2015 2,250 2,319,773 - --------------------------------------------------------------------------------------------------------------------------------- Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital) MBIA, 6.2%, 2018 1,000 1,031,180 - --------------------------------------------------------------------------------------------------------------------------------- Hinds County, MS, Rev. (Methodist Hospital & Rehabilitation), AMBAC, 5.6%, 2012 2,335 2,623,046 - --------------------------------------------------------------------------------------------------------------------------------- Jones County, MS, Hospital Rev. (South Central Regional Medical Center), 5.5%, 2017 1,000 1,007,150 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Adams County Hospital) FSA, 5.75%, 2016 1,000 1,087,780 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Medical Center) MBIA, 6.5%, 2010 1,190 1,274,859 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Medical Center) MBIA, 6%, 2013 750 799,507 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev. (Forrest County General Hospital) FSA, 5.625%, 2020 1,000 1,103,370 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev., Refunding & Improvement, 5.5%, 2019 $250 $255,943 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev., Refunding & Improvement, 5.75%, 2023 250 254,513 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev. (Rush Medical Foundation) CONNIE LEE, 6.7%, 2018 2,000 2,007,920 - --------------------------------------------------------------------------------------------------------------------------------- $16,278,227 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Jones County, MS, Solid Waste Disposal Rev. (International Paper Paper - 3.2% Co.), "A", 5.8%, 2021 $500 $517,255 - --------------------------------------------------------------------------------------------------------------------------------- Lowndes County, MS, Solid Waste Disposal & Pollution Control Rev. (Weyerhauser Co.), 6.8%, 2022 1,250 1,480,362 - --------------------------------------------------------------------------------------------------------------------------------- Warren County, MS, Solid Waste Disposal (International Paper Co.), "A", 6.6%, 2019 1,000 1,045,350 - --------------------------------------------------------------------------------------------------------------------------------- $3,042,967 - --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 1.3% Mississippi Development Bank (Diamond Lakes Utilities), 6.25%, 2017 $1,250 $1,280,212 - --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Gulfport, MS, Community Development Urban Renewal Rev. (Oakview Revenue - 2.0% Apartments) FNMA, 7.4%, 2025 $1,755 $1,780,395 - --------------------------------------------------------------------------------------------------------------------------------- Ridgeland, MS, Urban Renewal (Northbrook I & II Apartments), 6.15%, 2019* 300 144,948 - --------------------------------------------------------------------------------------------------------------------------------- $1,925,343 - --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 7.0% Mississippi Home Corp. Rev., Single Family Rev., "A", GNMA, 6.3%, 2031 $285 $303,907 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 5.3%, 2023 1,000 1,008,280 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.95%, 2031 755 807,216 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.5%, 2032 495 553,672 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "B", GNMA, 6.625%, 2027 635 653,942 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "B-2", GNMA, 6.375%, 2032 725 779,774 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "B-2", GNMA, 6.45%, 2033 855 894,065 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "F", GNMA, 7.55%, 2027 369 385,808 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., GNMA, 6.5%, 2024 1,250 1,275,125 - --------------------------------------------------------------------------------------------------------------------------------- $6,661,789 - --------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 13.0% Hinds Community College, MS, Conference & Training Center, 6.5%, 2014(++) $1,320 $1,349,291 - --------------------------------------------------------------------------------------------------------------------------------- Lamar County, MS, (Jail Project) MBIA, 5.1%, 2021 430 454,170 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Correctional Facilities), "A", 5.125%, 2025 1,000 1,049,740 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Horn Lake Recreation Facilities) AMBAC, 4.875%, 2018 495 518,577 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Mississippi, Ltd. Tax Hospital Rev.), 5.1%, 2020 1,000 1,052,910 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Natchez Mississippi Convention Center) AMBAC, 6%, 2021 750 879,293 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Public Improvement Board), 5%, 2023 750 737,940 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Southaven, MS, Recreation Facilities), 6.2%, 2020 400 453,176 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Southhaven, MS, Recreation Facilities), 5.875%, 2014 375 416,846 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Tupelo Fairgrounds), "A", AMBAC, 5%, 2017 785 833,395 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013+(+) 500 660,660 - --------------------------------------------------------------------------------------------------------------------------------- State of Mississippi, Certificates of Participation (Rehabilitation Services), 6.1%, 2014 1,990 2,012,706 - --------------------------------------------------------------------------------------------------------------------------------- Walnut Grove, MS, Corretional Authority, AMBAC, 6%, 2019 1,750 2,064,807 - --------------------------------------------------------------------------------------------------------------------------------- $12,483,511 - --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $245 $241,631 - --------------------------------------------------------------------------------------------------------------------------------- Guam Economic Development Authority, Tobacco Settlement, 5.5%, 2041 350 338,783 - --------------------------------------------------------------------------------------------------------------------------------- $580,414 - --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Mississippi Development Bank Special Obligations, Madison County Tax - 1.3% (Road & Bridge) AMBAC, 5.1%, 2019 $1,175 $1,263,336 - --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Jackson State University, Educational Building Corp., Student 9.1% Recreation Center, AMBAC, 5.125%, 2027 $750 $779,955 - --------------------------------------------------------------------------------------------------------------------------------- Medical Center, Educational Building Corp. Rev. (University of Mississippi Medical Center), "B", AMBAC, 5.5%, 2023 1,000 1,131,060 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi State University Educational Building Corp. Rev. (Athletic Facilities), "A", 6.2%, 2016(++) 1,000 1,119,810 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi State University Educational Building Corp. Rev. (Power General Facilities) FGIC, 5%, 2027 2,100 2,181,417 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi State University Educational Building Corp. Rev., AMBAC, 5.5%, 2016 1,000 1,133,120 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi State University Educational Building Corp. Rev., AMBAC, 5%, 2021 250 261,685 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Valley State University, Educational Building Corp., MBIA, 5.5%, 2021 890 989,110 - --------------------------------------------------------------------------------------------------------------------------------- University of Mississippi, Educational Building Corp. (Performing Arts Center) AMBAC, 5.25%, 2018 1,000 1,072,460 - --------------------------------------------------------------------------------------------------------------------------------- $8,668,617 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Warren County, MS, Pollution Control Rev. (Mississippi Power & Light Owned - 2.4% Co), 7%, 2022 $1,000 $1,025,000 - --------------------------------------------------------------------------------------------------------------------------------- Washington County, MS, Pollution Control Rev. (Mississippi Power & Light Co.), 7%, 2022 1,230 1,260,750 - --------------------------------------------------------------------------------------------------------------------------------- $2,285,750 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 2.5% Guam Power Authority Rev., RITES, AMBAC, 9.0426%, 2013+(+) $1,000 $1,239,580 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Okolona Electric System), 5.2%, 2016 1,010 1,099,435 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority, Power Rev., FSA, 5.25%, 2015 80 88,746 - --------------------------------------------------------------------------------------------------------------------------------- $2,427,761 - --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 8.8% Jackson, MS, Water & Sewer Systems Rev., FGIC, 5.25%, 2017 $420 $453,440 - --------------------------------------------------------------------------------------------------------------------------------- Meridian, MS, Water & Sewer Rev., "A", AMBAC, 6.2%, 2012 - 2013(++) 1,050 1,084,188 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Combined Water Sewer & Solid Waste Management) FSA, 5.25%, 2021 1,270 1,384,465 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Combined Water Sewer & Solid Waste Management) FSA, 5.05%, 2027 $1,610 $1,694,702 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Gulfport Water & Sewer Project), "A", FGIC, 5.25%, 2027 2,000 2,112,360 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Gulfport, MS, Combined Water & Sewer Project) FSA, 5.625%, 2024 500 555,630 - --------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Wastewater & Solid Waste Management), "A", FSA, 5.375%, 2017 1,000 1,108,690 - --------------------------------------------------------------------------------------------------------------------------------- $8,393,475 - --------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $85,428,091) $91,550,699 - --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.3% - --------------------------------------------------------------------------------------------------------------------------------- Jackson County, MS, Pollution Control Rev. (Chevron U.S.A., Inc.), due 4/01/04, at Identified Cost $2,200 $2,200,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $87,628,091) $93,750,699 - --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 2.0% 1,933,275 - --------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $95,683,974 - --------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - 3/31/04 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 - 97.5%
- --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.2% Port Authority NY & NJ, (131st Street Service), 5%, 2020 $1,500 $1,563,420 - --------------------------------------------------------------------------------------------------------------------------------- Port Authority NY & NJ, MBIA, 5.5%, 2018 1,500 1,636,560 - --------------------------------------------------------------------------------------------------------------------------------- Port Authority NY & NJ, Special Obligation Rev. (JFK International), MBIA, 6.25%, 2015 1,000 1,168,960 - --------------------------------------------------------------------------------------------------------------------------------- $4,368,940 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 9.5% Commonwealth of Puerto Rico, ROLs, XLCA, 9.806%, 2017+(+) $1,350 $1,799,037 - --------------------------------------------------------------------------------------------------------------------------------- New York, NY, 7.2%, 2004(++) 1,000 1,032,420 - --------------------------------------------------------------------------------------------------------------------------------- New York, NY, 7.3%, 2004(++) 5,880 6,072,746 - --------------------------------------------------------------------------------------------------------------------------------- New York, NY, 7.375%, 2004(++) 1,600 1,652,880 - --------------------------------------------------------------------------------------------------------------------------------- New York, NY, 5.5%, 2015 1,000 1,109,270 - --------------------------------------------------------------------------------------------------------------------------------- New York, NY, 5.375%, 2017 1,250 1,345,275 - --------------------------------------------------------------------------------------------------------------------------------- New York, NY, 6%, 2019 1,000 1,122,130 - --------------------------------------------------------------------------------------------------------------------------------- New York, NY, FGIC, 5.5%, 2026 2,100 2,256,681 - --------------------------------------------------------------------------------------------------------------------------------- State of New York, 5.7%, 2005(++) 1,000 1,054,260 - --------------------------------------------------------------------------------------------------------------------------------- State of New York, AMBAC, 6%, 2004(++) 1,000 1,029,830 - --------------------------------------------------------------------------------------------------------------------------------- $18,474,529 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 0.1% Erie County, NY, Public Improvement, FGIC, 5%, 2019 $140 $149,555 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.9% Arlington, NY, Central School District, FSA, 5%, 2021 $1,000 $1,065,460 - --------------------------------------------------------------------------------------------------------------------------------- Genesee Valley, NY, Central School District (Angelica Belmont), FGIC, 5.25%, 2028 1,720 1,839,265 - --------------------------------------------------------------------------------------------------------------------------------- North Babylon, NY, Union Free School District, FGIC, 5.5%, 2018 2,415 2,715,595 - --------------------------------------------------------------------------------------------------------------------------------- Port Byron, NY, Central School District, AMBAC, 7.4%, 2012 - 2015 2,000 2,659,490 - --------------------------------------------------------------------------------------------------------------------------------- Red Hook, NY, Central School District, FSA, 5.125%, 2018 685 751,041 - --------------------------------------------------------------------------------------------------------------------------------- Rome, NY, City School District, FSA, 5.5%, 2019 1,000 1,118,490 - --------------------------------------------------------------------------------------------------------------------------------- Washingtonville, NY, Central School Central District, FGIC, 7.35%, 2008 - 2009 1,100 1,341,442 - --------------------------------------------------------------------------------------------------------------------------------- $11,490,783 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Albany, NY, Industrial Development Agency, Civic Facility Rev., Hospitals - 6.9% 8.25%, 2004 $320 $320,810 - --------------------------------------------------------------------------------------------------------------------------------- Chautauqua County, NY, Civic Facilities Rev. (Women's Christian Assn.), 6.35%, 2017 180 181,372 - --------------------------------------------------------------------------------------------------------------------------------- Chautauqua County, NY, Civic Facilities Rev. (Women's Christian Assn.), 6.4%, 2029 490 472,007 - --------------------------------------------------------------------------------------------------------------------------------- Chemung County, NY, Industrial Development Agency, Civic Facility Rev. (Arnot Ogden Medical Center), 5%, 2029 1,750 1,738,420 - --------------------------------------------------------------------------------------------------------------------------------- Fulton County, NY, Industrial Development Agency, Civic Facility Rev. (Nathan Littauer Hospital), 5.75%, 2009 750 752,340 - --------------------------------------------------------------------------------------------------------------------------------- Nassua County, NY, Health Systems Rev. (Nassua County), FSA, 6%, 2014 1,000 1,171,530 - --------------------------------------------------------------------------------------------------------------------------------- Nassau County, NY, Industrial Development Agency, Civic Facility Rev. (North Shore Health Systems), 5.625%, 2010 500 554,435 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Industrial Development Agency, Civic Facilities Rev. (Staten Island University Hospital), 6.375%, 2031 $500 $503,305 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Health & Hospital Corp. Rev., 5.25%, 2017 760 793,113 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (Montefiore Medical Center), AMBAC, 5.25%, 2019 950 1,027,606 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (North Shore Long Island Jewish Group), 5.5%, 2033 250 258,578 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (St. Vincent's Hospital), FHA, 7.375%, 2011 1,205 1,217,894 - --------------------------------------------------------------------------------------------------------------------------------- New York Medical Care Facilities Finance Agency Rev., Mental Health Services (Huntington Hospital Mortgage), 6.5%, 2004(++) 1,250 1,313,975 - --------------------------------------------------------------------------------------------------------------------------------- New York Medical Facilities Finance Agency Rev. (Montefiore Medical Center), AMBAC, 6.5%, 2005(++) 1,550 1,654,052 - --------------------------------------------------------------------------------------------------------------------------------- Suffolk County, NY, Industrial Development Agency Rev. (Huntington Hospital), 5.875%, 2032 1,000 1,026,940 - --------------------------------------------------------------------------------------------------------------------------------- Yonkers, NY, Industrial Development Agency, Civic Facilities Rev. (St. John's Riverside Hospital), 7.125%, 2031 500 512,285 - --------------------------------------------------------------------------------------------------------------------------------- $13,498,662 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Westchester County, NY, Industrial Development Rev., Continuing Care Term Care - 0.2% Retirement (Kendal On Hudson), 6.5%, 2034 $300 $303,801 - --------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.7% Nassau County, NY, Industrial Development Agency, Civic Facility Rev. (Special Needs Facility), 6.5%, 2017 $205 $213,395 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Jewish Board of Families & Children), AMBAC, 5%, 2023 695 730,855 - --------------------------------------------------------------------------------------------------------------------------------- New York, NY, Industrial Development Agency (PSCH, Inc.), 6.375%, 2033 500 509,350 - --------------------------------------------------------------------------------------------------------------------------------- $1,453,600 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - New York Environmental Facilities Corp., Solid Waste Disposal Rev. 0.5% (Waste Management), 4%, 2012 $950 $951,644 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Onondaga County, NY, Industrial Development Agency Sewer Facilities Other - 0.6% Rev. (Bristol-Meyers Squibb Co.), 5.75%, 2024 $1,000 $1,126,670 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Essex County, NY, Industrial Development Agency, Pollution Control Paper - 1.3% Rev. (International Paper Corp.), 5.55%, 2014 $750 $834,038 - --------------------------------------------------------------------------------------------------------------------------------- Essex County, NY, Industrial Development Agency, Pollution Control Rev. (International Paper Corp.), 6.15%, 2021 1,000 1,050,240 - --------------------------------------------------------------------------------------------------------------------------------- Essex County, NY, Industrial Development Agency, Pollution Control Rev. (International Paper Corp.), 6.45%, 2023 700 752,283 - --------------------------------------------------------------------------------------------------------------------------------- $2,636,561 - --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.8% Battery Park City, NY, Miscellaneous Authority Rev., 5%, 2023 $1,500 $1,585,800 - --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing New York City, NY, Housing Development Corp., Multi-Family Housing Revenue - 1.3% Rev., 5.6%, 2019 $400 $418,988 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Housing Development Corp., Multi-Family Housing Rev., 5.5%, 2034 2,000 2,058,980 - --------------------------------------------------------------------------------------------------------------------------------- $2,477,968 - --------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 0.3% Schenectady NY, Metroplex Development Authority Rev., MBIA, 5.375%, 2021 $475 $522,310 - --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 3.1% New York Mortgage Agency Rev., 4.6%, 2015 $2,865 $2,928,718 - --------------------------------------------------------------------------------------------------------------------------------- New York Mortgage Agency Rev., 5.85%, 2018 1,445 1,515,227 - --------------------------------------------------------------------------------------------------------------------------------- New York Mortgage Agency Rev., 5.8%, 2020 1,555 1,628,505 - --------------------------------------------------------------------------------------------------------------------------------- $6,072,450 - --------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.5% Niagara County, NY, Solid Waste Disposal Rev., 5.625%, 2024 $850 $901,128 - --------------------------------------------------------------------------------------------------------------------------------- Oneida Herkimer, NY, Solid Waste Management Systems Rev., 6.75%, 2014 60 60,766 - --------------------------------------------------------------------------------------------------------------------------------- Rockland County, NY, Solid Waste Management Systems Rev., 4.8%, 2005 20 21,120 - --------------------------------------------------------------------------------------------------------------------------------- $983,014 - --------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 19.2% New York Dormitory Authority (City University), 5.625%, 2016 $2,450 $2,839,428 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (City University), AMBAC, 5.75%, 2018 800 951,728 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (City University), FSA, 5.75%, 2013 3,000 3,556,260 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Judicial Institute at Pace), AMBAC, 5.5%, 2020 2,500 2,805,400 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Master Boces Program), FSA, 5.25%, 2019 1,000 1,088,370 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Pace University), MBIA, 6%, 2019 1,700 2,002,243 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Personal Income Tax Education), 5.375%, 2022 1,000 1,078,620 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (School Program), 6.25%, 2020 1,690 2,007,974 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (State University), 5.375%, 2010(++) 1,500 1,744,710 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (State University), 5.875%, 2017 1,130 1,337,988 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Upstate Community Colleges), FSA, 6%, 2018 1,010 1,192,103 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, FGIC, 5%, 2024 1,935 2,025,810 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, Mental Health Services Facilites Improvement, FSA, 5.25%, 2010(++) 895 1,026,413 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, Mental Health Services Facilites Improvement, FSA, 5.25%, 2030 105 109,531 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, Mental Health Services Facilites Improvement, MBIA, 5.25%, 2011(++) 785 902,530 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, Mental Health Services Facilites Improvement, MBIA, 5.25%, 2031 1,215 1,273,855 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, Mental Health Services Facilities Improvement, MBIA, 5.75%, 2020 5 5,549 - --------------------------------------------------------------------------------------------------------------------------------- New York Medical Care Facilities Finance Agency, 6.375%, 2004(++) 15 15,594 - --------------------------------------------------------------------------------------------------------------------------------- New York Medical Care Facilities Finance Agency, MBIA, 6%, 2025 20 21,257 - --------------------------------------------------------------------------------------------------------------------------------- New York Municipal Bond Bank Special Program, AMBAC, 5.25%, 2015 715 788,931 - --------------------------------------------------------------------------------------------------------------------------------- New York Municipal Bond Bank Special School Purpose Rev., 5.25%, 2022 1,000 1,051,390 - --------------------------------------------------------------------------------------------------------------------------------- New York State Housing Finance Agency, Income Tax Rev., 5%, 2022 - 2023 2,000 2,080,990 - --------------------------------------------------------------------------------------------------------------------------------- New York Urban Development Corp. (Correctional Facilities) AMBAC, 0%, 2009 5,000 4,392,900 - --------------------------------------------------------------------------------------------------------------------------------- New York Urban Development Corp. (State Facilities), AMBAC, 5.6%, 2015 2,750 3,222,973 - --------------------------------------------------------------------------------------------------------------------------------- $37,522,547 - --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 2.9% New York City, NY, Transitional Finance Authority Rev., 5.75%, 2009(++) $2,730 $3,218,970 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Transitional Finance Authority Rev., 5%, 2026 1,000 1,041,060 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Transitional Finance Authority Rev., MBIA, 5%, 2022 1,400 1,477,910 - --------------------------------------------------------------------------------------------------------------------------------- $5,737,940 - --------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 0.3% Grand Central, NY, Special Assessment Rev., District Management Assn., Inc., 5%, 2022 $500 $521,285 - --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 1.7% Guam Economic Development Authority, 5.5%, 2041 $400 $387,180 - --------------------------------------------------------------------------------------------------------------------------------- New York County Tobacco Trust, 5.625%, 2035 800 765,536 - --------------------------------------------------------------------------------------------------------------------------------- Tobacco Settlement Financing Corp., 5.5%, 2018 2,000 2,205,860 - --------------------------------------------------------------------------------------------------------------------------------- $3,358,576 - --------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 7.1% New York City, NY, Dedicated Tax Fund Rev., AMBAC, 5.25%, 2029 $1,335 $1,404,367 - --------------------------------------------------------------------------------------------------------------------------------- Niagara Falls, NY, Bridge Commision Toll Rev., RITES, FGIC, 9.02%, 2015+(+) 3,500 4,520,460 - --------------------------------------------------------------------------------------------------------------------------------- Triborough Bridge & Tunnel Authority Rev., NY, 6%, 2012(++) 1,000 1,182,930 - --------------------------------------------------------------------------------------------------------------------------------- Triborough Bridge & Tunnel Authority Rev., NY, RITES, 9.508%, 2017+(+) 5,000 6,728,500 - --------------------------------------------------------------------------------------------------------------------------------- $13,836,257 - --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 11.2% Metropolitan Transportation Authority Rev., NY, 7.375%, 2008(++) $1,720 $1,922,066 - --------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, AMBAC, 5.75%, 2013 825 961,884 - --------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, Dedicated Tax Fund Rev., 5.5%, 2015(++) 750 886,050 - --------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, Dedicated Tax Fund Rev., FGIC, 5.25%, 2014 500 556,420 - --------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, FGIC, 5.875%, 2010(++) 2,000 2,358,660 - --------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, FGIC, 5%, 2025 2,500 2,602,950 - --------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority, NY, Commuter Facilities Rev., FGIC, 5.25%, 2011(++) 1,000 1,151,000 - --------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, 5.25%, 2015 1,500 1,639,680 - --------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, 5%, 2018 1,000 1,067,950 - --------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, AMBAC, 5.375%, 2010(++) 2,000 2,320,680 - --------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, FGIC, 5.4%, 2017 2,000 2,193,560 - --------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, FSA, 5.8%, 2018 20 23,013 - --------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, MBIA, 5.75%, 2009(++) 1,000 1,170,650 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Highway & Transportation Authority Rev., 6.25%, 2013 1,000 1,206,270 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Highway & Transportation Authority Rev., 5%, 2036 1,700 1,760,860 - --------------------------------------------------------------------------------------------------------------------------------- $21,821,693 - --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Amherst, NY, Industrial Development Agency Rev. (Daemen College), 4.2% 6%, 2021 $1,000 $1,059,600 - --------------------------------------------------------------------------------------------------------------------------------- Cattaraugus County, NY, Industrial Development Agency Rev. (Jamestown Community College), 6.4%, 2019 500 560,415 - --------------------------------------------------------------------------------------------------------------------------------- Hempstead Town, NY, Civic Facility Rev. (Hofstra University), MBIA, 5.8%, 2015 1,500 1,655,985 - --------------------------------------------------------------------------------------------------------------------------------- Islip, NY, Community Development Agency Rev. (New York Institute of Technology), 7.5%, 2006(++) 2,000 2,265,480 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Fordham University), AMBAC, 7.2%, 2015 40 40,167 - --------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (St. John's University), MBIA, 5%, 2017 300 323,301 - --------------------------------------------------------------------------------------------------------------------------------- Onondaga County, NY, Industrial Development Agency Rev. (Le Moyne College), 5.625%, 2021 750 806,963 - --------------------------------------------------------------------------------------------------------------------------------- Tompkins County, NY, Industrial Development Agency Rev. (Cornell University), 5.625%, 2010(++) 1,000 1,177,220 - --------------------------------------------------------------------------------------------------------------------------------- Utica, NY, Industrial Development Agency (Utica College), 5.3%, 2008 230 241,001 - --------------------------------------------------------------------------------------------------------------------------------- $8,130,132 - --------------------------------------------------------------------------------------------------------------------------------- Universities - Dormatories - 0.5% New York Dormitory Authority Rev. (Columbia University), 5%, 2022 $1,000 $1,066,530 - --------------------------------------------------------------------------------------------------------------------------------- Universities - Secondary New York City, NY, Industrial Development Agency, Civic Facility Schools - 0.8% Rev. (Nightingale-Bamford School), AMBAC, 5.25%, 2020 $1,440 $1,566,907 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Cogeneration - 0.5% Port Authority NY & NJ, Special Obligation, 6.75%, 2011 $1,000 $1,049,990 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Owned - 2.6% New York Energy Research & Development Rev., 6.1%, 2020 $2,400 $2,543,856 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Water Facilities Rev., 8.85%, 2015 2,500 2,560,000 - --------------------------------------------------------------------------------------------------------------------------------- $5,103,856 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 2.8% Guam Power Authority Rev., RITES, AMBAC, 9.043%, 2014+(+) $500 $612,800 - --------------------------------------------------------------------------------------------------------------------------------- Long Island Power Authority, Electrical Systems Rev., 5.5%, 2021 400 430,516 - --------------------------------------------------------------------------------------------------------------------------------- New York Power Authority Rev., 5%, 2021 1,000 1,057,500 - --------------------------------------------------------------------------------------------------------------------------------- New York Power Authority Rev., 5.25%, 2040 3,000 3,139,260 - --------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., 5.5%, 2017 200 208,740 - --------------------------------------------------------------------------------------------------------------------------------- $5,448,816 - --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 9.8% Erie County, NY, Water Authority Rev., AMBAC, 6.75%, 2014(++) $1,000 $1,243,910 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 6%, 2010 620 729,380 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 5%, 2027 1,500 1,564,335 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., FGIC, 5.25%, 2033 2,000 2,106,280 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., MBIA, 5.5%, 2027 1,250 1,366,638 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Clean Water & Drinking Rev., 5%, 2023 - 2025 4,005 4,204,603 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Pollution Control Rev., 5.75%, 2010 175 204,271 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Pollution Control Rev., 5.75%, 2010(++) 2,060 2,419,944 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Pollution Control Rev., 6.875%, 2010 220 221,019 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Pollution Control Rev., 7.25%, 2010 70 70,337 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Water Facilities Rev., 5.25%, 2020 1,000 1,089,050 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Water Facilities Rev., 6%, 2031 1,005 1,058,285 - --------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Water Facilities Rev. (Spring Valley Water Co.), AMBAC, 6.15%, 2024 1,500 1,553,955 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2005(++) 180 193,975 - --------------------------------------------------------------------------------------------------------------------------------- Suffolk County, NY, Water Authority Rev., MBIA, 5.1%, 2012 895 1,012,317 - --------------------------------------------------------------------------------------------------------------------------------- $19,038,299 - --------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $171,930,161) $190,299,115 - --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.5% - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, due 4/01/04 $1,300 $1,300,000 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Job Development Authority Rev., due 4/01/04 75 75,000 - --------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., due 4/01/04 1,500 1,500,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $2,875,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $174,805,161) $193,174,115 - --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.0% 1,883,690 - --------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $195,057,805 - --------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF FUND INVESTMENTS - 3/31/04 MFS(R) NORTH CAROLINA MUNICIPAL BOND - --------------------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes. Municipal Bonds - 98.2%
