-----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, E1xkF2oA9T/ASgrQ1tAfnIlrN1uM/+kE514v2WLXjmC2Toix7o4HKZFEoYAlZJy+ o8vUE+KQ4rXXmDfiE69EBA== 0000950156-05-000266.txt : 20050611 0000950156-05-000266.hdr.sgml : 20050611 20050606153547 ACCESSION NUMBER: 0000950156-05-000266 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050606 DATE AS OF CHANGE: 20050606 EFFECTIVENESS DATE: 20050606 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MFS MUNICIPAL SERIES TRUST CENTRAL INDEX KEY: 0000751656 IRS NUMBER: 000000000 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: 05880503 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 d626111.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 F. DesMarais Massachusetts Financial Services Company 500 Boylston Street Boston, Massachusetts 02116 - ------------------------------------------------------------------------------- (Name and address of agents for service) Registrant's telephone number, including area code: (617) 954-5000 - ------------------------------------------------------------------------------- Date of fiscal year end: March 31 - ------------------------------------------------------------------------------- Date of reporting period: March 31, 2005 - ------------------------------------------------------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. MFS(R) MUNICIPAL SERIES TRUST 3/31/05 FOR THE STATES OF ALABAMA, ARKANSAS, CALIFORNIA, FLORIDA, GEORGIA, MARYLAND, MASSACHUSETTS ANNUAL REPORT - ------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) THIS REPORT HAS BEEN PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. ANNUAL REPORT LETTER FROM THE CEO 1 ----------------------------------------------- PORTFOLIO COMPOSITION 2 ----------------------------------------------- MANAGEMENT REVIEW 5 ----------------------------------------------- PERFORMANCE SUMMARY 6 ----------------------------------------------- FUND EXPENSE TABLES 15 ----------------------------------------------- PORTFOLIO OF INVESTMENTS 18 ----------------------------------------------- FINANCIAL STATEMENTS 53 ----------------------------------------------- NOTES TO FINANCIAL STATEMENTS 78 ----------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 92 ----------------------------------------------- RESULTS OF SHAREHOLDER MEETING 93 ----------------------------------------------- TRUSTEES AND OFFICERS 94 ----------------------------------------------- PROXY VOTING POLICIES AND INFORMATION 96 ----------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE 96 ----------------------------------------------- FEDERAL TAX INFORMATION 96 ----------------------------------------------- CONTACT INFORMATION BACK COVER ----------------------------------------------- - -------------------------------------------------------------------------------- LETTER FROM THE CEO - -------------------------------------------------------------------------------- Dear Shareholders, [Photo of Robert J. Manning] Last summer and fall, I wrote to you about enhancements that MFS(R) was making to its investment process. Our goal, as always, was to deliver strong performance across all asset classes. I am now happy to report to you that 2004 was a very successful year for MFS, relative to our peers in the mutual fund industry. While there will always be room for improvement, we believe the enhancements we have made to our investment process resulted in significantly improved performance across the MFS Family of Funds(R). You may remember some of the enhancements I outlined last year. They included o increasing collaboration and information sharing among our investment personnel across asset classes, through an Investment Management Committee with members from our Domestic Equity, International Equity, Fixed Income, and Quantitative Research teams o increasing the number of analysts supporting our portfolio managers and doubling the average investment experience of our domestic equity analyst staff o making additional use of our most-seasoned portfolio managers to mentor research analysts o combining more quantitative, top-down risk control and security analysis with our traditional bottom-up research process o opening a research office in Mexico City to complement our existing staff in Boston, London, Singapore, and Tokyo The effect of these enhancements, I believe, is evident in the recent performance of our funds. For the 12 months ended March 31, 2005, 68% of MFS domestic equity funds, 88% of MFS international equity funds, and 90% of MFS fixed-income funds delivered results in the top half of their Lipper peer groups. Our longer-term performance also benefited from our ongoing commitment to the MFS Original Research(R) process: 69% of MFS funds were in the top half of their respective Lipper categories over the 3-, 5-, and 10-year periods ended March 31, 2005. Of course, I cannot offer any guarantees that our performance will repeat itself. Still, I am confident that the recent enhancements to our investment process will continue to benefit shareholders in 2005 and beyond. What I can tell you with certainty is that the way you manage your investments will determine how well you take advantage of the performance that financial markets deliver. Historically, individual investors have tended to underperform the markets. For example, a 2003 study by DALBAR, Inc. showed that over the nearly two decades from 1984 through 2002, the average U.S. stock investor earned a 2.6% average annual return at a time when U.S. stocks, as measured by the Standard & Poor's 500 Stock Index, delivered a 12.2% average annual return.(1) This huge discrepancy, in our view, occurred because nonprofessional investors generally did not adhere to the basic principles followed by most professional investors: allocate among asset classes, diversify within each asset class, and rebalance one's portfolio on a routine schedule. I elaborated on this "ADR" theme in fund reports over the last few months of 2004. For more information on how to apply a Disciplined Diversification(SM) strategy to your portfolio using the principles of ADR, I would urge you to contact your own investment professional. You may also want to refer to information on the subject on our Web site, MFS.COM. As always, we appreciate your confidence in MFS, and you can be sure of our continued commitment to do the best we can to help you pursue your long-term financial goals. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer and Chief Investment Officer MFS Investment Management May 16, 2005 It is not possible to invest directly in an index. Lipper rankings and performance are based on historical average annual returns of Class A shares, and do not include any sales charges. Past performance is no guarantee of future results. Asset allocation and diversification cannot guarantee a profit or protect against a loss. The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. (1) Source: DALBAR July 2003 update to its Quantitative Analysis of Investment Behavior; DALBAR, Inc., is a financial-services market research firm headquartered in Boston, MA. - ------------------------------------------------------------------------------- PORTFOLIO COMPOSITION - ------------------------------------------------------------------------------- MFS ALABAMA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE Bonds 97.9% Cash & Other Net Assets 2.1% TOP FIVE BOND INDUSTRIES* Health/Hospitals 17.2% ------------------------------------------------- Water/Sewer 15.9% ------------------------------------------------- Municipal-Owned Utilities 12.7% ------------------------------------------------- General Obligations/GP 11.2% ------------------------------------------------- State and Local Approp. 7.3% ------------------------------------------------- CREDIT QUALITY** AAA 67.4% ------------------------------------------------- AA 13.0% ------------------------------------------------- A 5.7% ------------------------------------------------- BBB 10.4% ------------------------------------------------- BB 0.2% ------------------------------------------------- Not Rated 3.3% ------------------------------------------------- PORTFOLIO FACTS Average Duration 6.6 ------------------------------------------------- Average Life 16.3 yrs. ------------------------------------------------- Average Maturity*** 16.8 yrs. ------------------------------------------------- Average Credit Quality**** AA ------------------------------------------------- Average Short-Term Credit Quality A-1 ------------------------------------------------- MFS ARKANSAS MUNICIPAL BOND FUND PORTFOLIO STRUCTURE Bonds 98.3% Cash & Other Net Assets 1.7% TOP FIVE BOND INDUSTRIES* Universities/Colleges 16.6% ------------------------------------------------- Water/Sewer 11.2% ------------------------------------------------- Single Family Housing/State 10.7% ------------------------------------------------- General Obligations/GP 10.0% ------------------------------------------------- Health/Hospitals 9.9% ------------------------------------------------- CREDIT QUALITY** AAA 70.0% ------------------------------------------------- AA 8.5% ------------------------------------------------- A 12.4% ------------------------------------------------- BBB 7.9% ------------------------------------------------- BB 0.8% ------------------------------------------------- Not Rated 0.4% ------------------------------------------------- PORTFOLIO FACTS Average Duration 6.9 ------------------------------------------------- Average Life 15.5 yrs. ------------------------------------------------- Average Maturity*** 16.4 yrs. ------------------------------------------------- Average Credit Quality**** AA ------------------------------------------------- Average Short-Term Credit Quality A-1 ------------------------------------------------- MFS CALIFORNIA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE Bonds 99.0% Cash & Other Net Assets 1.0% TOP FIVE BOND INDUSTRIES* General Obligation/Schools 15.6% ------------------------------------------------- State and Local Approp. 12.2% ------------------------------------------------- Health/Hospitals 11.2% ------------------------------------------------- General Obligations/GP 7.8% ------------------------------------------------- Water/Sewer 7.7% ------------------------------------------------- CREDIT QUALITY** AAA 51.5% ------------------------------------------------- AA 5.3% ------------------------------------------------- A 13.3% ------------------------------------------------- BBB 21.0% ------------------------------------------------- BB 0.6% ------------------------------------------------- B 0.1% ------------------------------------------------- CCC 0.5% ------------------------------------------------- Not Rated 7.7% ------------------------------------------------- PORTFOLIO FACTS Average Duration 7.6 ------------------------------------------------- Average Life 15.8 yrs. ------------------------------------------------- Average Maturity*** 16.5 yrs. ------------------------------------------------- Average Credit Quality**** AA- ------------------------------------------------- Average Short-Term Credit Quality A-1 ------------------------------------------------- MFS FLORIDA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE Bonds 98.4% Cash & Other Net Assets 1.6% TOP FIVE BOND INDUSTRIES* Health/Hospitals 15.2% ------------------------------------------------- Water/Sewer 15.1% ------------------------------------------------- General Obligations/Schools 9.4% ------------------------------------------------- General Obligations/GP 7.1% ------------------------------------------------- State and Local Approp. 6.0% ------------------------------------------------- CREDIT QUALITY** AAA 62.0% ------------------------------------------------- AA 14.7% ------------------------------------------------- A 7.4% ------------------------------------------------- BBB 8.7% ------------------------------------------------- BB 0.6% ------------------------------------------------- B 0.5% ------------------------------------------------- Not Rated 6.1% ------------------------------------------------- PORTFOLIO FACTS Average Duration 7.6 ------------------------------------------------- Average Life 17.8 yrs. ------------------------------------------------- Average Maturity*** 18.5 yrs. ------------------------------------------------- Average Credit Quality**** AA ------------------------------------------------- Average Short-Term Credit Quality A-1 ------------------------------------------------- MFS GEORGIA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE Bonds 98.4% Cash & Other Net Assets 1.6% TOP FIVE BOND INDUSTRIES* Water/Sewer 26.6% ------------------------------------------------- Universities/Colleges 8.9% ------------------------------------------------- Health/Hospitals 8.8% ------------------------------------------------- General Obligations/Schools 7.2% ------------------------------------------------- Municipal-Owned Utilities 6.3% ------------------------------------------------- CREDIT QUALITY** AAA 43.9% ------------------------------------------------- AA 30.4% ------------------------------------------------- A 8.8% ------------------------------------------------- BBB 9.8% ------------------------------------------------- BB 0.8% ------------------------------------------------- Not Rated 6.3% ------------------------------------------------- PORTFOLIO FACTS Average Duration 7.1 ------------------------------------------------- Average Life 16.5 yrs. ------------------------------------------------- Average Maturity*** 17.2 yrs. ------------------------------------------------- Average Credit Quality**** AA ------------------------------------------------- Average Short-Term Credit Quality A-1 ------------------------------------------------- MFS MARYLAND MUNICIPAL BOND FUND PORTFOLIO STRUCTURE Bonds 98.6% Cash & Other Net Assets 2.1% TOP FIVE BOND INDUSTRIES* Health/Hospitals 20.5% ------------------------------------------------- General Obligations/IMPT 16.1% ------------------------------------------------- Universities/Colleges 10.6% ------------------------------------------------- Water/Sewer 5.9% ------------------------------------------------- State & Agency - Other 5.5% ------------------------------------------------- CREDIT QUALITY** AAA 51.5% ------------------------------------------------- AA 18.8% ------------------------------------------------- A 12.5% ------------------------------------------------- BBB 10.4% ------------------------------------------------- B 0.4% ------------------------------------------------- Not Rated 6.4% ------------------------------------------------- PORTFOLIO FACTS Average Duration 7.2 ------------------------------------------------- Average Life 15.6 yrs. ------------------------------------------------- Average Maturity*** 16.3 yrs. ------------------------------------------------- Average Credit Quality**** AA ------------------------------------------------- Average Short-Term Credit Quality A-1 ------------------------------------------------- MFS MASSACHUSETTS MUNICIPAL BOND FUND PORTFOLIO STRUCTURE Bonds 97.9% Cash & Other Net Assets 2.1% TOP FIVE BOND INDUSTRIES* Universities/Colleges 19.0% ------------------------------------------------- General Obligations/GP 14.2% ------------------------------------------------- Health/Hospitals 10.0% ------------------------------------------------- Tax/Assessment 7.8% ------------------------------------------------- General Obligations/IMPT 5.7% ------------------------------------------------- CREDIT QUALITY** AAA 52.2% ------------------------------------------------- AA 24.6% ------------------------------------------------- A 6.4% ------------------------------------------------- BBB 13.0% ------------------------------------------------- BB 1.4% ------------------------------------------------- Not Rated 2.4% ------------------------------------------------- PORTFOLIO FACTS Average Duration 7.8 ------------------------------------------------- Average Life 17.1 yrs. ------------------------------------------------- Average Maturity*** 18.2 yrs. ------------------------------------------------- Average Credit Quality**** AA ------------------------------------------------- Average Short-Term Credit Quality A-1 ------------------------------------------------- * For purposes of these graphical presentations, the bond components include both accrued interest amounts and the equivalent exposure from any derivative holdings, if applicable. ** Each security is assigned a rating from Moody's Investors Service. If not rated by Moody's, the rating will be that assigned by Standard & Poor's. Likewise, if not assigned a rating by Standard & Poor's, it will be based on the rating assigned by Fitch, Inc. If not rated by any of the three agencies, the security is considered Not Rated. Percentages are based on the total market value of investments as of 3/31/05. *** The average maturity shown is calculated using the final stated maturity on the portfolio's holdings without taking into account any holdings which have been pre-refunded to an earlier date or which have a mandatory put date prior to the stated maturity. The average life shown takes into account these earlier dates. **** The Portfolio Average Credit Quality rating is based upon a market weighted average of portfolio holdings. Percentages are based on net assets as of 3/31/05, unless otherwise noted. The portfolios are actively managed, and current holdings may be different. - ------------------------------------------------------------------------------- MANAGEMENT REVIEW - ------------------------------------------------------------------------------- INVESTMENT OBJECTIVE The investment objective of each fund is to provide current income exempt from federal income tax and personal income tax, if any, of the state to which its name refers. Each fund invests, under normal market conditions, at least 80% of its net assets in securities and other investments, the interest on which is exempt from federal income tax and personal income tax, if any, of the state to which its name refers. A fund may invest in municipal securities, which are bonds or other debt obligations of a U.S. state or political subdivision, such as a country, city, town, village, or authority. MARKET ENVIRONMENT The U.S. fixed-income market experienced a dramatic flattening of the yield curve during the 12-month period. (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.) On June 30, 2004, the U.S. Federal Reserve Board (the Fed) raised its target federal funds rate for the first time in four years. For the remainder of the period, the Fed continued a steady drumbeat of quarter-point rate hikes. But while the Fed seemed committed to a course of gradually raising short-term rates, it appeared to us that several factors caused long-term rates to stagnate or retreat over the period. Job growth, which had shot up in the spring of 2004, faltered; this helped, in our opinion, to push down yields on longer-dated bonds. Another factor that we believe held long-term rates down was overseas demand for U.S. Treasuries, especially from foreign central banks. However, we felt that moderate gross domestic product (GDP) growth and inflation concerns kept shorter-term interest rates moving up. For the period as a whole, the net effect was a substantial flattening of the yield curve as short-term rates rose significantly while long-term rates were generally flat to down. FACTORS THAT AFFECTED PERFORMANCE During the period our duration positioning in most of the funds was longer than that of our benchmark, the Lehman Brothers Municipal Bond Index (the Lehman Index). Duration is a measure of a fund's sensitivity to changes in interest rates. For all funds - except the Alabama Fund - this longer duration stance held back relative performance. Yield curve positioning in all funds was a strong contributor to relative performance. Compared with our benchmark most of the funds were more heavily weighted in bonds on the long end of the yield curve - bonds with durations of 11 to 25+ years - and underweighted in bonds on the short end of the curve. This helped relative results during the period because long-term municipal rates were relatively unchanged and bonds on the short end of the curve suffered price declines as their yields increased. The effect of credit quality on relative performance was positive for all funds with the exception of the Arkansas fund, in which credit quality had a neutral effect. Sector allocation was neutral or positive for all funds - except the Arkansas Fund whose sector allocation effect was negative. Funds for which sector allocation was a positive factor were generally overweighted in one or more sectors that outperformed over the period. Our overweighted positions in the health care and utilities sectors aided relative results for most of the funds. 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. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 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 market-value-weighted index representative of the tax-exempt bond market. However, while this index is considered the benchmark for the performance of municipal bond funds, it is comprised of municipal bonds issued nationwide, while each of the funds is limited to investing in the bonds of a particular state. 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. HIGH SHORT-TERM RETURNS FOR ANY PERIOD MAY BE AND LIKELY WERE ATTRIBUTABLE TO FAVORABLE MARKET CONDITIONS DURING THAT PERIOD, WHICH MAY NOT BE REPEATABLE. 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 3/31/05) MFS Alabama Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,204 10,838 3/97 10,800 11,429 3/98 11,850 12,653 3/99 12,446 13,438 3/00 12,344 13,427 3/01 13,702 14,893 3/02 14,121 15,461 3/03 15,542 16,990 3/04 16,336 17,986 3/05 16,727 18,465 TOTAL RETURNS - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 2/01/90 2.40% 5.81% 6.27% 5.79% - ------------------------------------------------------------------------------ B 9/07/93 1.63% 4.99% 5.47% 4.99% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average Alabama municipal debt fund+ 1.73% 5.35% 5.88% 5.16% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.47% 4.11% 5.24% 5.28% - ------------------------------------------------------------------------------ B -2.27% 4.07% 5.15% 4.99% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.40% 18.46% 35.51% 75.62% - ------------------------------------------------------------------------------ B 1.63% 15.72% 30.52% 62.74% - ------------------------------------------------------------------------------ + Source: Lipper Inc., an independent firm that reports mutual fund performance. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 ARKANSAS MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS Arkansas Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,115 10,838 3/97 10,607 11,429 3/98 11,674 12,653 3/99 12,211 13,438 3/00 12,182 13,427 3/01 13,455 14,893 3/02 14,001 15,461 3/03 15,332 16,990 3/04 16,026 17,986 3/05 16,368 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 2/03/92 2.14% 5.35% 6.09% 5.56% - ------------------------------------------------------------------------------ B 9/07/93 1.37% 4.51% 5.25% 4.75% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average "other state" municipal debt fund+ 1.82% 4.68% 5.31% 5.07% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.72% 3.65% 5.06% 5.05% - ------------------------------------------------------------------------------ B -2.54% 3.59% 4.92% 4.75% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.14% 16.91% 34.36% 71.85% - ------------------------------------------------------------------------------ B 1.37% 14.16% 29.17% 59.10% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) CALIFRONIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS California Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,274 10,838 3/97 10,741 11,429 3/98 11,978 12,653 3/99 12,767 13,438 3/00 12,586 13,427 3/01 13,944 14,893 3/02 14,377 15,461 3/03 15,784 16,990 3/04 16,607 17,986 3/05 17,129 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 6/18/85 3.14% 6.01% 6.36% 6.04% - ------------------------------------------------------------------------------ B 9/07/93 2.38% 5.19% 5.53% 5.19% - ------------------------------------------------------------------------------ C 1/03/94 2.22% 5.06% 5.43% 5.07% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average California municipal debt fund+ 2.86% 5.46% 5.82% 5.62% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -1.76% 4.31% 5.33% 5.53% - ------------------------------------------------------------------------------ B -1.56% 4.28% 5.21% 5.19% - ------------------------------------------------------------------------------ C 1.24% 5.06% 5.43% 5.07% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 3.14% 19.15% 36.09% 79.83% - ------------------------------------------------------------------------------ B 2.38% 16.40% 30.90% 65.93% - ------------------------------------------------------------------------------ C 2.22% 15.95% 30.28% 63.91% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) FLORIDA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS Florida Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,269 10,838 3/97 10,621 11,429 3/98 11,700 12,653 3/99 12,315 13,438 3/00 12,145 13,427 3/01 13,447 14,893 3/02 13,920 15,461 3/03 15,229 16,990 3/04 16,021 17,986 3/05 16,541 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 2/03/92 3.25% 5.92% 6.37% 5.67% - ------------------------------------------------------------------------------ B 9/07/93 2.45% 5.12% 5.53% 4.82% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks Average Florida municipal debt fund+ 2.17% 4.97% 5.54% 5.38% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -1.66% 4.21% 5.34% 5.16% - ------------------------------------------------------------------------------ B -1.49% 4.21% 5.21% 4.82% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 3.25% 18.83% 36.19% 73.66% - ------------------------------------------------------------------------------ B 2.45% 16.16% 30.88% 60.16% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) GEORGIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS Georgia Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,142 10,838 3/97 10,596 11,429 3/98 11,763 12,653 3/99 12,340 13,438 3/00 12,177 13,427 3/01 13,492 14,893 3/02 13,901 15,461 3/03 15,288 16,990 3/04 16,042 17,986 3/05 16,405 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 6/06/88 2.27% 5.68% 6.14% 5.59% - ------------------------------------------------------------------------------ B 9/07/93 1.51% 4.89% 5.35% 4.79% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average Georgia municipal debt fund+ 1.54% 4.96% 5.64% 5.46% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.59% 3.98% 5.11% 5.07% - ------------------------------------------------------------------------------ B -2.41% 3.97% 5.02% 4.79% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.27% 18.01% 34.73% 72.23% - ------------------------------------------------------------------------------ B 1.51% 15.39% 29.75% 59.60% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) MARYLAND MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS Maryland Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,113 10,838 3/97 10,492 11,429 3/98 11,601 12,653 3/99 12,174 13,438 3/00 12,019 13,427 3/01 13,252 14,893 3/02 13,728 15,461 3/03 14,993 16,990 3/04 15,737 17,986 3/05 16,107 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 10/31/84 2.36% 5.47% 6.03% 5.39% - ------------------------------------------------------------------------------ B 9/07/93 1.69% 4.82% 5.35% 4.71% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average Maryland municipal debt fund+ 1.76% 4.95% 5.41% 5.20% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.51% 3.78% 5.00% 4.88% - ------------------------------------------------------------------------------ B -2.22% 3.91% 5.02% 4.71% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.36% 17.33% 34.02% 69.11% - ------------------------------------------------------------------------------ B 1.69% 15.18% 29.75% 58.47% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS Massachusetts Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,187 10,838 3/97 10,635 11,429 3/98 11,694 12,653 3/99 12,292 13,438 3/00 12,099 13,427 3/01 13,362 14,893 3/02 13,754 15,461 3/03 15,187 16,990 3/04 15,920 17,986 3/05 16,339 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 4/09/85 2.63% 5.91% 6.19% 5.54% - ------------------------------------------------------------------------------ B 9/07/93 1.97% 5.22% 5.54% 4.86% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average Massachusetts municipal debt fund+ 1.94% 5.34% 5.81% 5.38% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.24% 4.21% 5.16% 5.03% - ------------------------------------------------------------------------------ B -1.95% 4.31% 5.22% 4.86% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.63% 18.80% 35.05% 71.54% - ------------------------------------------------------------------------------ B 1.97% 16.49% 30.94% 60.80% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- NOTES TO PERFORMANCE SUMMARY AND KEY RISK CONSIDERATIONS - ------------------------------------------------------------------------------- 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%. For the fund that offers Class C shares, Class C results including sales charge (assuming redemption within one year from the end of the prior 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 As with any fixed income security, the prices of municipal securities in each fund's portfolio will generally fall when interest rates rise. Conversely, when interest rates fall, the prices of municipal securities in a fund's portfolio will generally rise. Interest rate risk will generally affect the price of a municipal security more if the security has a longer maturity. Municipal securities with longer maturities will therefore be more volatile than other fixed income securities with shorter maturities. Conversely, municipal securities with shorter maturities will be less volatile but generally provide lower returns than municipal securities with longer maturities. The average maturity of each fund's municipal security investments will affect the volatility of the fund's share price. Credit risk is the risk that the issuer of a municipal security will not be able to pay principal and interest when due. Rating agencies assign credit ratings to certain municipal securities to indicate their credit risk. The price of a municipal security will generally fall if the issuer defaults on its obligation to pay principal or interest, the rating agencies downgrade the issuer's credit rating or other news affects the market's perception of the issuer's credit risk. A participation interest is also subject to the risk of default by the issuing bank. Each fund may invest in municipal bonds that are general obligations backed by the full faith and credit of the municipal issuer. Each fund may also invest in municipal bonds called revenue obligations which are subject to a higher degree of credit risk than general obligations. Revenue obligations finance specific projects (such as building a hospital or toll roads, water and sewer projects, etc.), and are not backed by the full faith and credit of the municipal issuer. Each fund may invest in excess of 25% of its assets in revenue bonds relating to any one specific industry (e.g., housing, healthcare, water and sewer, etc.). Because revenue obligations are repaid from the revenues from a facility, they are subject to a risk of default in payments of principal and interest if the facility does not generate enough income. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the project or assets or the inability to collect revenues from the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline significantly in value. Because the portfolio invests at least 80% of its assets in securities of the named state, it is more susceptible to adverse economic, political or regulatory developments affecting that state than is a portfolio that invests more broadly. Because a fund may invest its assets in a small number of issuers, the fund is more susceptible to any single economic, political or regulatory event affecting those issuers than is a diversified fund. Speculative bonds are subject to a higher risk that the issuer will default on payments of principal and interest than higher rated investment grade bonds. Although the issuer's ability to make interest and principal payments appears adequate, an adverse change in economic conditions or other circumstances is more likely to cause a default by the issuer of a speculative bond than the issuer of a higher rated investment grade bond. The fixed income securities purchased by each fund may be traded in the over- the-counter market rather than on an organized exchange and are subject to liquidity risk. This means that they may be harder to purchase or sell at a fair price. The inability to purchase or sell these fixed income securities at a fair price could have a negative impact on a fund's performance. The portfolio may invest in high yield or lower-rated securities (non-rated, below "BBB"), which may provide greater returns but are subject to greater- than-average risk. 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 you are not a resident of the state to which the portfolio is targeted, the state tax exemption will not apply. Please see the prospectus for further information regarding these and other risk considerations. - ------------------------------------------------------------------------------- FUND EXPENSE TABLES - ------------------------------------------------------------------------------- FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, OCTOBER 1, 2004 THROUGH MARCH 31, 2005 As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments and redemption fees on certain exchanges and redemptions, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period October 1, 2004 through March 31, 2005. ACTUAL EXPENSES The first line for each share class in the tables below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line for each share class in the tables below provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. MFS(R) ALABAMA MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - -------------------------------------------------------------------------------- Actual 0.87% $1,000 $1,012 $4.36 A ------------------------------------------------------------------------ Hypothetical* 0.87% $1,000 $1,021 $4.38 - -------------------------------------------------------------------------------- Actual 1.62% $1,000 $1,008 $8.11 B ------------------------------------------------------------------------- Hypothetical* 1.62% $1,000 $1,017 $8.15 - -------------------------------------------------------------------------------- MFS(R) ARKANSAS MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - -------------------------------------------------------------------------------- Actual 0.69% $1,000 $1,011 $3.46 A ------------------------------------------------------------------------ Hypothetical* 0.69% $1,000 $1,021 $3.48 - -------------------------------------------------------------------------------- Actual 1.44% $1,000 $1,007 $7.21 B ------------------------------------------------------------------------- Hypothetical* 1.44% $1,000 $1,018 $7.24 - -------------------------------------------------------------------------------- MFS(R) CALIFORNIA MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - -------------------------------------------------------------------------------- Actual 0.64% $1,000 $1,014 $3.21 A ------------------------------------------------------------------------ Hypothetical* 0.64% $1,000 $1,022 $3.23 - -------------------------------------------------------------------------------- Actual 1.36% $1,000 $1,010 $6.82 B ------------------------------------------------------------------------- Hypothetical* 1.36% $1,000 $1,018 $6.84 - -------------------------------------------------------------------------------- Actual 1.54% $1,000 $1,009 $7.71 C ------------------------------------------------------------------------- Hypothetical* 1.54% $1,000 $1,017 $7.74 - -------------------------------------------------------------------------------- MFS(R) FLORIDA MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - -------------------------------------------------------------------------------- Actual 0.61% $1,000 $1,018 $3.07 A ------------------------------------------------------------------------ Hypothetical* 0.61% $1,000 $1,022 $3.08 - -------------------------------------------------------------------------------- Actual 1.38% $1,000 $1,015 $6.93 B ------------------------------------------------------------------------- Hypothetical* 1.38% $1,000 $1,018 $6.94 - -------------------------------------------------------------------------------- MFS(R) GEORGIA MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - -------------------------------------------------------------------------------- Actual 0.89% $1,000 $1,011 $4.46 A ------------------------------------------------------------------------ Hypothetical* 0.89% $1,000 $1,020 $4.48 - -------------------------------------------------------------------------------- Actual 1.64% $1,000 $1,007 $8.21 B ------------------------------------------------------------------------- Hypothetical* 1.64% $1,000 $1,017 $8.25 - -------------------------------------------------------------------------------- MFS(R) MARYLAND MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - -------------------------------------------------------------------------------- Actual 0.93% $1,000 $1,012 $4.67 A ------------------------------------------------------------------------ Hypothetical* 0.93% $1,000 $1,020 $4.68 - -------------------------------------------------------------------------------- Actual 1.57% $1,000 $1,010 $7.87 B ------------------------------------------------------------------------- Hypothetical* 1.57% $1,000 $1,017 $7.90 - -------------------------------------------------------------------------------- MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - -------------------------------------------------------------------------------- Actual 0.88% $1,000 $1,012 $4.41 A ------------------------------------------------------------------------ Hypothetical* 0.88% $1,000 $1,021 $4.43 - -------------------------------------------------------------------------------- Actual 1.53% $1,000 $1,008 $7.66 B ------------------------------------------------------------------------- Hypothetical* 1.53% $1,000 $1,017 $7.69 - -------------------------------------------------------------------------------- * 5% class return per year before expenses. ** Expenses paid is equal to each class" annualized expense ratio for the most recent six month period, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. - --------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 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 - 96.4% - --------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - --------------------------------------------------------------------------------------------------------------------- Airport & Port Alabama Docks Department Facilities Rev., MBIA, Revenue - 2.3% 5.5%, 2022 $1,000,000 $1,085,280 - --------------------------------------------------------------------------------------------------------------------- Alabama Port Authority Docks Facility MBIA, 5.25%, 2026 1,000,000 1,041,220 - --------------------------------------------------------------------------------------------------------------------- $2,126,500 - --------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 11.0% Boaz, AL, School Warrants, "A", XLCA, 5%, 2025 $1,000,000 $1,035,860 - --------------------------------------------------------------------------------------------------------------------- Boaz, AL, School Warrants, "A", XLCA, 5%, 2029 650,000 668,850 - --------------------------------------------------------------------------------------------------------------------- Fairfield, AL, Refunding Warrants, AMBAC, 5.25%, 2025 1,030,000 1,095,703 - --------------------------------------------------------------------------------------------------------------------- Gadsden, AL, Warrants, "B", AMBAC, 5.125%, 2028 1,500,000 1,577,640 - --------------------------------------------------------------------------------------------------------------------- Hoover, AL, "B", 6%, 2010(++) 500,000 563,495 - --------------------------------------------------------------------------------------------------------------------- Houston County, AL, AMBAC, 6.25%, 2009(++) 750,000 856,980 - --------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, School Warrants, FSA, 5.5%, 2020 1,750,000 1,880,025 - --------------------------------------------------------------------------------------------------------------------- Mobile County, AL, 6%, 2009(++) 1,345,000 1,493,528 - --------------------------------------------------------------------------------------------------------------------- Russell County, AL, Warrants, "A", AMBAC, 5%, 2017 1,000,000 1,046,530 - --------------------------------------------------------------------------------------------------------------------- $10,218,611 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 5.3% Birmingham, AL, 5.75%, 2019 $2,000,000 $2,199,640 - --------------------------------------------------------------------------------------------------------------------- Birmingham, AL, "A", 5.75%, 2017 1,000,000 1,105,870 - --------------------------------------------------------------------------------------------------------------------- Montgomery, AL, Warrants, MBIA, 5.1%, 2021 1,005,000 1,049,622 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2017+(+) 500,000 588,970 - --------------------------------------------------------------------------------------------------------------------- $4,944,102 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.3% Bessemer, AL, School Warrants, AMBAC, 5.5%, 2020 $2,015,000 $2,179,544 - --------------------------------------------------------------------------------------------------------------------- Phenix City, AL, AMBAC, 5.65%, 2021 1,500,000 1,663,620 - --------------------------------------------------------------------------------------------------------------------- Tuscaloosa, AL, Warrants, 5.7%, 2018 1,000,000 1,094,090 - --------------------------------------------------------------------------------------------------------------------- $4,937,254 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Alabama Special Care Facilities Financing Hospitals - 17.0% Authority (Daughters of Charity), AMBAC, ETM, 5%, 2025(++) $1,500,000 $1,521,825 - --------------------------------------------------------------------------------------------------------------------- Baldwin County, AL, Eastern Shore Health Care Authority Rev. (Thomas Hospital), 6.75%, 2015 500,000 512,995 - --------------------------------------------------------------------------------------------------------------------- Birmingham Medical Center, East Alabama, Special Health Care Facilities, Eastern Health Systems, "B", 5%, 2018 500,000 493,770 - --------------------------------------------------------------------------------------------------------------------- Birmingham, AL, Baptist Health Systems, "A", (Baptist Medical Center), 5.625%, 2015 300,000 319,344 - --------------------------------------------------------------------------------------------------------------------- Cullman, AL, Medical Park, South Clinic, "A", 6.5%, 2023 1,000,000 1,003,360 - --------------------------------------------------------------------------------------------------------------------- DCH Health Care Authority, Alabama Facilities Rev., 5.25%, 2016 1,000,000 1,064,000 - --------------------------------------------------------------------------------------------------------------------- Houston County, AL, Health Care Authority, AMBAC, 6.125%, 2022 1,000,000 1,113,200 - --------------------------------------------------------------------------------------------------------------------- Huntsville, AL, Health Care Authority Rev., 5.625%, 2026 950,000 985,863 - --------------------------------------------------------------------------------------------------------------------- Huntsville, AL, Health Care Authority Rev., "A", MBIA, 5%, 2023 1,000,000 1,026,440 - --------------------------------------------------------------------------------------------------------------------- Lauderdale County & Florence, AL, Health Care Authority Rev. (Eliza Coffee Memorial Hospital), MBIA, 5.75%, 2008(++) 1,000,000 1,084,230 - --------------------------------------------------------------------------------------------------------------------- Lauderdale County & Florence, AL, Health Care Authority Rev., "A", (Coffee Health Group), MBIA, 5.75%, 2014 1,000,000 1,098,570 - --------------------------------------------------------------------------------------------------------------------- Marshall County, AL, Health Care Authority Rev., "A", 5.75%, 2032 1,000,000 1,033,940 - --------------------------------------------------------------------------------------------------------------------- Montgomery, AL, Medical Clinic Board Rev. (Jackson Hospital & Clinic), AMBAC, 5.875%, 2016 1,000,000 1,045,670 - --------------------------------------------------------------------------------------------------------------------- Montgomery, AL, Special Care Facilities Financing Authority Rev., "C" (Baptist Medical Center), FSA, ETM, 5.375%, 2019(++) 1,150,000 1,220,725 - --------------------------------------------------------------------------------------------------------------------- Montgomery, AL, Special Care Facilities, Financing Authority Rev. (Baptist Health), "A-2", MBIA, 0% to 2007, 5% to 2025 1,135,000 1,003,567 - --------------------------------------------------------------------------------------------------------------------- Montgomery, AL, Special Care Facilities, Financing Authority Rev. (Baptist Health), "C", 5.25%, 2029 1,000,000 998,570 - --------------------------------------------------------------------------------------------------------------------- Valley, AL, Special Care Facilities Financing Authority, "A" (Lanier Memorial Hospital), 5.65%, 2022 225,000 219,285 - --------------------------------------------------------------------------------------------------------------------- $15,745,354 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Mobile County, AL, Industrial Development Metals - 0.6% Authority Rev. (Ipsco, Inc.), 6.875%, 2030 $500,000 $542,135 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Fairfield, AL, Environment Improvement Rev. (USX Other - 0.5% Corp.), 5.4%, 2016 $400,000 $436,212 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Butler, AL, Industrial Development Board, Solid Paper - 3.5% Waste Disposal Rev. (Pacific Corp.), 5.75%, 2028 $200,000 $199,804 - --------------------------------------------------------------------------------------------------------------------- Camden, AL, Industrial Development Board Exempt Rev., "B" (Weyerhaeuser), 6.375%, 2024 500,000 543,030 - --------------------------------------------------------------------------------------------------------------------- Mobile, AL, Industrial Development Board Improvement Rev., "A" (International Paper Co.), 6.35%, 2016 650,000 700,330 - --------------------------------------------------------------------------------------------------------------------- Mobile, AL, Industrial Development Board Improvement Rev., "B" (International Paper Co.), 6.45%, 2019 350,000 377,178 - --------------------------------------------------------------------------------------------------------------------- Phenix City, AL, Environmental Improvement Rev., 6.35%, 2035 750,000 820,710 - --------------------------------------------------------------------------------------------------------------------- Selma, AL, Industrial Development Board, "A" (International Paper Co.), 6.7%, 2018 500,000 548,470 - --------------------------------------------------------------------------------------------------------------------- $3,189,522 - --------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Birmingham, AL, Downtown Redevelopment Authority Other - 3.1% Rev. (Social Security Administrative Building), ETM, 12.5%, 2010(++) $1,635,000 $2,059,429 - --------------------------------------------------------------------------------------------------------------------- East Central Alabama Industrial Development Authority Rev., Unrefunded Balance, AMBAC, 5.4%, 2015 790,000 841,429 - --------------------------------------------------------------------------------------------------------------------- $2,900,858 - --------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Alabama Housing Finance Authority, Multi-Family Revenue - 2.5% Residential Development Rev., "K", (South Bay Apartments), FNMA, 5.875%, 2021 $960,000 $1,006,157 - --------------------------------------------------------------------------------------------------------------------- Alabama Housing Finance Authority, Multi-Family Residential Development Rev., FHA, 7.25%, 2023 1,145,000 1,146,100 - --------------------------------------------------------------------------------------------------------------------- Birmingham, AL, Multi-Family Housing Rev., "C" (Beaconview Apartments), 8%, 2030+* 395,000 39,500 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Corp., Multi-Family Mortgage Rev., LOC, 7.5%, 2015 155,000 155,618 - --------------------------------------------------------------------------------------------------------------------- $2,347,375 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Alabama Housing Finance Authority, Collateral State - 1.6% Home Mortgage Bond Program II, "B", 5.15%, 2019 $80,000 $80,841 - --------------------------------------------------------------------------------------------------------------------- Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program I, "B", 5.7%, 2015 500,000 513,055 - --------------------------------------------------------------------------------------------------------------------- Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program II, "A", GNMA, 5.4%, 2022 785,000 792,983 - --------------------------------------------------------------------------------------------------------------------- Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program II, "B", 5.15%, 2019 85,000 85,893 - --------------------------------------------------------------------------------------------------------------------- $1,472,772 - --------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 7.2% Alabama Building Renovation Authority, AMBAC, 6%, 2014 $1,515,000 $1,707,618 - --------------------------------------------------------------------------------------------------------------------- Alabama Public School & College, Capital Improvement, "A", 5%, 2019 500,000 522,545 - --------------------------------------------------------------------------------------------------------------------- Alabama Public School & College, Capital Improvement, "C", 5.75%, 2017 1,000,000 1,103,310 - --------------------------------------------------------------------------------------------------------------------- Alabama Public School & College, Capital Improvement, "C", 5.75%, 2018 1,035,000 1,141,066 - --------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Board of Education, "A", FSA, 5.8%, 2020 865,000 924,201 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013+(+) 500,000 620,180 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2016+(+) 500,000 634,000 - --------------------------------------------------------------------------------------------------------------------- $6,652,920 - --------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.2% Virgin Islands Public Finance Authority, "A", ASST GTY, 5.5%, 2018 $1,000,000 $1,056,100 - --------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $470,000 $471,725 - --------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 6.6% Alabama Board of Education Rev., Refunding & Improvement (Southern Union State Community College), MBIA, 5%, 2022 $1,000,000 $1,040,920 - --------------------------------------------------------------------------------------------------------------------- Auburn University, AL, General Fee Rev., AMBAC, 5%, 2034 1,000,000 1,029,550 - --------------------------------------------------------------------------------------------------------------------- Auburn University, AL, General Fee Rev., AMBAC, 5%, 2029 1,000,000 1,032,570 - --------------------------------------------------------------------------------------------------------------------- Mobile, AL, Spring Hill College, Educational Building Authority Rev., "A", 5.25%, 2034 1,360,000 1,429,999 - --------------------------------------------------------------------------------------------------------------------- University of Alabama, General Rev., "A", MBIA, 5%, 2029 1,000,000 1,033,570 - --------------------------------------------------------------------------------------------------------------------- University of Alabama, University Rev., General Fee, FGIC, 5%, 2021 525,000 548,982 - --------------------------------------------------------------------------------------------------------------------- $6,115,591 - --------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Alabama Municipal Electric Power Authority, "A", Owned - 12.5% MBIA, 5%, 2023 $1,000,000 $1,044,980 - --------------------------------------------------------------------------------------------------------------------- DeKalb & Cherokee County, AL, Gas Rev., AMBAC, 5.4%, 2016 2,000,000 2,085,500 - --------------------------------------------------------------------------------------------------------------------- Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2013+(+) 500,000 585,500 - --------------------------------------------------------------------------------------------------------------------- Guam Power Authority Rev., RITES, AMBAC, 7.077%, 2018+(+) 4,500,000 4,892,220 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "II", 5.25%, 2031 875,000 917,245 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "RR", XLCA, 5%, 2030 500,000 519,465 - --------------------------------------------------------------------------------------------------------------------- Southeastern Alabama Gas District Systems Rev., "A", AMBAC, 5.5%, 2020 1,000,000 1,082,580 - --------------------------------------------------------------------------------------------------------------------- Tuskegee, AL, Utilities Board, AMBAC, 5.5%, 2022 400,000 419,888 - --------------------------------------------------------------------------------------------------------------------- $11,547,378 - --------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Alabama Drinking Water Finance Authority, Revenue - 15.7% Revolving Fund Loan, "A", AMBAC, 6%, 2021 $725,000 $813,240 - --------------------------------------------------------------------------------------------------------------------- Alabama Drinking Water Finance Authority, Revolving Fund Loan, "C", AMBAC, 5.75%, 2018 1,000,000 1,103,760 - --------------------------------------------------------------------------------------------------------------------- Alabama Water Pollution Control Authority, Revolving Fund Loan, "B", AMBAC, 5.5%, 2016 1,000,000 1,035,230 - --------------------------------------------------------------------------------------------------------------------- Alabama Water Pollution Control Authority, Revolving Fund Loan, "B", AMBAC, 5.5%, 2020 1,380,000 1,428,617 - --------------------------------------------------------------------------------------------------------------------- Alabama Water Pollution Control Authority, Revolving Fund Loan, AMBAC, 5.75%, 2019 1,000,000 1,095,730 - --------------------------------------------------------------------------------------------------------------------- Alabaster, AL, Sewer Rev., AMBAC, 5%, 2029 750,000 774,113 - --------------------------------------------------------------------------------------------------------------------- Bessemer, AL, Water Rev., Warrants, "A", AMBAC, 5.75%, 2026 1,000,000 1,054,570 - --------------------------------------------------------------------------------------------------------------------- Birmingham, AL, Waterworks & Sewer Board Rev., "A", FGIC, 5%, 2034 1,365,000 1,411,014 - --------------------------------------------------------------------------------------------------------------------- Jasper, AL, Waterworks & Sewer Board, "A", AMBAC, 5.2%, 2020 750,000 794,468 - --------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., Warrants, "D", FGIC, 5.7%, 2007(++) 1,000,000 1,058,790 - --------------------------------------------------------------------------------------------------------------------- Limestone County, AL, Water Authority, FGIC, 5.5%, 2026 2,650,000 2,828,875 - --------------------------------------------------------------------------------------------------------------------- Madison, AL, Water & Wastewater Board, MBIA, 5.5%, 2019 1,000,000 1,061,430 - --------------------------------------------------------------------------------------------------------------------- Ozark, AL, Utilities Board Water & Sewer Rev., AMBAC, 5%, 2031 100,000 102,482 - --------------------------------------------------------------------------------------------------------------------- $14,562,319 - --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $83,478,388) $89,266,728 - --------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.1% - --------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 $700,000 $700,000 - --------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A", 2.3%, due 4/07/05 1,300,000 1,300,000 - --------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $2,000,000) $2,000,000 - --------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $85,478,388) $91,266,728 - --------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.5% 1,350,816 - --------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $92,617,544 - --------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) ARKANSAS MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 96.9% - --------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - --------------------------------------------------------------------------------------------------------------------- Airport & Port Little Rock, AR, Airport Rev., "A", FSA, Revenue - 1.4% 5.25%, 2019 $800,000 $841,040 - --------------------------------------------------------------------------------------------------------------------- Virgin Island Authority Marine Rev., "A", FSA, 5.25%, 2018 1,000,000 1,056,100 - --------------------------------------------------------------------------------------------------------------------- $1,897,140 - --------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 9.9% Arkansas College Savings, "A", 0%, 2017 $1,840,000 $1,075,075 - --------------------------------------------------------------------------------------------------------------------- Arkansas Federal Highway, Grant Anticipation Tax Rev., 5%, 2014 1,500,000 1,607,100 - --------------------------------------------------------------------------------------------------------------------- Arkansas Federal Highway, Grant Anticipation Tax Rev., "A", 5.5%, 2011 850,000 925,675 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Infrastructure, RITES, ETM, 8.112%, 2019+(+),(++) 1,250,000 1,498,150 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Public Improvement Rev., "A", 5%, 2034 1,000,000 1,019,200 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, RITES, MBIA, 8.612%, 2020+(+) 3,000,000 3,651,420 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority Rev. (State Office Building), "F", XLCA, 5.25%, 2025 2,000,000 2,266,620 - --------------------------------------------------------------------------------------------------------------------- Sebastian County, AR, Community Refunding & Improvement, AMBAC, 5.6%, 2007(++) 1,500,000 1,596,390 - --------------------------------------------------------------------------------------------------------------------- $13,639,630 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Puerto Rico Municipal Finance Agency, RITES, Improvement - 3.4% FSA, 8.129%, 2017+(+) $735,000 $865,815 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2018+(+) 3,250,000 3,820,180 - --------------------------------------------------------------------------------------------------------------------- $4,685,995 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Arkansas, Capital Appreciation, College Schools - 4.5% Savings, "B", 0%, 2012 $1,200,000 $893,148 - --------------------------------------------------------------------------------------------------------------------- Arkansas, Capital Appreciation, College Savings, "B", 0%, 2013 1,000,000 713,630 - --------------------------------------------------------------------------------------------------------------------- Arkansas, Capital Appreciation, College Savings, "B", 0%, 2014 1,150,000 780,390 - --------------------------------------------------------------------------------------------------------------------- Arkansas, Capital Appreciation, College Savings, "B", 0%, 2015 1,100,000 712,668 - --------------------------------------------------------------------------------------------------------------------- Little Rock, AR, School District Construction, "C", FSA, 5%, 2017 1,000,000 1,043,510 - --------------------------------------------------------------------------------------------------------------------- Little Rock, AR, School District, "A", FSA, 5.4%, 2017 1,000,000 1,073,600 - --------------------------------------------------------------------------------------------------------------------- Rogers, AR, School District, Number 030, Refunding & Construction, "A", AMBAC, 5%, 2007 (++) 1,000,000 1,048,400 - --------------------------------------------------------------------------------------------------------------------- $6,265,346 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Arkansas Development Finance Authority, Health Hospitals - 9.7% Refunding (Sister of Mercy), "A", MBIA, 5%, 2013 $4,340,000 $4,657,992 - --------------------------------------------------------------------------------------------------------------------- Batesville, AR, Medical District Rev. (White River Medical Center), 5.5%, 2024 750,000 769,673 - --------------------------------------------------------------------------------------------------------------------- Baxter County, AR, Hospital Rev., Refunding & Improvement, "B", 5.6%, 2021 1,500,000 1,553,685 - --------------------------------------------------------------------------------------------------------------------- Crittenden County, AR, Hospital Rev., Refunding & Improvement, 7.15%, 2025 750,000 749,498 - --------------------------------------------------------------------------------------------------------------------- Jefferson County, AR, Hospital Rev., Refunding & Improvement (Regional Medical Center), 5.8%, 2021 1,000,000 1,070,820 - --------------------------------------------------------------------------------------------------------------------- Little Rock, AR, Health Facilities Board (Baptist Health-Bri Project), 5%, 2014 500,000 526,820 - --------------------------------------------------------------------------------------------------------------------- Little Rock, AR, Health Facilities Hospital Board Rev. (Baptist Medical Center), 6.9%, 2009 400,000 450,688 - --------------------------------------------------------------------------------------------------------------------- North Little Rock, AR, Baptist Health Facilities, 5.7%, 2022 500,000 521,125 - --------------------------------------------------------------------------------------------------------------------- Pulaski County, AR, Hospital Rev. (Arkansas Childrens Hospital), "B", 5.25%, 2015 500,000 521,910 - --------------------------------------------------------------------------------------------------------------------- Pulaski County, AR, Hospital Rev. (Arkansas Childrens Hospital), "B", 5.25%, 2016 1,000,000 1,040,230 - --------------------------------------------------------------------------------------------------------------------- Sebastian County, AR, Health Facilities Improvement (Sparks Regional Medical Center), "A", 5.25%, 2021 1,000,000 1,031,450 - --------------------------------------------------------------------------------------------------------------------- State of Arkansas, Development Finance Authority Rev. (Washington Regional Medical Center), 7.25%, 2020 500,000 555,200 - --------------------------------------------------------------------------------------------------------------------- $13,449,091 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Arkansas Development Finance Authority Rev. Care - 1.0% (Evangelical Lutheran Project), "B", AMBAC, 5.375%, 2019 $1,315,000 $1,409,128 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Other - 0.3% Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 $335,000 $355,100 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Arkansas State Development Finance Authority, Paper - 1.2% Industrial Facilities Rev. (Potlatch Corp.), "A", 7.75%, 2025 $250,000 $283,870 - --------------------------------------------------------------------------------------------------------------------- Camden, AR, Enviornmental Improvement Rev. (International Paper Co.), "A", 5%, 2018 750,000 746,318 - --------------------------------------------------------------------------------------------------------------------- Pine Bluff, AR, Environmental Improvement (International Paper Co.), "A", 5.55%, 2022 250,000 255,673 - --------------------------------------------------------------------------------------------------------------------- Pine Bluff, AR, Environmental Refunding (International Paper Co.), "A", 6.7%, 2020 300,000 328,944 - --------------------------------------------------------------------------------------------------------------------- $1,614,805 - --------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Fort Smith, AR, Residential Housing (Gorman Revenue - 0.7% Towers), "A", GNMA, 5.45%, 2037 $1,000,000 $1,021,410 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Harrison, AR, Residential Housing Facilities Local - 7.4% Board, Single Family Mortgage Rev., FGIC, ETM, 7.4%, 2011(++) $4,000,000 $4,837,000 - --------------------------------------------------------------------------------------------------------------------- Lonoke County, AR, Residential Housing Facilities, FNMA, 7.9%, 2011 142,498 146,667 - --------------------------------------------------------------------------------------------------------------------- Pulaski County, AR, Public Facilities Board Rev., "C", FNMA, 0%, 2014 2,750,000 1,770,862 - --------------------------------------------------------------------------------------------------------------------- Pulaski County, AR, Public Facilities Board, "A", GNMA, 5.75%, 2034 1,890,000 1,939,745 - --------------------------------------------------------------------------------------------------------------------- Sherwood, AR, Residential Housing Facilities Board, Single Family Rev., MBIA, 7.5%, 2010(++) 1,250,000 1,502,387 - --------------------------------------------------------------------------------------------------------------------- $10,196,661 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Arkansas Development Finance Authority Rev., State - 10.5% "1", 0%, 2011 $570,000 $350,960 - --------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Mortgage Backed Securities Program, "B", 5%, 2029 285,000 284,193 - --------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Mortgage Backed Securities Program, "C", GNMA, 5.35%, 2027 1,795,000 1,812,017 - --------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Mortgage Backed Securities Program, "E", GNMA, 5.4%, 2034 880,000 886,204 - --------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Single Family Mortgage Rev., "B", GNMA, 5.125%, 2024 500,000 507,515 - --------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Single Family Mortgage Rev., "B", GNMA, 5.25%, 2035 3,495,000 3,555,498 - --------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Mortgage Backed Securities Program, "B", GNMA, 4.45%, 2034 1,610,000 1,621,077 - --------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, "F", GNMA, 7.45%, 2027 432,500 435,013 - --------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, 5.3%, 2023 690,000 694,892 - --------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, "B", GNMA, 6.7%, 2027 995,000 1,017,577 - --------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, "D", 5.85%, 2024 1,305,000 1,344,463 - --------------------------------------------------------------------------------------------------------------------- Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, "I", GNMA, 5.3%, 2033 615,000 619,299 - --------------------------------------------------------------------------------------------------------------------- Arkansas Housing Development Agency, Single Family Mortgage Program, ETM, 8.375%, 2011(++) $1,000,000 $1,267,810 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Authority, Mortgage Backed Securities, "A", 4.375%, 2017 165,000 165,718 - --------------------------------------------------------------------------------------------------------------------- $14,562,236 - --------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 0.5% Arkansas Development Finance Authority, Economic Development Rev., "B", 5%, 2018 $175,000 $180,532 - --------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Economic Development Rev., "B", AMBAC, 5.8%, 2020 500,000 523,710 - --------------------------------------------------------------------------------------------------------------------- $704,242 - --------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 1.5% Arkansas Student Loan Authority, "B", 6.25%, 2006(++) $2,000,000 $2,077,820 - --------------------------------------------------------------------------------------------------------------------- Tax - Other - 3.2% Little Rock, AR, Hotel & Restaurant Gross Receipts Tax, 7.375%, 2015 $2,790,000 $3,390,687 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 1,000,000 1,051,760 - --------------------------------------------------------------------------------------------------------------------- $4,442,447 - --------------------------------------------------------------------------------------------------------------------- Tobacco - 0.2% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $240,000 $240,881 - --------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico Highway & Tax - 2.6% Transportation Authority, "B", MBIA, 5.875%, 2021 $2,000,000 $2,236,000 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, "G", 5%, 2023 750,000 778,140 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, "G", FGIC, 5%, 2022 500,000 527,940 - --------------------------------------------------------------------------------------------------------------------- $3,542,080 - --------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 16.3% Arkansas State University, Student Fee-ASU (Newport Campus), AMBAC, 5%, 2028 $700,000 $712,502 - --------------------------------------------------------------------------------------------------------------------- Conway, AR, Public Facilities Board, Capital Improvement Rev. (Hendrix College), "B", 5%, 2035 1,000,000 995,340 - --------------------------------------------------------------------------------------------------------------------- Conway, AR, Public Facilities Rev. (Hendrix College), 5.85%, 2016 1,000,000 1,034,830 - --------------------------------------------------------------------------------------------------------------------- Pulaski, AR, Technical College, Student Tuition & Fee Rev., FGIC, 5%, 2029 1,820,000 1,870,924 - --------------------------------------------------------------------------------------------------------------------- Siloam Springs, AR, Public Education Facilities, Capital Improvement (John Brown University), AMBAC, 5.35%, 2020 500,000 529,940 - --------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Construction Rev. (UAMS Campus), "B", MBIA, 5%, 2026 1,405,000 1,459,107 - --------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Construction Rev. (UAMS Campus), "B", MBIA, 5%, 2027 1,000,000 1,036,140 - --------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Facilities Rev. (Fayetteville Campus), FGIC, 5.5%, 2012(++) 2,870,000 3,211,530 - --------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Facilities Rev. (Fayetteville Campus), FGIC, 5%, 2027 3,155,000 3,249,839 - --------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Facilities Rev. (Fayetteville Campus), FGIC, 5%, 2032 2,500,000 2,565,400 - --------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Rev. (UAMS Campus), "B", MBIA, 5%, 2034 2,500,000 2,586,425 - --------------------------------------------------------------------------------------------------------------------- University of Arkansas, University Revs. (Fayetteville Campus), FGIC, 5.5%, 2012(++) 1,765,000 1,975,035 - --------------------------------------------------------------------------------------------------------------------- University of Central Arkansas, "A", AMBAC, 5%, 2023 1,100,000 1,130,426 - --------------------------------------------------------------------------------------------------------------------- University of Central Arkansas, Student Housing Rev., "C", FGIC, 5%, 2034 250,000 256,142 - --------------------------------------------------------------------------------------------------------------------- $22,613,580 - --------------------------------------------------------------------------------------------------------------------- Universities - Arkansas State University Rev., Housing Dormitories - 2.4% Systems, AMBAC, 5.15%, 2021 $1,240,000 $1,298,354 - --------------------------------------------------------------------------------------------------------------------- Arkansas Tech University Rev., Housing Systems, AMBAC, 5.2%, 2026 1,000,000 1,056,310 - --------------------------------------------------------------------------------------------------------------------- Pope County, AR, Residential Housing, Arkansas Tech University Project, "A", 6%, 2027 500,000 485,855 - --------------------------------------------------------------------------------------------------------------------- University of Central Arkansas, Student Housing Rev., "C", FGIC, 5.25%, 2029 $500,000 $518,370 - --------------------------------------------------------------------------------------------------------------------- $3,358,889 - --------------------------------------------------------------------------------------------------------------------- Utilities - Investor Jefferson County, AR, Pollution Control Rev. Owned - 0.8% (Arkansas Power & Light Co.), 6.3%, 2018 $1,050,000 $1,067,115 - --------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 8.5% Benton, AR, Utilities Rev., AMBAC, 5%, 2030 $470,000 $482,558 - --------------------------------------------------------------------------------------------------------------------- North Little Rock, AR, Electric Rev., "A", MBIA, 6.5%, 2010 2,000,000 2,208,640 - --------------------------------------------------------------------------------------------------------------------- North Little Rock, AR, Electric Rev., "A", MBIA, 6.5%, 2015 6,000,000 7,181,640 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,000,000 1,042,560 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "RR", XLCA, 5%, 2030 775,000 805,171 - --------------------------------------------------------------------------------------------------------------------- $11,720,569 - --------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Arkansas Development Finance Authority, Revenue - 10.9% Economic Development Rev., "I", AMBAC, 5.65%, 2014 $375,000 $389,948 - --------------------------------------------------------------------------------------------------------------------- Arkansas Development Finance Authority, Revolving Loan Fund, "A", 5.85%, 2006(++) 2,130,000 2,228,896 - --------------------------------------------------------------------------------------------------------------------- Fort Smith, AR, Water & Sewer Rev., "C", FSA, 5.25%, 2020 1,315,000 1,402,934 - --------------------------------------------------------------------------------------------------------------------- Fort Smith, AR, Water & Sewer Rev., AMBAC, 5.65%, 2019 1,000,000 1,089,890 - --------------------------------------------------------------------------------------------------------------------- Fort Smith, AR, Water & Sewer Rev., Refunding & Construction, "A", FSA, 5%, 2019 2,125,000 2,207,216 - --------------------------------------------------------------------------------------------------------------------- Fort Smith, AR, Water & Sewer Rev., Refunding & Construction, "A", FSA, 5%, 2021 2,750,000 2,843,830 - --------------------------------------------------------------------------------------------------------------------- Little Rock, AR, Sewer Rev., Refunding & Construction, 5%, 2022 1,750,000 1,806,315 - --------------------------------------------------------------------------------------------------------------------- Paragould, AR, Water Sewer & Electric Rev., AMBAC, 5.6%, 2020 765,000 834,041 - --------------------------------------------------------------------------------------------------------------------- South Sebastian County, AR, Water Refunding, MBIA, 5%, 2038 1,000,000 1,025,440 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 1,250,000 1,321,937 - --------------------------------------------------------------------------------------------------------------------- $15,150,447 - --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $124,693,564) $134,014,612 - --------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 3.2% - --------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.08%, due 4/04/05 $400,000 $400,000 - --------------------------------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White Memorial Hospital), "B-1", 2.2%, due 4/01/05 200,000 200,000 - --------------------------------------------------------------------------------------------------------------------- Harris County, TX, Health Facilities Development Corp., Special Facilities Rev. (Texas Medical Center), MBIA, 2.2%, due 4/01/05 400,000 400,000 - --------------------------------------------------------------------------------------------------------------------- Illinois Development Finance Authority Rev. (Jewish Federation of Metropolitan Chicago), 2.2%, due 4/01/05 900,000 900,000 - --------------------------------------------------------------------------------------------------------------------- Irvine, CA, Improvement Building Act 1915, 2.28%, due 4/06/05 1,350,000 1,350,000 - --------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 2.2%, due 4/01/05 500,000 500,000 - --------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, 2.22%, due 4/01/05 400,000 400,000 - --------------------------------------------------------------------------------------------------------------------- San Francisco, CA, City & County Financial Corp., Lease Rev. (Moscone Center Expansion), 2.1%, due 4/07/05 250,000 250,000 - --------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $4,400,000) $4,400,000 - --------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $129,093,564) $138,414,612 - --------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (0.1)% (80,134 - --------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $138,334,478 - --------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) CALIFORNIA MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.8% - --------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - --------------------------------------------------------------------------------------------------------------------- Airport & Port Long Beach, CA, Habor Rev., "A" FGIC, Revenue - 3.8% 5.25%, 2018 $3,500,000 $3,685,710 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Department of Airports Rev. (Ontario International Airport), "A", FGIC, 6%, 2017 4,100,000 4,261,458 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Habor Department Rev.,"B", 5.375%, 2023 3,000,000 3,078,330 - --------------------------------------------------------------------------------------------------------------------- Port Oakland, CA, "K", FGIC, 5.75%, 2020 4,000,000 4,269,160 - --------------------------------------------------------------------------------------------------------------------- $15,294,658 - --------------------------------------------------------------------------------------------------------------------- General Obligations - General Commonwealth of Puerto Rico, ROLS, Series II R Purpose - 7.7% 124B, XLCA, 8.543%, 2017+(+) $1,500,000 $1,918,830 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, Series II R 184C, FGIC, 8.633%, 2016+(+) 3,300,000 4,264,260 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, RITES, 7.566%, 2014+(+) 5,405,000 6,621,017 - --------------------------------------------------------------------------------------------------------------------- State of California, 10%, 2007 1,055,000 1,224,486 - --------------------------------------------------------------------------------------------------------------------- State of California, 5.5%, 2010(++) 3,000,000 3,283,560 - --------------------------------------------------------------------------------------------------------------------- State of California, 5.125%, 2025 2,000,000 2,073,840 - --------------------------------------------------------------------------------------------------------------------- State of California, 5.25%, 2029 2,000,000 2,083,120 - --------------------------------------------------------------------------------------------------------------------- State of California, AMBAC, 7.2%, 2008 1,600,000 1,792,688 - --------------------------------------------------------------------------------------------------------------------- State of California, AMBAC, 6.3%, 2010 3,000,000 3,440,550 - --------------------------------------------------------------------------------------------------------------------- State of California, AMBAC, 7%, 2010 2,000,000 2,362,140 - --------------------------------------------------------------------------------------------------------------------- State of California, RITES, "B", 8.543%, 2017+(+) 1,250,000 1,539,725 - --------------------------------------------------------------------------------------------------------------------- $30,604,216 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Antelope Valley, CA (Union High School), "A", Schools - 15.5% MBIA, 5%, 2027 $1,500,000 $1,550,430 - --------------------------------------------------------------------------------------------------------------------- Butte Glenn Community College District, "A", MBIA, 5%, 2026 1,885,000 1,951,031 - --------------------------------------------------------------------------------------------------------------------- Campbell, CA, Union High School District, FSA, 5%, 2021 1,280,000 1,331,942 - --------------------------------------------------------------------------------------------------------------------- Campbell, CA, Union School District Election of 2002, "B", FGIC, 5.5%, 2033 2,270,000 2,463,676 - --------------------------------------------------------------------------------------------------------------------- Capistrano, CA, Union High School District, "A", FGIC, 5.875%, 2020 1,185,000 1,332,829 - --------------------------------------------------------------------------------------------------------------------- Chaffey, CA, Union High School District, "C", FSA, 5%, 2027 1,000,000 1,032,810 - --------------------------------------------------------------------------------------------------------------------- Colton, CA, Joint Union School District, "A", FGIC, 5.375%, 2026 1,200,000 1,302,540 - --------------------------------------------------------------------------------------------------------------------- Coronada, CA, Union School District, "A", 5.7%, 2020 1,285,000 1,427,841 - --------------------------------------------------------------------------------------------------------------------- Escondido, CA, Union School District, "A", FSA, 5%, 2026 1,000,000 1,031,460 - --------------------------------------------------------------------------------------------------------------------- Glendale, CA, Union School District, "B", FSA, 5.5%, 2018 4,275,000 4,670,138 - --------------------------------------------------------------------------------------------------------------------- Inglewood, CA, Union School District, "A", FGIC, 6%, 2019 1,695,000 1,890,857 - --------------------------------------------------------------------------------------------------------------------- Little Lake, CA, City School District, "A", FSA, 6.125%, 2010(++) 1,035,000 1,186,503 - --------------------------------------------------------------------------------------------------------------------- Live Oak, CA, School District, Santa Cruz County, Election 2004, "A", MBIA, 5%, 2033 1,410,000 1,458,194 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Union School District Election of 1997, "E", MBIA, 5.125%, 2027 5,000,000 5,194,050 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Union School District, RITES, FSA, 7.566%, 2020+(+) 5,000,000 5,791,300 - --------------------------------------------------------------------------------------------------------------------- Moreno Valley, CA, Union School District Election of 2004, "A", FSA, 5%, 2026 1,715,000 1,780,925 - --------------------------------------------------------------------------------------------------------------------- Moreno Valley, CA, Union School District Election of 2004, "A", FSA, 5%, 2025 1,075,000 1,118,817 - --------------------------------------------------------------------------------------------------------------------- Morgan Hill, CA, Union School District, FGIC, 5.5%, 2020 2,545,000 2,777,537 - --------------------------------------------------------------------------------------------------------------------- Natomas Union School District Election of 2002 "B", FGIC, 5%, 2028 1,430,000 1,483,167 - --------------------------------------------------------------------------------------------------------------------- Oceanside, CA, Union School District Election of 2000, "C", MBIA, 5.25%, 2032 1,940,000 2,035,952 - --------------------------------------------------------------------------------------------------------------------- Rowland, CA, Union School District, "A", FSA, 5.5%, 2020 1,250,000 1,365,675 - --------------------------------------------------------------------------------------------------------------------- San Diego, CA, Union School District, "C", FSA, 5%, 2026 2,150,000 2,224,670 - --------------------------------------------------------------------------------------------------------------------- San Gabriel, CA, Union School District, "A", FSA, 5%, 2024 2,000,000 2,069,240 - --------------------------------------------------------------------------------------------------------------------- San Ysidro, CA, School District, AMBAC, 6.125%, 2021 960,000 1,104,384 - --------------------------------------------------------------------------------------------------------------------- Santa Clara, CA, Union School District, FGIC, 5.5%, 2019 2,210,000 2,435,442 - --------------------------------------------------------------------------------------------------------------------- Santa Maria, CA, Joint Union High School District, "A", FSA, 5.375%, 2020 1,120,000 1,242,830 - --------------------------------------------------------------------------------------------------------------------- Santa Maria, CA, Joint Union High School District, "A", FSA, 5.375%, 2021 1,210,000 1,342,701 - --------------------------------------------------------------------------------------------------------------------- Tehachapi, CA, Union School District, "A", FGIC, 5.625%, 2020 1,100,000 1,206,623 - --------------------------------------------------------------------------------------------------------------------- Visalia, CA, Union School District, COP, MBIA, 0%, 2005 4,655,000 4,578,006 - --------------------------------------------------------------------------------------------------------------------- Washington, CA, Union School District, Election of 1999, "A", FGIC, 5.625%, 2021 1,000,000 1,108,940 - --------------------------------------------------------------------------------------------------------------------- $61,490,510 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Abag Finance Authority Rev. (San Diego Hospitals - 11.1% Hospital), "C", 5.375%, 2020 $2,000,000 $2,082,440 - --------------------------------------------------------------------------------------------------------------------- California Health Facilities Financing Authority Rev., Catholic Healthcare West, "G", 5.25%, 2023 2,000,000 2,067,880 - --------------------------------------------------------------------------------------------------------------------- California Health Facilities Financing Authority Rev., Health Facilities (Adventist Health Systems), "A", 5%, 2033 1,750,000 1,744,697 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Daughters Of Charity Health), "A", 5.25%, 2030 1,500,000 1,532,055 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Henry Mayo Newhall Memorial Hospital), "A", 5%, 2018 2,000,000 2,071,740 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Kaiser Permanente), "A", 5.5%, 2032 2,000,000 2,082,780 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Los Angeles Childrens Hospital), 5.125%, 2019 4,000,000 4,145,200 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev., CHFC, ETM, 0%, 2007(++) 3,645,000 3,397,577 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev., CHFC, ETM, 0%, 2008(++) 6,345,000 5,696,795 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev., Health Facilities (Memorial Health Services), "A", 6%, 2023 1,500,000 1,648,530 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development, "B", 5.625%, 2042 4,000,000 4,157,120 - --------------------------------------------------------------------------------------------------------------------- California Valley Health Systems, COP, 6.875%, 2023 500,000 500,840 - --------------------------------------------------------------------------------------------------------------------- Central California Joint Powers Health Financing (Community Hospitals of Central California), 5.625%, 2021 1,000,000 1,024,070 - --------------------------------------------------------------------------------------------------------------------- Kaweah Delta Health Care District Rev., 6%, 2034 2,000,000 2,142,800 - --------------------------------------------------------------------------------------------------------------------- Rancho Mirage, CA, Joint Powers (Eisenhower Medical Center), 5.625%, 2029 3,000,000 3,105,690 - --------------------------------------------------------------------------------------------------------------------- Tahoe Forest, CA, Hospital District Rev., "A", 5.85%, 2022 1,000,000 1,030,590 - --------------------------------------------------------------------------------------------------------------------- Turlock, CA, Health Facilities Rev. (Emanuel Medical Center), 5%, 2024 500,000 493,245 - --------------------------------------------------------------------------------------------------------------------- Turlock, CA, Health Facilities Rev. (Emanuel Medical Center), 5.375%, 2034 2,000,000 2,011,080 - --------------------------------------------------------------------------------------------------------------------- Washington Township, CA, Health Care Rev., 5%, 2018 1,000,000 1,024,680 - --------------------------------------------------------------------------------------------------------------------- West Contra Costa California Healthcare District, AMBAC, 5.5%, 2029 2,000,000 2,132,540 - --------------------------------------------------------------------------------------------------------------------- $44,092,349 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term California Health Facilities Financing Care - 0.7% Authority Rev. (Paradise Valley Estates), 5.125%, 2022 $1,000,000 $1,039,730 - --------------------------------------------------------------------------------------------------------------------- La Verne, CA, Certificate Participants (Brethren Hillcrest Homes), "B", 6.625%, 2025 1,000,000 1,070,330 - --------------------------------------------------------------------------------------------------------------------- Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae), 7.375%, 2027 475,000 498,270 - --------------------------------------------------------------------------------------------------------------------- $2,608,330 - --------------------------------------------------------------------------------------------------------------------- Human Services - 0.4% California Statewide Communities Development Authority (Prides Industries), 7.125%, 2016 $1,735,000 $1,789,670 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - California Pollution Control Financing Environmental Services - 1.3% Authority, Solid Waste Disposal Rev. (Browning Ferris, Inc.), 5.8%, 2016 $2,000,000 $1,889,420 - --------------------------------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Solid Waste Disposal Rev. (Waste Management Project), "A", 5.125%, 2031 2,250,000 2,284,312 - --------------------------------------------------------------------------------------------------------------------- California Pollution Control Financing Rev. (Laidlaw, Inc.), "A", 6.7%, 2007* 2,750,000 13,750 - --------------------------------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Solid Waste Disposal Rev. (Waste Mangement, Inc.), "A-2", 5.4%, 2025 1,000,000 1,012,490 - --------------------------------------------------------------------------------------------------------------------- $5,199,972 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Other - 0.3% Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 $960,000 $1,017,600 - --------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Del Mar, CA, Race Track Authority Rev., Tourism - 0.7% 6.2%, 2011 $1,365,000 $1,430,930 - --------------------------------------------------------------------------------------------------------------------- Del Mar, CA, Race Track Authority Rev., 6.45%, 2013 1,350,000 1,354,955 - --------------------------------------------------------------------------------------------------------------------- $2,785,885 - --------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - South Coast Air Quality Management District Other - 0.9% Building Corp., California Rev., "B" AMBAC, 0%, 2005 $3,480,000 $3,452,960 - --------------------------------------------------------------------------------------------------------------------- Multi-Family Housing California Housing Finance Agency Rev., Multi- Revenue - 3.2% Unit Rental Housing, "B II", 6.7%, 2015 $2,378,000 $2,413,028 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Irvine Apartments), 5.25%, 2025 6,000,000 6,231,780 - --------------------------------------------------------------------------------------------------------------------- Palmdale, CA, Multi-Family Housing Rev., "A", FNMA, 7.375%, 2024 1,000,000 1,001,690 - --------------------------------------------------------------------------------------------------------------------- San Bernardino County, CA (Equity Residential/ Redlands), "A", 5.2%, 2029 3,000,000 3,117,600 - --------------------------------------------------------------------------------------------------------------------- $12,764,098 - --------------------------------------------------------------------------------------------------------------------- Parking - 0.3% San Francisco, CA, Union Square, MBIA, 6%, 2020 $1,000,000 $1,117,940 - --------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Contra Costa, CA, Transportation & Sales Tax Revenue - 0.2% Rev., "A", ETM, 6.875%, 2007(++) $930,000 $980,081 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - California Rural Home Mortgage Finance Local - 1.1% Authority Rev., GNMA, 7.3%, 2031 $75,000 $76,846 - --------------------------------------------------------------------------------------------------------------------- California Rural Home Mortgage Finance Authority Rev., Mortgage Backed Securities Program, "B4", GNMA, 6.35%, 2029 95,000 95,651 - --------------------------------------------------------------------------------------------------------------------- Pomona, CA, Single Family Mortgage Rev., GNMA, ETM, 7.375%, 2010(++) 1,490,000 1,667,504 - --------------------------------------------------------------------------------------------------------------------- Pomona, CA, Single Family Mortgage Rev., GNMA, ETM, 7.5%, 2023(++) 2,000,000 2,652,060 - --------------------------------------------------------------------------------------------------------------------- $4,492,061 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - California Housing Finance Agency Rev., Home State - 0.9% Mortgage, FSA, 0%, 2019 $3,940,000 $1,711,654 - --------------------------------------------------------------------------------------------------------------------- California Housing Finance Agency Rev., Home Mortgage, MBIA, 0%, 2028 6,535,000 1,947,887 - --------------------------------------------------------------------------------------------------------------------- $3,659,541 - --------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.8% California Pollution Control Financing Authority, Solid Waste Disposal Rev. (West County Resource Recovery), "A", 5.125%, 2014 $1,000,000 $1,021,220 - --------------------------------------------------------------------------------------------------------------------- South Bayside Waste Management Authority, California Solid Waste System Rev., AMBAC, 5.75%, 2020 2,100,000 2,320,710 - --------------------------------------------------------------------------------------------------------------------- $3,341,930 - --------------------------------------------------------------------------------------------------------------------- State & Agency - Grossmont, CA, Union High School District, Other - 2.8% MBIA, 0%, 2006 $6,000,000 $5,738,040 - --------------------------------------------------------------------------------------------------------------------- Pasadena, CA, COP, Old Pasadena Parking Facilities Project, 6.25%, 2018 3,160,000 3,600,567 - --------------------------------------------------------------------------------------------------------------------- Sacramento County, CA, COP, Capital Projects, AMBAC, 5.75%, 2018 1,500,000 1,673,250 - --------------------------------------------------------------------------------------------------------------------- $11,011,857 - --------------------------------------------------------------------------------------------------------------------- State & Local Banning, CA, COP, Water Systems Improvement Agencies - 12.0% Project, AMBAC, 8%, 2019 $965,000 $1,234,804 - --------------------------------------------------------------------------------------------------------------------- California Public Works Board Lease Rev., Department of Corrections State Prison, "A", 7.4%, 2010 5,000,000 5,904,000 - --------------------------------------------------------------------------------------------------------------------- California Public Works Board, Department of Justice, "D", 5.25%, 2020 1,565,000 1,661,451 - --------------------------------------------------------------------------------------------------------------------- Fortuna, Parlier, & Susanville, CA, COP, "B", 7.375%, 2017 690,000 701,558 - --------------------------------------------------------------------------------------------------------------------- Golden State Tobacco Securitization, "B", 5.625%, 2038 5,000,000 5,349,200 - --------------------------------------------------------------------------------------------------------------------- Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "B", 5.5%, 2043 7,000,000 7,356,860 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Convention & Exhibition Center Authority, COP, 9%, 2005(++) 1,900,000 1,980,332 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Convention & Exhibition Center Authority, COP, AMBAC, 0%, 2005 2,400,000 2,379,120 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, COP, Antelope Valley Courthouse, "A", AMBAC, 5.25%, 2027 3,000,000 3,130,710 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, COP, Real Property Program, AMBAC, 5.3%, 2027 3,000,000 3,196,200 - --------------------------------------------------------------------------------------------------------------------- Pomona, CA, Public Financing Authority Rev., "P", 6.25%, 2010 4,020,000 4,438,884 - --------------------------------------------------------------------------------------------------------------------- Sacramento, CA, City Financing Authority Rev., Capital Improvement, 5.5%, 2021 1,635,000 1,760,682 - --------------------------------------------------------------------------------------------------------------------- Sacramento, CA, City Financing Authority Rev., City Hall & Redevelopment Projects, "A", FSA, 5%, 2032 2,000,000 2,041,960 - --------------------------------------------------------------------------------------------------------------------- Salinas CA, COP, Capital Improvement Projects, "A", 5.7%, 2028 2,200,000 2,314,730 - --------------------------------------------------------------------------------------------------------------------- San Francisco, CA, City & County COP (San Bruno Jail No 3), AMBAC, 5.25%, 2033 3,930,000 4,110,230 - --------------------------------------------------------------------------------------------------------------------- $47,560,721 - --------------------------------------------------------------------------------------------------------------------- Tax - Other - 2.3% Irvine, CA, School District Special Tax Rev., Community Facilities District No. 86-1, AMBAC, 5.8%, 2020 $3,500,000 $3,801,035 - --------------------------------------------------------------------------------------------------------------------- Santa Cruz County, CA, Redevelopment Agency Tax Allocation (Oak/Soquel Community), 5.6%, 2017 1,455,000 1,549,881 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 2,000,000 2,103,520 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,600,000 1,649,488 - --------------------------------------------------------------------------------------------------------------------- $9,103,924 - --------------------------------------------------------------------------------------------------------------------- Tax Assessment - 7.0% Brea, CA, Public Finance Authority Rev., MBIA, 0%, 2005 $2,235,000 $2,217,634 - --------------------------------------------------------------------------------------------------------------------- Brea, CA, Public Finance Authority Rev., MBIA, 0%, 2006 2,415,000 2,331,465 - --------------------------------------------------------------------------------------------------------------------- Duarte, CA, Redevelopment Agency Tax Allocation, Davis Addition Project Area, 6.7%, 2014 650,000 699,634 - --------------------------------------------------------------------------------------------------------------------- Fontana, CA, Redevelopment Agency Tax Allocation, Jurupa Hills Redevelopment Project, "A", 5.5%, 2027 3,350,000 3,435,526 - --------------------------------------------------------------------------------------------------------------------- Huntington Park, CA, Public Financing Rev. Wastewater Systems Project, "A", 6.2%, 2025 2,000,000 2,045,440 - --------------------------------------------------------------------------------------------------------------------- La Mirada, CA, Redevelopment Agency, Special Tax Rev., Community Facilities District No. 89-1, 5.7%, 2020 1,500,000 1,506,360 - --------------------------------------------------------------------------------------------------------------------- Modesto, CA, Irrigation District, COP, Refunding & Capital Improvements, "B", 5.3%, 2022 1,785,000 1,791,622 - --------------------------------------------------------------------------------------------------------------------- Modesto, CA, Public Financing Authority (John Thurman Field Renovation), 6.125%, 2016 1,330,000 1,400,317 - --------------------------------------------------------------------------------------------------------------------- Orange County, CA, Community Facilities District, Special Tax (Rancho Santa Margarita), "A", 5.55%, 2017 1,000,000 1,056,480 - --------------------------------------------------------------------------------------------------------------------- Poway, CA, Community Facilities District, Special Tax (Parkway Business Center), 6.5%, 2010 715,000 781,037 - --------------------------------------------------------------------------------------------------------------------- Poway, CA, Community Facilities District, Special Tax (Parkway Business Center), 6.75%, 2015 775,000 849,516 - --------------------------------------------------------------------------------------------------------------------- Riverside County, CA, Public Financing Authority, Tax Allocation Rev., Redevelopment Projects, "A", 5.25%, 2016 3,120,000 3,207,953 - --------------------------------------------------------------------------------------------------------------------- Riverside County, CA, Public Financing Authority, Tax Allocation Rev., XLCA, 5%, 2037 3,000,000 3,049,860 - --------------------------------------------------------------------------------------------------------------------- Riverside County, CA, Redevelopment Agency, Tax Allocation, "A", XLCA, 5%, 2037 2,000,000 2,033,240 - --------------------------------------------------------------------------------------------------------------------- San Diego, CA, Redevelopment Agency, Tax Allocation (Centre City), "B", AMBAC, 5.3%, 2020 1,250,000 1,344,013 - --------------------------------------------------------------------------------------------------------------------- $27,750,097 - --------------------------------------------------------------------------------------------------------------------- Tobacco - 0.9% Golden State Tobacco Securitization Corp., California Tobacco Settlement Rev., "A1", 6.75%, 2039 $1,940,000 $2,042,917 - --------------------------------------------------------------------------------------------------------------------- Golden State Tobacco Securitization, Asset Backed, "A1", 6.25%, 2033 1,485,000 1,523,031 - --------------------------------------------------------------------------------------------------------------------- $3,565,948 - --------------------------------------------------------------------------------------------------------------------- Toll Roads - 0.7% Foothill/Eastern Corridor Agency, California Toll Road Rev., Capital Appreciation, "A", 7.1%, 2010(++) $2,500,000 $2,970,850 - --------------------------------------------------------------------------------------------------------------------- Transportation - Special Alameda Corridor Transportaion Authority, Tax - 0.5% California Rev., Capital Appreciation, "A", AMBAC, 0%, 2030 $8,000,000 $2,072,480 - --------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 7.5% California Educational Facilities Authority Rev. (Fresno Pacific University), "A", 6.75%, 2019 $2,000,000 $2,188,060 - --------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (L.A. College of Chiropractic), 5.6%, 2017 2,100,000 2,023,917 - --------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (Lutheran University), "C", 5%, 2029 2,500,000 2,507,850 - --------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (Pomona College), "B", 5.875%, 2019 2,000,000 2,227,020 - --------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (Santa Clara University), "A", MBIA, 5%, 2027 1,340,000 1,374,156 - --------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev., Pooled College & University Projects, "B", 6%, 2012 1,400,000 1,456,896 - --------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev., Pooled College & University Projects, "B", 6.625%, 2020 1,000,000 1,096,940 - --------------------------------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev., Pooled College & University Projects, "B", 6.3%, 2007(++) 1,000,000 1,087,190 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities, Notre Dame De Namur University, 6.625%, 2033 1,000,000 1,012,700 - --------------------------------------------------------------------------------------------------------------------- Foothill-De Anza, CA, Community College District, Election of 1999, "B", FGIC, 0%, 2024 6,000,000 2,237,820 - --------------------------------------------------------------------------------------------------------------------- Foothill-De Anza, CA, Community College District, Election of 1999, "B", FGIC, 0%, 2025 1,500,000 527,415 - --------------------------------------------------------------------------------------------------------------------- Long Beach, CA, Industrial Development Rev. (CSU Foundation), "A", 5.25%, 2023 1,450,000 1,477,072 - --------------------------------------------------------------------------------------------------------------------- San Diego County, CA, COP, (Burnham Institute), 6.25%, 2029 2,300,000 2,404,811 - --------------------------------------------------------------------------------------------------------------------- University of California Rev., RITES, MBIA, 7.8927%, 2016+(+) 5,705,000 6,367,864 - --------------------------------------------------------------------------------------------------------------------- University of California, COP, San Diego Campus Projects, "A", 5.25%, 2032 1,840,000 1,909,092 - --------------------------------------------------------------------------------------------------------------------- $29,898,803 - --------------------------------------------------------------------------------------------------------------------- Universities - Secondary California Statewide Communities Development Schools - 1.0% Authority Rev. Aspire Public Schools, (Oakland Project), "A", 7.25%, 2031 $985,000 $1,004,661 - --------------------------------------------------------------------------------------------------------------------- California Statewide Communities, Development Authority Rev. (Escondido Charter High School), 7.5%, 2036 1,000,000 1,014,080 - --------------------------------------------------------------------------------------------------------------------- Los Angeles, CA, COP, 5.7%, 2018 1,900,000 2,013,487 - --------------------------------------------------------------------------------------------------------------------- $4,032,228 - --------------------------------------------------------------------------------------------------------------------- Utilities - Investor California Pollution Control Financing Owned - 1.6% Authority, Pollution Control Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 $3,500,000 $3,729,180 - --------------------------------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Pollution Control Rev. (Southern California Edison Co.), 6.4%, 2024 500,000 502,470 - --------------------------------------------------------------------------------------------------------------------- Chula Vista, CA, Industrial Development Rev. (San Diego Gas & Electric Co.), "A", 4.9%, 2023 2,000,000 1,992,820 - --------------------------------------------------------------------------------------------------------------------- $6,224,470 - --------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Glendale, CA, Electric Works Rev., MBIA, Owned - 5.0% 5.75%, 2019 $1,420,000 $1,585,302 - --------------------------------------------------------------------------------------------------------------------- Glendale, CA, Electric Works Rev., MBIA, 5.75%, 2020 1,160,000 1,283,192 - --------------------------------------------------------------------------------------------------------------------- Northern California Power Agency Public Power Rev., 5.85%, 2010 880,000 962,289 - --------------------------------------------------------------------------------------------------------------------- Sacramento, CA, Power Authority, Cogeneration Project Rev., MBIA, 5.875%, 2006(++) 5,500,000 5,824,500 - --------------------------------------------------------------------------------------------------------------------- Southern California Public Power Authority, Transmission Project Rev., "A", 0%, 2005 4,205,000 4,180,737 - --------------------------------------------------------------------------------------------------------------------- Southern California Public Power Authority, Transmission Project Rev., "A", ETM, 0%, 2005(++) 3,795,000 3,773,369 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., 5.5%, 2017 800,000 824,488 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., 5.3%, 2018 250,000 251,340 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., "A", 5.125%, 2013 1,000,000 1,015,280 - --------------------------------------------------------------------------------------------------------------------- $19,700,497 - --------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility California Department of Water Resources, Revenue - 7.6% Central Valley Project Rev., "X", FGIC, 5%, 2029 $2,000,000 $2,047,120 - --------------------------------------------------------------------------------------------------------------------- California Department of Water Resources, Water Systems Rev., 7%, 2012 1,090,000 1,324,590 - --------------------------------------------------------------------------------------------------------------------- California Department of Water Resources, Water Systems Rev., ETM, 7%, 2012(++) 405,000 496,396 - --------------------------------------------------------------------------------------------------------------------- Castalic Lake Water Agency, California Rev., Water Systems Improvement Project, AMBAC, 5.125%, 2030 1,725,000 1,794,035 - --------------------------------------------------------------------------------------------------------------------- Culver City, CA, Wastewater Facilities Rev, "A", FGIC, 5.6%, 2019 1,000,000 1,106,130 - --------------------------------------------------------------------------------------------------------------------- El Monte, CA, Water Authority Rev., Water Systems Project, AMBAC, 6%, 2019 1,065,000 1,193,631 - --------------------------------------------------------------------------------------------------------------------- Fairfield-Suisun, CA, Sewer District Rev., "A", MBIA, 0%, 2006 2,080,000 2,022,966 - --------------------------------------------------------------------------------------------------------------------- Livermore Amador Valley Water Management Rev., "A", AMBAC, 5%, 2031 4,875,000 4,951,196 - --------------------------------------------------------------------------------------------------------------------- Los Angeles County, CA, Public Works Rev., Multiple Capital Facilities Project, "A", AMBAC, 5.5%, 2010(++) 2,970,000 3,290,344 - --------------------------------------------------------------------------------------------------------------------- Mojave, CA, Water Agency, Improvement District (M Morongo Basin), FGIC, 5.75%, 2015 2,625,000 2,787,068 - --------------------------------------------------------------------------------------------------------------------- Southern California Metropolitan Water District Rev., RITES, 8.577%, 2018+(+) 5,000,000 6,511,100 - --------------------------------------------------------------------------------------------------------------------- West Sacramento, CA, Financing Authority Rev., Water Systems Improvement Project, FGIC, 5%, 2032 2,750,000 2,807,338 - --------------------------------------------------------------------------------------------------------------------- $30,331,914 - --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $368,158,139) $388,915,590 - --------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.7% - --------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 $800,000 $800,000 - --------------------------------------------------------------------------------------------------------------------- California Health Facilities Financing Authority Rev. (Adventist Hospital), "B", 2.28%, due 4/01/05 100,000 100,000 - --------------------------------------------------------------------------------------------------------------------- Irvine, CA, Improvement Building Act 1915, 2.28%, due 4/06/05 1,050,000 1,050,000 - --------------------------------------------------------------------------------------------------------------------- San Francisco, CA, City & County Financial Corp., Lease Rev. (Moscone Center Expansion), 2.28%, due 4/07/05 900,000 900,000 - --------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $2,850,000) $2,850,000 - --------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $371,008,139) $391,765,590 - --------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.5% 5,869,298 - --------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $397,634,888 - --------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) FLORIDA MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 96.6% - --------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - --------------------------------------------------------------------------------------------------------------------- Airport & Port Florida Capital Projects Finance Authority Rev. Revenue - 5.1% (AAAE Airports Project), "I", MBIA, 5%, 2020 $500,000 $521,335 - --------------------------------------------------------------------------------------------------------------------- Greater Orlando Aviation Authority Rev., "A", FGIC, 5.25%, 2018 1,000,000 1,046,500 - --------------------------------------------------------------------------------------------------------------------- Hillsborough County, FL, Aviation Authority Rev. (Tampa International Airport), "A", FGIC, 5.875%, 2015 750,000 793,590 - --------------------------------------------------------------------------------------------------------------------- Lee County, FL, Airport Rev., "A", FSA, 5.875%, 2018 1,000,000 1,097,550 - --------------------------------------------------------------------------------------------------------------------- Miami-Dade County, FL, Aviation Rev., "C", MBIA, 5.25%, 2018 500,000 522,190 - --------------------------------------------------------------------------------------------------------------------- Pensacola, FL, Airport Rev., "B", MBIA, 5.625%, 2014 500,000 528,985 - --------------------------------------------------------------------------------------------------------------------- $4,510,150 - --------------------------------------------------------------------------------------------------------------------- Chemicals - 0.2% Red River Authority, TX, Pollution Control Rev. (Celanese Project), 6.7%, 2030 $200,000 $207,436 - --------------------------------------------------------------------------------------------------------------------- General Obligations - General Commonwealth of Puerto Rico, RITES, MBIA, Purpose - 7.0% 8.612%, 2019+(+) $1,000,000 $1,217,140 - --------------------------------------------------------------------------------------------------------------------- Maimi-Dade County, FL, Educational Facilities Authority, "A", AMBAC, 5.5%, 2018 1,400,000 1,520,162 - --------------------------------------------------------------------------------------------------------------------- State of Florida, RITES, 7.054%, 2017+(+) 3,000,000 3,356,640 - --------------------------------------------------------------------------------------------------------------------- $6,093,942 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Florida Board of Education, Capital Outlay, Schools - 9.2% 9.125%, 2014 $2,600,000 $3,361,020 - --------------------------------------------------------------------------------------------------------------------- Florida Board of Education, Capital Outlay, ETM, 9.125%, 2014(++) 400,000 531,344 - --------------------------------------------------------------------------------------------------------------------- Florida Board of Education, Public Education Capital Outlay, "A", 5.25%, 2024 1,000,000 1,054,640 - --------------------------------------------------------------------------------------------------------------------- Florida State Board of Education, Public Education, "J", 5%, 2032 1,000,000 1,033,330 - --------------------------------------------------------------------------------------------------------------------- Osceola County, FL, School Board Certificate, "A", AMBAC, 5.25%, 2027 1,950,000 2,067,917 - --------------------------------------------------------------------------------------------------------------------- $8,048,251 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Citrus County, FL, Hospital Development Hospitals - 15.0% Authority Rev. (Citrus Memorial Hospital), 6.25%, 2023 $495,000 $519,691 - --------------------------------------------------------------------------------------------------------------------- Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 250,000 256,307 - --------------------------------------------------------------------------------------------------------------------- Highlands County, FL, Health Facilities Authority Rev. (Adventist Health Systems), 5.25%, 2013 500,000 523,240 - --------------------------------------------------------------------------------------------------------------------- Hillsborough County, FL, Industrial Development Rev. (University Community Hospital), MBIA, 6.5%, 2019 1,000,000 1,225,360 - --------------------------------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Munster Medical Research Foundation, Inc.), 6.375%, 2031 500,000 520,195 - --------------------------------------------------------------------------------------------------------------------- Jacksonville, FL, Health Facilities, Ascension Health, "A", 5.25%, 2032 1,000,000 1,031,380 - --------------------------------------------------------------------------------------------------------------------- Lakeland, FL, Hospital Systems Rev. (Lakeland Regional Health Systems), 5.5%, 2032 1,000,000 1,045,970 - --------------------------------------------------------------------------------------------------------------------- Leesburg, FL, Hospital Rev. (Leesburg Regional Medical Center), 5.5%, 2032 750,000 768,360 - --------------------------------------------------------------------------------------------------------------------- Marion County, FL, Hospital District Rev., Refunding & Improvement, Health Systems (Monroe Regional Health System), 5.5%, 2014 500,000 529,435 - --------------------------------------------------------------------------------------------------------------------- Marshall County, AL, Health Care Rev., "A", 6.25%, 2022 500,000 533,895 - --------------------------------------------------------------------------------------------------------------------- Martin County, FL, Health Facilities Rev. (Martin Memorial Medical Center), "B", 5.75%, 2022 500,000 510,165 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Medstar Health), 5.5%, 2033 200,000 207,088 - --------------------------------------------------------------------------------------------------------------------- Miami Beach, FL, Health Facilities Rev. (Mount Sinai Medical Center), "A", 6.7%, 2019 250,000 270,577 - --------------------------------------------------------------------------------------------------------------------- Miami, FL, Health Facilities Authority Rev. (Catholic Health East), "B", 5.25%, 2028 650,000 660,764 - --------------------------------------------------------------------------------------------------------------------- New Hampshire Health & Educational Facilities Authority Rev. (Exeter Hospital), 6%, 2024 500,000 539,980 - --------------------------------------------------------------------------------------------------------------------- Orange County, FL, Health Facilities Authority Hospital Rev. (Orlando Regional Healthcare), 5.75%, 2032 1,000,000 1,064,800 - --------------------------------------------------------------------------------------------------------------------- Rhode Island Health & Education Building Rev., Hospital Financing (Lifespan Obligated Group), 6.5%, 2032 500,000 550,850 - --------------------------------------------------------------------------------------------------------------------- South Dakota Health & Education Facilities Authority Rev. (Prairie Lakes Health Care System), 5.625%, 2032 500,000 508,515 - --------------------------------------------------------------------------------------------------------------------- Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Healthcare), 6.25%, 2020 300,000 309,168 - --------------------------------------------------------------------------------------------------------------------- Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Regional Medical Center), MBIA, 6.625%, 2013 1,000,000 1,026,880 - --------------------------------------------------------------------------------------------------------------------- Wisconsin Health & Educational Facilities (Aurora Health Care, Inc.), "A", 5.6%, 2029 500,000 506,105 - --------------------------------------------------------------------------------------------------------------------- $13,108,725 - --------------------------------------------------------------------------------------------------------------------- Human Services - 0.3% Orange County, FL, Health Facilities Authority Rev. (GF Project), 8.875%, 2021 $300,000 $303,804 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Brazos River, TX, Brazoria County Environmental Chemicals - 0.9% Rev. (Dow Chemical, Co.), "A", 6.625%, 2033 $500,000 $557,005 - --------------------------------------------------------------------------------------------------------------------- Sweetwater County, WY, Solid Waste Disposal Rev. (FMC Corp.), "A", 7%, 2024 200,000 202,306 - --------------------------------------------------------------------------------------------------------------------- $759,311 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Nevada Department of Business (Republic Environmental Services - 0.4% Services, Inc.), 5.625%, 2026 $300,000 $318,789 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Hernando County, FL, Water & Sewer Rev., MBIA, Other - 1.4% 5%, 2029 $500,000 $518,180 - --------------------------------------------------------------------------------------------------------------------- Park Creek Metropolitan District, CO, Rev., Custodial Receipts, "CR", 7.875%, 2032## 160,000 163,971 - --------------------------------------------------------------------------------------------------------------------- Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific Corp.), 5.7%, 2026 500,000 518,840 - --------------------------------------------------------------------------------------------------------------------- $1,200,991 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Delta County, MI, Economic Development Corp., Paper - 0.6% Environmental Improvements Rev. (Mead Westvaco Escanaba), 6.25%, 2027 $500,000 $559,555 - --------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Palm Beach County, FL, Industrial Development Entertainment & Rev. (South Florida Fair Project), MBIA, Tourism - 1.2% 5.5%, 2020 $1,000,000 $1,075,950 - --------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Collier County, FL, Housing Finance Authority Revenue - 2.8% Rev. (Goodlette Arms Housing Project), "A", FNMA, 4.9%, 2032 $500,000 $533,005 - --------------------------------------------------------------------------------------------------------------------- Florida Housing Finance Corp., Housing Rev. (Augustine Club Apartments), "D", MBIA, 5.5%, 2020 500,000 522,755 - --------------------------------------------------------------------------------------------------------------------- Florida Housing Finance Corp., Housing Rev. (Crossing At University Apartments), AMBAC, 5.1%, 2018 1,180,000 1,200,202 - --------------------------------------------------------------------------------------------------------------------- Palm Beach County, FL, Housing Finance Rev. (Westlake Apartments Project), Phase II, FSA, 4.3%, 2012 155,000 157,111 - --------------------------------------------------------------------------------------------------------------------- $2,413,073 - --------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Escambia County, FL, Sales Tax Rev., AMBAC, 5%, Revenue - 4.2% 2022 $1,160,000 $1,218,916 - --------------------------------------------------------------------------------------------------------------------- Pasco County, FL, Sales Tax Rev., Half Central, AMBAC, 5%, 2023 1,000,000 1,047,880 - --------------------------------------------------------------------------------------------------------------------- Taylor County, FL, Sales Tax Rev., FGIC, 5.5%, 2020 500,000 541,495 - --------------------------------------------------------------------------------------------------------------------- Volusia County, FL, Tourist Development Tax Rev., FSA, 5%, 2034 815,000 842,710 - --------------------------------------------------------------------------------------------------------------------- $3,651,001 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Brevard County, FL, Housing Finance Authority, Local - 3.3% "B", GNMA, 6.5%, 2022 $59,000 $59,185 - --------------------------------------------------------------------------------------------------------------------- Lee County, FL, Housing Finance Authority Rev., "A", GNMA, 7%, 2031 180,000 182,945 - --------------------------------------------------------------------------------------------------------------------- Lee County, FL, Housing Finance Authority, Multi-County Program, "A", GNMA, 7.2%, 2033 60,000 60,243 - --------------------------------------------------------------------------------------------------------------------- Manatee County, FL, Housing Finance Mortgage Rev., Single Family, Subordinated, "3", GNMA, 5.3%, 2028 130,000 133,596 - --------------------------------------------------------------------------------------------------------------------- Miami-Dade County, FL, Housing Finance Authority Rev. (Home Ownership Mortgage), "A", GNMA, 5.2%, 2031 555,000 568,203 - --------------------------------------------------------------------------------------------------------------------- Palm Beach County, FL, Single Family Rev., "B", GNMA, 5.5%, 2022 375,000 376,155 - --------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Housing Finance Authority Rev., Multi-County Program, "A", GNMA, 5.45%, 2034 890,000 945,233 - --------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Housing Finance Authority Rev., Multi-County Program, "B", GNMA, 7.25%, 2029 140,000 141,823 - --------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Housing Finance Authority Rev., Multi-County Program, "B", GNMA, 6.2%, 2031 380,000 391,062 - --------------------------------------------------------------------------------------------------------------------- $2,858,445 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Florida Housing Finance Corp. Rev., Homeowner State - 2.0% Mortgage, "4", FSA, 5.85%, 2031 $685,000 $693,761 - --------------------------------------------------------------------------------------------------------------------- Florida Housing Finance Corp. Rev., Homeowner Mortgage, "5", 5%, 2034 990,000 1,029,442 - --------------------------------------------------------------------------------------------------------------------- $1,723,203 - --------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.2% Delaware County, PA, Industrial Development Authority Rev., Resource Recovery Facilities (American Ref-Fuel Co.), "A", 6.2%, 2019 $200,000 $207,022 - --------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 5.9% Florida Municipal Loan Council Rev., "A", MBIA, 5.625%, 2020 $1,000,000 $1,092,420 - --------------------------------------------------------------------------------------------------------------------- Florida Municipal Loan Council Rev., "B", MBIA, 5.625%, 2019 1,000,000 1,098,020 - --------------------------------------------------------------------------------------------------------------------- Florida Municipal Loan Council Rev., "C", MBIA, 5.25%, 2022 1,000,000 1,086,300 - --------------------------------------------------------------------------------------------------------------------- Palm Beach County, FL, School Board, "A", AMBAC, 5.5%, 2011(++) 750,000 840,397 - --------------------------------------------------------------------------------------------------------------------- St. Augustine, FL, Capital Improvement Rev, AMBAC, 5%, 2029 1,000,000 1,037,480 - --------------------------------------------------------------------------------------------------------------------- $5,154,617 - --------------------------------------------------------------------------------------------------------------------- Tax - Other - 2.0% Orange County, FL, Tourist Development Tax Rev., Subordinated, AMBAC, 5.25%, 2027 $1,500,000 $1,584,300 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 130,000 136,234 - --------------------------------------------------------------------------------------------------------------------- $1,720,534 - --------------------------------------------------------------------------------------------------------------------- Tax Assessment - 3.0% Arbor Greene, FL, Community Development District, 5.75%, 2006 $56,000 $56,409 - --------------------------------------------------------------------------------------------------------------------- Concorde Estates Community Development District, Florida Capital Improvement Rev., "B", 5%, 2011 350,000 348,551 - --------------------------------------------------------------------------------------------------------------------- Fishawk Community Development District II, "B", 5%, 2007 110,000 110,665 - --------------------------------------------------------------------------------------------------------------------- Greyhawk Landing Community Development, Florida Special Assessment Rev., "B", 6.25%, 2009 115,000 117,102 - --------------------------------------------------------------------------------------------------------------------- Heritage Harbour South Community, Development District Florida Rev., Capital Improvement, "B", 5.4%, 2008 340,000 339,765 - --------------------------------------------------------------------------------------------------------------------- Heritage Isles, FL, Community Development District, "A", 5.75%, 2005 210,000 210,004 - --------------------------------------------------------------------------------------------------------------------- Killarney, FL, Community Development District, "B", 5.125%, 2009 250,000 250,375 - --------------------------------------------------------------------------------------------------------------------- Lakes By The Bay South Community Development District, Florida Special Assessment, "B", 5.3%, 2009 200,000 200,582 - --------------------------------------------------------------------------------------------------------------------- Middle Village Community Development District, Florida Special Assessment, "B", 5%, 2009 200,000 199,748 - --------------------------------------------------------------------------------------------------------------------- Middle Village, FL, Community Development District Rev., "A", 5.8%, 2022 100,000 101,549 - --------------------------------------------------------------------------------------------------------------------- Old Palm Community Development District, Special Assessment (Palm Beach Gardens), "B", 5.375%, 2014 200,000 200,274 - --------------------------------------------------------------------------------------------------------------------- Panther Trace, FL, Community Development District Rev., 5.4%, 2008 100,000 100,156 - --------------------------------------------------------------------------------------------------------------------- Panther Trace, FL, Community Development District Rev., "B", 6.5%, 2009 35,000 35,560 - --------------------------------------------------------------------------------------------------------------------- Panther Trace, FL, Community Development District Rev., "B", 5%, 2010 100,000 100,060 - --------------------------------------------------------------------------------------------------------------------- Parkway Center, FL, Community Development District Rev., "B", 5.625%, 2014 100,000 100,629 - --------------------------------------------------------------------------------------------------------------------- Renaissance Community Development of Florida, "B", 6.25%, 2008 115,000 117,891 - --------------------------------------------------------------------------------------------------------------------- $2,589,320 - --------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Iowa Tobacco Settlement Authority, Tobacco Settlement Rev., Asset Backed, "B", 5.3%, 2025 $250,000 $232,117 - --------------------------------------------------------------------------------------------------------------------- Louisiana Tobacco Settlement Financing Corp., Asset Backed, "B", 5.875%, 2039 250,000 246,945 - --------------------------------------------------------------------------------------------------------------------- $479,062 - --------------------------------------------------------------------------------------------------------------------- Toll Roads - 5.0% Florida Turnpike Authority Rev., Department of Transportation, "A", 5.75%, 2018 $2,000,000 $2,217,080 - --------------------------------------------------------------------------------------------------------------------- Lee County, FL, Transportation Facilities Rev., "A", AMBAC, 5%, 2027 1,000,000 1,041,400 - --------------------------------------------------------------------------------------------------------------------- Miami-Dade County, FL, Expressway Authority, FGIC, 6%, 2010(++) 1,000,000 1,135,220 - --------------------------------------------------------------------------------------------------------------------- $4,393,700 - --------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico, Highway & Tax - 4.3% Transportation, ROLS, Railroad II R 227 1, MBIA, 8.633%, 2020+(+) $2,500,000 $3,262,400 - --------------------------------------------------------------------------------------------------------------------- St. Johns County, FL, Rev. Transportation Improvement, AMBAC, 5%, 2027 500,000 518,905 - --------------------------------------------------------------------------------------------------------------------- $3,781,305 - --------------------------------------------------------------------------------------------------------------------- Universities - Florida Board Regents, Housing Rev. (University Dormitories - 3.4% of Central Florida), FGIC, 5.25%, 2020 $1,185,000 $1,283,936 - --------------------------------------------------------------------------------------------------------------------- Florida Board Regents, Housing Rev., MBIA, 5.3%, 2020 610,000 660,484 - --------------------------------------------------------------------------------------------------------------------- Florida Finance Authority, Capital Loan Projects, "F", MBIA, 5.125%, 2021 1,000,000 1,014,400 - --------------------------------------------------------------------------------------------------------------------- $2,958,820 - --------------------------------------------------------------------------------------------------------------------- Utilities - Investor Brazos River Authority, TX, Pollution Control Owned - 0.8% Rev. (TXU Energy Co.), "B", 6.3%, 2032 $120,000 $127,463 - --------------------------------------------------------------------------------------------------------------------- Brazos River Authority, TX, Pollution Control Rev. (TXU Energy Co.), "C", 6.75%, 2038 215,000 232,178 - --------------------------------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority Rev. (Reliant Energy Seward), "A", 6.75%, 2036 150,000 159,965 - --------------------------------------------------------------------------------------------------------------------- Port Morrow, OR, Pollution Control Rev. (Portland General Electric), 5.2%, 2033 200,000 209,812 - --------------------------------------------------------------------------------------------------------------------- $729,418 - --------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Palm Coast, FL, Utility Systems Rev., MBIA, Owned - 3.0% 5%, 2024 $250,000 $260,890 - --------------------------------------------------------------------------------------------------------------------- Port St. Lucie, FL, Utility Rev., Capital Appreciation, "A", FGIC, 0%, 2006(++) 1,405,000 554,624 - --------------------------------------------------------------------------------------------------------------------- Port St. Lucie, FL, Utility Rev., MBIA, 5%, 2022 1,000,000 1,050,340 - --------------------------------------------------------------------------------------------------------------------- St. Lucie West, FL, Utility Rev., MBIA, 5.25%, 2034 720,000 767,232 - --------------------------------------------------------------------------------------------------------------------- $2,633,086 - --------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - Bay County, FL, Water Systems Rev., AMBAC, 14.9% 5.625%, 2019 $1,000,000 $1,100,660 - --------------------------------------------------------------------------------------------------------------------- Florida Community Services Corp., AMBAC, 5.5%, 2018 1,125,000 1,226,182 - --------------------------------------------------------------------------------------------------------------------- Indian Trace Development District, Florida Special Assessment (Water Management Special Benefit), MBIA, 5%, 2026 700,000 720,454 - --------------------------------------------------------------------------------------------------------------------- Lee County, FL, Industrial Development Authority (Bonita Springs Utilities Project), MBIA, 6.05%, 2015 1,000,000 1,053,640 - --------------------------------------------------------------------------------------------------------------------- Miami Beach, FL, Stormwater Rev., FGIC, 5.25%, 2020 1,000,000 1,068,740 - --------------------------------------------------------------------------------------------------------------------- Miami-Dade County, FL, Stormwater Utility Rev., MBIA, 5%, 2028 1,000,000 1,040,680 - --------------------------------------------------------------------------------------------------------------------- Orlando, FL, Utilities Commission, Water & Electric Rev. "C", 5%, 2027 1,000,000 1,033,410 - --------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Sewer Rev., FSA, 5%, 2032 1,500,000 1,547,085 - --------------------------------------------------------------------------------------------------------------------- Polk County, FL, Utility Systems Rev., "A", FGIC, 5%, 2030 1,000,000 1,035,140 - --------------------------------------------------------------------------------------------------------------------- Polk County, FL, Utility Systems Rev., FGIC, 5%, 2023 1,000,000 1,047,170 - --------------------------------------------------------------------------------------------------------------------- Seminole