- --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.1% Charlotte, NC, "B", MBIA, 5.875%, 2019 - 2020 $4,775 $5,233,886 - --------------------------------------------------------------------------------------------------------------------------------- Raleigh Durham, NC, Airport Authority Rev., "A", FGIC, 5.25%, 2018 2,700 2,956,284 - --------------------------------------------------------------------------------------------------------------------------------- $8,190,170 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 0.9% Charlotte, NC, 5.5%, 2016 $3,100 $3,549,996 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 2.5% Durham, NC, 5.9%, 2014 $2,400 $2,543,208 - --------------------------------------------------------------------------------------------------------------------------------- Mecklenburg County, NC, Public Improvement, "A", 5%, 2017 1,000 1,091,050 - --------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, Public Improvement, 5.75%, 2017(++) 1,000 1,197,950 - --------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, Public Improvement, 5.8%, 2019 4,200 5,043,948 - --------------------------------------------------------------------------------------------------------------------------------- $9,876,156 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 3.4% Brunswick County, NC, FGIC, 5%, 2020 $2,800 $3,015,152 - --------------------------------------------------------------------------------------------------------------------------------- Cumberland County, NC, 5.8%, 2019 4,400 5,086,224 - --------------------------------------------------------------------------------------------------------------------------------- Johnston County, NC, FGIC, 5.6%, 2018 2,000 2,284,700 - --------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, Public Improvement, 5%, 2021 1,435 1,517,814 - --------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, School Improvement, 5%, 2019 1,255 1,350,518 - --------------------------------------------------------------------------------------------------------------------------------- $13,254,408 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Catawba County, NC, Hospital Rev. (Catawba Memorial Hospital), Hospitals - 21.2% AMBAC, 5%, 2017 $1,200 $1,275,924 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A", 5.75%, 2021 1,500 1,566,915 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A", 5.125%, 2022 1,000 1,022,740 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A", 5%, 2031 3,500 3,579,380 - --------------------------------------------------------------------------------------------------------------------------------- Cumberland County, NC, Hospital Facilities Rev. (Cumberland Hospital), MBIA, 0%, 2009 1,800 1,532,970 - --------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, Hospital Rev. (New Hanover Regional Medical Center), MBIA, 5%, 2019 6,225 6,606,157 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission (Novant Health), "A", MBIA, 5%, 2018 1,975 2,089,530 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission (Novant Health), Obligations Group A, 5%, 2020 500 516,430 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Health Care Facilities Rev. (Deerfield), "A", 5%, 2023 1,000 996,220 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Health Care Facilities Rev. (Wakemed), AMBAC, 5%, 2021 3,500 3,724,700 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Betsy Johnson Health Care System), FSA, 5.125%, 2032 1,500 1,568,700 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Duke University), "C", 5.25%, 2021 5,975 6,102,686 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Gaston Memorial Hospital), 5.5%, 2015 - 2019 12,290 12,801,586 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Maria Parham Medical Center), 6.5%, 2026 $1,000 $1,072,950 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Mission-St. Joseph Health Systems), 5.25%, 2015 2,210 2,396,657 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Mission-St. Joseph Health Systems), 5.5%, 2021 2,825 3,001,054 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Mission-St. Joseph Health Systems), MBIA, 5.1%, 2018 1,500 1,593,765 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Pitt County Memorial Hospital), "B", 5%, 2018 3,000 3,082,920 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Rex Healthcare), AMBAC, 5%, 2017 5,000 5,304,550 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Southeastern Regional Medical Center), 5.375%, 2032 3,330 3,402,461 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Wilson Memorial Hospital), AMBAC, 0%, 2013 - 2015 2,140 1,398,101 - --------------------------------------------------------------------------------------------------------------------------------- Northern Hospital District Surry County, NC, Health Care Facilities Rev., ASST GTY, 5.5%, 2019 1,250 1,366,625 - --------------------------------------------------------------------------------------------------------------------------------- Northern Hospital District Surry County, NC, Health Care Facilities Rev., ASST GTY, 5.1%, 2021 1,000 1,052,960 - --------------------------------------------------------------------------------------------------------------------------------- Pitt County, NC, Rev. (Pitt County Memorial Hospital), 5.25%, 2021 10,135 10,510,299 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Hospital Rev. (Chapel Hill Hospital), 5.25%, 2019(++) 4,800 5,231,760 - --------------------------------------------------------------------------------------------------------------------------------- $82,798,040 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 0.7% Mocksville, NC (Housing Foundation, Inc.), 7.25%, 2029 $960 $834,134 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Health Care Commission, Health Care Facilities Rev. (Givens Estates), 6.5%, 2032 800 822,624 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Health Care Facilities Rev. (Arbor Acres Community), 6.375%, 2032 1,000 1,034,880 - --------------------------------------------------------------------------------------------------------------------------------- $2,691,638 - --------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.6% Cumberland County, NC, Finance Corp., Installment Payment Rev. (Detention Center & Mental Health), AMBAC, 5.625%, 2019 $2,125 $2,382,338 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Columbus County, NC, Industrial Facilities & Pollution Control Paper - 4.7% Financing Authority (International Paper Co.), "A", 5.8%, 2016 $2,000 $2,114,340 - --------------------------------------------------------------------------------------------------------------------------------- Haywood County, NC, Industrial Facilities & Pollution Control Financing Authority (Champion International Corp.), "A", 5.75%, 2025 5,400 5,486,508 - --------------------------------------------------------------------------------------------------------------------------------- Martin County, NC, Industrial Facilities & Pollution Control Financing Authority Rev. (Solid Waste Disposal Weyerhaeuser), 7.25%, 2014 7,000 7,101,850 - --------------------------------------------------------------------------------------------------------------------------------- Martin County, NC, Industrial Facilities & Pollution Control Financing Authority Rev. (Solid Waste Disposal Weyerhaeuser), 6.8%, 2024 3,500 3,582,600 - --------------------------------------------------------------------------------------------------------------------------------- $18,285,298 - --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Charlotte, NC, Housing Authority, Mortgage Rocky Branch II, GNMA, Revenue - 1.5% 4.65%, 2035 $2,300 $2,262,556 - --------------------------------------------------------------------------------------------------------------------------------- Durham County, NC, Multifamily Rev. (Alston Village Apartments), FNMA, 5.65%, 2034 2,540 2,762,072 - --------------------------------------------------------------------------------------------------------------------------------- Mecklenburg County, NC (Little Rock Apartments), FNMA, 5.15%, 2022 1,000 1,033,640 - --------------------------------------------------------------------------------------------------------------------------------- $6,058,268 - --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 6.6% North Carolina Housing Finance Agency Rev., "13-A", 4.25%, 2028 $2,820 $2,898,763 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "14-A", AMBAC, 4.35%, 2028 4,780 4,881,049 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "15-A", FSA, 4.85%, 2023 600 604,008 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "15-A", FSA, 4.95%, 2032 500 504,680 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "5-A", 5.55%, 2019 3,910 4,016,782 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "7-A", 6.15%, 2020 900 935,757 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "A", 5.25%, 2020 1,500 1,523,775 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "A", 5.375%, 2023 250 252,408 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency, "H", FHA, 6.05%, 2028 4,460 4,620,025 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "PP", FHA, 6.15%, 2017 1,740 1,824,025 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "RR", 5.85%, 2028 3,625 3,727,261 - --------------------------------------------------------------------------------------------------------------------------------- $25,788,533 - --------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 16.8% Brunswick County, NC, Certificates of Participation, FSA, 5.5%, 2020 $1,000 $1,123,770 - --------------------------------------------------------------------------------------------------------------------------------- Cabarrus County, NC, Development Corp., AMBAC, 5.3%, 2019 1,250 1,364,750 - --------------------------------------------------------------------------------------------------------------------------------- Cabarrus County, NC, Installment Financing Contract, 5%, 2021 5,500 5,811,245 - --------------------------------------------------------------------------------------------------------------------------------- Carteret County, NC, AMBAC, 5.625%, 2020 1,010 1,144,976 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Certificates of Participation (Convention Facilities), 5.5%, 2020 3,000 3,377,220 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Certificates of Participation (Convention Facilities), AMBAC, 0%, 2004 - 2008 12,320 11,804,578 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Certificates of Participation (Public Saftey Facilities), "D", 5.5%, 2020 3,000 3,362,400 - --------------------------------------------------------------------------------------------------------------------------------- Cumberland County, NC, Certificates of Participation (Civic Center), "A", AMBAC, 0%, 2011 - 2013 1,425 1,017,691 - --------------------------------------------------------------------------------------------------------------------------------- Forsyth County, NC, Certificates of Participation (Forsyth County Public Facilities Equipment), 5.25%, 2023 1,230 1,328,695 - --------------------------------------------------------------------------------------------------------------------------------- Forsyth County, NC, Certificates of Participation (Public Facilities & Equipment Project), 5.25%, 2019 775 852,733 - --------------------------------------------------------------------------------------------------------------------------------- Franklin County, NC, Certificates of Participation (Jail & School Projects), FGIC, 6.625%, 2014(++) 2,000 2,057,660 - --------------------------------------------------------------------------------------------------------------------------------- Harnett County, NC, Certificates of Participation, AMBAC, 6.2%, 2006 (++) 1,000 1,054,430 - --------------------------------------------------------------------------------------------------------------------------------- Harnett County, NC, Certificates of Participation, FSA, 5.25%, 2015 1,020 1,170,899 - --------------------------------------------------------------------------------------------------------------------------------- Harnett County, NC, Certificates of Participation, FSA, 5.5%, 2016 1,225 1,405,786 - --------------------------------------------------------------------------------------------------------------------------------- Iredell County, NC, Public Facilities (School Projects), AMBAC, 5.5%, 2019(++) 1,000 1,165,020 - --------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, Certificates of Participation (New Hanover County Projects), AMBAC, 5.25%, 2018 1,635 1,812,839 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Infrastructure Financial Corp. (Correctional Facilities Projects), 5%, 2021 2,500 2,638,025 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Infrastructure Financial Corp., Certificates of Participation (North Carolina State Correctional Facilities), "A", 5%, 2023 1,345 1,404,853 - --------------------------------------------------------------------------------------------------------------------------------- Pitt County, NC, Certificates of Participation (School Facilities Improvement), "A", FSA, 5.5%, 2020 1,250 1,404,863 - --------------------------------------------------------------------------------------------------------------------------------- Pitt County, NC, Certificates of Participation (School Facilities Improvement), "B", FSA, 5.75%, 2018 - 2019 2,780 3,207,745 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Bank & Finance Agency (Kidder), 7.5%, 2006 7,000 7,575,820 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013+(+) 1,500 1,981,260 - --------------------------------------------------------------------------------------------------------------------------------- Randolph County, NC, Certificates of Participation, FSA, 5.6%, 2018 3,000 3,489,360 - --------------------------------------------------------------------------------------------------------------------------------- Rockingham, NC, Certificates of Participation, AMBAC, 5.125%, 2024 $350 $372,243 - --------------------------------------------------------------------------------------------------------------------------------- Rutherford County, NC, Certificates of Participation (Rutherford County School), AMBAC, 5%, 2023 840 883,865 - --------------------------------------------------------------------------------------------------------------------------------- Winston Salem, NC, Certificates of Participation, "C", 5%, 2018 2,575 2,763,670 - --------------------------------------------------------------------------------------------------------------------------------- $65,576,396 - --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.4% Virgin Islands Public Finance Authority Rev., 5.5%, 2022 $1,650 $1,706,727 - --------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 1,000 1,094,520 - --------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., FSA, 5.25%, 2020 1,200 1,322,724 - --------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., FSA, 5%, 2022 1,315 1,399,555 - --------------------------------------------------------------------------------------------------------------------------------- $5,523,526 - --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $1,930 $1,903,463 - --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation Authority Tax - 2.0% Rev., RITES, FSA, 10.5541%, 2018+(+) $5,425 $7,828,709 - --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 7.4% Appalachian State University, NC, "A", FGIC, 5.125%, 2022 $1,260 $1,349,485 - --------------------------------------------------------------------------------------------------------------------------------- Appalachian State University, NC, Rev. (Package Systems), FSA, 5.6%, 2020 2,285 2,592,241 - --------------------------------------------------------------------------------------------------------------------------------- East Carolina University, NC, Rev., "A", AMBAC, 5.25%, 2021 1,375 1,499,259 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (Duke University), "A", 5.125%, 2041 4,915 5,111,797 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (High Point University), 5.125%, 2018 - 2021 810 864,537 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (Johnson & Wales University), "A", XLCA, 5.25%, 2021 - 2022 2,645 2,871,254 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Industrial Tourist Authority (University Plaza), "A", MBIA, 5%, 2020 2,180 2,323,749 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Greensboro Rev., "A", FSA, 5%, 2020 2,835 3,029,679 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Greensboro Rev., "B", FSA, 5.375%, 2017 325 363,561 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Ashville Rev., Refunding General, "A", AMBAC, 5%, 2019 530 568,171 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Greensboro Rev., "B", FSA, 5.375%, 2016 1,085 1,223,077 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, University Rev., 0%, 2015 3,250 2,066,903 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, University Rev., 5%, 2028 2,000 2,094,160 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Wilmington Rev., "A", AMBAC, 5%, 2019 1,375 1,479,775 - --------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Wilmington Rev., AMBAC, 5.25%, 2021 1,380 1,500,101 - --------------------------------------------------------------------------------------------------------------------------------- $28,937,749 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Wake County, NC, Industrial Facilities & Pollution Control Rev. Owned - 0.7% (Carolina Power & Light Co.), 5.375%, 2017 $2,500 $2,718,000 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 15.3% North Carolina Eastern Municipal Power Agency, "A", 7.5%, 2010 $2,595 $3,257,659 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, "A", MBIA, 7.5%, 2010 3,005 3,743,208 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, "A", MBIA, 5%, 2017 3,120 3,485,227 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, "B", MBIA, 7.25%, 2007 5,000 5,717,650 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, AMBAC, 6%, 2018 1,245 1,503,113 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, RITES, AMBAC, 10.5082%, 2018+(+) 6,500 9,195,160 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, "A", MBIA, 5.5%, 2014 3,000 3,490,320 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., 6%, 2011 5,000 5,895,850 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., 6.375%, 2013 1,000 1,141,170 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 7%, 2007 $5,000 $5,684,400 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, ROLS, 9.358%, 2020+(+) 3,000 3,485,460 - --------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, ROLS, MBIA, 9.358%, 2019+(+) 5,000 5,870,300 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., FSA, 6%, 2016(++) 5,000 5,160,400 - --------------------------------------------------------------------------------------------------------------------------------- Raleigh, NC, Combined Enterprise Systems Rev., 5.125%, 2022 2,000 2,149,960 - --------------------------------------------------------------------------------------------------------------------------------- $59,779,877 - --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 9.9% Broad River, NC, Water Authority Rev., MBIA, 5.75%, 2019 $1,490 $1,724,660 - --------------------------------------------------------------------------------------------------------------------------------- Buncombe County, NC, Metropolitan Sewer District, MBIA, 5%, 2019 1,245 1,344,737 - --------------------------------------------------------------------------------------------------------------------------------- Cary, NC, Combined Enterprise Systems Rev., 5%, 2026 1,000 1,037,330 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Storm Water Fee, 6%, 2020(++) 3,180 3,794,312 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Water & Sewer Systems Rev., 5.75%, 2016 - 2018(++) 7,075 8,324,633 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Water & Sewer Systems Rev., 5.5%, 2017 1,650 1,886,049 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Water & Sewer Systems Rev., 5.25%, 2021 4,000 4,320,040 - --------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Water & Sewer Systems Rev., 5.25%, 2025(++) 3,000 3,452,820 - --------------------------------------------------------------------------------------------------------------------------------- Durham County, NC, Enterprise Systems Rev., 5%, 2023 1,675 1,769,872 - --------------------------------------------------------------------------------------------------------------------------------- Fayetteville, NC, Public Works Commission Rev., FSA, 5.25%, 2016 1,500 1,672,605 - --------------------------------------------------------------------------------------------------------------------------------- Greensboro, NC, Enterprise Systems Rev., "A", 5.125%, 2018 - 2019 3,240 3,503,166 - --------------------------------------------------------------------------------------------------------------------------------- Greenville, NC, Combined Enterprise Systems Rev., FSA, 5%, 2016 1,005 1,098,746 - --------------------------------------------------------------------------------------------------------------------------------- Greenville, NC, Combined Enterprise Systems Rev., FSA, 5.25%, 2019 1,170 1,286,754 - --------------------------------------------------------------------------------------------------------------------------------- Kannapolis, NC, Water & Sewer Rev., "B", FSA, 5.25%, 2021 1,000 1,073,140 - --------------------------------------------------------------------------------------------------------------------------------- Winston Salem, NC, Water & Sewer Systems Rev., 5.125%, 2028(++) 2,000 2,285,154 - --------------------------------------------------------------------------------------------------------------------------------- $38,574,018 - --------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $349,479,083) $383,716,583 - --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.8% - --------------------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, CA, Toll Bridge Rev. "A", due 4/07/04 $2,000 $2,000,000 - --------------------------------------------------------------------------------------------------------------------------------- California State, Department of Water Resources, Power Supply Rev., due 4/07/04 500 500,000 - --------------------------------------------------------------------------------------------------------------------------------- Knoxville, TN, Utilities Board Rev., due 4/01/04 75 75,000 - --------------------------------------------------------------------------------------------------------------------------------- Missouri Development Finance, Board of Cultural Facilities Rev. (Nelson Gallery), "B", due 4/01/04 400 400,000 - --------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority, Local Government Public Improvement, "II G1", due 4/07/04 115 115,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $3,090,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $352,569,083) $386,806,583 - --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.0% 3,997,328 - --------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $390,803,911 - --------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - 3/31/04 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 - 99.1%
- --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Allegheny County PA, Airport Rev. (Pittsburgh International Revenue - 1.9% Airport), FGIC, 6.125%, 2017 $500 $550,565 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County PA, Airport Rev. (Pittsburgh International Airport), MBIA, 5.75%, 2014 1,000 1,124,940 - --------------------------------------------------------------------------------------------------------------------------------- Susquehanna Area Regional Airport, 5.375%, 2018 200 200,216 - --------------------------------------------------------------------------------------------------------------------------------- Susquehanna Area Regional Airport, AMBAC, 5.375%, 2023 500 531,035 - --------------------------------------------------------------------------------------------------------------------------------- $2,406,756 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 9.6% Allegheny County, PA, FGIC, 5.3%, 2018 $500 $543,550 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, FGIC, 5.4%, 2019 500 544,035 - --------------------------------------------------------------------------------------------------------------------------------- Allentown, PA, FGIC, 5%, 2022 1,350 1,425,614 - --------------------------------------------------------------------------------------------------------------------------------- Beaver County, PA, MBIA, 5.75%, 2006(++) 250 275,733 - --------------------------------------------------------------------------------------------------------------------------------- Butler County, PA, FGIC, 5.25%, 2022 675 776,513 - --------------------------------------------------------------------------------------------------------------------------------- Butler County, PA, FGIC, 5.25%, 2023 645 742,002 - --------------------------------------------------------------------------------------------------------------------------------- Centre County, PA, MBIA, 5.25%, 2018 1,000 1,097,690 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, FGIC, 9.896%, 2015(+)+ 1,000 1,348,100 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, XLCA, 9.806%, 2017(+)+ 1,000 1,332,620 - --------------------------------------------------------------------------------------------------------------------------------- Luzerne County, PA, MBIA, 5.25%, 2025 500 532,125 - --------------------------------------------------------------------------------------------------------------------------------- North Huntingdon Township, PA, AMBAC, 5.25%, 2019 500 535,890 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Finance Rev. (Pennsylvania Hills), FGIC, 5.45%, 2019 500 543,170 - --------------------------------------------------------------------------------------------------------------------------------- State of Pennsylvania, 6.25%, 2010 300 360,192 - --------------------------------------------------------------------------------------------------------------------------------- State of Pennsylvania, 6%, 2019 1,000 1,169,820 - --------------------------------------------------------------------------------------------------------------------------------- Westmoreland County, PA, FGIC, 5%, 2019 580 621,505 - --------------------------------------------------------------------------------------------------------------------------------- $11,848,559 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 0.5% Pittsburgh, PA, FGIC, 5.75%, 2009(++) $500 $581,675 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 21.2% Butler, PA, School District, FGIC, 5.375%, 2018 $500 $545,385 - --------------------------------------------------------------------------------------------------------------------------------- Chambersburg, PA, School District, FSA, 5%, 2016 500 538,110 - --------------------------------------------------------------------------------------------------------------------------------- Dover, PA, School District, FGIC, 5%, 2015 1,510 1,633,820 - --------------------------------------------------------------------------------------------------------------------------------- Downingtown, PA, School District, AMBAC, 5.65%, 2019 500 561,125 - --------------------------------------------------------------------------------------------------------------------------------- Exeter Township, PA, School District, FGIC, 5%, 2025 1,000 1,042,920 - --------------------------------------------------------------------------------------------------------------------------------- Garnet Valley, PA, School District, FGIC, 5.5%, 2015 750 853,373 - --------------------------------------------------------------------------------------------------------------------------------- Gateway, PA, Alleghany School District, FGIC, 5.2%, 2023 1,000 1,066,070 - --------------------------------------------------------------------------------------------------------------------------------- Keystone Oaks, PA, School District, FGIC, 5%, 2016 920 978,190 - --------------------------------------------------------------------------------------------------------------------------------- Mt. Lebanon PA, School District, MBIA, 5%, 2020 1,000 1,063,480 - --------------------------------------------------------------------------------------------------------------------------------- Norristown, PA, School District, FGIC, 5%, 2021 500 529,580 - --------------------------------------------------------------------------------------------------------------------------------- North Allegheny, PA, School District, FGIC, 5.05%, 2022 590 619,140 - --------------------------------------------------------------------------------------------------------------------------------- North Pocono, PA, School District, FGIC, 5%, 2023 500 523,990 - --------------------------------------------------------------------------------------------------------------------------------- Palmyra, PA, School District, FGIC, 5.375%, 2016 820 919,515 - --------------------------------------------------------------------------------------------------------------------------------- Pennridge, PA, School District, MBIA, 5%, 2020 500 531,740 - --------------------------------------------------------------------------------------------------------------------------------- Pennridge, PA, School District, MBIA, 5%, 2021 500 529,450 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev., State Systems of Higher Education, AMBAC, 5%, 2018 500 531,830 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Public School Building (Garnet Valley School Disctrict), AMBAC, 5.5%, 2018 $1,005 $1,129,278 - --------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, FSA, 5%, 2019 500 528,030 - --------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, FSA, 5%, 2023 1,000 1,044,410 - --------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, FSA, 5%, 2024 1,000 1,042,890 - --------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, FSA, 5%, 2025 1,260 1,311,194 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, School District, AMBAC, 5.375%, 2019 500 537,710 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, School District, FSA, 5.75%, 2019 500 571,335 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, School District, MBIA, 6%, 2016 500 584,705 - --------------------------------------------------------------------------------------------------------------------------------- Pittsburgh, PA, School District, 5.5%, 2009(++) 1,320 1,526,263 - --------------------------------------------------------------------------------------------------------------------------------- Riverside, PA, School District, FGIC, 5.45%, 2017 500 577,900 - --------------------------------------------------------------------------------------------------------------------------------- Riverside, PA, School District, FGIC, 5.5%, 2020 500 579,380 - --------------------------------------------------------------------------------------------------------------------------------- South Park, PA, School District, FGIC, 5%, 2019 750 794,265 - --------------------------------------------------------------------------------------------------------------------------------- Southeastern Area, PA, Special Schools Authority Rev., 0%, 2007 360 330,224 - --------------------------------------------------------------------------------------------------------------------------------- State Public School Building Authority, Pennsylvania School (Lease Philadelphia School District), FSA, 5.25%, 2024 1,000 1,066,060 - --------------------------------------------------------------------------------------------------------------------------------- State Public School Building Authority, Pennsylvania School (Tuscarora School District), FSA, 5%, 2024 1,000 1,077,980 - --------------------------------------------------------------------------------------------------------------------------------- Wilson, PA, School District, FGIC, 5.125%, 2017 1,000 1,083,150 - --------------------------------------------------------------------------------------------------------------------------------- $26,252,492 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Allegheny County, PA, Hospital Development Authority Rev. (South Hospitals - 10.0% Hills Health System), MBIA, 5.8%, 2016 $500 $546,565 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (South Hills Health Systems), 9.25%, 2022 50 55,421 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (UPMC Health Systems), MBIA, 5%, 2018 500 529,400 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Pennsylvania Allegheny Health), 6.75%, 2025 555 567,981 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Pennsylvania Allegheny Health), 9.25%, 2030 150 166,263 - --------------------------------------------------------------------------------------------------------------------------------- Blair County, PA, Hospital Authority Rev. (Altoona), AMBAC, 5.5%, 2008 470 529,403 - --------------------------------------------------------------------------------------------------------------------------------- Chester County, PA, Health & Education (Main Line Health Systems), 5.5%, 2015 335 342,176 - --------------------------------------------------------------------------------------------------------------------------------- Cumberland County PA, Municipal Authority Rev. (Carlisle Hospital & Health Centers), 6.8%, 2004(++) 250 263,778 - --------------------------------------------------------------------------------------------------------------------------------- Erie County, PA, Hospital Authority Rev. (Hamot Health Foundation), AMBAC, 5.25%, 2017 675 743,094 - --------------------------------------------------------------------------------------------------------------------------------- Lancaster County, PA, Hospital Authority Rev., 5.5%, 2026 500 511,690 - --------------------------------------------------------------------------------------------------------------------------------- Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan Hospital), 5%, 2018 200 203,932 - --------------------------------------------------------------------------------------------------------------------------------- Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan Hospital), 6%, 2035 350 359,135 - --------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital), 5.25%, 2032 600 608,130 - --------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital), MBIA, 7%, 2016 250 321,410 - --------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, General Purpose Authority (St. Lukes Bethlehem Hospital), 5.375%, 2033 600 605,718 - --------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, Hospital Rev. (Lehigh Valley Hospital), FSA, 5.25%, 2019 500 540,730 - --------------------------------------------------------------------------------------------------------------------------------- Lycoming County, PA, Authority Hospital Rev. (Williamsport Hospital Obligation Group), CONNIE LEE, 5.375%, 2010 $750 $807,578 - --------------------------------------------------------------------------------------------------------------------------------- Monroe County, PA, Hospital Authority Rev. (Pocono Medical Center), 6%, 2043 750 780,053 - --------------------------------------------------------------------------------------------------------------------------------- Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial Hospital), 5.625%, 2032 400 405,948 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev., 6.25%, 2018 100 111,165 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev., 6%, 2031 650 694,590 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Health & Educational Facilities Rev. (Jeane Health), 6.6%, 2010 180 191,824 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Health & Educational Facilities Rev. (Temple University), 6.625%, 2023 250 252,765 - --------------------------------------------------------------------------------------------------------------------------------- Sayre, PA, Health Care Facilities Authority Rev., 5.875%, 2031 500 524,840 - --------------------------------------------------------------------------------------------------------------------------------- Sayre, PA, Health Care Facilities Authority Rev. (Latrobe Hospital), AMBAC, 5.25%, 2015 585 650,760 - --------------------------------------------------------------------------------------------------------------------------------- Scranton-Lackawanna, PA, Health & Welfare Authority Rev. (Allied Rehab Hospital), AMBAC, 7.125%, 2005 110 111,432 - --------------------------------------------------------------------------------------------------------------------------------- Southcentral Pennsylvania General Authority Rev. (York Hospital), 5.625%, 2026 600 630,990 - --------------------------------------------------------------------------------------------------------------------------------- West Shore, PA, Hospital Authority (Holy Spirit Hospital), 6.25%, 2032 350 362,327 - --------------------------------------------------------------------------------------------------------------------------------- $12,419,098 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Blair County, PA, Industrial Development Authority Rev. (Village of Term Care - 0.8% Penn St.), 7%, 2034 $150 $155,766 - --------------------------------------------------------------------------------------------------------------------------------- Clarion, PA, Industrial Development Authority Rev. (Beverly Enterprises, Inc.), 7.5%, 2012 150 153,977 - --------------------------------------------------------------------------------------------------------------------------------- Cumberland County, PA, Retirement Community Rev. (Wesley Affiliated Services), 7.25%, 2035 150 152,961 - --------------------------------------------------------------------------------------------------------------------------------- Lancaster County, PA, Hospital Authority Rev. (Willow Valley Retirement Project), 5.875%, 2031 500 517,565 - --------------------------------------------------------------------------------------------------------------------------------- $980,269 - --------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.1% Montgomery County, PA, Industrial Development Authority (Wordsworth Academy), 8%, 2024 $150 $150,987 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - New Morgan, PA, Industrial Development Authority, Solid Waste 0.8% Disposal Rev. (New Morgan Landfill Co, Inc.), 6.5%, 2019 $500 $480,245 - --------------------------------------------------------------------------------------------------------------------------------- Westmoreland County, PA, Industrial Development Corp. (Waste Management), LOC, 5.1%, 2018 500 538,710 - --------------------------------------------------------------------------------------------------------------------------------- $1,018,955 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Bucks County, PA, Industrial Development Authority Rev. (USX Corp.), Other - 1.5% 5.4%, 2017 $300 $340,977 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority Rev. (Amtrak), 6.125%, 2021 150 153,599 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority, Solid Waste Disposal Rev. (Proctor & Gamble), 5.375%, 2031 1,000 1,099,920 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority, Wastewater Treatment Rev. (Sunoco Co.), 7.6%, 2024 250 263,470 - --------------------------------------------------------------------------------------------------------------------------------- $1,857,966 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Erie County, PA, Industrial Development Authority (International Paper - 0.8% Paper Co.), 5.3%, 2012 $650 $716,424 - --------------------------------------------------------------------------------------------------------------------------------- Erie County, PA, Industrial Development Authority (International Paper Co.), 7.625%, 2018 250 262,543 - --------------------------------------------------------------------------------------------------------------------------------- $978,967 - --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.2% Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013 $185 $187,540 - --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Philadelphia, PA, Housing Authority Capital Program Rev., FSA, Revenue - 0.9% 5.25%, 2014 $1,000 $1,136,620 - --------------------------------------------------------------------------------------------------------------------------------- Parking - 1.4% Philadelphia, PA, Public Parking Authority Rev., FSA, 5.625%, 2015 $1,000 $1,134,110 - --------------------------------------------------------------------------------------------------------------------------------- Pittsburgh, PA, Public Parking Authority Rev., AMBAC, 6%, 2020 500 583,395 - --------------------------------------------------------------------------------------------------------------------------------- $1,717,505 - --------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium Revenue - 0.4% Hotel Room), AMBAC, 5.25%, 2017 $500 $543,370 - --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Philadelphia, PA, Redevelopment Authority Home Improvement Loan Local - 0.3% Rev., FHA, 6.1%, 2010 $60 $62,440 - --------------------------------------------------------------------------------------------------------------------------------- Pittsburgh, PA, Urban Development Authority Mortgage Rev., 5.5%, 2010 305 310,270 - --------------------------------------------------------------------------------------------------------------------------------- $372,710 - --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., State - 5.0% 4.25%, 2012 $500 $511,220 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.75%, 2013 1,000 1,051,380 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5%, 2014 500 518,695 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.1%, 2020 1,405 1,433,212 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.25%, 2021 750 761,108 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.25%, 2033 795 844,799 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5%, 2034 1,000 1,063,390 - --------------------------------------------------------------------------------------------------------------------------------- $6,183,804 - --------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.3% Delaware County, PA, Industrial Development Authority Rev., 6.2%, 2019 $300 $312,279 - --------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 8.2% Delaware Valley, PA, Regional Finance Authority, 5.5%, 2012 $1,000 $1,136,930 - --------------------------------------------------------------------------------------------------------------------------------- Delaware Valley, PA, Regional Finance Authority, RITES, AMBAC, 9.8655%, 2018(+) 500 657,340 - --------------------------------------------------------------------------------------------------------------------------------- Northumberland County, PA (Country Careers And Arts Center), 6.65%, 2020 265 276,800 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Convention Center Rev., 6.75%, 2019 250 258,760 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Industrial Development Authority, Economic Development, AMBAC, 7%, 2007 300 340,632 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Industrial Development Authority, Economic Development, AMBAC, 5.8%, 2009 400 458,900 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Industrial Development Authority, FSA, 5.125%, 2026 1,000 1,046,030 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Industrial Development Authority, FSA, 5.25%, 2030 750 786,225 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Industrial Development Authority, MBIA, 5.35%, 2012 500 553,115 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority, 5%, 2007 1,585 1,732,310 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., 5.7%, 2025 1,000 1,099,840 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.304%, 2013(+)+ 500 660,660 - --------------------------------------------------------------------------------------------------------------------------------- State Public School Building Authority, Pennsylvania School (Brandywine Heights), FGIC, 5%, 2019 1,000 1,069,350 - --------------------------------------------------------------------------------------------------------------------------------- $10,076,892 - --------------------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 1.3% Pennsylvania Higher Education, Capital Acquistion Rev., MBIA, 5%, 2026 $1,500 $1,550,625 - --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.5% Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium Hotel Room), AMBAC, 5.25%, 2013 $500 $557,535 - --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.4% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $340 $335,325 - --------------------------------------------------------------------------------------------------------------------------------- Tobacco Settlement Financing Corp., 5%, 2021 170 164,050 - --------------------------------------------------------------------------------------------------------------------------------- $499,375 - --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 6.8% Allegheny County, PA, Port Authority Special Rev., FGIC, 5%, 2021 $750 $790,073 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Port Authority Special Rev., MBIA, 6.25%, 2009(++) 500 594,300 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, 5.5%, 2013 500 573,875 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, MBIA, 5.5%, 2015 500 587,025 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, ROLS, MBIA, 9.896%, 2020+(+) 1,500 2,017,890 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Turnpike Commission, 5.5%, 2015 250 283,203 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Turnpike Commission, AMBAC, 5%, 2041 580 598,369 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Turnpike Commission, MBIA, 5%, 2024 1,775 1,855,727 - --------------------------------------------------------------------------------------------------------------------------------- Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC, 5.25%, 2013 500 556,100 - --------------------------------------------------------------------------------------------------------------------------------- Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC, 5.375%, 2017 500 548,890 - --------------------------------------------------------------------------------------------------------------------------------- $8,405,452 - --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Allegheny County, PA, Higher Education Building Authority Rev. 9.9% (Duquesne University), FGIC, 5%, 2034 $1,500 $1,556,265 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, (Carnegie Mellon University), 5.25%, 2032 750 788,648 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, (Chatham College), 5.95%, 2032 335 351,787 - --------------------------------------------------------------------------------------------------------------------------------- Cumberland County, PA, Municipal Authority (Dickinson College), AMBAC, 5.55%, 2017 535 591,919 - --------------------------------------------------------------------------------------------------------------------------------- Delaware County, PA, Authority University Rev. (Villanova University), FGIC, 5.25%, 2020 1,000 1,089,470 - --------------------------------------------------------------------------------------------------------------------------------- Delaware County, PA, Authority University Rev. (Villanova University), FGIC, 5.25%, 2021 1,000 1,084,620 - --------------------------------------------------------------------------------------------------------------------------------- Lycoming County, PA, (College of Technology), AMBAC, 5.25%, 2032 750 791,438 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Clarion University Foundation), XLCA, 5%, 2023 1,000 1,049,260 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University), 5.2%, 2032 500 520,410 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Independent Colleges & University), FGIC, 5%, 2024 1,000 1,047,110 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Marywood University), MBIA, 5.5%, 2018 300 337,530 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Widener University), 5.375%, 2029 300 305,859 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Public School Building Authority (Delaware County College), MBIA, 5.75%, 2016 500 581,185 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania State University, 5%, 2029 1,000 1,041,110 - --------------------------------------------------------------------------------------------------------------------------------- Union County, PA, Higher Educational Facilities Financing Authority, University Rev. (Bucknell University), 5.25%, 2021 1,000 1,079,800 - --------------------------------------------------------------------------------------------------------------------------------- $12,216,411 - --------------------------------------------------------------------------------------------------------------------------------- Universities - Pennsylvania Economic Development Financing Authority (Germantown Dormatories - 0.5% Friends School Project), 5.35%, 2031 $600 $627,426 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Cogeneration - Carbon County, PA, Industrial Development Authority Rev. (Panther 0.2% Creek Partners), 6.65%, 2010 $135 $147,776 - --------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority, Resources Recovery Rev. (Northhampton Generating), 6.4%, 2009 150 153,371 - --------------------------------------------------------------------------------------------------------------------------------- $301,147 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.0% Guam Power Authority Rev., RITES, AMBAC, 9.043%, 2014(+)+ $2,170 $2,659,543 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Gas Works Rev., 6%, 2013(++) 1,645 1,965,430 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Gas Works Rev. (1998 General Ordinance), FSA, 5.25%, 2020 1,000 1,081,400 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2016 1,000 1,120,890 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2018 500 559,335 - --------------------------------------------------------------------------------------------------------------------------------- $7,386,598 - --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 9.6% Allegheny County, PA, Sewer Rev., MBIA, 5.75%, 2017 $750 $873,840 - --------------------------------------------------------------------------------------------------------------------------------- Bucks County, PA, (Suburban Water Co.), FGIC, 5.55%, 2032 1,000 1,063,800 - --------------------------------------------------------------------------------------------------------------------------------- Delaware County, PA, Water Quality Control Authority, Sewer Rev., FGIC, 5%, 2017 1,000 1,067,540 - --------------------------------------------------------------------------------------------------------------------------------- Delaware County, PA, Water Quality Control Authority, Sewer Rev., FGIC, 5%, 2018 750 794,603 - --------------------------------------------------------------------------------------------------------------------------------- Fairview Township, PA, Sewer Rev., FGIC, 5.05%, 2018 750 797,025 - --------------------------------------------------------------------------------------------------------------------------------- Lancaster County, PA, Water & Sewer Authority Rev., MBIA, 5%, 2023 1,450 1,526,285 - --------------------------------------------------------------------------------------------------------------------------------- Lancaster County, PA, Water & Sewer Authority Rev., MBIA, 5%, 2028 440 458,071 - --------------------------------------------------------------------------------------------------------------------------------- Luzerne County, PA, Industrial Development Authority, 6.05%, 2019 300 307,680 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Water Rev., 5.5%, 2014 1,000 1,072,170 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Water Rev., FGIC, 5.25%, 2014 985 1,111,228 - --------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Water Rev., MBIA, 6.25%, 2012 550 664,736 - --------------------------------------------------------------------------------------------------------------------------------- University Area Joint Authority, Sewer Rev., MBIA, 5%, 2023 1,500 1,562,370 - --------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 500 539,040 - --------------------------------------------------------------------------------------------------------------------------------- $11,838,388 - --------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $114,746,060) $122,409,401 - --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.5% - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), due 4/07/04 $1,400 $1,400,000 - --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), due 4/07/04 200 200,000 - --------------------------------------------------------------------------------------------------------------------------------- New Castle, PA, Area Hospital Authority (Jameson Memorial Hospital), due 4/07/04 325 325,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $1,925,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $116,671,060) $124,334,401 - --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (0.6)% (771,220 - --------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $123,563,181 - --------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF FUND INVESTMENTS - 3/31/04 MFS(R) SOUTH CAROLINA MUNICIPAL BOND - --------------------------------------------------------------------------------------------------------------------------------- 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 - 97.1%
- --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 3.2% Horry County, SC, "A", FSA, 5.7%, 2027 $2,250 $2,387,565 - --------------------------------------------------------------------------------------------------------------------------------- Richland Lexington, SC, Airport Rev. (Columbia Airport), "A", AMBAC, 5.7%, 2026 1,000 1,046,500 - --------------------------------------------------------------------------------------------------------------------------------- Richland Lexington, SC, Airport Rev. (Columbia Airport), "A", FSA, 5%, 2026 1,000 1,030,390 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina State Ports Authority Rev., FSA, 5%, 2016 1,000 1,065,540 - --------------------------------------------------------------------------------------------------------------------------------- $5,529,995 - --------------------------------------------------------------------------------------------------------------------------------- Chemicals - 0.5% York County, SC, Industrial Rev., Exempt Facilities Hoechst Celanese, 5.7%, 2024 $850 $838,857 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 8.1% Berkeley County, SC, Refunding & Improvement, FSA, 5%, 2024 $1,560 $1,635,582 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, RITES, 9.5771%, 2018 - 2019+(+) 3,750 4,750,155 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, RITES, MBIA, 10.0771%, 2020+(+) 2,000 2,661,000 - --------------------------------------------------------------------------------------------------------------------------------- Hilton Head Island, SC, Public Facilities Corp., AMBAC, 5.75%, 2014 1,750 1,854,125 - --------------------------------------------------------------------------------------------------------------------------------- Hilton Head Island, SC, Rev., MBIA, 5.125%, 2022 1,000 1,068,990 - --------------------------------------------------------------------------------------------------------------------------------- Horry County, SC, Hospital Fee Special Obligation, 6%, 2015 915 1,050,329 - --------------------------------------------------------------------------------------------------------------------------------- Richard Lexington Riverbanks, SC, Parks District, FGIC, 5.8%, 2018 1,000 1,143,570 - --------------------------------------------------------------------------------------------------------------------------------- $14,163,751 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.3% Beaufort County, SC, FGIC, 5.25%, 2018 $1,000 $1,081,410 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, RITES, FSA, 10.6246%, 2016+(+) 850 1,155,626 - --------------------------------------------------------------------------------------------------------------------------------- $2,237,036 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 10.0% Anderson County, SC, School District, "B", 5.5%, 2018 $1,465 $1,653,589 - --------------------------------------------------------------------------------------------------------------------------------- Beaufort County, SC, School District, "B", 5.625%, 2018 2,000 2,237,200 - --------------------------------------------------------------------------------------------------------------------------------- Charleston County, SC, School District, "B", 5%, 2019 735 783,503 - --------------------------------------------------------------------------------------------------------------------------------- Chesterfield County, SC, School District, FSA, 5%, 2023 3,000 3,139,710 - --------------------------------------------------------------------------------------------------------------------------------- Georgetown County, SC, School District, 5.25%, 2018 - 2019 2,500 2,721,815 - --------------------------------------------------------------------------------------------------------------------------------- Orangeburg County, SC, Consolidated School District, FSA, 5.25%, 2020 1,065 1,155,355 - --------------------------------------------------------------------------------------------------------------------------------- Orangeburg County, SC, Consolidated School District, FSA, 5.375%, 2022 2,050 2,231,138 - --------------------------------------------------------------------------------------------------------------------------------- Richland County, SC, School District, 5.1%, 2021 1,750 1,853,145 - --------------------------------------------------------------------------------------------------------------------------------- Spartanburg County, SC, School District 7, 5%, 2019 1,620 1,769,704 - --------------------------------------------------------------------------------------------------------------------------------- $17,545,159 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 15.3% Charleston County, SC (Care Alliance Health Services), "A", FSA, 5%, 2019 $1,000 $1,065,090 - --------------------------------------------------------------------------------------------------------------------------------- Charleston County, SC, Hospital Facilities Rev. (Medical Society Health), MBIA, 5%, 2022(++) 2,450 2,456,076 - --------------------------------------------------------------------------------------------------------------------------------- Greenville, SC, Hospital Systems, Hospital Facilities Rev., 6%, 2020 3,400 3,987,554 - --------------------------------------------------------------------------------------------------------------------------------- Greenwood County, SC, Hospital Facilities Rev. (Self Memorial Hospital), 5.5%, 2021 1,000 1,038,540 - --------------------------------------------------------------------------------------------------------------------------------- Greenwood County, SC, Hospital Facilities Rev. (Self Regional Heathcare), "A", FSA, 5%, 2017 1,000 1,077,880 - --------------------------------------------------------------------------------------------------------------------------------- Horry County, SC, Hospital Facilities Rev. (Conway Hospital, Inc.), 6.75%, 2012 785 795,723 - --------------------------------------------------------------------------------------------------------------------------------- Lexington County, SC, Health Services District, Inc., Hospital Rev., Refunding & Improvement, 5.5%, 2032 1,000 1,035,900 - --------------------------------------------------------------------------------------------------------------------------------- Lexington County, SC, Health Services District, Inc., Hospital Rev., Refunding & Improvement, FSA, 5.125%, 2021 $1,500 $1,587,645 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Anderson Area Medical Center, Inc.), MBIA, 5.25%, 2015 1,750 1,877,418 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Georgetown Memorial Hospital), ASST GTY, 5.25%, 2021 1,500 1,581,915 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Bon Secours Health Systems, Inc.), "A", 5.625%, 2030 1,250 1,273,725 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Georgetown Memorial Hospital), AMBAC, 6%, 2014 1,000 1,183,840 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Georgetown Memorial Hospital), AMBAC, 5%, 2023 1,000 1,031,890 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs Economic Development Authority, Hospital Facililties Rev. (Palmetto Health Alliance), 6.25%, 2031 750 792,578 - --------------------------------------------------------------------------------------------------------------------------------- Spartanburg County, SC, Health Service Rev., AMBAC, 5.3%, 2020 - 2025 3,500 3,650,040 - --------------------------------------------------------------------------------------------------------------------------------- Spartanburg County, SC, Health Service Rev., FSA, 5.25%, 2032 2,250 2,365,988 - --------------------------------------------------------------------------------------------------------------------------------- $26,801,802 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Greenville County, SC, Hospital Rev., 1st Mortgage Facilities Term Care - 0.8% Chestnut Hill, "A", 8%, 2015 $1,585 $1,417,006 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Calhoun County, SC, Solid Waste Disposal Facilities Rev. (Carolina Other - 0.7% Eastman Co.), 6.75%, 2017(++) $1,000 $1,284,250 - --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Darlington County, SC, Industrial Development Rev. (Sonoco Products Paper - 2.0% Co.), 6.125%, 2025 $1,500 $1,573,830 - --------------------------------------------------------------------------------------------------------------------------------- Florence County, SC, Industrial Development Rev. (Stone Container Corp.), 7.375%, 2007 335 339,439 - --------------------------------------------------------------------------------------------------------------------------------- Georgetown County, SC, Environmental Improvement Rev. (International Paper), "A", 5.3%, 2028 500 498,725 - --------------------------------------------------------------------------------------------------------------------------------- Richland County, SC, Environmental Improvement Rev. (International Paper), "A", 6.1%, 2023 1,000 1,079,750 - --------------------------------------------------------------------------------------------------------------------------------- $3,491,744 - --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & South Carolina Jobs & Economic Development Authority (Myrtle Beach Tourism - 1.1% Convention), "B", MBIA, 5.125%, 2018 - 2020 $1,795 $1,915,912 - --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing South Carolina Housing, Finance & Development Authority (Hunting Revenue - 1.4% Ridge Apartments), 6.75%, 2025 $1,000 $1,030,910 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Housing, Finance & Development Authority (Runaway Bay Apartments), 6.125%, 2015 1,300 1,356,121 - --------------------------------------------------------------------------------------------------------------------------------- $2,387,031 - --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - South Carolina Housing, Finance & Development Authority Rev., "A", State - 2.1% AMBAC, 4.85%, 2023 $985 $981,326 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Housing, Finance & Development Authority Rev., "A-2", FSA, 6%, 2020 560 567,986 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Housing, Finance & Development Authority Rev., "A-2", FSA, 5.35%, 2024 2,000 2,049,640 - --------------------------------------------------------------------------------------------------------------------------------- $3,598,952 - --------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 8.6% Berkeley County, SC, School District, 5%, 2020 $2,000 $2,124,780 - --------------------------------------------------------------------------------------------------------------------------------- Berkeley County, SC, School District (Berkeley School Facilities Group, Inc.), AMBAC, 5%, 2016 500 538,230 - --------------------------------------------------------------------------------------------------------------------------------- Greenville County, SC (University Center), "A", AMBAC, 5.25%, 2019 1,000 1,079,950 - --------------------------------------------------------------------------------------------------------------------------------- Greenville County, SC, Public Facilities Corp., Certificates of Participation (Courthouse Project), AMBAC, 5%, 2017 1,695 1,826,464 - --------------------------------------------------------------------------------------------------------------------------------- North Charleston, SC, Municipal Golf Course Mortgage Rev., AMBAC, 5.5%, 2019(++) 1,000 1,158,660 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., 5.75%, 2030 1,000 1,070,470 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013 - 2019+(+) 2,675 3,526,445 - --------------------------------------------------------------------------------------------------------------------------------- Richland County, SC, Certificates of Participation, 0%, 2005 1,160 1,148,458 - --------------------------------------------------------------------------------------------------------------------------------- Richland County, SC, Certificates of Participation, FGIC, 0%, 2006 1,160 1,125,780 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Water Resources Authority Rev. (Local Government Program), "A", 7.25%, 2020 685 691,624 - --------------------------------------------------------------------------------------------------------------------------------- Spartanburg, SC, Public Facilities Corp. (Renaissance Park), AMBAC, 5.125%, 2025 685 718,229 - --------------------------------------------------------------------------------------------------------------------------------- $15,009,090 - --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.6% Virgin Islands Public Finance Authority, FSA, 5.25%, 2021 $1,000 $1,096,880 - --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% South Carolina Tobacco Settlement Rev. Management Authority, 6.375%, 2028 $1,000 $960,050 - --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special South Carolina Transportation Infrastructure Rev., "A", AMBAC, Tax - 0.9% 5.375%, 2018 $1,000 $1,102,020 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Transportation Infrastructure Rev., "A", AMBAC, 5%, 2023 500 522,230 - --------------------------------------------------------------------------------------------------------------------------------- $1,624,250 - --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 8.1% Clemson University, University Rev., AMBAC, 6.25%, 2015 $1,250 $1,472,263 - --------------------------------------------------------------------------------------------------------------------------------- Coastal Carolina University, SC, Rev., MBIA, 6.875%, 2026(++) 1,000 1,029,220 - --------------------------------------------------------------------------------------------------------------------------------- College Charleston, SC, Higher Education Facility Rev., "A", FGIC, 5.25%, 2028 2,435 2,583,559 - --------------------------------------------------------------------------------------------------------------------------------- Greenville County, SC, Certificates of Participation, Greenville Technical College, AMBAC, 5%, 2017 1,000 1,071,470 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Educational Facilities Authority (Furman University), AMBAC, 5.375%, 2020 1,245 1,367,284 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Educational Facilities Authority (Furman University), AMBAC, 5.5%, 2030 2,000 2,204,640 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Student Housing Rev. (FMU Francis Marion University), "A", MBIA, 5%, 2034 1,945 2,028,577 - --------------------------------------------------------------------------------------------------------------------------------- University of South Carolina, University Rev., "A", FGIC, 5.625%, 2020 1,555 1,759,374 - --------------------------------------------------------------------------------------------------------------------------------- University of South Carolina, University Rev., MBIA, 5.75%, 2026 515 561,613 - --------------------------------------------------------------------------------------------------------------------------------- $14,078,000 - --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Camden, SC, Public Utility Rev., Refunding & Improvement, MBIA, Owned - 10.8% 5.5%, 2017 $1,500 $1,665,345 - --------------------------------------------------------------------------------------------------------------------------------- Easley, SC, Utility Rev., FSA, 5.25%, 2019 1,315 1,443,646 - --------------------------------------------------------------------------------------------------------------------------------- Easley, SC, Utility Rev., FSA, 5%, 2021 - 2027 2,000 2,109,750 - --------------------------------------------------------------------------------------------------------------------------------- Greenwood, SC, Combined Public Utility, Refunding & Improvement Systems, MBIA, 5%, 2021 - 2023 475 501,411 - --------------------------------------------------------------------------------------------------------------------------------- Orangeburg County, SC, Solid Waste Disposal Facilities Rev., Electric & Gas, 5.7%, 2024 2,000 2,016,740 - --------------------------------------------------------------------------------------------------------------------------------- Piedmont, SC, Municipal Power Agency, FGIC, 6.25%, 2021 4,600 5,732,106 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority, RITES, FSA, 9.0063%, 2015+(+) $1,000 $1,219,140 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "A", MBIA, 5.5%, 2018 200 224,564 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "B", AMBAC, 5.5%, 2023 1,000 1,082,600 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "B", FGIC, 5.875%, 2023 500 544,495 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "B", FSA, 5.125%, 2037 1,500 1,555,740 - --------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "D", FSA, 5%, 2018 750 803,303 - --------------------------------------------------------------------------------------------------------------------------------- $18,898,840 - --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 21.0% Anderson County, SC, Joint Municipal Water, FSA, 5%, 2032 $1,000 $1,035,720 - --------------------------------------------------------------------------------------------------------------------------------- Anderson, SC, Water & Sewer Systems Rev., FGIC, 5.125%, 2032 2,000 2,097,180 - --------------------------------------------------------------------------------------------------------------------------------- Anderson, SC, Water & Sewer Systems Rev., MBIA, 5%, 2021 1,690 1,799,766 - --------------------------------------------------------------------------------------------------------------------------------- Charleston, SC, Waterworks & Sewer Rev., Capital Improvement, "B", 5%, 2028 1,000 1,041,820 - --------------------------------------------------------------------------------------------------------------------------------- Charleston, SC, Waterworks & Sewer Rev., Refunding Systems, 5.25%, 2018 1,000 1,092,570 - --------------------------------------------------------------------------------------------------------------------------------- Columbia, SC, Waterworks & Sewer Systems Rev., 0%, 2005 - 2006 11,575 11,273,560 - --------------------------------------------------------------------------------------------------------------------------------- Columbia, SC, Waterworks & Sewer Systems Rev., 6%, 2015(++) 2,000 2,356,840 - --------------------------------------------------------------------------------------------------------------------------------- Greenville, SC, Stormwater Systems, FSA, 5%, 2022 595 630,004 - --------------------------------------------------------------------------------------------------------------------------------- Greenville, SC, Waterworks Rev., 5.25%, 2020 860 937,460 - --------------------------------------------------------------------------------------------------------------------------------- Greenville, SC, Waterworks Rev., 5.5%, 2022 1,000 1,100,450 - --------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2009(++) 530 571,149 - --------------------------------------------------------------------------------------------------------------------------------- Rock Hill, SC, Utility Systems Rev., Refunding & Improvement, "A", FSA, 5.375%, 2023 500 540,805 - --------------------------------------------------------------------------------------------------------------------------------- Spartanburg, SC, San Sewer District, Sewer Systems Rev., "B", MBIA, 5%, 2034 3,000 3,124,710 - --------------------------------------------------------------------------------------------------------------------------------- Spartanburg, SC, Waterworks Rev., FGIC, 6.05%, 2018(++) 2,750 3,020,518 - --------------------------------------------------------------------------------------------------------------------------------- Western Carolina Regional Sewer Authority Rev., AMBAC, 0%, 2007 4,000 3,770,920 - --------------------------------------------------------------------------------------------------------------------------------- York County, SC, Water & Sewer Rev., Refunding & Capital Improvement, MBIA, 5%, 2024 - 2027 2,270 2,372,624 - --------------------------------------------------------------------------------------------------------------------------------- $36,766,096 - --------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $154,160,925) $169,644,701 - --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.9% - --------------------------------------------------------------------------------------------------------------------------------- California State, Department of Water Resources, Power Supply Rev., due 4/01/04 $1,500 $1,500,000 - --------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority (Local Government Public Improvement), due 4/07/04 100 100,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $1,600,000 - --------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $155,760,925) $171,244,701 - --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 2.0% 3,483,385 - --------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $174,728,086 - --------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - 3/31/04 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 - 98.3%
- --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Memphis-Shelby County, TN, Airport Authority Facilities Rev., AMBAC, Revenue - 2.0% 6%, 2024 $1,165 $1,292,894 - --------------------------------------------------------------------------------------------------------------------------------- Memphis-Shelby County, TN, Airport Authority Facilities Rev., FSA, 5.125%, 2021 1,500 1,552,275 - --------------------------------------------------------------------------------------------------------------------------------- $2,845,169 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 11.9% Commonwealth of Puerto Rico, 5.4%, 2006(++) $3,000 $3,307,140 - --------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Refunding Public Improvement, FSA, 5%, 2024 2,000 2,095,080 - --------------------------------------------------------------------------------------------------------------------------------- Dickson County, TN, FGIC, 5%, 2019 1,430 1,548,890 - --------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev., 5%, 2018 1,500 1,619,355 - --------------------------------------------------------------------------------------------------------------------------------- Lincoln County, TN, FGIC, 5.25%, 2017 - 2018 2,085 2,360,927 - --------------------------------------------------------------------------------------------------------------------------------- Lincoln County, TN, School Improvement, FGIC, 5.8%, 2007(++) 2,000 2,256,360 - --------------------------------------------------------------------------------------------------------------------------------- Memphis, TN, 5%, 2017 1,455 1,634,474 - --------------------------------------------------------------------------------------------------------------------------------- Putnam County, TN, FGIC, 5.25%, 2020 2,000 2,260,260 - --------------------------------------------------------------------------------------------------------------------------------- $17,082,486 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 5.9% Chattanooga, TN, Public Improvement, 5%, 2021 $2,570 $2,718,983 - --------------------------------------------------------------------------------------------------------------------------------- Knoxville, TN, Public Improvement, 5%, 2024 350 363,209 - --------------------------------------------------------------------------------------------------------------------------------- Knoxville, TN, Recreational Facilities Improvement, 5.5%, 2017 645 721,394 - --------------------------------------------------------------------------------------------------------------------------------- State of Tennessee, FSA, 5%, 2018 1,000 1,077,500 - --------------------------------------------------------------------------------------------------------------------------------- Williamson County, TN, Public Improvement, 5.375%, 2010(++) 1,500 1,715,880 - --------------------------------------------------------------------------------------------------------------------------------- Williamson County, TN, Public Improvement, 5%, 2018 1,760 1,893,338 - --------------------------------------------------------------------------------------------------------------------------------- $8,490,304 - --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 17.1% Fayette County, TN, School District, MBIA, 5.6%, 2008(++) $1,215 $1,372,270 - --------------------------------------------------------------------------------------------------------------------------------- Franklin, TN, Special School District, Capital Appreciation, FSA, 0%, 2020 2,000 959,800 - --------------------------------------------------------------------------------------------------------------------------------- Gibson County, TN, School District, MBIA, 5.75%, 2009(++) 455 527,422 - --------------------------------------------------------------------------------------------------------------------------------- Gibson County, TN, School District, MBIA, 5.75%, 2016 190 216,070 - --------------------------------------------------------------------------------------------------------------------------------- Giles County, TN, School Improvement, FGIC, 5.75%, 2010(++) 1,980 2,306,740 - --------------------------------------------------------------------------------------------------------------------------------- Greene County, TN, Rural School, FGIC, 5%, 2020 - 2021 2,540 2,675,497 - --------------------------------------------------------------------------------------------------------------------------------- Milan, TN, Special School District, MBIA, 5%, 2021 1,000 1,050,470 - --------------------------------------------------------------------------------------------------------------------------------- Roane County, TN, Rural School, FGIC, 5.6%, 2019 - 2020 1,890 2,133,337 - --------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School & Public Improvement, 5%, 2022 1,510 1,582,661 - --------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School District, 5.875%, 2010(++) 1,100 1,293,930 - --------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School Improvement, 0%, 2007(++) 1,500 893,580 - --------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School Improvement, 5.875%, 2010(++) 2,000 2,352,600 - --------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School Improvement, 5%, 2020 1,000 1,051,710 - --------------------------------------------------------------------------------------------------------------------------------- State of Tennessee, School Bond Authority (Higher Education Facilities), FSA, 5%, 2017 1,000 1,074,270 - --------------------------------------------------------------------------------------------------------------------------------- State of Tennessee, School Bond Authority (Higher Education Facilities), FSA, 5.25%, 2029 3,000 3,182,490 - --------------------------------------------------------------------------------------------------------------------------------- Williamson County, TN, Rural School, 6.125%, 2010(++) 1,575 1,865,714 - --------------------------------------------------------------------------------------------------------------------------------- $24,538,561 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Jackson, TN, Hospital Rev. (Jackson-Madison County General Hospitals - 11.3% Hospital), AMBAC, 5%, 2018 $1,000 $1,066,110 - --------------------------------------------------------------------------------------------------------------------------------- Johnson City, TN, Health & Education Financing Authority Rev. (Johnson City Medical Center Hospital), MBIA, 5.25%, 2016(++) 1,375 1,414,779 - --------------------------------------------------------------------------------------------------------------------------------- Johnson City, TN, Health & Education Financing Authority Rev. (Johnson City Medical Center Hospital), MBIA, 5%, 2018 1,500 1,596,045 - --------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health Educational Housing Facilities Board, Hospital Facilities Rev. (Baptist Health Systems), 6.5%, 2031 800 832,344 - --------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev. (Catholic Healthcare Partners), 5.25%, 2030 1,000 1,031,390 - --------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev. (East Tennessee Children's Hospital), 5.75%, 2033 450 455,918 - --------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev. (Fort Sanders), MBIA, 5.75%, 2014 3,250 3,803,800 - --------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev., FSA, 5%, 2022 1,000 1,044,780 - --------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Adventist Health System), 5.25%, 2020 1,000 1,012,500 - --------------------------------------------------------------------------------------------------------------------------------- Shelby County, TN, Health Educational & Housing Facilities Board Rev. (St. Judes Children's Research), 5.5%, 2020 1,750 1,850,380 - --------------------------------------------------------------------------------------------------------------------------------- Shelby County, TN, Health, Educational & Housing Facilities Board Rev. (Methodist Healthcare), 6.5%, 2021 1,000 1,106,600 - --------------------------------------------------------------------------------------------------------------------------------- Springfield, TN, Health & Higher Educational Facilities Hospital Rev. (Northcrest Medical Center), 5.25%, 2013 1,000 1,026,500 - --------------------------------------------------------------------------------------------------------------------------------- $16,241,146 - --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Shelby County, TN, Health Educational Rev. (Germantown Village), Term Care - 0.6% 7.25%, 2034 $500 $502,820 - -------------------------------------------------------------------------------------------------------------------------------- Shelby County, TN, Nursing Home Rev. (Beverly Enterprises, Inc.), 7.4%, 2011 270 270,232 - -------------------------------------------------------------------------------------------------------------------------------- $773,052 - -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 2.0% Hardeman County, TN, Correctional Facilities Corp., 7.75%, 2017 $1,000 $1,049,480 - -------------------------------------------------------------------------------------------------------------------------------- Humphreys County, TN, Industrial Rev. (Board Inland Container Corp.), 6.7%, 2024 1,750 1,792,000 - -------------------------------------------------------------------------------------------------------------------------------- $2,841,480 - -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - McMinn County, TN, Industrial Development Board, Pollution Control Paper - 0.7% Rev. (Bowater, Inc.), 7.625%, 2016 $1,000 $1,001,510 - -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Bristol, TN, Industrial Development Authority Rev. (Kmart Corp.), Retail - 0.7% 7.5%, 2004(++) $875 $916,554 - -------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.125%, Tourism - 2.7% 2028 $2,000 $2,097,140 - -------------------------------------------------------------------------------------------------------------------------------- Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.35%, 2029 1,665 1,792,056 - -------------------------------------------------------------------------------------------------------------------------------- $3,889,196 - -------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Chattanooga, TN, Health, Educational & Housing Facilities (Rainbow Revenue - 4.0% Creek), GNMA, 6.125%, 2019 $465 $497,862 - -------------------------------------------------------------------------------------------------------------------------------- Franklin, TN, Industrial Development Rev. (Landings Apartments), FSA, 6%, 2026 1,000 1,044,640 - -------------------------------------------------------------------------------------------------------------------------------- Franklin, TN, Industrial Development Rev. (Sussex Downs), FHA, 6.75%, 2004(++) 1,000 1,039,010 - -------------------------------------------------------------------------------------------------------------------------------- Memphis, TN, Health & Educational Facilities Board Rev. (Hickory Point Apartments), MBIA, 5.85%, 2020 1,000 1,048,270 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Berkshire Place), GNMA, 6%, 2023 500 523,465 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Herman Street), FHA, 7.25%, 2032 495 501,192 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Authority, 5%, 2020 1,000 1,062,180 - -------------------------------------------------------------------------------------------------------------------------------- $5,716,619 - -------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 8.9% Tennessee Housing Development Agency Mortgage Finance, 5.2%, 2023 $1,500 $1,547,625 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Mortgage Finance, 5.35%, 2034 2,000 2,028,940 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 5.45%, 2014 2,535 2,658,936 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 4.45%, 2017 1,305 1,303,643 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 4.55%, 2018 1,265 1,263,620 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 6%, 2020 625 650,138 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 5.05%, 2027 1,000 1,011,340 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, FSA, 5.4%, 2032 930 947,196 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, FSA, 4.15%, 2033 905 912,321 - -------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, MBIA, 6.125%, 2020 410 425,859 - -------------------------------------------------------------------------------------------------------------------------------- $12,749,618 - -------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 3.1% Chattanooga,TN, Industrial Development Board, AMBAC, 5.75%, 2018 $1,000 $1,153,430 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., 5.5%, 2021 1,000 1,139,770 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., 5.75%, 2030 2,000 2,140,940 - -------------------------------------------------------------------------------------------------------------------------------- $4,434,140 - -------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.5% Virgin Islands Public Finance Authority Rev., 5.875%, 2018 $730 $759,134 - -------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.7% Guam Economic Development Authority, 5.5%, 2041 $350 $338,783 - -------------------------------------------------------------------------------------------------------------------------------- Tobacco Settlement Financing Corp., 5%, 2031 750 683,723 - -------------------------------------------------------------------------------------------------------------------------------- $1,022,506 - -------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Metropolitan Government of Nashville & Davidson County, TN, Health, 4.2% Educational & Housing Facilities Board Rev. (McKendree Village, Inc.), 5.125%, 2020 $1,000 $1,041,800 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Meharry Medical College), AMBAC, 5%, 2024 3,750 3,882,863 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Vanderbilt University), 5%, 2019 1,000 1,056,690 - -------------------------------------------------------------------------------------------------------------------------------- $5,981,353 - -------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.8% Dickson, TN, Electrical Systems Rev., FSA, 5%, 2016 $1,490 $1,640,833 - -------------------------------------------------------------------------------------------------------------------------------- Jackson, TN, Electrical Systems Rev., MBIA, 5%, 2018 1,000 1,048,850 - -------------------------------------------------------------------------------------------------------------------------------- Lawrenceburg, TN, Electrical Rev., MBIA, 5.5%, 2009(++) 1,255 1,445,409 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., 5.125%, 2021 1,500 1,592,070 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., MBIA, 0%, 2012 3,305 2,440,974 - -------------------------------------------------------------------------------------------------------------------------------- West Knox County Utility District, TN, Water & Sewer Rev. (Hallsdale-Powell), FGIC, 5%, 2027 1,500 1,557,570 - -------------------------------------------------------------------------------------------------------------------------------- $9,725,706 - -------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 15.2% Clarksville, TN, Water, Sewer & Gas Rev., FSA, 5%, 2022 $445 $464,807 - -------------------------------------------------------------------------------------------------------------------------------- Harpeth Valley, TN, Utilities Improvements Rev., MBIA, 5.05%, 2020 1,925 2,040,943 - -------------------------------------------------------------------------------------------------------------------------------- Hendersonville, TN, Utilities Improvement Rev., FGIC, 5.5%, 2018 1,125 1,255,556 - -------------------------------------------------------------------------------------------------------------------------------- Madison, TN, Utility Waterworks Rev., MBIA, 5%, 2019 2,750 2,900,288 - -------------------------------------------------------------------------------------------------------------------------------- Memphis, TN, Sewage Systems Rev., 5.75%, 2016 - 2020 2,520 2,827,410 - -------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, Water Rev., MBIA, 5%, 2027 770 810,494 - -------------------------------------------------------------------------------------------------------------------------------- West Knox Utility District, TN, Water & Sewer Rev., MBIA, 0%, 2004 - 2007(++) 5,760 5,516,641 - -------------------------------------------------------------------------------------------------------------------------------- White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FGIC, 0%, 2014 3,590 2,443,605 - -------------------------------------------------------------------------------------------------------------------------------- White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FSA, 6%, 2010(++) 1,000 1,176,050 - -------------------------------------------------------------------------------------------------------------------------------- White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FSA, 5%, 2021 - 2032 2,300 2,390,581 - -------------------------------------------------------------------------------------------------------------------------------- $21,826,375 - -------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $130,145,968) $140,834,909 - -------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.3% - -------------------------------------------------------------------------------------------------------------------------------- Knoxville, TN, Utilities Board Rev., due 4/01/04 $190 $190,000 - -------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority, due 4/07/04 1,245 1,245,000 - -------------------------------------------------------------------------------------------------------------------------------- South Blount County, TN, Utility District Rev., due 4/01/04 400 400,000 - -------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $1,835,000 - -------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $131,980,968) $142,669,909 - -------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.4% 626,073 - -------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $143,295,982 - -------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - 3/31/04 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 - 98.2% - -------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - -------------------------------------------------------------------------------------------------------------------------------- Airport & Port Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC, Revenue - 7.1% 5.125%, 2024 $1,000 $1,039,530 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC, 5%, 2025 705 725,600 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Washington, DC, Airport Authority Rev., "B", 5.5%, 2016 2,465 2,627,320 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Washington, DC, Airport Authority Rev., "B", 5.75%, 2020 11,000 11,739,090 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Washington, DC, Airport Authority Rev., "B", MBIA, 5%, 2018 2,000 2,065,640 - -------------------------------------------------------------------------------------------------------------------------------- Norfolk, VA, Airport Authority Rev., "A", FGIC, 5.375%, 2017 1,755 1,937,889 - -------------------------------------------------------------------------------------------------------------------------------- Norfolk, VA, Airport Authority Rev., "A", FGIC, 5%, 2022 3,000 3,123,600 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Airport Rev., "B", 5.125%, 2027 720 741,427 - -------------------------------------------------------------------------------------------------------------------------------- $24,000,096 - -------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 1.0% Bristol, VA, MBIA, 5.3%, 2018 $1,250 $1,368,113 - -------------------------------------------------------------------------------------------------------------------------------- Lebanon, VA, 6.375%, 2006(++) 1,625 1,819,756 - -------------------------------------------------------------------------------------------------------------------------------- $3,187,869 - -------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 14.7% Alexandria, VA, Public Improvement, 5.5%, 2018 $2,980 $3,382,985 - -------------------------------------------------------------------------------------------------------------------------------- Chesterfield County, VA, 5%, 2020 2,015 2,138,338 - -------------------------------------------------------------------------------------------------------------------------------- Chesterfield County, VA, 6%, 2020 1,900 2,236,585 - -------------------------------------------------------------------------------------------------------------------------------- Hampton, VA, Public Improvement, 6%, 2018 3,280 3,849,113 - -------------------------------------------------------------------------------------------------------------------------------- Hampton, VA, Public Improvement, 6%, 2019 3,480 4,073,618 - -------------------------------------------------------------------------------------------------------------------------------- Loudoun County, VA, Public Improvement, "B", 5.375%, 2016 2,650 2,950,484 - -------------------------------------------------------------------------------------------------------------------------------- Lynchburg, VA, Public Improvement, 5.6%, 2020 1,765 1,993,179 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 10.6246%, 2016+(+) 1,105 1,502,314 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017+(+) 615 783,239 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, 0%, 2006 1,000 974,130 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, 0%, 2006 2,500 2,435,325 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, 0%, 2008 2,000 1,824,900 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, "A", FSA, 5.125%, 2024 5,000 5,233,700 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, "B", 0%, 2007 5,280 4,982,314 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, "B", 0%, 2008 5,270 4,808,612 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, "B", 0%, 2009 5,175 4,514,101 - -------------------------------------------------------------------------------------------------------------------------------- Suffolk, VA, Public Improvement, 5.5%, 2020 1,880 2,096,632 - -------------------------------------------------------------------------------------------------------------------------------- $49,779,569 - -------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 1.3% Culpeper County, VA, School District, FSA, 6%, 2010(++) $1,000 $1,185,730 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority Rev., "B", 5.25%, 2021 3,075 3,240,681 - -------------------------------------------------------------------------------------------------------------------------------- $4,426,411 - -------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Albemarle County, VA, Industrial Development Authority, Hospital Hospitals - 15.3% Rev. (Martha Jefferson Hospital), 5.25%, 2023 $3,000 $3,050,070 - -------------------------------------------------------------------------------------------------------------------------------- Arlington County, VA, Industrial Development Authority Rev. (Virginia, Hospital Center Arlington Health Systems), 5.25%, 2021 2,600 2,697,136 - -------------------------------------------------------------------------------------------------------------------------------- Augusta County, VA, Industrial Development Authority Rev., Augusta Health Care, Inc., 5.25%, 2020 1,325 1,445,747 - -------------------------------------------------------------------------------------------------------------------------------- Fredericksburg, VA, Industrial Development Rev. (Medicorp Health Systems), "B", 5.125%, 2033 $750 $756,323 - -------------------------------------------------------------------------------------------------------------------------------- Fredericksburg, VA, Industrial Development Rev. (Medicorp Health Systems), AMBAC, 5.25%, 2023 11,000 11,728,420 - -------------------------------------------------------------------------------------------------------------------------------- Henrico County, VA, Economic Development Authority Rev. (Bon Secours Health Systems, Inc.), "A", 5.6%, 2030 2,000 2,075,180 - -------------------------------------------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority Rev. (Bon Secours Health Systems, Inc.), MBIA, 6.25%, 2020 1,500 1,855,230 - -------------------------------------------------------------------------------------------------------------------------------- Loudoun County, VA, Industrial Development Authority, Hospital Rev. (Loudoun Hospital Center), "A", 6.1%, 2032 1,000 1,049,670 - -------------------------------------------------------------------------------------------------------------------------------- Lynchburg, VA, Industrial Development Authority Rev., 5.2%, 2018 1,000 1,035,030 - -------------------------------------------------------------------------------------------------------------------------------- Medical College of Virginia, Hospital Authority Rev., MBIA, 5.125%, 2018 3,000 3,180,810 - -------------------------------------------------------------------------------------------------------------------------------- Peninsula Ports Authority Rev. (Whittaker Memorial), FHA, 8.7%, 2023 2,070 2,576,508 - -------------------------------------------------------------------------------------------------------------------------------- Peninsula Ports Authority, VA, Health Care Rev. (Riverside Health System), 5%, 2018 3,580 3,704,942 - -------------------------------------------------------------------------------------------------------------------------------- Prince William County, VA, Industrial Development Authority, Hospital Rev. (Potomac Hospital Corp.), 5.2%, 2026 1,000 1,016,560 - -------------------------------------------------------------------------------------------------------------------------------- Roanoke, VA, Industrial Development Authority, Hospital Rev. (Roanoke Memorial Hospital), "B", MBIA, 6.125%, 2017 6,000 7,299,600 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Beach, VA, Development Authority Rev. (Sentara Health System), 4.75%, 2018 3,750 3,851,438 - -------------------------------------------------------------------------------------------------------------------------------- Winchester, VA, Industrial Development Authority Rev. (Winchester Medical Center), RIBS, AMBAC, 11.831%, 2014(+) 3,900 4,400,526 - -------------------------------------------------------------------------------------------------------------------------------- $51,723,190 - -------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Henrico County, VA, Economic Development Authority, Residential Care Term Care - 0.2% Facilities (United Methodist Homes), "A", 6.7%, 2027 $750 $770,318 - -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - Charles City County, VA, Industrial Development Authority, Solid 1.0% Waste Disposal Facility Rev. (Waste Management, Inc.), 6.25%, 2027 $1,500 $1,698,750 - -------------------------------------------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority Rev. (Browning Ferris), 5.45%, 2014 1,750 1,632,330 - -------------------------------------------------------------------------------------------------------------------------------- $3,331,080 - -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Loudoun County, VA, Industrial Development Authority Rev. (Dulles Other - 0.9% Airport Marriot Hotel), 7.125%, 2015 $2,000 $2,031,960 - -------------------------------------------------------------------------------------------------------------------------------- Peninsula Ports Authority, Virginia Coal (Dominion Terminal Associates), 6%, 2033 1,000 1,042,560 - -------------------------------------------------------------------------------------------------------------------------------- $3,074,520 - -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Bedford County, VA, Industrial Development Authority Rev. (Nekooska Paper - 3.2% Packaging Corp.), 5.6%, 2025 $1,000 $895,730 - -------------------------------------------------------------------------------------------------------------------------------- Hopewell, VA, Industrial Development Authority, Resources Recovery Rev. (Stone Container Corp.), 8.25%, 2016 1,250 1,266,738 - -------------------------------------------------------------------------------------------------------------------------------- Isle Wight County, VA, Industrial Development Authority, Solid Waste Disposal Facilities Rev. (Union Camp Corp.), 6.55%, 2024 4,000 4,098,800 - -------------------------------------------------------------------------------------------------------------------------------- Isle Wight County, VA, Industrial Development Authority, Solid Waste Disposal Facilities Rev. (Union Camp Corp.), 6.1%, 2027 2,750 2,853,345 - -------------------------------------------------------------------------------------------------------------------------------- West Point, VA, Industrial Development Authority, Solid Waste Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 1,900 1,769,660 - -------------------------------------------------------------------------------------------------------------------------------- $10,884,273 - -------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Rockbridge County, VA, Industrial Development Authority Rev. Other - 0.1% (Virginia Horse Center), 6.85%, 2021 $500 $474,435 - -------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Alexandria, VA, Redevelopment & Housing Finance Authority Rev., Revenue - 5.5% (Portals West Apartments), "B", 9%, 2018 $3,740 $3,738,841 - -------------------------------------------------------------------------------------------------------------------------------- Arlington County, VA, Industrial Development Authority Rev. (Colonial Village), FNMA, 5.15%, 2031 3,000 3,098,340 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Housing Development Authority Rev., "B", 5.95%, 2016 1,905 2,011,432 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Housing Development Authority Rev., "F", 6.5%, 2013 2,300 2,349,588 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Housing Development Authority Rev., "G", 5.625%, 2020 2,000 2,089,920 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Housing Development Authority Rev., "I", 5.15%, 2017 3,000 3,090,930 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Housing Development Authority Rev., "Z", 4.85%, 2033 2,000 2,021,340 - -------------------------------------------------------------------------------------------------------------------------------- $18,400,391 - -------------------------------------------------------------------------------------------------------------------------------- Parking - 0.5% Norfolk, VA, Parking Systems Rev., MBIA, 5%, 2020 $1,630 $1,725,437 - -------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 22.7% Blue Ridge, VA, Regional Jail Authority, MBIA, 5.2%, 2021 $1,830 $1,945,876 - -------------------------------------------------------------------------------------------------------------------------------- Caroline County, VA, Industrial Development Authority, Lease Rev., AMBAC, 5.125%, 2034 1,000 1,048,500 - -------------------------------------------------------------------------------------------------------------------------------- Chesapeake, VA, Industrial Development Authority (Chesapeake Court House), MBIA, 6.25%, 2011 3,985 4,547,323 - -------------------------------------------------------------------------------------------------------------------------------- Chesapeake, VA, Industrial Development Authority (Chesapeake Court House), MBIA, 5.25%, 2017 2,000 2,206,240 - -------------------------------------------------------------------------------------------------------------------------------- Chesterfield County, VA, Industrial Development Authority, Public Facilities Lease Rev., 7.5%, 2008 1,720 1,723,990 - -------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Certificates of Participation, 6.1%, 2017 3,090 3,698,143 - -------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Economic Development (Laurel Hill Public Facilities), 5%, 2023 1,690 1,780,111 - -------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Economic Development Authority (Vienna II Metrorail), 6%, 2017 1,750 2,063,775 - -------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Economic Development Authority, Parking Rev. (Vienna II Metrorail), 6%, 2016 1,650 1,947,677 - -------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Redevelopment & Housing Authority Rev. (Mott & Gum Springs Community Centers), 5.5%, 2017 2,225 2,313,310 - -------------------------------------------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority, Public Lease Rev., 6.5%, 2005(++) 5,000 5,457,500 - -------------------------------------------------------------------------------------------------------------------------------- King William County VA, Industrial Development Authority (Virginia Courthouse), AMBAC, 5%, 2023 890 938,202 - -------------------------------------------------------------------------------------------------------------------------------- Middlesex County, VA, Industrial Development Authority Rev., AMBAC, 5.125%, 2027 1,000 1,058,590 - -------------------------------------------------------------------------------------------------------------------------------- Middlesex County, VA, Industrial Development Authority Rev., AMBAC, 5.25%, 2032 2,000 2,141,700 - -------------------------------------------------------------------------------------------------------------------------------- Montgomery County, VA, Industrial Development, "B", AMBAC, 6%, 2017 1,000 1,182,190 - -------------------------------------------------------------------------------------------------------------------------------- Montgomery County, VA, Industrial Development, "C", AMBAC, 6%, 2017 1,120 1,324,053 - -------------------------------------------------------------------------------------------------------------------------------- New River Valley, VA, Regional Jail Authority, MBIA, 5.125%, 2019 6,405 6,822,542 - -------------------------------------------------------------------------------------------------------------------------------- Orange County, VA, Industrial Development Authority (Orange County Project), AMBAC, 5%, 2034 1,000 1,037,220 - -------------------------------------------------------------------------------------------------------------------------------- Pamunkey, VA, Regional Jail Authority, MBIA, 5.75%, 2006(++) 2,230 2,486,249 - -------------------------------------------------------------------------------------------------------------------------------- Pamunkey, VA, Regional Jail Authority, MBIA, 5.75%, 2006(++) 270 301,026 - -------------------------------------------------------------------------------------------------------------------------------- Powhatan County, VA, Economic Development Authority Lease Rev. (Virginia Capital Projects), AMBAC, 5.25%, 2033 1,000 1,070,570 - -------------------------------------------------------------------------------------------------------------------------------- Prince William County, VA, Lease Partnerships, 5%, 2021 1,500 1,579,125 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013+(+) $2,000 $2,642,640 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2016+(+) 500 660,420 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, Public Facilities, Certificates of Participation (Megahertz Project), "A", AMBAC, 5%, 2022 1,600 1,676,848 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Biotechnology Research Park (Biotech Two), 5.25%, 2018 8,800 9,513,152 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Biotechnology Research Park Lease Rev. (Consolidated Laboratories), 5%, 2021 1,500 1,582,560 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Public Building Authority Rev., "B", MBIA, 0%, 2007 3,750 3,485,925 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Rev., "B", FSA, 5.5%, 2019 1,070 1,202,209 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Rev., ROLS, 8.761%, 2021+(+) 1,390 1,569,282 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Rev., ROLS, 8.76%, 2023+(+) 1,520 1,691,426 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Rev., ROLS, 8.816%, 2033+(+) 2,510 2,732,788 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Infrastructure Rev., "A", 5%, 2017 1,360 1,461,442 - -------------------------------------------------------------------------------------------------------------------------------- $76,892,604 - -------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.5% Greater Richmond Convention Center Authority, Hotel Tax Rev. (Convention Center Expansion), 6.125%, 2020 $3,500 $3,954,020 - -------------------------------------------------------------------------------------------------------------------------------- Territory of Virgin Islands, Public Finance Authority Rev., "A", 5.625%, 2025 1,000 1,033,650 - -------------------------------------------------------------------------------------------------------------------------------- $4,987,670 - -------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.3% Childrens Trust Fund, Settlement Rev., Puerto Rico, 5.375%, 2033 $480 $473,400 - -------------------------------------------------------------------------------------------------------------------------------- Tobacco Settlement Financing Corp., 5%, 2021 640 617,600 - -------------------------------------------------------------------------------------------------------------------------------- $1,091,000 - -------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 1.8% Chesapeake Bay, Bridge & Tunnel Commission, Virginia District Rev., FGIC, 0%, 2005 $4,535 $4,463,891 - -------------------------------------------------------------------------------------------------------------------------------- Pocahontas Parkway Assn., VA, Toll Road Rev., 0%, 2012 1,500 840,600 - -------------------------------------------------------------------------------------------------------------------------------- Pocahontas Parkway Assn., VA, Toll Road Rev., 0%, 2013 1,500 777,345 - -------------------------------------------------------------------------------------------------------------------------------- $6,081,836 - -------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Virginia Transportation Board Rev. (U.S. Route 58), "B", 5.125%, Tax - 1.7% 2021 $4,000 $4,187,400 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Commonwealth Board Program (Oak Grove Connector), "A", 5.25%, 2022 1,500 1,597,935 - -------------------------------------------------------------------------------------------------------------------------------- $5,785,335 - -------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Danville, VA, Industrial Development Authority, Educational 4.3% Facilities Rev. (Averett University), 6%, 2022 $500 $514,425 - -------------------------------------------------------------------------------------------------------------------------------- Loudoun County, VA, Industrial Development Authority, University Facilities Rev. (George Washington University), 6.25%, 2012 2,710 2,725,718 - -------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority (21st Century College Program), 6%, 2018 2,000 2,310,540 - -------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority, Educational Facilities Rev. (Washington & Lee University), MBIA, 5.25%, 2031 1,000 1,123,040 - -------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority, Educational Facilities Rev. (Hampden Sydney College), 5%, 2016 1,730 1,843,332 - -------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority, Educational Facilities Rev. (Hampton University), 5%, 2018 1,655 1,740,845 - -------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority, Educational Facilities Rev. (Hampton University), 6%, 2020 1,000 1,133,930 - -------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority, Educational Facilities Rev. (Regent University), MBIA, 5.125%, 2031 1,000 1,041,340 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Public School Authority, "B", 6.5%, 2004(++) 1,875 1,946,063 - -------------------------------------------------------------------------------------------------------------------------------- $14,379,233 - -------------------------------------------------------------------------------------------------------------------------------- Utilities - Cogeneration - Mecklenburg County, VA, Industrial Development Authority Rev. (UAE 0.8% Mecklenburg, LP), 6.5%, 2017 $700 $719,446 - -------------------------------------------------------------------------------------------------------------------------------- Pittsylvania County, VA, Industrial Development Authority Rev. (Multi-trade of Pittsylvania), 7.5%, 2014 2,000 2,007,480 - -------------------------------------------------------------------------------------------------------------------------------- $2,726,926 - -------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Chesapeake VA, Industrial Development Authority Rev. (Pollution Owned - 1.2% Control), 5.25%, 2008 $750 $788,970 - -------------------------------------------------------------------------------------------------------------------------------- Halifax County, VA, Industrial Development Authority (Old Dominion Electric Cooperative), AMBAC, 5.625%, 2028 3,000 3,225,630 - -------------------------------------------------------------------------------------------------------------------------------- $4,014,600 - -------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 4.9% Bristol VA, Utility Systems Rev., FSA, 5.75%, 2016(++) $240 $288,972 - -------------------------------------------------------------------------------------------------------------------------------- Guam Power Authority Rev., RITES, AMBAC, 9.0426%, 2015+(+) 1,010 1,232,463 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., RITES, FSA, 10.0771%, 2017+(+) 2,500 3,415,550 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., RITES, FSA, 9.8271%, 2019+(+) 1,270 1,638,046 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., RITES, FSA, 9.1771%, 2020+(+) 1,250 1,535,000 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "X", 6%, 2005(++) 3,000 3,244,620 - -------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, Public Utilities Rev., FSA, 5%, 2033 5,000 5,169,200 - -------------------------------------------------------------------------------------------------------------------------------- $16,523,851 - -------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 8.2% Fairfax County, VA, Water Authority Rev., 5%, 2027 $4,000 $4,182,600 - -------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Water Authority Rev., 5%, 2032 2,000 2,077,580 - -------------------------------------------------------------------------------------------------------------------------------- Hanover County, VA, Water & Sewer Systems Rev., MBIA, 5.25%, 2026 2,000 2,074,860 - -------------------------------------------------------------------------------------------------------------------------------- Henry County, VA, Public Service Water & Sewer Rev., FSA, 5.5%, 2019 1,000 1,172,900 - -------------------------------------------------------------------------------------------------------------------------------- Prince William County, VA, Water & Sewer Rev., FGIC, 5.5%, 2019 2,000 2,243,860 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2005(++) 2,935 3,162,873 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., 10.25%, 2009(++) 275 341,432 - -------------------------------------------------------------------------------------------------------------------------------- Spotsylvania County, VA, Water & Sewer Rev., FSA, 5%, 2022 1,450 1,518,252 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Beach, VA, Storm Water Utilities Rev., 6%, 2020 1,000 1,178,070 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Sewer Systems Rev. (Hopewell Regional Wastewater), 5.75%, 2021 1,335 1,480,048 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Clean Water Rev., 6%, 2017 2,750 3,256,440 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Clean Water Rev., 5.4%, 2018 1,135 1,261,269 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Infrastructure Rev., "A", MBIA, 5.5%, 2019 1,600 1,804,048 - -------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Infrastructure Rev., "A", MBIA, 5.5%, 2020 1,690 1,901,013 - -------------------------------------------------------------------------------------------------------------------------------- $27,655,245 - -------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $303,952,081) $331,915,889 - -------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.2% - -------------------------------------------------------------------------------------------------------------------------------- Harris County, TX, Health Facilities Development Rev. (University of Texas Medical Center), due 4/01/04 $100 $100,000 - -------------------------------------------------------------------------------------------------------------------------------- Missouri Development Finance, Board of Cultural Facilities Rev. (Nelson Gallery), "B", due 4/01/04 300 300,000 - -------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., due 4/01/04 200 200,000 - -------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water Finance Authority, Water & Sewer Systems Rev., "C", due 4/01/04 200 200,000 - -------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority, due 4/07/04 80 80,000 - -------------------------------------------------------------------------------------------------------------------------------- State of California, Department of Water Resources, Power Supply Rev., due 4/07/04 3,200 3,200,000 - -------------------------------------------------------------------------------------------------------------------------------- West Baton Rouge Parish, LA, Industrial District (Dow Chemical Co.), "B", due 4/01/04 100 100,000 - -------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $4,180,000 - -------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $308,132,081) $336,095,889 - -------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.6% 2,024,381 - -------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $338,120,270 - -------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF FUND INVESTMENTS - 3/31/04 MFS(R) WEST VIRGINIA MUNICIPAL BOND - -------------------------------------------------------------------------------------------------------------------------------- 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 - 96.0% - -------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT ISSUER (000 Omitted) $ VALUE - -------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 16.4% Charleston, WV, Public Improvements, 7.2%, 2009 $1,140 $1,396,044 - -------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Public Improvement, 5.25%, 2023 1,500 1,602,180 - -------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Public Improvement, FGIC, 5.5%, 2016 1,000 1,173,490 - -------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Public Improvement, RITES, MBIA, 10.0771%, 2019+(+) 3,000 3,991,500 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Highway Improvements, FGIC, 5.625%, 2019 2,000 2,262,520 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Public Improvements, FGIC, 5%, 2021 4,000 4,212,000 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Sewer Improvements, FGIC, 5.5%, 2017 2,565 2,837,428 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Water Utility Improvements, FGIC, 5.25%, 2026 8,000 8,501,920 - -------------------------------------------------------------------------------------------------------------------------------- $25,977,082 - -------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.7% Brooke County, WV, Board of Education, FGIC, 5%, 2016(++) $1,390 $1,493,499 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017+(+) 900 1,146,204 - -------------------------------------------------------------------------------------------------------------------------------- $2,639,703 - -------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 3.7% Jefferson County, WV, Board of Education, FGIC, 6.85%, 2009 $1,680 $2,045,887 - -------------------------------------------------------------------------------------------------------------------------------- Monongalia County, WV, Board of Education, MBIA, 7%, 2005 500 529,345 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority Rev., "B", 5.25%, 2021 3,115 3,282,836 - -------------------------------------------------------------------------------------------------------------------------------- $5,858,068 - -------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 8.5% Berkeley County, WV, Hospital Rev. (City Hospital, Inc.), 6.5%, 2022 $840 $844,292 - -------------------------------------------------------------------------------------------------------------------------------- Kanawha County, WV, Building Commission Rev. (St. Francis Hospital), 7.5%, 2007 110 123,080 - -------------------------------------------------------------------------------------------------------------------------------- Ohio County, WV, County Commission Health System Rev. (Ohio Valley Medical Center), 5.75%, 2013 750 692,130 - -------------------------------------------------------------------------------------------------------------------------------- Randolph County, WV, Community Health Systems Rev. (Davis Health Systems, Inc.), FSA, 5.2%, 2021 1,000 1,070,350 - -------------------------------------------------------------------------------------------------------------------------------- Weirton, WV, Municipal Hospital Building Commission Rev. (Weirton Hospital Medical Center), 6.375%, 2031 600 590,376 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (Cabell Huntington Hospital), AMBAC, 6.25%, 2019 5,000 5,129,450 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (Charleston Area Medical Center), 6.5%, 2023 2,000 2,492,240 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (Fairmont General Hospital), 6.625%, 2019 500 498,415 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (General Division Medical Office Building), 7.25%, 2014 1,890 1,933,432 - -------------------------------------------------------------------------------------------------------------------------------- $13,373,765 - -------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Harrison County, WV, Building Commission Rev. (Maplewood Term Care - 2.0% Retirement), AMBAC, 5.25%, 2021 $2,625 $2,770,714 - -------------------------------------------------------------------------------------------------------------------------------- Monongalia County, WV, Health Facilities Rev. (Beverly Enterprises, Inc.), 5.875%, 2007 410 404,891 - -------------------------------------------------------------------------------------------------------------------------------- $3,175,605 - -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Braxton County, WV, Solid Waste Disposal Rev. (Weyerhaeuser Co.), Paper - 1.3% 6.5%, 2025 $2,000 $2,083,480 - -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Retail - 0.6% Kanawha County, WV, Commercial Development Rev. (Kroger Co.), 8%, 2011 $1,000 $1,022,350 - -------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 0.7% Huntington, WV, Housing Corp. Rev., FNMA, 7.5%, 2024 $800 $801,808 - -------------------------------------------------------------------------------------------------------------------------------- Webster County, WV, Housing Development Rev. (Circlebrook), FHA, 6.35%, 2008 245 249,905 - -------------------------------------------------------------------------------------------------------------------------------- $1,051,713 - -------------------------------------------------------------------------------------------------------------------------------- Parking - 0.9% West Virginia Economic Development Authority, Auto Lease Rev. (Capitol Parking Garage), AMBAC, 5.8%, 2020 $1,260 $1,439,512 - -------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Local - 1.0% Charlestown, WV, Residential Mortgage Rev., 6.2%, 2011 $360 $363,784 - -------------------------------------------------------------------------------------------------------------------------------- Kanawha County, WV, 0%, 2015(++) 1,920 1,152,326 - -------------------------------------------------------------------------------------------------------------------------------- $1,516,110 - -------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 3.5% Puerto Rico Housing Finance Authority, 4.75%, 2023 $2,000 $2,001,360 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Housing Development Fund Rev., 5.25%, 2018 1,000 1,021,840 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Housing Development Fund Rev., 5.3%, 2023 1,000 1,017,860 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Housing Development Fund Rev., 0%, 2037 9,000 1,539,180 - -------------------------------------------------------------------------------------------------------------------------------- $5,580,240 - -------------------------------------------------------------------------------------------------------------------------------- State & Local Appropriation - 21.4% Huntington, WV, Municipal Development Authority, Rev., MBIA, 5.1%, 2018 $1,740 $1,853,344 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority Rev. (State Office Building), XCLA, 5.25%, 2025 2,000 2,266,240 - -------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority, Rev., 5.25%, 2019 2,000 2,224,800 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, "A", RITES, AMBAC, 9.2238%, 2018+(+) 4,520 5,784,063 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, "B", RITES, AMBAC, 9.2238%, 2018+(+) 1,250 1,599,575 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, Lease Rev. (West Virginia Regional Jail), AMBAC, 5.375%, 2018 1,000 1,139,830 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, Lease Rev., MBIA, 0%, 2007 - 2008 6,200 5,697,435 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, Lease Rev., MBIA, 0%, 2009(++) 1,000 864,440 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority (Correctional Juvenile & Public), 5%, 2020 1,000 1,045,920 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority (Correctional Juvenile & Public), MBIA, 5.5%, 2013 1,000 1,154,780 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority (Correctional Juvenile & Public), MBIA, 5%, 2026 2,100 2,175,327 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority, Auto Lease Rev., 5.2%, 2033 1,000 1,010,470 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority, Department of Enviromental Protection, 5.5%, 2022 2,000 2,189,720 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (Veterans Nursing Home), 5.5%, 2034 1,000 1,005,040 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (West Virginia University Hospital), AMBAC, 5%, 2018 1,000 1,046,850 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia School Building Authority, Miscellaneous Tax Rev., FSA, 5.25%, 2021 2,550 2,757,162 - -------------------------------------------------------------------------------------------------------------------------------- $33,814,996 - -------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.3% Territory of Virgin Islands, Public Finance Authority Rev., "A", 5.625%, 2025 $500 $516,825 - -------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., Puerto Rico, 5.375%, 2033 $720 $710,100 - -------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 7.1% West Virginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, 0%, 2007 $2,000 $1,871,560 - -------------------------------------------------------------------------------------------------------------------------------- West Viriginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, 0%, 2005 - 2006 4,750 4,626,040 - -------------------------------------------------------------------------------------------------------------------------------- West Viriginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, 0%, 2008(++) 610 549,946 - -------------------------------------------------------------------------------------------------------------------------------- West Viriginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, 5.25%, 2014 - 2019 3,760 4,249,187 - -------------------------------------------------------------------------------------------------------------------------------- $11,296,733 - -------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Commonwealth of Puerto Rico, Industrial Tourist Education 13.4% (University Plaza), MBIA, 5%, 2021 $1,270 $1,349,375 - -------------------------------------------------------------------------------------------------------------------------------- Fairmont State College, West Virginia, College Rev., 5.25%, 2022 5,130 5,484,893 - -------------------------------------------------------------------------------------------------------------------------------- Fairmont State College, West Virginia, College Rev., FGIC, 5.375%, 2027 1,500 1,609,590 - -------------------------------------------------------------------------------------------------------------------------------- Fairmont State College, West Virginia, College Rev., FGIC, 5%, 2032 2,250 2,320,470 - -------------------------------------------------------------------------------------------------------------------------------- State of West Virginia, Department of Higher Education (Marshall University), FGIC, 5.25%, 2019 1,680 1,805,026 - -------------------------------------------------------------------------------------------------------------------------------- State of West Virginia, Department of Higher Education (Student Union), FGIC, 5.125%, 2022 1,500 1,572,930 - -------------------------------------------------------------------------------------------------------------------------------- State of West Virginia, Department of Higher Education, MBIA, 5%, 2010 1,345 1,504,638 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia University, University Systems Rev. (Marshall University), FGIC, 6%, 2020 2,705 3,167,690 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia University, University Systems Rev. (West Virginia University), MBIA, 5.5%, 2013 - 2020 2,125 2,451,464 - -------------------------------------------------------------------------------------------------------------------------------- $21,266,076 - -------------------------------------------------------------------------------------------------------------------------------- Universities - Dormitories - 1.6% West Liberty State College, Capital Improvement, 6%, 2028 $500 $523,355 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia University, Dormitory Rev., AMBAC, 5%, 2022 2,000 2,075,140 - -------------------------------------------------------------------------------------------------------------------------------- $2,598,495 - -------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Mason County, WV, Pollution Control Rev. (Appalachian Power Co.), Owned - 0.5% 5.5%, 2022 $750 $764,730 - -------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 10.9% Clarksburg, WV, Water Rev., FGIC, 5.25%, 2019 $2,725 $2,980,115 - -------------------------------------------------------------------------------------------------------------------------------- Fairmont, WV, Waterworks Rev., AMBAC, 5.25%, 2022 200 223,314 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., 7.1%, 2009(++) 150 172,782 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., AMBAC, 6.25%, 2020 1,000 1,157,230 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., AMBAC, 5.25%, 2023 3,545 3,830,408 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., AMBAC, 5%, 2026 2,100 2,184,882 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., FSA, 6.2%, 2024(++) 3,000 3,150,210 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., FSA, 5.25%, 2035 2,000 2,117,260 - -------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority, Infrastructure Rev., FSA, 5.5%, 2018 - 2019 1,285 1,441,830 - -------------------------------------------------------------------------------------------------------------------------------- $17,258,031 - -------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $139,388,317) $151,943,614 - -------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 3.0% - -------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), due 4/07/04 $1,700 $1,700,000 - -------------------------------------------------------------------------------------------------------------------------------- East Baton Rouge, LA, Pollution Control Rev. (Exxon), due 4/01/04 300 300,000 - -------------------------------------------------------------------------------------------------------------------------------- Harris County, TX, Health Facilities Development Rev. (University of Texas Medical Center), due 4/01/04 100 100,000 - -------------------------------------------------------------------------------------------------------------------------------- Lincoln County, WY, Pollution Control Rev. (Exxon Mobile Corp.), due 4/01/04 100 100,000 - -------------------------------------------------------------------------------------------------------------------------------- MSR Public Power Agency, CA, due 4/07/04 1,200 1,200,000 - -------------------------------------------------------------------------------------------------------------------------------- New York City, NY, due 4/01/04 1,100 1,100,000 - -------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., due 4/01/04 100 100,000 - -------------------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, due 4/01/04 200 200,000 - -------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $4,800,000 - -------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $144,188,317) $156,743,614 - -------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.0% 1,599,398 - -------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $158,343,012 - -------------------------------------------------------------------------------------------------------------------------------- * Non-income producing security - in default. + Restricted security. (+) Inverse floating rate security. (++) Refunded bond. The following abbreviations for insurers and inverse floater are used in the Portfolio of Investments and are defined: Insurers: Inverse Floaters: AMBAC -- AMBAC Indemnity Corp. INFLOS -- Inverse Floating Security ASST GTY -- Asset Guaranty Insurance Co. RIBS -- Residual Interest Bonds CONNIE LEE -- Connie Lee Insurance Co. RITES -- Residual Interest Tax-Exempt Security FGIC -- Financial Guaranty Insurance Co. ROLS -- Residual Options Longs FHA -- Federal Housing Administration FNMA -- Federal National Mortgage Assn. FSA -- Financial Security Assurance Inc. GNMA -- Government National Mortgage Assn. MBIA -- Municipal Bond Investors Corp. XLCA -- XL Capital Insurance Co. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------------------------------------------------------- This statement represents your fund's balance sheet, which details the assets and liabilities composing the total value of your fund.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA At 3/31/04 FUND FUND FUND FUND ASSETS Investments - Identified cost $87,628,091 $174,805,161 $352,569,083 $116,671,060 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation 6,122,608 18,368,954 34,237,500 7,663,341 - -------------------------------------------------------------------------------------------------------------------------------- Total, at value $93,750,699 $193,174,115 $386,806,583 $124,334,401 - -------------------------------------------------------------------------------------------------------------------------------- Cash 99,638 97,874 276,163 97,085 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for investments sold 3,443,004 125,000 2,821,497 10,000 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for fund shares sold 54,847 313,175 411,115 191,837 - -------------------------------------------------------------------------------------------------------------------------------- Interest receivable 1,443,940 2,918,442 5,753,962 1,804,813 - -------------------------------------------------------------------------------------------------------------------------------- Receivable from investment adviser -- -- -- 127,043 - -------------------------------------------------------------------------------------------------------------------------------- Other assets 506 968 2,823 264 - -------------------------------------------------------------------------------------------------------------------------------- Total assets $98,792,634 $196,629,574 $396,072,143 $126,565,443 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $363,831 $667,726 $1,334,425 $389,968 - -------------------------------------------------------------------------------------------------------------------------------- Payable for investments purchased 2,212,390 -- 2,303,268 1,042,082 - -------------------------------------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 5,334 104,903 546,092 891,979 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swap agreements 322,221 485,615 839,815 471,610 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on rate lock swap agreements 139,766 225,296 110,600 114,942 - -------------------------------------------------------------------------------------------------------------------------------- Payable to affiliates - Management fee 786 1,601 3,208 1,021 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 2,390 4,995 9,360 4,420 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee 1,875 2,636 5,265 17,980 - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 43 88 177 59 - -------------------------------------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 60,024 78,909 116,022 68,201 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities $3,108,660 $1,571,769 $5,268,232 $3,002,262 - -------------------------------------------------------------------------------------------------------------------------------- Net assets $95,683,974 $195,057,805 $390,803,911 $123,563,181 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $90,377,230 $178,506,390 $358,872,690 $117,788,707 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on investments 5,660,621 17,658,043 33,287,085 7,076,789 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net realized loss on investments (217,718) (507,032) (208,152) (1,013,695) - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (136,159) (599,596) (1,147,712) (288,620) - -------------------------------------------------------------------------------------------------------------------------------- Net assets $95,683,974 $195,057,805 $390,803,911 $123,563,181 - --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA FUND FUND FUND FUND Shares of beneficial interest outstanding Class A 8,232,153 11,419,089 24,811,219 7,281,780 - -------------------------------------------------------------------------------------------------------------------------------- Class B 1,313,167 3,611,166 4,099,316 4,689,726 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- 1,903,078 2,869,332 -- - -------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 9,545,320 16,933,333 31,779,867 11,971,506 - -------------------------------------------------------------------------------------------------------------------------------- Net assets Class A $82,506,565 $131,642,185 $305,184,936 $75,082,706 - -------------------------------------------------------------------------------------------------------------------------------- Class B 13,177,409 41,508,579 50,363,011 48,480,475 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- 21,907,041 35,255,964 -- - -------------------------------------------------------------------------------------------------------------------------------- Total net assets $95,683,974 $195,057,805 $390,803,911 $123,563,181 - -------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $10.02 $11.53 $12.30 $10.31 - -------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25 of net asset value per share) $10.52 $12.10 $12.91 $10.82 - -------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $10.03 $11.49 $12.29 $10.34 - -------------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $11.51 $12.29 $-- - -------------------------------------------------------------------------------------------------------------------------------- On sales of $100,000 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
Statement of Assets and Liabilities - continued
SOUTH WEST CAROLINA TENNESSEE VIRGINIA VIRGINIA At 3/31/04 FUND FUND FUND FUND ASSETS Investments - Identified cost $155,760,925 $131,980,968 $308,132,081 $144,188,317 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation 15,483,776 10,688,941 27,963,808 12,555,297 - -------------------------------------------------------------------------------------------------------------------------------- Total, at value $171,244,701 $142,669,909 $336,095,889 $156,743,614 - -------------------------------------------------------------------------------------------------------------------------------- Cash 13,226 43,583 98,596 60,630 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for investments sold 4,034,587 131,827 -- 25,000 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for fund shares sold 369,128 163,009 109,173 99,744 - -------------------------------------------------------------------------------------------------------------------------------- Interest receivable 2,419,543 1,916,709 5,072,152 2,568,123 - -------------------------------------------------------------------------------------------------------------------------------- Other assets 1,168 837 2,692 961 - -------------------------------------------------------------------------------------------------------------------------------- Total assets $178,082,353 $144,925,874 $341,378,502 $159,498,072 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $623,273 $457,601 $1,250,635 $539,332 - -------------------------------------------------------------------------------------------------------------------------------- Payable for investments purchased 2,032,886 811,252 -- -- - -------------------------------------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 187,183 127,982 1,310,313 149,549 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swap agreements 263,122 159,330 551,954 386,304 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on rate lock swap agreements 160,001 -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Payable to affiliates - Management fee 1,434 1,176 2,786 1,300 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 3,909 5,943 9,330 3,972 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee 2,328 1,805 3,907 1,834 - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 80 65 154 72 - -------------------------------------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 80,051 64,738 129,153 72,697 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities $3,354,267 $1,629,892 $3,258,232 $1,155,060 - -------------------------------------------------------------------------------------------------------------------------------- Net assets $174,728,086 $143,295,982 $338,120,270 $158,343,012 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $161,854,422 $132,987,933 $315,973,462 $147,792,537 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on investments 15,060,653 10,529,611 27,411,854 12,168,993 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net realized gain (loss) on investments (2,110,711) 174,019 (4,313,616) (1,224,324) - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (76,278) (395,581) (951,430) (394,194) - -------------------------------------------------------------------------------------------------------------------------------- Net assets $174,728,086 $143,295,982 $338,120,270 $158,343,012 - --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
SOUTH WEST CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND Shares of beneficial interest outstanding Class A 10,936,420 10,860,905 25,686,016 11,890,268 - -------------------------------------------------------------------------------------------------------------------------------- Class B 2,921,475 2,219,953 2,010,885 1,501,279 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- 1,137,628 -- - -------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 13,857,895 13,080,858 28,834,529 13,391,547 - -------------------------------------------------------------------------------------------------------------------------------- Net assets Class A $137,911,430 $118,990,189 $301,218,056 $140,599,383 - -------------------------------------------------------------------------------------------------------------------------------- Class B 36,816,656 24,305,793 23,564,146 17,743,629 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- 13,338,068 -- - -------------------------------------------------------------------------------------------------------------------------------- Total net assets $174,728,086 $143,295,982 $338,120,270 $158,343,012 - -------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $12.61 $10.96 $11.73 $11.82 - -------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25 of net asset value per share) $13.24 $11.51 $12.31 $12.41 - -------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $12.60 $10.95 $11.72 $11.82 - -------------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $-- $11.72 $-- - -------------------------------------------------------------------------------------------------------------------------------- On sales of $100,000 or more, the price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, and Class C shares. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------------------------------------------------------- This statement describes how much your fund received in investment income and paid in expenses. It also describes any gains and/or losses generated by fund operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA FUND FUND FUND FUND For year ended 3/31/04 NET INVESTMENT INCOME Interest income $5,276,412 $10,247,908 $20,977,675 $5,859,048 - -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $552,517 $1,071,579 $2,202,103 $673,690 - -------------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 4,459 7,097 12,988 6,636 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 145,897 280,941 545,247 175,422 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) -- 334,531 1,084,168 73,299 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 111,023 422,503 555,201 442,059 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class C) -- 184,580 343,803 -- - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 9,834 19,182 39,548 12,211 - -------------------------------------------------------------------------------------------------------------------------------- Custodian fee 37,712 71,410 141,667 45,259 - -------------------------------------------------------------------------------------------------------------------------------- Printing 8,281 20,837 33,333 16,519 - -------------------------------------------------------------------------------------------------------------------------------- Postage 1,541 4,076 6,622 2,840 - -------------------------------------------------------------------------------------------------------------------------------- Auditing fees 34,446 33,366 34,046 33,360 - -------------------------------------------------------------------------------------------------------------------------------- Legal fees 4,576 2,270 5,664 5,852 - -------------------------------------------------------------------------------------------------------------------------------- Miscellaneous 36,170 77,303 87,691 75,170 - -------------------------------------------------------------------------------------------------------------------------------- Total expenses $946,456 $2,529,675 $5,092,081 $1,562,317 - -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (1,340) (1,648) (3,868) (1,621) - -------------------------------------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (205,621) (399,065) (819,959) (378,004) - -------------------------------------------------------------------------------------------------------------------------------- Net expenses $739,495 $2,128,962 $4,268,254 $1,182,692 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income $4,536,917 $8,118,946 $16,709,421 $4,676,356 - -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) (identified cost basis)- Investment transactions $562,246 $99,833 $721,574 $441,692 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (311,262) (506,595) (1,286,022) (612,121) - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $250,984 $(406,762) $(564,448) $(170,429) - -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $112,878 $1,618,106 $2,909,917 $1,673,887 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (325,124) (516,414) (325,278) (378,199) - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(212,246) $1,101,692 $2,584,639 $1,295,688 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments $38,738 $694,930 $2,020,191 $1,125,259 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $4,575,655 $8,813,876 $18,729,612 $5,801,615 - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Operations - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND For year ended 3/31/04 NET INVESTMENT INCOME Interest income $9,156,798 $7,291,872 $18,830,837 $8,268,201 - -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $941,169 $796,244 $1,890,807 $861,311 - -------------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 7,614 6,972 12,934 7,600 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 238,927 199,249 474,254 212,344 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) 464,313 415,855 1,067,806 482,517 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 381,837 257,110 246,641 184,672 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class C) -- -- 134,301 -- - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 16,781 14,216 33,953 15,589 - -------------------------------------------------------------------------------------------------------------------------------- Custodian fee 61,274 52,516 125,183 56,680 - -------------------------------------------------------------------------------------------------------------------------------- Printing 15,357 9,095 32,052 12,046 - -------------------------------------------------------------------------------------------------------------------------------- Postage 2,832 1,899 5,894 2,367 - -------------------------------------------------------------------------------------------------------------------------------- Auditing fees 34,046 34,166 33,561 32,666 - -------------------------------------------------------------------------------------------------------------------------------- Legal fees 5,692 5,936 4,054 4,867 - -------------------------------------------------------------------------------------------------------------------------------- Miscellaneous 44,983 38,217 93,187 35,356 - -------------------------------------------------------------------------------------------------------------------------------- Total expenses $2,214,825 $1,831,475 $4,154,627 $1,908,015 - -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (2,030) (1,518) (3,018) (1,997) - -------------------------------------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (350,655) (296,509) (704,136) (320,918) - -------------------------------------------------------------------------------------------------------------------------------- Net expenses $1,862,140 $1,533,448 $3,447,473 $1,585,100 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income $7,294,658 $5,758,424 $15,383,364 $6,683,101 - -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Realized gain (loss) (identified cost basis)- Investment transactions $555,192 $555,429 $272,436 $190,091 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (573,958) (266,155) (716,117) (294,315) - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $(18,766) $289,274 $(443,681) $(104,224) - -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $1,505,374 $580,731 $4,267,328 $1,110,287 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (234,807) (119,612) (405,485) (301,935) - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain on investments $1,270,567 $461,119 $3,861,843 $808,352 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments $1,251,801 $750,393 $3,418,162 $704,128 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $8,546,459 $6,508,817 $18,801,526 $7,387,229 - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS - ---------------------------------------------------------------------------------------------------------------------------------- This statement describes 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 For year ended 3/31/04 INCREASE IN NET ASSETS OPERATIONS Net investment income $4,536,917 $8,118,946 $16,709,421 $4,676,356 - ---------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 250,984 (406,762) (564,448) (170,429) - ---------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments (212,246) 1,101,692 2,584,639 1,295,688 - ---------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $4,575,655 $8,813,876 $18,729,612 $5,801,615 - ---------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(4,064,652) $(5,975,204) $(13,419,746) $(3,030,603) - ---------------------------------------------------------------------------------------------------------------------------------- Class B (520,819) (1,566,640) (2,043,344) (1,629,792) - ---------------------------------------------------------------------------------------------------------------------------------- Class C -- (682,101) (1,263,628) -- - ---------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- -- (280,664) -- - ---------------------------------------------------------------------------------------------------------------------------------- Class B -- -- (49,717) -- - ---------------------------------------------------------------------------------------------------------------------------------- Class C -- -- (31,261) -- - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(4,585,471) $(8,223,945) $(17,088,360) $(4,660,395) - ---------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $10,655,498 $41,425,831 $37,294,299 $30,601,516 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 2,272,543 5,293,059 11,195,687 2,819,570 - ---------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (17,857,814) (39,966,408) (66,966,662) (26,644,762) - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from fund share transactions $(4,929,773) $6,752,482 $(18,476,676) $6,776,324 - ---------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets $(4,939,589) $7,342,413 $(16,835,424) $7,917,544 - ---------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 100,623,563 187,715,392 407,639,335 115,645,637 - ---------------------------------------------------------------------------------------------------------------------------------- At end of period $95,683,974 $195,057,805 $390,803,911 $123,563,181 - ---------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(136,159) $(599,596) $(1,147,712) $(288,620) - ---------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND For year ended 3/31/04 INCREASE IN NET ASSETS OPERATIONS Net investment income $7,294,658 $5,758,424 $15,383,364 $6,683,101 - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (18,766) 289,274 (443,681) (104,224) - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain on investments 1,270,567 461,119 3,861,843 808,352 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $8,546,459 $6,508,817 $18,801,526 $7,387,229 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(6,047,323) $(4,946,524) $(13,869,373) $(5,969,940) - -------------------------------------------------------------------------------------------------------------------------------- Class B (1,491,730) (903,219) (960,093) (679,583) - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- (522,406) -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(7,539,053) $(5,849,743) $(15,351,872) $(6,649,523) - -------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $29,350,138 $15,937,341 $20,320,016 $14,857,638 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 4,689,230 3,214,136 8,573,893 4,326,299 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (27,765,798) (19,879,059) (40,615,202) (20,585,229) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from fund share transactions $6,273,570 $(727,582) $(11,721,293) $(1,401,292) - -------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets $7,280,976 $(68,508) $(8,271,639) $(663,586) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 167,447,110 143,364,490 346,391,909 159,006,598 - -------------------------------------------------------------------------------------------------------------------------------- At end of period $174,728,086 $143,295,982 $338,120,270 $158,343,012 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(76,278) $(395,581) $(951,430) $(394,194) - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA FUND FUND FUND FUND For year ended 3/31/03 INCREASE IN NET ASSETS OPERATIONS Net investment income $4,340,327 $7,663,268 $17,561,632 $3,987,503 - ---------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 211,423 284,626 2,016,429 (149,368) - ---------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain on investments 3,809,412 8,095,618 17,099,996 4,464,372 - ---------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $8,361,162 $16,043,512 $36,678,057 $8,302,507 - ---------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(4,058,929) $(6,022,805) $(14,502,430) $(2,791,122) - ---------------------------------------------------------------------------------------------------------------------------------- Class B (469,269) (1,402,028) (2,353,128) (1,467,283) - ---------------------------------------------------------------------------------------------------------------------------------- Class C -- (476,288) (1,117,181) -- - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(4,528,198) $(7,901,121) $(17,972,739) $(4,258,405) - ---------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $17,633,153 $43,561,956 $39,282,954 $50,723,478 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 2,287,961 5,090,304 11,621,792 2,485,165 - ---------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (9,311,035) (30,877,198) (46,495,365) (17,554,351) - ---------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from fund share transactions $10,610,079 $17,775,062 $4,409,381 $35,654,292 - ---------------------------------------------------------------------------------------------------------------------------------- Total increase in net assets $14,443,043 $25,917,453 $23,114,699 $39,698,394 - ---------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 86,180,520 164,797,939 384,524,636 75,947,243 - ---------------------------------------------------------------------------------------------------------------------------------- At end of period $100,623,563 $187,715,392 $407,639,335 $115,645,637 - ---------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(86,847) $(489,403) $(1,114,375) $(292,552) - ---------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND For year ended 3/31/03 INCREASE IN NET ASSETS OPERATIONS Net investment income $7,418,489 $5,925,598 $15,689,806 $7,005,287 - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments 714,730 359,898 239,753 361,090 - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain on investments 6,460,467 5,835,725 13,828,605 5,329,668 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $14,593,686 $12,121,221 $29,758,164 $12,696,045 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(6,104,336) $(5,116,263) $(14,108,313) $(6,342,674) - -------------------------------------------------------------------------------------------------------------------------------- Class B (1,485,789) (1,081,818) (1,023,751) (762,988) - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- (459,134) -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(7,590,125) $(6,198,081) $(15,591,198) $(7,105,662) - -------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $26,803,450 $27,676,408 $27,785,098 $22,629,845 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 4,672,734 3,548,392 8,405,139 4,569,399 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (26,609,520) (21,260,850) (40,642,264) (11,890,910) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from fund share transactions $4,866,664 $9,963,950 $(4,452,027) $15,308,334 - -------------------------------------------------------------------------------------------------------------------------------- Total increase in net assets $11,870,225 $15,887,090 $9,714,939 $20,898,717 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 155,576,885 127,477,400 336,676,970 138,107,881 - -------------------------------------------------------------------------------------------------------------------------------- At end of period $167,447,110 $143,364,490 $346,391,909 $159,006,598 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed (distributions in excess of) net investment income included in net assets at end of period $128,349 $(335,965) $(949,088) $(479,948) - -------------------------------------------------------------------------------------------------------------------------------- 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 each fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in a fund (assuming reinvestment of all distributions) held for the entire period. This information has been audited by the fund's independent auditors, whose report, together with each fund's financial statements, are included in this report. For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.02 $9.61 $9.78 $9.37 $9.93 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.46 $0.46 $0.49 $0.50 $0.50 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.01 0.44 (0.16) 0.41 (0.56) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.47 $0.90 $0.33 $0.91 $(0.06) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.47) $(0.49) $(0.50) $(0.50) $(0.50) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.02 $10.02 $9.61 $9.78 $9.37 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 4.77 9.48 3.45 10.02 (0.58) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.62 0.64 0.65 0.65 0.66 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.61 4.70 5.05 5.28 5.22 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 12 22 6 19 18 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $82,507 $87,724 $76,004 $67,458 $66,173 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.44 $0.44 $0.47 $0.48 $0.48 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.82 0.84 0.85 0.85 0.84 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.41 4.50 4.85 5.08 5.04 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by less than 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MISSISSIPPI MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.04 $9.62 $9.79 $9.38 $9.94 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.38 $0.38 $0.42 $0.43 $0.42 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.01)^ 0.44 (0.17) 0.41 (0.56) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.37 $0.82 $0.25 $0.84 $(0.14) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.38) $(0.40) $(0.42) $(0.43) $(0.42) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.03 $10.04 $9.62 $9.79 $9.38 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 3.80 8.67 2.62 9.17 (1.37) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.44 1.47 1.45 1.43 1.46 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.79 3.86 4.23 4.50 4.41 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 12 22 6 19 18 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $13,177 $12,900 $10,177 $10,986 $10,786 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.36 $0.36 $0.40 $0.41 $0.40 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.64 1.67 1.65 1.63 1.64 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.59 3.66 4.03 4.30 4.23 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by less than 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. ^ 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 the Fund shares and the amount of per share realized and unrealized gains and losses at such time. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.49 $10.94 $11.14 $10.58 $11.27 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.51 $0.52 $0.53 $0.55 $0.55 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.04 0.56 (0.18) 0.57 (0.69) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.55 $1.08 $0.35 $1.12 $(0.14) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.51) $(0.53) $(0.54) $(0.55) $(0.55) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) (0.01) -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.51) $(0.53) $(0.55) $(0.56) $(0.55) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.53 $11.49 $10.94 $11.14 $10.58 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 4.90 10.05 3.16 10.75 (1.06) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.86 0.87 0.88 0.86 0.85 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.39 4.56 4.80 5.10 5.14 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 13 17 18 35 38 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $131,642 $132,843 $121,717 $125,917 $101,403 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.48 $0.49 $0.51 $0.52 $0.53 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.06 1.07 1.08 1.06 1.03 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.19 4.36 4.60 4.90 4.96 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31 CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.45 $10.93 $11.13 $10.58 $11.27 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.42 $0.43 $0.45 $0.46 $0.47 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.04 0.54 (0.19) 0.57 (0.69) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.46 $0.97 $0.26 $1.03 $(0.22) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.42) $(0.45) $(0.45) $(0.47) $(0.47) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) (0.01) -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.42) $(0.45) $(0.46) $(0.48) $(0.47) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.49 $11.45 $10.93 $11.13 $10.58 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.12 8.96 2.39 9.94 (1.89) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.60 1.62 1.63 1.61 1.60 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.62 3.80 4.05 4.33 4.38 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 13 17 18 35 38 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $41,509 $40,867 $29,903 $25,928 $20,224 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.39 $0.41 $0.43 $0.44 $0.45 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.80 1.82 1.83 1.81 1.78 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.42 3.60 3.85 4.13 4.20 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------------------