County, FL, Water & Sewer Rev., MBIA, 6%, 2019 940,000 1,093,145 - --------------------------------------------------------------------------------------------------------------------- Tohopekaliga Water Authority, Florida Utility System Rev., "A", FSA, 5%, 2024 1,000,000 1,043,560 - --------------------------------------------------------------------------------------------------------------------- $13,009,866 - --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $79,894,379) $84,489,376 - --------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.5% - --------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, 2.3%, due 4/ 01/05, at Identified Cost $1,350,000 $1,350,000 - --------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $81,244,379) $85,839,376 - --------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.9% 1,624,699 - --------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $87,464,075 - --------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) GEORGIA MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 96.6% - --------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - --------------------------------------------------------------------------------------------------------------------- Airport & Port Atlanta, GA, Airport Passenger Facilities Rev., Revenue - 5.2% "J", FSA, 5%, 2029 $750,000 $771,502 - --------------------------------------------------------------------------------------------------------------------- Atlanta, GA, Airport Passenger Facilities Rev., "J", 5%, 2034 1,250,000 1,278,950 - --------------------------------------------------------------------------------------------------------------------- Atlanta, GA, Airport Rev., "B", FSA, 5.25%, 2033 1,000,000 1,050,710 - --------------------------------------------------------------------------------------------------------------------- Augusta, GA, Airport Rev., "B", 5.35%, 2028 350,000 350,497 - --------------------------------------------------------------------------------------------------------------------- $3,451,659 - --------------------------------------------------------------------------------------------------------------------- General Obligations - General Columbia County, GA (Courthouse Detention Purpose - 4.1% Center), 5.625%, 2020 $1,490,000 $1,611,822 - --------------------------------------------------------------------------------------------------------------------- Macon Bibb County, GA, Urban Development Rev. (Bibb County Public Facilities Project), 5.5%, 2022 1,000,000 1,083,680 - --------------------------------------------------------------------------------------------------------------------- $2,695,502 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Puerto Rico Municipal Finance Agency, RITES, Improvement - 2.1% FSA, 9.137%, 2016+(+) $500,000 $614,020 - --------------------------------------------------------------------------------------------------------------------- Suwanee, GA, MBIA, 5.25%, 2032 750,000 786,780 - --------------------------------------------------------------------------------------------------------------------- $1,400,800 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Fayette County, GA, School District Rev., 0% to Schools - 7.1% 2010, 4.90% to 2024 $575,000 $435,344 - --------------------------------------------------------------------------------------------------------------------- Forsyth County, GA, School District, 6%, 2010(++) 750,000 851,280 - --------------------------------------------------------------------------------------------------------------------- Fulton County, GA, School District, 6.375%, 2010 2,000,000 2,272,020 - --------------------------------------------------------------------------------------------------------------------- Wilkes County, GA, School District, 5%, 2024 1,115,000 1,166,803 - --------------------------------------------------------------------------------------------------------------------- $4,725,447 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Athens Clarke County, GA (United Catholic Health Hospitals - 8.6% East Issue), 5.5%, 2032 $500,000 $517,875 - --------------------------------------------------------------------------------------------------------------------- Chatham County, GA, Hospital Authority Rev. (Memorial Health Medical Center), "A", 6%, 2017 350,000 379,515 - --------------------------------------------------------------------------------------------------------------------- Chatham County, GA, Hospital Authority Rev., Hospital Improvement (Memorial Health University), "A", 5.375%, 2026 200,000 206,816 - --------------------------------------------------------------------------------------------------------------------- Cobb County, GA, Hospital Authority Revolving, Refunding & Improvement Rev., Anticipation Certificates, AMBAC, 5.25%, 2023 750,000 811,620 - --------------------------------------------------------------------------------------------------------------------- Coffee County, GA, Hospital Authority Rev. (Coffee Regional Medical Center, Inc.), 5%, 2026 350,000 347,368 - --------------------------------------------------------------------------------------------------------------------- Gainsville & Hall County, GA, Hospital Authority Rev. (Northeast Georgia Health System, Inc.), 5.5%, 2031 500,000 514,055 - --------------------------------------------------------------------------------------------------------------------- Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare System, Inc.), 6.125%, 2009 330,000 331,766 - --------------------------------------------------------------------------------------------------------------------- Tift County, GA, Hospital Authority Rev., Anticipation Certificates, AMBAC, 5%, 2022 2,000,000 2,086,960 - --------------------------------------------------------------------------------------------------------------------- Valdosta & Lowdes County, GA, Hospital Authority Rev. (Southern Georgia Medical Center Project), AMBAC, 5.25%, 2027 500,000 527,660 - --------------------------------------------------------------------------------------------------------------------- $5,723,635 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Fulton County, GA, Residential Care Facilities Care - 2.0% (Canterbury Court), "A", 6.125%, 2034 $150,000 $149,107 - --------------------------------------------------------------------------------------------------------------------- Richmond County, GA, Development Authority, Nursing Home Rev. (Beverly Enterprises Georgia, Inc.), 8.75%, 2011 1,190,000 1,194,617 - --------------------------------------------------------------------------------------------------------------------- $1,343,724 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Savannah, GA, Economic Development Authority, Environmental Services - 0.8% Solid Waste Disposal Rev. (Georgia Waste Management Project), "A", 5.5%, 2016 $500,000 $519,570 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Cartersville, GA, Development Authority Waste Other - 1.8% (Anheuser Busch Project), 5.95%, 2032 $750,000 $797,820 - --------------------------------------------------------------------------------------------------------------------- De Kalb County, GA, Development Authority (General Motors Corp.), 6%, 2021 250,000 252,495 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 160,000 169,600 - --------------------------------------------------------------------------------------------------------------------- $1,219,915 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Effingham County, GA, Development Authority, Paper - 2.4% Solid Waste Disposal Rev. (Fort James), 5.625%, 2018 $150,000 $153,192 - --------------------------------------------------------------------------------------------------------------------- Savannah, GA, Economic Development Authority Rev. (Stone Container Corp.), 7.4%, 2026 300,000 300,123 - --------------------------------------------------------------------------------------------------------------------- Savannah, GA, Economic Development Pollution (Union Camp Corp.), 6.15%, 2017 1,000,000 1,107,880 - --------------------------------------------------------------------------------------------------------------------- $1,561,195 - --------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Clayton County, GA, Housing Authority, Multi- Revenue - 5.0% Family Housing Rev. (Vineyard Pointe), "A", GNMA, 5.5%, 2032 $995,000 $1,033,895 - --------------------------------------------------------------------------------------------------------------------- De Kalb County, GA, Housing Authority Multi- Family Housing Rev. (Castaways Apartments), "A", GNMA, 5.4%, 2029 595,000 615,712 - --------------------------------------------------------------------------------------------------------------------- Hinesville, GA, Leased Housing Corp., "A", FHA, 6.7%, 2017 900,000 902,655 - --------------------------------------------------------------------------------------------------------------------- Savannah, GA, Housing Authority (Chatham Gardens Project), FNMA, 5.625%, 2031 745,000 798,826 - --------------------------------------------------------------------------------------------------------------------- $3,351,088 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Georgia Housing & Finance Authority Rev., State - 5.6% 5.5%, 2032 $1,000,000 $1,006,560 - --------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, 5.2%, 2020 350,000 350,364 - --------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, "A", 5.6%, 2032 740,000 746,971 - --------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, "B", 6.05%, 2019 70,000 70,673 - --------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, "C", 5.8%, 2021 750,000 770,745 - --------------------------------------------------------------------------------------------------------------------- Georgia Housing & Finance Authority Rev., Single Family Mortgage, "C", 5.1%, 2022 750,000 755,617 - --------------------------------------------------------------------------------------------------------------------- $3,700,930 - --------------------------------------------------------------------------------------------------------------------- State & Agency - County Commissioners of Georgia Assoc., Leasing Other - 2.5% Program, Rockdale County, GA (Public Purpose Project), AMBAC, 5.625%, 2020 $500,000 $545,555 - --------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Facilities Corp., Fulton County, GA (Public Purpose Project), AMBAC, 5.9%, 2019 1,000,000 1,127,680 - --------------------------------------------------------------------------------------------------------------------- $1,673,235 - --------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 2.8% Clayton County, GA, Development Authority Rev., "A", 6.25%, 2020 $500,000 $567,180 - --------------------------------------------------------------------------------------------------------------------- Dekalb County, GA, Public Safety & Judicial Facilities Authority Rev., 5%, 2029 400,000 414,232 - --------------------------------------------------------------------------------------------------------------------- Fayette County, GA, Public Facilities Authority (Criminal Justice Center Project), 6.25%, 2010(++) 755,000 866,914 - --------------------------------------------------------------------------------------------------------------------- $1,848,326 - --------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.6% Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 $1,000,000 $1,067,540 - --------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $380,000 $381,395 - --------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico Highway & Tax - 1.0% Transportation Authority, "Y", 5.5%, 2036 $610,000 $662,741 - --------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 8.7% Fulton County, GA (Morehouse College), AMBAC, 6.25%, 2021 $980,000 $1,125,736 - --------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation Funding), "A", 5%, 2031 265,000 271,649 - --------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation), "A", 5.75%, 2017 1,000,000 1,112,440 - --------------------------------------------------------------------------------------------------------------------- Private Colleges & University Authority (Emory University), "A", 5.75%, 2016 1,000,000 1,106,380 - --------------------------------------------------------------------------------------------------------------------- Private Colleges & University Authority (Emory University), "A", 5.75%, 2018 1,000,000 1,112,100 - --------------------------------------------------------------------------------------------------------------------- Private Colleges & University Authority (Mercer University), 5.75%, 2021 500,000 538,505 - --------------------------------------------------------------------------------------------------------------------- Savannah, GA, Economic Development Authority Rev. (College of Art & Design, Inc.), ETM, 6.2%, 2009(++) 500,000 538,550 - --------------------------------------------------------------------------------------------------------------------- $5,805,360 - --------------------------------------------------------------------------------------------------------------------- Universities - Georgia Private College & University Authority Dormitories - 2.4% Rev. (Mercer Housing Corp.), "A", 6%, 2021 $500,000 $518,560 - --------------------------------------------------------------------------------------------------------------------- Marietta, GA, Development Authority Rev., Student Housing (Southern Polytech University), "A", 6.25%, 2007(++) 1,000,000 1,098,640 - --------------------------------------------------------------------------------------------------------------------- $1,617,200 - --------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Burke County, GA, Development Authority Owned - 6.2% Pollution Control Rev. (Georgia Power Co., Plant Vogtle), "1", 4.75%, 2034 $500,000 $494,540 - --------------------------------------------------------------------------------------------------------------------- Georgia Municipal Electric Authority Power Rev., "A", MBIA, 6.5%, 2020 1,250,000 1,549,363 - --------------------------------------------------------------------------------------------------------------------- Griffin, GA, Combined Public Utility Rev., Refunding & Improvement, AMBAC, 5%, 2025 500,000 523,520 - --------------------------------------------------------------------------------------------------------------------- Monroe County, GA, Pollution Control Rev. (Oglethorpe Power Corp.), "A", 6.8%, 2012 1,000,000 1,183,990 - --------------------------------------------------------------------------------------------------------------------- Summerville, GA, Public Utility Rev., Refunding & Improvement, 5.75%, 2026 350,000 374,595 - --------------------------------------------------------------------------------------------------------------------- $4,126,008 - --------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Atlanta, GA, Water & Wastewater Rev., "A", MBIA, Revenue - 26.1% 5%, 2033 $500,000 $513,155 - --------------------------------------------------------------------------------------------------------------------- Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 8.043%, 2016+(+) 4,000,000 5,084,720 - --------------------------------------------------------------------------------------------------------------------- Augusta, GA, Water & Sewer Rev., FSA, 5.25%, 2034 1,000,000 1,069,360 - --------------------------------------------------------------------------------------------------------------------- Clayton County, GA, Water Authority, Water & Sewer Rev., 6.25%, 2010(++) 1,000,000 1,146,190 - --------------------------------------------------------------------------------------------------------------------- Columbia County, GA, Water & Sewer Rev., FGIC, 6.25%, 2010(++) 470,000 535,692 - --------------------------------------------------------------------------------------------------------------------- Coweta County, GA, Development Authority Rev. (Newnan Water Sewer & Light Commission Project), AMBAC, 5.75%, 2016 1,000,000 1,103,120 - --------------------------------------------------------------------------------------------------------------------- De Kalb County, GA, Water & Sewer Rev., 5.125%, 2031 1,200,000 1,246,584 - --------------------------------------------------------------------------------------------------------------------- Fairburn, GA, Utility Rev., 5.75%, 2020 500,000 544,695 - --------------------------------------------------------------------------------------------------------------------- Forsyth County, GA, Water & Sewer Authority, 6.25%, 2010(++) 1,105,000 1,261,556 - --------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Water & Sewer Rev., FGIC, 6.375%, 2014 100,000 115,882 - --------------------------------------------------------------------------------------------------------------------- Fulton County, GA, Water & Sewer Rev., FGIC, ETM, 6.375%, 2014(++) 2,150,000 2,491,463 - --------------------------------------------------------------------------------------------------------------------- Gainesville, GA, Water & Sew Rev., FGIC, 5.625%, 2019 1,000,000 1,094,670 - --------------------------------------------------------------------------------------------------------------------- Jackson County, GA, Water & Sewer Authority, "A", AMBAC, 5.75%, 2017 1,000,000 1,121,210 - --------------------------------------------------------------------------------------------------------------------- $17,328,297 - --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $59,687,761) $64,203,567 - --------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.5% - --------------------------------------------------------------------------------------------------------------------- Atlanta, GA, Water & Wastewater Rev., "C", 2.28%, due 4/01/05 $600,000 $600,000 - --------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 1,000,000 1,000,000 - --------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, 2.3%, due 4/01/05 100,000 100,000 - --------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $1,700,000) $1,700,000 - --------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $61,387,761) $65,903,567 - --------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.9% 565,932 - --------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $66,469,499 - --------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) MARYLAND MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.3% - --------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - --------------------------------------------------------------------------------------------------------------------- Airport and Port Maryland Transportation Authority (Baltimore/ Revenue - 0.7% Washington International Airport), "A", AMBAC, 5%, 2027 $1,000,000 $1,031,870 - --------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 5.1% Baltimore, MD, "B", 7.15%, 2009 $2,120,000 $2,458,712 - --------------------------------------------------------------------------------------------------------------------- Baltimore, MD, UT, Public Improvement, "A", MBIA, 7%, 2009 1,000,000 1,158,060 - --------------------------------------------------------------------------------------------------------------------- Frederick County, MD, Public Facilities, 5.25%, 2016 2,000,000 2,149,000 - --------------------------------------------------------------------------------------------------------------------- Frederick County, MD, Public Facilities, 5.2%, 2019 1,700,000 1,840,063 - --------------------------------------------------------------------------------------------------------------------- $7,605,835 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 16.0% Anne Arundel County, MD, 5%, 2009(++) $2,000,000 $2,155,940 - --------------------------------------------------------------------------------------------------------------------- Howard County, MD, "B", 0%, 2008 1,000,000 897,900 - --------------------------------------------------------------------------------------------------------------------- Howard County, MD, Consolidated Public Improvement, "A", 5.5%, 2008(++) 1,000,000 1,078,920 - --------------------------------------------------------------------------------------------------------------------- Howard County, MD, Consolidated Public Improvement, "A", 5.5%, 2008(++) 2,000,000 2,157,840 - --------------------------------------------------------------------------------------------------------------------- Montgomery County, MD, Consolidated Public Improvement, 5%, 2020 1,000,000 1,061,510 - --------------------------------------------------------------------------------------------------------------------- Montgomery County, MD, Consolidated Public Improvement, 5%, 2021 500,000 529,415 - --------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, 0%, 2007 5,110,000 4,765,688 - --------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Consolidated Public Improvement, "A", 5%, 2023 2,000,000 2,113,260 - --------------------------------------------------------------------------------------------------------------------- Prince Georges County, MD, Unrefunded Balance, Public Improvement, FSA, 5.375%, 2015 80,000 86,762 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2019+(+) 1,000,000 1,172,920 - --------------------------------------------------------------------------------------------------------------------- Washington Suburban Sanitation District, General Construction Rev., 5%, 2028 980,000 1,017,916 - --------------------------------------------------------------------------------------------------------------------- Washington Suburban Sanitation District, General Construction Rev., 5%, 2027 930,000 968,288 - --------------------------------------------------------------------------------------------------------------------- Washington Suburban Sanitation District, General Construction Rev., 5%, 2029 1,025,000 1,062,966 - --------------------------------------------------------------------------------------------------------------------- Washington, MD, Suburban Sanitation District, General Construction, "A", 5.25%, 2005(++) 865,000 869,178 - --------------------------------------------------------------------------------------------------------------------- Worcester County, MD, Public Improvement, 5.625%, 2010(++) 1,620,000 1,804,599 - --------------------------------------------------------------------------------------------------------------------- Worcester County, MD, Public Improvement, 5.625%, 2010(++) 2,030,000 2,261,319 - --------------------------------------------------------------------------------------------------------------------- $24,004,421 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Maryland Health & Higher Educational Facilities Hospitals - 20.2% Authority Rev. (Adventist Healthcare), "A", 5.75%, 2025 $1,000,000 $1,050,320 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Anne Arundel Health Systems), "A", FSA, 5%, 2023 1,000,000 1,052,060 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Anne Arundel Health Systems), "A", FSA, 5%, 2034 1,585,000 1,635,783 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Calvert Health Systems), 5.5%, 2039 1,000,000 1,037,300 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Carroll County General Hospital), 6%, 2037 1,000,000 1,055,670 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Doctors Community Hospital), 5.5%, 2024 1,000,000 999,860 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Frederick Memorial Hospital), 5.125%, 2035 1,000,000 996,110 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Frederick Memorial Hospital), FGIC, 5.25%, 2013 1,850,000 2,010,839 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Good Samaritan Hospital), ETM, 5.7%, 2009(++) 1,085,000 1,168,599 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins University), 5%, 2021 750,000 775,065 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Lifebridge Health), "A", 5.125%, 2034 1,000,000 1,017,230 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Medalantic/Helix Issue), "B", AMBAC, 5.25%, 2038 1,500,000 1,648,980 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Medstar Health), 5.5%, 2033 800,000 $828,352 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Mercy Medical Center), FSA, 5.625%, 2017 1,800,000 1,892,322 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (North Arundel Hospital), 6.5%, 2026 500,000 566,125 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Suburban Hospital), "A", 5.5%, 2016 1,000,000 1,090,630 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Union Hospital of Cecil County Issue), 5.625%, 2032 1,000,000 1,041,180 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (University of Maryland Medical Systems), 6.625%, 2020 1,000,000 1,128,990 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (University of Maryland Medical Systems), "B", AMBAC, 5%, 2024 1,000,000 1,050,190 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Upper Chesapeake Hospital), "A", FSA, 5.5%, 2020 2,000,000 2,117,360 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Rev. (Helix Health Issue), AMBAC, ETM, 5%, 2027 (++) 2,500,000 2,641,675 - --------------------------------------------------------------------------------------------------------------------- Maryland Industrial Development Authority, Economic Development Rev., RIBS, FSA, 10.058%, 2022(+) 1,400,000 1,917,272 - --------------------------------------------------------------------------------------------------------------------- Maryland State Health & Higer Educational Facilities Authority Rev. (Catholic Health), "A", 6%, 2020 245,000 274,221 - --------------------------------------------------------------------------------------------------------------------- Maryland State Health & Higher Educational Facilities Authority Rev. (Catholic Health), ETM, "A", 6%, 2020(++) 755,000 847,140 - --------------------------------------------------------------------------------------------------------------------- Montgomery County, MD, Economic Development (Trinity Healthcare Group), 5.125%, 2022 500,000 518,355 - --------------------------------------------------------------------------------------------------------------------- $30,361,628 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Maryland Health & Higher Educational Facilities Care - 1.0% Authority Rev. (Bradford Oaks Nursing & Rehabilitation Center), 6.375%, 2027 $1,000,000 $1,005,470 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Mercy Ridge), "A", 6%, 2035 150,000 153,114 - --------------------------------------------------------------------------------------------------------------------- Westminster, MD, Economic Development Rev. (Carroll Lutheran Village), "A", 6.25%, 2034 400,000 410,968 - --------------------------------------------------------------------------------------------------------------------- $1,569,552 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Baltimore, MD, Port Facilities Rev., Chemicals - 1.1% Consolidated Coal Sales, "B", 6.5%, 2011 $1,500,000 $1,607,715 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Northeast Maryland Waste Disposal Authority, Environmental Services - 0.5% Resources Recovery Rev. (Baltimore Resco Retrofit Project), 5%, 2012 $690,000 $698,977 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Other - 0.3% Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 $375,000 $397,500 - --------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Maryland Industrial Development Authority, Entertainment & Economic Development (Baltimore Aquarium Tourism - 0.7% Project), 5.2%, 2026 $1,000,000 $1,041,860 - --------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Harford County MD, Economic Development Rev. Other - 3.1% (Battelle Memorial Institute Project), 5.25%, 2034 $1,600,000 $1,665,088 - --------------------------------------------------------------------------------------------------------------------- Maryland Industrial Authority, Economic Development Rev. (YMCA Baltimore), 8%, 2006(++) 2,825,000 3,070,606 - --------------------------------------------------------------------------------------------------------------------- $4,735,694 - --------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Baltimore, MD, City Housing Corp. Rev., "A", Revenue - 4.9% FHA, 7.25%, 2023 $1,065,000 $1,069,249 - --------------------------------------------------------------------------------------------------------------------- Baltimore, MD, City Housing Corp. Rev., FHA, 7.75%, 2009 505,000 502,642 - --------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration (Waters Landing II Apartments), "A", GNMA, 5.875%, 2033 1,500,000 1,576,335 - --------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, "A", 5%, 2034 940,000 934,210 - --------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, "A", 5.1%, 2044 1,000,000 989,870 - --------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Housing, "D", 5%, 2032 1,000,000 986,740 - --------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Multi-Family Housing Insured Mortgage, "B", 5.6%, 2032 1,250,000 1,291,325 - --------------------------------------------------------------------------------------------------------------------- $7,350,371 - --------------------------------------------------------------------------------------------------------------------- Parking - 1.0% Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins Medical Institutions), AMBAC, 5%, 2034 $1,500,000 $1,564,155 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Prince George's County, MD, Housing, Single Local - 0.4% Family Collateral, "A", 7.4%, 2032 $120,000 $120,714 - --------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Housing, Single Family Collateral, "A", GNMA, 5.6%, 2034 170,000 173,922 - --------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Housing, Single Family Step Coupon, "A", GNMA, 5.375%, 2018 300,000 307,005 - --------------------------------------------------------------------------------------------------------------------- $601,641 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Maryland Community Development Administration, State - 4.1% Housing, "A", 5.875%, 2016 $1,280,000 $1,325,504 - --------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Residential, "B", 4.75%, 2019 1,500,000 1,501,890 - --------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Single Family Program, First Series, 5.15%, 2018 2,000,000 2,028,780 - --------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Single Family Program, Second Series, 4.5%, 2024 820,000 829,643 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Authority, Home Mortgage Rev., Mortgage Backed Securities, "A", 4.75%, 2023 180,000 181,228 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Authority, Mortgage Backed Securities, "A", 4.375%, 2017 305,000 306,327 - --------------------------------------------------------------------------------------------------------------------- $6,173,372 - --------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.8% Northeast Maryland Waste Disposal Authority, Solid Waste Rev., 6%, 2006 $1,100,000 $1,137,191 - --------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 5.4% Howard County, MD, COP, 8%, 2019 $680,000 $958,310 - --------------------------------------------------------------------------------------------------------------------- Howard County, MD, COP, 8%, 2019 805,000 1,134,470 - --------------------------------------------------------------------------------------------------------------------- Howard County, MD, COP, 8%, 2019 385,000 542,573 - --------------------------------------------------------------------------------------------------------------------- Howard County, MD, COP, 8.15%, 2021 450,000 647,685 - --------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, COP, "A", MBIA, 0%, 2005 2,495,000 2,481,302 - --------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, COP, "A", MBIA, 0%, 2006 2,490,000 2,407,930 - --------------------------------------------------------------------------------------------------------------------- $8,172,270 - --------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 4.2% Maryland Stadium Authority, Lease Rev. (Convention Center Expansion), AMBAC, 5.875%, 2012 $1,000,000 $1,025,980 - --------------------------------------------------------------------------------------------------------------------- Prince George's County, MD, Lease Development Authority Rev., MBIA, 0%, 2009 1,500,000 1,293,345 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., Commonwealth Appropriation, "E", 5.7%, 2010(++) 1,235,000 1,370,146 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2010+(+) 500,000 620,180 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2016+(+) 1,520,000 1,927,360 - --------------------------------------------------------------------------------------------------------------------- $6,237,011 - --------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.4% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $1,000,000 $1,051,760 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,000,000 1,030,930 - --------------------------------------------------------------------------------------------------------------------- $2,082,690 - --------------------------------------------------------------------------------------------------------------------- Tax Assessment - 1.1% Anne Arundel County, MD, Special Obligations (Arundel Mills Project), 5.125%, 2029 $1,555,000 $1,632,501 - --------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $240,000 $240,881 - --------------------------------------------------------------------------------------------------------------------- Guam Economic Development Authority, Tobacco Settlement, "B", 5.5%, 2041 400,000 384,916 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 250,000 242,618 - --------------------------------------------------------------------------------------------------------------------- $868,415 - --------------------------------------------------------------------------------------------------------------------- Toll Roads - 1.1% Maryland State Transportation Authority, Project Facilities Rev., FSA, 5%, 2034 $1,540,000 $1,599,937 - --------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 10.5% Annapolis, MD, Economic Development Rev. (St. John's College), 5.5%, 2018 $750,000 $780,592 - --------------------------------------------------------------------------------------------------------------------- Anne Arundel County, MD, Economic Development (Community College Project), 5.25%, 2028 1,600,000 1,683,600 - --------------------------------------------------------------------------------------------------------------------- Frederick County, MD, Educational Facilities Rev. (Mount St. Mary's College), "A", 5.7%, 2020 850,000 886,677 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Goucher College), 5.375%, 2025 500,000 529,635 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins University), 5.625%, 2027 1,400,000 1,466,696 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins University), "A", 5%, 2032 2,000,000 2,061,060 - --------------------------------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Loyola College), "A", MBIA, 5.5%, 2016 3,000,000 3,172,140 - --------------------------------------------------------------------------------------------------------------------- Morgan State University, MD, Academic, "A", MBIA, ETM, 0%, 2006(++) 1,135,000 1,097,239 - --------------------------------------------------------------------------------------------------------------------- Morgan State University, MD, Academic, "A", MBIA, ETM, 0%, 2008(++) 1,400,000 1,263,206 - --------------------------------------------------------------------------------------------------------------------- Morgan State University, MD, Academic, MBIA, 6.05%, 2015 1,500,000 1,720,365 - --------------------------------------------------------------------------------------------------------------------- Westminster, MD, Educational Facilities Rev. (McDaniel College), 5.5%, 2032 1,000,000 1,035,960 - --------------------------------------------------------------------------------------------------------------------- $15,697,170 - --------------------------------------------------------------------------------------------------------------------- Universities - Maryland Economic Development Corp. (Morgan Dormitories - 3.3% State University Project), "A", 6%, 2034 $1,000,000 $1,029,900 - --------------------------------------------------------------------------------------------------------------------- Maryland Economic Development Corp. (University of Maryland College Park Project), AMBAC, 5%, 2019 1,850,000 1,944,887 - --------------------------------------------------------------------------------------------------------------------- Maryland Economic Development Corp., Collegiate Housing (Salisbury), "A", 6%, 2019 1,000,000 1,043,200 - --------------------------------------------------------------------------------------------------------------------- Maryland Economic Development Corp., Collegiate Housing Rev. (Towson University), "A", 5.75%, 2029 1,000,000 1,003,510 - --------------------------------------------------------------------------------------------------------------------- $5,021,497 - --------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Guam Power Authority Rev., RITES, AMBAC, Owned - 4.0% 7.577%, 2015+(+) $1,680,000 $1,936,670 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,500,000 1,563,840 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "RR", XLCA, 5%, 2030 850,000 883,091 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., RITES, FSA, 7.559%, 2015+(+) 1,400,000 1,570,450 - --------------------------------------------------------------------------------------------------------------------- $5,954,051 - --------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - Baltimore, MD, Project Rev. (Wastwater 5.8% Projects), "A", FGIC, 5%, 2033 $1,095,000 $1,133,796 - --------------------------------------------------------------------------------------------------------------------- Baltimore, MD, Project Revenue., Refunding Water Projects, "A", FGIC, 5.125%, 2032 1,000,000 1,045,090 - --------------------------------------------------------------------------------------------------------------------- Baltimore, MD, Rev., LEVRRS, MBIA, 8.77%, 2020(+) 3,000,000 3,941,640 - --------------------------------------------------------------------------------------------------------------------- Baltimore, MD, Wastewater Rev. Project, "A", MBIA, 5.65%, 2020 2,000,000 2,313,880 - --------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., ETM, 10.25%, 2009(++) 290,000 340,274 - --------------------------------------------------------------------------------------------------------------------- $8,774,680 - --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $135,924,080) $145,922,004 - --------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 4.3% - --------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 $2,200,000 $2,200,000 - --------------------------------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White Memorial Hospital), 2.3%, due 4/01/05 1,300,000 1,300,000 - --------------------------------------------------------------------------------------------------------------------- Harris County, TX, Health Facilities Development Corp., Special Facilities Rev. (Texas Medical Center), MBIA, 2.3%, due 4/01/05 100,000 100,000 - --------------------------------------------------------------------------------------------------------------------- Irvine, CA, Improvement Building Act 1915, 2.28%, due 4/06/05 1,000,000 1,000,000 - --------------------------------------------------------------------------------------------------------------------- New York City, NY, "A-4", 2.28%, due 4/01/05 1,300,000 1,300,000 - --------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 2.28%, due 4/01/05 300,000 300,000 - --------------------------------------------------------------------------------------------------------------------- San Francisco, CA, City & County Financial Corp., Lease Rev. (Moscone Center Expansion), 2.28%, due 4/07/05 200,000 200,000 - --------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $6,400,000) $6,400,000 - --------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $142,324,080) $152,322,004 - --------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (1.6)% (2,345,704 - --------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $149,976,300 - --------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 96.3% - --------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - --------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 3.3% Massachusetts Port Authority Rev., 6.125%, 2017 $1,460,000 $1,627,477 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., "A", FSA, 5.125%, 2017 1,275,000 1,357,556 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., "A", MBIA, 5%, 2033 3,000,000 3,058,620 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., "C", 6%, 2015 1,000,000 1,111,160 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., ETM, 13%, 2013(++) 705,000 1,001,572 - --------------------------------------------------------------------------------------------------------------------- $8,156,385 - --------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 14.1% Boston, MA, "A", 5.75%, 2010(++) $3,645,000 $4,043,362 - --------------------------------------------------------------------------------------------------------------------- Brookline, MA, 5.375%, 2019 1,800,000 1,966,662 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Massachusetts, 5.875%, 2009(++) 1,000,000 1,111,660 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Massachusetts, "B", 5.25%, 2028 2,500,000 2,745,950 - --------------------------------------------------------------------------------------------------------------------- Commonwealth of Massachusetts, FGIC, ETM, 7%, 2009(++) 1,150,000 1,282,238 - --------------------------------------------------------------------------------------------------------------------- Greater Lawrence, MA, San District, MBIA, 5.625%, 2020 1,640,000 1,800,589 - --------------------------------------------------------------------------------------------------------------------- Lynn, MA, AMBAC, 5.125%, 2018 3,690,000 3,916,898 - --------------------------------------------------------------------------------------------------------------------- Mansfield, MA, FSA, 5.375%, 2017 1,170,000 1,272,246 - --------------------------------------------------------------------------------------------------------------------- Middleborough, MA, FGIC, 5.6%, 2014 75,000 82,297 - --------------------------------------------------------------------------------------------------------------------- Salisbury, MA, MBIA, MBIA, 5.25%, 2031 2,790,000 2,976,372 - --------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Capital Appreciation Consolidated Loan, "C", ETM, 0%, 2005(++) 2,000,000 1,966,040 - --------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "A", 6%, 2010(++) 3,000,000 3,365,280 - --------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "B", 5.75%, 2010(++) 1,000,000 1,113,730 - --------------------------------------------------------------------------------------------------------------------- State of Massachusetts, Consolidated Loan, "C", 5.75%, 2010(++) 1,500,000 1,668,000 - --------------------------------------------------------------------------------------------------------------------- Sutton, MA, MBIA, 5.5%, 2017 1,000,000 1,092,510 - --------------------------------------------------------------------------------------------------------------------- Sutton, MA, MBIA, 5.5%, 2019 1,000,000 1,088,690 - --------------------------------------------------------------------------------------------------------------------- Westford, MA, FGIC, 5.25%, 2020 2,250,000 2,422,013 - --------------------------------------------------------------------------------------------------------------------- Weymouth, MA, MBIA, 5.375%, 2020 1,250,000 1,344,663 - --------------------------------------------------------------------------------------------------------------------- $35,259,200 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Massachusetts Bay Transportation Authority, Improvement - 5.6% RITES, 9.380%, 2016+(+) $4,835,000 $6,425,038 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Bay Transportation Authority, Unrefunded Balance "A", 5.75%, 2018 320,000 353,043 - --------------------------------------------------------------------------------------------------------------------- Maynard, MA, MBIA, 5.5%, 2021 1,000,000 1,103,870 - --------------------------------------------------------------------------------------------------------------------- Springfield, MA, FSA, 6.25%, 2019 2,600,000 2,934,204 - --------------------------------------------------------------------------------------------------------------------- Worcester, MA, "A", FSA, 6%, 2016 2,955,000 3,318,229 - --------------------------------------------------------------------------------------------------------------------- $14,134,384 - --------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 4.6% Belmont, MA, 5%, 2015 $2,165,000 $2,214,882 - --------------------------------------------------------------------------------------------------------------------- Dudley-Charlton, MA, Regional School District, RITES, FGIC, 7.566%, 2015+(+) 1,365,000 1,659,294 - --------------------------------------------------------------------------------------------------------------------- Dudley-Charlton, MA, Regional School District, RITES, FGIC, 7.566%, 2016+(+) 1,430,000 1,749,062 - --------------------------------------------------------------------------------------------------------------------- Dudley-Charlton, MA, Regional School District, RITES, FGIC, 7.566%, 2018+(+) 1,565,000 1,928,299 - --------------------------------------------------------------------------------------------------------------------- Narragansett, MA, Regional School District, AMBAC, 6%, 2019 1,720,000 1,930,322 - --------------------------------------------------------------------------------------------------------------------- Tantasquama, MA, Regional School District, FSA, 5.375%, 2016 2,000,000 2,186,060 - --------------------------------------------------------------------------------------------------------------------- $11,667,919 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Massachusetts Development Finance Agency, Hospitals - 9.9% Massachusetts Biomedical Research, "C", 6.375%, 2016 $50,000 $55,662 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Baystate Medical Center), "F", 5.75%, 2033 2,000,000 2,096,180 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Berkshire Health Systems), 6.25%, 2031 1,350,000 1,429,245 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), 6.5%, 2012 500,000 548,535 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), "B", 6.25%, 2022 20,000 21,185 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Covenant Health Systems, Inc.), 6.5%, 2017 75,000 82,714 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Covenant Health Systems, Inc.), 6%, 2031 1,000,000 1,048,480 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Jordan Hospital), 5.25%, 2018 1,330,000 1,241,143 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Milford Whitinsville Hospital), 6.35%, 2032 50,000 52,587 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Milford-Whitinsville Regional Hospital), "C", 5.25%, 2018 1,500,000 1,456,605 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Milton Hospital), "C", 5.5%, 2016 800,000 807,912 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (New England Medical Center Hospital), "H", FGIC, 5.375%, 2018 1,000,000 1,084,970 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (New England Medical Center Hospital), "H", FGIC, 5.375%, 2019 815,000 885,832 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Newton Wellesley Hospital), "G", MBIA, 6.125%, 2015 1,000,000 1,081,050 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (North Adams Regional Hospital), 6.625%, 2018 475,000 483,284 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare Systems), 5.75%, 2021 100,000 109,022 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare Systems), "A", MBIA, 5.375%, 2018 2,000,000 2,106,900 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (South Shore Hospital), "F", 5.625%, 2019 2,000,000 2,076,460 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts Memorial Hospital), 6.5%, 2021 1,000,000 1,086,140 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Revenue (New England Medical Center Hospital), "H", FGIC, 5%, 2025 1,135,000 1,172,648 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Higher Educational Facilities Authority Rev., Catholic Health East Issue, 5.5%, 2032 1,575,000 1,626,266 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Capital Appreciation (Mass Biomedical Research), "A", 0%, 2010 5,300,000 4,272,595 - --------------------------------------------------------------------------------------------------------------------- $24,825,415 - --------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Boston, MA, Industrial Development Finance Care - 1.0% Authority, Alzheimers Center Project, FHA, 5.5%, 2012 $240,000 $253,202 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., First Mortgage Loomis Communities Project, "A", 6.9%, 2032 530,000 564,185 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Beverly Enterprises), 8.375%, 2009 1,725,000 1,726,604 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Evanswood 1st Mortgage), "A", 7.625%, 2014* 496,655 0 - --------------------------------------------------------------------------------------------------------------------- $2,543,991 - --------------------------------------------------------------------------------------------------------------------- Human Services - 0.4% Massachusetts Health & Educational Facilities Authority Rev. (Learning Center for Deaf Children), 6.1%, 2019 $1,000,000 $1,009,780 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Massachusetts Port Authority Rev. (Delta Air Airlines - 2.1% Lines, Inc.), "A", AMBAC, 5.5%, 2019 $2,000,000 $2,087,820 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev. (U.S. Airways), MBIA, 5.875%, 2016 1,900,000 2,000,966 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Port Authority Rev., Special Facilities (U.S. Airways), "A", MBIA, 5.625%, 2011 1,140,000 1,192,520 - --------------------------------------------------------------------------------------------------------------------- $5,281,306 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Massachusetts Development Finance Agency Rev. Environmental Services - 0.8% (Waste Management, Inc.), 5.5%, 2027 $750,000 $781,853 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Resource Recovery Rev. (Waste Management, Inc.), 6.9%, 2029 1,000,000 1,114,110 - --------------------------------------------------------------------------------------------------------------------- $1,895,963 - --------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Massachusetts Development Finance Agency Rev., Other - 1.8% Resource Recovery Rev. (Flour Corp.), 5.625%, 2019 $1,675,000 $1,755,048 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.), 5.6%, 2017 2,100,000 2,257,815 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 595,000 630,700 - --------------------------------------------------------------------------------------------------------------------- $4,643,563 - --------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Martha's Vineyard, MA, Land Bank Rev., AMBAC, Other - 1.6% 5%, 2029 $785,000 $812,169 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., (WHGH Educational Foundation), "A", AMBAC, 5.375%, 2042 3,000,000 3,161,910 - --------------------------------------------------------------------------------------------------------------------- $3,974,079 - --------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Massachusetts Development Finance Agency Revenue - 4.0% (Morville House Apartments), "A" LOC, 4.95%, 2023 $2,500,000 $2,474,575 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Credit Housing-Chelsea Homes), "I-A", 5%, 2024 1,185,000 1,171,739 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency Rev., "F", 5.125%, 2034 720,000 722,196 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency Rev., "P", 5%, 2023 1,240,000 1,235,449 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency Rev., "P", 5.1%, 2033 1,565,000 1,562,543 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency Rev., "P", 5.2%, 2045 1,445,000 1,404,453 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Housing Rev., Rental Mortgage, "A", AMBAC, 5.7%, 2020 1,515,000 1,546,012 - --------------------------------------------------------------------------------------------------------------------- $10,116,967 - --------------------------------------------------------------------------------------------------------------------- Parking - 0.5% Rail Connections, Inc., Massachusetts Rev. (Rte 128 Parking Garage), "A", 6%, 2009(++) $450,000 $507,609 - --------------------------------------------------------------------------------------------------------------------- Rail Connections, Inc., Massachusetts Rev. (Rte 128 Parking Garage), "A", 6%, 2009(++) 500,000 564,010 - --------------------------------------------------------------------------------------------------------------------- Rail Connections, Inc., Massachusetts Rev. (Rte 128 Parking Garage), "A", 6%, 2009(++) 250,000 282,005 - --------------------------------------------------------------------------------------------------------------------- $1,353,624 - --------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Route 3 North Transportation Improvement Revenue - 0.7% Associates, MBIA, 5.625%, 2010(++) $1,500,000 $1,666,665 - --------------------------------------------------------------------------------------------------------------------- Single Family Housing - Massachusetts Housing Finance Agency, Single State - 1.5% Family Housing Rev., "102", 5%, 2029 $1,500,000 $1,493,655 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "51", MBIA, 6.35%, 2022 440,000 450,916 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "79", FSA, 5.85%, 2021 210,000 216,439 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "91", 5.5%, 2031 1,265,000 1,273,197 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Housing Finance Agency, Single Family Housing Rev., "93", 5.05%, 2020 265,000 266,797 - --------------------------------------------------------------------------------------------------------------------- $3,701,004 - --------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 1.5% Massachusetts Development Finance Agency Rev. (Ogden Haverhill Associates), 6.7%, 2014 $600,000 $636,756 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Semass Systems, "B", MBIA, 5.625%, 2016 1,125,000 1,234,305 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Resource Recovery Rev. (Ogden Haverhill Associates), 5.5%, 2013 $25,000 $25,226 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Resource Recovery Rev. (Ogden Haverhill Associates), 5.6%, 2019 1,925,000 1,934,105 - --------------------------------------------------------------------------------------------------------------------- $3,830,392 - --------------------------------------------------------------------------------------------------------------------- State & Agency - Massachusetts Development Finance Agency Rev., Other - 0.6% Visual & Performing Arts Project, 6%, 2015 $1,235,000 $1,431,921 - --------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 2.5% Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2016+(+) $2,500,000 $3,170,000 - --------------------------------------------------------------------------------------------------------------------- Univeristy of Massachusetts, Building Authority Project, "B", AMBAC, 5.5%, 2018 1,400,000 1,523,592 - --------------------------------------------------------------------------------------------------------------------- University of Massachusetts, Building Authority Project, "1", AMBAC, 5.25%, 2023 1,500,000 1,607,895 - --------------------------------------------------------------------------------------------------------------------- $6,301,487 - --------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 1.1% Massachusetts Educational Financing Authority, Education Loan Rev., "E", AMBAC, 5%, 2013 $895,000 $929,135 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Educational Financing Authority, Education Loan Rev., "E", AMBAC, 5%, 2015 90,000 93,379 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Educational Financing Authority, Education Loan Rev., "Issue E", AMBAC, 5.3%, 2016 1,490,000 1,544,981 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Educational Financing Authority, Education Loan Rev., "Isuue G, "A", MBIA, 6.05%, 2017 70,000 72,831 - --------------------------------------------------------------------------------------------------------------------- $2,640,326 - --------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.8% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $2,950,000 $3,102,692 - --------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,420,000 1,463,921 - --------------------------------------------------------------------------------------------------------------------- $4,566,613 - --------------------------------------------------------------------------------------------------------------------- Tax Assessment - 7.7% Massachusetts Bay Transportation Authority Assessment, "A", 5.75%, 2010(++) $3,460,000 $3,857,519 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Bay Transportation Authority Assessment, "A", 5.25%, 2010(++) 2,315,000 2,504,483 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Bay Transportation Authority Assessment, "A", 5.25%, 2030 615,000 665,338 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Bay Transportation Authority, "A", 5%, 2034 3,500,000 3,612,140 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Bay Transportation Authority, Sales Tax Rev., "A", 5%, 2032 2,020,000 2,069,126 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Special Obligations, Dedicated Tax Rev., FGIC, 5%, 2034 6,500,000 6,680,180 - --------------------------------------------------------------------------------------------------------------------- $19,388,786 - --------------------------------------------------------------------------------------------------------------------- Tobacco - 0.3% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $700,000 $702,569 - --------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 18.7% Massachusetts College Building Authority Project Rev., "A", MBIA, 5.625%, 2009(++) $1,650,000 $1,816,749 - --------------------------------------------------------------------------------------------------------------------- Massachusetts College Building Authority Project Rev., "A", XLCA, 5.25%, 2023 1,000,000 1,068,400 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Boston University), XLCA, 6%, 2059 1,500,000 1,762,185 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Eastern Nazarene College), 5.625%, 2019 1,000,000 939,770 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Hampshire College), 5.7%, 2034 1,000,000 1,045,450 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), 6.625%, 2010(++) 50,000 57,710 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), "C", 5.75%, 2033 1,000,000 1,050,330 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Mount Holyoke College), 5.125%, 2021 1,000,000 1,059,250 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Suffolk University), 5.75%, 2019 1,000,000 1,056,750 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Suffolk University), 5.85%, 2029 1,000,000 1,047,540 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Western New England College), 6.125%, 2032 1,115,000 1,148,126 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Higher Education (Smith College), 5.5%, 2010(++) 1,210,000 1,344,770 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Olin College, "B", XLCA, 5.25%, 2033 3,000,000 3,155,370 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Authority Rev. (University of Massachusetts), "A", FGIC, 5.625%, 2010(++) 2,170,000 2,396,939 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Boston College), "K", 5.25%, 2023 4,350,000 4,374,447 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Simmons College), "D", AMBAC, 6.05%, 2010(++) 1,745,000 1,994,919 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Simmons College), "F", FGIC, 5%, 2023 500,000 524,310 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts Worcester Campus), "B", FGIC, 5.125%, 2019 1,780,000 1,883,827 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "A", FGIC, 5.75%, 2010(++) 2,395,000 2,666,545 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "A", FGIC, 5.85%, 2010(++) 1,200,000 1,342,620 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "C", MBIA, 5.25%, 2031 3,000,000 3,174,900 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Wellseley College), "H", 5%, 2033 1,000,000 1,027,790 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Wheelock College), "B", MBIA, 5.5%, 2021 3,275,000 3,558,615 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Brandeis University), "C", MBIA, 0%, 2009 1,000,000 850,880 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Brandeis University), "C", MBIA, 0%, 2010 1,000,000 809,830 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Brandeis University), "C", MBIA, 0%, 2011 500,000 385,460 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Lesley College), "A", CNIE LEE, 6.3%, 2025 $2,000,000 $2,058,160 - --------------------------------------------------------------------------------------------------------------------- Massachusetts State College Building Authority Project Rev., "A", XLCA, 5%, 2043 2,110,000 2,156,314 - --------------------------------------------------------------------------------------------------------------------- Massachusetts State Health & Educational Facilities Authority Rev. (Williams College), "H", 5%, 2028 1,000,000 1,034,040 - --------------------------------------------------------------------------------------------------------------------- $46,791,996 - --------------------------------------------------------------------------------------------------------------------- Universities - Secondary Massachusetts Development Finance Agency Rev. Schools - 4.3% (Deerfield Academy), "A", 5%, 2028 $1,000,000 $1,033,240 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Williston Northampton School), 6.5%, 2028 1,300,000 1,388,777 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Xaverian Brothers High School), 5.55%, 2019 1,000,000 1,055,450 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Xaverian Brothers High School), 5.65%, 2029 1,000,000 1,038,010 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Middlesex School Education Project, 5.125%, 2023 500,000 529,185 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Belmont Hill School), 5.625%, 2020 1,150,000 1,222,347 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Concord Academy), 5.5%, 2027 2,000,000 2,064,520 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Dana Hall School), 5.9%, 2007(++) 1,340,000 1,450,671 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Tabor Academy), 5.4%, 2018 1,000,000 1,049,530 - --------------------------------------------------------------------------------------------------------------------- $10,831,730 - --------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Massachusetts Development Finance Agency Rev. Owned - 0.3% (Devens Electric Systems), 5.625%, 2016 $725,000 $774,539 - --------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Massachusetts State Water Pollution Abatement Revenue - 5.6% Trust, (Pool Program Bonds), "10", 5%, 2029 $1,000,000 $1,036,890 - --------------------------------------------------------------------------------------------------------------------- Massachusetts State Water Pollution Abatement Trust, MWRA Program, "A", 5%, 2032 1,510,000 1,551,812 - --------------------------------------------------------------------------------------------------------------------- Massachusetts State Water Resources Authority, "B", MBIA, 5%, 2035 1,000,000 1,034,380 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Water Pollution Abatement Trust (Pool Program Bonds), "10", 5%, 2034 1,000,000 1,033,050 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Water Pollution Abatement Trust, Series "5", 5.75%, 2009(++) 975,000 1,083,488 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Water Pollution Abatement Trust, Unrefunded Balance, Series "5", 5.75%, 2017 25,000 27,505 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, "A", FGIC, 6%, 2010(++) 1,000,000 1,129,220 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, General, "J", FSA, 5%, 2023 500,000 523,035 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, RITES, FGIC, 9.916%, 2019+(+) 4,010,000 5,663,724 - --------------------------------------------------------------------------------------------------------------------- Springfield, MA, Street & Sewer Commission, General, "A", AMBAC, 5%, 2021 1,000,000 1,057,240 - --------------------------------------------------------------------------------------------------------------------- $14,140,344 - --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $225,218,787) $241,630,948 - --------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.8% - --------------------------------------------------------------------------------------------------------------------- Massachusetts Health & Higher Educational Facilities Authority Rev., Capital Assets Program, "D", 2.24%, due 4/01/05 $6,500,000 $6,500,000 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, 2.23%, due 4/06/05 200,000 200,000 - --------------------------------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority Rev., 2.23%, due 4/06/05 195,000 195,000 - --------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes (Identified Cost, $6,895,000) $6,895,000 - --------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $232,113,787) $248,525,948 - --------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.9% 2,342,838 - --------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $250,868,786 - --------------------------------------------------------------------------------------------------------------------- Portfolio Footnotes: * Non-income producing security - in default. (+) Inverse floating rate security. (++) Refunded bond. + Restricted security. ## SEC Rule 144A restriction. The following abbreviations are used in the Portfolio of Investments and are defined: ETM -- Escrowed-to-maturity COP -- Certificate of Participation Insurers: Inverse Floaters: AMBAC -- AMBAC Indemnity Corp. LEVRRS -- Leveraged Reverse Rate Securities ASST GTY -- Asset Guaranty Insurance Co. RIBS -- Residual Interest Bonds CHFC -- California Health Facilities Construction Program RITES -- Residual Interest Tax-Exempt Securities CNIE LEE -- Connie Lee ROLS -- Residual Option Longs FGIC -- Financial Guaranty Insurance Co. FHA -- Federal Housing Administration FNMA -- Federal National Mortgage Assn. FSA -- Financial Security Assurance, Inc. GNMA -- Government National Mortgage Assn. LOC -- Letter of Credit MBIA -- Municipal Bond Investors Corp. XLCA -- XL Capital Insurance Co. SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENTS 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 3/31/05 FUND FUND FUND FUND ASSETS Investments - Identified cost $85,478,388 $129,093,564 $371,008,139 $81,244,379 - --------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) 5,788,340 9,321,048 20,757,451 4,594,997 - --------------------------------------------------------------------------------------------------------------------------- Total investments, at value $91,266,728 $138,414,612 $391,765,590 $85,839,376 - --------------------------------------------------------------------------------------------------------------------------- Cash 29,894 34,783 10,690 57,024 - --------------------------------------------------------------------------------------------------------------------------- Receivable for investments sold 673,757 6,870 3,512,023 190,199 - --------------------------------------------------------------------------------------------------------------------------- Receivable for fund shares sold 62,791 44,676 130,348 72,151 - --------------------------------------------------------------------------------------------------------------------------- Interest receivable 1,330,352 1,911,278 4,816,838 1,540,905 - --------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on interest rate swaps 80,896 148,424 88,225 107,019 - --------------------------------------------------------------------------------------------------------------------------- Other assets 553 -- 1,779 679 - --------------------------------------------------------------------------------------------------------------------------- Total assets $93,444,971 $140,560,643 $400,325,493 $87,807,353 - --------------------------------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $137,599 $199,586 $697,551 $173,272 - --------------------------------------------------------------------------------------------------------------------------- Payable for investments purchased 518,635 1,805,412 1,000,000 -- - --------------------------------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 75,879 101,184 707,620 87,588 - --------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swaps 4,658 15,924 98,583 4,658 - --------------------------------------------------------------------------------------------------------------------------- Payable to affiliates - Management fee 758 1,133 3,262 719 - --------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 11,643 21,631 38,588 11,608 - --------------------------------------------------------------------------------------------------------------------------- Distribution and service fee 942 3,866 22,078 953 - --------------------------------------------------------------------------------------------------------------------------- Administrative fee 41 50 148 32 - --------------------------------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 77,272 77,379 122,775 64,448 - --------------------------------------------------------------------------------------------------------------------------- Total liabilities $827,427 $2,226,165 $2,690,605 $343,278 - --------------------------------------------------------------------------------------------------------------------------- Net assets $92,617,544 $138,334,478 $397,634,888 $87,464,075 - --------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $86,963,870 $129,840,266 $377,110,729 $83,930,513 - --------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on investments 5,864,578 9,453,548 20,747,093 4,697,359 - --------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net realized gain (loss) on investments (45,909) (986,264) 492,646 (1,065,778) - --------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed (distributions in excess of) net investment income (164,995) 26,928 (715,580) (98,019) - --------------------------------------------------------------------------------------------------------------------------- Net assets $92,617,544 $138,334,478 $397,634,888 $87,464,075 - ---------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA FUND FUND FUND FUND Shares of beneficial interest outstanding Class A 7,294,371 12,500,592 50,215,656 6,843,870 - --------------------------------------------------------------------------------------------------------------------------- Class B 1,423,066 1,106,332 11,750,779 1,821,054 - --------------------------------------------------------------------------------------------------------------------------- Class C -- -- 5,619,565 -- - --------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 8,717,437 13,606,924 67,586,000 8,664,924 - --------------------------------------------------------------------------------------------------------------------------- Net assets Class A $77,499,361 $127,075,167 $295,331,566 $69,082,330 - --------------------------------------------------------------------------------------------------------------------------- Class B 15,118,183 11,259,311 69,141,815 18,381,745 - --------------------------------------------------------------------------------------------------------------------------- Class C -- -- 33,161,507 -- - --------------------------------------------------------------------------------------------------------------------------- Total net assets $92,617,544 $138,334,478 $397,634,888 $87,464,075 - --------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $10.62 $10.17 $5.88 $10.09 - --------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25 of net asset value per share) $11.15 $10.68 $6.17 $10.59 - --------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $10.62 $10.18 $5.88 $10.09 - --------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $-- $5.90 $-- - --------------------------------------------------------------------------------------------------------------------------- On sales of $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
Statements of Assets and Liabilities - continued
GEORGIA MARYLAND MASSACHUSETTS At 3/31/05 FUND FUND FUND ASSETS Investments - Identified cost $61,387,761 $142,324,080 $232,113,787 - ---------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) 4,515,806 9,997,924 16,412,161 - ---------------------------------------------------------------------------------------------------------------- Total investments, at value $65,903,567 $152,322,004 $248,525,948 - ---------------------------------------------------------------------------------------------------------------- Cash 41,290 7,637 45,919 - ---------------------------------------------------------------------------------------------------------------- Receivable for investments sold -- -- 5,000 - ---------------------------------------------------------------------------------------------------------------- Receivable for fund shares sold 21,623 25,381 117,450 - ---------------------------------------------------------------------------------------------------------------- Interest receivable 1,146,397 1,954,116 3,764,356 - ---------------------------------------------------------------------------------------------------------------- Unrealized appreciation on interest rate swaps 70,383 42,060 199,588 - ---------------------------------------------------------------------------------------------------------------- Other assets 472 974 1,672 - ---------------------------------------------------------------------------------------------------------------- Total assets $67,183,732 $154,352,172 $252,659,933 - ---------------------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $83,613 $248,329 $451,484 - ---------------------------------------------------------------------------------------------------------------- Payable for investments purchased 490,000 3,924,225 1,032,430 - ---------------------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 53,296 86,165 115,877 - ---------------------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swaps 5,308 12,945 73,582 - ---------------------------------------------------------------------------------------------------------------- Payable to affiliates - Management fee 544 1,230 2,056 - ---------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 10,493 14,625 21,503 - ---------------------------------------------------------------------------------------------------------------- Distribution and service fee 727 1,892 3,123 - ---------------------------------------------------------------------------------------------------------------- Administrative fee 23 56 93 - ---------------------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 70,229 86,405 90,999 - ---------------------------------------------------------------------------------------------------------------- Total liabilities $714,233 $4,375,872 $1,791,147 - ---------------------------------------------------------------------------------------------------------------- Net assets $66,469,499 $149,976,300 $250,868,786 - ---------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $62,244,767 $140,568,715 $235,163,407 - ---------------------------------------------------------------------------------------------------------------- Unrealized appreciation on investments 4,580,881 10,027,039 16,538,167 - ---------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (173,142) (287,812) (318,252) - ---------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (183,007) (331,642) (514,536) - ---------------------------------------------------------------------------------------------------------------- Net assets $66,469,499 $149,976,300 $250,868,786 - ----------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND Shares of beneficial interest outstanding Class A 4,840,122 10,810,865 18,574,432 - ---------------------------------------------------------------------------------------------------------------- Class B 1,207,294 2,238,535 3,598,262 - ---------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 6,047,416 13,049,400 22,172,694 - ---------------------------------------------------------------------------------------------------------------- Net assets Class A $53,189,501 $124,260,632 $210,102,898 - ---------------------------------------------------------------------------------------------------------------- Class B 13,279,998 25,715,668 40,765,888 - ---------------------------------------------------------------------------------------------------------------- Total net assets $66,469,499 $149,976,300 $250,868,786 - ---------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $10.99 $11.49 $11.31 - ---------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25 of net asset value per share) $11.54 $12.06 $11.87 - ---------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $11.00 $11.49 $11.33 - ---------------------------------------------------------------------------------------------------------------- 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 STATEMENTS 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 3/31/05 NET INVESTMENT INCOME Interest $5,021,991 $7,198,215 $22,709,308 $4,728,440 - ----------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $521,011 $775,862 $2,265,431 $494,950 - ----------------------------------------------------------------------------------------------------------------------------- Trustees" compensation 4,369 6,417 12,681 5,857 - ----------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 113,606 162,354 473,326 106,298 - ----------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) 195,922 129,508 301,754 -- - ----------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 163,522 98,531 634,733 152,286 - ----------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class C) -- -- 341,679 -- - ----------------------------------------------------------------------------------------------------------------------------- Administrative fee 7,508 11,243 32,691 7,186 - ----------------------------------------------------------------------------------------------------------------------------- Custodian fee 37,070 53,103 142,251 33,592 - ----------------------------------------------------------------------------------------------------------------------------- Printing 7,375 11,564 36,507 8,476 - ----------------------------------------------------------------------------------------------------------------------------- Postage 3,707 2,954 18,273 1,755 - ----------------------------------------------------------------------------------------------------------------------------- Auditing fees 46,804 44,763 47,014 45,297 - ----------------------------------------------------------------------------------------------------------------------------- Legal fees 5,948 5,234 20,388 2,431 - ----------------------------------------------------------------------------------------------------------------------------- Miscellaneous 52,637 53,340 76,273 36,561 - ----------------------------------------------------------------------------------------------------------------------------- Total expenses $1,159,479 $1,354,873 $4,403,001 $894,689 - ----------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (2,447) (3,493) (9,208) (3,297) - ----------------------------------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (237,366) (353,261) (1,031,477) (225,523) - ----------------------------------------------------------------------------------------------------------------------------- Net expenses $919,666 $998,119 $3,362,316 $665,869 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income $4,102,325 $6,200,096 $19,346,992 $4,062,571 - ----------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) (identified cost basis) - Investment transactions $637,046 $808,733 $3,172,621 $989,592 - ----------------------------------------------------------------------------------------------------------------------------- Swap transactions (317,176) (831,018) (476,964) (448,208) - ----------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $319,870 $(22,285) $2,695,657 $541,384 - ----------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $(2,793,720) $(4,180,546) $(11,319,849) $(2,728,107) - ----------------------------------------------------------------------------------------------------------------------------- Swap transactions 475,294 611,024 869,313 596,133 - ----------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(2,318,426) $(3,569,522) $(10,450,536) $(2,131,974) - ----------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(1,998,556) $(3,591,807) $(7,754,879) $(1,590,590) - ----------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $2,103,769 $2,608,289 $11,592,113 $2,471,981 - ----------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statements of Operations - continued GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND For year ending 3/31/05 NET INVESTMENT INCOME Interest $3,570,536 $8,462,589 $13,657,506 - ------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $376,168 $868,154 $1,412,732 - ------------------------------------------------------------------------------------------------------------------- Trustees" compensation 4,304 7,134 12,302 - ------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 82,910 180,788 212,133 - ------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) 133,279 449,994 749,983 - ------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 150,768 290,651 425,537 - ------------------------------------------------------------------------------------------------------------------- Administrative fee 5,425 12,519 20,378 - ------------------------------------------------------------------------------------------------------------------- Custodian fee 29,033 57,319 90,218 - ------------------------------------------------------------------------------------------------------------------- Printing 5,423 19,207 24,921 - ------------------------------------------------------------------------------------------------------------------- Postage 1,775 4,945 4,049 - ------------------------------------------------------------------------------------------------------------------- Auditing fees 46,872 46,824 44,295 - ------------------------------------------------------------------------------------------------------------------- Legal fees 6,079 7,605 6,845 - ------------------------------------------------------------------------------------------------------------------- Miscellaneous 42,448 43,035 82,384 - ------------------------------------------------------------------------------------------------------------------- Total expenses $884,484 $1,988,175 $3,085,777 - ------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (2,166) (3,802) (5,881) - ------------------------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (171,316) (395,857) (643,220) - ------------------------------------------------------------------------------------------------------------------- Net expenses $711,002 $1,588,516 $2,436,676 - ------------------------------------------------------------------------------------------------------------------- Net investment income $2,859,534 $6,874,073 $11,220,830 - ------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) (identified cost basis)- Investment transactions $513,151 $1,359,552 $1,156,752 - ------------------------------------------------------------------------------------------------------------------- Swap transactions (375,993) (575,000) (577,012) - ------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $137,158 $784,552 $579,740 - ------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $(2,079,639) $(4,804,286) $(6,617,250) - ------------------------------------------------------------------------------------------------------------------- Swap transactions 424,142 434,191 898,523 - ------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(1,655,497) $(4,370,095) $(5,718,727) - ------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(1,518,339) $(3,585,543) $(5,138,987) - ------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $1,341,195 $3,288,530 $6,081,843 - ------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------------------------------------------------
ALABAMA ARKANSAS CALIFORNIA FLORIDA FUND FUND FUND FUND For year ended 3/31/05 CHANGE IN NET ASSETS OPERATIONS Net investment income $4,102,325 $6,200,096 $19,346,992 $4,062,571 - ------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 319,870 (22,285) 2,695,657 541,384 - ------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments (2,318,426) (3,569,522) (10,450,536) (2,131,974) - ------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $2,103,769 $2,608,289 $11,592,113 $2,471,981 - ------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(3,487,315) $(5,765,824) $(14,446,017) $(3,284,555) - ------------------------------------------------------------------------------------------------------------------------- Class B (604,659) (425,966) (3,065,257) (773,814) - ------------------------------------------------------------------------------------------------------------------------- Class C -- -- (1,327,738) -- - ------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (270,143) -- -- -- - ------------------------------------------------------------------------------------------------------------------------- Class B (56,021) -- -- -- - ------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(4,418,138) $(6,191,790) $(18,839,012) $(4,058,369) - ------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $8,259,350 $11,546,464 $27,789,022 $11,762,373 - ------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 2,840,711 4,099,667 11,063,366 2,029,002 - ------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (14,211,009) (25,615,407) (69,550,092) (26,207,969) - ------------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(3,110,948) $(9,969,276) $(30,697,704) $(12,416,594) - ------------------------------------------------------------------------------------------------------------------------- Redemption fees $-- $91 $1,866 $-- - ------------------------------------------------------------------------------------------------------------------------- Total change in net assets $(5,425,317) $(13,552,686) $(37,942,737) $(14,002,982) - ------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 98,042,861 151,887,164 435,577,625 101,467,057 - ------------------------------------------------------------------------------------------------------------------------- At end of period $92,617,544 $138,334,478 $397,634,888 $87,464,075 - ------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed (distributions in excess of) net investment income included in net assets at end of period $(164,995) $26,928 $(715,580) $(98,019) - ------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND For year ended 3/31/05 CHANGE IN NET ASSETS OPERATIONS Net investment income $2,859,534 $6,874,073 $11,220,830 - --------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 137,158 784,552 579,740 - --------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments (1,655,497) (4,370,095) (5,718,727) - --------------------------------------------------------------------------------------------------------------- Change in net assets from operations $1,341,195 $3,288,530 $6,081,843 - --------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(2,302,371) $(5,719,390) $(9,525,974) - --------------------------------------------------------------------------------------------------------------- Class B (538,120) (1,103,829) (1,614,570) - --------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- (49,124) -- - --------------------------------------------------------------------------------------------------------------- Class B -- (11,124) -- - --------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(2,840,491) $(6,883,467) $(11,140,544) - --------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $4,007,035 $7,869,461 $15,147,404 - --------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 1,956,777 4,346,146 5,925,507 - --------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (10,413,486) (28,541,821) (36,322,806) - --------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(4,449,674) $(16,326,214) $(15,249,895) - --------------------------------------------------------------------------------------------------------------- Redemption fees $61 $-- $926 - --------------------------------------------------------------------------------------------------------------- Total change in net assets $(5,948,909) $(19,921,151) $(20,307,670) - --------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 72,418,408 169,897,451 271,176,456 - --------------------------------------------------------------------------------------------------------------- At end of period $66,469,499 $149,976,300 $250,868,786 - --------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(183,007) $(331,642) $(514,536) - --------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENTS 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 CHANGE IN NET ASSETS 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) - ------------------------------------------------------------------------------------------------------------------------- Change 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) - ------------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(3,105,529) $5,199,101 $(38,348,403) $(10,177,495) - ------------------------------------------------------------------------------------------------------------------------- Total change 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
Statements of Changes in Net Assets - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND For year ended 3/31/04 CHANGE IN NET ASSETS OPERATIONS Net investment income $3,053,920 $7,304,054 $11,933,918 - --------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 130,924 647,406 757,334 - --------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments 196,883 233,396 223,258 - --------------------------------------------------------------------------------------------------------------- Change 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) - --------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(3,604,840) $(3,556,215) $(10,750,406) - --------------------------------------------------------------------------------------------------------------- Total change 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
- ----------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ALABAMA MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------- The financial highlights table is intended to help you understand each funds" 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 funds" independent registered public accounting firm, whose report, together with each fund's financial statements, are included in this report. For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.88 $10.82 $10.31 $10.53 $10.00 - ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.48 $0.48 $0.48 $0.51 $0.54 - ----------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.22) 0.06 0.54 (0.19) 0.53 - ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.26 $0.54 $1.02 $0.32 $1.07 - ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.48) $(0.48) $(0.50) $(0.54) $(0.54) - ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.04) -- (0.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ -- - ----------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.52) $(0.48) $(0.51) $(0.54) $(0.54) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.62 $10.88 $10.82 $10.31 $10.53 - ----------------------------------------------------------------------------------------------------------------------------- Total return (%)(+)& 2.40 5.11 10.06 3.05 11.00 - ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.84 0.88 0.88 0.88 0.86 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.46 4.38 4.49 4.87 5.25 - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 17 10 21 20 17 - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $77,499 $80,704 $84,474 $83,146 $81,615 - ----------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.45 $0.45 $0.46 $0.49 $0.52 - ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.09 1.09 1.08 1.08 1.06 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.21 4.17 4.29 4.67 5.05 - ----------------------------------------------------------------------------------------------------------------------------- (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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ALABAMA MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.88 $10.82 $10.31 $10.53 $10.00 - --------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.40 $0.39 $0.40 $0.43 $0.46 - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.23) 0.07 0.54 (0.19) 0.53 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.17 $0.46 $0.94 $0.24 $0.99 - --------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.39) $(0.40) $(0.42) $(0.46) $(0.46) - --------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.04) -- (0.01) -- -- - --------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ -- - --------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.43) $(0.40) $(0.43) $(0.46) $(0.46) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.62 $10.88 $10.82 $10.31 $10.53 - --------------------------------------------------------------------------------------------------------------------------- Total return (%)& 1.63 4.32 9.14 2.38 10.17 - --------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.59 1.63 1.63 1.63 1.61 - --------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.71 3.63 3.74 4.09 4.50 - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 17 10 21 20 17 - --------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $15,118 $17,339 $16,163 $13,579 $12,531 - --------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.37 $0.37 $0.38 $0.41 $0.46 - --------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.84 1.83 1.83 1.83 1.81 - --------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.46 3.43 3.54 3.89 4.30 - --------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ARKANSAS MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.41 $10.40 $9.97 $10.08 $9.61 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.45 $0.47 $0.51 $0.51 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.23) 0.01 0.46 (0.11) 0.47 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.22 $0.46 $0.93 $0.40 $0.98 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.46) $(0.45) $(0.50) $(0.51) $(0.51) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.17 $10.41 $10.40 $9.97 $10.08 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)(+)& 2.14 4.53 9.51 4.06 10.45 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.65 0.72 0.73 0.72 0.70 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.47 4.31 4.59 5.05 5.25 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 13 19 15 15 12 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $127,075 $139,333 $134,521 $119,328 $113,928 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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 $0.43 $0.45 $0.49 $0.49 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.90 0.92 0.93 0.92 0.90 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.22 4.11 4.39 4.85 5.05 - ------------------------------------------------------------------------------------------------------------------------------ (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 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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ARKANSAS MUNICIPAL BOND FUND - ----------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.42 $10.41 $9.98 $10.09 $9.62 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.38 $0.37 $0.39 $0.43 $0.44 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.24) 0.01 0.46 (0.11) 0.46 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.14 $0.38 $0.85 $0.32 $0.90 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.38) $(0.37) $(0.42) $(0.43) $(0.43) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.18 $10.42 $10.41 $9.98 $10.09 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)& 1.37 3.68 8.62 3.24 9.59 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.41 1.53 1.54 1.50 1.47 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.71 3.50 3.77 4.26 4.49 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 13 19 15 15 12 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $11,259 $12,554 $12,049 $8,700 $9,822 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.35 $0.34 $0.37 $0.41 $0.42 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.66 1.73 1.74 1.70 1.67 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.46 3.30 3.57 4.06 4.29 - ------------------------------------------------------------------------------------------------------------------------------ (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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $5.98 $5.96 $5.70 $5.81 $5.52 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.29 $0.28 $0.28 $0.28 $0.28 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.11) 0.02 0.27 (0.10) 0.30 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.18 $0.30 $0.55 $0.18 $0.58 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.28) $(0.28) $(0.29) $(0.28) $(0.29) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- -- (0.01) -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.28) $(0.28) $(0.29) $(0.29) $(0.29) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $5.88 $5.98 $5.96 $5.70 $5.81 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)(+)& 3.14 5.22 9.79 3.11 10.78 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.61 0.67 0.67 0.67 0.62 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.91 4.71 4.73 4.87 5.08 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 12 8 22 12 21 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $295,332 $314,108 $333,350 $305,699 $293,137 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.27 $0.27 $0.27 $0.27 $0.27 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.86 0.87 0.87 0.87 0.87 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.66 4.51 4.53 4.67 4.83 - ------------------------------------------------------------------------------------------------------------------------------ (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 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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $5.98 $5.96 $5.70 $5.81 $5.52 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.25 $0.23 $0.23 $0.24 $0.24 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.11) 0.03 0.27 (0.11) 0.30 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.14 $0.26 $0.50 $0.13 $0.54 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.24) $(0.24) $(0.24) $(0.23) $(0.25) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- -- (0.01) -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.24) $(0.24) $(0.24) $(0.24) $(0.25) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $5.88 $5.98 $5.96 $5.70 $5.81 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)& 2.38 4.38 8.93 2.30 9.93 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.34 1.47 1.46 1.45 1.39 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.17 3.91 3.94 4.09 4.31 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 12 8 22 12 21 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $69,142 $85,106 $98,888 $84,123 $80,473 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.23 $0.22 $0.22 $0.23 $0.23 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.59 1.67 1.66 1.65 1.64 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.92 3.71 3.74 3.89 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 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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS C 2005 2004 2003 2002 2001 Net asset value, beginning of period $6.00 $5.98 $5.72 $5.83 $5.53 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.24 $0.23 $0.23 $0.23 $0.23 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.11) 0.02 0.27 (0.10) 0.31 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.13 $0.25 $0.50 $0.13 $0.54 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.23) $(0.23) $(0.24) $(0.23) $(0.24) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- -- (0.01) -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.23) $(0.23) $(0.24) $(0.24) $(0.24) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $5.90 $6.00 $5.98 $5.72 $5.83 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)& 2.22 4.27 8.78 2.17 9.97^ - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.51 1.56 1.57 1.57 1.52 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.01 3.81 3.83 3.97 4.21 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 12 8 22 12 21 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $33,162 $36,363 $40,804 $35,022 $33,056 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.22 $0.22 $0.22 $0.22 $0.22 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.76 1.77 1.77 1.77 1.77 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.76 3.60 3.63 3.77 3.96 - ------------------------------------------------------------------------------------------------------------------------------ (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 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. ^ The total return previously reported for the year ended March 31, 2001 has been revised, from 9.96% to 9.97%. +++ 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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) FLORIDA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.24 $10.19 $9.78 $9.95 $9.47 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.47 $0.47 $0.48 $0.50 $0.50 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.15) 0.05 0.44 (0.16) 0.49 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.32 $0.52 $0.92 $0.34 $0.99 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.47) $(0.47) $(0.51) $(0.51) $(0.51) - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.09 $10.24 $10.19 $9.78 $9.95 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)(+)& 3.25 5.20 9.40 3.52^ 10.72 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.57 0.64 0.62 0.63 0.63 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.68 4.58 4.78 5.09 5.23 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 18 31 27 16 18 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $69,082 $79,155 $86,045 $69,959 $66,807 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.45 $0.45 $0.46 $0.48 $0.48 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.82 0.85 0.82 0.83 0.83 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.43 4.37 4.58 4.89 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. ^ The total return previously reported for the year ended March 31, 2002 has been revised, from 3.41% to 3.52%. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. (+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) FLORIDA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.24 $10.19 $9.78 $9.95 $9.47 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.40 $0.39 $0.40 $0.43 $0.42 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.16) 0.05 0.43 (0.17) 0.49 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.24 $0.44 $0.83 $0.26 $0.91 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.39) $(0.39) $(0.42) $(0.43) $(0.43) - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.09 $10.24 $10.19 $9.78 $9.95 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)& 2.45 4.36 8.64 2.58 9.84 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.34 1.44 1.42 1.43 1.43 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.92 3.78 3.97 4.29 4.43 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 18 31 27 16 18 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $18,382 $22,312 $25,175 $22,151 $23,820 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.37 $0.37 $0.38 $0.41 $0.41 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.59 1.64 1.62 1.63 1.63 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.67 3.58 3.77 4.09 4.23 - ------------------------------------------------------------------------------------------------------------------------------ (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) GEORGIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.22 $11.17 $10.63 $10.82 $10.26 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.48 $0.49 $0.49 $0.50 $0.52 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.23) 0.05 0.55 (0.17) 0.56 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.25 $0.54 $1.04 $0.33 $1.08 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.48) $(0.49) $(0.50) $(0.51) $(0.52) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- -- (0.01) -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.48) $(0.49) $(0.50) $(0.52) $(0.52) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.99 $11.22 $11.17 $10.63 $10.82 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)(+)& 2.27 4.93 9.97 3.03 10.80 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.88 0.91 0.92 0.93 0.90 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.35 4.35 4.43 4.67 4.95 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 18 12 25 19 24 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $53,190 $55,659 $57,636 $54,179 $52,236 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.45 $0.46 $0.47 $0.48 $0.50 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.13 1.12 1.12 1.13 1.10 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.10 4.14 4.23 4.47 4.75 - ------------------------------------------------------------------------------------------------------------------------------ (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 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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) GEORGIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.23 $11.18 $10.64 $10.83 $10.27 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.40 $0.40 $0.40 $0.42 $0.45 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.24) 0.06 0.56 (0.18) 0.55 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.16 $0.46 $0.96 $0.24 $1.00 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.39) $(0.41) $(0.42) $(0.42) $(0.44) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- -- (0.01) -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.39) $(0.41) $(0.42) $(0.43) $(0.44) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.00 $11.23 $11.18 $10.64 $10.83 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)& 1.51 4.15 9.15 2.26 9.97 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.63 1.66 1.67 1.68 1.65 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.60 3.60 3.68 3.91 4.25 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 18 12 25 19 24 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $13,280 $16,759 $18,077 $16,031 $17,376 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.37 $0.38 $0.38 $0.40 $0.43 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.88 1.86 1.87 1.88 1.85 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.35 3.40 3.48 3.71 4.05 - ------------------------------------------------------------------------------------------------------------------------------ (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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MARYLAND MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.74 $11.69 $11.21 $11.35 $10.81 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.52 $0.51 $0.52 $0.54 $0.54 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.25) 0.06 0.50 (0.14) 0.54 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.27 $0.57 $1.02 $0.40 $1.08 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.51) $(0.52) $(0.54) $(0.54) $(0.54) - ------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (0.01) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.52) $(0.52) $(0.54) $(0.54) $(0.54) - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.49 $11.74 $11.69 $11.21 $11.35 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)(+)& 2.36 4.96 9.21 3.59 10.26 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.89 0.96 0.95 0.95 0.95 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.48 4.35 4.51 4.73 4.96 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 12 21 12 8 14 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $124,261 $138,201 $138,666 $128,750 $125,316 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.49 $0.49 $0.50 $0.52 $0.52 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.14 1.17 1.15 1.15 1.15 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.23 4.14 4.31 4.53 4.76 - ------------------------------------------------------------------------------------------------------------------------------ (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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MARYLAND MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.74 $11.68 $11.20 $11.34 $10.81 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.44 $0.43 $0.45 $0.46 $0.47 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.25) 0.07 0.49 (0.13) 0.53 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.19 $0.50 $0.94 $0.33 $1.00 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.44) $(0.44) $(0.46) $(0.47) $(0.47) - ------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments $(0.00)+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.44) $(0.44) $(0.46) $(0.47) $(0.47) - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.49 $11.74 $11.68 $11.20 $11.34 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)& 1.69 4.37 8.52 2.92 9.46 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.54 1.61 1.60 1.60 1.60 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.83 3.70 3.86 4.08 4.30 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 12 21 12 8 14 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $25,716 $31,697 $34,033 $31,542 $28,859 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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 $0.41 $0.42 $0.44 $0.47 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.79 1.81 1.80 1.80 1.80 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.58 3.50 3.66 3.88 4.10 - ------------------------------------------------------------------------------------------------------------------------------ (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 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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.52 $11.49 $10.90 $11.11 $10.60 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.51 $0.51 $0.52 $0.53 $0.55 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.22) 0.03 0.60 (0.21) 0.52 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.29 $0.54 $1.12 $0.32 $1.07 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.50) $(0.51) $(0.53) $(0.52) $(0.56) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- -- (0.01) -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.50) $(0.51) $(0.53) $(0.53) $(0.56) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.31 $11.52 $11.49 $10.90 $11.11 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)(+)& 2.63 4.82 10.42 2.93 10.44 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.84 0.95 0.92 0.92 0.92 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.48 4.39 4.56 4.73 5.10 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 11 14 15 13 22 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $210,103 $224,923 $233,500 $210,269 $216,272 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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 $0.48 $0.49 $0.51 $0.53 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.09 1.16 1.12 1.12 1.12 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 4.23 4.18 4.36 4.53 4.90 - ------------------------------------------------------------------------------------------------------------------------------ (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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.54 $11.51 $10.92 $11.12 $10.60 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.43 $0.43 $0.44 $0.46 $0.48 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (0.21) 0.04 0.60 (0.20) 0.53 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $0.22 $0.47 $1.04 $0.26 $1.01 - ------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.43) $(0.44) $(0.45) $(0.45) $(0.49) - ------------------------------------------------------------------------------------------------------------------------------ In excess of net investment income -- -- -- (0.01) -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(0.43) $(0.44) $(0.45) $(0.46) $(0.49) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.33 $11.54 $11.51 $10.92 $11.12 - ------------------------------------------------------------------------------------------------------------------------------ Total return (%)& 1.97 4.14 9.69 2.35 9.82^ - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.49 1.60 1.57 1.57 1.57 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.83 3.74 3.91 4.13 4.45 - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover 11 14 15 13 22 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000 Omitted) $40,766 $46,253 $47,612 $37,487 $30,057 - ------------------------------------------------------------------------------------------------------------------------------ (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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 $0.41 $0.42 $0.44 $0.46 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.74 1.80 1.77 1.77 1.77 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income(S)(S) 3.58 3.54 3.71 3.93 4.25 - ------------------------------------------------------------------------------------------------------------------------------ (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. ^ The total return previously reported for the year ended March 31, 2001 has been revised, from (9.82)% to 9.82%. +++ 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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. 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 U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Because each fund invests primarily in the securities of a single state and its political subdivisions, each fund is vulnerable to the effects of changes in the legal and economic environment of the particular state. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the projects or assets or the inability to collect revenues for the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline in value. Investment Valuations - 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. 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 approximates market value as determined by the Board of Trustees. When pricing service information or market quotations are not readily available, securities are priced at fair value as determined under the direction of 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. The funds may use swaps for both hedging and non-hedging purposes. For hedging purposes, each fund may use swaps to reduce its exposure to interest and foreign exchange 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 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 Swaps - Each 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. Short Term Fees - For purchases made on or after July 1, 2004 and before April 1, 2005, each fund charged a 2% redemption fee (which was retained by each fund) on proceeds from Class A, Class B, and Class C shares redeemed or exchanged within 5 business days following their acquisition (either by purchase or exchange). Effective April 1, 2005, each fund will no longer charge a redemption fee. See the funds" prospectus for details. Any redemption fees charged are accounted for as an addition to paid-in-capital. Investment Transactions and Income - Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. 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. Each fund may receive proceeds from litigation settlements involving its portfolio holdings. Any proceeds received are reflected in realized gain/loss in the statement of operations, or in unrealized gain/loss if the security is still held by the fund. 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, 2005, 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, net operating losses, expiration of capital loss carry forward, treating a portion of the proceeds from redemptions as a distribution for tax purposes, and amortization and accretion on debt securities. The tax character of distributions declared for the years ended March 31, 2005 and March 31, 2004 was as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS YEAR ENDED 3/31/05 FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Distributions declared from: Tax-exempt income $4,028,102 $5,977,001 $18,783,159 $4,058,369 $2,840,491 $6,753,147 $10,888,037 - ---------------------------------------------------------------------------------------------------------------------------------- Long-term capital gain 326,164 -- -- -- -- 60,248 -- - ---------------------------------------------------------------------------------------------------------------------------------- Ordinary income 63,872 214,789 55,853 -- -- 70,072 252,507 - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions declared $4,418,138 $6,191,790 $18,839,012 $4,058,369 $2,840,491 $6,883,467 $11,140,544 - ---------------------------------------------------------------------------------------------------------------------------------- YEAR ENDED 3/31/04 - ---------------------------------------------------------------------------------------------------------------------------------- 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 - ---------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2005, the following amounts were reclassified due to differences between book and tax accounting for amortization and accretion on debt securities, expiration of capital loss carry forward, derivatives, defaulted bonds, net operating losses, distributions in excess of realized capital gains, and treating a portion of the proceeds from redemptions as a distribution for tax purposes: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease): Paid-in capital $(74,123) $34,245 $249,161 $(2,007) $(11,069) $(323,530) $58,451 - ---------------------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments 39,659 (226,203) (301,749) (62,938) 10,035 338,696 (42,576) - ---------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed distributions in excess of net investment income 34,464 191,958 52,588 64,945 1,034 (15,166) (15,875) - ---------------------------------------------------------------------------------------------------------------------------------- These changes had no effect on the net assets or net asset value per share of the funds. As of March 31, 2005, 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 $270,804 $550,797 $836,932 $188,923 $67,059 $227,044 $389,414 - ---------------------------------------------------------------------------------------------------------------------------------- Undistributed ordinary income -- -- -- 49,709 -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Undistributed long-term capital gain -- -- 657,132 -- -- -- 92,360 - ---------------------------------------------------------------------------------------------------------------------------------- Capital loss carryforward -- (532,845) (229,685) (1,067,421) (171,792) (400,494) -- - ---------------------------------------------------------------------------------------------------------------------------------- Post-October capital loss deferral (77,028) (490,965) -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Unrealized gain (loss) 5,818,060 9,356,495 20,815,088 4,595,215 4,513,756 10,108,507 15,998,051 - ---------------------------------------------------------------------------------------------------------------------------------- Other temporary differences (358,162) (389,270) (1,555,308) (232,864) (184,291) (527,472) (774,446) - ---------------------------------------------------------------------------------------------------------------------------------- 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 on: ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND EXPIRATION DATE FUND FUND* FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------ March 31, 2006 $-- $-- $(781,761) $-- $-- - ------------------------------------------------------------------------------------------------------------------ March 31, 2007 -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------ March 31, 2008 -- (229,685) -- -- -- - ------------------------------------------------------------------------------------------------------------------ March 31, 2009 -- -- -- (171,792) (400,494) - ------------------------------------------------------------------------------------------------------------------ March 31, 2010 -- -- (164,025) -- -- - ------------------------------------------------------------------------------------------------------------------ March 31, 2011 -- -- (121,635) -- -- - ------------------------------------------------------------------------------------------------------------------ March 31, 2012 (532,845) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------ Total $(532,845) $(229,685) $(1,067,421) $(171,792) $(400,494) - ------------------------------------------------------------------------------------------------------------------ * The availability of a portion of the capital loss carryforwards which were acquired on March 9, 2001, in connection with the PaineWebber California Tax Free Fund merger, may be limited in a given year.
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 shares outstanding of each class, without distinction between share classes. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A shares approximately eight years after purchase. (3) TRANSACTIONS WITH AFFILIATES Investment Adviser - The 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. In the case of the Massachusetts Fund the reduction of expenses by the investment adviser includes a non-recurring reimbursement of prior period out-of-pocket shareholder servicing costs in the amount of $96,368. As part of a settlement agreement with the New York Attorney General concerning market timing and related matters (See Legal Proceedings footnote), MFS has agreed to reduce each fund's management fee to 0.30% of average daily net assets for the period March 1, 2004 through February 28, 2009, which is shown as a reduction of total expenses in the Statement of Operations. 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. Each fund pays compensation to its Independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons, and pays no compensation directly to its Trustees who are officers of the investment adviser, or to officers of the funds, all of whom receive remuneration for their services to the funds from MFS. Certain officers and Trustees of the funds are officers or directors of MFS, 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 Trustees" compensation is a pension expense for retired Independent Trustees for the year ended March 31, 2005:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Pension Expense $1,284 $1,177 $1,881 $1,175 $1,281 $1,851 $1,881 - ----------------------------------------------------------------------------------------------------------------------------------
These funds and certain other MFS funds (the "funds") have entered into a services agreement (the "Agreement") which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. MFS has agreed to reimburse each of the funds for a proportional share of substantially all of the payments made by the funds to Tarantino LLC and also to provide office space and other administrative support and supplies to the ICCO. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. 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. Each fund paid MFS an administrative fee up to the following annual percentage rates of the fund's average daily net assets: 4/01/04 THROUGH EFFECTIVE DATE 2/28/05 3/01/05 First $2 billion 0.01120% 0.01626% - ------------------------------------------------------------------------------- Next $2.5 billion 0.00832% 0.01206% - ------------------------------------------------------------------------------- Next $2.5 billion 0.00032% 0.00056% - ------------------------------------------------------------------------------- In excess of $7 billion 0.00000% 0.00000% - ------------------------------------------------------------------------------- For the year ended March 31, 2005, each fund paid MFS the following amounts 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 $7,508 $11,243 $32,691 $7,186 $5,425 $12,519 $20,378 - ----------------------------------------------------------------------------------------------------------------------------------- Percentage of average daily net assets 0.00793% 0.00799% 0.00794% 0.00799% 0.00793% 0.00794% 0.00793% - ----------------------------------------------------------------------------------------------------------------------------------- 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, 2005: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------------- $25,937 $38,856 $53,837 $21,523 $11,780 $25,872 $41,311 - -------------------------------------------------------------------------------------------------------------------------------
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, 2005, 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 - ------------------------------------------------------------------------------------------------------------------------------- $1,313 $1,181 $3,802 $-- $885 $3,681 $48,023 - ------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2005, 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 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, 2005 were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Class B $85 $2 $ 36 $-- $20 $187 $128 - ----------------------------------------------------------------------------------------------------------------------------------- Class C N/A N/A 1,727 N/A N/A N/A N/A - ----------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2005, 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% 0.86% 0.86% 0.77% 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 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 of purchase. MFD receives all contingent deferred sales charges. Contingent deferred sales charges imposed during the year ended March 31, 2005 were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------------ Class A $-- $ 9,620 $ 4,570 $ 1,984 $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------ Class B 55,153 29,402 166,354 46,758 31,192 51,171 75,883 - ------------------------------------------------------------------------------------------------------------------------------ Class C N/A N/A 5,788 N/A N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------------ 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 each fund's average daily net assets is set periodically under the supervision of the fund's Trustees. For the period April 1, 2004 through June 30, 2004, the fee was set at 0.10% of each fund's average daily net assets. For the period July 1, 2004 through December 31, 2004, each fund was charged up to 0.0861% of its average daily net assets. For the period January 1, 2005 through February 28, 2005, each fund was charged up to 0.1035% of its average daily net assets. Effective March 1, 2005, each fund is charged up to 0.1159% of its average daily net assets. For the year ended March 31, 2005, each fund paid MFSC the following fee for shareholder services: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Expense paid $89,133 $132,745 $387,544 $84,771 $64,346 $148,296 $241,720 - ----------------------------------------------------------------------------------------------------------------------------------- Percentage of average daily net assets 0.0941% 0.0944% 0.0941% 0.0942% 0.0941% 0.0941% 0.0941% - ----------------------------------------------------------------------------------------------------------------------------------- Shareholder service costs include out of pocket expenses and sub accounting services expenses paid by MFSC on behalf of the funds and subsequently reimbursed to MFSC which amounted to the following, as well as other costs paid by the funds directly to unaffiliated vendors for the year ended March 31, 2005: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- $12,231 $23,533 $32,469 $10,344 $16,159 $24,085 $38,228 - -----------------------------------------------------------------------------------------------------------------------------------
(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 $15,782,284 $17,463,071 $49,873,138 $15,823,105 $12,031,295 $18,604,386 $27,315,483 - ----------------------------------------------------------------------------------------------------------------------------------- Sales 19,273,041 25,029,897 85,909,122 29,798,220 15,727,941 37,761,783 45,971,564 - ----------------------------------------------------------------------------------------------------------------------------------- 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: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Aggregate cost $85,448,668 $129,058,117 $370,950,502 $81,244,161 $61,389,811 $142,213,497 $232,527,897 - ----------------------------------------------------------------------------------------------------------------------------------- Gross unrealized appreciation $6,243,366 $9,424,599 $23,696,193 $4,702,378 $4,556,143 $10,435,465 $16,747,026 - ----------------------------------------------------------------------------------------------------------------------------------- Gross unrealized depreciation (425,306) (68,104) (2,881,105) (107,163) (42,387) (326,958) (748,975) - ----------------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) $5,818,060 $9,356,495 $20,815,088 $4,595,215 $4,513,756 $10,108,507 $15,998,051 - -----------------------------------------------------------------------------------------------------------------------------------
(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 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended 3/31/05 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold 634 $6,775 996 $10,203 3,679 $21,729 972 $9,841 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 228 2,439 373 3,818 1,399 8,246 164 1,665 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (984) (10,502) (2,249) (22,990) (7,403) (43,515) (2,024) (20,329) - ----------------------------------------------------------------------------------------------------------------------------------- Net change (122) $(1,288) (880) $(8,969) (2,325) $(13,540) (888) $(8,823) - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/04 (000 Omitted) 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 8,298 179 1,822 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,322) (14,349) (1,283) (13,287) (11,257) (66,990) (2,067) (21,072) - ----------------------------------------------------------------------------------------------------------------------------------- Net change (389) $(4,215) 445 $4,701 (3,373) $(20,047) (710) $(7,226) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended 3/31/05 (000 Omitted) Shares sold 140 $1,484 131 $1,343 386 $2,273 190 $1,921 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 38 402 28 282 330 1,946 36 364 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (348) (3,709) (257) (2,625) (3,196) (18,787) (585) (5,879) - ----------------------------------------------------------------------------------------------------------------------------------- Net change (170) $(1,823) (98) $(1,000) (2,480) $(14,568) (359) $(3,594) - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/04 (000 Omitted) 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 change 100 $1,110 47 $498 (2,351) $(13,851) (291) $(2,952) - ----------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended 3/31/05 (000 Omitted) SHARES AMOUNT Shares sold 642 $3,787 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 147 871 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,231) (7,248) - ----------------------------------------------------------------------------------------------------------------------------------- Net change (442) $(2,590) - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/04 (000 Omitted) Shares sold 1,235 $7,407 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 160 955 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (2,154) (12,812) - ----------------------------------------------------------------------------------------------------------------------------------- Net change (759) $(4,450) - ----------------------------------------------------------------------------------------------------------------------------------- GEORGIA MARYLAND MASSACHUSETTS - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended 3/31/05 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold 329 $3,642 581 $6,708 1,137 $12,908 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 148 1,635 318 3,668 427 4,841 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (598) (6,574) (1,857) (21,368) (2,510) (28,364) - ----------------------------------------------------------------------------------------------------------------------------------- Net change (121) $(1,297) (958) $(10,992) (946) $(10,615) - ----------------------------------------------------------------------------------------------------------------------------------- Year ending 3/31/04 (000 Omitted) 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 change (198) $(2,221) (95) $(1,075) (803) $(9,242) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended 3/31/05 (000 Omitted) Shares sold 33 $365 101 $1,161 197 $2,239 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 29 322 59 678 95 1,085 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (347) (3,840) (622) (7,173) (702) (7,959) - ----------------------------------------------------------------------------------------------------------------------------------- Net change (285) $(3,153) (462) $(5,334) (410) $(4,635) - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/04 (000 Omitted) 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 change (124) $(1,384) (213) $(2,481) (130) $(1,508) - -----------------------------------------------------------------------------------------------------------------------------------
(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 Federal Reserve funds 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, 2005 ranged from $357 to $2,351, and is included in miscellaneous expense. None of the funds had significant borrowings during the year ended March 31, 2005. (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 and foreign currency exchange 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 Swaps
NOTIONAL PRINCIPAL CASH FLOWS UNREALIZED AMOUNT OF RECEIVED BY CASH FLOWS PAID APPRECIATION FUND EXPIRATION CURRENCY CONTRACT THE FUND BY THE FUND (DEPRECIATION) - ---------------------------------------------------------------------------------------------------------------------------------- Alabama Fund Floating -- 7 Day Fixed -- 3 Year BMA Swap BMA Swap 12/1/07 USD 2,000,000 Index Index (2.795%) $14,974 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/8/15 USD 2,000,000 Index Index (3.657%) 29,523 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/27/15 USD 2,000,000 Index Index (3.809%) 7,867 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 11 Year BMA Swap BMA Swap 7/12/16 USD 2,000,000 Index Index (3.777%) 23,874 - ---------------------------------------------------------------------------------------------------------------------------------- Total Alabama Fund $76,238 - ---------------------------------------------------------------------------------------------------------------------------------- Arkansas Fund Floating -- 7 Day Fixed -- 3 Year BMA Swap BMA Swap 12/1/07 USD 3,000,000 Index Index (2.795%) $22,460 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/8/15 USD 3,000,000 Index Index (3.657%) 44,285 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/15/15 USD 3,000,000 Index Index (3.702%) 34,970 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/1/15 USD 3,000,000 Index Index (3.937%) (8,936) - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 4/6/17 USD 1,500,000 Index Index (3.884%) 3,559 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 4/20/17 USD 2,000,000 Index Index (3.714%) 36,162 - ---------------------------------------------------------------------------------------------------------------------------------- Total Arkansas Fund $132,500 - ---------------------------------------------------------------------------------------------------------------------------------- California Fund Floating -- 7 Day Fixed -- 3 Year BMA Swap BMA Swap 12/1/07 USD 9,000,000 Index Index (2.795%) $67,262 - ---------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 6/1/35 USD 4,000,000 Index (4.172%) Index (62,736) - ---------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 9/6/35 USD 2,000,000 Index (4.254%) Index (14,884) - ---------------------------------------------------------------------------------------------------------------------------------- Total California Fund $(10,358) - ---------------------------------------------------------------------------------------------------------------------------------- Florida Fund Floating -- 7 Day Fixed -- 3 Year BMA Swap BMA Swap 12/1/07 USD 2,000,000 Index Index (2.795%) $14,947 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/15/15 USD 1,500,000 Index Index (3.702%) 17,485 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/22/15 USD 1,000,000 Index Index (3.628%) 17,735 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/27/15 USD 2,000,000 Index Index (3.809%) 7,867 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 11 Year BMA Swap BMA Swap 7/12/16 USD 2,000,000 Index Index (3.777%) 23,874 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 4/6/17 USD 1,000,000 Index Index (3.884%) 2,372 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 4/20/17 USD 1,000,000 Index Index (3.714%) 18,081 - ---------------------------------------------------------------------------------------------------------------------------------- Total Florida Fund $102,361 - ---------------------------------------------------------------------------------------------------------------------------------- Georgia Fund Floating -- 7 Day Fixed -- 3 Year BMA Swap BMA Swap 12/1/07 USD 1,000,000 Index Index (2.795%) $7,487 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/8/15 USD 1,000,000 Index Index (3.657%) 14,762 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/15/15 USD 1,500,000 Index Index (3.702%) 17,485 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/27/15 USD 2,000,000 Index Index (3.809%) 7,867 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/1/15 USD 1,000,000 Index Index (3.937%) (2,979) - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 4/6/17 USD 1,000,000 Index Index (3.884%) 2,372 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 4/20/17 USD 1,000,000 Index Index (3.714%) 18,081 - ---------------------------------------------------------------------------------------------------------------------------------- Total Georgia Fund $65,075 - ---------------------------------------------------------------------------------------------------------------------------------- Maryland Fund Floating -- 7 Day Fixed -- 3 Year BMA Swap BMA Swap 12/1/07 USD 3,000,000 Index Index (2.795%) $22,460 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/27/15 USD 2,000,000 Index Index (3.809%) 7,867 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 9/1/15 USD 2,000,000 Index Index (3.937%) (5,957) - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 4/6/17 USD 2,000,000 Index Index (3.884%) 4,745 - ---------------------------------------------------------------------------------------------------------------------------------- Total Maryland Fund $29,115 - ---------------------------------------------------------------------------------------------------------------------------------- Massachusetts Fund Floating -- 7 Day Fixed -- 3 Year BMA Swap BMA Swap 12/1/07 USD 5,000,000 Index Index (2.795%) $37,434 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/15/15 USD 5,000,000 Index Index (3.702%) 58,284 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 6/22/15 USD 2,000,000 Index Index (3.628%) 35,470 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 10 Year BMA Swap BMA Swap 8/3/15 USD 5,000,000 Index Index (3.803%) 30,508 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 11 Year BMA Swap BMA Swap 7/12/16 USD 2,000,000 Index Index (3.777%) 23,874 - ---------------------------------------------------------------------------------------------------------------------------------- Floating -- 7 Day Fixed -- 12 Year BMA Swap BMA Swap 4/6/17 USD 1,000,000 Index Index (3.884%) 2,372 - ---------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 6/1/35 USD 3,000,000 Index (4.172%) Index (47,052) - ---------------------------------------------------------------------------------------------------------------------------------- Fixed -- 30 Year Floating -- 7 Day BMA Swap BMA Swap 9/6/35 USD 2,000,000 Index (4.254%) Index (14,884) - ---------------------------------------------------------------------------------------------------------------------------------- Total Massachusetts Fund $126,006 - ----------------------------------------------------------------------------------------------------------------------------------
At March 31, 2005, each fund had sufficient cash and/or securities to cover any commitments under these contracts. (8) RESTRICTED SECURITIES At March 31, 2005, each fund owned the following restricted securities which are subject to legal or contractual restrictions on resale, 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 a pricing service, or if not available, in good faith at the direction of the Trustees.