For years ended 3/31 Period Ended 2004 2003 2002 3/31/2001* CLASS C Net asset value, beginning of period $11.47 $10.93 $11.13 $10.91 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.42 $0.43 $0.45 $0.14 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.04 0.56 (0.18) 0.23 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.46 $0.99 $0.27 $0.37 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.42) $(0.45) $(0.46) $(0.14) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.42) $(0.45) $(0.47) $(0.15) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.51 $11.47 $10.93 $11.13 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.12 9.14 2.39 3.36++ - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.60 1.62 1.63 1.61+ - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.63 3.81 4.05 4.20+ - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 13 17 18 35 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $21,907 $14,005 $10,178 $8,578 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.39 $0.41 $0.43 $0.14 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.80 1.82 1.83 1.81+ - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.43 3.61 3.85 4.00+ - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. * For the period from the inception of Class C shares, December 11, 2000, through March 31, 2001. + Annualized. ++ Not annualized. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $12.24 $11.68 $11.89 $11.35 $12.14 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.53 $0.54 $0.57 $0.58 $0.59 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.07 0.58 (0.21) 0.55 (0.80) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.60 $1.12 $0.36 $1.13 $(0.21) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.53) $(0.56) $(0.57) $(0.58) $(0.58) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.00)+++ (0.01) -- - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.01) -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.54) $(0.56) $(0.57) $(0.59) $(0.58) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.30 $12.24 $11.68 $11.89 $11.35 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 5.01 9.71 3.08 10.20 (1.67) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.92 0.91 0.92 0.91 0.91 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.30 4.50 4.78 5.03 5.07 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 9 20 13 27 9 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $305,185 $316,687 $303,250 $308,447 $310,624 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.50 $0.52 $0.54 $0.56 $0.57 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.12 1.11 1.12 1.11 1.09 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.10 4.30 4.58 4.83 4.89 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. +++ Per share amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $12.23 $11.67 $11.89 $11.35 $12.13 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.47 $0.48 $0.50 $0.51 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.07 0.57 (0.20) 0.55 (0.78) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.52 $1.04 $0.28 $1.05 $(0.27) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.45) $(0.48) $(0.49) $(0.50) $(0.51) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) (0.01) -- - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.01) -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.46) $(0.48) $(0.50) $(0.51) $(0.51) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.29 $12.23 $11.67 $11.89 $11.35 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.33 9.01 2.33 9.49 (2.22) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.56 1.56 1.57 1.56 1.56 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.64 3.85 4.07 4.37 4.42 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 9 20 13 27 9 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $50,363 $59,116 $57,534 $60,449 $48,794 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.42 $0.44 $0.46 $0.48 $0.49 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.76 1.76 1.77 1.76 1.74 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.44 3.65 3.87 4.17 4.24 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS C 2004 2003 2002 2001 2000 Net asset value, beginning of period $12.23 $11.67 $11.89 $11.35 $12.13 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.46 $0.48 $0.50 $0.51 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.07 0.58 (0.20) 0.55 (0.78) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.52 $1.04 $0.28 $1.05 $(0.27) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.45) $(0.48) $(0.49) $(0.50) $(0.51) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.01) (0.01) -- - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.01) -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.46) $(0.48) $(0.50) $(0.51) $(0.51) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.29 $12.23 $11.67 $11.89 $11.35 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.33 9.01 2.33 9.49 (2.22) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.57 1.56 1.57 1.56 1.56 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.67 3.84 4.07 4.37 4.42 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 9 20 13 27 9 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $35,256 $31,836 $23,741 $19,099 $14,206 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.43 $0.44 $0.46 $0.48 $0.49 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.77 1.76 1.77 1.76 1.74 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.47 3.64 3.87 4.17 4.24 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.21 $9.73 $9.85 $9.36 $9.90 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.42 $0.45 $0.48 $0.49 $0.50 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.10 0.51 (0.11) 0.49 (0.55) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.52 $0.96 $0.37 $0.98 $(0.05) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.42) $(0.48) $(0.49) $(0.49) $(0.49) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.00)+++ -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.42) $(0.48) $(0.49) $(0.49) $(0.49) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.31 $10.21 $9.73 $9.85 $9.36 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 5.12 10.12 3.85 10.85 (0.45) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.64 0.48 0.36 0.37 0.38 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.12 4.47 4.90 5.17 5.19 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 24 19 19 10 48 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $75,083 $68,705 $47,661 $33,842 $25,494 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually agreed under a temporary expense agreement to pay all of the fund's operating expenses, exclusive of management, distribution and service fees in excess of 0.20% of average daily net assets. Prior to January 1, 2003, MFS had contractually agreed, subject to reimbursement, to bear a portion of the fund's "Other Expenses", which are defined as the fund's operating expenses, exclusive of management, distribution and service fees such that "Other Expenses" did not exceed 0.40% annually. This arrangement was effected by MFS bearing all of the fund's "Other Expenses" during the fund's fiscal year and the fund paying MFS an expense reimbursement fee not greater than 0.40% of average daily net assets. The investment adviser had agreed to waive 0.40% of the reimbursement fee for an indefinite period of time. This agreement terminated on December 31, 2002. In addition, the investment adviser contractually waived a portion of its fee for the periods indicated. To the extent actual expenses were over these limitations, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.39 $0.40 $0.43 $0.44 $0.44 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.94 0.96 0.89 0.93 0.91 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.82 3.99 4.37 4.61 4.66 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. +++ Per share amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.24 $9.75 $9.88 $9.38 $9.92 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.34 $0.36 $0.40 $0.42 $0.42 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.10 0.53 (0.12) 0.50 (0.55) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.44 $0.89 $0.28 $0.92 $(0.13) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.34) $(0.40) $(0.41) $(0.42) $(0.41) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.00)+++ -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.34) $(0.40) $(0.41) $(0.42) $(0.41) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.34 $10.24 $9.75 $9.88 $9.38 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.38 9.21 2.86 10.06 (1.25) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.44 1.30 1.20 1.17 1.19 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.32 3.62 4.06 4.38 4.38 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 24 19 19 10 48 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $48,480 $46,941 $28,286 $20,827 $17,496 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually agreed under a temporary expense agreement to pay all of the fund's operating expenses, exclusive of management, distribution and service fees in excess of 0.20% of average daily net assets. Prior to January 1, 2003, MFS had contractually agreed, subject to reimbursement, to bear a portion of the fund's "Other Expenses", which are defined as the fund's operating expenses, exclusive of management, distribution and service fees such that "Other Expenses" did not exceed 0.40% annually. This arrangement was effected by MFS bearing all of the fund's "Other Expenses" during the fund's fiscal year and the fund paying MFS an expense reimbursement fee not greater than 0.40% of average daily net assets. The investment adviser had agreed to waive 0.40% of the reimbursement fee for an indefinite period of time. This agreement terminated on December 31, 2002. In addition, the investment adviser contractually waived a portion of its fee for the periods indicated. To the extent actual expenses were over these limitations, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.31 $0.32 $0.35 $0.36 $0.37 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.74 1.78 1.73 1.73 1.72 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.02 3.14 3.53 3.82 3.85 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. +++ Per share amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $12.53 $12.00 $12.15 $11.58 $12.48 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.55 $0.58 $0.60 $0.60 $0.58 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.10 0.54 (0.16) 0.56 (0.86) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.65 $1.12 $0.44 $1.16 $(0.28) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.57) $(0.59) $(0.59) $(0.59) $(0.58) - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- -- -- -- (0.03) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.57) $(0.59) $(0.59) $(0.59) $(0.62) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.61 $12.53 $12.00 $12.15 $11.58 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 5.30 9.51 3.68 10.26 (2.27) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.94 0.95 0.94 0.96 0.94 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.39 4.68 4.91 5.13 4.91 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 16 21 10 33 18 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $137,911 $129,844 $121,438 $120,529 $121,064 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.53 $0.55 $0.57 $0.58 $0.56 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.14 1.15 1.14 1.16 1.12 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.19 4.48 4.71 4.93 4.73 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share, and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.03%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $12.52 $11.99 $12.14 $11.58 $12.47 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.47 $0.50 $0.52 $0.52 $0.51 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.10 0.54 (0.16) 0.55 (0.86) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.57 $1.04 $0.36 $1.07 $(0.35) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.49) $(0.51) $(0.51) $(0.51) $(0.50) - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- -- -- -- (0.03) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.49) $(0.51) $(0.51) $(0.51) $(0.54) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.60 $12.52 $11.99 $12.14 $11.58 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.62 8.81 3.01 9.46 (2.82) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.59 1.60 1.59 1.61 1.59 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.74 4.03 4.25 4.47 4.26 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 16 21 10 33 18 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $36,817 $37,603 $34,139 $33,302 $31,532 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.45 $0.47 $0.49 $0.50 $0.48 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.79 1.80 1.79 1.81 1.77 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.54 3.83 4.05 4.27 4.08 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.03%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) TENNESSEE MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.90 $10.43 $10.58 $10.11 $10.87 - ------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.47 $0.49 $0.50 $0.50 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 0.06 0.49 (0.14) 0.47 (0.69) - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.51 $0.96 $0.35 $0.97 $(0.19) - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.45) $(0.49) $(0.50) $(0.50) $(0.50) - ------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- -- -- (0.07) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- (0.00)+++ -- -- - ------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gain on investments -- -- -- -- (0.00)+++ - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.45) $(0.49) $(0.50) $(0.50) $(0.57) - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.96 $10.90 $10.43 $10.58 $10.11 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)(+) 4.80 9.34 3.36 9.87 (1.75) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.94 0.97 0.94 0.95 0.96 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.08 4.35 4.66 4.87 4.80 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 19 16 12 19 20 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $118,990 $115,819 $101,294 $99,097 $100,251 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.42 $0.45 $0.47 $0.48 $0.48 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.14 1.17 1.14 1.15 1.14 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.88 4.15 4.46 4.67 4.62 - ------------------------------------------------------------------------------------------------------------------------------ (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. +++ Per share amount was less than $(0.01). # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) TENNESSEE MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.89 $10.42 $10.57 $10.10 $10.86 - ------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.38 $0.40 $0.42 $0.43 $0.43 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 0.06 0.49 (0.14) 0.47 (0.69) - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.44 $0.89 $0.28 $0.90 $(0.26) - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.38) $(0.42) $(0.43) $(0.43) $(0.43) - ------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- -- -- (0.07) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- (0.00)+++ -- -- - ------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gain on investments -- -- -- -- (0.00)+++ - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.38) $(0.42) $(0.43) $(0.43) $(0.50) - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.95 $10.89 $10.42 $10.57 $10.10 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%) 4.12 8.64 2.69 9.17 (2.39) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.59 1.62 1.59 1.60 1.61 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.43 3.70 4.00 4.22 4.15 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 19 16 12 19 20 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $24,306 $27,546 $26,183 $23,656 $21,321 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.35 $0.38 $0.40 $0.41 $0.41 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.79 1.82 1.79 1.80 1.79 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.23 3.50 3.80 4.02 3.97 - ------------------------------------------------------------------------------------------------------------------------------ (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. +++ Per share amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.61 $11.14 $11.36 $10.91 $11.60 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.53 $0.53 $0.54 $0.56 $0.57 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.12 0.47 (0.22) 0.45 (0.70) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.65 $1.00 $0.32 $1.01 $(0.13) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.53) $(0.53) $(0.54) $(0.56) $(0.56) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.00)+++ (0.00)+++ -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.53) $(0.53) $(0.54) $(0.56) $(0.56) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.73 $11.61 $11.14 $11.36 $10.91 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 5.70 9.10 2.87 9.55 (1.09) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.93 0.93 0.92 0.91 0.91 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.53 4.62 4.77 5.06 5.07 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 11 13 14 24 13 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $301,218 $308,164 $299,088 $304,581 $311,934 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.51 $0.51 $0.52 $0.54 $0.54 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.13 1.13 1.12 1.11 1.09 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.33 4.42 4.57 4.86 4.89 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. +++ Per share amount was less than $(0.01). # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charges had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.60 $11.13 $11.35 $10.91 $11.60 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.46 $0.47 $0.48 $0.49 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.12 0.46 (0.22) 0.44 (0.70) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.57 $0.92 $0.25 $0.92 $(0.21) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.45) $(0.45) $(0.47) $(0.48) $(0.48) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.00)+++ (0.00)+++ -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.45) $(0.45) $(0.47) $(0.48) $(0.48) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.72 $11.60 $11.13 $11.35 $10.91 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 5.02 8.40 2.20 8.76 (1.73) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.57 1.58 1.58 1.56 1.56 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.88 3.97 4.12 4.39 4.42 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 11 13 14 24 13 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $23,564 $25,470 $26,970 $29,872 $29,316 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.43 $0.43 $0.45 $0.46 $0.47 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.77 1.78 1.78 1.76 1.74 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.68 3.77 3.92 4.19 4.24 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. +++ Per share amount was less than $(0.01). # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS C 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.61 $11.13 $11.36 $10.91 $11.60 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.45 $0.47 $0.48 $0.49 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.11 0.48 (0.23) 0.45 (0.70) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.56 $0.93 $0.24 $0.93 $(0.21) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.45) $(0.45) $(0.47) $(0.48) $(0.48) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- (0.00)+++ (0.00)+++ -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.45) $(0.45) $(0.47) $(0.48) $(0.48) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.72 $11.61 $11.13 $11.36 $10.91 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.93 8.49 2.10 8.85 (1.73) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.57 1.58 1.57 1.56 1.56 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.88 3.97 4.10 4.37 4.42 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 11 13 14 24 13 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $13,338 $12,758 $10,619 $6,965 $5,171 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.43 $0.43 $0.44 $0.46 $0.47 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.77 1.78 1.77 1.76 1.74 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.68 3.77 3.90 4.17 4.24 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. +++ Per share amount was less than $(0.01). # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.77 $11.32 $11.45 $10.95 $11.75 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.51 $0.55 $0.57 $0.57 $0.57 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.05 0.46 (0.14) 0.50 (0.80) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.56 $1.01 $0.43 $1.07 $(0.23) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.51) $(0.56) $(0.56) $(0.57) $(0.57) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.82 $11.77 $11.32 $11.45 $10.95 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+) 4.84 9.04 3.79 10.04 (1.89) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.93 0.96 0.93 0.95 0.95 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.33 4.71 4.97 5.14 5.13 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 17 13 2 9 30 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $140,599 $139,564 $121,860 $118,862 $117,174 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.49 $0.53 $0.55 $0.55 $0.55 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.13 1.16 1.13 1.15 1.13 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.13 4.51 4.77 4.94 4.95 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would have been lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.76 $11.31 $11.44 $10.94 $11.74 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.43 $0.47 $0.50 $0.50 $0.50 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.06 0.46 (0.15) 0.50 (0.80) - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.49 $0.93 $0.35 $1.00 $(0.30) - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.43) $(0.48) $(0.48) $(0.50) $(0.50) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.82 $11.76 $11.31 $11.44 $10.94 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%) 4.25 8.34 3.12 9.34 (2.53) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.58 1.61 1.59 1.60 1.60 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.68 4.06 4.31 4.48 4.48 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 17 13 2 9 30 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $17,744 $19,443 $16,248 $16,170 $14,727 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. If this fee had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income(S)(S) $0.41 $0.45 $0.47 $0.48 $0.48 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.78 1.81 1.79 1.80 1.78 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.48 3.86 4.11 4.28 4.30 - -------------------------------------------------------------------------------------------------------------------------------- (S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1, 2001, have not been restated to reflect this change in presentation. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- (1) BUSINESS AND ORGANIZATION MFS Mississippi Municipal Bond Fund (Mississippi Fund), MFS New York Municipal Bond Fund (New York Fund), MFS North Carolina Municipal Bond Fund (North Carolina Fund), MFS Pennsylvania Municipal Bond Fund (Pennsylvania Fund), MFS South Carolina Municipal Bond Fund (South Carolina Fund), MFS Tennessee Municipal Bond Fund (Tennessee Fund), MFS Virginia Municipal Bond Fund (Virginia Fund), and MFS West Virginia Municipal Bond Fund (West Virginia Fund) are each a non-diversified series of MFS Municipal Series Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open- end management investment company. (2) SIGNIFICANT ACCOUNTING POLICIES General - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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, interest from the security could become taxable and the security could decline in value. Investment Valuations - Each fund uses independent pricing services approved by the Board of Trustees wherever possible to value its portfolio securities. Portfolio securities are valued at current market prices where current market prices are readily available, or the fund may fair value portfolio securities under the direction of the Board of Trustees when a determination is made that current market prices are not readily available. Bonds and other fixed income securities (other than short-term obligations) in each fund's portfolio are valued at an evaluated bid price as reported by an independent pricing service, or to the extent a valuation is not reported by a pricing service, such securities are valued on the basis of quotes from brokers and dealers. Prices obtained from pricing services utilize both dealer-supplied valuations and electronic data processing techniques which take into account appropriate 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 without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Bonds and other fixed income securities for which it is determined that current market prices are not readily available will be fair valued under the direction of the Board of Trustees. Short-term obligations with a remaining maturity in excess of 60 days will be valued upon dealer-supplied valuations. All other short-term obligations in each fund's portfolio are valued at amortized cost, which constitutes market value as determined by the Board of Trustees. Swap Agreements - Each fund may enter into swap agreements. A swap is an exchange of cash payments between the fund and another party, which is based on a specific financial index. Cash payments are exchanged at specified intervals and the expected income or expense is recorded on the accrual basis. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation. Risks may arise upon entering into these agreements from the potential inability of counterparties to meet the terms of their contract and from unanticipated changes in the value of the financial index on which the swap agreement is based. Each fund may use swaps for both hedging and non-hedging purposes. For hedging purposes, each fund may use swaps to reduce its exposure to interest rate fluctuations. For non- hedging purposes, each fund may use swaps to take a position on anticipated changes in the underlying financial index. Interest Rate Swap Agreements - Interest rate swap agreements are agreements to exchange cash flows periodically based on a notional principal amount, for example the exchange of fixed rate interest payments for floating rate interest payments which are based on a specific financial index or the exchange of two distinct floating rate payments. The net receivable or payable associated with these payments is accrued daily and is recorded as net interest income or expense. For financial statement purposes, the net interest income or expense periodically recognized for an interest rate swap agreement is recorded in the same line item as any unrealized and realized gains or losses recognized for that instrument. The primary risk associated with interest rate swap agreements is that unfavorable changes in the fluctuation of interest rates could adversely impact the funds. Rate Lock Swap Agreements - Each fund may enter into rate lock swap agreements, which are used to reduce the interest rate risk of the portfolio. A rate lock swap agreement is a payment or receipt of cash on a specified future date, calculated as the difference between the strike rate and a specific index yield on that date. The payment received or made at the end of the measurement period is 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 is recorded as unrealized appreciation or depreciation. 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 accounting principles generally accepted in the United States of America. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. Interest payments received in additional securities are recorded on the ex- interest date in an amount equal to the value of the security on such date. Some securities may be purchased on a "when-issued" or "forward delivery" basis, which means that the securities will be delivered to the fund at a future date, usually beyond customary settlement time. 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 the fund. This amount, for the year ended March 31, 2004, is shown as a reduction of total expenses on the Statement of Operations. Tax Matters and Distributions - Each fund's policy is to comply with the provisions of the Internal Revenue Code (the Code) applicable to regulated investment companies and to distribute to shareholders all of its net tax- exempt and taxable net income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is provided. Distributions paid by each fund from net interest received on tax-exempt municipal bonds are not includable by shareholders as gross income for federal income tax purposes because each fund intends to meet certain requirements of the Code applicable to regulated investment companies, which will enable each fund to pay exempt-interest dividends. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986 may be considered a tax-preference item to shareholders. Distributions to shareholders are recorded on the ex-dividend date. Each fund distinguishes between distributions on a tax basis and a financial reporting basis and only distributions in excess of tax basis earnings and profits are reported in the financial statements as distributions from paid-in capital. Differences in the recognition or classification of income between the financial statements and tax earnings and profits, which result in temporary over-distributions for financial statement purposes, are classified as distributions in excess of net investment income or net realized gains. Common types of book and tax differences that could occur include differences in accounting for derivatives, defaulted bonds, capital losses, and amortization and accretion on debt securities. The tax character of distributions declared for the year ended March 31, 2004 was as follows:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Distributions declared from: Tax-exempt income $4,585,471 $8,223,945 $16,726,718 $4,660,395 $7,539,053 $5,849,743 $15,351,872 $6,649,523 - ----------------------------------------------------------------------------------------------------------------------------------- Long-term capital gain -- -- 361,642 -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions $4,585,471 $8,223,945 $17,088,360 $4,660,395 $7,539,053 $5,849,743 $15,351,872 $6,649,523 - ----------------------------------------------------------------------------------------------------------------------------------- The tax character of distributions declared for the year ended March 31, 2003 was as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Distributions declared from: Tax-exempt income $4,528,198 $7,901,121 $17,972,739 $4,258,405 $7,590,125 $6,198,081 $15,591,198 $7,105,662 - ----------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2004, the following amounts were reclassified due to differences between book and tax accounting for amortization and accretion on debt securities, market discount, utilization of equalization (a tax basis dividends paid deduction from earnings and profits distributed to shareholders upon redemption of shares): NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Increase (decrease): Paid-in capital $(1,465,782) $(41,270) $12,273 $(905,564) $31,019 $40,964 $(44,941) $(1,541,807) - ----------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net realized gain (loss) on investments 1,466,540 46,464 3,767 917,593 (70,787) (72,667) 78,775 1,489,631 - ----------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (758) (5,194) (16,040) (12,029) 39,768 31,703 (33,834) 52,176 - ----------------------------------------------------------------------------------------------------------------------------------- As of March 31, 2004, the components of distributable earnings on a tax basis were as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Undistributed tax- exempt income $276,013 $81,738 $199,849 $113,238 $562,102 $80,464 $315,637 $125,061 - ----------------------------------------------------------------------------------------------------------------------------------- Undistributed ordinary income -- -- -- -- -- -- -- 35,540 - ----------------------------------------------------------------------------------------------------------------------------------- Undistributed long- term capital gains -- -- -- -- -- 72,692 -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Capital loss carryforward (228,833) (576,318) (437,200) (1,074,365) (2,259,134) -- (4,501,068) (1,077,400) - ----------------------------------------------------------------------------------------------------------------------------------- Post October capital loss deferred -- -- -- -- -- -- (16,414) (215,607) - ----------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation 5,667,802 17,727,329 33,515,393 7,136,961 15,209,030 10,630,938 27,614,345 12,237,676 - ----------------------------------------------------------------------------------------------------------------------------------- Other temporary differences (408,238) (681,334) (1,346,821) (401,360) (638,334) (476,045) (1,265,692) (554,795) - ----------------------------------------------------------------------------------------------------------------------------------- Post-October capital loss deferrals represent losses realized during the current fiscal year, but recognized for tax purposes in the next fiscal year. For federal income tax purposes, the capital loss carryforward may be applied against any net taxable realized gains of each succeeding year until the earlier of its utilization or expiration. NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA EXPIRATION DATE FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2005 $(228,833) $-- $-- $(533,472) $-- $-- $(342,289) $(714,690) - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2008 -- (125,530) -- (43,665) -- -- -- (58,823) - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2009 -- -- -- (175,279) (2,259,134) -- (1,733,400) (220,540) - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2010 -- (97,978) -- -- -- -- (2,059,003) (83,347) - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2011 -- -- -- (120,267) -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2012 -- (352,810) (437,200) (201,682) -- -- (366,376) -- - ----------------------------------------------------------------------------------------------------------------------------------- Total $(228,833) $(576,318) $(437,200) $(1,074,365) $(2,259,134) $-- $(4,501,068) $(1,077,400) - -----------------------------------------------------------------------------------------------------------------------------------