DATE OF PAR FUND DESCRIPTION ACQUISITION AMOUNT COST VALUE - ----------------------------------------------------------------------------------------------------------------------------------- Alabama Fund Birmingham, AL, Multi-Family Housing Rev., "C" (Beaconview Apartments), 8%, 2030 7/19/00 $395,000 $395,000 $39,500 Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2013 5/20/99 500,000 536,360 585,500 Guam Power Authority Rev., RITES, AMBAC, 7.077%, 2018 5/20/99 4,500,000 4,376,790 4,892,220 Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2017 1/6/00 500,000 469,080 588,970 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013 3/31/99 500,000 509,110 634,000 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2016 9/30/99 500,000 569,030 620,180 - ----------------------------------------------------------------------------------------------------------------------------------- $7,360,370 - ----------------------------------------------------------------------------------------------------------------------------------- Arkansas Fund Commonwealth of Puerto Rico, Infrastructure, RITES, ETM, 8.112%, 2019 10/5/00 $1,250,000 $1,282,225 $1,498,150 Commonwealth of Puerto Rico, RITES, MBIA, 8.612%, 2020 3/30/00 3,000,000 3,067,320 3,651,420 Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2017 1/6/00 735,000 689,548 865,815 Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2018 1/6/00 3,250,000 3,006,835 3,820,180 - ----------------------------------------------------------------------------------------------------------------------------------- $9,835,565 - ----------------------------------------------------------------------------------------------------------------------------------- California Fund Los Angeles, CA, RITES, 7.566%, 2014 7/20/99 $5,405,000 $5,672,548 $6,621,017 Los Angeles, CA, Union School District, RITES, FSA, 7.566%, 2020 3/4/03 5,000,000 5,808,100 5,791,300 Commonwealth of Puerto Rico, ROLS, Series II R 124B, XLCA, 8.543%, 2017 10/22/01 1,500,000 1,816,140 1,918,830 Commonwealth of Puerto Rico, ROLS, Series II R 184C, FGIC, 8.633%, 2016 8/5/02 3,300,000 4,269,738 4,264,260 Southern California Metropolitan Water District Rev., RITES, 8.577%, 2018 5/7/01 5,000,000 5,819,300 6,511,100 State of California, RITES, "B", 8.543%, 2017 1/3/00 1,250,000 1,230,275 1,539,725 University of California Rev., RITES, MBIA, 7.316%, 2016 5/21/99 5,705,000 5,783,273 6,367,864 - ----------------------------------------------------------------------------------------------------------------------------------- $33,014,09 6 - ----------------------------------------------------------------------------------------------------------------------------------- Florida Fund Commonwealth of Puerto Rico, Highway & Transportation, ROLS, Railroad II R 227 1, MBIA, 8.633%, 2020 4/25/03 $2,500,000 $3,282,600 $3,262,400 Commonwealth of Puerto Rico, RITES, MBIA, 8.612%, 2019 3/30/00 1,000,000 1,030,240 1,217,140 State of Florida, RITES, 7.054%, 2017 4/9/99 3,000,000 3,042,840 3,356,640 - ----------------------------------------------------------------------------------------------------------------------------------- $7,836,180 - ----------------------------------------------------------------------------------------------------------------------------------- Georgia Fund Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 8.043%, 2016 4/20/99 $4,000,000 $4,668,400 $5,084,720 Puerto Rico Municipal Finance Agency, RITES, FSA, 9.137%, 2016 1/6/00 500,000 519,760 614,020 - ----------------------------------------------------------------------------------------------------------------------------------- $5,698,740 - ----------------------------------------------------------------------------------------------------------------------------------- Maryland Fund Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2015 5/20/99 $1,680,000 $1,760,909 $1,936,670 Puerto Rico Electric Power Authority Rev., RITES, FSA, 7.559%, 2015 9/16/99 1,400,000 1,367,100 1,570,450 Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2019 1/6/00 1,000,000 905,080 1,172,920 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2010 9/30/99 500,000 509,110 620,180 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2016 3/31/99 1,520,000 1,729,851 1,927,360 - ----------------------------------------------------------------------------------------------------------------------------------- $7,227,580 - ----------------------------------------------------------------------------------------------------------------------------------- Massachusetts Dudley-Charlton, MA, Regional School District, RITES, FGIC, Fund 7.566%, 2015 5/5/99 $1,365,000 $1,501,582 $1,659,294 Dudley-Charlton, MA, Regional School District, RITES, FGIC, 7.566%, 2016 5/5/99 1,430,000 1,558,414 1,749,062 Dudley-Charlton, MA, Regional School District, RITES, FGIC, 7.566%, 2018 5/5/99 1,565,000 1,687,884 1,928,299 Massachusetts Bay Transportation Authority, RITES, 9.380%, 2016 4/19/00 4,835,000 5,484,534 6,425,038 Massachusetts Water Resources Authority, RITES, FGIC, 9.916%, 2019 3/16/00 4,010,000 4,742,707 5,663,724 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2016 3/31/99 2,500,000 2,845,150 3,170,000 - ----------------------------------------------------------------------------------------------------------------------------------- $20,595,417 - -----------------------------------------------------------------------------------------------------------------------------------
At March 31, 2005, 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 - ------------------------------------------------------------------------------------------------------------------------- 7.95% 7.11% 8.30% 8.96% 8.57% 4.82% 8.21% - -------------------------------------------------------------------------------------------------------------------------
(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 March 31, 2005, 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 - -------------------------------------------------------------------------------------------------------------------------------- 69.83% 63.69% 49.43% 60.82% 28.25% 32.22% 47.90% - -------------------------------------------------------------------------------------------------------------------------------- For each fund, the greatest exposure to any one institution or agency did not exceed the following percentages of total investments as of March 31, 2005: ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- 38.00% 17.62% 13.15% 24.42% 14.03% 9.16% 15.96% - --------------------------------------------------------------------------------------------------------------------------------
(10) LEGAL PROCEEDINGS On March 31, 2004, MFS settled an administrative proceeding with the Securities and Exchange Commission ("SEC") regarding disclosure of brokerage allocation practices in connection with MFS fund sales (the term "MFS funds" means the open-end registered management investment companies sponsored by MFS). 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 developed by an independent distribution consultant. The brokerage allocation practices which were the subject of this proceeding were discontinued by MFS in November 2003. The agreement with the SEC is reflected in an order of the SEC. The SEC 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 SEC settlement order states that MFS had in place policies designed to obtain best execution of all MFS fund trades. As part of the settlement, MFS retained an independent compliance consultant to review the completeness of its current policies and practices regarding disclosure to MFS fund trustees and to MFS fund shareholders of strategic alliances between MFS or its affiliates and broker-dealers and other financial intermediaries who support the sale of MFS fund shares. Pursuant to the SEC order, on July 28, 2004, MFS transferred these settlement amounts to the SEC, and those MFS funds entitled to these settlement amounts accrued an estimate of their pro rata portion of these amounts. The final distribution plan was approved by the SEC on January 21, 2005, and the affected MFS funds received the payment on February 16, 2005. In addition, in February 2004, MFS reached agreement with the SEC, the New York Attorney General ("NYAG") and the Bureau of Securities Regulation of the State of New Hampshire ("NH") to settle administrative proceedings alleging false and misleading information in certain MFS open-end retail fund ("MFS retail funds") prospectuses regarding market timing and related matters (the "February Settlements"). These regulators alleged that prospectus language for certain MFS retail funds was false and misleading because, although the prospectuses for those funds in the regulators" view indicated that they prohibited market timing, MFS did not limit trading activity in 11 domestic large cap stock, high grade bond and money market retail funds. MFS" former Chief Executive Officer and former President 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. These individuals 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 MFS 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 Board of Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further agreed with 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 retained $250,000 and $750,000 was 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, MFS Fund Distributors, Inc., MFS Service Center, Inc., MFS Corporation Retirement Committee, Sun Life Financial Inc., various MFS funds, certain current and/or former 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 MFS funds during specified periods, as ERISA actions by participants in certain retirement plan accounts on behalf of those accounts, or as derivative actions on behalf of the MFS funds. The lawsuits relating to market timing and related matters have been transferred to, and consolidated before, the United States District Court for the District of Maryland, as part of a multi-district litigation of market timing and related claims involving several other fund complexes (In re Mutual Funds Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam, Allianz Dresdner), No. 1:04-md-15863 (transfer began March 19, 2004)). The market timing cases related to the MFS complex are Riggs v. MFS et al., Case No. 04-cv-01162-JFM (direct), Hammerslough v. MFS et al., Case No. 04-md-01620 (derivative) and Anita Walker v. MFS et al., Case No. 1:04-CV-01758 (ERISA). The plaintiffs in these consolidated lawsuits generally seek injunctive relief including removal of the named Trustees, adviser and distributor, rescission of contracts and 12b-1 Plans, disgorgement of fees and profits, monetary damages, punitive damages, attorney's fees and costs and other equitable and declaratory relief. Two lawsuits alleging improper brokerage allocation practices and excessive compensation are pending in the United States District Court for the District of Massachusetts (Forsythe v. Sun Life Financial Inc., et al., No. 04cv10584 (GAO) (a consolidated action) and Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No. 04cv11458 (GAO)). The plaintiffs in these lawsuits generally seek compensatory damages, punitive damages, recovery of fees, rescission of contracts, an accounting, restitution, declaratory relief, equitable and/or injunctive relief and attorney's fees and costs. The various lawsuits generally allege that some or all of the defendants (i) permitted or acquiesced in market timing and/or late trading in some of the MFS funds, inadequately disclosed MFS" internal policies concerning market timing and such matters (ii) received excessive compensation as fiduciaries to the MFS funds, or (iii) permitted or acquiesced in the improper use of fund assets by MFS to support the distribution of MFS fund shares and inadequately disclosed MFS" use of fund assets in this 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. Insofar as any of the actions is appropriately brought derivatively on behalf of any of the MFS funds, any recovery will inure to the benefit of the MFS funds. 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 certain MFS retail funds for damages that they allegedly sustained as a result of market timing or late trading in certain of the MFS retail funds, and distributed $50 million to affected MFS funds to compensate those funds based upon the amount of brokerage commissions allocated in recognition of MFS 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 MFS 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 MFS funds. - ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTING FIRM - ------------------------------------------------------------------------------- To the Trustees and Shareholders of MFS Municipal Series Trust: We have audited the accompanying statement of assets and liabilities 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, certain of the portfolios of MFS Municipal Series Trust (the "Trust"), including the portfolio of investments, as of March 31, 2005, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of aforementioned portfolios of MFS Municipal Series Trust as of March 31, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts May 24, 2005 - ------------------------------------------------------------------------------- RESULTS OF SHAREHOLDER MEETING (unaudited) - 3/31/05 - ------------------------------------------------------------------------------- At a special meeting of shareholders 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, which was held on March 23, 2005, the following actions were taken: ITEM 1. To elect a Board of Trustees: NUMBER OF DOLLARS ---------------------------------------- NOMINEE AFFIRMATIVE WITHHOLD AUTHORITY Lawrence H. Cohn 2,338,745,402.20 23,104,899.71 - ------------------------------------------------------------------------------- David H. Gunning 2,340,048,506.07 21,801,795.84 - ------------------------------------------------------------------------------- William R. Gutow 2,339,850,605.62 21,999,696.29 - ------------------------------------------------------------------------------- Michael Hegarty 2,340,213,807.46 21,636,494.45 - ------------------------------------------------------------------------------- J. Atwood Ives 2,338,786,653.70 23,063,648.21 - ------------------------------------------------------------------------------- Amy B. Lane 2,339,960,815.68 21,889,486.23 - ------------------------------------------------------------------------------- Robert J. Manning 2,340,560,593.28 21,289,708.63 - ------------------------------------------------------------------------------- Lawrence T. Perera 2,338,677,013.42 23,173,288.49 - ------------------------------------------------------------------------------- Robert C. Pozen 2,340,797,047.27 21,053,254.64 - ------------------------------------------------------------------------------- J. Dale Sherratt 2,338,746,772.55 23,103,529.36 - ------------------------------------------------------------------------------- Laurie J. Thomsen 2,339,932,511.83 21,917,790.08 - ------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND, - ---------------------------------------------------------------------------------------------------------------------------------- The Trustees and officers of the Trust, as of May 1, 2005, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
POSITION(s) HELD TRUSTEE/OFFICER PRINCIPAL OCCUPATIONS DURING THE PAST FIVE NAME, DATE OF BIRTH WITH FUND SINCE(1) YEARS & OTHER DIRECTORSHIPS(2) - ------------------- ---------------- --------------- ------------------------------------------ INTERESTED TRUSTEES Robert J. Manning(3) Trustee and President February 2004 Massachusetts Financial Services Company, Chief (born 10/20/63) Executive Officer, President, Chief Investment Officer and Director 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); Bell Canada Enterprises (telecommunication s), Director; Medtronic, Inc. (medical technology), Director; Telesat (satellite communications), Director INDEPENDENT TRUSTEES J. Atwood Ives Trustee and Chair of February 1992 Private investor; Eastern Enterprises (diversified (born 05/01/36) Trustees 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 Cardiac (born 03/11/37) Surgery; Harvard Medical School, Professor of Surgery David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining products and service (born 05/30/42) 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 Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial services and (born 12/21/44) insurance), Vice Chairman and Chief Operating Officer (until May 2001); The Equitable Life Assurance Society (insurance), President and Chief Operating Officer (until May 2001) 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) 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) Laurie J. Thomsen Trustee March 2005 Private investor; Prism Venture Partners (venture (born 08/05/57) capital), Co- founder and General Partner (until June 2004); St. Paul Travelers Companies (commercial property liability insurance), Director OFFICERS Robert J. Manning(3) President and Trustee February 2004 Massachusetts Financial Services Company, Chief (born 10/20/63) Executive Officer, President, Chief Investment Officer and Director Jeffrey N. Carp(3) Secretary and Clerk September 2004 Massachusetts Financial Services Company, Executive (born 12/1/56) Vice President, General Counsel and Secretary (since April 2004); Hale and Dorr LLP (law firm), Partner (prior to April 2004) Stephanie A. DeSisto(3) Assistant Treasurer May 2003 Massachusetts Financial Services Company, Vice (born 10/01/53) 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) James F. DesMarais(3) Assistant Secretary and September 2004 Massachusetts Financial Services Company, Assistant (born 03/09/61) Assistant Clerk General Counsel Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial Services Company, Senior (born 08/29/58) 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) Brian T. Hourihan(3) Assistant Secretary and September 2004 Massachusetts Financial Services Company, Vice (born 11/11/64) Assistant Clerk President, Senior Counsel and Assistant Secretary (since June 2004); Affiliated Managers Group, Inc., Chief Legal Officer/ Centralized Compliance Program (January to April 2004); Fidelity Research & Management Company, Assistant General Counsel (prior to January 2004) Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial Services Company, Vice (born 11/13/57) President Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance services), (born 03/07/44) Compliance Officer Principal (since June 2004); CRA Business Strategies Group (consulting services), Executive Vice President (April 2003 to June 2004); David L. Babson & Co. (investment adviser), Managing Director, Chief Administrative Officer and Director (February 1997 to March 2003) James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial Services Company, Senior (born 06/12/60) 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 the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. Each Trustee has been elected by shareholders and each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Messrs. Ives and Sherratt and Mses. Lane and Thomsen are members of the Trust's Audit Committee. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. As of December 31, 2004, each Trustee served as a board member of 99 funds within the MFS Family of Funds. The Trust held a shareholders" meeting in 2005, and will hold a shareholder's meeting at least once every five years thereafter, to elect Trustees. 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 State Street Bank and Trust Company Company 225 Franklin Street, Boston, MA 02110 500 Boylston Street, Boston, MA 02116-3741 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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
- ------------------------------------------------------------------------------- PROXY VOTING POLICIES AND INFORMATION - ------------------------------------------------------------------------------- A general description of the MFS funds" proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the About MFS section of mfs.com or by visiting the SEC's Web site at http://www.sec. gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. - ------------------------------------------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE - ------------------------------------------------------------------------------- The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission Washington, D.C. 20549-0102 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund's Form N-Q is available on the EDGAR database on the Commission's Internet website at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. - -------------------------------------------------------------------------------- FEDERAL TAX INFORMATION (UNAUDITED) In January 2006, 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 2005. Capital gain dividends designated for the year ended March 31, 2005 was as follows: CAPITAL GAIN DIVIDENDS - ------------------------------------------------------------------------------- Alabama Fund $326,164 California Fund 227,579 Maryland Fund 60,248 Massachusetts Fund 99,947 For the year ended March 31, 2005, the amount of distributions from income designated as exempt-interest dividends was as follows: EXEMPT-INTEREST DIVIDENDS - ------------------------------------------------------------------------------- Alabama Fund 98.44% Arkansas Fund 96.53% California Fund 99.70% Florida Fund 100.00% Georgia Fund 100.00% Maryland Fund 98.97% Massachusetts Fund 97.73% - ------------------------------------------------------------------------------- CONTACT INFORMATION INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 55824 Boston, MA 02205-5824 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 - ------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) (C) 2005 MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. MST-A-ANN-05/05 31M MFS(R) MUNICIPAL SERIES TRUST 3/31/05 FOR THE STATES OF: MISSISSIPPI, NEW YORK, NORTH CAROLINA, PENNSYLVANIA, SOUTH CAROLINA, TENNESSEE, VIRGINIA, AND WEST VIRGINIA ANNUAL REPORT - ------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) THIS REPORT HAS BEEN PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. ANNUAL REPORT LETTER FROM THE CEO 1 ----------------------------------------------- PORTFOLIO COMPOSITION 2 ----------------------------------------------- MANAGEMENT REVIEW 6 ----------------------------------------------- PERFORMANCE SUMMARY 7 ----------------------------------------------- FUND EXPENSE TABLES 17 ----------------------------------------------- PORTFOLIO OF INVESTMENTS 21 ----------------------------------------------- FINANCIAL STATEMENTS 60 ----------------------------------------------- NOTES TO FINANCIAL STATEMENTS 89 ----------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 104 ----------------------------------------------- RESULTS OF SHAREHOLDER MEETING 105 ----------------------------------------------- TRUSTEES AND OFFICERS 106 ----------------------------------------------- PROXY VOTING POLICIES AND INFORMATION 108 ----------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE 108 ----------------------------------------------- FEDERAL TAX INFORMATION 108 ----------------------------------------------- CONTACT INFORMATION BACK COVER ----------------------------------------------- - -------------------------------------------------------------------------------- LETTER FROM THE CEO - -------------------------------------------------------------------------------- Dear Shareholders, [Photo of Robert J. Manning] Last summer and fall, I wrote to you about enhancements that MFS(R) was making to its investment process. Our goal, as always, was to deliver strong performance across all asset classes. I am now happy to report to you that 2004 was a very successful year for MFS, relative to our peers in the mutual fund industry. While there will always be room for improvement, we believe the enhancements we have made to our investment process resulted in significantly improved performance across the MFS Family of Funds(R). You may remember some of the enhancements I outlined last year. They included o increasing collaboration and information sharing among our investment personnel across asset classes, through an Investment Management Committee with members from our Domestic Equity, International Equity, Fixed Income, and Quantitative Research teams o increasing the number of analysts supporting our portfolio managers and doubling the average investment experience of our domestic equity analyst staff o making additional use of our most-seasoned portfolio managers to mentor research analysts o combining more quantitative, top-down risk control and security analysis with our traditional bottom-up research process o opening a research office in Mexico City to complement our existing staff in Boston, London, Singapore, and Tokyo The effect of these enhancements, I believe, is evident in the recent performance of our funds. For the 12 months ended March 31, 2005, 68% of MFS domestic equity funds, 88% of MFS international equity funds, and 90% of MFS fixed-income funds delivered results in the top half of their Lipper peer groups. Our longer-term performance also benefited from our ongoing commitment to the MFS Original Research(R) process: 69% of MFS funds were in the top half of their respective Lipper categories over the 3-, 5-, and 10-year periods ended March 31, 2005. Of course, I cannot offer any guarantees that our performance will repeat itself. Still, I am confident that the recent enhancements to our investment process will continue to benefit shareholders in 2005 and beyond. What I can tell you with certainty is that the way you manage your investments will determine how well you take advantage of the performance that financial markets deliver. Historically, individual investors have tended to underperform the markets. For example, a 2003 study by DALBAR, Inc. showed that over the nearly two decades from 1984 through 2002, the average U.S. stock investor earned a 2.6% average annual return at a time when U.S. stocks, as measured by the Standard & Poor's 500 Stock Index, delivered a 12.2% average annual return.(1) This huge discrepancy, in our view, occurred because nonprofessional investors generally did not adhere to the basic principles followed by most professional investors: allocate among asset classes, diversify within each asset class, and rebalance one's portfolio on a routine schedule. I elaborated on this "ADR" theme in fund reports over the last few months of 2004. For more information on how to apply a Disciplined Diversification(SM) strategy to your portfolio using the principles of ADR, I would urge you to contact your own investment professional. You may also want to refer to information on the subject on our Web site, MFS.COM. As always, we appreciate your confidence in MFS, and you can be sure of our continued commitment to do the best we can to help you pursue your long-term financial goals. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer and Chief Investment Officer MFS Investment Management May 16, 2005 It is not possible to invest directly in an index. Lipper rankings and performance are based on historical average annual returns of Class A shares, and do not include any sales charges. Past performance is no guarantee of future results. Asset allocation and diversification cannot guarantee a profit or protect against a loss. The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. (1) Source: DALBAR July 2003 update to its Quantitative Analysis of Investment Behavior; DALBAR, Inc., is a financial-services market research firm headquartered in Boston, MA. - ------------------------------------------------------------------------------- PORTFOLIO COMPOSITION - ------------------------------------------------------------------------------- MFS MISSISSIPPI MUNICIPAL BOND FUND PORTFOLIO STRUCTURE* Bonds 97.0% Cash & Other Net Assets 3.0% TOP FIVE BOND INDUSTRIES* Health/Hospitals 19.0% ------------------------------------------------ State & Local Approp. 11.7% ------------------------------------------------ General Obligations/GP 11.2% ------------------------------------------------ Water/Sewer 10.6% ------------------------------------------------ Universities/Colleges 10.6% ------------------------------------------------ CREDIT QUALITY** AAA 75.5% ------------------------------------------------ AA 5.4% ------------------------------------------------ A 8.1% ------------------------------------------------ BBB 9.2% ------------------------------------------------ Not Rated 1.8% ------------------------------------------------ PORTFOLIO FACTS Average Duration 6.6 ------------------------------------------------ Average Life 15.3 yrs. ------------------------------------------------ Average Maturity*** 16.1 yrs. ------------------------------------------------ Average Credit Quality**** AA+ ------------------------------------------------ Average Credit Quality Short-Term Bonds A-1 ------------------------------------------------ MFS NEW YORK MUNICIPAL BOND FUND PORTFOLIO STRUCTURE* Bonds 97.5% Cash & Other Net Assets 2.5% TOP FIVE BOND INDUSTRIES* Water/Sewer 12.7% ------------------------------------------------ State & Local Approp. 12.0% ------------------------------------------------ Transportation/Spec Tax 10.7% ------------------------------------------------ Toll Roads 9.2% ------------------------------------------------ General Obligations/GP 8.5% ------------------------------------------------ CREDIT QUALITY** AAA 51.1% ------------------------------------------------ AA1 7.7% ------------------------------------------------ A 15.3% ------------------------------------------------ BBB 6.8% ------------------------------------------------ BB 1.8% ------------------------------------------------ Not Rated 7.3% ------------------------------------------------ PORTFOLIO FACTS Average Duration 7.1 ------------------------------------------------ Average Life 16.0 yrs. ------------------------------------------------ Average Maturity*** 17.5 yrs. ------------------------------------------------ Average Credit Quality**** AA ------------------------------------------------ Average Credit Quality Short-Term Bonds A-1 ------------------------------------------------ MFS NORTH CAROLINA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE* Bonds 98.0% Cash & Other Net Assets 2.0% TOP FIVE BOND INDUSTRIES* Health/Hospitals 23.5% ------------------------------------------------ Municipal Owned Utilities 14.2% ------------------------------------------------ State & Agency - Other 9.6% ------------------------------------------------ Water/Sewer 8.5% ------------------------------------------------ Universities/Colleges 8.4% ------------------------------------------------ CREDIT QUALITY** AAA 38.8% ------------------------------------------------ AA 33.8% ------------------------------------------------ A 8.8% ------------------------------------------------ BBB 18.0% ------------------------------------------------ Not Rated 0.6% ------------------------------------------------ PORTFOLIO FACTS Average Duration 7.4 ------------------------------------------------ Average Life 15.1 yrs. ------------------------------------------------ Average Maturity*** 15.7 yrs. ------------------------------------------------ Average Credit Quality**** AA- ------------------------------------------------ Average Credit Quality Short-Term Bonds A-1 ------------------------------------------------ MFS PENNSYLVANIA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE* Bonds 98.2% Cash & Other Net Assets 1.8% TOP FIVE BOND INDUSTRIES* General Obligations/Schools 25.9% ------------------------------------------------ Health/Hospitals 11.9% ------------------------------------------------ Universities/Colleges 9.9% ------------------------------------------------ Water/Sewer 9.6% ------------------------------------------------ Transportation/Spec Tax 6.3% ------------------------------------------------ CREDIT QUALITY** AAA 66.6% ------------------------------------------------ AA 13.4% ------------------------------------------------ A 5.5% ------------------------------------------------ BBB 9.7% ------------------------------------------------ BB 0.1% ------------------------------------------------ B 0.5% ------------------------------------------------ CCC 0.5% ------------------------------------------------ Not Rated 3.7% ------------------------------------------------ PORTFOLIO FACTS Average Duration 7.7 ------------------------------------------------ Average Life 18.2 yrs. ------------------------------------------------ Average Maturity*** 18.5 yrs. ------------------------------------------------ Average Credit Quality**** AA ------------------------------------------------ Average Credit Quality Short-Term Bonds A-1 ------------------------------------------------ MFS SOUTH CAROLINA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE* Bonds 98.9% Cash & Other Net Assets 1.1% TOP FIVE BOND INDUSTRIES* Water/Sewer 20.3% ------------------------------------------------ Health/Hospitals 19.9% ------------------------------------------------ General Obligations/Schools 10.7% ------------------------------------------------ Universities/Colleges 10.2% ------------------------------------------------ Municipal Owned Utilities 9.7% ------------------------------------------------ CREDIT QUALITY** AAA 73.2% ------------------------------------------------ AA 14.2% ------------------------------------------------ A 6.7% ------------------------------------------------ BBB 3.8% ------------------------------------------------ B 0.6% ------------------------------------------------ Not Rated 1.5% ------------------------------------------------ PORTFOLIO FACTS Average Duration 7.8 ------------------------------------------------ Average Life 16.6 yrs. ------------------------------------------------ Average Maturity*** 17.8 yrs. ------------------------------------------------ Average Credit Quality**** AA+ ------------------------------------------------ Average Credit Quality Short-Term Bonds A-1 ------------------------------------------------ MFS TENNESSEE MUNICIPAL BOND FUND PORTFOLIO STRUCTURE* Bonds 99.1% Cash & Other Net Assets 0.9% TOP FIVE BOND INDUSTRIES* Water/Sewer 18.4% ------------------------------------------------ General Obligations/Schools 15.2% ------------------------------------------------ Health/Hospitals 12.6% ------------------------------------------------ Single Family Housing/State 11.9% ------------------------------------------------ State & Local Approp. 6.9% ------------------------------------------------ CREDIT QUALITY** AAA 56.2% ------------------------------------------------ AA 28.7% ------------------------------------------------ A 4.9% ------------------------------------------------ BBB 6.7% ------------------------------------------------ BB 0.8% ------------------------------------------------ Not Rated 2.7% ------------------------------------------------ PORTFOLIO FACTS Average Duration 7.3 ------------------------------------------------ Average Life 14.5 yrs. ------------------------------------------------ Average Maturity*** 16.8 yrs. ------------------------------------------------ Average Credit Quality**** AA+ ------------------------------------------------ Average Credit Quality Short-Term Bonds A-1 ------------------------------------------------ MFS VIRGINIA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE* Bonds 98.9% Cash & Other Net Assets 1.1% TOP FIVE BOND INDUSTRIES* State & Local Approp. 21.5% ------------------------------------------------ General Obligations/IMPT 14.5% ------------------------------------------------ Health/Hospitals 13.3% ------------------------------------------------ Water/Sewer 11.1% ------------------------------------------------ Airport 7.9% ------------------------------------------------ CREDIT QUALITY** AAA 45.6% ------------------------------------------------ AA 27.3% ------------------------------------------------ A 13.4% ------------------------------------------------ BBB 5.7% ------------------------------------------------ BB 1.4% ------------------------------------------------ B 0.6% ------------------------------------------------ CCC 0.6% ------------------------------------------------ Not Rated 5.4% ------------------------------------------------ PORTFOLIO FACTS Average Duration 7.4 ------------------------------------------------ Average Life 14.7 yrs. ------------------------------------------------ Average Maturity*** 15.9 yrs. ------------------------------------------------ Average Credit Quality**** AA ------------------------------------------------ Average Credit Quality Short-Term Bonds A-1 ------------------------------------------------ MFS WEST VIRGINIA MUNICIPAL BOND FUND PORTFOLIO STRUCTURE* Bonds 97.6% Cash & Other Net Assets 2.4% TOP FIVE BOND INDUSTRIES* General Obligations/GP 21.7% ------------------------------------------------ State & Local Approp. 20.3% ------------------------------------------------ Universities/Colleges 18.3% ------------------------------------------------ Water/Sewer 7.5% ------------------------------------------------ General Obligations/Schools 5.5% ------------------------------------------------ CREDIT QUALITY** AAA 79.3% ------------------------------------------------ AA 0.1% ------------------------------------------------ A1 0.9% ------------------------------------------------ BBB 7.1% ------------------------------------------------ BB 0.2% ------------------------------------------------ B 0.5% ------------------------------------------------ Not Rated 1.9% ------------------------------------------------ PORTFOLIO FACTS Average Duration 7.1 ------------------------------------------------ Average Life 16.6 yrs. ------------------------------------------------ Average Maturity*** 16.9 yrs. ------------------------------------------------ Average Credit Quality**** AA+ ------------------------------------------------ Average Credit Quality Short-Term Bonds A-1 ------------------------------------------------ * For purposes of these graphical presentations, the bond components include both accrued interest amounts and the equivalent exposure from any derivative holdings, if applicable. ** Each security is assigned a rating from Moody's Investors Service. If not rated by Moody's, the rating will be that assigned by Standard & Poor's. Likewise, if not assigned a rating by Standard & Poor's, it will be based on the rating assigned by Fitch, Inc. If not rated by any of the three agencies, the security is considered Not Rated. Percentages are based on the total market value of investments as of 3/31/05. *** The average maturity shown is calculated using the final stated maturity on the portfolio's holdings without taking into account any holdings which have been pre-refunded to an earlier date or which have a mandatory put date prior to the stated maturity. The average life shown takes into account these earlier dates. **** The Portfolio Average Credit Quality rating is based upon a market weighted average of portfolio holdings. Percentages are based on net assets as of 3/31/05, unless otherwise noted. The portfolios are actively managed, and current holdings may be different. - ------------------------------------------------------------------------------- MANAGEMENT REVIEW - ------------------------------------------------------------------------------- INVESTMENT OBJECTIVE The investment objective of each fund is to provide current income exempt from federal income tax and personal income tax, if any, of the state to which its name refers. Each fund invests, under normal market conditions, at least 80% of its net assets in securities and other investments, the interest on which is exempt from federal income tax and personal income tax, if any, of the state to which its name refers. A fund may invest in municipal securities, which are bonds or other debt obligations of a U.S. state or political subdivision, such as a country, city, town, village, or authority. MARKET ENVIRONMENT The U.S. fixed-income market experienced a dramatic flattening of the yield curve during the 12-month period. (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.) On June 30, 2004, the U.S. Federal Reserve Board (the Fed) raised its target federal funds rate for the first time in four years. For the remainder of the period, the Fed continued a steady drumbeat of quarter-point rate hikes. But while the Fed seemed committed to a course of gradually raising short-term rates, it appeared to us that several factors caused long-term rates to stagnate or retreat over the period. Job growth, which had shot up in the spring of 2004, faltered; this helped, in our opinion, to push down yields on longer-dated bonds. Another factor that we believe held long-term rates down was overseas demand for U.S. Treasuries, especially from foreign central banks. However, we feel that moderate gross domestic product (GDP) growth and inflation concerns kept shorter-term interest rates moving up. For the period as a whole, the net effect was a substantial flattening of the yield curve as short-term rates rose significantly while long-term rates were generally flat to down. FACTORS THAT AFFECTED PERFORMANCE During the period, our duration positioning in most of the funds was longer than that of our benchmark, the Lehman Brothers Municipal Bond Index (the Lehman Index). Duration is a measure of a fund's sensitivity to changes in interest rates. For all funds - except the Tennessee fund - this longer duration stance held back relative performance. Yield curve positioning in all funds - except for the Virginia fund - was a strong contributor to relative performance. Compared with our benchmark most of the funds were more heavily weighted in bonds on the long end of the yield curve - bonds with durations of 11 to 25+ years- and underweighted in bonds on the short end of the curve. This helped relative results during the period because long-term municipal rates were relatively unchanged and bonds on the short end of the curve suffered price declines as their yields increased. 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 or positive for most funds with the exception of the South Carolina fund. Sector allocation was neutral or positive overall. Funds for which sector allocation was a positive factor were generally overweighted in one or more sectors that outperformed over the period. Our overweighted positions in the health care and utilities sectors aided relative results for most of the funds. 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. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 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 market-value-weighted index representative of the tax-exempt bond market. However, while this index is considered the benchmark for the performance of municipal bond funds, it is comprised of municipal bonds issued nationwide, while each of the funds is limited to investing in the bonds of a particular state. 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. HIGH SHORT-TERM RETURNS FOR ANY PERIOD MAY BE AND LIKELY WERE ATTRIBUTABLE TO FAVORABLE MARKET CONDITIONS DURING THAT PERIOD, WHICH MAY NOT BE REPEATABLE. 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 3/31/05) MFS Mississippi Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,286 10,838 3/97 10,822 11,429 3/98 12,015 12,653 3/99 12,690 13,438 3/00 12,616 13,427 3/01 13,880 14,893 3/02 14,359 15,461 3/03 15,721 16,990 3/04 16,470 17,986 3/05 16,925 18,465 TOTAL RETURNS - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 8/06/92 2.76% 5.63% 6.05% 5.92% - ------------------------------------------------------------------------------ B 9/07/93 2.08% 4.81% 5.22% 5.08% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average other state municipal debt fund+ 1.82% 4.68% 5.31% 5.07% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.12% 3.93% 5.03% 5.40% - ------------------------------------------------------------------------------ B -1.85% 3.89% 4.90% 5.08% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.76% 17.87% 34.16% 77.69% - ------------------------------------------------------------------------------ B 2.08% 15.15% 28.99% 64.12% - ------------------------------------------------------------------------------ + Source: Lipper Inc., an independent firm that reports mutual fund performance. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) NEW YORK MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS New York Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,189 10,838 3/97 10,666 11,429 3/98 11,903 12,653 3/99 12,514 13,438 3/00 12,382 13,427 3/01 13,713 14,893 3/02 14,147 15,461 3/03 15,569 16,990 3/04 16,332 17,986 3/05 16,733 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 6/06/88 2.45% 5.75% 6.21% 5.80% - ------------------------------------------------------------------------------ B 9/07/93 1.77% 4.91% 5.38% 4.97% - ------------------------------------------------------------------------------ C 12/11/00 1.78% 4.97% 5.40% 4.98% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average New York municipal debt fund+ 2.07% 5.24% 5.83% 5.49% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.41% 4.05% 5.18% 5.28% - ------------------------------------------------------------------------------ B -2.15% 3.99% 5.06% 4.97% - ------------------------------------------------------------------------------ C 0.79% 4.97% 5.40% 4.98% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.45% 18.28% 35.14% 75.67% - ------------------------------------------------------------------------------ B 1.77% 15.46% 29.97% 62.44% - ------------------------------------------------------------------------------ C 1.78% 15.66% 30.06% 62.55% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS North Carolina Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,150 10,838 3/97 10,666 11,429 3/98 11,771 12,653 3/99 12,331 13,438 3/00 12,125 13,427 3/01 13,362 14,893 3/02 13,774 15,461 3/03 15,111 16,990 3/04 15,868 17,986 3/05 16,209 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr A 10/31/84 2.15% 5.58% 5.98% 5.46% - ------------------------------------------------------------------------------ B 9/07/93 1.49% 4.90% 5.28% 4.76% - ------------------------------------------------------------------------------ C 1/03/94 1.49% 4.90% 5.28% 4.78% - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average North Carolina municipal debt fund+ 1.54% 5.02% 5.58% 5.20% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.70% 3.88% 4.95% 4.95% - ------------------------------------------------------------------------------ B -2.41% 3.98% 4.95% 4.76% - ------------------------------------------------------------------------------ C 0.51% 4.90% 5.28% 4.78% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.15% 17.68% 33.68% 70.17% - ------------------------------------------------------------------------------ B 1.49% 15.42% 29.32% 59.19% - ------------------------------------------------------------------------------ C 1.49% 15.42% 29.32% 59.53% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS Pennsylvania Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,177 10,838 3/97 10,652 11,429 3/98 11,894 12,653 3/99 12,589 13,438 3/00 12,533 13,427 3/01 13,893 14,893 3/02 14,427 15,461 3/03 15,887 16,990 3/04 16,699 17,986 3/05 17,195 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 2/01/93 2.97% 6.03% 6.53% 6.08% - ------------------------------------------------------------------------------ B 9/07/93 2.19% 5.22% 5.69% 5.27% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average Pennsylvania municipal debt fund+ 2.19% 5.29% 5.72% 5.33% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -1.92% 4.32% 5.50% 5.57% - ------------------------------------------------------------------------------ B -1.76% 4.31% 5.37% 5.27% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.97% 19.19% 37.20% 80.52% - ------------------------------------------------------------------------------ B 2.19% 16.48% 31.86% 67.05% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS South Carolina Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,155 10,838 3/97 10,566 11,429 3/98 11,688 12,653 3/99 12,193 13,438 3/00 11,917 13,427 3/01 13,139 14,893 3/02 13,623 15,461 3/03 14,919 16,990 3/04 15,710 17,986 3/05 16,106 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 10/31/84 2.52% 5.74% 6.21% 5.39% - ------------------------------------------------------------------------------ B 9/07/93 1.94% 5.09% 5.52% 4.70% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average South Carolina municipal debt fund+ 2.29% 5.25% 5.80% 5.35% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.35% 4.04% 5.18% 4.88% - ------------------------------------------------------------------------------ B -1.98% 4.17% 5.20% 4.70% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.52% 18.22% 35.15% 69.09% - ------------------------------------------------------------------------------ B 1.94% 16.05% 30.85% 58.30% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) TENNESSEE MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS Tennessee Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,159 10,838 3/97 10,614 11,429 3/98 11,794 12,653 3/99 12,360 13,438 3/00 12,144 13,427 3/01 13,342 14,893 3/02 13,790 15,461 3/03 15,078 16,990 3/04 15,802 17,986 3/05 16,201 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 8/12/88 2.53% 5.52% 5.94% 5.46% - ------------------------------------------------------------------------------ B 9/07/93 1.87% 4.84% 5.25% 4.76% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average Tennessee municipal debt fund+ 1.81% 5.16% 5.60% 5.46% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.34% 3.82% 4.91% 4.94% - ------------------------------------------------------------------------------ B -2.04% 3.92% 4.93% 4.76% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.53% 17.48% 33.42% 70.09% - ------------------------------------------------------------------------------ B 1.87% 15.23% 29.18% 59.27% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) VIRGINIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS Virginia Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,146 10,838 3/97 10,549 11,429 3/98 11,637 12,653 3/99 12,186 13,438 3/00 12,053 13,427 3/01 13,204 14,893 3/02 13,583 15,461 3/03 14,819 16,990 3/04 15,663 17,986 3/05 16,106 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 10/31/84 2.83% 5.84% 5.97% 5.39% - ------------------------------------------------------------------------------ B 9/07/93 2.16% 5.16% 5.27% 4.70% - ------------------------------------------------------------------------------ C 1/03/94 2.25% 5.19% 5.29% 4.73% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average Virginia municipal debt fund+ 1.87% 5.04% 5.55% 5.41% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.06% 4.14% 4.94% 4.88% - ------------------------------------------------------------------------------ B -1.77% 4.25% 4.94% 4.70% - ------------------------------------------------------------------------------ C 1.27% 5.19% 5.29% 4.73% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.83% 18.58% 33.63% 69.10% - ------------------------------------------------------------------------------ B 2.16% 16.30% 29.28% 58.34% - ------------------------------------------------------------------------------ C 2.25% 16.40% 29.37% 58.78% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (For the 10-year period ended 3/31/05) MFS West Virginia Lehman Brothers Municipal Bond Municipal Bond Fund -- Class A Index 3/95 $ 9,525 $10,000 3/96 10,152 10,838 3/97 10,680 11,429 3/98 11,686 12,653 3/99 12,239 13,438 3/00 12,008 13,427 3/01 13,213 14,893 3/02 13,714 15,461 3/03 14,954 16,990 3/04 15,678 17,986 3/05 16,035 18,465 Total Returns - ------------------------ Average annual without sales charge - ------------------------ Share class Inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 10/31/84 2.28% 5.35% 5.96% 5.35% - ------------------------------------------------------------------------------ B 9/07/93 1.62% 4.70% 5.29% 4.65% - ------------------------------------------------------------------------------ - ------------------------ Average annual - ------------------------ Comparative benchmarks - ------------------------------------------------------------------------------ Average other state municipal debt fund+ 1.82% 4.68% 5.31% 5.07% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - ------------------------ Average annual with sales charge - ------------------------ Share class - ------------------------------------------------------------------------------ A -2.58% 3.66% 4.93% 4.84% - ------------------------------------------------------------------------------ B -2.30% 3.78% 4.96% 4.65% - ------------------------------------------------------------------------------ - ------------------------ Cumulative without sales charge - ------------------------ - ------------------------------------------------------------------------------ A 2.28% 16.93% 33.54% 68.35% - ------------------------------------------------------------------------------ B 1.62% 14.77% 29.40% 57.60% - ------------------------------------------------------------------------------ + Source: Lipper Inc. # Source: Standard & Poor's Micropal, Inc. - ------------------------------------------------------------------------------- NOTES TO PERFORMANCE SUMMARY AND KEY RISK CONSIDERATIONS - ------------------------------------------------------------------------------- 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%. For the fund(s) that offer(s) Class C shares, Class C results including sales charge (assuming redemption within one year from the end of the prior month of purchase) reflect the deduction of the 1% CDSC. For New York fund only. Performance for Class C shares includes the performance of the fund's Class B shares prior to their offering. This blended class performance has been adjusted to take into account differences in sales loads, if any, applicable to Class C shares, but has not been adjusted to take into account differences in class specific operating expenses (such as Rule 12b-1 fees). Compared to performance Class C shares would have experienced had they been offered for the entire period, the use of blended performance generally results in higher performance for Class C shares. 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 As with any fixed income security, the prices of municipal securities in each fund's portfolio will generally fall when interest rates rise. Conversely, when interest rates fall, the prices of municipal securities in a fund's portfolio will generally rise. Interest rate risk will generally affect the price of a municipal security more if the security has a longer maturity. Municipal securities with longer maturities will therefore be more volatile than other fixed income securities with shorter maturities. Conversely, municipal securities with shorter maturities will be less volatile but generally provide lower returns than municipal securities with longer maturities. The average maturity of each fund's municipal security investments will affect the volatility of the fund's share price. Credit risk is the risk that the issuer of a municipal security will not be able to pay principal and interest when due. Rating agencies assign credit ratings to certain municipal securities to indicate their credit risk. The price of a municipal security will generally fall if the issuer defaults on its obligation to pay principal or interest, the rating agencies downgrade the issuer's credit rating or other news affects the market's perception of the issuer's credit risk. A participation interest is also subject to the risk of default by the issuing bank. Each fund may invest in municipal bonds that are general obligations backed by the full faith and credit of the municipal issuer. Each fund may also invest in municipal bonds called revenue obligations which are subject to a higher degree of credit risk than general obligations. Revenue obligations finance specific projects (such as building a hospital or toll roads, water and sewer projects, etc.), and are not backed by the full faith and credit of the municipal issuer. Each fund may invest in excess of 25% of its assets in revenue bonds relating to any one specific industry (e.g., housing, healthcare, water and sewer, etc.). Because revenue obligations are repaid from the revenues from a facility, they are subject to a risk of default in payments of principal and interest if the facility does not generate enough income. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the project or assets or the inability to collect revenues from the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline significantly in value. Because the portfolio invests at least 80% of its assets in securities of the named state, it is more susceptible to adverse economic, political or regulatory developments affecting that state than is a portfolio that invests more broadly. Because a fund may invest its assets in a small number of issuers, the fund is more susceptible to any single economic, political or regulatory event affecting those issuers than is a diversified fund. Speculative bonds are subject to a higher risk that the issuer will default on payments of principal and interest than higher rated investment grade bonds. Although the issuer's ability to make interest and principal payments appears adequate, an adverse change in economic conditions or other circumstances is more likely to cause a default by the issuer of a speculative bond than the issuer of a higher rated investment grade bond. The fixed income securities purchased by each fund may be traded in the over- the-counter market rather than on an organized exchange and are subject to liquidity risk. This means that they may be harder to purchase or sell at a fair price. The inability to purchase or sell these fixed income securities at a fair price could have a negative impact on a fund's performance. The portfolio may invest in high yield or lower-rated securities (non-rated, below "BBB"), which may provide greater returns but are subject to greater- than-average risk. 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 you are not a resident of the state to which the portfolio is targeted, the state tax exemption will not apply. Please see the prospectus for further information regarding these and other risk considerations. - ------------------------------------------------------------------------------- FUND EXPENSE TABLES - ------------------------------------------------------------------------------- FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, OCTOBER 1, 2004 THROUGH MARCH 31, 2005 As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments and redemption fees on certain exchanges and redemptions, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period October 1, 2004 through March 31, 2005. ACTUAL EXPENSES The first line for each share class in the tables below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line for each share class in the tables below provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. MFS(R) MISSISSIPPI MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - ------------------------------------------------------------------------------- Actual 0.60% $1,000 $1,014 $3.01 A ----------------------------------------------------------------------- Hypothetical* 0.60% $1,000 $1,022 $3.02 - ------------------------------------------------------------------------------- Actual 1.37% $1,000 $1,011 $6.87 B ------------------------------------------------------------------------ Hypothetical* 1.37% $1,000 $1,018 $6.89 - ------------------------------------------------------------------------------- MFS(R) NEW YORK MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - ------------------------------------------------------------------------------- Actual 0.79% $1,000 $1,010 $3.96 A ----------------------------------------------------------------------- Hypothetical* 0.79% $1,000 $1,021 $3.98 - ------------------------------------------------------------------------------- Actual 1.54% $1,000 $1,006 $7.70 B ------------------------------------------------------------------------ Hypothetical* 1.54% $1,000 $1,017 $7.74 - ------------------------------------------------------------------------------- Actual 1.54% $1,000 $1,007 $7.71 C ----------------------------------------------------------------------- Hypothetical* 1.54% $1,000 $1,017 $7.74 - ------------------------------------------------------------------------------- MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - ------------------------------------------------------------------------------- Actual 0.88% $1,000 $1,009 $4.41 A ----------------------------------------------------------------------- Hypothetical* 0.88% $1,000 $1,021 $4.43 - ------------------------------------------------------------------------------- Actual 1.53% $1,000 $1,006 $7.65 B ------------------------------------------------------------------------ Hypothetical* 1.53% $1,000 $1,017 $7.69 - ------------------------------------------------------------------------------- Actual 1.53% $1,000 $1,005 $7.65 C ----------------------------------------------------------------------- Hypothetical* 1.53% $1,000 $1,017 $7.69 - ------------------------------------------------------------------------------- MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - ------------------------------------------------------------------------------- Actual 0.60% $1,000 $1,016 $3.02 A ----------------------------------------------------------------------- Hypothetical* 0.60% $1,000 $1,022 $3.02 - ------------------------------------------------------------------------------- Actual 1.36% $1,000 $1,013 $6.83 B ------------------------------------------------------------------------ Hypothetical* 1.36% $1,000 $1,018 $6.84 - ------------------------------------------------------------------------------- MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - ------------------------------------------------------------------------------- Actual 0.93% $1,000 $1,015 $4.67 A ----------------------------------------------------------------------- Hypothetical* 0.93% $1,000 $1,020 $4.68 - ------------------------------------------------------------------------------- Actual 1.57% $1,000 $1,013 $7.88 B ------------------------------------------------------------------------ Hypothetical* 1.57% $1,000 $1,017 $7.90 - ------------------------------------------------------------------------------- MFS(R) TENNESSEE MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - ------------------------------------------------------------------------------- Actual 0.91% $1,000 $1,010 $4.56 A ----------------------------------------------------------------------- Hypothetical* 0.91% $1,000 $1,020 $4.58 - ------------------------------------------------------------------------------- Actual 1.56% $1,000 $1,007 $7.81 B ------------------------------------------------------------------------ Hypothetical* 1.56% $1,000 $1,017 $7.84 - ------------------------------------------------------------------------------- MFS(R) VIRGINIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - ------------------------------------------------------------------------------- Actual 0.86% $1,000 $1,014 $4.32 A ----------------------------------------------------------------------- Hypothetical* 0.86% $1,000 $1,021 $4.33 - ------------------------------------------------------------------------------- Actual 1.51% $1,000 $1,010 $7.57 B ------------------------------------------------------------------------ Hypothetical* 1.51% $1,000 $1,017 $7.59 - ------------------------------------------------------------------------------- Actual 1.51% $1,000 $1,011 $7.57 C ----------------------------------------------------------------------- Hypothetical* 1.51% $1,000 $1,017 $7.59 - ------------------------------------------------------------------------------- MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - -------------- Share Class - -------------- - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period** Expense Account Value Account Value 10/01/04- Ratio 10/01/04 3/31/05 3/31/05 - ------------------------------------------------------------------------------- Actual 0.90% $1,000 $1,011 $4.51 A ----------------------------------------------------------------------- Hypothetical* 0.90% $1,000 $1,020 $4.53 - ------------------------------------------------------------------------------- Actual 1.55% $1,000 $1,009 $7.76 B ------------------------------------------------------------------------ Hypothetical* 1.55% $1,000 $1,017 $7.79 - ------------------------------------------------------------------------------- * 5% class return per year before expenses. ** Expenses paid is equal to each class" annualized expense ratio for the most recent six month period, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. - ------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 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 - 95.5% - ------------------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 11.1% Commonwealth of Puerto Rico, ROLS, FGIC, 8.633%, 2016+(+) $3,110,000 $4,018,742 - ------------------------------------------------------------------------------------------------------------------------------- Hinds County, MS, MBIA, 6.25%, 2010 1,660,000 1,870,438 - ------------------------------------------------------------------------------------------------------------------------------- Hinds County, MS, MBIA, 6.25%, 2011 1,285,000 1,467,598 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Jackson, Mississippi) FSA, 5.25%, 2018 600,000 662,250 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Jackson, Mississippi) FSA, 5.25%, 2019 1,260,000 1,392,615 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Jackson, Mississippi) FSA, 5.25%, 2020 620,000 685,019 - ------------------------------------------------------------------------------------------------------------------------------- $10,096,662 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 5.5% Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2017+(+) $750,000 $883,485 - ------------------------------------------------------------------------------------------------------------------------------- State of Mississippi, Capital Improvement, 5.25%, 2010(++) 2,000,000 2,185,260 - ------------------------------------------------------------------------------------------------------------------------------- State of Mississippi, Capital Improvement, 5.5%, 2010(++) 750,000 828,915 - ------------------------------------------------------------------------------------------------------------------------------- State of Mississippi, Capital Improvement, "I", 6%, 2009(++) 1,000,000 1,115,940 - ------------------------------------------------------------------------------------------------------------------------------- $5,013,600 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.5% Biloxi, MS, Public School District, MBIA, 5%, 2021 $1,000,000 $1,036,610 - ------------------------------------------------------------------------------------------------------------------------------- Jackson, MS, Public School District, "B", AMBAC, 5.75%, 2010(++) 1,000,000 1,105,690 - ------------------------------------------------------------------------------------------------------------------------------- Jackson, MS, Public School District, "B", AMBAC, 0%, 2022 2,000,000 807,880 - ------------------------------------------------------------------------------------------------------------------------------- Jackson, MS, Public School District, "B", AMBAC, 0%, 2023 1,000,000 377,840 - ------------------------------------------------------------------------------------------------------------------------------- Madison County, MS, School District, "A", MBIA, 5.875%, 2016 1,500,000 1,664,265 - ------------------------------------------------------------------------------------------------------------------------------- $4,992,285 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Alcorn County, MS, Corinth Hospital Rev. (Magnolia Regional Health Hospitals - 18.6% Center), AMBAC, 5.75%, 2013 $1,000,000 $1,035,000 - ------------------------------------------------------------------------------------------------------------------------------- Corinth & Alcorn County, MS, Hospital Rev. (Magnolia Regional Health Center), 5.5%, 2021 400,000 401,208 - ------------------------------------------------------------------------------------------------------------------------------- Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), 5.75%, 2031 1,000,000 1,042,950 - ------------------------------------------------------------------------------------------------------------------------------- Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital) MBIA, 6.125%, 2015 2,250,000 2,296,507 - ------------------------------------------------------------------------------------------------------------------------------- Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital) MBIA, 6.2%, 2018 1,000,000 1,020,850 - ------------------------------------------------------------------------------------------------------------------------------- Hinds County, MS, Rev. (Methodist Hospital & Rehabilitation) AMBAC, 5.6%, 2012 2,335,000 2,491,959 - ------------------------------------------------------------------------------------------------------------------------------- Jones County, MS, Hospital Rev. (South Central Regional Medical Center), 5.5%, 2017 1,000,000 1,025,960 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Adams County Hospital) FSA, 5.75%, 2016 1,000,000 1,043,160 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Medical Center) MBIA, 6.5%, 2010 1,190,000 1,217,120 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Medical Center) MBIA, 6%, 2013 750,000 766,823 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Memorial Heathcare), "B-1", 5%, 2024 1,000,000 1,007,420 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev. (Forrest County General Hospital) FSA, 5.625%, 2020 1,000,000 1,087,270 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authority Rev., Refunding & Improvement, Southwest Regional Medical Center, 5.5%, 2019 250,000 260,430 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Authoruty, Refunding & Improvement, Southwest Regional Medical Center, 5.75%, 2023 250,000 260,500 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Rev. (Rush Medical Foundation) CONNIE LEE, 6.7%, 2018 2,000,000 2,008,660 - ------------------------------------------------------------------------------------------------------------------------------- $16,965,817 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev. Other - 0.3% (Hovensa Refinery), 5.875%, 2022 $210,000 $222,600 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Jones County, MS, Solid Waste Disposal Rev. (International Paper Co.) Paper - 4.1% "A", 5.8%, 2021 $500,000 $512,875 - ------------------------------------------------------------------------------------------------------------------------------- Lowndes County, MS, Solid Waste Disposal & Pollution Control Rev. (Weyerhaeuser Co.), 6.8%, 2022 1,250,000 1,499,112 - ------------------------------------------------------------------------------------------------------------------------------- Warren County, MS, Environmental Improvement Rev. (International Paper Co.),"A", 4.4%, 2015 750,000 732,893 - ------------------------------------------------------------------------------------------------------------------------------- Warren County, MS, Solid Waste Disposal (International Paper Co.), "A", 6.6%, 2019 1,000,000 1,021,150 - ------------------------------------------------------------------------------------------------------------------------------- $3,766,030 - ------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Mississippi Development Bank, Special Obligation (Diamond Lakes Tourism - 1.4% Utilities), 6.25%, 2017 $1,250,000 $1,280,687 - ------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Gulfport, MS, Community Development Urban Renewal Rev. (Oakview Revenue - 2.1% Apartments) FNMA, 7.4%, 2025 $1,755,000 $1,755,632 - ------------------------------------------------------------------------------------------------------------------------------- Ridgeland, MS, Urban Renewal (Northbrook I & II Apartments), 2.5%, 2019** 300,000 144,000 - ------------------------------------------------------------------------------------------------------------------------------- $1,899,632 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Mississippi Home Corp. Rev., Single Family Rev, "B-2", GNMA, State - 8.3% 6.375%, 2032 $725,000 $777,186 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "A", GNMA, 6.3%, 2031 240,000 252,060 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 5.3%, 2023 930,000 923,397 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.95%, 2031 480,000 511,085 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.5%, 2032 425,000 447,109 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "B", 5.3%, 2035 935,000 952,475 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "B", GNMA, 6.625%, 2027 430,000 439,335 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "B-2", GNMA, 6.45%, 2033 855,000 928,889 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "C", GNMA, 4.95%, 2025 1,000,000 1,001,330 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., "F", GNMA, 7.55%, 2027 234,000 239,576 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Home Corp. Rev., Single Family Rev., GNMA, 6.5%, 2024 1,090,000 1,097,794 - ------------------------------------------------------------------------------------------------------------------------------- $7,570,236 - ------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 11.5% Lamar County, MS, (Jail Project) MBIA, 5.1%, 2021 $430,000 $450,051 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Correctional Facilities), "A", AMBAC, 5.125%, 2025 1,000,000 1,048,250 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Mississippi, Ltd. Tax Hospital Rev.), 5.1%, 2020 1,000,000 1,040,160 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Natchez Mississippi Convention Center) AMBAC, 6%, 2021 750,000 839,017 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Public Improvement Board), 5%, 2023 750,000 740,993 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Southaven, MS, Recreation Facilities), 5.875%, 2014 375,000 404,250 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Southaven, MS, Recreation Facilities), 6.2%, 2020 400,000 444,336 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Tunica County Highway Construction Project), FGIC, 5%, 2024 1,000,000 1,044,630 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Tunica County Highway Construction Project), FGIC, 5%, 2025 1,000,000 1,041,410 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Tupelo Fairgrounds), "A", AMBAC, 5%, 2017 785,000 819,540 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013+(+) 500,000 620,180 - ------------------------------------------------------------------------------------------------------------------------------- Walnut Grove, MS, Correctional Authority, AMBAC, 6%, 2009(++) 1,750,000 1,979,093 - ------------------------------------------------------------------------------------------------------------------------------- $10,471,910 - ------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.2% Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 $135,000 $141,473 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $240,000 $240,881 - ------------------------------------------------------------------------------------------------------------------------------- Guam Economic Development Authority, Tobacco Settlement, "B", 5.5%, 2041 350,000 336,801 - ------------------------------------------------------------------------------------------------------------------------------- $577,682 - ------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Mississippi Development Bank Special Obligations, Madison County Tax - 1.4% (Road & Bridge) AMBAC, 5.1%, 2019 $1,175,000 $1,243,996 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Jackson State University, Educational Building Corp. Rev., (Campus Colleges - 10.4% Facilities), "A", FGIC, 5%, 2029 $3,100,000 $3,181,282 - ------------------------------------------------------------------------------------------------------------------------------- Jackson State University, Educational Building Corp. Rev., (Student Recreation Center), AMBAC, 5.125%, 2027 750,000 778,102 - ------------------------------------------------------------------------------------------------------------------------------- Medical Center, Educational Building Corp. Rev. (University of Mississippi Medical Center), "B", AMBAC, 5.5%, 2023 1,000,000 1,134,820 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi State University Educational Building Corp. Rev. (Athletic Facilities), "A", 6.2%, 2006(++) 1,000,000 1,059,500 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi State University Educational Building Corp. Rev., AMBAC, 5.5%, 2016 1,000,000 1,087,660 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi State University Educational Building Corp. Rev., AMBAC, 5%, 2021 250,000 259,583 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Valley State University, Educational Building Corp., MBIA, 5.5%, 2021 890,000 958,575 - ------------------------------------------------------------------------------------------------------------------------------- University of Mississippi, Educational Building Corp. (Performing Arts Center) AMBAC, 5.25%, 2018 1,000,000 1,050,320 - ------------------------------------------------------------------------------------------------------------------------------- $9,509,842 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 4.0% Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2013+(+) $1,000,000 $1,171,000 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Okolona Electric System), 5.2%, 2016 1,010,000 1,071,115 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "II", 5.25%, 2031 875,000 917,245 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "RR", XLCA, 5%, 2030 500,000 519,465 - ------------------------------------------------------------------------------------------------------------------------------- $3,678,825 - ------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 10.5% Jackson, MS, Water & Sewer Systems Rev., FGIC, 5.25%, 2017 $420,000 $442,907 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Combined Water Sewer & Solid Waste Management) FSA, 5.25%, 2021 1,270,000 1,376,997 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Combined Water Sewer & Solid Waste Management) FSA, 5.05%, 2027 1,610,000 1,689,582 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Gulfport Water & Sewer Project) FSA, 5.625%, 2012(++) 500,000 552,770 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Gulfport Water & Sewer Project), "A", FGIC, 5.25%, 2012(++) 2,000,000 2,100,480 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Jackson Water & Sewer System Project) FSA, 5%, 2029 2,000,000 2,063,520 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Jackson Water & Sewer System Project), FGIC, 5%, 2032 250,000 256,363 - ------------------------------------------------------------------------------------------------------------------------------- Mississippi Development Bank Special Obligations (Wastewater & Solid Waste Management), "A", FSA, 5.375%, 2017 1,000,000 1,085,220 - ------------------------------------------------------------------------------------------------------------------------------- $9,567,839 - ------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $82,712,076) $86,999,116 - ------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 3.9% - ------------------------------------------------------------------------------------------------------------------------------- Jackson County, MS, Pollution Control Rev. (Chevron USA, Inc.), 2.28%, due 4/01/05 $855,000 $855,000 - ------------------------------------------------------------------------------------------------------------------------------- Jackson County, MS, Pollution Control Rev. (Chevron USA, Inc.), 2.28%, due 4/01/05 1,000,000 1,000,000 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, "A-4", 2.28%, due 4/01/05 1,500,000 1,500,000 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 2.28%, due 4/01/05 200,000 200,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $3,555,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $86,267,076) $90,554,116 - ------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.6% 563,741 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $91,117,857 - ------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 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 - 95.9% - ------------------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - ------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.6% Port Authority NY & NJ, (120th Series) MBIA, 5.5%, 2018 $1,500,000 $1,591,695 - ------------------------------------------------------------------------------------------------------------------------------- Port Authority NY & NJ, (132nd Series), 5%, 2033 2,000,000 2,060,480 - ------------------------------------------------------------------------------------------------------------------------------- Port Authority NY & NJ, Special Obligation Rev. (JFK International), MBIA, 6.25%, 2015 1,000,000 1,130,480 - ------------------------------------------------------------------------------------------------------------------------------- $4,782,655 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 8.4% Commonwealth of Puerto Rico, ROLS, XLCA, 8.543%, 2017+(+) $1,350,000 $1,726,947 - ------------------------------------------------------------------------------------------------------------------------------- Nassua County, NY, Health Systems Rev. (Nassua County), FSA, 6%, 2009(++) 1,000,000 1,130,010 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, "D", 5%, 2028 2,000,000 2,048,860 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, "J", 5%, 2030 2,500,000 2,556,750 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, "A", 6%, 2010(++) 640,000 725,082 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, "B", 5.375%, 2017 1,250,000 1,341,713 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, "C-1", 5.25%, 2025 1,000,000 1,048,930 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, "G", 5%, 2028 2,000,000 2,049,140 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, "J", FGIC, 5.5%, 2026 2,100,000 2,179,128 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, Unrefunded, "A", 6%, 2019 360,000 400,496 - ------------------------------------------------------------------------------------------------------------------------------- $15,207,056 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 0.1% Erie County, NY, Public Improvement, "A", FGIC, 5%, 2019 $140,000 $147,767 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Genesee Valley, NY, Central School District (Angelica Belmont), FGIC, Schools - 5.2% 5.25%, 2028 $1,720,000 $1,843,788 - ------------------------------------------------------------------------------------------------------------------------------- North Babylon, NY, Union Free School District, "A", FGIC, 5.5%, 2018 2,415,000 2,617,884 - ------------------------------------------------------------------------------------------------------------------------------- Port Byron, NY, Central School District, AMBAC, ETM, 7.4%, 2012(++) 500,000 619,805 - ------------------------------------------------------------------------------------------------------------------------------- Port Byron, NY, Central School District, AMBAC, ETM, 7.4%, 2013(++) 500,000 629,710 - ------------------------------------------------------------------------------------------------------------------------------- Port Byron, NY, Central School District, AMBAC, ETM, 7.4%, 2014(++) 500,000 637,650 - ------------------------------------------------------------------------------------------------------------------------------- Port Byron, NY, Central School District, AMBAC, ETM, 7.4%, 2015(++) 500,000 645,030 - ------------------------------------------------------------------------------------------------------------------------------- Rome, NY, City School District, FSA, 5.5%, 2019 1,000,000 1,080,690 - ------------------------------------------------------------------------------------------------------------------------------- Washingtonville, NY, Central School Central District, FGIC, 7.35%, 2008 550,000 619,999 - ------------------------------------------------------------------------------------------------------------------------------- Washingtonville, NY, Central School Central District, FGIC, 7.35%, 2009 550,000 634,920 - ------------------------------------------------------------------------------------------------------------------------------- $9,329,476 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Chautauqua County, NY, Industrial Development Agency, Civic Hospitals - 5.6% Facilities Rev. (Women's Christian Assn.), "A", 6.35%, 2017 $170,000 $171,569 - ------------------------------------------------------------------------------------------------------------------------------- Chautauqua County, NY, Industrial Development Agency, Civic Facilities Rev. (Women's Christian Assn.), "A", 6.4%, 2029 490,000 483,762 - ------------------------------------------------------------------------------------------------------------------------------- Chemung County, NY, Industrial Development Agency, Civic Facilities Rev. (Arnot Ogden Medical Center), 5%, 2029 750,000 746,820 - ------------------------------------------------------------------------------------------------------------------------------- Chemung County, NY, Industrial Development Agency, Civic Facilities Rev. (Arnot Ogden Medical Center), 5%, 2029 1,000,000 995,760 - ------------------------------------------------------------------------------------------------------------------------------- Fulton County, NY, Industrial Development Agency, Civic Facilities Rev. (Nathan Littauer Hospital), 5.75%, 2009 750,000 743,932 - ------------------------------------------------------------------------------------------------------------------------------- Nassau County, NY, Industrial Development Agency, Civic Facilities Rev. (North Shore Health Systems), 5.625%, 2010 500,000 535,310 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Industrial Development Agency, Civic Facilities Rev. (Staten Island University Hospital), 6.375%, 2031 500,000 490,865 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Health & Hospital Corp. Rev., 5.25%, 2017 760,000 789,298 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (Montefiore Medical Center), AMBAC, 5.25%, 2019 850,000 902,386 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (North Shore Long Island Jewish Group), 5.5%, 2033 250,000 261,928 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (St. Vincent's Hospital), FHA, 7.375%, 2011 900,000 903,897 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (White Plains Hospital), FHA, 5.375%, 2043 1,500,000 1,564,905 - ------------------------------------------------------------------------------------------------------------------------------- Suffolk County, NY, Industrial Development Agency, Civic Facilities Rev. (Huntington Hospital), "C", 5.875%, 2032 1,000,000 1,041,130 - ------------------------------------------------------------------------------------------------------------------------------- Yonkers, NY, Industrial Development Agency, Civic Facilities Rev. (St. John's Riverside Hospital), "A", 7.125%, 2031 500,000 513,305 - ------------------------------------------------------------------------------------------------------------------------------- $10,144,867 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Suffolk County, NY, Industrial Development Agency, Civic Facilities Term Care - 0.4% Rev. (Gurwin Jewish Phase II), 6.7%, 2039 $385,000 $393,689 - ------------------------------------------------------------------------------------------------------------------------------- Westchester County, NY, Industrial Development Agency, Civic Facilities Rev., Continuing Care Retirement (Kendal On Hudson), 6.5%, 2034 300,000 310,080 - ------------------------------------------------------------------------------------------------------------------------------- $703,769 - ------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.8% Nassau County, NY, Industrial Development Agency, Civic Facility Rev. (Special Needs Facility), "B-1", 6.5%, 2017 $205,000 $213,464 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (Jewish Board of Families & Children), AMBAC, 5%, 2023 695,000 725,955 - ------------------------------------------------------------------------------------------------------------------------------- New York, NY, Industrial Development Agency (PSCH, Inc.), 6.375%, 2033 500,000 519,435 - ------------------------------------------------------------------------------------------------------------------------------- $1,458,854 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Onondaga County, NY, Industrial Development Agency, Sewer Facilities Other - 0.9% Rev. (Bristol-Meyers Squibb Co.), 5.75%, 2024 $1,000,000 $1,111,840 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 430,000 455,800 - ------------------------------------------------------------------------------------------------------------------------------- $1,567,640 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Essex County, NY, Industrial Development Agency, Pollution Control Paper - 1.4% Rev. (International Paper Corp.), 5.55%, 2014 $750,000 $805,762 - ------------------------------------------------------------------------------------------------------------------------------- Essex County, NY, Industrial Development Agency, Pollution Control Rev. (International Paper Corp.), 6.15%, 2021 1,000,000 1,038,870 - ------------------------------------------------------------------------------------------------------------------------------- Essex County, NY, Industrial Development Agency, Pollution Control Rev. (International Paper Corp.), 6.45%, 2023 700,000 738,591 - ------------------------------------------------------------------------------------------------------------------------------- $2,583,223 - ------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - New York City, NY, Industrial Development Agency, Civic Facilities Other - 0.6% Rev. (United Jewish Appeal), "A", 5%, 2027 $1,000,000 $1,040,460 - ------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing New York City, NY, Housing Development Corp., Multi-Family Housing Revenue - 1.4% Rev., 5.6%, 2019 $400,000 $415,268 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Housing Development Corp., Multi-Family Housing Rev., 5.5%, 2034 2,000,000 2,045,720 - ------------------------------------------------------------------------------------------------------------------------------- $2,460,988 - ------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Schenectady, NY, Metroplex Development Authority Rev., "A", MBIA, Revenue - 0.3% 5.375%, 2021 $475,000 $516,221 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 3.6% New York Mortgage Agency Rev., 4.6%, 2015 $2,000,000 $2,006,660 - ------------------------------------------------------------------------------------------------------------------------------- New York Mortgage Agency Rev., 5.85%, 2018 945,000 978,056 - ------------------------------------------------------------------------------------------------------------------------------- New York Mortgage Agency Rev., 5.8%, 2020 1,555,000 1,606,548 - ------------------------------------------------------------------------------------------------------------------------------- New York Mortgage Agency Rev., 5.1%, 2024 2,000,000 2,020,100 - ------------------------------------------------------------------------------------------------------------------------------- $6,611,364 - ------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.5% Niagara County, NY, Industrial Developement Agency, Solid Waste Disposal Rev., (American Ref-fuel), "C", 5.625%, 2024 $850,000 $897,090 - ------------------------------------------------------------------------------------------------------------------------------- Oneida Herkimer, NY, Solid Waste Management Systems Rev., 6.75%, 2014 60,000 60,199 - ------------------------------------------------------------------------------------------------------------------------------- Rockland County, NY, Solid Waste Management Systems Rev., 4.8%, 2005 20,000 20,289 - ------------------------------------------------------------------------------------------------------------------------------- $977,578 - ------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 5.3% New York Dormitory Authority (City University), AMBAC, 5.75%, 2018 $800,000 $930,208 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Pace University), MBIA, 6%, 2019 1,700,000 1,908,080 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (School Program), 6.25%, 2020 1,690,000 1,916,866 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (State University), 5.375%, 2010(++) 1,500,000 1,663,155 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (State University), 5.875%, 2017 1,130,000 1,307,026 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Upstate Community Colleges), FSA, 6%, 2010(++) 1,010,000 1,149,188 - ------------------------------------------------------------------------------------------------------------------------------- New York Municipal Bond Bank Agency, Special Program Rev., AMBAC, 5.25%, 2015 715,000 769,018 - ------------------------------------------------------------------------------------------------------------------------------- $9,643,541 - ------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 11.9% New York Dormitory Authority (City University), "A", 5.625%, 2016 $2,450,000 $2,762,400 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority (Judicial Institute at Pace), AMBAC, 5.5%, 2020 2,500,000 2,724,275 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev., Mental Health Services, "A", MBIA, 5.75%, 2010(++) 5,000 5,562 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev., Mental Health Services, "B", MBIA, 5.25%, 2011(++) 385,000 424,262 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev., Mental Health Services, "D", 5.25%, 2010(++) 35,000 38,345 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev., Mental Health Services, Unrefunded, "B", MBIA, 5.25%, 2031 830,000 864,520 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev., Mental Health Services, Unrefunded, "D", FSA, 5.25%, 2030 70,000 72,540 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, Mental Health Services Facilites Improvement, 5.25%, 2010(++) 895,000 980,535 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, Mental Health Services Facilites Improvement, 5.25%, 2011(++) 785,000 862,699 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority, Mental Health Services Facilities Improvement, "A", AMBAC, 5%, 2030 2,000,000 2,057,940 - ------------------------------------------------------------------------------------------------------------------------------- New York Municipal Bond Bank Agency, Special School Purpose Rev., 5.25%, 2022 1,000,000 1,059,770 - ------------------------------------------------------------------------------------------------------------------------------- New York Urban Development Corp. (Correctional Facilities) AMBAC, 0%, 2009 5,000,000 4,399,750 - ------------------------------------------------------------------------------------------------------------------------------- New York Urban Development Corp. (State Facilities), AMBAC, 5.6%, 2015 2,750,000 3,126,393 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco Settlement Financing Corp., NY, "A", 5.5%, 2018 2,000,000 2,175,880 - ------------------------------------------------------------------------------------------------------------------------------- $21,554,871 - ------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 2.2% New York City, NY, Transitional Finance Authority Rev., 5.75%, 2009 (++) $2,730,000 $3,042,012 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Transitional Finance Authority Rev., "A", 5%, 2026 1,000,000 1,035,730 - ------------------------------------------------------------------------------------------------------------------------------- $4,077,742 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Guam Economic Development Authority, Tobacco Settlement, "B", 5.5%, 2041 $400,000 $384,916 - ------------------------------------------------------------------------------------------------------------------------------- New York County Tobacco Trust II, 5.625%, 2035 800,000 798,352 - ------------------------------------------------------------------------------------------------------------------------------- $1,183,268 - ------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 9.0% New York Thruway Authority, General Rev., Highway & Bridges, 5.25%, 2015 $1,500,000 $1,593,705 - ------------------------------------------------------------------------------------------------------------------------------- Niagara Falls, NY, Bridge Commision Toll Rev., RITES, FGIC, 7.566%, 2015+(+) 3,500,000 4,180,400 - ------------------------------------------------------------------------------------------------------------------------------- Triborough Bridge & Tunnel Authority Rev., NY, "A", MBIA, 5%, 2032 2,000,000 2,045,760 - ------------------------------------------------------------------------------------------------------------------------------- Triborough Bridge & Tunnel Authority Rev., NY, "B", 5%, 2032 1,000,000 1,024,100 - ------------------------------------------------------------------------------------------------------------------------------- Triborough Bridge & Tunnel Authority Rev., NY, ETM, 6%, 2012(++) 1,000,000 1,121,150 - ------------------------------------------------------------------------------------------------------------------------------- Triborough Bridge & Tunnel Authority Rev., NY, RITES, ETM, 8.054%, 2017(++),+(+) 5,000,000 6,347,500 - ------------------------------------------------------------------------------------------------------------------------------- $16,312,615 - ------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 10.5% Metropolitan Transportation Authority Rev., NY, "A", AMBAC, 5%, 2033 $2,000,000 $2,066,480 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, AMBAC, ETM, 5.75%, 2013(++) 825,000 922,020 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, Dedicated Tax Fund Rev., 5.5%, 2015(++) 750,000 849,097 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, Dedicated Tax Fund Rev., FGIC, ETM, 5.25%, 2014(++) 500,000 533,835 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, ETM, 7.375%, 2008(++) 1,425,000 1,531,561 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, FGIC, 5.875%, 2010(++) 2,000,000 2,241,940 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority Rev., NY, FGIC, 5%, 2025 2,500,000 2,585,700 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Transportation Authority, NY, Commuter Facilities Rev., FGIC, 5.25%, 2011(++) 1,000,000 1,100,210 - ------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, 5%, 2018 1,000,000 1,039,080 - ------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, "B", FGIC, 5.4%, 2017 2,000,000 2,144,720 - ------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, "B", FSA, 5.8%, 2018 20,000 22,131 - ------------------------------------------------------------------------------------------------------------------------------- New York Thruway Authority, General Rev., Highway & Bridges, AMBAC, 5.375%, 2010(++) 2,000,000 2,213,240 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Highway & Transportation Authority Rev., 5%, 2036 1,700,000 1,742,517 - ------------------------------------------------------------------------------------------------------------------------------- $18,992,531 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Amherst, NY, Industrial Development Agency Rev. (Daemen College), Colleges - 5.4% "A", 6%, 2021 $1,000,000 $1,063,500 - ------------------------------------------------------------------------------------------------------------------------------- Cattaraugus County, NY, Industrial Development Agency Rev. (Jamestown Community College), "A", 6.4%, 2019 500,000 555,000 - ------------------------------------------------------------------------------------------------------------------------------- Hempstead Town, NY, Industrial Development Agency, Civic Facilities Rev. (Hofstra University), MBIA, 5.8%, 2015 1,500,000 1,584,660 - ------------------------------------------------------------------------------------------------------------------------------- Islip, NY, Community Development Agency Rev. (New York Institute of Technology), 7.5%, 2006(++) 2,000,000 2,127,080 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (Fordham University), AMBAC, 7.2%, 2015 40,000 40,182 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (St. John's University), "A", MBIA, 5%, 2017 300,000 317,322 - ------------------------------------------------------------------------------------------------------------------------------- New York Dormitory Authority Rev. (Yeshiva University), AMBAC, 5.125%, 2034 1,000,000 1,045,980 - ------------------------------------------------------------------------------------------------------------------------------- Onondaga County, NY, Industrial Development Agency Rev. (Le Moyne College), 5.625%, 2021 750,000 804,938 - ------------------------------------------------------------------------------------------------------------------------------- Schenectady, NY, Industrial Development Agency, Civic Facilities Rev. (Union College), "A", AMBAC, 5%, 2032 2,000,000 2,054,200 - ------------------------------------------------------------------------------------------------------------------------------- Utica, NY, Industrial Development Agency, Civic Facilities Rev. (Utica College), 5.3%, 2008 140,000 144,193 - ------------------------------------------------------------------------------------------------------------------------------- $9,737,055 - ------------------------------------------------------------------------------------------------------------------------------- Universities - New York Dormitory Authority Rev. (New York Unversity), "A", FGIC, Dormatories - 0.6% 5%, 2029 $1,000,000 $1,032,800 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Cogeneration - 0.3% Port Authority NY & NJ, Special Obligation Rev., 6.75%, 2011 $500,000 $529,035 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Owned - 2.8% New York Energy Research & Development Rev. (Con Edison), 6.1%, 2020 $2,400,000 $2,466,936 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities, Water Facilities Rev. (NY American Water Co.), 8.85%, 2015 2,500,000 2,532,550 - ------------------------------------------------------------------------------------------------------------------------------- $4,999,486 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 3.0% Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2014+(+) $500,000 $578,980 - ------------------------------------------------------------------------------------------------------------------------------- Long Island Power Authority, Electrical Systems Rev., 5.5%, 2021 400,000 432,956 - ------------------------------------------------------------------------------------------------------------------------------- New York Power Authority Rev., 5%, 2021 1,000,000 1,046,970 - ------------------------------------------------------------------------------------------------------------------------------- New York Power Authority Rev., 5.25%, 2040 3,000,000 3,120,900 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., 5.5%, 2017 200,000 206,122 - ------------------------------------------------------------------------------------------------------------------------------- $5,385,928 - ------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 12.5% Erie County, NY, Water Authority Rev., AMBAC, ETM, 6.75%, 2014(++) $1,000,000 $1,189,840 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 5%, 2027 1,500,000 1,549,785 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 5.5%, 2033 1,850,000 1,986,734 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., "B", AMBAC, 5%, 2028 1,500,000 1,553,535 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., "C", 5%, 2031 1,000,000 1,031,370 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., ETM, 6%, 2010(++) 620,000 701,487 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., FGIC, 5.25%, 2033 2,000,000 2,084,560 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., MBIA, 5.5%, 2007(++) 1,250,000 1,333,600 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2024 1,005,000 1,046,898 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2025 1,500,000 1,561,260 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2029 2,000,000 2,065,360 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Pollution Control Rev., 5.75%, 2010 175,000 195,216 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Pollution Control Rev., 6.875%, 2010 220,000 222,235 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Pollution Control Rev., 7.25%, 2010 70,000 70,335 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Pollution Control Rev., ETM, 5.75%, 2010(++) 945,000 1,057,994 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Pollution Control Rev., ETM, 5.75%, 2010(++) 1,115,000 1,248,321 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Water Facilities Rev., 6%, 2031 1,005,000 1,065,029 - ------------------------------------------------------------------------------------------------------------------------------- New York Environmental Facilities Corp., Water Facilities Rev. (Spring Valley Water Co.), AMBAC, 6.15%, 2024 1,500,000 1,536,720 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2005(++) 150,000 152,369 - ------------------------------------------------------------------------------------------------------------------------------- Suffolk County, NY, Water Authority Rev., MBIA, 5.1%, 2012 895,000 976,033 - ------------------------------------------------------------------------------------------------------------------------------- $22,628,681 - ------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $161,273,041) $173,609,471 - ------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.8% - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Job Development Authority Rev., 2.28%, due 4/01/05 $1,200,000 $1,200,000 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 2.28%, due 4/01/05 2,000,000 2,000,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $3,200,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $164,473,041) $176,809,471 - ------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 2.3% 4,109,660 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $180,919,131 - ------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 96.5% - ------------------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - ------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 4.5% Charlotte, NC, "B", MBIA, 5.875%, 2019 $1,000,000 $1,083,680 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, "B", MBIA, 5.875%, 2020 3,775,000 4,081,643 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2029 2,000,000 2,067,140 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2034 4,485,000 4,611,651 - ------------------------------------------------------------------------------------------------------------------------------- Raleigh Durham, NC, Airport Authority Rev., "A", AMBAC, 5%, 2030 1,000,000 1,034,370 - ------------------------------------------------------------------------------------------------------------------------------- Raleigh Durham, NC, Airport Authority Rev., "A", FGIC, 5.25%, 2018 2,700,000 2,895,453 - ------------------------------------------------------------------------------------------------------------------------------- $15,773,937 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 1.0% Charlotte, NC, 5.5%, 2016 $3,100,000 $3,410,899 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.4% New Hanover County, NC, Public Improvement, 5.8%, 2010(++) $4,200,000 $4,774,938 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 3.7% Brunswick County, NC, FGIC, 5%, 2020 $2,800,000 $2,981,048 - ------------------------------------------------------------------------------------------------------------------------------- Cumberland County, NC, 5.8%, 2010(++) 4,400,000 4,962,804 - ------------------------------------------------------------------------------------------------------------------------------- Johnston County, NC, FGIC, 5.6%, 2018 2,000,000 2,194,800 - ------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, Public Improvement, 5%, 2021 1,435,000 1,505,243 - ------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, School Improvement, 5%, 2019 1,255,000 1,335,383 - ------------------------------------------------------------------------------------------------------------------------------- $12,979,278 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Catawba County, NC, Hospital Rev. (Catawba Memorial Hospital), AMBAC, Hospitals - 23.2% 5%, 2017 $1,200,000 $1,253,868 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A", 5.75%, 2021 1,500,000 1,548,780 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A", 5.125%, 2022 1,000,000 1,023,510 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A", 5%, 2031 3,500,000 3,536,400 - ------------------------------------------------------------------------------------------------------------------------------- Cumberland County, NC, Hospital Facilities Rev. (Cumberland Hospital), MBIA, 0%, 2009 1,800,000 1,528,218 - ------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, Hospital Rev. (New Hanover Regional Medical Center), MBIA, 5%, 2019 6,225,000 6,507,055 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission (Cleveland County Healthcare), "A", AMBAC, 5%, 2035 1,305,000 1,334,963 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission (Northeast Medical Center), 5.25%, 2029 2,000,000 2,069,900 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission (Novant Health), "A", MBIA, 5%, 2018 1,975,000 2,057,871 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission (Novant Health), Obligations Group A, 5%, 2020 500,000 517,960 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Health Care Facilities Rev. (Wakemed), AMBAC, 5%, 2021 3,500,000 3,680,600 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Betsy Johnson Health Care System), FSA, 5.125%, 2032 1,500,000 1,561,245 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Duke University), "C", 5.25%, 2021 5,975,000 6,146,303 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Gaston Memorial Hospital), 5.5%, 2015 5,790,000 5,971,401 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Gaston Memorial Hospital), 5.5%, 2019 6,500,000 6,685,185 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Maria Parham Medical Center), 6.5%, 2026 1,000,000 1,085,800 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Mission-St. Joseph Health Systems), 5.5%, 2021 2,825,000 3,001,054 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Mission-St. Joseph Health Systems), MBIA, 5.1%, 2018 1,500,000 1,565,790 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Pitt County Memorial Hospital), "B", 5%, 2018 3,000,000 3,070,980 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Rex Healthcare), AMBAC, 5%, 2017 5,000,000 5,205,850 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Southeastern Regional Medical Center), 5.375%, 2032 3,330,000 3,410,320 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Wilson Memorial Hospital), AMBAC, 0%, 2013 1,000,000 694,990 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Hospital Rev. (Wilson Memorial Hospital), AMBAC, 0%, 2015 1,140,000 710,687 - ------------------------------------------------------------------------------------------------------------------------------- Northern Hospital District Surry County, NC, Health Care Facilities Rev., ASST GTY, 5.5%, 2019 1,250,000 1,331,825 - ------------------------------------------------------------------------------------------------------------------------------- Northern Hospital District Surry County, NC, Health Care Facilities Rev., ASST GTY, 5.1%, 2021 1,000,000 1,041,650 - ------------------------------------------------------------------------------------------------------------------------------- Pitt County, NC, Rev., Pitt County Memorial Hospital, ETM, 5.25%, 2021(++) 10,135,000 10,204,121 - ------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Hospital Rev. (Chapel Hill Hospital), 5.25%, 2006(++) 4,800,000 5,005,584 - ------------------------------------------------------------------------------------------------------------------------------- $81,751,910 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long North Carolina Medical Care Commission, Health Care Facilities Rev. Term Care - 0.8% (Arbor Acres Community), 6.375%, 2032 $1,000,000 $1,039,910 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Health Care Facilities Rev. (Deerfield), "A", 5%, 2023 1,000,000 1,017,470 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Health Care Facilities Rev. (Givens Estates), 6.5%, 2032 800,000 828,256 - ------------------------------------------------------------------------------------------------------------------------------- $2,885,636 - ------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.9% Cumberland County, NC, Finance Corp., Installment Payment Rev. (Detention Center & Mental Health), AMBAC, 5.625%, 2019 $2,125,000 $2,301,928 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Medical Care Commission, Health Care Facilities Rev. "A", 5.8%, 2034 1,000,000 1,013,320 - ------------------------------------------------------------------------------------------------------------------------------- $3,315,248 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev. Other - 0.3% (Hovensa Refinery), 5.875%, 2022 $860,000 $911,600 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Columbus County, NC, Industrial Facilities & Pollution Control Paper - 3.1% Financing Authority Rev. (International Paper Co.), "A", 5.8%, 2016 $2,000,000 $2,096,200 - ------------------------------------------------------------------------------------------------------------------------------- Haywood County, NC, Industrial Facilities & Pollution Control Financing Authority Rev. (Champion International Corp.), "A", 5.75%, 2025 5,400,000 5,433,804 - ------------------------------------------------------------------------------------------------------------------------------- Martin County, NC, Industrial Facilities & Pollution Control Financing Authority Rev. (Solid Waste Disposal Weyerhaeuser), 6.8%, 2024 3,500,000 3,547,985 - ------------------------------------------------------------------------------------------------------------------------------- $11,077,989 - ------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Charlotte, NC, Housing Authority Rev., Mortgage Rocky Branch II, Revenue - 2.1% GNMA, 4.65%, 2035 $2,000,000 $1,924,240 - ------------------------------------------------------------------------------------------------------------------------------- Mecklenburg County, NC (Little Rock Apartments), FNMA, 5.15%, 2022 1,000,000 1,025,040 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency, "H", FHA, 6.05%, 2028 4,460,000 4,572,347 - ------------------------------------------------------------------------------------------------------------------------------- $7,521,627 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 5.9% North Carolina Housing Finance Agency Rev., "13-A", 4.25%, 2028 $2,410,000 $2,434,534 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "14-A", AMBAC, 4.35%, 2028 4,300,000 4,339,560 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "15-A", FSA, 4.95%, 2032 500,000 499,225 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "19-A", 5.1%, 2030 2,500,000 2,513,800 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "5-A", 5.55%, 2019 3,530,000 3,589,551 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "7-A", 6.15%, 2020 765,000 794,024 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "A", 5.25%, 2020 1,490,000 1,499,357 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "A", 5.375%, 2023 250,000 254,028 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "PP", FHA, 6.15%, 2017 1,680,000 1,736,263 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Housing Finance Agency Rev., "RR", 5.85%, 2028 3,020,000 3,062,854 - ------------------------------------------------------------------------------------------------------------------------------- $20,723,196 - ------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 9.5% Brunswick County, NC, Certificates of Participation, FSA, 5.5%, 2020 $1,000,000 $1,084,160 - ------------------------------------------------------------------------------------------------------------------------------- Cabarrus County, NC, Installment Financing Contract, 5%, 2021 5,500,000 5,750,415 - ------------------------------------------------------------------------------------------------------------------------------- Carteret County, NC, AMBAC, 5.625%, 2020 1,010,000 1,103,334 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Certificates of Participation (Convention Facilities), 5.5%, 2020 3,000,000 3,255,900 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Certificates of Participation (Convention Facilities), AMBAC, 0%, 2005 4,810,000 4,730,154 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Certificates of Participation (Convention Facilities), AMBAC, 0%, 2006 1,075,000 1,026,131 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Certificates of Participation (Convention Facilities), AMBAC, 0%, 2008 3,000,000 2,655,000 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Certificates of Participation (Public Safety Facilities), "D", 5.5%, 2020 3,000,000 3,259,830 - ------------------------------------------------------------------------------------------------------------------------------- Harnett County, NC, Certificates of Participation, FSA, 5.25%, 2015 1,020,000 1,135,831 - ------------------------------------------------------------------------------------------------------------------------------- Harnett County, NC, Certificates of Participation, FSA, 5.5%, 2016 1,225,000 1,344,511 - ------------------------------------------------------------------------------------------------------------------------------- Pitt County, NC, Certificates of Participation (School Facilities Improvement), "A", FSA, 5.5%, 2020 1,250,000 1,352,550 - ------------------------------------------------------------------------------------------------------------------------------- Pitt County, NC, Certificates of Participation (School Facilities Improvement), "B", FSA, 5.75%, 2018 1,390,000 1,541,691 - ------------------------------------------------------------------------------------------------------------------------------- Pitt County, NC, Certificates of Participation (School Facilities Improvement), "B", FSA, 5.75%, 2019 1,390,000 1,539,008 - ------------------------------------------------------------------------------------------------------------------------------- Randolph County, NC, Certificates of Participation, FSA, 5.6%, 2009(++) 3,000,000 3,305,460 - ------------------------------------------------------------------------------------------------------------------------------- Rockingham, NC, Certificates of Participation, AMBAC, 5.125%, 2024 350,000 371,777 - ------------------------------------------------------------------------------------------------------------------------------- $33,455,752 - ------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 5.4% Cabarrus County, NC, Development Corp., AMBAC, 5.3%, 2019 $1,250,000 $1,341,550 - ------------------------------------------------------------------------------------------------------------------------------- Forsyth County, NC, Certificates of Participation (Forsyth County Public Facilities Equipment), 5.25%, 2023 1,230,000 1,317,994 - ------------------------------------------------------------------------------------------------------------------------------- Forsyth County, NC, Certificates of Participation (Public Facilities & Equipment Project), 5.25%, 2019 775,000 835,458 - ------------------------------------------------------------------------------------------------------------------------------- Iredell County, NC, Public Facilities (School Projects), AMBAC, 5.5%, 2010(++) 1,000,000 1,112,920 - ------------------------------------------------------------------------------------------------------------------------------- New Hanover County, NC, Certificates of Participation (New Hanover County Projects), AMBAC, 5.25%, 2018 1,635,000 1,779,861 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Bank & Finance Agency (Kidder), 7.5%, 2006 7,000,000 7,371,140 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2012+(+) 1,500,000 1,902,000 - ------------------------------------------------------------------------------------------------------------------------------- Rutherford County, NC, Certificates of Participation (Rutherford County School), AMBAC, 5%, 2023 840,000 881,185 - ------------------------------------------------------------------------------------------------------------------------------- Winston Salem, NC, Certificates of Participation, "C", 5%, 2018 2,575,000 2,698,394 - ------------------------------------------------------------------------------------------------------------------------------- $19,240,502 - ------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.8% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $1,650,000 $1,735,404 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 1,000,000 1,067,540 - ------------------------------------------------------------------------------------------------------------------------------- $2,802,944 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $1,880,000 $1,886,900 - ------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., Tax - 2.1% RITES, FSA, 9.089%, 2018+(+) $5,425,000 $7,512,974 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 8.2% Appalachian State University, NC, "A", FGIC, 5.125%, 2022 $1,260,000 $1,342,606 - ------------------------------------------------------------------------------------------------------------------------------- Appalachian State University, NC, Rev. (Package Systems), FSA, 5.6%, 2020 2,285,000 2,491,747 - ------------------------------------------------------------------------------------------------------------------------------- East Carolina University, NC, Rev., "A", AMBAC, 5.25%, 2021 1,375,000 1,486,114 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (Duke University), "A", 5.125%, 2041 4,915,000 5,033,402 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (Duke University), "A", 5.25%, 2042 2,000,000 2,076,420 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (High Point University), 5.125%, 2018 510,000 543,992 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (High Point University), 5.125%, 2021 300,000 315,657 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (Johnson & Wales University), "A", XLCA, 5.25%, 2021 775,000 835,737 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (Johnson & Wales University), "A", XLCA, 5.25%, 2022 1,870,000 2,009,970 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Capital Facilities Finance (Johnson & Wales University), "A", XLCA, 5%, 2033 2,000,000 2,046,260 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Industrial Tourist Authority (University Plaza), "A", MBIA, 5%, 2020 2,180,000 2,291,463 - ------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Greensboro Rev., "A", FSA, 5%, 2020 2,835,000 2,990,443 - ------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Systems Pool Rev., "C", AMBAC, 5%, 2029 2,000,000 2,064,300 - ------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, University Rev., 5%, 2028 2,000,000 2,069,460 - ------------------------------------------------------------------------------------------------------------------------------- University of North Carolina, Wilmington Rev., "A", AMBAC, 5%, 2019 1,375,000 1,452,536 - ------------------------------------------------------------------------------------------------------------------------------- $29,050,107 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Wake County, NC, Industrial Facilities & Pollution Control Rev. Owned - 0.8% (Carolina Power & Light Co.), 5.375%, 2017 $2,500,000 $2,674,300 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal North Carolina Eastern Municipal Power Agency, "A", ETM, Owned - 13.9% 7.5%, 2010(++) $2,595,000 $3,071,831 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, "A", ETM, 5%, 2017(++) 3,120,000 3,382,049 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, "A", MBIA, 7.5%, 2010 3,005,000 3,536,945 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, "B", MBIA, 7.25%, 2007 5,000,000 5,376,550 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, AMBAC, 6%, 2018 1,245,000 1,457,522 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Eastern Municipal Power Agency, RITES, AMBAC, 9.066%, 2018+(+) 6,500,000 8,716,890 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., 6.375%, 2013 1,000,000 1,111,650 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 7%, 2007 5,000,000 5,355,450 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 6%, 2011 5,000,000 5,641,750 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, ROLS, 8.096%, 2020+(+) 3,000,000 3,425,160 - ------------------------------------------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, ROLS, MBIA, 8.096%, 2019+(+) 5,000,000 5,688,100 - ------------------------------------------------------------------------------------------------------------------------------- Raleigh, NC, Combined Enterprise Systems Rev., 5.125%, 2022 2,000,000 2,080,900 - ------------------------------------------------------------------------------------------------------------------------------- Raleigh, NC, Combined Enterprise Systems Rev., 5%, 2024 385,000 401,563 - ------------------------------------------------------------------------------------------------------------------------------- $49,246,360 - ------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 8.4% Broad River, NC, Water Authority Rev., MBIA, 5.75%, 2019 $1,490,000 $1,652,574 - ------------------------------------------------------------------------------------------------------------------------------- Cary, NC, Combined Enterprise Systems Rev., 5%, 2026 1,000,000 1,034,820 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Storm Water Fee Rev., 6%, 2010(++) 3,180,000 3,613,943 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Storm Water Fee Rev., 5%, 2034 4,190,000 4,316,999 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Water & Sewer Systems Rev., 5.75%, 2009(++) 2,000,000 2,215,240 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Water & Sewer Systems Rev., 5.75%, 2010(++) 3,075,000 3,458,422 - ------------------------------------------------------------------------------------------------------------------------------- Charlotte, NC, Water & Sewer Systems Rev., 5.5%, 2017 1,650,000 1,806,156 - ------------------------------------------------------------------------------------------------------------------------------- Durham County, NC, Enterprise Systems Rev., MBIA, 5%, 2023 1,675,000 1,763,088 - ------------------------------------------------------------------------------------------------------------------------------- Greensboro, NC, Enterprise Systems Rev., "A", 5.125%, 2018 1,490,000 1,590,575 - ------------------------------------------------------------------------------------------------------------------------------- Greensboro, NC, Enterprise Systems Rev., "A", 5.125%, 2019 1,750,000 1,863,208 - ------------------------------------------------------------------------------------------------------------------------------- Greenville, NC, Combined Enterprise Systems Rev., FSA, 5%, 2016 1,005,000 1,074,345 - ------------------------------------------------------------------------------------------------------------------------------- Greenville, NC, Combined Enterprise Systems Rev., FSA, 5.25%, 2019 1,170,000 1,270,632 - ------------------------------------------------------------------------------------------------------------------------------- Harnett County, NC, Water & Sewer Systems Rev., AMBAC, 5%, 2028 700,000 725,452 - ------------------------------------------------------------------------------------------------------------------------------- Kannapolis, NC, Water & Sewer Rev., "B", FSA, 5.25%, 2021 1,000,000 1,066,580 - ------------------------------------------------------------------------------------------------------------------------------- Winston Salem, NC, Water & Sewer Systems Rev., 5%, 2033 2,000,000 2,074,080 - ------------------------------------------------------------------------------------------------------------------------------- $29,526,114 - ------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $318,233,533) $340,522,211 - ------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.1% - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D", 2.3%, due 4/07/05 $600,000 $600,000 - ------------------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 500,000 500,000 - ------------------------------------------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White Memorial Hospital), 2.3%, due 4/01/05 1,530,000 1,530,000 - ------------------------------------------------------------------------------------------------------------------------------- Irvine, CA, Improvement Building Act 1915, 2.28%, due 4/06/05 1,000,000 1,000,000 - ------------------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, 2.3%, due 4/01/05 1,800,000 1,800,000 - ------------------------------------------------------------------------------------------------------------------------------- Sacramento, CA, Unified School District, District Certification Partnership, 2.28%, due 4/07/05 2,000,000 2,000,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $7,430,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $325,663,533) $347,952,211 - ------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.4% 5,070,100 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $353,022,311 - ------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 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 - 96.6% - ------------------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - ------------------------------------------------------------------------------------------------------------------------------- Airport & Port Allegheny County PA, Airport Rev. (Pittsburgh International Airport), Revenue - 2.2% FGIC, 6.125%, 2017 $500,000 $538,780 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County PA, Airport Rev. (Pittsburgh International Airport), MBIA, 5.75%, 2014 1,000,000 1,087,160 - ------------------------------------------------------------------------------------------------------------------------------- Susquehanna Area Regional Airport, 5.375%, 2018 200,000 205,522 - ------------------------------------------------------------------------------------------------------------------------------- Susquehanna Area Regional Airport, AMBAC, 5.375%, 2023 500,000 526,620 - ------------------------------------------------------------------------------------------------------------------------------- $2,358,082 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 6.0% Allegheny County, PA, Unrefunded Balance, "C53", FGIC, 5.3%, 2018 $285,000 $306,982 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Unrefunded Balance, "C53", FGIC, 5.4%, 2019 290,000 313,763 - ------------------------------------------------------------------------------------------------------------------------------- Beaver County, PA, MBIA, 5.75%, 2006(++) 250,000 261,428 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, FGIC, 8.633%, 2015+(+) 1,000,000 1,278,080 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLS, XLCA, 8.543%, 2017+(+) 1,000,000 1,279,220 - ------------------------------------------------------------------------------------------------------------------------------- Luzerne County, PA, MBIA, 5.25%, 2025 500,000 529,865 - ------------------------------------------------------------------------------------------------------------------------------- North Huntingdon Township, PA, AMBAC, 5.25%, 2019 500,000 541,570 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania State Finance Authority Rev. (Penn Hills), "A", FGIC, 5.45%, 2010(++) 85,000 93,847 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania State Finance Authority Rev. (Penn Hills), "A", FGIC, 5.45%, 2019 415,000 448,793 - ------------------------------------------------------------------------------------------------------------------------------- State of Pennsylvania, 6%, 2010(++) 1,000,000 1,127,880 - ------------------------------------------------------------------------------------------------------------------------------- State of Pennsylvania, 6.25%, 2010 300,000 340,695 - ------------------------------------------------------------------------------------------------------------------------------- $6,522,123 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 0.5% Pittsburgh, PA, FGIC, 5.75%, 2009(++) $500,000 $547,895 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 25.5% Allegheny Valley, PA, School District, "A", MBIA, 5%, 2028 $1,000,000 $1,037,720 - ------------------------------------------------------------------------------------------------------------------------------- Ambridge, PA, Area School District, MBIA, 5%, 2034 750,000 774,165 - ------------------------------------------------------------------------------------------------------------------------------- Butler, PA, Area School District, FSA, 5%, 2031 1,000,000 1,030,660 - ------------------------------------------------------------------------------------------------------------------------------- Butler, PA, School District, FGIC, 5.375%, 2018 500,000 533,075 - ------------------------------------------------------------------------------------------------------------------------------- Chambersburg, PA, School District, FSA, 5%, 2016 500,000 526,885 - ------------------------------------------------------------------------------------------------------------------------------- Downingtown, PA, School District, AMBAC, 5.65%, 2008(++) 500,000 541,735 - ------------------------------------------------------------------------------------------------------------------------------- Exeter Township, PA, School District, FGIC, 5%, 2025 1,000,000 1,041,120 - ------------------------------------------------------------------------------------------------------------------------------- Garnet Valley, PA, School District, FGIC, 5.5%, 2015 750,000 828,094 - ------------------------------------------------------------------------------------------------------------------------------- Gateway, PA, Alleghany School District, FGIC, 5.2%, 2023 1,000,000 1,067,350 - ------------------------------------------------------------------------------------------------------------------------------- Gateway, PA, Allegheny School District, FGIC, 5%, 2032 1,390,000 1,429,820 - ------------------------------------------------------------------------------------------------------------------------------- Jim Thorpe, PA, Area School District, FSA, 5%, 2026 2,085,000 2,176,281 - ------------------------------------------------------------------------------------------------------------------------------- Mt. Lebanon PA, School District, MBIA, 5%, 2020 1,000,000 1,052,360 - ------------------------------------------------------------------------------------------------------------------------------- North Allegheny, PA, School District, FGIC, 5.05%, 2022 590,000 615,423 - ------------------------------------------------------------------------------------------------------------------------------- North Pocono, PA, School District, FGIC, 5%, 2023 500,000 522,305 - ------------------------------------------------------------------------------------------------------------------------------- North Schuylkill, PA, School District, FGIC, 5%, 2028 650,000 669,162 - ------------------------------------------------------------------------------------------------------------------------------- Palmyra, PA, School District, FGIC, 5.375%, 2016 820,000 896,219 - ------------------------------------------------------------------------------------------------------------------------------- Pennridge, PA, School District, MBIA, 5%, 2020 500,000 526,180 - ------------------------------------------------------------------------------------------------------------------------------- Pennridge, PA, School District, MBIA, 5%, 2021 500,000 524,810 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Public School Building (Garnet Valley School Disctrict), AMBAC, 5.5%, 2018 1,005,000 1,086,345 - ------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, "A", FSA, 5.25%, 2028 1,000,000 1,057,500 - ------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, FSA, 5%, 2019 500,000 521,505 - ------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, FSA, 5%, 2023 1,000,000 1,041,410 - ------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, FSA, 5%, 2024 1,000,000 1,041,410 - ------------------------------------------------------------------------------------------------------------------------------- Perkiomen Valley, PA, School District, FSA, 5%, 2025 1,260,000 1,308,737 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, School District, AMBAC, 5.375%, 2007(++) 500,000 525,235 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, School District, FSA, 5.75%, 2011(++) 500,000 559,045 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, School District, MBIA, 6%, 2010(++) 500,000 559,945 - ------------------------------------------------------------------------------------------------------------------------------- South Park, PA, School District, FGIC, 5%, 2019 750,000 784,238 - ------------------------------------------------------------------------------------------------------------------------------- Southeastern Area, PA, Special Schools Authority Rev., 0%, 2007 360,000 329,893 - ------------------------------------------------------------------------------------------------------------------------------- State Public School Building Authority, Pennsylvania School (Colonial Intermediate Unit 20), FGIC, 5%, 2030 500,000 516,000 - ------------------------------------------------------------------------------------------------------------------------------- State Public School Building Authority, Pennsylvania School (Lease Philadelphia School District), FSA, 5.25%, 2024 1,000,000 1,066,130 - ------------------------------------------------------------------------------------------------------------------------------- State Public School Building Authority, Pennsylvania School (Tuscarora School District), FSA, 5%, 2024 1,000,000 1,041,410 - ------------------------------------------------------------------------------------------------------------------------------- State Public School Building Authority, Pennsylvania School (Wattsburg School District), MBIA, 0%, 2027 2,150,000 671,918 - ------------------------------------------------------------------------------------------------------------------------------- $27,904,085 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Allegheny County, PA, Hospital Development Authority Rev. (South Hospitals - 11.7% Hills Health System), MBIA, 5.8%, 2016 $500,000 $524,665 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (South Hills Health Systems), 6.75%, 2025 555,000 586,319 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (UPMC Health Systems), MBIA, 5%, 2018 500,000 521,665 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), 9.25%, 2022 50,000 57,843 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), 9.25%, 2030 150,000 173,064 - ------------------------------------------------------------------------------------------------------------------------------- Blair County, PA, Hospital Authority Rev. (Altoona), AMBAC, 5.5%, 2008 470,000 503,732 - ------------------------------------------------------------------------------------------------------------------------------- Erie County, PA, Hospital Authority Rev. (Hamot Health Foundation), AMBAC, 5.25%, 2017 675,000 728,264 - ------------------------------------------------------------------------------------------------------------------------------- Lancaster County, PA, Hospital Authority Rev., 5.5%, 2026 500,000 520,175 - ------------------------------------------------------------------------------------------------------------------------------- Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan Hospital), 5%, 2018 200,000 203,348 - ------------------------------------------------------------------------------------------------------------------------------- Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan Hospital), 6%, 2035 350,000 360,161 - ------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, General Purpose Authority (Good Shepherd Group), "A", 5.625%, 2034 350,000 365,113 - ------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital), 5.25%, 2032 600,000 609,456 - ------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital), MBIA, 7%, 2016 250,000 311,670 - ------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, General Purpose Authority (St. Lukes Bethlehem Hospital), 5.375%, 2033 600,000 606,600 - ------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, Hospital Rev. (Lehigh Valley Hospital), FSA, 5.25%, 2019 500,000 535,505 - ------------------------------------------------------------------------------------------------------------------------------- Lycoming County, PA, Authority Hospital Rev. (Williamsport Hospital Obligation Group), CONNIE LEE, 5.375%, 2010 750,000 777,188 - ------------------------------------------------------------------------------------------------------------------------------- Monroe County, PA, Hospital Authority Rev. (Pocono Medical Center), 6%, 2043 750,000 779,888 - ------------------------------------------------------------------------------------------------------------------------------- Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial Hospital), 5.625%, 2032 400,000 414,504 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev., 6.25%, 2018 100,000 112,569 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev., 6%, 2031 650,000 709,293 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Health & Educational Facilities Rev. (Jeane Health), 6.6%, 2010 160,000 168,941 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Health & Educational Facilities Rev. (Temple Universty), 6.625%, 2023 250,000 253,878 - ------------------------------------------------------------------------------------------------------------------------------- Sayre, PA, Health Care Facilities Authority Rev., 5.875%, 2031 500,000 524,270 - ------------------------------------------------------------------------------------------------------------------------------- Sayre, PA, Health Care Facilities Authority Rev. (Latrobe Hospital), AMBAC, 5.25%, 2015 585,000 632,824 - ------------------------------------------------------------------------------------------------------------------------------- Scranton-Lackawanna, PA, Health & Welfare Authority Rev. (Allied Rehab Hospital), 7.125%, 2005 55,000 55,115 - ------------------------------------------------------------------------------------------------------------------------------- Southcentral Pennsylvania General Authority Rev. (York Hospital), 5.625%, 2026 600,000 631,338 - ------------------------------------------------------------------------------------------------------------------------------- St. Mary's Hospital Authority, PA, Health Systems Rev. (Catholic Health East), "B", 5.375%, 2034 750,000 772,365 - ------------------------------------------------------------------------------------------------------------------------------- West Shore, PA, Hospital Authority (Holy Spirit Hospital), 6.25%, 2032 350,000 372,064 - ------------------------------------------------------------------------------------------------------------------------------- $12,811,817 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Clarion, PA, Industrial Development Authority Rev. (Beverly Term Care - 1.0% Enterprises, Inc.), 7.5%, 2012 $150,000 $152,942 - ------------------------------------------------------------------------------------------------------------------------------- Cumberland County, PA, Retirement Community Rev. (Wesley Affiliated Services), 7.25%, 2035 150,000 157,545 - ------------------------------------------------------------------------------------------------------------------------------- Lancaster County, PA, Hospital Authority Rev. (Willow Valley Retirement Project), 5.875%, 2031 500,000 519,315 - ------------------------------------------------------------------------------------------------------------------------------- Montgomery County, PA, Industrial Development Authority Rev. (Whitemarsh Continuing Care), 6.25%, 2035 250,000 253,938 - ------------------------------------------------------------------------------------------------------------------------------- $1,083,740 - ------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.1% Montgomery County, PA, Industrial Development Authority (Wordsworth Academy), 8%, 2024 $150,000 $150,501 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - New Morgan, PA, Industrial Development Authority, Solid Waste Environmental Services - 1.0% Disposal Rev. (New Morgan Landfill Co, Inc./Browning Ferris, Inc.), 6.5%, 2019 $530,000 $521,594 - ------------------------------------------------------------------------------------------------------------------------------- Westmoreland County, PA, Industrial Development Corp. (Waste Management), LOC, 5.1%, 2018 500,000 516,930 - ------------------------------------------------------------------------------------------------------------------------------- $1,038,524 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Bucks County, PA, Industrial Development Authority Rev. (USX Corp.), Other - 2.1% 5.4%, 2017 $300,000 $327,159 - ------------------------------------------------------------------------------------------------------------------------------- Lehigh County, PA, Industrial Development Authority Pollution Control Rev. (PPL Electric Utility Corp.), "A", FGIC, 4.7%, 2029 500,000 490,720 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority Rev. (Amtrak), 6.125%, 2021 150,000 156,048 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority, Solid Waste Disposal Rev. (Proctor & Gamble), 5.375%, 2031 1,000,000 1,060,100 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 270,000 286,200 - ------------------------------------------------------------------------------------------------------------------------------- $2,320,227 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Erie County, PA, Industrial Development Authority (International Paper - 0.6% Paper Co.), 5.3%, 2012 $650,000 $690,086 - ------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.2% Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013## $165,000 $164,667 - ------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Philadelphia, PA, Housing Authority Capital Program Rev., FSA, Revenue - 1.0% 5.25%, 2014 $1,000,000 $1,103,680 - ------------------------------------------------------------------------------------------------------------------------------- Parking - 1.5% Philadelphia, PA, Public Parking Authority Rev., FSA, 5.625%, 2015 $1,000,000 $1,091,180 - ------------------------------------------------------------------------------------------------------------------------------- Pittsburgh, PA, Public Parking Authority Rev., AMBAC, 6%, 2020 500,000 557,970 - ------------------------------------------------------------------------------------------------------------------------------- $1,649,150 - ------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium Revenue - 0.5% Hotel Room), AMBAC, 5.25%, 2017 $500,000 $532,250 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing Revenue - Local - 0.2% Pittsburgh, PA, Urban Development Authority Mortgage Rev., 5.5%, 2010 $225,000 $226,096 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., State - 4.2% 5.75%, 2013 $195,000 $201,692 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5%, 2014 500,000 509,360 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.1%, 2020 1,405,000 1,416,381 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.25%, 2021 750,000 754,253 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.25%, 2033 670,000 692,010 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5%, 2034 950,000 986,936 - ------------------------------------------------------------------------------------------------------------------------------- $4,560,632 - ------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.3% Delaware County, PA, Industrial Development Authority Rev., Resource Recovery Facilities (American Ref-Fuel Co.), "A", 6.2%, 2019 $300,000 $310,533 - ------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 4.1% Delaware Valley, PA, Regional Finance Authority, RITES, AMBAC, 8.952%, 2018(+) $500,000 $634,380 - ------------------------------------------------------------------------------------------------------------------------------- Northumberland County, PA (Country Careers and Arts Center), 6.65%, 2020 255,000 261,357 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Convention Center Rev., 6.75%, 2019 250,000 255,958 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Industrial Development Authority, Economic Development, AMBAC, 7%, 2007 300,000 321,063 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Industrial Development Authority, FSA, 5.125%, 2026 1,000,000 1,044,530 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Industrial Development Authority, FSA, 5.25%, 2030 750,000 779,625 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Industrial Development Authority, MBIA, 5.35%, 2012 500,000 530,180 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013+(+) 500,000 620,180 - ------------------------------------------------------------------------------------------------------------------------------- $4,447,273 - ------------------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 1.4% Pennsylvania Higher Education, Capital Acquistion Rev., MBIA, 5%, 2026 $1,500,000 $1,546,515 - ------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.6% Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium Hotel Room), AMBAC, 5.25%, 2013 $500,000 $537,845 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 135,000 141,473 - ------------------------------------------------------------------------------------------------------------------------------- $679,318 - ------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 0.3% Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh Mills), 5.6%, 2023 $350,000 $362,709 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.4% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $335,000 $336,229 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 160,000 155,275 - ------------------------------------------------------------------------------------------------------------------------------- $491,504 - ------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Allegheny County, PA, Port Authority Special Rev., MBIA, Tax - 6.2% 6.25%, 2009(++) $500,000 $561,930 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, "Y", 5.5%, 2036 1,020,000 1,108,189 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico Highway & Transportation Authority, ROLS, MBIA, 8.633%, 2020+(+) 1,500,000 1,957,440 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Turnpike Commission, 5.5%, 2015 250,000 273,373 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Turnpike Commission, MBIA, 5%, 2024 1,775,000 1,853,473 - ------------------------------------------------------------------------------------------------------------------------------- Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC, 5.25%, 2013 500,000 537,170 - ------------------------------------------------------------------------------------------------------------------------------- Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC, 5.375%, 2017 500,000 530,785 - ------------------------------------------------------------------------------------------------------------------------------- $6,822,360 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 9.7% Allegheny County, PA, (Chatham College), 5.95%, 2032 $335,000 $353,974 - ------------------------------------------------------------------------------------------------------------------------------- Cumberland County, PA, Municipal Authority (Dickinson College), AMBAC, 5.55%, 2017 535,000 577,977 - ------------------------------------------------------------------------------------------------------------------------------- Lycoming County, PA, (College of Technology), AMBAC, 5.25%, 2032 750,000 781,875 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Clarion University Foundation), XLCA, 5%, 2023 1,000,000 1,045,950 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University), 5.2%, 2032 500,000 519,955 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University), MBIA, 5%, 2028 750,000 779,460 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Indepedent Colleges & University), FGIC, 5%, 2024 1,000,000 1,045,970 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Marywood University), MBIA, 5.5%, 2010(++) 300,000 331,341 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Mercyhurst College), "B", 5%, 2023 500,000 499,985 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Widener University), 5.375%, 2029 300,000 312,270 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Higher Educational Facilities Authority Rev. (Widener University), 5%, 2031 300,000 300,933 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Public School Building Authority (Delaware County College), MBIA, 5.75%, 2016 500,000 554,420 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania State University, 5%, 2029 1,000,000 1,032,530 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania State University, 5%, 2029 1,400,000 1,449,350 - ------------------------------------------------------------------------------------------------------------------------------- Union County, PA, Higher Educational Facilities Financing Authority, University Rev. (Bucknell University), 5.25%, 2021 1,000,000 1,062,960 - ------------------------------------------------------------------------------------------------------------------------------- $10,648,950 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Pennsylvania Economic Development Financing Authority (Germantown Dormatories - 0.6% Friends School Project), 5.35%, 2031 $600,000 $625,884 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Carbon County, PA, Industrial Development Authority Rev. (Panther Cogeneration - 0.3% Creek Partners), 6.65%, 2010 $125,000 $134,359 - ------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority Rev., Resources Recovery Rev. (Northampton Generating), 6.4%, 2009 150,000 151,278 - ------------------------------------------------------------------------------------------------------------------------------- $285,637 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Pennsylvania Economic Development Financing Authority Rev. (Reliant Owned - 0.2% Energy Seward), "A", 6.75%, 2036 $250,000 $266,608 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 4.8% Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2014+(+) $2,170,000 $2,512,773 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Gas Works Rev. (1998 General Ordinance), FSA, 5.25%, 2020 1,000,000 1,073,770 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2016 1,000,000 1,079,750 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2018 500,000 540,630 - ------------------------------------------------------------------------------------------------------------------------------- $5,206,923 - ------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 9.4% Allegheny County, PA, Sewer Rev., MBIA, 5.75%, 2017 $750,000 $833,865 - ------------------------------------------------------------------------------------------------------------------------------- Bucks County, PA, (Suburban Water Co.), FGIC, 5.55%, 2032 1,000,000 1,057,430 - ------------------------------------------------------------------------------------------------------------------------------- Delaware County, PA, Water Quality Control Authority, Sewer Rev., FGIC, 5%, 2018 750,000 784,125 - ------------------------------------------------------------------------------------------------------------------------------- Fairview Township, PA, Sewer Rev., FGIC, 5.05%, 2018 750,000 788,460 - ------------------------------------------------------------------------------------------------------------------------------- Johnstown, PA, Redevelopment Authority, Sewer Rev., "A", FSA, 5%, 2034 1,500,000 1,547,445 - ------------------------------------------------------------------------------------------------------------------------------- Lancaster County, PA, Water & Sewer Authority Rev., MBIA, 5%, 2028 440,000 455,787 - ------------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA, Water Rev., MBIA, 5.5%, 2014 1,000,000 1,029,820 - ------------------------------------------------------------------------------------------------------------------------------- Unity Township, PA, Municipal Authority Sewer Rev., FSA, 5%, 2034 1,660,000 1,713,817 - ------------------------------------------------------------------------------------------------------------------------------- University Area Joint Authority, Sewer rev., MBIA, 5%, 2023 1,500,000 1,556,910 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 500,000 528,775 - ------------------------------------------------------------------------------------------------------------------------------- $10,296,434 - ------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $101,137,600) $105,654,203 - ------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.8% - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "A", 2.3%, due 4/07/05 $1,355,000 $1,355,000 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "B", 2.3%, due 4/07/05 870,000 870,000 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D", 2.3%, due 4/07/05 900,000 900,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $3,125,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $104,262,600) $108,779,203 - ------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.6% 618,493 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $109,397,696 - ------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.4% - ------------------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - ------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.7% Horry County, SC, "A", FSA, 5.7%, 2027 $2,250,000 $2,310,163 - ------------------------------------------------------------------------------------------------------------------------------- Richland Lexington, SC, Airport Rev. (Columbia Airport), "A", AMBAC, 5.7%, 2026 1,000,000 1,024,849 - ------------------------------------------------------------------------------------------------------------------------------- Richland Lexington, SC, Airport Rev. (Columbia Airport), "A", FSA, 5%, 2026 1,000,000 1,023,460 - ------------------------------------------------------------------------------------------------------------------------------- $4,358,472 - ------------------------------------------------------------------------------------------------------------------------------- Chemicals - 0.5% York County, SC, Industrial Rev., Exempt Facilities Hoechst Celanese, 5.7%, 2024 $850,000 $811,036 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 6.3% Commonwealth of Puerto Rico, RITES, ETM, 8.112%, 2009+(+),(++) $2,000,000 $2,401,240 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, RITES, ETM, 8.112%, 2009+(+),(++) 1,750,000 2,097,410 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, RITES, MBIA, 8.612%, 2020+(+) 2,000,000 2,434,280 - ------------------------------------------------------------------------------------------------------------------------------- Hilton Head Island, SC, Rev., MBIA, 5.125%, 2022 1,000,000 1,063,330 - ------------------------------------------------------------------------------------------------------------------------------- Horry County, SC, Hospital Fee Special Obligation, 6%, 2015 915,000 1,016,364 - ------------------------------------------------------------------------------------------------------------------------------- Richard Lexington Riverbanks, SC, Parks District, FGIC, 5.8%, 2018 1,000,000 1,096,590 - ------------------------------------------------------------------------------------------------------------------------------- $10,109,214 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.3% Beaufort County, SC, FGIC, 5.25%, 2018 $1,000,000 $1,060,840 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, RITES, FSA, 9.137%, 2016+(+) 850,000 1,043,834 - ------------------------------------------------------------------------------------------------------------------------------- $2,104,674 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 10.6% Anderson County, SC, School District, "B", 5.5%, 2018 $1,465,000 $1,592,426 - ------------------------------------------------------------------------------------------------------------------------------- Beaufort County, SC, School District, "B", 5.625%, 2009(++) 2,000,000 2,184,360 - ------------------------------------------------------------------------------------------------------------------------------- Berkeley County, SC, School District, 5%, 2008(++) 2,000,000 2,153,720 - ------------------------------------------------------------------------------------------------------------------------------- Chesterfield County, SC, School District, FSA, 5%, 2023 3,000,000 3,127,830 - ------------------------------------------------------------------------------------------------------------------------------- Darlington County, SC, School District, FSA, 5%, 2027 2,770,000 2,895,370 - ------------------------------------------------------------------------------------------------------------------------------- Orangeburg County, SC, Consolidated School District, FSA, 5.25%, 2020 1,065,000 1,143,927 - ------------------------------------------------------------------------------------------------------------------------------- Orangeburg County, SC, Consolidated School District, FSA, 5.375%, 2022 2,050,000 2,219,125 - ------------------------------------------------------------------------------------------------------------------------------- Richland County, SC, School District, 5.1%, 2021 1,750,000 1,840,895 - ------------------------------------------------------------------------------------------------------------------------------- $17,157,653 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Charleston County, SC, Hospital Facilities Rev. (Medical Society Hospitals - 19.5% Health), MBIA, ETM, 5%, 2022(++) $2,450,000 $2,465,754 - ------------------------------------------------------------------------------------------------------------------------------- Florence County, SC, Hospital Rev. (McLeod Regional Medical Center), "A", 5%, 2031 2,000,000 2,056,640 - ------------------------------------------------------------------------------------------------------------------------------- Florence County, SC, Hospital Rev. (McLeod Regional Medical Center), "A", FSA, 5.25%, 2034 2,000,000 2,091,780 - ------------------------------------------------------------------------------------------------------------------------------- Greenville, SC, Hospital Systems, Hospital Facilities Rev., 6%, 2020 3,400,000 3,970,010 - ------------------------------------------------------------------------------------------------------------------------------- Greenwood County, SC, Hospital Facilities Rev. (Self Memorial Hospital), 5.5%, 2021 1,000,000 1,035,810 - ------------------------------------------------------------------------------------------------------------------------------- Lexington County, SC, Health Services District, Inc., 5.5%, 2032 250,000 262,365 - ------------------------------------------------------------------------------------------------------------------------------- Lexington County, SC, Health Services District, Inc., 5.5%, 2037 250,000 261,803 - ------------------------------------------------------------------------------------------------------------------------------- Lexington County, SC, Health Services District, Inc., Hospital Rev., Refunding & Improvement, 5.5%, 2032 1,000,000 1,045,110 - ------------------------------------------------------------------------------------------------------------------------------- Lexington County, SC, Health Services District, Inc., Hospital Rev., Refunding & Improvement, FSA, 5.125%, 2021 1,500,000 1,571,280 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Anderson Area Medical Center, Inc.), MBIA, 5.25%, 2015 1,750,000 1,817,130 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Georgetown Memorial Hospital), ASST GTY, 5.25%, 2021 1,500,000 1,572,975 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031 750,000 804,158 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority (Bon Secours Health Systems, Inc.), "A", 5.625%, 2030 1,250,000 1,283,750 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Georgetown Memorial Hospital), AMBAC, 5%, 2023 1,000,000 1,026,360 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilties Rev. (Georgetown Memorial Hospital), AMBAC, 6%, 2014 1,000,000 1,115,530 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Medical University, Hospital Facilities Rev, "A", MBIA, 5%, 2031 3,100,000 3,167,239 - ------------------------------------------------------------------------------------------------------------------------------- Spartanburg County, SC, Health Service Rev., AMBAC, 5.3%, 2020 2,500,000 2,558,325 - ------------------------------------------------------------------------------------------------------------------------------- Spartanburg County, SC, Health Service Rev., AMBAC, 5.3%, 2025 1,000,000 1,023,250 - ------------------------------------------------------------------------------------------------------------------------------- Spartanburg County, SC, Health Service Rev., FSA, 5.25%, 2032 2,250,000 2,345,175 - ------------------------------------------------------------------------------------------------------------------------------- $31,474,444 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 1.2% Greenville County, SC, Hospital Rev. (Chestnut Hill) "A", 8%, 2015 $1,505,000 $1,497,761 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Residential Care Facilities (Episcopal Home), "A", 6.375%, 2032 400,000 408,196 - ------------------------------------------------------------------------------------------------------------------------------- $1,905,957 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Calhoun County, SC, Solid Waste Disposal Facilities Rev. (Carolina Other - 1.0% Eastman Co.), ETM, 6.75%, 2017(++) $1,000,000 $1,238,790 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 385,000 408,100 - ------------------------------------------------------------------------------------------------------------------------------- $1,646,890 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Darlington County, SC, Industrial Development Rev. (Sonoco Products Paper - 2.0% Co.), 6.125%, 2025 $1,500,000 $1,539,765 - ------------------------------------------------------------------------------------------------------------------------------- Florence County, SC, Industrial Development Rev. (Stone Container Corp.), 7.375%, 2007 225,000 225,585 - ------------------------------------------------------------------------------------------------------------------------------- Georgetown County, SC, Environmental Improvement Rev., International Paper, "A", 5.3%, 2028 500,000 491,510 - ------------------------------------------------------------------------------------------------------------------------------- Richland County, SC, Environmental Improvement Rev., International Paper, "A", 6.1%, 2023 1,000,000 1,050,780 - ------------------------------------------------------------------------------------------------------------------------------- $3,307,640 - ------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 1.5% Myrtle Beach, SC, Hospitality Fee Rev., "A", FGIC, 5%, 2036 $510,000 $525,071 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority (Myrtle Beach Convention), "B", MBIA, 5.125%, 2018 570,000 598,586 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority (Myrtle Beach Convention), "B", MBIA, 5.125%, 2019 595,000 629,361 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority (Myrtle Beach Convention), "B", MBIA, 5.125%, 2020 630,000 664,663 - ------------------------------------------------------------------------------------------------------------------------------- $2,417,681 - ------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing South Carolina Housing, Finance & Development Authority (Hunting Revenue - 1.5% Ridge Apartments), 6.75%, 2025 $1,000,000 $1,021,270 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Housing, Finance & Development Authority (Runaway Bay Apartments), 6.125%, 2015 1,300,000 1,336,608 - ------------------------------------------------------------------------------------------------------------------------------- $2,357,878 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - South Carolina Housing, Finance & Development Amt, "A-2", FSA, State - 2.2% 5.2%, 2035 $1,000,000 $1,011,270 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Housing, Finance & Development Authority Rev., "A-2", FSA, 6%, 2020 460,000 460,147 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Housing, Finance & Development Authority Rev., "A-2", FSA, 5.35%, 2024 2,000,000 2,037,160 - ------------------------------------------------------------------------------------------------------------------------------- $3,508,577 - ------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 1.8% Greenville County, SC (University Center), "A", AMBAC, 5.25%, 2019 $1,000,000 $1,088,930 - ------------------------------------------------------------------------------------------------------------------------------- Richland County, SC, Certificates of Participation, FGIC, ETM, 0%, 2006(++) 1,160,000 1,135,164 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Water Resources Authority Rev. (Local Government Program), "A", 7.25%, 2020 685,000 688,644 - ------------------------------------------------------------------------------------------------------------------------------- $2,912,738 - ------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 3.9% North Charleston, SC, Municipal Golf Course Mortgage Rev., 5.5%, 2009(++) $1,000,000 $1,096,330 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., 5.75%, 2007(++) 1,000,000 1,053,830 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013+(+) 1,375,000 1,705,495 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2019+(+) 1,300,000 1,655,966 - ------------------------------------------------------------------------------------------------------------------------------- Spartanburg, SC, Public Facilities Corp. (Renaissance Park), AMBAC, 5.125%, 2025 685,000 717,113 - ------------------------------------------------------------------------------------------------------------------------------- $6,228,734 - ------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.1% Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 $180,000 $188,631 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% South Carolina Tobacco Settlement Authority, 6.375%, 2028 $1,000,000 $1,015,500 - ------------------------------------------------------------------------------------------------------------------------------- Transportation - Special South Carolina Transportation Infrastructure Rev., "A", AMBAC, Tax - 1.0% 5%, 2023 $500,000 $520,205 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Transportation Infrastructure Rev., "A", MBIA, 5.375%, 2018 1,000,000 1,081,530 - ------------------------------------------------------------------------------------------------------------------------------- $1,601,735 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Charleston, SC, Academic & Administrative Facilities Rev., "B", XLCA, Colleges - 10.0% 5.125%, 2034 $1,510,000 $1,573,465 - ------------------------------------------------------------------------------------------------------------------------------- Clemson University, University Rev., AMBAC, 6.25%, 2015 1,250,000 1,400,850 - ------------------------------------------------------------------------------------------------------------------------------- College Charleston, SC, Higher Education Facility Rev., "A", FGIC, 5.25%, 2028 2,435,000 2,564,347 - ------------------------------------------------------------------------------------------------------------------------------- College of Charleston, SC, Academic & Administrative Facilities Rev., "B", XLCA, 5%, 2024 800,000 833,504 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Educational Facilities Authority (Furman University), AMBAC, 5.375%, 2020 1,245,000 1,347,588 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Educational Facilities Authority (Furman University), AMBAC, 5.5%, 2030 2,000,000 2,146,260 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Student Housing Rev. (FMU Francis Marion University), "A", MBIA, 5%, 2034 1,945,000 1,995,901 - ------------------------------------------------------------------------------------------------------------------------------- University of South Carolina, University Rev., "A", FGIC, 5.625%, 2020 1,555,000 1,689,679 - ------------------------------------------------------------------------------------------------------------------------------- University of South Carolina, University Rev., MBIA, 5.75%, 2026 515,000 537,063 - ------------------------------------------------------------------------------------------------------------------------------- University of South Carolina, University Rev., "A", 5%, 2034 2,000,000 2,049,300 - ------------------------------------------------------------------------------------------------------------------------------- $16,137,957 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Camden, SC, Public Utility Rev., Refunding & Improvement, MBIA, Owned - 9.6% 5.5%, 2017 $1,500,000 $1,594,365 - ------------------------------------------------------------------------------------------------------------------------------- Easley, SC, Utility Rev., FSA, 5%, 2027 1,000,000 1,036,610 - ------------------------------------------------------------------------------------------------------------------------------- Greenwood, SC, Combined Public Utility, Refunding & Improvement Systems, MBIA, 5%, 2021 175,000 183,895 - ------------------------------------------------------------------------------------------------------------------------------- Orangeburg County, SC, Solid Waste Disposal Facilities Rev., Electric & Gas, AMBAC, 5.7%, 2024 2,000,000 2,005,860 - ------------------------------------------------------------------------------------------------------------------------------- Piedmont, SC, Municipal Power Agency, FGIC, 6.25%, 2021 2,600,000 3,195,504 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., "RR", XLCA, 5%, 2030 875,000 909,064 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority, RITES, FSA, 7.559%, 2015+(+) 1,000,000 1,121,750 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "A", AMBAC, 5%, 2034 2,000,000 2,056,900 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "A", MBIA, 5.5%, 2018 200,000 216,550 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "B", AMBAC, 5.5%, 2023 1,000,000 1,039,080 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "B", FGIC, 5.875%, 2023 500,000 522,075 - ------------------------------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, "B", FSA, 5.125%, 2037 1,500,000 1,545,960 - ------------------------------------------------------------------------------------------------------------------------------- $15,427,613 - ------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 20.1% Anderson County, SC, Joint Municipal Water, FSA, 5%, 2032 $1,000,000 $1,028,170 - ------------------------------------------------------------------------------------------------------------------------------- Anderson, SC, Water & Sewer Systems Rev., FGIC, 5.125%, 2032 2,000,000 2,086,520 - ------------------------------------------------------------------------------------------------------------------------------- Charleston, SC, Waterworks & Sewer Rev., Capital Improvement, "B", 5%, 2028 1,000,000 1,026,380 - ------------------------------------------------------------------------------------------------------------------------------- Columbia, SC, Waterworks & Sewer Systems Rev., 0%, 2006 9,330,000 9,111,678 - ------------------------------------------------------------------------------------------------------------------------------- Columbia, SC, Waterworks & Sewer Systems Rev., 6%, 2010(++) 2,000,000 2,240,700 - ------------------------------------------------------------------------------------------------------------------------------- Greenville, SC, Stormwater Systems, FSA, 5%, 2022 595,000 625,773 - ------------------------------------------------------------------------------------------------------------------------------- Greenville, SC, Waterworks Rev., 5.5%, 2007(++) 1,000,000 1,067,540 - ------------------------------------------------------------------------------------------------------------------------------- Greenville, SC, Waterworks Rev., 5.25%, 2020 860,000 925,558 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2005(++) 445,000 452,027 - ------------------------------------------------------------------------------------------------------------------------------- Rock Hill, SC, Utility Systems Rev., Refunding & Improvement, "A", FSA, 5.375%, 2023 500,000 539,810 - ------------------------------------------------------------------------------------------------------------------------------- Spartanburg, SC, San Sewer District, Sewer Systems Rev., "B", MBIA, 5%, 2034 4,000,000 4,115,680 - ------------------------------------------------------------------------------------------------------------------------------- Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA, 5.25%, 2030 1,000,000 1,060,520 - ------------------------------------------------------------------------------------------------------------------------------- Spartanburg, SC, Waterworks Rev., FGIC, 6.05%, 2006(++) 2,750,000 2,857,195 - ------------------------------------------------------------------------------------------------------------------------------- Western Carolina Regional Sewer Authority Rev., AMBAC, 0%, 2007 4,000,000 3,782,920 - ------------------------------------------------------------------------------------------------------------------------------- York County, SC, Water & Sewer Rev., Refunding & Capital Improvement, MBIA, 5%, 2027 1,490,000 1,549,540 - ------------------------------------------------------------------------------------------------------------------------------- $32,470,011 - ------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $146,548,556) $157,143,035 - ------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.8% - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "A", 2.3%, due 4/07/05 $100,000 $100,000 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D", 2.3%, due 4/07/05 700,000 700,000 - ------------------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 1,300,000 1,300,000 - ------------------------------------------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (University of Chicago Hospital), 2.3%, due 4/01/05 600,000 600,000 - ------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., Warrants, "B-4", 2.3%, due 4/07/05 100,000 100,000 - ------------------------------------------------------------------------------------------------------------------------------- Oklahoma Industries Authority, Health System Rev. (Integris Baptist Medical Center), "B", 1.10%, 2.3%, due 4/01/05 100,000 100,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $2,900,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $149,448,556) $160,043,035 - ------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 0.8% 1,330,743 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $161,373,778 - ------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 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 - 97.6% - ------------------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - ------------------------------------------------------------------------------------------------------------------------------- Airport and Port Memphis-Shelby County, TN, Airport Authority Facilities Rev., FSA, Revenue - 1.2% 5.125%, 2021 $1,500,000 $1,541,820 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Commonwealth of Puerto Rico, Unrefunded, Public Improvement, FSA, Purpose - 5.7% 5%, 2024 $770,000 $801,739 - ------------------------------------------------------------------------------------------------------------------------------- Lincoln County, TN, School Improvement, FGIC, 5.8%, 2007(++) 1,000,000 1,068,110 - ------------------------------------------------------------------------------------------------------------------------------- Lincoln County, TN, School Improvement, FGIC, 5.8%, 2007(++) 1,000,000 1,068,110 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Commonwealth, 5.4%, 2006(++) 3,000,000 3,145,200 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Building Authority, 5.5%, 2021 1,000,000 1,125,370 - ------------------------------------------------------------------------------------------------------------------------------- $7,208,529 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 4.2% Chattanooga, TN, Public Improvement, 5%, 2021 $2,570,000 $2,658,511 - ------------------------------------------------------------------------------------------------------------------------------- Knoxville, TN, Recreational Facilities Improvement, 5.5%, 2008(++) 645,000 697,858 - ------------------------------------------------------------------------------------------------------------------------------- Williamson County, TN, Public Improvement, 5%, 2018 1,760,000 1,867,483 - ------------------------------------------------------------------------------------------------------------------------------- $5,223,852 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 14.9% Fayette County, TN, School District, AMBAC, 5.6%, 2008(++) $1,215,000 $1,301,860 - ------------------------------------------------------------------------------------------------------------------------------- Gibson County, TN, School District, MBIA, 5.75%, 2009(++) 455,000 499,913 - ------------------------------------------------------------------------------------------------------------------------------- Gibson County, TN, School District, MBIA, 5.75%, 2016 190,000 209,055 - ------------------------------------------------------------------------------------------------------------------------------- Giles County, TN, School Improvement, FGIC, 5.75%, 2010(++) 1,980,000 2,196,394 - ------------------------------------------------------------------------------------------------------------------------------- Greene County, TN, Rural School, FGIC, 5%, 2020 1,240,000 1,293,928 - ------------------------------------------------------------------------------------------------------------------------------- Greene County, TN, Rural School, FGIC, 5%, 2021 1,300,000 1,355,107 - ------------------------------------------------------------------------------------------------------------------------------- Milan, TN, Special School District, MBIA, 5%, 2021 1,000,000 1,041,430 - ------------------------------------------------------------------------------------------------------------------------------- Roane County, TN, Rural School, FGIC, 5.6%, 2008(++) 915,000 980,084 - ------------------------------------------------------------------------------------------------------------------------------- Roane County, TN, Rural School, FGIC, 5.6%, 2008(++) 975,000 1,044,352 - ------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School & Public Improvement, 5%, 2022 1,510,000 1,579,445 - ------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School District, 5.875%, 2010(++) 1,100,000 1,230,383 - ------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School Improvement, 0%, 2007(++) 1,500,000 894,150 - ------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School Improvement, 5.875%, 2010(++) 2,000,000 2,237,060 - ------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, School Improvement, 5%, 2011(++) 1,000,000 1,083,780 - ------------------------------------------------------------------------------------------------------------------------------- Williamson County, TN, Rural School, 6.125%, 2010(++) 1,575,000 1,772,663 - ------------------------------------------------------------------------------------------------------------------------------- $18,719,604 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Jackson, TN, Hospital Rev. (Jackson-Madison County General Hospital), Hospitals - 12.4% AMBAC, 5%, 2018 $1,000,000 $1,043,630 - ------------------------------------------------------------------------------------------------------------------------------- Johnson City, TN, Health & Education Financing Authority Rev. (Johnson City Medical Center Hospital), MBIA, 5.25%, 2016 1,375,000 1,407,299 - ------------------------------------------------------------------------------------------------------------------------------- Johnson City, TN, Health & Education Financing Authority Rev. (Johnson City Medical Center Hospital), MBIA, ETM, 5%, 2018(++) 1,500,000 1,562,865 - ------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health Educational Housing Facilities Board, Hospital Facilities Rev. (Baptist Health Systems), 6.5%, 2031 300,000 310,233 - ------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev. (Catholic Healthcare Partners), 5.25%, 2030 1,000,000 1,028,660 - ------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev. (Covenent Health), FSA, 5%, 2022 1,000,000 1,039,590 - ------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev. (East Tennessee Children's Hospital), 5.75%, 2033 450,000 468,513 - ------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Health, Education & Housing Facilities Board Rev. (Fort Sanders), MBIA, 5.75%, 2014 3,250,000 3,681,145 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Adventist Health System), 5.25%, 2020 1,000,000 1,028,830 - ------------------------------------------------------------------------------------------------------------------------------- Shelby County, TN, Health Educational & Housing Facilities Board Rev. (St. Judes Children's Research), 5.5%, 2020 1,750,000 1,842,208 - ------------------------------------------------------------------------------------------------------------------------------- Shelby County, TN, Health Educational & Housing Facilities Hospital Rev., (Methodist Healthcare), 6.5%, 2012(++) 625,000 737,875 - ------------------------------------------------------------------------------------------------------------------------------- Shelby County, TN, Health Educational & Housing Facilities Hospital Rev., (Methodist Healthcare), ETM, 6.5%, 2021(++) 375,000 441,458 - ------------------------------------------------------------------------------------------------------------------------------- Springfield, TN, Health & Higher Educational Facilities Hospital Rev. (Northcrest Medical Center), 5.25%, 2013 1,000,000 1,013,810 - ------------------------------------------------------------------------------------------------------------------------------- $15,606,116 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Shelby County, TN, Health Educational Rev. (Germantown Village), Term Care - 0.6% 7.25%, 2034 $500,000 $518,855 - ------------------------------------------------------------------------------------------------------------------------------- Shelby County, TN, Nursing Home Rev. (Beverly Enterprises, Inc.), 7.4%, 2006(++) 260,000 281,765 - ------------------------------------------------------------------------------------------------------------------------------- $800,620 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Metropolitan Knoxville, TN, Airport Authority Special Purpose Rev. Airlines - 0.1% (Northwest Airlines), 8%, 2032 $150,000 $148,312 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 2.5% Hardeman County, TN, Correctional Facilities Rev., 7.75%, 2017 $1,000,000 $1,041,010 - ------------------------------------------------------------------------------------------------------------------------------- Humphreys County, TN, Industrial Rev. DuPont, 6.7%, 2024 1,750,000 1,773,852 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 320,000 339,200 - ------------------------------------------------------------------------------------------------------------------------------- $3,154,062 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - McMinn County, TN, Industrial Development Board, Pollution Control Paper - 0.8% Rev. (Bowater, Inc.), 7.625%, 2016 $1,000,000 $1,008,840 - ------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 3.1% Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.125%, 2028 $2,000,000 $2,084,600 - ------------------------------------------------------------------------------------------------------------------------------- Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.35%, 2029 1,665,000 1,781,350 - ------------------------------------------------------------------------------------------------------------------------------- $3,865,950 - ------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Chattanooga, TN, Health, Educational & Housing Facilities (Rainbow Revenue - 3.7% Creek), GNMA, 6.125%, 2019 $445,000 $471,736 - ------------------------------------------------------------------------------------------------------------------------------- Franklin, TN, Industrial Development Rev. (Landings Apartments), FSA, 6%, 2026 1,000,000 1,034,070 - ------------------------------------------------------------------------------------------------------------------------------- Memphis, TN, Health & Educational Facilities Board Rev. (Hickory Point Apartments), MBIA, 5.85%, 2020 1,000,000 1,039,130 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health & Educational & Housing Facilities Board Rev. (Berkshire Place), GNMA, 6%, 2023 500,000 524,875 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Herman Street), FHA, 7.25%, 2032 495,000 495,713 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Housing Finance Authority Rev., 5%, 2020 1,000,000 1,054,010 - ------------------------------------------------------------------------------------------------------------------------------- $4,619,534 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 11.8% Tennessee Housing Development Agency Mortgage Finance, 5.2%, 2023 $1,500,000 $1,555,305 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Mortgage Finance, 5.35%, 2034 2,000,000 2,037,160 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 5.45%, 2014 2,535,000 2,602,051 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 4.45%, 2017 645,000 632,816 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 4.45%, 2017 660,000 647,143 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 4.55%, 2018 575,000 564,604 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 4.55%, 2018 690,000 677,173 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 6%, 2020 1,585,000 1,626,670 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 5.05%, 2027 975,000 975,507 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, 5.25%, 2034 1,500,000 1,570,635 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, FSA, 5.4%, 2032 855,000 862,122 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, FSA, 4.15%, 2033 745,000 754,454 - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Housing Development Agency Rev., Homeownership Program, MBIA, 6.125%, 2020 235,000 240,123 - ------------------------------------------------------------------------------------------------------------------------------- $14,745,763 - ------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 6.7% Chattanooga,TN, Industrial Development Board, AMBAC, 5.75%, 2018 $1,000,000 $1,102,550 - ------------------------------------------------------------------------------------------------------------------------------- Knoxville, TN, Community Development Corp. 5%, 2024 1,000,000 1,038,150 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., 5.75%, 2007(++) 2,000,000 2,107,660 - ------------------------------------------------------------------------------------------------------------------------------- State of Tennessee, School Bond Authority (Higher Education Facilities), FSA, 5%, 2017 1,000,000 1,056,000 - ------------------------------------------------------------------------------------------------------------------------------- State of Tennessee, School Bond Authority (Higher Education Facilities), FSA, 5.25%, 2029 3,000,000 3,153,450 - ------------------------------------------------------------------------------------------------------------------------------- $8,457,810 - ------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.6% Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 $730,000 $752,579 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.8% Guam Economic Development Authority, Tobacco Settlement, "B", 5.5%, 2041 $350,000 $336,801 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco Settlement Financing Corp., 5%, 2031 750,000 674,385 - ------------------------------------------------------------------------------------------------------------------------------- $1,011,186 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Metropolitan Government of Nashville & Davidson County, TN, Health, Colleges - 3.9% Educational & Housing Facilities Board Rev. (McKendree Village, Inc.), 5.125%, 2020 $1,000,000 $1,028,210 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Meharry Medical College), AMBAC, 5%, 2024 3,750,000 3,878,587 - ------------------------------------------------------------------------------------------------------------------------------- $4,906,797 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.4% Jackson, TN, Electrical Systems Rev., MBIA, 5%, 2018 $1,000,000 $1,028,170 - ------------------------------------------------------------------------------------------------------------------------------- Lawrenceburg, TN, Electrical Rev., MBIA, 5.5%, 2009(++) 1,255,000 1,369,029 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., 5.125%, 2021 1,500,000 1,574,040 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., "A", AMBAC, 5%, 2029 1,500,000 1,550,940 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., MBIA, 0%, 2012 3,305,000 2,462,688 - ------------------------------------------------------------------------------------------------------------------------------- $7,984,867 - ------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Hallsdale-Powell Utility District, TN, Water & Sewer Rev., "A", FGIC, Revenue - 18.2% 5%, 2024 $1,500,000 $1,562,115 - ------------------------------------------------------------------------------------------------------------------------------- Hallsdale-Powell Utility District, TN, Water & Sewer Rev., FGIC, 5%, 2027 3,000,000 3,103,770 - ------------------------------------------------------------------------------------------------------------------------------- Harpeth Valley, TN, Utilities Improvements Rev., MBIA, 5.05%, 2020 1,925,000 2,021,943 - ------------------------------------------------------------------------------------------------------------------------------- Knox County, TN, Hallsdale-Powell Utility District, Water & Sewer Rev., "B", FGIC, 5%, 2034 500,000 513,580 - ------------------------------------------------------------------------------------------------------------------------------- Madison, TN, Utility Waterworks Rev., MBIA, 5%, 2019 2,750,000 2,845,590 - ------------------------------------------------------------------------------------------------------------------------------- Memphis, TN, Sewage Systems Rev., 5.75%, 2016 625,000 675,406 - ------------------------------------------------------------------------------------------------------------------------------- Memphis, TN, Sewage Systems Rev., 5.75%, 2018 1,145,000 1,237,344 - ------------------------------------------------------------------------------------------------------------------------------- Memphis, TN, Sewage Systems Rev., 5.75%, 2020 750,000 816,465 - ------------------------------------------------------------------------------------------------------------------------------- Rutherford County, TN, Water Rev., MBIA, 5%, 2027 770,000 803,995 - ------------------------------------------------------------------------------------------------------------------------------- West Knox Utility District, TN, Water & Sewer Rev., MBIA, ETM, 0%, 2006(++) 1,920,000 1,832,429 - ------------------------------------------------------------------------------------------------------------------------------- West Knox Utility District, TN, Water & Sewer Rev., MBIA, ETM, 0%, 2007(++) 1,920,000 1,769,856 - ------------------------------------------------------------------------------------------------------------------------------- West Wilson Utility District, TN, Waterworks Rev., MBIA, 5.25%, 2030 2,000,000 2,116,040 - ------------------------------------------------------------------------------------------------------------------------------- White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FSA, 6%, 2010(++) 1,000,000 1,118,420 - ------------------------------------------------------------------------------------------------------------------------------- White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FSA, 5%, 2021 800,000 831,872 - ------------------------------------------------------------------------------------------------------------------------------- White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FSA, 5%, 2032 1,500,000 1,536,075 - ------------------------------------------------------------------------------------------------------------------------------- $22,784,900 - ------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $115,337,691) $122,541,141 - ------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.0% - ------------------------------------------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, 2.3%, due 4/01/05 $200,000 $200,000 - ------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority, Government Public Improvement, 2.31%, due 4/07/05 200,000 200,000 - ------------------------------------------------------------------------------------------------------------------------------- South Blount County, TN, Utility District Rev., 2.32%, due 4/01/05 800,000 800,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $1,200,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $116,537,691) $123,741,141 - ------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.4% 1,784,776 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $125,525,917 - ------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 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 - 97.4% - ------------------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - ------------------------------------------------------------------------------------------------------------------------------- Airport & Port Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC, Revenue - 7.8% 5.125%, 2024 $1,000,000 $1,030,170 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC, 5%, 2025 705,000 717,683 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Washington, DC, Airport Authority Rev., "A", MBIA, 5%, 2035 3,000,000 3,014,520 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Washington, DC, Airport Authority Rev., "B", 5.5%, 2016 2,465,000 2,575,282 - ------------------------------------------------------------------------------------------------------------------------------- Metropolitan Washington, DC, Airport Authority Rev., "B", 5.75%, 2020 11,000,000 11,556,710 - ------------------------------------------------------------------------------------------------------------------------------- Norfolk, VA, Airport Authority Rev., "A", FGIC, 5.375%, 2017 1,755,000 1,899,031 - ------------------------------------------------------------------------------------------------------------------------------- Norfolk, VA, Airport Authority Rev., "A", FGIC, 5%, 2022 3,000,000 3,108,660 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Airport Rev., "B", 5.125%, 2027 720,000 737,381 - ------------------------------------------------------------------------------------------------------------------------------- $24,639,437 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 2.0% Bristol, VA, MBIA, 5.3%, 2008(++) $1,250,000 $1,356,725 - ------------------------------------------------------------------------------------------------------------------------------- Lebanon, VA, 6.375%, 2006(++) 1,625,000 1,744,064 - ------------------------------------------------------------------------------------------------------------------------------- Stafford County, VA, Industrial Development Authority Rev., "B", MBIA, 5%, 2034 3,060,000 3,163,489 - ------------------------------------------------------------------------------------------------------------------------------- $6,264,278 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 14.4% Chesterfield County, VA, 6%, 2010(++) $1,900,000 $2,126,708 - ------------------------------------------------------------------------------------------------------------------------------- Chesterfield County, VA, 5%, 2020 2,015,000 2,121,090 - ------------------------------------------------------------------------------------------------------------------------------- Hampton, VA, Public Improvement, 6%, 2010(++) 3,280,000 3,730,836 - ------------------------------------------------------------------------------------------------------------------------------- Hampton, VA, Public Improvement, 6%, 2010(++) 3,480,000 3,958,326 - ------------------------------------------------------------------------------------------------------------------------------- Loudoun County, VA, Public Improvement, "B", 5.375%, 2010(++) 2,650,000 2,914,417 - ------------------------------------------------------------------------------------------------------------------------------- Lynchburg, VA, Public Improvement, 5.6%, 2010(++) 1,765,000 1,972,617 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 9.137%, 2016+(+) 1,105,000 1,356,984 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2017+(+) 615,000 724,458 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, 0%, 2006 1,000,000 979,880 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, 0%, 2006 2,500,000 2,449,700 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, 0%, 2008 2,000,000 1,825,180 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, "A", FSA, 5.125%, 2024 5,000,000 5,250,100 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, "B", 0%, 2007 5,280,000 5,014,786 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, "B", 0%, 2008 5,270,000 4,809,349 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, "B", 0%, 2009 5,175,000 4,500,646 - ------------------------------------------------------------------------------------------------------------------------------- Suffolk, VA, Public Improvement, 5.5%, 2020 1,880,000 2,025,362 - ------------------------------------------------------------------------------------------------------------------------------- $45,760,439 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 0.4% Harrisonburg, VA, Public Recreation Facilities, FSA, 5.75%, 2029 $1,000,000 $1,112,880 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Albemarle County, VA, Industrial Development Authority, Hospital Rev. Hospitals - 13.2% (Martha Jefferson Hospital), 5.25%, 2023 $3,000,000 $3,065,130 - ------------------------------------------------------------------------------------------------------------------------------- Arlington County, VA, Industrial Development Authority Rev. (Virginia, Hospital Center Arlington Health Systems), 5.25%, 2021 2,600,000 2,700,100 - ------------------------------------------------------------------------------------------------------------------------------- Fredericksburg, VA, Industrial Development Rev. (Medicorp Health Systems), "B", 5.125%, 2033 750,000 756,000 - ------------------------------------------------------------------------------------------------------------------------------- Fredericksburg, VA, Industrial Development Rev. (Medicorp Health Systems), AMBAC, 5.25%, 2023 11,000,000 11,486,310 - ------------------------------------------------------------------------------------------------------------------------------- Henrico County, VA, Economic Development Authority Rev. (Bon Secours Health Systems, Inc.), "A", 5.6%, 2030 2,000,000 2,087,940 - ------------------------------------------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority Rev. (Bon Secours Health Systems, Inc.), MBIA, 6.25%, 2020 1,500,000 1,790,130 - ------------------------------------------------------------------------------------------------------------------------------- Loudoun County, VA, Industrial Development Authority, Hospital Rev. (Loudoun Hospital Center), "A", 6.1%, 2032 1,000,000 1,065,280 - ------------------------------------------------------------------------------------------------------------------------------- Lynchburg, VA, Industrial Development Authority, Healthcare Facilities Rev. (Central Health), 5.2%, 2008(++) 855,000 912,182 - ------------------------------------------------------------------------------------------------------------------------------- Lynchburg, VA, Industrial Development Authority, Healthcare Facilities Rev., Unrefunded Balance (Central Health), 5.2%, 2018 145,000 152,307 - ------------------------------------------------------------------------------------------------------------------------------- Medical College of Virginia, Hospital Authority Rev., MBIA, 5.125%, 2018 3,000,000 3,133,380 - ------------------------------------------------------------------------------------------------------------------------------- Peninsula Ports Authority Rev. (Whittaker Memorial), FHA, 8.7%, 2023 2,050,000 2,431,895 - ------------------------------------------------------------------------------------------------------------------------------- Peninsula Ports Authority, VA, Health Care Rev. (Riverside Health System), 5%, 2018 3,580,000 3,688,510 - ------------------------------------------------------------------------------------------------------------------------------- Prince William County, VA, Industrial Development Authority, Hospital Rev. (Potomac Hospital Corp.), 5.2%, 2026 1,000,000 1,019,440 - ------------------------------------------------------------------------------------------------------------------------------- Roanoke, VA, Industrial Development Authority, Hospital Rev. (Roanoke Memorial Hospital), "B", MBIA, 6.125%, 2017 3,000,000 3,551,190 - ------------------------------------------------------------------------------------------------------------------------------- Winchester, VA, Industrial Development Authority Rev. (Winchester Medical Center), RIBS, AMBAC, 10.057%, 2014(+) 3,600,000 3,899,664 - ------------------------------------------------------------------------------------------------------------------------------- $41,739,458 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Henrico County, VA, Economic Development Authority, Residential Care Term Care - 0.5% Facilities (United Methodist Homes), "A", 6.7%, 2027 $750,000 $785,693 - ------------------------------------------------------------------------------------------------------------------------------- Norfolk, VA, Redevelopment & Housing Authority Rev. (First Mortgage Retirement Community), "A", 6.125%, 2035 750,000 743,468 - ------------------------------------------------------------------------------------------------------------------------------- $1,529,161 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Charles City County, VA, Industrial Development Authority, Solid Environmental Services - 1.0% Waste Disposal Facility Rev. (Waste Management, Inc.), 6.25%, 2027 $1,500,000 $1,639,920 - ------------------------------------------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority Rev. (Browning Ferris, Inc.), 5.45%, 2014 1,750,000 1,629,915 - ------------------------------------------------------------------------------------------------------------------------------- $3,269,835 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Loudoun County, VA, Industrial Development Authority Rev. (Dulles Other - 1.2% Airport Marriot Hotel), 7.125%, 2015 $2,000,000 $2,024,560 - ------------------------------------------------------------------------------------------------------------------------------- Peninsula Ports Authority, Virginia Coal (Dominion Terminal Associates), 6%, 2033 1,000,000 1,067,210 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 750,000 795,000 - ------------------------------------------------------------------------------------------------------------------------------- $3,886,770 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Bedford County, VA, Industrial Development Authority Rev. (Nekooska Paper - 3.4% Packaging Corp.), 5.6%, 2025 $1,000,000 $985,370 - ------------------------------------------------------------------------------------------------------------------------------- Hopewell, VA, Industrial Development Authority, Resources Recovery Rev. (Stone Container Corp.), 8.25%, 2016 1,250,000 1,256,850 - ------------------------------------------------------------------------------------------------------------------------------- Isle Wight County, VA, Industrial Development Authority, Solid Waste Disposal Facilities Rev. (Union Camp Corp.), 6.55%, 2024 4,000,000 4,050,200 - ------------------------------------------------------------------------------------------------------------------------------- Isle Wight County, VA, Industrial Development Authority, Solid Waste Disposal Facilities Rev. (Union Camp Corp.), 6.1%, 2027 2,750,000 2,828,485 - ------------------------------------------------------------------------------------------------------------------------------- West Point, VA, Industrial Development Authority, Solid Waste Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 1,750,000 1,762,303 - ------------------------------------------------------------------------------------------------------------------------------- $10,883,208 - ------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Alexandria, VA, Redevelopment & Housing Finance Authority Rev. Revenue - 4.4% (Jefferson Village Apartments), "B", 9%, 2018 $3,675,000 $3,652,766 - ------------------------------------------------------------------------------------------------------------------------------- Arlington County, VA, Industrial Development Authority Rev. (Colonial Village), FNMA, 5.15%, 2031 3,000,000 3,077,220 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Housing Development Authority Rev., "B", 5.95%, 2016 1,905,000 1,970,322 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Housing Development Authority Rev., "G", 5.625%, 2020 2,000,000 2,070,980 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Housing Development Authority Rev., "I", 5.15%, 2017 3,000,000 3,065,490 - ------------------------------------------------------------------------------------------------------------------------------- $13,836,778 - ------------------------------------------------------------------------------------------------------------------------------- Parking - 0.5% Norfolk, VA, Parking Systems Rev., MBIA, 5%, 2020 $1,630,000 $1,702,339 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 0.6% Virginia State Housing Development Authority, "A", 5%, 2031 $2,000,000 $2,019,600 - ------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 1.6% Fairfax County, VA, Certificates of Participation, 6.1%, 2017 $3,090,000 $3,541,140 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Biotechnology Research Park Lease Rev. (Consolidated Laboratories), 5%, 2021 1,500,000 1,570,155 - ------------------------------------------------------------------------------------------------------------------------------- $5,111,295 - ------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 21.1% Blue Ridge, VA, Regional Jail Authority, MBIA, 5.2%, 2021 $1,830,000 $1,925,252 - ------------------------------------------------------------------------------------------------------------------------------- Caroline County, VA, Industrial Development Authority, Lease Rev., AMBAC, 5.125%, 2034 1,000,000 1,042,740 - ------------------------------------------------------------------------------------------------------------------------------- Chesapeake, VA, Industrial Development Authority (Chesapeake Court House), MBIA, 6.25%, 2011 3,985,000 4,327,072 - ------------------------------------------------------------------------------------------------------------------------------- Chesapeake, VA, Industrial Development Authority (Chesapeake Court House), MBIA, 5.25%, 2017 2,000,000 2,125,900 - ------------------------------------------------------------------------------------------------------------------------------- Chesterfield County, VA, Industrial Development Authority, Public Facilities Lease Rev., 7.5%, 2008 1,450,000 1,453,190 - ------------------------------------------------------------------------------------------------------------------------------- Dinwiddie County, VA, Industrial Development Authority Lease Rev., "B", MBIA, 5%, 2030 2,500,000 2,586,675 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Economic Development Authority (Vienna II Metrorail), 6%, 2017 1,750,000 1,971,725 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Economic Development Authority Rev. (U.S. Route 28), MBIA, 5%, 2029 1,000,000 1,036,630 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Economic Development Authority, Parking Rev. (Vienna II Metrorail), 6%, 2016 1,650,000 1,860,524 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Redevelopment & Housing Authority Rev. (Mott & Gum Springs Community Centers), 5.5%, 2017 2,225,000 2,287,656 - ------------------------------------------------------------------------------------------------------------------------------- Front Royal & Warren County, VA, Industrial Development Authority Lease Rev., School & Capital Improvement, "B", FSA, 5%, 2035 2,875,000 2,952,481 - ------------------------------------------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority, Public Lease Rev., 6.5%, 2005(++) 5,000,000 5,166,850 - ------------------------------------------------------------------------------------------------------------------------------- King George County, VA, Industrial Development Authority Lease Rev., FSA, 5%, 2036 2,000,000 2,057,840 - ------------------------------------------------------------------------------------------------------------------------------- Middlesex County, VA, Industrial Development Authority Rev., AMBAC, 5.125%, 2027 1,000,000 1,055,390 - ------------------------------------------------------------------------------------------------------------------------------- Middlesex County, VA, Industrial Development Authority Rev., AMBAC, 5.25%, 2032 2,000,000 2,114,700 - ------------------------------------------------------------------------------------------------------------------------------- Montgomery County, VA, Industrial Development, "B", AMBAC, 6%, 2017 1,000,000 1,133,380 - ------------------------------------------------------------------------------------------------------------------------------- Montgomery County, VA, Industrial Development, "C", AMBAC, 6%, 2017 1,120,000 1,269,386 - ------------------------------------------------------------------------------------------------------------------------------- New River Valley, VA, Regional Jail Authority, MBIA, 5.125%, 2019 3,405,000 3,620,979 - ------------------------------------------------------------------------------------------------------------------------------- Orange County, VA, Industrial Development Authority (Orange County Project), AMBAC, 5%, 2034 1,000,000 1,032,340 - ------------------------------------------------------------------------------------------------------------------------------- Pamunkey, VA, Regional Jail Authority, MBIA, 5.75%, 2006(++) 2,230,000 2,358,180 - ------------------------------------------------------------------------------------------------------------------------------- Pamunkey, VA, Regional Jail Authority, MBIA, 5.75%, 2006(++) 270,000 285,520 - ------------------------------------------------------------------------------------------------------------------------------- Powhatan County, VA, Economic Development Authority Lease Rev. (Virginia Capital Projects), AMBAC, 5.25%, 2033 1,000,000 1,056,460 - ------------------------------------------------------------------------------------------------------------------------------- Prince William County, VA, Lease Partnerships, 5%, 2021 1,500,000 1,567,755 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013+(+) 2,000,000 2,480,720 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2016+(+) 500,000 634,000 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, Public Facilities, Certificates of Participation (Megahertz Project), "A", AMBAC, 5%, 2022 1,600,000 1,666,720 - ------------------------------------------------------------------------------------------------------------------------------- Southwest Virginia Regional Jail Authority Rev., MBIA, 5%, 2035 1,720,000 1,771,067 - ------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority (21st Century College Program), 6%, 2009(++) 2,000,000 2,225,220 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Public Building Authority Rev., "B", MBIA, 0%, 2007 3,750,000 3,481,088 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Rev., "B", FSA, 5.5%, 2019 1,070,000 1,161,496 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Rev., ROLS, 7.589%, 2021+(+) 1,390,000 1,534,921 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Rev., ROLS, 7.589%, 2023+(+) 1,520,000 1,658,442 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Rev., ROLS, 7.589%, 2033+(+) 2,510,000 2,673,250 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Infrastructure Rev., "A", 5%, 2017 1,360,000 1,428,150 - ------------------------------------------------------------------------------------------------------------------------------- $67,003,699 - ------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.6% Greater Richmond Convention Center Authority, Hotel Tax Rev. (Convention Center Expansion), 6.125%, 2020 $3,500,000 $3,992,380 - ------------------------------------------------------------------------------------------------------------------------------- Territory of Virgin Islands, Public Finance Authority Rev., "A", 5.625%, 2025 1,000,000 1,050,120 - ------------------------------------------------------------------------------------------------------------------------------- $5,042,500 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.3% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $470,000 $471,725 - ------------------------------------------------------------------------------------------------------------------------------- Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 605,000 587,134 - ------------------------------------------------------------------------------------------------------------------------------- $1,058,859 - ------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 1.7% Chesapeake Bay, Bridge & Tunnel Commission, Virginia District Rev., FGIC, 0%, 2005 $4,535,000 $4,509,468 - ------------------------------------------------------------------------------------------------------------------------------- Pocahontas Parkway Assn., VA, Toll Road Rev., 0%, 2013 1,500,000 912,465 - ------------------------------------------------------------------------------------------------------------------------------- $5,421,933 - ------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., Tax - 2.2% "J", MBIA, 5%, 2029 $1,210,000 $1,263,615 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Transportation Board Rev. (U.S. Route 58), "B", 5.125%, 2006(++) 4,000,000 4,146,440 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Commonwealth Board Program (Oak Grove Connector), "A", 5.25%, 2022 1,500,000 1,551,015 - ------------------------------------------------------------------------------------------------------------------------------- $6,961,070 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Danville, VA, Industrial Development Authority, Educational Colleges - 2.1% Facilities Rev. (Averett University), 6%, 2022 $500,000 $513,030 - ------------------------------------------------------------------------------------------------------------------------------- Loudoun County, VA, Industrial Development Authority, University Facilities Rev. (George Washington University), 6.25%, 2012 2,710,000 2,723,848 - ------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority, Educational Facilities Rev. (Washington & Lee University), MBIA, 5.25%, 2031 1,000,000 1,120,140 - ------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority, Educational Facilities Rev. (Hampton University), 6%, 2020 1,000,000 1,119,010 - ------------------------------------------------------------------------------------------------------------------------------- Virginia College Building Authority, Educational Facilities Rev. (Regent University), MBIA, 5.125%, 2031 1,000,000 1,035,970 - ------------------------------------------------------------------------------------------------------------------------------- $6,511,998 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Chesapeake, VA, Industrial Development Authority Rev. (VEPCO), Owned - 2.2% 5.25%, 2008 $750,000 $766,920 - ------------------------------------------------------------------------------------------------------------------------------- Halifax County, VA, Industrial Development Authority (Old Dominion Electric Cooperative), AMBAC, 5.625%, 2028 3,000,000 3,213,570 - ------------------------------------------------------------------------------------------------------------------------------- Mecklenburg County, VA, Industrial Development Authority Rev. (UAE Mecklenburg, LP), 6.5%, 2017 700,000 774,431 - ------------------------------------------------------------------------------------------------------------------------------- Pittsylvania County, VA, Industrial Development Authority Rev. (Multi-trade of Pittsylvania), 7.5%, 2014 2,000,000 2,064,400 - ------------------------------------------------------------------------------------------------------------------------------- $6,819,321 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 4.3% Bristol VA, Utility Systems Rev., FSA, ETM, 5.75%, 2016(++) $240,000 $278,282 - ------------------------------------------------------------------------------------------------------------------------------- Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2015+(+) 1,010,000 1,164,308 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., RITES, FSA, 8.612%, 2017+(+) 2,500,000 3,123,100 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., RITES, FSA, 8.362%, 2019+(+) 1,270,000 1,524,940 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Electric Power Authority Rev., RITES, FSA, 7.712%, 2020+(+) 1,250,000 1,475,000 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, Public Utilities Rev., FSA, 5%, 2033 5,000,000 5,129,600 - ------------------------------------------------------------------------------------------------------------------------------- Richmond, VA, Public Utilities Rev., FSA, 5%, 2035 1,000,000 1,036,730 - ------------------------------------------------------------------------------------------------------------------------------- $13,731,960 - ------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 10.9% Fairfax County, VA, Water Authority Rev., 5%, 2012(++) $790,000 $820,178 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Water Authority Rev., 5%, 2026 1,000,000 1,045,660 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Water Authority Rev., 5%, 2027 3,210,000 3,332,622 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Water Authority Rev., 5%, 2027 1,000,000 1,043,390 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Water Authority Rev., 5%, 2032 2,000,000 2,056,980 - ------------------------------------------------------------------------------------------------------------------------------- Fairfax County, VA, Water Authority Rev., "A", 5%, 2030 5,000,000 5,199,350 - ------------------------------------------------------------------------------------------------------------------------------- Hanover County, VA, Water & Sewer Systems Rev., MBIA, 5.25%, 2026 2,000,000 2,078,240 - ------------------------------------------------------------------------------------------------------------------------------- Prince William County, VA, Water & Sewer Rev., FGIC, 5.5%, 2009(++) 2,000,000 2,166,880 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2005(++) 2,455,000 2,493,764 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Aqueduct & Sewer Authority Rev., ETM, 10.25%, 2009(++) 235,000 275,740 - ------------------------------------------------------------------------------------------------------------------------------- Spotsylvania County, VA, Water & Sewer Rev., FSA, 5%, 2022 1,450,000 1,509,073 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Beach, VA, Storm Water Utilities Rev., 6%, 2020 1,000,000 1,128,830 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority Sewer Systems Rev. (Hopewell Regional Wastewater), 5.75%, 2021 1,335,000 1,469,555 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Clean Water Rev., 6%, 2017 2,750,000 3,094,988 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Clean Water Rev., 5.4%, 2018 1,135,000 1,234,755 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Infrastructure Rev., "A", MBIA, 5.5%, 2019 1,600,000 1,740,784 - ------------------------------------------------------------------------------------------------------------------------------- Virginia Resources Authority, Infrastructure Rev., "A", MBIA, 5.5%, 2020 1,690,000 1,834,884 - ------------------------------------------------------------------------------------------------------------------------------- Virginia State Resources Authority, Water & Sewer Systems Rev. (Tuckahoe Creek Project), 5%, 2035 2,015,000 2,079,923 - ------------------------------------------------------------------------------------------------------------------------------- $34,605,596 - ------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $290,810,220) $308,912,414 - ------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.8% - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "A", 2.3%, due 4/07/05 $100,000 $100,000 - ------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "B", 2.3%, due 4/07/05 100,000 100,000 - ------------------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 1,500,000 1,500,000 - ------------------------------------------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White Memorial Hospital), "B-1", 2.3%, due 4/01/05 6,100,000 6,100,000 - ------------------------------------------------------------------------------------------------------------------------------- Illinois Development Finance Authority Rev. (Jewish Federation of Metropolitan Chicago), 2.3%, due 4/01/05 800,000 800,000 - ------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority, 2.31%, due 4/07/05 100,000 100,000 - ------------------------------------------------------------------------------------------------------------------------------- West Baton Rouge Parish, LA, Industrial District (Dow Chemical Co.), "B", 2.4%, due 4/01/05 100,000 100,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $8,800,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $299,610,220) $317,712,414 - ------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (0.2)% (681,959 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $317,030,455 - ------------------------------------------------------------------------------------------------------------------------------- SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 3/31/05 MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------- The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 95.8% - ------------------------------------------------------------------------------------------------------------------------------- ISSUER PAR AMOUNT $ VALUE - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 21.3% Charleston, WV, Public Improvements, 7.2%, 2009 $1,140,000 $1,311,251 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Public Improvement, 5.25%, 2023 1,500,000 1,587,210 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Public Improvement Rev., "A", 5%, 2034 2,000,000 2,038,400 - ------------------------------------------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, Public Improvement, RITES, MBIA, 8.612%, 2019+(+) 3,000,000 3,651,420 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority Rev. (State Office Building), "F", XLCA, 5.25%, 2025 2,000,000 2,266,620 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico Public Buildings Authority Rev., "B", 5.25%, 2007(++) 3,115,000 3,324,671 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Highway Improvements, FGIC, 5.625%, 2019 2,000,000 2,188,740 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Public Improvements, FGIC, 5%, 2021 4,000,000 4,141,640 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Sewer Improvements, FGIC, 5.5%, 2017 2,565,000 2,764,890 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Water Utility Improvements, FGIC, 5.25%, 2026 8,000,000 8,370,080 - ------------------------------------------------------------------------------------------------------------------------------- $31,644,922 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.7% Brooke County, WV, Board of Education, FGIC, 5%, 2016 $1,390,000 $1,462,711 - ------------------------------------------------------------------------------------------------------------------------------- Puerto Rico, Municipal Finance Agency, RITES, FSA, 8.129%, 2017+(+) 900,000 1,060,182 - ------------------------------------------------------------------------------------------------------------------------------- $2,522,893 - ------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.3% Jefferson County, WV, Board of Education, FGIC, ETM, 6.85%, 2009(++) $1,680,000 $1,921,870 - ------------------------------------------------------------------------------------------------------------------------------- Monongalia County, WV, Board of Education, MBIA, 5%, 2027 2,350,000 2,438,454 - ------------------------------------------------------------------------------------------------------------------------------- Monongalia County, WV, Board of Education, MBIA, 5%, 2033 3,000,000 3,088,440 - ------------------------------------------------------------------------------------------------------------------------------- Monongalia County, WV, Board of Education, MBIA, ETM, 7%, 2005(++) 500,000 500,000 - ------------------------------------------------------------------------------------------------------------------------------- $7,948,764 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Kanawha County, WV, Building Commission Rev. (St. Francis Hospital), Hospitals - 4.7% ETM, 7.5%, 2007(++) $85,000 $91,170 - ------------------------------------------------------------------------------------------------------------------------------- Ohio County, WV, County Commission Health System Rev. (Ohio Valley Medical Center), 5.75%, 2013 750,000 701,677 - ------------------------------------------------------------------------------------------------------------------------------- Randolph County, WV, Community Health Systems Rev. (Davis Health Systems, Inc.), FSA, 5.2%, 2021 1,000,000 1,064,670 - ------------------------------------------------------------------------------------------------------------------------------- Weirton, WV, Municipal Hospital Building, Commission Rev. (Weirton Hospital Medical Center), 6.375%, 2031 600,000 594,996 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (Charleston Area Medical Center), ETM, 6.5%, 2023(++) 2,000,000 2,440,820 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (Fairmont General Hospital), 6.625%, 2019 300,000 300,123 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (General Division Medical Office Building), 7.25%, 2014 1,770,000 1,792,798 - ------------------------------------------------------------------------------------------------------------------------------- $6,986,254 - ------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Harrison County, WV, Building Commission Rev. (Maplewood Retirement), Term Care - 2.0% AMBAC, 5.25%, 2021 $2,625,000 $2,743,072 - ------------------------------------------------------------------------------------------------------------------------------- Monongalia County, WV, Health Facilities Rev. (Beverly Enterprises, Inc.), 5.875%, 2007 270,000 270,548 - ------------------------------------------------------------------------------------------------------------------------------- $3,013,620 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev. Other - 0.2% (Hovensa Refinery), 5.875%, 2022 $350,000 $371,000 - ------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Braxton County, WV, Solid Waste Disposal Rev. (Weyerhaeuser Co.), Paper - 1.4% 6.5%, 2025 $2,000,000 $2,077,640 - ------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 0.7% Huntington, WV, Housing Corp. Rev., FNMA, 7.5%, 2024 $800,000 $799,936 - ------------------------------------------------------------------------------------------------------------------------------- Webster County, WV, Housing Development Rev. (Circlebrook), FHA, 6.35%, 2008 185,000 185,764 - ------------------------------------------------------------------------------------------------------------------------------- $985,700 - ------------------------------------------------------------------------------------------------------------------------------- Parking - 0.9% West Virginia Economic Development Authority, Auto Lease Rev. (Capitol Parking Garage), AMBAC, 5.8%, 2020 $1,260,000 $1,390,347 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Local - 0.9% Charlestown, WV, Residential Mortgage Rev., 6.2%, 2011 $195,000 $195,577 - ------------------------------------------------------------------------------------------------------------------------------- Kanawha County, WV, 0%, 2014(++) 1,920,000 1,172,986 - ------------------------------------------------------------------------------------------------------------------------------- $1,368,563 - ------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Puerto Rico Housing Finance Authority, Home Mortgage Rev., Mortgage State - 1.8% Backed Securities, "A", 4.75%, 2023 $695,000 $699,740 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Housing Development Fund Rev., 5.25%, 2018 1,000,000 1,010,590 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia State, Housing Development Fund Rev., 5.3%, 2023 1,000,000 1,008,130 - ------------------------------------------------------------------------------------------------------------------------------- $2,718,460 - ------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 1.7% West Virginia, Higher Education Facilities Rev., "B", FGIC, 5%, 2034 $2,500,000 $2,572,925 - ------------------------------------------------------------------------------------------------------------------------------- State & Local Huntington, WV, Municipal Development Authority, Rev., MBIA, 5.1%, Agencies - 20.1% 2018 $1,740,000 $1,820,545 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, "A", RITES, AMBAC, 7.781%, 2018+(+) 4,520,000 5,539,441 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, "B", RITES, AMBAC, 7.781%, 2018+(+) 1,250,000 1,531,925 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, Lease Rev., MBIA, ETM, 0%, 2007(++) 3,150,000 2,944,903 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, Lease Rev., MBIA, ETM, 0%, 2008(++) 3,050,000 2,751,985 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Building Commission, Lease Rev., MBIA, ETM, 0%, 2009(++) 1,000,000 865,390 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority (Correctional Juvenile & Public), 5%, 2020 1,000,000 1,040,510 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority (Correctional Juvenile & Public), MBIA, 5.5%, 2013 1,000,000 1,116,550 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority (Correctional Juvenile & Public), MBIA, 5%, 2026 2,100,000 2,170,896 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority State Office Building, "B", MBIA, 5.25%, 2030 1,355,000 1,425,663 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority, Auto Lease Rev., 5.2%, 2033 1,000,000 1,021,190 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority, Department of Enviromental Protection, 5.5%, 2022 2,000,000 2,188,080 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Economic Development Authority, Lease Rev. (State Office Building), "B", MBIA, 5.25%, 2025 645,000 683,416 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (Veterans Nursing Home), 5.5%, 2034 1,000,000 1,010,790 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Hospital Finance Authority, Hospital Rev. (West Virginia University Hospital), AMBAC, 5%, 2018 1,000,000 1,028,160 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia School Building Authority, Miscellaneous Tax Rev., FSA, 5.25%, 2021 2,550,000 2,713,863 - ------------------------------------------------------------------------------------------------------------------------------- $29,853,307 - ------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.3% Territory of Virgin Islands, Public Finance Authority Rev., "A", 5.625%, 2025 $500,000 $525,060 - ------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $700,000 $702,569 - ------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 4.8% West Virginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, ETM, 0%, 2007(++) $2,000,000 $1,869,780 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, ETM, 0%, 2005(++) 2,250,000 2,237,175 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, ETM, 0%, 2006(++) 2,500,000 2,416,825 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, ETM, 0%, 2008(++) 610,000 550,397 - ------------------------------------------------------------------------------------------------------------------------------- $7,074,177 - ------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., Tax - 1.3% "J", MBIA, 5%, 2029 $1,820,000 $1,900,644 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Commonwealth of Puerto Rico, Industrial Tourist Education (University Colleges - 17.9% Plaza), MBIA, 5%, 2021 $1,270,000 $1,328,801 - ------------------------------------------------------------------------------------------------------------------------------- Fairmont State College, West Virginia, College Rev., "A", FGIC, 5%, 2032 2,000,000 2,044,220 - ------------------------------------------------------------------------------------------------------------------------------- Fairmont State College, West Virginia, College Rev., FGIC, 5.25%, 2022 5,130,000 5,465,605 - ------------------------------------------------------------------------------------------------------------------------------- Fairmont State College, West Virginia, College Rev., FGIC, 5.375%, 2027 1,500,000 1,608,435 - ------------------------------------------------------------------------------------------------------------------------------- Fairmont State College, West Virginia, College Rev., FGIC, 5%, 2032 2,250,000 2,312,032 - ------------------------------------------------------------------------------------------------------------------------------- State of West Virginia, Department of Higher Education (Marshall University), FGIC, 5.25%, 2019 1,680,000 1,785,655 - ------------------------------------------------------------------------------------------------------------------------------- State of West Virginia, Department of Higher Education (Student Union James C. Wilson College), 5.125%, 2022 1,500,000 1,576,095 - ------------------------------------------------------------------------------------------------------------------------------- State of West Virginia, Department of Higher Education, "B", FGIC, 5%, 2029 1,000,000 1,032,890 - ------------------------------------------------------------------------------------------------------------------------------- State of West Virginia, Department of Higher Education, MBIA, 5%, 2010 1,345,000 1,441,705 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia University, Dormatory Rev., AMBAC, 5%, 2007(++) 2,000,000 2,122,420 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia University, University Systems Rev. (Marshall University), FGIC, 6%, 2020 2,705,000 3,040,122 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia University, University Systems Rev. (West Virginia University), MBIA, 5.5%, 2020 1,700,000 1,925,692 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia, West Virginia University Improvement Rev., "C", FGIC, 5%, 2028 1,000,000 1,029,700 - ------------------------------------------------------------------------------------------------------------------------------- $26,713,372 - ------------------------------------------------------------------------------------------------------------------------------- Universities - Dormatories - 0.4% West Liberty State College, Capital Improvement, 6%, 2028 $500,000 $527,975 - ------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Mason County, WV, Pollution Control Rev. (Appalachian Power Co.), Owned - 0.5% 5.5%, 2022 $750,000 $765,562 - ------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 7.4% Fairmont, WV, Waterworks Rev., AMBAC, 5.25%, 2022 $200,000 $222,434 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., AMBAC, 6.25%, 2020 1,000,000 1,119,990 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., AMBAC, 5.25%, 2023 1,000,000 1,067,400 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., AMBAC, 5%, 2026 2,850,000 2,959,754 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., ETM, 7.1%, 2009(++) 130,000 142,219 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority Rev., FSA, 5.25%, 2035 2,000,000 2,058,740 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority, Infrastructure Rev., "A", AMBAC, 5%, 2033 1,950,000 2,004,893 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority, Infrastructure Rev., FSA, 5.5%, 2018 390,000 421,964 - ------------------------------------------------------------------------------------------------------------------------------- West Virginia Water Development Authority, Infrastructure Rev., FSA, 5.5%, 2019 895,000 965,598 - ------------------------------------------------------------------------------------------------------------------------------- $10,962,992 - ------------------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $133,795,461) $142,626,746 - ------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.1% - ------------------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 $800,000 $800,000 - ------------------------------------------------------------------------------------------------------------------------------- California Health Facilities Financing Authority Rev. (Adventist Hospital), "B", 2.28%, due 4/01/05 100,000 100,000 - ------------------------------------------------------------------------------------------------------------------------------- Missouri Development Finance, Board of Cultural Facilities Rev. (Nelson Gallery), "B", 2.3%, due 4/01/05 200,000 200,000 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 2.25%, due 4/01/05 100,000 100,000 - ------------------------------------------------------------------------------------------------------------------------------- New York City, NY, Municipal Water & Sewer Finance Authority Rev., 2.28%, due 4/01/05 100,000 100,000 - ------------------------------------------------------------------------------------------------------------------------------- Sevier County, TN, Public Building Authority, Government Public Improvement, 2.31%, due 4/07/05 300,000 300,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $1,600,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $135,395,461) $144,226,746 - ------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 3.1% 4,566,404 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100.0% $148,793,150 - ------------------------------------------------------------------------------------------------------------------------------- Portfolio Footnotes: + Restricted security. (+) Inverse floating rate security. (++) Refunded bond. ** Interest received was less than stated coupon rate. ## SEC Rule 144A restriction. The following abbreviations are used in the Portfolio of Investments and are defined: ETM -- Escrowed to Maturity Insurers: Inverse Floaters: AMBAC -- AMBAC Indemnity Corp. RIBS -- Residual Interest Bonds ASST GTY -- Asset Guaranty Insurance Co. RITES -- Residual Interest Tax-Exempt Security CONNIE LEE -- Connie Lee Insurance Co. ROLS -- Residual Option Longs FGIC -- Financial Guaranty Insurance Co. FHA -- Federal Housing Administration FNMA -- Federal National Mortgage Assn. FSA -- Financial Security Assurance, Inc. GNMA -- Government National Mortgage Assn. LOC -- Letter of Credit 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 3/31/05 FUND FUND FUND FUND ASSETS Investments - Identified cost $86,267,076 $164,473,041 $325,663,533 $104,262,600 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) 4,287,040 12,336,430 22,288,678 4,516,603 - -------------------------------------------------------------------------------------------------------------------------------- Total investments, at value $90,554,116 $176,809,471 $347,952,211 $108,779,203 - -------------------------------------------------------------------------------------------------------------------------------- Cash 6,403 75,723 65,883 35,682 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for investments sold 156,101 1,535,242 -- 1,247,173 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for fund shares sold 50,879 243,887 266,177 65,301 - -------------------------------------------------------------------------------------------------------------------------------- Interest receivable 