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 and estimated shares outstanding of each class, without distinction between share classes. Dividends are declared separately for each class. Differences in per share dividend rates are due to differences in separate class expenses charged. 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 advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at an annual rate of 0.55% of each fund's average daily net assets. The investment adviser has contractually agreed to waive a portion of its fee, which is shown as a reduction of total expenses in each fund's Statement of Operations. From April 1, 2003 to February 29, 2004 MFS reduced each fund's management fees to 0.35% of average daily net assets. As part of the settlement agreement with the New York Attorney General concerning market timing and related matters, MFS has agreed to reduce each fund's management fee to 0.30% of average daily net assets for the period from March 1, 2004 through February 28, 2009. During this time period, the Board of Trustees will continue to review the appropriateness of all advisory fees in accordance with their oversight responsibilities. After February 28, 2009 the management fee will be determined in accordance with then existing review policies approved by the Board of Trustees overseeing the funds. Management fees incurred for the year ended March 31, 2004, were 0.35% of average daily net assets on an annualized basis for each fund. For the Pennsylvania Fund, the investment adviser contractually agreed under a temporary expense agreement to pay all of the fund's operating expenses, exclusive of management, distribution and service fees in excess of 0.20% of average daily net assets. Prior to January 1, 2003, MFS had contractually agreed, subject to reimbursement, to bear a portion of the Pennsylvania Fund's "Other Expenses", which are defined as the fund's operating expenses, exclusive of management, distribution and service fees such that "Other Expenses" did not exceed 0.40% annually. This arrangement was effected by MFS bearing all of the Pennsylvania Fund's "Other Expenses" during the fund's fiscal year and the fund paying MFS an expense reimbursement fee not greater than 0.40% of average daily net assets. The investment adviser agreed to waive 0.40% of the reimbursement fee for an indefinite period of time. This agreement terminated on December 31, 2002. Each fund pays compensation to the Independent Trustees ("Trustees") in the form of both a retainer and attendance fees, and pays no compensation directly to its Trustees who are officers of the investment adviser, or to officers of each fund, all of whom receive remuneration for their services to each fund from MFS. Certain officers and Trustees of each fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and MFS Service Center, Inc. (MFSC). Each fund has an unfunded, defined benefit plan for retired Independent Trustees. Included in each fund's Trustees' compensation is a pension expense for retired Independent Trustees for the year ended March 31, 2004:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Pension Expense $1,374 $1,799 $2,372 $1,390 $2,330 $1,704 $2,359 $2,324 - ----------------------------------------------------------------------------------------------------------------------------------- Administrator - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to certain funds for which MFS acts as investment adviser. Under an administrative services agreement between the funds and MFS, MFS is entitled to partial reimbursement of the costs MFS incurs to provide these services, subject to review and approval by the Board of Trustees. Each fund is allocated a portion of these administrative costs based on its size and relative average net assets, subject to a maximum amount, (i.e., each fund will pay the lesser of its allocated costs or a maximum amount based on its average daily net assets). For the year ended March 31, 2004, the maximum amount is based on the following annual percentages of the fund's average daily net assets: First $2 billion 0.0175% - -------------------------------------------------------------------------------------------------------------- Next $2.5 billion 0.0130% - -------------------------------------------------------------------------------------------------------------- Next $2.5 billion 0.0005% - -------------------------------------------------------------------------------------------------------------- In excess of $7 billion 0.0000% - -------------------------------------------------------------------------------------------------------------- For the year ended March 31, 2004, each fund paid MFS, which is listed below, that is equivalent to a percentage of average daily net assets, to partially reimburse MFS for the costs of providing administrative services. NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Expenses Paid $9,834 $19,182 $39,548 $12,211 $16,781 $14,216 $33,953 $15,589 - ----------------------------------------------------------------------------------------------------------------------------------- Percentage of average daily net assets 0.0098% 0.0098% 0.0098% 0.0099% 0.0098% 0.0098% 0.0098% 0.0099% - ----------------------------------------------------------------------------------------------------------------------------------- The maximum amount that could have been charged to the fund during the year ended March 31, 2004 for administrative costs: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- $17,644 $34,226 $70,322 $21,519 $30,061 $25,430 $60,383 $27,506 - ----------------------------------------------------------------------------------------------------------------------------------- Effective April 1, 2004 the maximum amount is based on the following annual percentages of each fund's average daily net assets: First $2 billion 0.01120% - --------------------------------------------------------------------------------------------------------------- Next $2.5 billion 0.00832% - --------------------------------------------------------------------------------------------------------------- Next $2.5 billion 0.00032% - --------------------------------------------------------------------------------------------------------------- In excess of $7 billion 0.00000% - --------------------------------------------------------------------------------------------------------------- Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received the following amounts for the year ended March 31, 2004 as its portion of the sales charge on sales of Class A shares of each fund: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- $35,697 $56,875 $78,359 $87,213 $54,929 $36,387 $61,487 $61,271 - ----------------------------------------------------------------------------------------------------------------------------------- The Trustees have adopted a distribution plan for Class A, Class B, and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows: Each fund's distribution plan provides that each fund will pay MFD an annual percentage of up to 0.35% per annum of its average daily net assets attributable to Class A shares in order that MFD may pay expenses on behalf of each fund related to the distribution and servicing of its shares. These expenses include a service fee paid to each securities dealer that enters into a sales agreement with MFD of up to 0.25% per annum of each fund's average daily net assets of accounts attributable to such dealers and a distribution fee to MFD of up to 0.10% per annum of each fund's average daily net assets attributable to a securities dealer, which amounted to the following amounts for the year ended March 31, 2004. NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- $-- $9,517 $9,858 $308 $2,737 $1,384 $13,328 $5,318 - -------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2004, fees incurred under the distribution plan as a percentage of each fund's average daily net assets attributable to Class A shares on an annualized basis were as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- -- 0.25% 0.35% 0.10% 0.35% 0.35% 0.35% 0.35% - -------------------------------------------------------------------------------------------------------------------------------- Payments of the Mississippi Fund's 0.35% per annum Class A distribution and service fee will be implemented on such date as the Trustees of the Trust may determine. In the case of the New York Fund, payment of the 0.10% per annum Class A distribution fee will be implemented on such date as the Trustees of the Trust may determine. Additionally for the Pennsylvania Fund the remaining portion of the 0.25% Class A service fee is not yet implemented and will become payable on such a date as the Trustees of the Trust may determine. Each fund's distribution plan provides that each fund will pay MFD an annual percentage of up to 0.75% per annum, and a service fee of 0.25% per annum, of the fund's average daily net assets attributable to Class B and Class C shares. MFD will pay to securities dealers that enter into a sales agreement with MFD all or a portion of the service fee attributable to Class B and Class C shares, and will pay to such securities dealers all of the distribution fee attributable to Class C shares. The service fee is intended to be consideration for services rendered by the dealer with respect to Class B and Class C shares, MFD retains the service fee for accounts not attributable to a securities dealer. For Class B and Class C service fees retained for the year ended March 31, 2004 were as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Class B $-- $132 $64 $397 $459 $-- $52 $103 - ----------------------------------------------------------------------------------------------------------------------------------- Class C N/A $3 $220 N/A N/A N/A $226 N/A - ----------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2004, fees incurred under the distribution plan as a percentage of average daily net assets attributable to Class B and Class C shares on an annualized basis were as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Class B 0.82% 1.00% 1.00% 0.90% 1.00% 1.00% 1.00% 1.00% - ----------------------------------------------------------------------------------------------------------------------------------- Class C N/A 1.00% 1.00% N/A N/A N/A 1.00% N/A - ----------------------------------------------------------------------------------------------------------------------------------- Except in the case of the 0.25% per annum Class B service fee paid by the Mississippi Fund upon sale of Class B shares in the first year, payment of the Class B service fee will be suspended until such date as the Trustees of the Trust may determine. Except in the case of the 0.25% per annum Class B service fee paid by the Pennsylvania Fund upon sale of Class B shares in the first year, the Class B shares service fee is currently 0.10% until such date as the Trustees of the Trust 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, for Class A shares, 12 months following the purchase, and, for Class C shares, the first year from the end of the calendar month of purchase. A contingent deferred sales charge is imposed on shareholder redemptions of Class B shares in the event of a shareholder redemption within six years from the end of the calendar month of purchase. MFD receives all contingent deferred sales charges. Contingent deferred sales charges imposed during the year ended March 31, 2004, 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 $-- $4,037 $-- $1,870 $48,897 $-- $5 $-- - ----------------------------------------------------------------------------------------------------------------------------------- Class B $10,114 $111,073 $90,519 $111,207 N/A $41,439 $41,151 $46,466 - ----------------------------------------------------------------------------------------------------------------------------------- NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Shareholder Servicing Fee $110,308 $213,973 $439,629 $135,470 $187,929 $158,979 $377,499 $171,962 - ----------------------------------------------------------------------------------------------------------------------------------- Also included in shareholder servicing costs are out-of-pocket expenses, paid to MFSC, for the year ended March 31, 2004, as well as other expenses paid to unaffiliated vendors. The amounts for the year ended March 31, 2004 are the following: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Out-of-pocket expenses $10,408 $22,131 $40,256 $18,235 $16,754 $17,149 $40,704 $15,763 - ----------------------------------------------------------------------------------------------------------------------------------- (4) PORTFOLIO SECURITIES Purchases and sales of investments, other than U.S. government securities 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 $11,966,578 $31,206,979 $37,100,458 $39,866,773 $30,118,136 $26,194,151 $38,624,224 $26,450,145 - ----------------------------------------------------------------------------------------------------------------------------------- Sales $17,971,483 $25,402,813 $57,334,091 $28,648,017 $26,305,424 $27,961,088 $53,103,215 $29,584,390 - ----------------------------------------------------------------------------------------------------------------------------------- The cost and unrealized appreciation and depreciation in the value of the investments owned by each fund, as computed on a federal income tax basis, are as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Aggregate cost $87,620,910 $174,735,873 $352,340,775 $116,610,890 $155,612,518 $131,879,641 $307,929,587 $144,119,633 - ---------------------------------------------------------------------------------------------------------------------------------- Gross unrealized appreciation $6,351,014 $19,090,703 $34,813,245 $8,337,343 $15,758,594 $11,077,665 $29,287,308 $13,146,597 - ---------------------------------------------------------------------------------------------------------------------------------- Gross unrealized depreciation (221,225) (652,461) (347,437) (613,832) (126,441) (287,397) (1,121,006) (522,616) - ------------------------------------------------------------------------------------------------------------------------------------ Net unrealized appreciation $6,129,789 $18,438,242 $34,465,808 $7,723,511 $15,632,153 $10,790,268 $28,166,302 $12,623,981 - ------------------------------------------------------------------------------------------------------------------------------------ (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 NORTH CAROLINA FUND PENNSYLVANIA FUND - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended 3/31/04 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold 835 $8,379 1,733 $19,959 1,903 $23,424 2,013 $20,634 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 199 1,999 336 3,864 742 9,087 177 1,812 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,553) (15,577) (2,215) (25,477) (3,698) (45,354) (1,636) (16,776) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (519) $(5,199) (146) $(1,654) (1,053) $(12,843) 554 $5,670 - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/03 (000 Omitted) Shares sold 1,308 $12,963 1,999 $22,648 1,660 $20,028 2,820 $28,556 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 206 2,042 347 3,932 780 9,413 165 1,663 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (673) (6,672) (1,908) (21,538) (2,539) (30,707) (1,157) (11,682) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 841 $8,333 438 $5,042 (99) $(1,266) 1,828 $18,537 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended 3/31/04 (000 Omitted) Shares sold 228 $2,276 900 $10,362 380 $4,673 967 $9,968 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 27 273 86 980 96 1,174 98 1,007 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (227) (2,280) (943) (10,800) (1,210) (14,801) (960) (9,869) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 28 $269 43 $542 (734) $(8,954) 105 $1,106 - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/03 (000 Omitted) Shares sold 469 $4,670 1,444 $16,373 776 9,368 2,185 $22,167 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 25 246 73 824 116 1,397 81 822 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (267) (2,639) (685) (7,748) (990) (11,945) (581) (5,872) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 227 $2,277 832 $9,449 (98) $(1,180) 1,685 $17,117 - ----------------------------------------------------------------------------------------------------------------------------------- NEW YORK FUND NORTH CAROLINA FUND - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended 3/31/04 (000 Omitted) SHARES AMOUNT SHARES AMOUNT Shares sold 965 $11,104 748 $9,197 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 39 449 76 934 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (322) (3,689) (558) (6,811) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase 682 $7,864 266 $3,320 - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/03 (000 Omitted) Shares sold 400 $4,541 819 $9,887 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 30 334 67 811 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (140) (1,591) (318) (3,843) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase 290 $3,284 568 $6,855 - ----------------------------------------------------------------------------------------------------------------------------------- SOUTH CAROLINA FUND TENNESSEE FUND VIRGINIA FUND WEST VIRGINIA FUND - --------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended 3/31/04 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold 1,835 $23,147 1,281 $14,063 1,257 $14,684 1,027 $12,116 - --------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 296 3,724 245 2,675 662 7,719 331 3,896 - --------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,556) (19,575) (1,291) (14,092) (2,781) (32,458) (1,330) (15,638) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 575 $7,296 235 $2,646 (862) $(10,055) 28$374 - --------------------------------------------------------------------------------------------------------------------------------- Year ending 3/31/03 (000 Omitted) Shares sold 1,548 $19,226 2,101 $22,622 1,591 $18,255 1,461 $17,040 - --------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 302 3,742 269 2,902 660 7,573 352 4,100 - --------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,610) (20,054) (1,456) (15,736) (2,560) (29,382) (716) (8,365) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 240 $2,914 914 $9,788 (309) $(3,554) 1,097 $12,775 - --------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended 3/31/04 (000 Omitted) Shares sold 492 $6,203 171 $1,874 246 $2,882 234 $2,742 - --------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 77 965 49 539 43 504 36 430 - --------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (650) (8,191) (529) (5,787) (474) (5,531) (422) (4,947) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (81) $(1,023) (309) $(3,374) (185) $(2,145) (152) $(1,775) - --------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/03 (000 Omitted) Shares sold 611 $7,578 470 $5,054 449 $5,163 481 $5,590 - --------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 75 931 60 647 45 519 40 469 - --------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (530) (6,556) (513) (5,525) (722) (8,269) (304) (3,526) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 156 $1,953 17 $176 (228) $(2,587) 217 $2,533 - --------------------------------------------------------------------------------------------------------------------------------- VIRGINIA FUND - ------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended 3/31/04 (000 Omitted) SHARES AMOUNT Shares sold 234 $2,754 - ------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 30 351 - ------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (226) (2,626) - ------------------------------------------------------------------------------------------------------------------------------- Net increase 38 $479 - ------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/03 (000 Omitted) Shares sold 380 $4,367 - ------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 27 313 - ------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (261) (2,991) - ------------------------------------------------------------------------------------------------------------------------------- Net increase 146 $1,689 - ------------------------------------------------------------------------------------------------------------------------------- (6) LINE OF CREDIT The trust and other affiliated funds participate in an $800 million unsecured line of credit provided by a syndication of banks under a line of credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the bank's base rate plus 0.50%. In addition, a commitment fee, based on the average daily, unused portion of the line of credit, is allocated among the participating funds at the end of each calendar quarter. The commitment fee allocated to each fund for the year ended March 31, 2004 was between $587 and $2,617. None of the funds had significant borrowings during the year. (7) FINANCIAL INSTRUMENTS Each fund trades financial instruments with off-balance-sheet risk in the normal course of its investing activities in order to manage exposure to market risks such as interest rates. These financial instruments include swap agreements. The notional or contractual amounts of these instruments represent the investment each fund has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. SWAP AGREEMENTS - --------------- Interest Rate Swap Agreements Interest Rate Swap Agreements - continued NOTIONAL PRINCIPAL AMOUNT CASH FLOWS UNREALIZED OF CONTRACT RECEIVED BY CASH FLOWS PAID APPRECIATION FUND EXPIRATION (000) THE FUND BY THE FUND (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------------------------------ Mississippi Fund Floating -- 7 Day BMA Swap 11/15/04 2,000 Index Fixed -- 1.945% $(12,462) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 10/31/12 1,000 X 78.875% Index (4,979) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 12/18/12 2,000 X 78.875% Index (10,771) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 9/22/14 500 Index Fixed -- 3.443% 5,310 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/14 1,900 Index Fixed -- 3.444% 26,160 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/14 1,900 Index Fixed -- 3.73% (17,457) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/14 1,900 Index Fixed -- 3.576% 6,529 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/17/16 1,500 Index Fixed -- 4.09% (61,664) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 5/26/19 2,000 Index Fixed -- 4.152% (63,690) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/9/19 1,000 Index Fixed -- 4.278% (47,772) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/23/19 1,000 Index Fixed -- 4.23% (41,063) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/14/19 500 Index Fixed -- 4.137% (12,663) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/11/19 1,000 Index Fixed -- 4.069% (18,629) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/25/19 1,200 Index Fixed -- 4.015% (9,513) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 4/7/24 1,000 Index Fixed -- 4.159% (18,023) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/34 1,000 Fixed -- 4.132% Index (25,295) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/34 1,000 Fixed -- 4.322% Index 1,223 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/34 1,000 Fixed -- 4.200% Index (17,462) - ------------------------------------------------------------------------------------------------------------------------------------ $(322,221) - ------------------------------------------------------------------------------------------------------------------------------------ New York Fund Floating -- 7 Day BMA Swap 11/15/04 4,000 Index Fixed -- 1.945% $(24,869) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 10/31/12 1,750 X 78.875% Index (8,714) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 12/18/12 3,500 X 78.875% Index (18,850) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 9/22/14 800 Index Fixed -- 3.443% 8,496 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/14 3,800 Index Fixed -- 3.444% 52,323 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/14 3,800 Index Fixed -- 3.73% (34,915) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/14 3,800 Index Fixed -- 3.576% 13,057 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/17/16 1,500 Index Fixed -- 4.09% (61,664) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 5/18/19 2,000 Index Fixed -- 4.184% (79,192) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 5/26/19 2,000 Index Fixed -- 4.152% (63,690) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/23/19 1,000 Index Fixed -- 4.23% (41,063) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/14/19 400 Index Fixed -- 4.137% (10,131) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/21/19 1,750 Index Fixed -- 4.0495% (26,370) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/28/19 1,750 Index Fixed -- 4.00% (21,771) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/11/19 2,000 Index Fixed -- 4.069% (37,259) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/25/19 1,500 Index Fixed -- 4.015% (11,891) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 4/7/24 2000 Index Fixed -- 4.159% (36,047) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/34 2,000 Fixed -- 4.132% Index (50,587) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/34 2,000 Fixed -- 4.322% Index 2,446 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/34 2,000 Fixed -- 4.200% Index (34,924) - ------------------------------------------------------------------------------------------------------------------------------------ $(485,615) - ------------------------------------------------------------------------------------------------------------------------------------ North Carolina Fund Floating -- 7 Day BMA Swap 11/15/04 5,200 Index Fixed -- 1.945% $(32,390) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 10/31/12 4,000 X 78.75% Index (19,926) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 12/18/12 8,100 X 78.875% Index (43,632) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 9/22/14 1,000 Index Fixed -- 3.443% 10,620 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/14 7,800 Index Fixed -- 3.444% 107,400 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/14 7,800 Index Fixed -- 3.73% (71,667) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/14 7,600 Index Fixed -- 3.576% 26,115 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/17/16 2,000 Index Fixed -- 4.09% (82,218) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 5/18/19 10,000 Index Fixed -- 4.184% (395,960) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/14/19 800 Index Fixed -- 4.137% (20,261) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/11/19 3,000 Index Fixed -- 4.069% (55,888) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/25/19 3,000 Index Fixed -- 4.015% (23,782) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 4/7/24 4,000 Index Fixed -- 4.159% (72,093) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/34 4,000 Fixed -- 4.132% Index (101,177) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/34 4,000 Fixed -- 4.322% Index 4,892 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/34 4,000 Fixed -- 4.200% Index (69,848) - ------------------------------------------------------------------------------------------------------------------------------------ $(839,815) - ------------------------------------------------------------------------------------------------------------------------------------ Pennsylvania Fund Floating -- 7 Day BMA Swap 11/15/04 1,800 Index Fixed -- 1.945% $(11,216) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 10/31/12 1,000 X 78.875% Index (4,979) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 12/18/12 2,000 X 78.875% Index (10,771) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 9/22/14 1,500 Index Fixed -- 3.443% 15,930 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/14 2,375 Index Fixed -- 3.444% 32,702 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/14 2,375 Index Fixed -- 3.73% (21,822) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/14 2,470 Index Fixed -- 3.576% 8,487 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/17/16 850 Index Fixed -- 4.09% (34,943) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 5/18/19 2,000 Index Fixed -- 4.184% (79,192) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 5/26/19 2,000 Index Fixed -- 4.152% (63,690) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/9/19 3,000 Index Fixed -- 4.278% (143,317) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/23/19 750 Index Fixed -- 4.23% (30,798) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/14/19 500 Index Fixed -- 4.137% (12,663) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/4/19 1,000 Index Fixed -- 4.039% (12,562) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/11/19 1,000 Index Fixed -- 4.069% (18,629) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/25/19 1,000 Index Fixed -- 4.015% (7,927) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 4/7/24 1,300 Index Fixed -- 4.159% (23,430) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/34 1,250 Fixed -- 4.132% Index (31,619) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/34 1,250 Fixed -- 4.322% Index 1,530 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/34 1,300 Fixed -- 4.200% Index (22,701) - ------------------------------------------------------------------------------------------------------------------------------------ $(471,610) - ------------------------------------------------------------------------------------------------------------------------------------ South Carolina Fund Floating -- 7 Day BMA Swap 11/15/04 4,000 Index Fixed -- 1.945% $(24,923) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 10/31/12 1,650 X 78.875% Index (8,216) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 12/18/12 3,400 X 78.75% Index (18,311) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 9/22/14 900 Index Fixed -- 3.443% 9,558 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/14 3,325 Index Fixed -- 3.444% 45,782 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/14 3,325 Index Fixed -- 3.73% (30,550) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/14 3,325 Index Fixed -- 3.576% 11,425 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/17/16 1,500 Index Fixed -- 4.09% (61,664) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/21/19 1,500 Index Fixed -- 4.0495% (22,602) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/28/19 1,500 Index Fixed -- 4.00% (18,661) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/11/19 1,500 Index Fixed -- 4.069% (27,944) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/25/19 1,500 Index Fixed -- 4.015% (11,891) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 4/7/24 1,800 Index Fixed -- 4.159% (32,442) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/34 1,750 Fixed -- 4.132% Index (44,265) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/34 1,750 Fixed -- 4.322% Index 2,140 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/34 1,750 Fixed -- 4.200% Index (30,558) - ------------------------------------------------------------------------------------------------------------------------------------ $(263,122) - ------------------------------------------------------------------------------------------------------------------------------------ Tennessee Fund Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 10/31/12 1,400 X 78.875% Index $(6,971) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 12/18/12 2,800 X 78.875% Index (15,079) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 9/22/14 1,000 Index Fixed -- 3.443% 10,620 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/14 2,850 Index Fixed -- 3.444% 39,242 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/14 2,850 Index Fixed -- 3.73% (26,186) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/14 2,850 Index Fixed -- 3.576% 9,793 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/17/16 1,000 Index Fixed -- 4.09% (41,109) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/28/19 1,250 Index Fixed -- 4.00% (15,551) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/11/19 1,000 Index Fixed -- 4.069% (18,629) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/25/19 1,000 Index Fixed -- 4.015% (7,927) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 4/7/24 1,400 Index Fixed -- 4.159% (25,233) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/34 1,500 Fixed -- 4.132% Index (37,942) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/34 1,500 Fixed -- 4.322% Index 1,835 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/34 1,500 Fixed -- 4.200% Index (26,193) - ------------------------------------------------------------------------------------------------------------------------------------ $(159,330) - ------------------------------------------------------------------------------------------------------------------------------------ Virginia Fund Floating -- 7 Day BMA Swap 11/15/04 4,000 Index Fixed -- 1.945% $(24,923) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 10/31/12 3,400 X 78.875% Index (16,930) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 12/18/12 6,900 X 78.875% Index (37,161) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 9/22/14 2,000 Index Fixed -- 3.443% 21,241 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/14 7,000 Index Fixed -- 3.444% 96,384 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/14 7,000 Index Fixed -- 3.73% (64,317) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/14 6,650 Index Fixed -- 3.576% 22,850 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/17/16 2,500 Index Fixed -- 4.09% (102,773) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/2/19 5,000 Index Fixed -- 4.103% (146,115) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/21/19 2,500 Index Fixed -- 4.0495% (37,671) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/28/19 2,500 Index Fixed -- 4.00% (31,101) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/25/19 2,900 Index Fixed -- 4.015% (22,989) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 4/7/24 3,500 Index Fixed -- 4.159% (63,082) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/34 3,500 Fixed -- 4.132% Index (88,531) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/34 3,500 Fixed -- 4.322% Index 4,281 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/34 3,500 Fixed -- 4.200% Index (61,117) - ------------------------------------------------------------------------------------------------------------------------------------ $(551,954) - ------------------------------------------------------------------------------------------------------------------------------------ West Virginia Fund Floating -- 7 Day BMA Swap 11/15/04 3,750 Index Fixed -- 1.945% $(23,366) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 10/31/12 1,500 X 78.875% Index (7,469) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Floating -- 3M Day LIBOR BMA Swap 12/18/12 3,000 X 78.875% Index (16,157) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 9/22/14 1,000 Index Fixed -- 3.443% 10,620 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/14 3,040 Index Fixed -- 3.444% 41,858 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/14 3,040 Index Fixed -- 3.73% (27,932) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/14 3,040 Index Fixed -- 3.576% 10,446 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 6/17/16 2,650 Index Fixed -- 4.09% (108,939) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 5/26/19 2,000 Index Fixed -- 4.152% (63,690) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/14/19 1,500 Index Fixed -- 4.137% (37,990) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/21/19 1,500 Index Fixed -- 4.0495% (22,603) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 7/28/19 1,500 Index Fixed -- 4.00% (18,661) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/11/19 1,000 Index Fixed -- 4.069% (18,629) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 8/25/19 1,300 Index Fixed -- 4.015% (10,305) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 4/7/24 1,500 Index Fixed -- 4.159% (27,035) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 10/27/34 1,600 Fixed -- 4.132% Index (40,471) - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/9/34 1,600 Fixed -- 4.322% Index 1,957 - ------------------------------------------------------------------------------------------------------------------------------------ Floating -- 7 Day BMA Swap 11/10/34 1,600 Fixed -- 4.200% Index (27,939) - ------------------------------------------------------------------------------------------------------------------------------------ $(386,304) - ------------------------------------------------------------------------------------------------------------------------------------ Rate Lock Swap Agreements Description - Agreement with Merrill Lynch terminating April 13, 2004 to pay the difference between the notional value and the market value of a bond with a 5.106% coupon maturing on 4/13/25 priced at a yield to maturity equal to the MMD general obligation yield curve rate for the designated maturity years as of the close of business on the termination date, if negative (received if positive): NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF DEPRECIATION FUND CONTRACT (000) ($) - ----------------------------------------------------------------------------------------------------------------------------------- Mississippi Fund 800 (73,406) - ----------------------------------------------------------------------------------------------------------------------------------- New York Fund 1,250 (114,696) - ----------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Fund 650 (59,642) - ----------------------------------------------------------------------------------------------------------------------------------- South Carolina Fund 900 (82,581) - ----------------------------------------------------------------------------------------------------------------------------------- Description - Agreement with Goldman Sachs terminating April 14, 2004 to pay the difference between the notional value and the market value of a bond with a 5.10% coupon maturing on 4/14/25 priced at a yield to maturity equal to the MMD general obligation yield curve rate for the designated maturity year as of the close of business on the termination date, if negative (received if positive): NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF DEPRECIATION FUND CONTRACT (000) ($) - ----------------------------------------------------------------------------------------------------------------------------------- Mississippi Fund 750 (66,360) - ----------------------------------------------------------------------------------------------------------------------------------- New York Fund 1,250 (110,600) - ----------------------------------------------------------------------------------------------------------------------------------- North Carolina Fund 1,250 (110,600) - ----------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Fund 625 (55,300) - ----------------------------------------------------------------------------------------------------------------------------------- South Carolina Fund 875 (77,420) - ----------------------------------------------------------------------------------------------------------------------------------- Total Unrealized Depreciation on Rate Lock Swap Agreements: UNREALIZED DEPRECIATION FUND ($) - ----------------------------------------------------------------------------------------------------------------------------------- Mississippi Fund (139,766) - ----------------------------------------------------------------------------------------------------------------------------------- New York Fund (225,296) - ----------------------------------------------------------------------------------------------------------------------------------- North Carolina Fund (110,600) - ----------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Fund (114,942) - ----------------------------------------------------------------------------------------------------------------------------------- South Carolina Fund (160,001) - ----------------------------------------------------------------------------------------------------------------------------------- At March 31, 2004, each fund had sufficient cash and/or securities to cover any commitments under these contracts. (8) RESTRICTED SECURITIES Each fund may invest not more than 15% of its net assets in securities which are subject to legal or contractual restrictions on resale. At March 31, 2004 the funds owned the following restricted securities, excluding securities issued under Rule 144A, which may not be publicly sold without registration under the Securities Act of 1933. Each fund does not have the right to demand that such securities be registered. The value of these securities is determined by an independent valuations furnished by dealers or by a pricing service, or if not available, at fair value under the direction of the Trustees. DATE OF ACQUISITIO SHARE/PAR FUND DESCRIPTION ACQUISITION AMOUNT COST VALUE - ----------------------------------------------------------------------------------------------------------------------------------- Mississippi Fund Commonwealth of Puerto Rico, ROLS, FGIC, 9.996%, 2016 8/5/02 3,110,000 $4,023,905 $4,189,108 Guam Power Authority Rev., RITES, AMBAC 9.0426%, 2013 5/20/99 1,000,000 1,072,720 1,239,580 Puerto Rico Municipal Finance Agency, RITES, 9.6169%, 2017 1/6/00 750,000 703,620 955,170 Puerto Rico Public Finance Corp., AMBAC, RITES, 9.3041% 9/30/99 500,000 509,110 660,660 - ----------------------------------------------------------------------------------------------------------------------------------- $7,044,518 - ----------------------------------------------------------------------------------------------------------------------------------- New York Fund Commonwealth of Puerto Rico, ROLS, XLCA 9.806%, 2017 10/22/01 1,350,000 $1,634,526 $1,799,037 Guam Power Authority Rev., RITES, AMBAC 9.043%, 2014 5/20/99 500,000 531,950 612,800 Niagara Falls, NY, Bridge Commission Toll Rev., RITES, FGIC, 9.02010%, 2015 5/21/99 3,500,000 3,755,920 4,520,460 Triborough Bridge & Tunnel Authority Rev., NY, RITES, 9.508%, 2017 4/18/00 5,000,000 5,018,300 6,728,500 - ----------------------------------------------------------------------------------------------------------------------------------- $13,660,797 - ----------------------------------------------------------------------------------------------------------------------------------- North Carolina Fund Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., RITES, FSA, 10.5541%, 2018 2/26/99 5,425,000 $7,037,418 $7,828,709 North Carolina Eastern Municipal Power Agency, RITES, AMBAC, 10.5082%, 2018 5/26/00 6,500,000 6,552,130 9,195,160 North Carolina Municipal Power Agency, MBIA, 9.358%s, 2019 3/3/03 5,000,000 5,726,600 5,870,300 North Carolina Municipal Power Agency, ROLS, 9.358%, 2020 3/3/03 3,000,000 3,376,680 3,485,460 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2016 9/30/99 1,500,000 1,471,890 1,981,260 - ----------------------------------------------------------------------------------------------------------------------------------- $28,360,889 - ----------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Fund Commonwealth of Puerto Rico, ROLS, FGIC, 9.896%, 2015 8/5/02 1,000,000 $1,292,920 $1,348,100 Commonwealth of Puerto Rico, ROLS, XLCA 9.806%, 2017 10/22/01 1,000,000 1,210,760 1,332,620 Guam Power Authority Rev., RITES, AMBAC, 9.043%, 2014 5/20/99 2,170,000 2,308,663 2,659,552 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.304%, 2013 9/30/99 500,000 509,110 660,660 Commonwealth of Puerto Rico, ROLS, Highway & Transportation Authority, MBIA, 9.896%, 2020 4/25/03 1,500,000 1,970,477 2,017,890 - ----------------------------------------------------------------------------------------------------------------------------------- $8,018,822 - ----------------------------------------------------------------------------------------------------------------------------------- South Carolina Fund Commonwealth of Puerto Rico, RITES, 9.5771%, 2018-2019 10/5/00 3,750,000 $3,860,541 $4,750,155 Commonwealth of Puerto Rico, RITES, MBIA, 10.0771%, 2020 3/30/00 2,000,000 2,043,232 2,661,000 Puerto Rico Electric Power Authority, RITES, FSA, 9.0063%, 2015 9/30/99 1,000,000 976,500 1,219,140 Commonwealth of Puerto Rico Municipal, RITES, FSA, 10.6246%, 2016 1/6/00 850,000 882,124 1,155,626 Puerto Rico Public Finance Corp., RITES, AMBAC, 3/31/99 & 9.3041%, 2013-2019 9/30/99 2,675,000 1,610,119 3,526,445 - ----------------------------------------------------------------------------------------------------------------------------------- $13,312,366 - ----------------------------------------------------------------------------------------------------------------------------------- Virginia Fund Guam Power Authority Rev., RITES, AMBAC, 9.0426%, 2015 5/20/99 1,010,000 $1,058,642 $1,232,463 Puerto Rico Electric Power Authority Rev., RITES, FSA, 10.0771%, 2017 8/28/00 2,500,000 2,770,600 3,415,550 Puerto Rico Electric Power Authority Rev., RITES, FSA, 9.8271%, 2019 8/28/00 1,270,000 1,345,006 1,638,046 Puerto Rico Electric Power Authority Rev., RITES, FSA, 9.1771%, 2020 8/28/00 1,250,000 1,240,075 1,535,000 Puerto Rico Municipal Finance Agency, RITES, FSA, 10.6246%, 2016 1/6/00 1,105,000 1,148,670 1,502,314 Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017 1/6/00 615,000 576,968 783,239 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041%, 2013 9/30/99 2,000,000 2,036,440 2,642,640 Puerto Rico Public Finance Corp., RITES, AMBAC, 9.3041, 2016 3/31/99 500,000 560,030 660,420 Virginia Resources Authority Rev., ROLS, 8.761%, 2021 3/12/01 1,520,000 1,508,372 1,691,426 Virginia Resources Authority Rev., ROLS, 8.76%, 2023 3/12/01 2,510,000 1,612,568 2,732,788 Virginia Resources Authority Rev., ROLS, 8.816%, 2033 3/12/01 1,360,000 2,586,057 1,461,442 - ----------------------------------------------------------------------------------------------------------------------------------- $19,295,328 - ----------------------------------------------------------------------------------------------------------------------------------- West Virginia Fund Commonwealth of Puerto Rico, Public Improvement, RITES, MBIA, 10.0771%, 2019 3/30/00 3,000,000 $3,090,720 $3,991,500 Puerto Rico Municipal Finance Agency, RITES, FSA, 9.6169%, 2017 1/6/00 900,000 844,344 1,146,204 West Virginia Building Commission, "A", RITES, AMBAC, 9.2238%, 2018 5/5/99 4,520,000 4,888,560 5,784,063 West Virginia Building Commission, "B", RITES, AMBAC, 9.2238%, 2018 5/5/99 1,250,000 1,351,925 1,599,575 - ----------------------------------------------------------------------------------------------------------------------------------- $12,521,342 - ----------------------------------------------------------------------------------------------------------------------------------- At March 31, 2004, restricted securities constituted the following percentages of each fund's net assets: MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA VIRGINIA WEST VIRGINIA FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- 7.4% 7.0% 7.3% 6.5% 7.6% 5.7% 7.9% - ----------------------------------------------------------------------------------------------------------------------------------- (9) CONCENTRATION OF CREDIT RISK Since each Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. The risk associated with such factors is mitigated by the fact that a percentage of securities in a portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. At year end, March 31, 2004, the percentage of holdings that carried such enhancements were as follows: MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- 69.0% 43.2% 46.8% 68.9% 63.1% 57.4% 37.3% 71.6% - ----------------------------------------------------------------------------------------------------------------------------------- For each fund, the greatest exposure to any one institution or agency did not exceed total investments as of year end March 31, 2004, were as follows: MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- 20.2% 15.0% 14.8% 25.7% 19.2% 20.3% 13.7% 30.2% - -----------------------------------------------------------------------------------------------------------------------------------
(10) LEGAL PROCEEDINGS On March 31, 2004, MFS settled an administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales. Under the terms of the settlement, in which MFS neither admitted nor denied any wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50 million in penalty to certain MFS funds, pursuant to a plan to be approved by an independent distribution consultant. The agreement with the SEC is reflected in an order of the SEC. The settlement order states that MFS failed to adequately disclose to the Boards of Trustees and to shareholders of the MFS funds the specifics of its preferred arrangements with certain brokerage firms selling MFS fund shares. The settlement order states that MFS had in place policies designed to obtain best execution of all fund trades. As part of the settlement, MFS has retained an independent compliance consultant to review the completeness of its disclosure to fund trustees and to fund shareholders of strategic alliances between MFS or its affiliates and broker- dealers and other financial advisers who support the sale of fund shares. The brokerage allocation practices which were the subject of this proceeding were discontinued by MFS in November 2003. In addition, in February, 2004, MFS reached agreement with the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG") and the Bureau of Securities Regulation of the State of New Hampshire ("NH") to settle administrative proceedings alleging false and misleading information in certain MFS fund prospectuses regarding market timing and related matters (the "February Settlements"). These regulators alleged that prospectus language for certain MFS funds was false and misleading because, although the prospectuses for those funds in the regulators' view indicated that the funds prohibited market timing, MFS did not limit trading activity in 11 domestic large cap stock, high grade bond and money market funds. MFS' former Chief Executive Officer, John W. Ballen, and former President, Kevin R. Parke, also reached agreement with the SEC in which they agreed to, among other terms, monetary fines and temporary suspensions from association with any investment adviser or registered investment company. Messrs. Ballen and Parke have resigned their positions with, and will not be returning to, MFS and the MFS funds. Under the terms of the February Settlements, MFS and the executives neither admit nor deny wrongdoing. Under the terms of the February Settlements, a $225 million pool has been established for distribution to shareholders in certain of the MFS funds offered to retail investors ("Retail Funds"), which has been funded by MFS and of which $50 million is characterized as a penalty. This pool will be distributed in accordance with a methodology developed by an independent distribution consultant in consultation with MFS and the Boards of Trustees of the Retail Funds, and acceptable to the SEC. MFS has further agreed with the NYAG to reduce its management fees in the aggregate amount of approximately $25 million annually over the next five years, and not to increase certain management fees during this period. MFS has also paid an administrative fine to NH in the amount of $1 million, which will be used for investor education purposes (NH will retain $250,000 and $750,000 will be contributed to the North American Securities Administrators Association's Investor Protection Trust). In addition, under the terms of the February Settlements, MFS is in the process of adopting certain governance changes and reviewing its policies and procedures. Since December 2003, MFS, Sun Life Financial Inc., various MFS funds, the Trustees of these MFS funds, and certain officers of MFS have been named as defendants in multiple lawsuits filed in federal and state courts. The lawsuits variously have been commenced as class actions or individual actions on behalf of investors who purchased, held or redeemed shares of the funds during specified periods, as class actions on behalf of participants in certain retirement plan accounts, or as derivative actions on behalf of the MFS funds. The lawsuits generally allege that some or all of the defendants (i) permitted or acquiesced in market timing and/or late trading in some of the MFS funds, inadequately disclosed MFS' internal policies concerning market timing and such matters, and received excessive compensation as fiduciaries to the MFS funds, or (ii) permitted or acquiesced in the improper use of fund assets by MFS to support the distribution of fund shares and inadequately disclosed MFS' use of fund assets in this manner. The actions assert that some or all of the defendants violated the federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, as well as fiduciary duties and other violations of common law. The lawsuits seek unspecified compensatory damages. Insofar as any of the actions is appropriately brought derivatively on behalf of any of the MFS funds, any recovery will inure to the benefit of the funds. The defendants are reviewing the allegations of the multiple complaints and will respond appropriately. Additional lawsuits based on similar allegations may be filed in the future. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against MFS, the MFS funds, or any other named defendant. As noted above, as part of the regulatory settlements, MFS has established a restitution pool in the amount of $225 million to compensate certain shareholders of the Retail Funds for damages that they allegedly sustained as a result of market timing or late trading in certain of the funds, and will pay $50 million to compensate certain MFS funds based upon the amount of brokerage commissions allocated in recognition of fund sales. It is not clear whether these amounts will be sufficient to compensate shareholders for all of the damage they allegedly sustained, whether certain shareholders or putative class members may have additional claims to compensation, or whether the damages that may be awarded in any of the actions will exceed these amounts. In the event the MFS funds incur any losses, costs or expenses in connection with such lawsuits, the Boards of Trustees of the affected funds may pursue claims on behalf of such funds against any party that may have liability to the funds in respect thereof. Review of these matters by the independent Trustees of the MFS funds and their counsel is continuing. There can be no assurance that these regulatory actions and lawsuits, or the adverse publicity associated with these developments, will not result in increased fund redemptions, reduced sales of fund shares, or other adverse consequences to the funds. - ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - ------------------------------------------------------------------------------- To the Trustees of MFS Municipal Series Trust and Shareholders of the Portfolios MFS Municipal Series Trust: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of MFS Mississippi Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS Tennessee Municipal Bond Fund, MFS Virginia Municipal Bond Fund, and MFS West Virginia Municipal Bond Fund (portfolios of MFS Municipal Series Trust) as of March 31, 2004, the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at March 31, 2004 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial positions of each of the aforementioned portfolios of MFS Municipal Series Trust as of March 31, 2004, the results of their operations, the changes in their net assets, and their financial highlights for the respective stated periods in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts May 14, 2004 - ---------------------------------------------------------------------------------------------------------------------------- TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND - ---------------------------------------------------------------------------------------------------------------------------- The Trustees and officers of the Trust are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The business address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS & OTHER POSITION(s) HELD TRUSTEE/OFFICER DIRECTORSHIPS(2) DURING NAME, DATE OF BIRTH WITH FUND SINCE(1) THE PAST FIVE YEARS - ------------------- ---------------- --------------- ----------------------------- INTERESTED TRUSTEES John W. Ballen(3) Trustee and President August 2001 until Massachusetts Financial Services Company, (born 09/12/59) February 2004 Chief Executive Officer and Director (until February 2004) Robert J. Manning(3) Trustee and President February 2004 Massachusetts Financial Services Company, (born 10/20/63) Chief Executive Officer, President, Chief Investment Officer and Director Kevin R. Parke(3) Trustee January 2002 until Massachusetts Financial Services Company, (born 12/14/59) February 2004 President, Chief Investment Officer and Director (until February 2004) Robert C. Pozen(3) Trustee February 2004 Massachusetts Financial Services Company, (born 08/08/46) Chairman (since February 2004); Harvard Law School (education), John Olin Visiting Professor (since July 2002); Secretary of Economic Affairs, The Commonwealth of Massachusetts (January 2002 to December 2002); Fidelity Investments, Vice Chairman (June 2000 to December 2001); Fidelity Management & Research Company (investment adviser), President (March 1997 to July 2001); The Bank of New York (financial services), Director; Bell Canada Enterprises (telecommunications), Director; Telesat (satellite communications), Director Jeffrey L.Shames(3) Trustee October 1993 until Massachusetts Financial Services Company, (born 06/02/55) February 2004 Chairman (until February 2004) INDEPENDENT TRUSTEES J. Atwood Ives Chairman February 1992 Private investor; KeySpan Corporation (energy (born 05/01/36) related services), Director; Eastern Enterprises (diversified services company), Chairman, Trustee and Chief Executive Officer (until November 2000) Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Chief of (born 03/11/37) Cardiac Surgery; Harvard Medical School, Professor of Surgery David H. Gunning Trustee January 2004 Cleveland-Cliffs, Inc. (mining products and (born 05/30/42) service provider), Vice Chairman/ Director (since April 2001); Encinitos Ventures (private investment company), Principal (1997 to April 2001); Lincoln Electric Holdings, Inc. (welding equipment manufacturer), Director; Southwest Gas Corporation (natural gas distribution company), Director William R. Gutow Trustee December 1993 Private investor and real estate consultant; (born 09/27/41) Capitol Entertainment Management Company (video franchise), Vice Chairman Amy B. Lane Trustee January 2004 Retired; Merrill Lynch & Co., Inc., Managing (born 02/08/53) Director, Investment Banking Group (1997 to February 2001); Borders Group, Inc. (book and music retailer), Director; Federal Realty Investment Trust (real estate investment trust), Trustee Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys), Partner (born 06/23/35) William J. Poorvu Trustee August 1982 Private investor; Harvard University Graduate (born 04/10/35) School of Business Administration, Class of 1961 Adjunct Professor in Entrepreneurship Emeritus; CBL & Associates Properties, Inc. (real estate investment trust), Director J. Dale Sherratt Trustee August 1993 Insight Resources, Inc. (acquisition planning (born 09/23/38) specialists), President; Wellfleet Investments (investor in health care companies), Managing General Partner (since 1993); Cambridge Nutraceuticals (professional nutritional products), Chief Executive Officer (until May 2001) Elaine R. Smith Trustee February 1992 Independent health care industry consultant (born 04/25/46) Ward Smith Trustee October 1992 Private investor (born 09/13/30) OFFICERS Robert J. Manning(3) President and Trustee February 2004 Massachusetts Financial Services Company, (born 10/20/63) Chief Executive Officer, President, Chief Investment Officer and Director. John W. Ballen(3) President and Trustee August 2001 until Massachusetts Financial Services Company, (born 09/12/59) February 2004 Chief Executive Officer and Director (until February 2004) James R. Bordewick, Jr.(3) Assistant Secretary September 1990 Massachusetts Financial Services Company, (born 03/06/59) and Assistant Clerk Senior Vice President and Associate General Counsel Stephen E. Cavan(3) Secretary and Clerk December 1989 until Massachusetts Financial Services Company, (born 11/06/53) March 2004 Senior Vice President, General Counsel and Secretary (until March 2004) Stephanie A. DeSisto(3) Assistant Treasurer May 2003 Massachusetts Financial Services Company, (born 10/01/53) Vice President (since April 2003); Brown Brothers Harriman & Co., Senior Vice President (November 2002 to April 2003); ING Groep N.V./Aeltus Investment Management, Senior Vice President (prior to November 2002) Robert R. Flaherty(3) Assistant Treasurer August 2000 Massachusetts Financial Services Company, (born 09/18/63) Vice President (since August 2000); UAM Fund Services, Senior Vice President (prior to August 2000) Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial Services Company, (born 08/29/58) Senior Vice President (since July 2002); The Bank of New York, Senior Vice President (September 2000 to July 2002); Lexington Global Asset Managers, Inc., Executive Vice President and Chief Financial Officer (prior to September 2000); Lexington Funds, Chief Financial Officer (prior to September 2000) Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial Services Company, (born 11/13/57) Vice President James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial Services Company, (born 06/12/60) Senior Vice President - ------------------ (1) Date first appointed to serve as Trustee/Officer of an MFS fund. Each Trustee has served continuously since appointment unless indicated otherwise. (2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public companies"). (3) "Interested person" of MFS within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act) which is the principal federal law governing investment companies like the series/the fund. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. The Trust does not hold annual shareholder meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. The Trust will hold a shareholders' meeting in 2005 and at least once every five years thereafter to elect Trustees. Each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. Each Trustee serves as a board member of 109 funds within the MFS Family of Funds. The Statement of Additional Information contains further information about the Trustees and is available without charge upon request by calling 1-800-225-2606. - ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER CUSTODIANS Massachusetts Financial Services Company State Street Bank and Trust Company 500 Boylston Street, Boston, MA 225 Franklin Street, Boston, MA 02110 02116-3741 AUDITORS DISTRIBUTOR Deloitte & Touche LLP MFS Fund Distributors, Inc. 200 Berkeley Street, Boston, MA 02116 500 Boylston Street, Boston, MA 02116-3741 PORTFOLIO MANAGERS Michael L. Dawson Geoffrey L. Schechter
- ------------------------------------------------------------------------------- MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS - ------------------------------------------------------------------------------- YOUR GOALS ARE IMPORTANT MFS offers a complete range of investments and investment services to address specific financial needs over time. When your investing goals change, you can easily stay with MFS for the products you need, when you need them. Whether you're investing for college or retirement expenses or for tax management or estate planning, MFS will be there. Ask your investment professional how MFS can help you move toward the goals you've set. MFS FAMILY OF FUNDS(R) More than 50 portfolios offer domestic and international equity and fixed- income investment across the full risk spectrum VARIABLE ANNUITIES A selection of annuity products with advantages for building and preserving wealth MFS 401(k) AND IRA SUITES Retirement plans for businesses and individuals MFS COLLEGE SAVINGS PLANS Investment products to help meet education expenses MFS PRIVATE PORTFOLIO SERVICES Investment advisory services that provide custom products for high-net-worth individuals A prospectus for any MFS product can be obtained from your investment professional. You should read the prospectus carefully before investing as it contains complete information on the fund's investment objective(s), the risks associated with an investment in the fund, the fees, charges, and expenses involved. These elements, as well as other information contained in the prospectus, should be considered carefully before investing. Variable Annuities are offered through MFS/Sun Life Financial Distributors, Inc. - ------------------------------------------------------------------------------- FEDERAL TAX INFORMATION (Unaudited) - ------------------------------------------------------------------------------- In January 2005, shareholders will be mailed a Tax Form Summary or Form 1099- DIV, if applicable, reporting the federal tax status of all distributions paid during the calendar year 2004. The MFS North Carolina fund has designated $361,642 as a capital gain dividend for the year ended March 31, 2004. For federal income tax purposes, approximately 100% of the total dividends paid by each fund from net investment income during the year ended March 31, 2004, is designated as an exempt-interest dividend. - ------------------------------------------------------------------------------- CONTACT INFORMATION - ------------------------------------------------------------------------------- INVESTOR INFORMATION For information on MFS mutual funds, call your investment professional or, for an information kit, call toll free: 1-800-225-2606 any business day from 8 a.m. to 8 p.m. Eastern time. 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 About MFS section of mfs.com or by visiting the SEC's website at http://www.sec.gov. INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 2281 Boston, MA 02107-9906 Type of Information Phone number Hours, Eastern Time - -------------------------------------------------------------------------------- General information 1-800-225-2606 8 a.m. to 8 p.m., any business day - -------------------------------------------------------------------------------- Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any business day - -------------------------------------------------------------------------------- Shares prices, account 1-800-MFS-TALK balances exchanges (1-800-637-8255) 24 hours a day, 365 days a or stock and bond outlooks touch-tone required year - -------------------------------------------------------------------------------- WORLD WIDE WEB Go to MFS.COM for a clear view of market events, investor education, account access, and product and performance insights. Go paperless with EDELIVERY: Join your fellow shareholders who are already taking advantage of this great new benefit from MFS. With eDelivery, we send you prospectuses, reports, and proxies electronically. You get timely information without mailbox clutter (and help your fund save printing and postage costs). SIGN-UP instructions: If your account is registered with us, 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 through a retirement plan, MFS Talk, MFS Access, and eDelivery may not be available to you. [logo] M F S(R) INVESTMENT MANAGEMENT [Graphic Omitted] 500 Boylston Street Boston, MA 02116-3741 (C)2004 MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distriutors, Inc. 500 Boylston Street, Boston, MA 02116 MST-B-ANN-5/04 57M ITEM 2. CODE OF ETHICS. The Registrant has adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act and as defined in the instructions to Form N-CSR that applies to the Registrant's principal executive officer and principal financial and accounting officer. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Messrs. J. Atwood Ives and Ward Smith, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of "audit committee financial expert" as such term is defined in the instructions to Form N-CSR. In addition, Messrs. Ives and Smith are both "independent" members of the Audit Committee as defined in the instructions to Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. ITEMS 4(A) THROUGH 4(D) AND 4(G): The Board of Trustees has appointed Deloitte & Touche LLP ("Deloitte") to serve as independent accountants to the Registrant. In addition, Deloitte may provide non-audit related services to the Registrant and/or to the Registrant's investment adviser, Massachusetts Financial Services Company ("MFS") and to various entities either controlling, controlled by, or under common control with MFS that provide ongoing services to the Funds ("MFS Related Entities"). For the fiscal years ended March 31, 2004 and 2003, audit fees billed to the Registrant by Deloitte were as follows: Registrant Audit Fees Fees billed by Deloitte: 2004 2003 ---- ---- MFS Alabama Municipal Bond Fund $29,410 $27,000 MFS Arkansas Municipal Bond Fund 29,410 27,000 MFS California Municipal Bond Fund 29,410 27,000 MFS Florida Municipal Bond Fund 29,410 27,000 MFS Georgia Municipal Bond Fund 29,410 27,000 MFS Maryland Municipal Bond Fund 29,410 27,000 MFS Massachusetts Municipal Bond Fund 29,410 27,000 MFS Mississippi Municipal Bond Fund 29,410 27,000 MFS Municipal Income Fund 32,160 29,300 MFS New York Municipal Bond Fund 29,410 27,000 MFS North Carolina Municipal Bond Fund 29,410 27,000 MFS Pennsylvania Municipal Bond Fund 29,410 27,000 MFS South Carolina Municipal Bond Fund 29,410 27,000 MFS Tennessee Municipal Bond Fund 29,410 27,000 MFS Virginia Municipal Bond Fund 29,410 27,000 MFS West Virginia Municipal Bond Fund 29,410 27,000 ------ ------ TOTAL $473,310 $434,300 For the fiscal years ended March 31, 2004 and 2003, fees for audit-related, tax and other services provided to the Registrant, MFS and MFS Related Entities were as follows:
Total Audit-Related Fees(1) Tax Fees(2) All Other Fees(3) Non-Audit Fees Fees billed by Deloitte: 2004 2003 2004 2003 2004 2003 2004 2003 ---- ---- ---- ---- ---- ---- ---- ---- MFS Alabama Municipal Bond Fund $3,950 $ 3,400 MFS Arkansas Municipal Bond Fund 3,950 3,400 MFS California Municipal Bond Fund 3,950 3,400 MFS Florida Municipal Bond Fund 3,950 3,400 MFS Georgia Municipal Bond Fund 3,950 3,400 MFS Maryland Municipal Bond Fund 3,950 3,400 MFS Massachusetts Municipal Bond Fund 3,950 3,400 MFS Mississippi Municipal Bond Fund 3,950 3,400 MFS Municipal Income Fund 3,950 3,600 MFS New York Municipal Bond Fund 3,950 3,400 MFS North Carolina Municipal Bond Fund 3,950 3,400 MFS Pennsylvania Municipal Bond Fund 3,950 3,400 MFS South Carolina Municipal Bond Fund 3,950 3,400 MFS Tennessee Municipal Bond Fund 3,950 3,400 MFS Virginia Municipal Bond Fund 3,950 3,400 MFS West Virginia Municipal Bond Fund 3,950 3,400 ----- ----- Total fees billed by Deloitte $ 0 $ 0 $ 63,200 $ 54,600 $ 0 $ 0 $ 63,200 $ 54,600 To MFS and MFS Related Entities $ 442,450 $ 170,000 $ 57,195 $ 59,248 $160,500 $223,678 $660,145 $452,926 --------- --------- -------- -------- -------- -------- -------- -------- Total fees billed $ 442,450 $ 170,000 $120,395 $113,848 $160,500 $223,678 $723,345 $507,526 (1) There were no Audit-Related services provided to the Registrant by Deloitte for the fiscal years ended March 31, 2004 and 2003. Audit-Related Fees billed by Deloitte to MFS and MFS Related Entities includes fees for internal control reviews. (2) Fees included in the Tax Fees category comprise all services performed by professional staff in the independent accountant's tax division except those services related to the audit. This category includes fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, and tax advice related to income recognition and distribution policies. (3) All Other Fees include fees for services related to financial information system implementation, consultation on internal cost allocations.
ITEM 4(E)(1): Set forth below are the policies and procedures established by the Audit Committee of the Board of Trustees relating to the pre-approval of audit and non-audit related services: Pre-approval is needed for all planned and anticipated audit and permissible non-audit services rendered to the Funds and all permissible non-audit services rendered to MFS or MFS Related Entities if the services relate directly to the operations and/or financial reporting of the Registrant. In the event such services arise between regular meetings of the Audit Committee and it is not practical to seek pre-approval at the next regular meeting of the Audit Committee, such services may be referred to the Chair of the Audit Committee for approval; provided that, the Chair may not approve any individual engagement for such services exceeding $50,000 or multiple engagements for such services in the aggregate exceeding $100,000 between such regular meetings of the Audit Committee. Any engagement approved by the Chair between regular meetings of the Audit Committee shall be presented for ratification by the entire Audit Committee at its next regularly scheduled meeting. ITEM 4(E)(2): None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and All Other Fees paid by the Registrant and MFS and MFS Related Entities disclosed above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (which permits audit committee approval after the start of the engagement with respect to services other than audit review or attest services, if certain conditions are satisfied). ITEM 4(F): Not applicable. ITEM 4(H): Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the Registrant. ITEM 6. SCHEDULE OF INVESTMENTS Not applicable at this time. [Applicable for periods ending on or after July 9, 2004 (beginning with Form N-CSRs filed at the end of September, 2004 for July 31, 2004 reporting period.)] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the Registrant. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. ITEM 10. CONTROLS AND PROCEDURES. (a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this 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 registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Code of Ethics attached hereto. (2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2): Attached hereto. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: Attached hereto. 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)* ROBERT J. MANNING ------------------------------------------ Robert J. Manning, President Date: May 24, 2004 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)* ROBERT J. MANNING ------------------------------------------ Robert J. Manning, President (Principal Executive Officer) Date: May 24, 2004 By (Signature and Title)* RICHARD M. HISEY ------------------------------------------ Richard M. Hisey, Treasurer (Principal Financial Officer and Accounting Officer) Date: May 24, 2004 * Print name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 ex99_code-ethics.txt CODE OF ETHICS EXHIBIT 11(a)(1) SEPTEMBER 2003 (AS REVISED FEBRUARY, 2004) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICERS I. COVERED OFFICERS/PURPOSE OF THE CODE This code of ethics (this "Code") has been adopted by the funds (collectively, "Funds" and each, "Fund") under supervision of the MFS Funds Board and Compass Board of Trustees/Managers (the "Boards") and applies to the Funds' Principal Executive Officer and Principal Financial Officer (the "Covered Officers" each of whom is set forth in Exhibit A) for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that the Funds file with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Funds; o compliance by the Funds with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. II. CONDUCT GUIDELINES Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. In addition, each Covered Officer should not place his or her personal interests ahead of the Funds' interests and should endeavor to act honestly and ethically. In furtherance of the foregoing, each Covered Officer must: o not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting for any Fund whereby the Covered Officer would benefit personally to the detriment of the Fund; and o not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund. The following activities, which could create the appearance of a conflict of interest, are permitted only with the approval of the Funds' Chief Legal Officer ("CLO"): o service as a director on the board of any "for profit" company; o running for political office; o the receipt of any Fund business-related gift in excess of $300; o the receipt of any entertainment from any company with which a Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any material ownership interest in, or any consulting or employment relationship with, any Fund service providers (e.g., custodian banks, audit firms), other than the Funds' investment adviser, principal underwriter, administrator or any affiliated person thereof; o a direct or indirect financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares, other than an interest arising from the Covered Officer's employment or securities ownership. III. DISCLOSURE AND COMPLIANCE o Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Funds; o each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about a Fund to others, whether within or outside the Fund, including to the Fund's trustees and auditors, and to governmental regulators and self-regulatory organizations; o each Covered Officer should, to the extent appropriate within his or her area of Fund responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o it is the responsibility of each Covered Officer to promote compliance within his or her area of Fund responsibility with the standards and restrictions imposed by applicable laws, rules and regulations. IV. REPORTING AND ACCOUNTABILITY Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Boards that he or she has received, read, and understands the Code; o annually thereafter affirm to the Boards that he or she has complied with the requirements of the Code; o annually report to the CLO affiliations and relationships which are or may raise the appearance of a conflict of interest with the Covered Officer's duties to the Funds, as identified in the annual Trustee and Officer Questionnaire; o not retaliate against any other Covered Officer or any officer or employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and o notify the CLO promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code. The CLO is responsible for applying this Code to specific situations in which questions are presented under it, granting waivers upon consultation with the appropriate Board or its designee, investigating violations, and has the authority to interpret this Code in any particular situation. The CLO will report requests for waivers to the appropriate Board (or a designee thereof) promptly upon receipt of a waiver request and will periodically report to the appropriate Board any approvals granted since the last report. The CLO will take all appropriate action to investigate any potential violations reported to him or her and to report any violations to the appropriate Board. If the Board concurs that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer. Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment adviser's codes of ethics under Rule 17j-1 under the Investment Company Act and any other codes or policies or procedures adopted by the Funds or their investment adviser or other service providers are separate requirements and are not part of this Code. VI. AMENDMENTS Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of each Board, including a majority of independent trustees. VII. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code and under the direction of the CLO will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Funds' Board, its counsel, counsel to the Board's independent trustees and senior management and the board of directors of the Fund's investment adviser and its counsel. VIII. INTERNAL USE The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. EXHIBIT A PERSONS COVERED BY THIS CODE OF ETHICS Funds' Principal Executive Officer: Robert J. Manning Funds' Principal Financial Officer: Richard M. Hisey EX-99.CERT 3 ex99_cert.txt CERTIFICATION EX-99.CERT MFS MUNICIPAL SERIES TRUST CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Richard M. Hisey, certify that: 1. I have reviewed this report on Form N-CSR of MFS Municipal Series Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 24, 2004 RICHARD M. HISEY ------------ ----------------------------------------- Richard M. Hisey Treasurer (Principal Financial Officer and Accounting Officer) EX-99.CERT MFS MUNICIPAL SERIES TRUST CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Robert J. Manning, certify that: 1. I have reviewed this report on Form N-CSR of MFS Municipal Series Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 24, 2004 ROBERT J. MANNING ------------ ----------------------------------------- Robert J. Manning President (Principal Executive Officer) EX-99.906CERT MFS MUNICIPAL SERIES TRUST Certification Pursuant to Section 906 of the Sarbanes-Oxley Act I, Richard M. Hisey, certify that, to my knowledge: 1. The Form N-CSR (the "Report") of MFS Municipal Series Trust (the "Registrant") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: May 24, 2004 RICHARD M. HISEY ------------ ----------------------------------------- Richard M. Hisey Treasurer (Principal Financial Officer and Accounting Officer) A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. EX-99.906CERT MFS MUNICIPAL SERIES TRUST CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT I, Robert J. Manning, certify that, to my knowledge: 1. The Form N-CSR (the "Report") of MFS Municipal Series Trust (the "Registrant") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: May 24, 2004 ROBERT J. MANNING ------------ ----------------------------------------- Robert J. Manning President (Principal Executive Officer) A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. -----END PRIVACY-ENHANCED MESSAGE-----