1,289,149 2,709,593 5,457,325 1,658,384 - -------------------------------------------------------------------------------------------------------------------------------- Receivable from investment adviser -- -- -- 37,707 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on interest rate swaps 90,165 123,339 121,069 144,155 - -------------------------------------------------------------------------------------------------------------------------------- Other assets 504 969 2,823 264 - -------------------------------------------------------------------------------------------------------------------------------- Total assets $92,147,317 $181,498,224 $353,865,488 $111,967,869 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $171,281 $233,139 $436,497 $134,627 - -------------------------------------------------------------------------------------------------------------------------------- Payable for investments purchased 518,635 -- -- 2,167,165 - -------------------------------------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 258,081 242,208 246,904 145,712 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swaps 7,637 6,988 31,188 13,594 - -------------------------------------------------------------------------------------------------------------------------------- Payable to affiliates - Management fee 749 1,483 2,894 895 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 12,234 21,292 19,702 12,610 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee 723 2,366 4,676 12,735 - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 34 67 158 49 - -------------------------------------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 60,086 71,550 101,158 82,786 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities $1,029,460 $579,093 $843,177 $2,570,173 - -------------------------------------------------------------------------------------------------------------------------------- Net assets $91,117,857 $180,919,131 $353,022,311 $109,397,696 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $87,500,297 $168,331,011 $331,013,769 $105,520,002 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) on investments 4,369,568 12,452,781 22,378,559 4,647,164 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments (606,173) 715,267 259,691 (521,854) - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (145,835) (579,928) (629,708) (247,616) - -------------------------------------------------------------------------------------------------------------------------------- Net assets $91,117,857 $180,919,131 $353,022,311 $109,397,696 - --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA FUND FUND FUND FUND Shares of beneficial interest outstanding Class A 8,101,268 11,136,583 23,338,351 6,680,817 - -------------------------------------------------------------------------------------------------------------------------------- Class B 1,173,720 3,135,959 3,361,084 4,065,877 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- 1,748,275 2,745,295 -- - -------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 9,274,988 16,020,817 29,444,730 10,746,694 - -------------------------------------------------------------------------------------------------------------------------------- Net assets Class A $79,574,101 $125,861,203 $279,874,640 $67,942,451 - -------------------------------------------------------------------------------------------------------------------------------- Class B 11,543,756 35,328,324 40,250,997 41,455,245 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- 19,729,604 32,896,674 -- - -------------------------------------------------------------------------------------------------------------------------------- Total net assets $91,117,857 $180,919,131 $353,022,311 $109,397,696 - -------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $9.82 $11.30 $11.99 $10.17 - -------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25 of net asset value per share) $10.31 $11.86 $12.59 $10.68 - -------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $9.84 $11.27 $11.98 $10.20 - -------------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $11.29 $11.98 $-- - -------------------------------------------------------------------------------------------------------------------------------- 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 CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA At 3/31/05 FUND FUND FUND FUND ASSETS Investments - Identified cost $149,448,556 $116,537,691 $299,610,220 $135,395,461 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) 10,594,479 7,203,450 18,102,194 8,831,285 - -------------------------------------------------------------------------------------------------------------------------------- Total investments, at value $160,043,035 $123,741,141 $317,712,414 $144,226,746 - -------------------------------------------------------------------------------------------------------------------------------- Cash 3,223 78,843 68,763 85,901 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for investments sold -- 314,366 838,898 2,240,157 - -------------------------------------------------------------------------------------------------------------------------------- Receivable for fund shares sold 180,312 65,544 129,097 114,232 - -------------------------------------------------------------------------------------------------------------------------------- Interest receivable 2,405,146 1,842,050 4,761,972 2,450,854 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on interest rate swaps 61,198 23,812 114,431 115,248 - -------------------------------------------------------------------------------------------------------------------------------- Other assets 1,168 837 2,694 961 - -------------------------------------------------------------------------------------------------------------------------------- Total assets $162,694,082 $126,066,593 $323,628,269 $149,234,099 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $198,680 $209,708 $512,197 $170,481 - -------------------------------------------------------------------------------------------------------------------------------- Payable for investments purchased 907,611 -- 5,014,520 -- - -------------------------------------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 99,785 202,100 722,780 163,123 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swaps 6,988 35,808 229,495 6,987 - -------------------------------------------------------------------------------------------------------------------------------- Payable to affiliates - Management fee 1,322 1,030 2,600 1,218 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 18,861 13,326 32,346 17,143 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee 2,093 1,571 3,599 1,678 - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 60 46 141 55 - -------------------------------------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 84,904 77,087 80,136 80,264 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities $1,320,304 $540,676 $6,597,814 $440,949 - -------------------------------------------------------------------------------------------------------------------------------- Net assets $161,373,778 $125,525,917 $317,030,455 $148,793,150 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital $151,955,124 $118,502,621 $300,996,280 $140,768,426 - -------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) on investments 10,648,689 7,191,454 17,987,130 8,939,546 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments (1,125,985) 117,367 (1,090,321) (578,600) - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (104,050) (285,525) (862,634) (336,222) - -------------------------------------------------------------------------------------------------------------------------------- Net assets $161,373,778 $125,525,917 $317,030,455 $148,793,150 - --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA At 3/31/05 FUND FUND FUND FUND Shares of beneficial interest outstanding Class A 10,541,560 9,787,631 24,754,359 11,606,388 - -------------------------------------------------------------------------------------------------------------------------------- Class B 2,511,402 1,932,786 1,705,825 1,237,930 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- 1,059,940 -- - -------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 13,052,962 11,720,417 27,520,124 12,844,318 - -------------------------------------------------------------------------------------------------------------------------------- Net assets Class A $130,341,583 $104,837,222 $285,185,022 $134,458,704 - -------------------------------------------------------------------------------------------------------------------------------- Class B 31,032,195 20,688,695 19,637,046 14,334,446 - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- 12,208,387 -- - -------------------------------------------------------------------------------------------------------------------------------- Total net assets $161,373,778 $125,525,917 $317,030,455 $148,793,150 - -------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $12.36 $10.71 $11.52 $11.58 - -------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25 of net asset value per share) $12.98 $11.24 $12.09 $12.16 - -------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $12.36 $10.70 $11.51 $11.58 - -------------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $-- $11.52 $-- - -------------------------------------------------------------------------------------------------------------------------------- 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 3/31/05 NET INVESTMENT INCOME Interest $4,874,779 $9,773,657 $19,154,417 $5,525,842 - -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $507,830 $1,022,390 $2,012,638 $616,390 - -------------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 4,049 6,633 12,576 6,165 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 114,597 237,790 411,873 142,708 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) -- 318,311 1,009,796 68,295 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 94,947 380,292 443,632 379,348 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class C) -- 205,175 330,103 -- - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 7,341 14,737 29,062 8,935 - -------------------------------------------------------------------------------------------------------------------------------- Custodian fee 34,864 66,067 127,120 42,637 - -------------------------------------------------------------------------------------------------------------------------------- Printing 9,152 20,105 24,235 14,400 - -------------------------------------------------------------------------------------------------------------------------------- Postage 3,352 6,278 11,988 6,445 - -------------------------------------------------------------------------------------------------------------------------------- Auditing fees 43,536 44,649 44,031 44,623 - -------------------------------------------------------------------------------------------------------------------------------- Legal fees 6,029 5,536 9,496 13,320 - -------------------------------------------------------------------------------------------------------------------------------- Miscellaneous 36,988 52,169 77,950 47,697 - -------------------------------------------------------------------------------------------------------------------------------- Total expenses $862,685 $2,380,132 $4,544,500 $1,390,963 - -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (2,582) (4,179) (8,211) (2,928) - -------------------------------------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (231,359) (465,497) (916,395) (381,310) - -------------------------------------------------------------------------------------------------------------------------------- Net expenses $628,744 $1,910,456 $3,619,894 $1,006,725 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income $4,246,035 $7,863,201 $15,534,523 $4,519,117 - -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) (identified cost basis)- Investment transactions $(32,553) $1,852,400 $3,053,372 $1,216,279 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (567,226) (547,082) (751,757) (700,849) - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $(599,779) $1,305,318 $2,301,615 $515,430 - -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $(1,835,568) $(6,032,524) $(11,948,822) $(3,146,738) - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions 544,515 827,262 1,040,296 717,113 - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(1,291,053) $(5,205,262) $(10,908,526) $(2,429,625) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(1,890,832) $(3,899,944) $(8,606,911) $(1,914,195) - -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $2,355,203 $3,963,257 $6,927,612 $2,604,922 - -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Operations - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND For year ended 3/31/05 NET INVESTMENT INCOME Interest $8,878,676 $6,675,857 $17,770,397 $7,959,252 - -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $906,745 $725,770 $1,782,820 $834,680 - -------------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 7,144 6,403 12,450 7,103 - -------------------------------------------------------------------------------------------------------------------------------- Shareholder servicing costs 195,440 152,569 390,544 179,711 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) 459,159 384,015 1,015,188 476,346 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 334,572 222,175 216,663 156,489 - -------------------------------------------------------------------------------------------------------------------------------- Distribution and service fee (Class C) -- -- 124,010 -- - -------------------------------------------------------------------------------------------------------------------------------- Administrative fee 13,085 10,495 25,753 12,040 - -------------------------------------------------------------------------------------------------------------------------------- Custodian fee 58,331 50,564 109,855 56,699 - -------------------------------------------------------------------------------------------------------------------------------- Printing 11,657 10,277 20,579 15,080 - -------------------------------------------------------------------------------------------------------------------------------- Postage 5,405 5,572 10,907 3,554 - -------------------------------------------------------------------------------------------------------------------------------- Auditing fees 43,961 44,629 44,697 44,637 - -------------------------------------------------------------------------------------------------------------------------------- Legal fees 7,275 9,328 8,494 7,122 - -------------------------------------------------------------------------------------------------------------------------------- Miscellaneous 55,114 47,305 39,676 45,201 - -------------------------------------------------------------------------------------------------------------------------------- Total expenses $2,097,888 $1,669,102 $3,801,636 $1,838,662 - -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (3,491) (3,237) (5,969) (3,471) - -------------------------------------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (413,517) (330,563) (812,366) (380,133) - -------------------------------------------------------------------------------------------------------------------------------- Net expenses $1,680,880 $1,335,302 $2,983,301 $1,455,058 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income $7,197,796 $5,340,555 $14,787,096 $6,504,194 - -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Realized gain (loss) (identified cost basis)- Investment transactions $1,252,790 $772,415 $3,059,445 $580,887 - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions (322,543) 235,473 239,414 (657,821) - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $930,247 $1,007,888 $3,298,859 $(76,934) - -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $(4,889,297) $(3,485,491) $(9,861,614) $(3,724,012) - -------------------------------------------------------------------------------------------------------------------------------- Swap transactions 477,333 147,334 436,890 494,565 - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(4,411,964) $(3,338,157) $(9,424,724) $(3,229,447) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(3,481,717) $(2,330,269) $(6,125,865) $(3,306,381) - -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $3,716,079 $3,010,286 $8,661,231 $3,197,813 - -------------------------------------------------------------------------------------------------------------------------------- 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 3/31/05 CHANGE IN NET ASSETS OPERATIONS Net investment income $4,246,035 $7,863,201 $15,534,523 $4,519,117 - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (599,779) 1,305,318 2,301,615 515,430 - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments (1,291,053) (5,205,262) (10,908,526) (2,429,625) - -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $2,355,203 $3,963,257 $6,927,612 $2,604,922 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(3,800,669) $(5,659,906) $(12,575,689) $(2,936,106) - -------------------------------------------------------------------------------------------------------------------------------- Class B (488,047) (1,405,511) (1,644,629) (1,545,007) - -------------------------------------------------------------------------------------------------------------------------------- Class C -- (758,214) (1,223,511) -- - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- -- (936,801) -- - -------------------------------------------------------------------------------------------------------------------------------- Class B -- -- (140,671) -- - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- (107,103) -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(4,288,716) $(7,823,631) $(16,628,404) $(4,481,113) - -------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $9,045,267 $14,263,800 $20,817,725 $11,805,847 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 2,261,536 5,273,314 11,824,254 3,083,455 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (13,939,448) (29,817,855) (60,722,788) (27,178,617) - -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(2,632,645) $(10,280,741) $(28,080,809) $(12,289,315) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees $41 $2,441 $1 $21 - -------------------------------------------------------------------------------------------------------------------------------- Total change in net assets $(4,566,117) $(14,138,674) $(37,781,600) $(14,165,485) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 95,683,974 195,057,805 390,803,911 123,563,181 - -------------------------------------------------------------------------------------------------------------------------------- At end of period $91,117,857 $180,919,131 $353,022,311 $109,397,696 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(145,835) $(579,928) $(629,708) $(247,616) - -------------------------------------------------------------------------------------------------------------------------------- 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 3/31/05 CHANGE IN NET ASSETS OPERATIONS Net investment income $7,197,796 $5,340,555 $14,787,096 $6,504,194 - -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 930,247 1,007,888 3,298,859 (76,934) - -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments (4,411,964) (3,338,157) (9,424,724) (3,229,447) - -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $3,716,079 $3,010,286 $8,661,231 $3,197,813 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income Class A $(5,900,829) $(4,493,724) $(13,347,276) $(5,865,720) - -------------------------------------------------------------------------------------------------------------------------------- Class B (1,287,235) (765,363) (855,754) (572,534) - -------------------------------------------------------------------------------------------------------------------------------- Class C -- -- (489,932) -- - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- (753,833) -- - -------------------------------------------------------------------------------------------------------------------------------- Class B -- (154,547) -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(7,188,064) $(6,167,467) $(14,692,962) $(6,438,254) - -------------------------------------------------------------------------------------------------------------------------------- FUND SHARE (PRINCIPAL) TRANSACTIONS Net proceeds from sale of shares $13,511,576 $9,769,194 $20,694,470 $8,490,937 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in reinvestment of distributions 4,984,841 3,893,707 9,044,221 4,607,193 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares reacquired (28,378,740) (28,275,785) (44,797,381) (19,407,595) - -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(9,882,323) $(14,612,884) $(15,058,690) $(6,309,465) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees $-- $-- $606 $44 - -------------------------------------------------------------------------------------------------------------------------------- Total change in net assets $(13,354,308) $(17,770,065) $(21,089,815) $(9,549,862) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of period 174,728,086 143,295,982 338,120,270 158,343,012 - -------------------------------------------------------------------------------------------------------------------------------- At end of period $161,373,778 $125,525,917 $317,030,455 $148,793,150 - -------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(104,050) $(285,525) $(862,634) $(336,222) - -------------------------------------------------------------------------------------------------------------------------------- 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 3/31/04 CHANGE 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 - -------------------------------------------------------------------------------------------------------------------------------- Change 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) - -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(4,929,773) $6,752,482 $(18,476,676) $6,776,324 - -------------------------------------------------------------------------------------------------------------------------------- Total change 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 CHANGE 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 (loss) on investments 1,270,567 461,119 3,861,843 808,352 - -------------------------------------------------------------------------------------------------------------------------------- Change 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) - -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $6,273,570 $(727,582) $(11,721,293) $(1,401,292) - -------------------------------------------------------------------------------------------------------------------------------- Total change 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
- -------------------------------------------------------------------------------------------------------------------------------- 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 (or, if shorter, the period of the fund's operations). 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 registered public accounting firm, whose report, together with the fund's financial statements, are included in this report. For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.02 $10.02 $9.61 $9.78 $9.37 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.46 $0.46 $0.46 $0.49 $0.50 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.19) 0.01 0.44 (0.16) 0.41 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.27 $0.47 $0.90 $0.33 $0.91 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.47) $(0.47) $(0.49) $(0.50) $(0.50) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.82 $10.02 $10.02 $9.61 $9.78 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+)& 2.76 4.77 9.48 3.45 10.02 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.58 0.62 0.64 0.65 0.65 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.70 4.61 4.70 5.05 5.28 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 19 12 22 6 19 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $79,574 $82,507 $87,724 $76,004 $67,458 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.44 $0.44 $0.44 $0.47 $0.48 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.83 0.82 0.84 0.85 0.85 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.45 4.41 4.50 4.85 5.08 - -------------------------------------------------------------------------------------------------------------------------------- (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 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 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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MISSISSIPPI MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.03 $10.04 $9.62 $9.79 $9.38 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.39 $0.38 $0.38 $0.42 $0.43 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.19) (0.01)^ 0.44 (0.17) 0.41 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.20 $0.37 $0.82 $0.25 $0.84 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.39) $(0.38) $(0.40) $(0.42) $(0.43) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.84 $10.03 $10.04 $9.62 $9.79 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 2.08 3.80 8.67 2.62 9.17 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.35 1.44 1.47 1.45 1.43 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.93 3.79 3.86 4.23 4.50 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 19 12 22 6 19 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $11,544 $13,177 $12,900 $10,177 $10,986 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.36 $0.36 $0.36 $0.40 $0.41 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.60 1.64 1.67 1.65 1.63 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.68 3.59 3.66 4.03 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 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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. ^ 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 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.53 $11.49 $10.94 $11.14 $10.58 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.51 $0.51 $0.52 $0.53 $0.55 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.24) 0.04 0.56 (0.18) 0.57 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.27 $0.55 $1.08 $0.35 $1.12 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.50) $(0.51) $(0.53) $(0.54) $(0.55) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.50) $(0.51) $(0.53) $(0.55) $(0.56) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.30 $11.53 $11.49 $10.94 $11.14 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+)& 2.45 4.90 10.05 3.16 10.75 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.79 0.86 0.87 0.88 0.86 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.47 4.39 4.56 4.80 5.10 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 20 13 17 18 35 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $125,861 $131,642 $132,843 $121,717 $125,917 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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 $0.48 $0.49 $0.51 $0.52 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.04 1.06 1.07 1.08 1.06 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.22 4.19 4.36 4.60 4.90 - -------------------------------------------------------------------------------------------------------------------------------- (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 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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.49 $11.45 $10.93 $11.13 $10.58 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.42 $0.42 $0.43 $0.45 $0.46 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.22) 0.04 0.54 (0.19) 0.57 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.20 $0.46 $0.97 $0.26 $1.03 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.42) $(0.42) $(0.45) $(0.45) $(0.47) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.42) $(0.42) $(0.45) $(0.46) $(0.48) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.27 $11.49 $11.45 $10.93 $11.13 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 1.77 4.12 8.96 2.39 9.94 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.54 1.60 1.62 1.63 1.61 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.70 3.62 3.80 4.05 4.33 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 20 13 17 18 35 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $35,328 $41,509 $40,867 $29,903 $25,928 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.39 $0.39 $0.41 $0.43 $0.44 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.79 1.80 1.82 1.83 1.81 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.45 3.42 3.60 3.85 4.13 - -------------------------------------------------------------------------------------------------------------------------------- (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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND - --------------------------------------------------------------------------------------------------------------------------------
Years Ended 3/31 Period Ended 2005 2004 2003 2002 3/31/2001* CLASS C Net asset value, beginning of period $11.51 $11.47 $10.93 $11.13 $10.91 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.42 $0.42 $0.43 $0.45 $0.14 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.22) 0.04 0.56 (0.18) 0.23 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.20 $0.46 $0.99 $0.27 $0.37 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.42) $(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) $(0.42) $(0.45) $(0.47) $(0.15) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.29 $11.51 $11.47 $10.93 $11.13 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 1.78 4.12 9.14 2.39 3.36++ - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.54 1.60 1.62 1.63 1.61+ - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.72 3.63 3.81 4.05 4.20+ - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 20 13 17 18 35 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $19,730 $21,907 $14,005 $10,178 $8,578 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.39 $0.39 $0.41 $0.43 $0.14 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.79 1.80 1.82 1.83 1.81+ - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.47 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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $12.30 $12.24 $11.68 $11.89 $11.35 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.53 $0.53 $0.54 $0.57 $0.58 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.27) 0.07 0.58 (0.21) 0.55 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.26 $0.60 $1.12 $0.36 $1.13 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.53) $(0.53) $(0.56) $(0.57) $(0.58) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ (0.01) - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.04) (0.01) -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.57) $(0.54) $(0.56) $(0.57) $(0.59) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.99 $12.30 $12.24 $11.68 $11.89 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+)& 2.15 5.01 9.71 3.08 10.20 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.85 0.92 0.91 0.92 0.91 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.38 4.30 4.50 4.78 5.03 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 9 9 20 13 27 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $279,875 $305,185 $316,687 $303,250 $308,447 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.50 $0.50 $0.52 $0.54 $0.56 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.10 1.12 1.11 1.12 1.11 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.13 4.10 4.30 4.58 4.83 - -------------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (+) Total returns 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 2005 2004 2003 2002 2001 Net asset value, beginning of period $12.29 $12.23 $11.67 $11.89 $11.35 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.45 $0.47 $0.48 $0.50 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.27) 0.07 0.57 (0.20) 0.55 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.18 $0.52 $1.04 $0.28 $1.05 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.45) $(0.45) $(0.48) $(0.49) $(0.50) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.04) (0.01) -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.49) $(0.46) $(0.48) $(0.50) $(0.51) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.98 $12.29 $12.23 $11.67 $11.89 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 1.49 4.33 9.01 2.33 9.49 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.50 1.56 1.56 1.57 1.56 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.72 3.64 3.85 4.07 4.37 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 9 9 20 13 27 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $40,251 $50,363 $59,116 $57,534 $60,449 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.42 $0.42 $0.44 $0.46 $0.48 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.75 1.76 1.76 1.77 1.76 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.47 3.44 3.65 3.87 4.17 - -------------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS C 2005 2004 2003 2002 2001 Net asset value, beginning of period $12.29 $12.23 $11.67 $11.89 $11.35 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.45 $0.46 $0.48 $0.50 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.27) 0.07 0.58 (0.20) 0.55 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.18 $0.52 $1.04 $0.28 $1.05 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.45) $(0.45) $(0.48) $(0.49) $(0.50) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.04) (0.01) -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.49) $(0.46) $(0.48) $(0.50) $(0.51) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.98 $12.29 $12.23 $11.67 $11.89 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 1.49 4.33 9.01 2.33 9.49 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.51 1.57 1.56 1.57 1.56 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.76 3.67 3.84 4.07 4.37 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 9 9 20 13 27 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $32,897 $35,256 $31,836 $23,741 $19,099 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.42 $0.43 $0.44 $0.46 $0.48 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.76 1.77 1.76 1.77 1.76 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.51 3.47 3.64 3.87 4.17 - -------------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.31 $10.21 $9.73 $9.85 $9.36 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.44 $0.42 $0.45 $0.48 $0.49 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.14) 0.10 0.51 (0.11) 0.49 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.30 $0.52 $0.96 $0.37 $0.98 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.44) $(0.42) $(0.48) $(0.49) $(0.49) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.44) $(0.42) $(0.48) $(0.49) $(0.49) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.17 $10.31 $10.21 $9.73 $9.85 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+)& 2.97 5.12 10.12 3.85 10.85 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.60 0.64 0.48 0.36 0.37 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.33 4.12 4.47 4.90 5.17 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 20 24 19 19 10 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $67,942 $75,083 $68,705 $47,661 $33,842 - -------------------------------------------------------------------------------------------------------------------------------- (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 and certain other fees and expenses 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. Effective June 7, 2004, the investment adviser also has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.40 $0.39 $0.40 $0.43 $0.44 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 0.94 0.94 0.96 0.89 0.93 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.99 3.82 3.99 4.37 4.61 - -------------------------------------------------------------------------------------------------------------------------------- (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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.34 $10.24 $9.75 $9.88 $9.38 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.36 $0.34 $0.36 $0.40 $0.42 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.14) 0.10 0.53 (0.12) 0.50 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.22 $0.44 $0.89 $0.28 $0.92 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.36) $(0.34) $(0.40) $(0.41) $(0.42) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.36) $(0.34) $(0.40) $(0.41) $(0.42) - -------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.20 $10.34 $10.24 $9.75 $9.88 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 2.19 4.38 9.21 2.86 10.06 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.37 1.44 1.30 1.20 1.17 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.56 3.32 3.62 4.06 4.38 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 20 24 19 19 10 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $41,455 $48,480 $46,941 $28,286 $20,827 - -------------------------------------------------------------------------------------------------------------------------------- (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 and certain other fees and expenses 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. Effective June 7, 2004, the investment adviser also has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.33 $0.31 $0.32 $0.35 $0.36 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.71 1.74 1.78 1.73 1.73 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.22 3.02 3.14 3.53 3.82 - -------------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $12.61 $12.53 $12.00 $12.15 $11.58 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.56 $0.55 $0.58 $0.60 $0.60 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.25) 0.10 0.54 (0.16) 0.56 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.31 $0.65 $1.12 $0.44 $1.16 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.56) $(0.57) $(0.59) $(0.59) $(0.59) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.36 $12.61 $12.53 $12.00 $12.15 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+)& 2.52 5.30 9.51 3.68 10.26 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.89 0.94 0.95 0.94 0.96 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.50 4.39 4.68 4.91 5.13 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 15 16 21 10 33 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $130,342 $137,911 $129,844 $121,438 $120,529 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.53 $0.53 $0.55 $0.57 $0.58 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.14 1.14 1.15 1.14 1.16 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.25 4.19 4.48 4.71 4.93 - -------------------------------------------------------------------------------------------------------------------------------- (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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (+) Total returns 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 2005 2004 2003 2002 2001 Net asset value, beginning of period $12.60 $12.52 $11.99 $12.14 $11.58 - -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S) Net investment income (loss)(S) $0.48 $0.47 $0.50 $0.52 $0.52 - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.24) 0.10 0.54 (0.16) 0.55 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.24 $0.57 $1.04 $0.36 $1.07 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.48) $(0.49) $(0.51) $(0.51) $(0.51) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.36 $12.60 $12.52 $11.99 $12.14 - -------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 1.94 4.62 8.81 3.01 9.46 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.54 1.59 1.60 1.59 1.61 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss)(S)(S) 3.85 3.74 4.03 4.25 4.47 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 15 16 21 10 33 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $31,032 $36,817 $37,603 $34,139 $33,302 - -------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. If these fees had been incurred by the fund, the net investment income per share and the ratios would have been: Net investment income (loss)(S)(S) $0.45 $0.45 $0.47 $0.49 $0.50 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.79 1.79 1.80 1.79 1.81 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss)(S)(S) 3.60 3.54 3.83 4.05 4.27 - -------------------------------------------------------------------------------------------------------------------------------- (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 $0.03 per share. In addition, the ratio of net investment income to average net assets increased by less than 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 amount was less than $0.01. # Per share data are based on average shares outstanding. ## Ratios do not reflect reductions from fees paid indirectly. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) TENNESSEE MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.96 $10.90 $10.43 $10.58 $10.11 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.45 $0.45 $0.47 $0.49 $0.50 - ------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.18) 0.06 0.49 (0.14) 0.47 - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.27 $0.51 $0.96 $0.35 $0.97 - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.44) $(0.45) $(0.49) $(0.50) $(0.50) - ------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.08) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ -- - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.52) $(0.45) $(0.49) $(0.50) $(0.50) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.71 $10.96 $10.90 $10.43 $10.58 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+)& 2.53 4.80 9.34 3.36 9.87 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.91 0.94 0.97 0.94 0.95 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.16 4.08 4.35 4.66 4.87 - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 11 19 16 12 19 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $104,837 $118,990 $115,819 $101,294 $99,097 - ------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer services paid to Tarantino LLC. 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) $0.42 $0.42 $0.45 $0.47 $0.48 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.16 1.14 1.17 1.14 1.15 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.91 3.88 4.15 4.46 4.67 - ------------------------------------------------------------------------------------------------------------------------------- (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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) TENNESSEE MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $10.95 $10.89 $10.42 $10.57 $10.10 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.38 $0.38 $0.40 $0.42 $0.43 - ------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.18) 0.06 0.49 (0.14) 0.47 - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.20 $0.44 $0.89 $0.28 $0.90 - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.37) $(0.38) $(0.42) $(0.43) $(0.43) - ------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (0.08) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ -- - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.45) $(0.38) $(0.42) $(0.43) $(0.43) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.70 $10.95 $10.89 $10.42 $10.57 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 1.87 4.12 8.64 2.69 9.17 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.56 1.59 1.62 1.59 1.60 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.51 3.43 3.70 4.00 4.22 - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 11 19 16 12 19 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $20,689 $24,306 $27,546 $26,183 $23,656 - ------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.35 $0.35 $0.38 $0.40 $0.41 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.81 1.79 1.82 1.79 1.80 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.26 3.23 3.50 3.80 4.02 - ------------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.73 $11.61 $11.14 $11.36 $10.91 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.53 $0.53 $0.53 $0.54 $0.56 - ------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.21) 0.12 0.47 (0.22) 0.45 - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.32 $0.65 $1.00 $0.32 $1.01 - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.53) $(0.53) $(0.53) $(0.54) $(0.56) - ------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ (0.00)+++ - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.53) $(0.53) $(0.53) $(0.54) $(0.56) - ------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.52 $11.73 $11.61 $11.14 $11.36 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%)(+)& 2.83 5.70 9.10 2.87 9.55 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.85 0.93 0.93 0.92 0.91 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.63 4.53 4.62 4.77 5.06 - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 11 11 13 14 24 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $285,185 $301,218 $308,164 $299,088 $304,581 - ------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.51 $0.51 $0.51 $0.52 $0.54 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.10 1.13 1.13 1.12 1.11 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.38 4.33 4.42 4.57 4.86 - ------------------------------------------------------------------------------------------------------------------------------- (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 the 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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (+) Total returns 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) VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.72 $11.60 $11.13 $11.35 $10.91 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.46 $0.45 $0.46 $0.47 $0.48 - ------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.21) 0.12 0.46 (0.22) 0.44 - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.25 $0.57 $0.92 $0.25 $0.92 - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.46) $(0.45) $(0.45) $(0.47) $(0.48) - ------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ (0.00)+++ - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.46) $(0.45) $(0.45) $(0.47) $(0.48) - ------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.51 $11.72 $11.60 $11.13 $11.35 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 2.16 5.02 8.40 2.20 8.76 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.50 1.57 1.58 1.58 1.56 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.98 3.88 3.97 4.12 4.39 - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 11 11 13 14 24 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $19,637 $23,564 $25,470 $26,970 $29,872 - ------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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 $0.43 $0.43 $0.45 $0.46 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.75 1.77 1.78 1.78 1.76 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.73 3.68 3.77 3.92 4.19 - ------------------------------------------------------------------------------------------------------------------------------- (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 the 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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS C 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.72 $11.61 $11.13 $11.36 $10.91 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.46 $0.45 $0.45 $0.47 $0.48 - ------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.20) 0.11 0.48 (0.23) 0.45 - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.26 $0.56 $0.93 $0.24 $0.93 - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.46) $(0.45) $(0.45) $(0.47) $(0.48) - ------------------------------------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (0.00)+++ (0.00)+++ - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.46) $(0.45) $(0.45) $(0.47) $(0.48) - ------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.52 $11.72 $11.61 $11.13 $11.36 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 2.25 4.93 8.49 2.10 8.85 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.50 1.57 1.58 1.57 1.56 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.98 3.88 3.97 4.10 4.37 - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 11 11 13 14 24 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $12,208 $13,338 $12,758 $10,619 $6,965 - ------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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 $0.43 $0.43 $0.44 $0.46 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.75 1.77 1.78 1.77 1.76 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.73 3.68 3.77 3.90 4.17 - ------------------------------------------------------------------------------------------------------------------------------- (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 the 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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.82 $11.77 $11.32 $11.45 $10.95 - -------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.51 $0.51 $0.55 $0.57 $0.57 - -------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.25) 0.05 0.46 (0.14) 0.50 - -------------------------------------------------------------------------------------------- Total from investment operations $0.26 $0.56 $1.01 $0.43 $1.07 - -------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.50) $(0.51) $(0.56) $(0.56) $(0.57) - -------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - -------------------------------------------------------------------------------------------- Net asset value, end of period $11.58 $11.82 $11.77 $11.32 $11.45 - -------------------------------------------------------------------------------------------- Total return (%)(+)& 2.28 4.84 9.04 3.79 10.04 - -------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.89 0.93 0.96 0.93 0.95 - -------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.35 4.33 4.71 4.97 5.14 - -------------------------------------------------------------------------------------------- Portfolio turnover 14 17 13 2 9 - -------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $134,459 $140,599 $139,564 $121,860 $118,862 - -------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer services paid to Tarantino LLC. 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 $0.53 $0.55 $0.55 - -------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.14 1.13 1.16 1.13 1.15 - -------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.10 4.13 4.51 4.77 4.94 - -------------------------------------------------------------------------------------------- (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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- For years ended 3/31
CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $11.82 $11.76 $11.31 $11.44 $10.94 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS#(S)(S) Net investment income(S) $0.43 $0.43 $0.47 $0.50 $0.50 - ------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.24) 0.06 0.46 (0.15) 0.50 - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.19 $0.49 $0.93 $0.35 $1.00 - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.43) $(0.43) $(0.48) $(0.48) $(0.50) - ------------------------------------------------------------------------------------------------------------------------------- Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.58 $11.82 $11.76 $11.31 $11.44 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%)& 1.62 4.25 8.34 3.12 9.34 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.54 1.58 1.61 1.59 1.60 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.71 3.68 4.06 4.31 4.48 - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 14 17 13 2 9 - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $14,334 $17,744 $19,443 $16,248 $16,170 - ------------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of substantially all of Independent Chief Compliance Officer services paid to Tarantino LLC. 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) $0.40 $0.41 $0.45 $0.47 $0.48 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) TO AVERAGE NET ASSETS: Expenses## 1.79 1.78 1.81 1.79 1.80 - ------------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.46 3.48 3.86 4.11 4.28 - ------------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. 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 U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Because each fund invests primarily in the securities of a single state and its political subdivisions, each fund is vulnerable to the effects of changes in the legal and economic environment of the particular state. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the projects or assets or the inability to collect revenues for the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline in value. Investment Valuations - 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. 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 approximates market value as determined by the Board of Trustees. When pricing service information or market quotations are not readily available, securities are priced at fair value as determined under the direction of 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. The funds use swaps for both hedging and non-hedging purposes. For hedging purposes, the funds may use swaps to reduce its exposure to interest and foreign exchange rate fluctuations. For non-hedging purposes, the funds 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 Swaps - Each 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. Short Term Fees - For purchases made on or after July 1, 2004 and before April 1, 2005, each fund charged a 2% redemption fee (which was retained by each fund) on proceeds from Class A, Class B, and Class C shares redeemed or exchanged within 5 business days following their acquisition (either by purchase or exchange). Effective April 1, 2005, each fund will no longer charge a redemption fee. See the funds' prospectus for details. Any redemption fees charged are accounted for as an addition to paid-in-capital. Investment Transactions and Income - Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. 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. Each fund may receive proceeds from litigation settlements involving its portfolio holdings. Any proceeds received are reflected in realized gain/loss in the statement of operations, or in unrealized gain/loss if the security is still held by the fund. 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, 2005, 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, expiration of capital loss carry forward, treating a portion of the proceeds from redemptions as a distribution for tax purposes and amortization and accretion on debt securities and net operating losses. The tax character of distributions declared for the years ended March 31, 2005 and March 31, 2004 was as follows:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA YEAR ENDED 3/31/05 FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Distributions declared from: Tax-exempt income $4,288,716 $7,823,631 $15,104,858 $4,481,113 $7,152,028 $5,259,087 $14,692,962 $6,402,713 - ------------------------------------------------------------------------------------------------------------------------------------ Ordinary income -- -- 338,971 -- 36,036 194,393 -- 35,541 - ------------------------------------------------------------------------------------------------------------------------------------ Long-term capital gain -- -- 1,184,575 -- -- 713,987 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions $4,288,716 $7,823,631 $16,628,404 $4,481,113 $7,188,064 $6,167,467 $14,692,962 $6,438,254 - ------------------------------------------------------------------------------------------------------------------------------------ NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA YEAR ENDED 3/31/05 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 - ------------------------------------------------------------------------------------------------------------------------------------ During the year ended March 31, 2005, the following amounts were reclassified due to differences between book and tax accounting for amortization and accretion on debt securities, expiration of capital loss carry forward, derivatives, defaulted bonds, net operating losses and treating a portion of the proceeds from redemptions as a distribution for tax purposes: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA YEAR ENDED 3/31/05 FUND FUND FUND FUND FUND FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Increase (decrease): Paid-in capital $(244,329) $102,921 $221,887 $20,589 $(16,975) $127,572 $80,902 $(714,690) - ----------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net realized gain (loss) on investments 211,324 (83,019) (649,197) (23,589) 54,479 (156,160) (75,564) 722,658 - ----------------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed (distributions in excess of) net investment income 33,005 (19,902) 427,310 3,000 (37,504) 28,588 (5,338) (7,968) - ----------------------------------------------------------------------------------------------------------------------------------- These changes had no effect on the net assets or net asset value per share of the funds. As of March 31, 2005, the components of distributable earnings (accumulated losses) on a tax basis were as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA YEAR ENDED 3/31/05 FUND FUND FUND FUND FUND FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Undistributed tax- exempt income $210,462 $48,816 $626,554 $134,028 $489,563 $139,959 $347,921 $194,988 - ----------------------------------------------------------------------------------------------------------------------------------- Undistributed ordinary income -- -- -- -- -- 10,961 -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Capital loss carryforward (287,448) -- -- (540,893) (1,301,294) -- (1,228,716) (425,144) - ----------------------------------------------------------------------------------------------------------------------------------- Undistributed long- term capital gains -- 641,119 139,770 -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Post-October capital loss carryforward (328,645) -- -- -- -- -- -- (209,354) - ----------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) 4,291,618 12,408,479 22,402,961 4,533,706 10,767,643 7,320,817 18,234,990 8,884,754 - ----------------------------------------------------------------------------------------------------------------------------------- Other temporary differences (268,427) (510,294) (1,160,743) (249,147) (537,258) (448,441) (1,320,020) (420,520) - ----------------------------------------------------------------------------------------------------------------------------------- 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 on: SOUTH WEST MISSISSIPPI PENNSYLVANIA CAROLINA VIRGINIA VIRGINIA EXPIRATION DATE FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2008 $-- $(43,665) $-- $-- $(58,823) - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2009 -- (175,279) (1,301,294) -- (220,540) - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2010 -- -- -- (862,340) (83,347) - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2011 -- (120,267) -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2012 -- (201,682) -- (366,376) -- - ----------------------------------------------------------------------------------------------------------------------------------- March 31, 2013 (287,448) -- -- -- (62,434) - ----------------------------------------------------------------------------------------------------------------------------------- Total $(287,448) $(540,893) $(1,301,294) $(1,228,716) $(425,144) - -----------------------------------------------------------------------------------------------------------------------------------
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 shares outstanding of each class, without distinction between share classes. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A shares approximately eight years after purchase. (3) TRANSACTIONS WITH AFFILIATES Investment Adviser - The 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. As part of a settlement agreement with the New York Attorney General concerning market timing and related matters (See Legal Proceedings footnote), MFS has agreed to reduce each fund's management fee to 0.30% of average daily net assets for the period March 1, 2004 through February 28, 2009, which is shown as a reduction of total expenses in the Statement of Operations. 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. For the Pennsylvania Fund, the investment adviser has contractually agreed to pay the fund's "other expenses", which are defined as the fund's operating expenses, exclusive of management, distribution and service fees, and certain other fees and expenses, such that the fund's other expenses do not exceed 0.20% of average daily net assets on an annualized basis. This is reflected as a reduction of expenses in the Statement of Operations. Each fund pays compensation to its Independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons, and pays no compensation directly to its Trustees who are officers of the investment adviser, or to officers of the funds, all of whom receive remuneration for their services to the funds from MFS. Certain officers and Trustees of the funds are officers or directors of MFS, 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 Trustees' compensation is a pension expense for retired Independent Trustees for the year ended March 31, 2005:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA YEAR ENDED 3/31/05 FUND FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Pension Expense $969 $1,292 $1,888 $987 $1,853 $1,184 $1,878 $1,850 - ------------------------------------------------------------------------------------------------------------------------------------
These funds and certain other MFS funds (the "funds") have entered into a services agreement (the "Agreement") which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. MFS has agreed to reimburse each of the funds for a proportional share of substantially all of the payments made by the funds to Tarantino LLC and also to provide office space and other administrative support and supplies to the ICCO. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. Administrator - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to certain funds for which MFS acts as investment advisor. 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. Each fund paid MFS an administrative fee up to the following annual percentage rates of the fund's average daily net assets: 4/01/04 THROUGH EFFECTIVE DATE 2/28/05 3/01/05 First $2 billion 0.01120% 0.01626% - ------------------------------------------------------------------------------- Next $2.5 billion 0.00832% 0.01206% - ------------------------------------------------------------------------------- Next $2.5 billion 0.00032% 0.00056% - ------------------------------------------------------------------------------- In excess of $7 billion 0.00000% 0.00000% - ------------------------------------------------------------------------------- For the year ended March 31, 2005, each fund paid MFS the following amounts and 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 YEAR ENDED 3/31/05 FUND FUND FUND FUND FUND FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Expenses paid $7,341 $14,737 $29,062 $8,935 $13,085 $10,495 $25,753 $12,040 - ----------------------------------------------------------------------------------------------------------------------------------- Percentage of average daily net assets 0.0080% 0.0079% 0.0079% 0.0080% 0.0080% 0.0080% 0.0079% 0.0079% - ----------------------------------------------------------------------------------------------------------------------------------- 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, 2005: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- $22,360 $35,375 $57,124 $43,013 $39,811 $32,599 $49,634 $35,102 - ---------------------------------------------------------------------------------------------------------------------------------- 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, 2005, MFD retained the following service fees for accounts not attributable to a securities dealer: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- $-- $9,220 $9,488 $317 $3,208 $1,038 $13,906 $5,830 - ---------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2005, 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% - ---------------------------------------------------------------------------------------------------------------------------------- Payment of the Mississippi Fund's 0.35% per annum Class A distribution and service fee will commence on such date as the Trustees of the Trust may determine. In the case of the New York and Pennsylvania Funds, 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 (0.15%) 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. Class B and Class C service fees retained for the year ended March 31, 2005 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 $-- $137 $43 $394 $180 $-- $94 $33 - ----------------------------------------------------------------------------------------------------------------------------------- Class C N/A 2 1 N/A N/A N/A $905 N/A - ----------------------------------------------------------------------------------------------------------------------------------- During the year ended March 31, 2005, 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 0.77% 1.00% 1.00% 0.87% 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, 2005, were as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Class A $9,854 $-- $2,000 $-- $7,431 $10,595 $1,823 $7 - ----------------------------------------------------------------------------------------------------------------------------------- Class B 18,336 98,443 80,261 117,790 60,125 50,314 29,593 76,536 - ----------------------------------------------------------------------------------------------------------------------------------- Class C N/A 2,606 6,554 N/A N/A N/A 4,449 N/A - ----------------------------------------------------------------------------------------------------------------------------------- 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 each fund's average daily net assets is set periodically under the supervision of the fund's Trustees. For the period April 1, 2004 through June 30, 2004, the fee was set at 0.10% of each fund's average daily net assets. For the period July 1, 2004 through December 31, 2004, each fund was charged up to 0.0861% of its average daily net assets. For the period January 1, 2005 through February 28, 2005, each fund was charged up to 0.1035% of its average daily net assets. Effective March 1, 2005, each fund is charged up to 0.1159% of its average daily net assets. For the year ended March 31, 2005, each fund paid MFSC the following fee for shareholder services: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Expenses paid $86,911 $174,897 $344,246 $105,536 $154,959 $124,087 $305,026 $142,800 - ----------------------------------------------------------------------------------------------------------------------------------- Percentage of average daily net assets 0.0941% 0.0941% 0.0941% 0.0942% 0.0941% 0.0941% 0.0941% 0.0941% - ----------------------------------------------------------------------------------------------------------------------------------- Shareholder service costs include out of pocket expenses and sub accounting services expenses paid by MFSC on behalf of the funds and subsequently reimbursed to MFSC, as well as other costs paid by the funds directly to unaffiliated vendors. For the year ended March 31, 2005 the out of pocket expenses and sub accounting services expenses amounted to the following: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- $22,765 $49,439 $49,056 $27,183 $32,462 $22,171 $65,947 $28,986 - ----------------------------------------------------------------------------------------------------------------------------------- (4) PORTFOLIO SECURITIES Purchases and sales of investments, other than U.S. government securities, purchased option transactions, and short-term obligations were as follows: NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Purchases $16,502,406 $36,751,958 $31,774,733 $21,968,188 $24,193,168 $14,637,260 $34,746,093 $21,204,835 - ----------------------------------------------------------------------------------------------------------------------------------- Sales $19,139,993 $49,412,789 $66,622,450 $36,614,641 $34,097,048 $30,730,690 $52,521,263 $28,140,075 - ----------------------------------------------------------------------------------------------------------------------------------- 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 YEAR ENDED 3/31/05 FUND FUND FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- Aggregate cost $86,262,498 $164,400,992 $325,549,250 $104,245,497 $149,275,392 $116,420,324 $299,477,424 $135,341,992 - ----------------------------------------------------------------------------------------------------------------------------------- Gross unrealized appreciation 4,509,579 12,634,709 22,595,663 4,635,034 10,874,950 7,449,802 18,540,523 9,052,972 - ------------------------------------------------------------------------------------------------------------------------------------ Gross unrealized depreciation (217,961) (226,230) (192,702) (101,328) (107,307) (128,985) (305,533) (168,218) - ------------------------------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) $4,291,618 $12,408,479 $22,402,961 $4,533,706 $10,767,643 $7,320,817 $18,234,990 $8,884,754 - ------------------------------------------------------------------------------------------------------------------------------------ (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: MISSISSIPPI FUND NEW YORK FUND NORTH CAROLINA FUND PENNSYLVANIA FUND - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended 3/31/05 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold 849 $8,374 815 $9,247 1,144 $13,852 940 $9,573 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 202 1,995 341 3,877 801 9,698 199 2,028 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,182) (11,628) (1,439) (16,300) (3,418) (41,257) (1,740) (17,572) - ----------------------------------------------------------------------------------------------------------------------------------- Net Change (131) $(1,259) (283) $(3,176) (1,473) $(17,707) (601) $(5,971) - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/04 (000 Omitted) 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 Change (519) $(5,199) (146) $(1,654) (1,053) $(12,843) 554 $5,670 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended 3/31/05 (000 Omitted) Shares sold 68 $671 189 $2,135 226 $2,728 219 $2,233 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 27 266 82 932 91 1,084 104 1,055 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (234) (2,311) (746) (8,419) (1,055) (12,698) (947) (9,607) - ----------------------------------------------------------------------------------------------------------------------------------- Net Change (139) $(1,374) (475) $(5,352) (738) $(8,886) (624) $(6,319) - ----------------------------------------------------------------------------------------------------------------------------------- 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 Change 28 $269 43 $542 (734) $(8,954) 105 $1,106 - ----------------------------------------------------------------------------------------------------------------------------------- NEW YORK FUND NORTH CAROLINA FUND VIRGINIA FUND - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended 3/31/05 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold 254 $2,882 351 $4,238 152 $1,778 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 41 464 86 1,042 30 343 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (450) (5,099) (561) (6,768) (260) (2,996) - ----------------------------------------------------------------------------------------------------------------------------------- Net Change (155) $(1,753) (124) $(1,488) (78) $(875) - ----------------------------------------------------------------------------------------------------------------------------------- Year ended 3/31/04 (000 Omitted) Shares sold 965 $11,104 748 $9,197 234 $2,754 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 39 449 76 934 30 351 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (322) (3,689) (558) (6,811) (226) (2,626) - ----------------------------------------------------------------------------------------------------------------------------------- Net Change 682 $7,864 266 $3,320 38 $479 - ----------------------------------------------------------------------------------------------------------------------------------- SOUTH CAROLINA FUND TENNESSEE FUND VIRGINIA FUND WEST VIRGINIA FUND - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended 3/31/05 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold 951 $11,758 807 $8,690 1,463 $16,951 650 $7,567 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 331 4,103 305 3,295 708 8,199 363 4,229 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (1,677) (20,680) (2,185) (23,512) (3,103) (35,811) (1,297) (15,045) - ----------------------------------------------------------------------------------------------------------------------------------- Net Change (395) $(4,819) (1,073) $(11,527) (932) $(10,661) (284) $(3,249) - ----------------------------------------------------------------------------------------------------------------------------------- Year ending 3/31/04 (000 Omitted) 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 Change 575 $7,296 235 $2,646 (862) $(10,055) 28 $374 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended 3/31/05 (000 Omitted) Shares sold 142 $1,754 100 $1,079 170 $1,965 79 $924 - ----------------------------------------------------------------------------------------------------------------------------------- Shares issued to shareholders in reinvestment of distributions 71 882 56 599 44 502 33 378 - ----------------------------------------------------------------------------------------------------------------------------------- Shares reacquired (623) (7,699) (443) (4,764) (519) (5,990) (375) (4,362) - ----------------------------------------------------------------------------------------------------------------------------------- Net Change (410) $(5,063) (287) $(3,086) (305) $(3,523) (263) $(3,060) - ----------------------------------------------------------------------------------------------------------------------------------- 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 Change (81) $(1,023) (309) $(3,374) (185) $(2,145) (152) $(1,775) - -----------------------------------------------------------------------------------------------------------------------------------
(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 Federal Reserve funds 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, 2005 ranged from $414 to $1,682, and is included in miscellaneous expense. None of the funds had significant borrowings during the year ended March 31, 2005. (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 and foreign currency exchange 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 Swaps
NOTIONAL CASH FLOWS UNREALIZED PRINCIPAL AMOUNT CASH FLOWS PAID RECEIVED BY APPRECIATION FUND EXPIRATION CURRENCY OF CONTRACT BY THE FUND THE FUND (DEPRECIATION) - ----------------------------------------------------------------------------------------------------------------------------------- Mississippi Fund Fixed - 3 Year BMA Swap Index, Floating - 7 Day 12/01/07 USD 2,000,000 (2.795%) BMA Swap Index $14,965 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/15/15 USD 2,000,000 (3.702%) BMA Swap Index 23,314 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/22/15 USD 1,000,000 (3.628%) BMA Swap Index 17,735 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 9/01/15 USD 1,000,000 (3.937%) BMA Swap Index (2,979) - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 12 Year BMA Swap Index, Floating - 7 Day 4/06/17 USD 1,000,000 (3.884%) BMA Swap Index 2,372 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 12 Year BMA Swap Index, Floating - 7 Day 4/20/17 USD 1,500,000 (3.714%) BMA Swap Index 27,121 - ----------------------------------------------------------------------------------------------------------------------------------- Total Mississippi Fund $82,528 - ----------------------------------------------------------------------------------------------------------------------------------- New York Fund Fixed - 3 Year BMA Swap Index, Floating - 7 Day 12/01/07 USD 3,000,000 (2.795%) BMA Swap Index $22,460 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/27/15 USD 2,000,000 (3.809%) BMA Swap Index 7,867 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 8/03/15 USD 2,000,000 (3.803%) BMA Swap Index 12,203 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 11 Year BMA Swap Index, Floating - 7 Day 7/12/16 USD 2,000,000 (3.777%) BMA Swap Index 23,874 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 12 Year BMA Swap Index, Floating - 7 Day 4/06/17 USD 2,000,000 (3.884%) BMA Swap Index 4,745 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 12 Year BMA Swap Index, Floating - 7 Day 4/20/17 USD 2,500,000 (3.714%) BMA Swap Index 45,202 - ----------------------------------------------------------------------------------------------------------------------------------- Total New York Fund $116,351 - ----------------------------------------------------------------------------------------------------------------------------------- North Carolina Fund Fixed - 3 Year BMA Swap Index, Floating - 7 Day 12/01/07 USD 7,000,000 (2.795%) BMA Swap Index $52,408 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/27/15 USD 3,000,000 (3.809%) BMA Swap Index 11,801 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 11 Year BMA Swap Index, Floating - 7 Day 7/12/16 USD 3,000,000 (3.777%) BMA Swap Index 35,811 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 12 Year BMA Swap Index, Floating - 7 Day 4/06/17 USD 2,000,000 (3.884%) BMA Swap Index 4,745 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 30 Year Floating - 7 Day BMA Swap Index, 9/06/35 USD 2,000,000 BMA Swap Index (4.254%) (14,884) - ----------------------------------------------------------------------------------------------------------------------------------- Total North Carolina Fund $89,881 - ----------------------------------------------------------------------------------------------------------------------------------- Pennsylvania Fund Fixed - 3 Year BMA Swap Index, Floating - 7 Day 12/01/07 USD 2,000,000 (2.795%) BMA Swap Index $14,974 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/08/15 USD 2,000,000 (3.657%) BMA Swap Index 29,523 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/15/15 USD 2,000,000 (3.702%) BMA Swap Index 23,314 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/27/15 USD 2,000,000 (3.809%) BMA Swap Index 7,867 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 8/03/15 USD 3,000,000 (3.803%) BMA Swap Index 18,305 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 9/01/15 USD 3,000,000 (3.937%) BMA Swap Index (8,936) - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 11 Year BMA Swap Index, Floating - 7 Day 7/12/16 USD 2,000,000 (3.777%) BMA Swap Index 23,874 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 12 Year BMA Swap Index, Floating - 7 Day 4/06/17 USD 1,500,000 (3.884%) BMA Swap Index 3,559 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 12 Year BMA Swap Index, Floating - 7 Day 4/20/17 USD 1,000,000 (3.714) BMA Swap Index 18,081 - ----------------------------------------------------------------------------------------------------------------------------------- Total Pennsylvania Fund $130,561 - ----------------------------------------------------------------------------------------------------------------------------------- South Carolina Fund Fixed - 3 Year BMA Swap Index, Floating - 7 Day 12/01/07 USD 3,000,000 (2.795%) BMA Swap Index $22,460 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 30 Year Floating - 7 Day BMA Swap Index, 5/10/35 USD 2,000,000 BMA Swap Index (4.374%) 31,750 - ----------------------------------------------------------------------------------------------------------------------------------- Total South Carolina Fund $54,210 - ----------------------------------------------------------------------------------------------------------------------------------- Tennessee Fund Fixed - 30 Year Floating - 7 Day BMA Swap Index, 5/10/35 USD 1,500,000 BMA Swap Index (4.374%) $23,812 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 30 Year Floating - 7 Day BMA Swap Index, 5/18/35 USD 2,000,000 BMA Swap Index (4.153%) (35,808) - ----------------------------------------------------------------------------------------------------------------------------------- Total Tennessee Fund $(11,996) - ----------------------------------------------------------------------------------------------------------------------------------- Virginia Fund Fixed - 3 Year BMA Swap Index, Floating - 7 Day 12/01/07 USD 6,000,000 (2.795%) BMA Swap Index $44,894 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 30 Year Floating - 7 Day BMA Swap Index, 5/10/35 USD 3,500,000 BMA Swap Index (4.374%) 55,562 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 30 Year Floating - 7 Day BMA Swap Index, 5/17/35 USD 4,000,000 BMA Swap Index (4.019%) (146,923) - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 30 Year Floating - 7 Day BMA Swap Index, 5/18/35 USD 3,000,000 BMA Swap Index (4.153%) (53,713) - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 30 Year Floating - 7 Day BMA Swap Index, 9/06/35 USD 2,000,000 BMA Swap Index (4.254%) (14,884) - ----------------------------------------------------------------------------------------------------------------------------------- Total Virginia Fund $(115,064) - ----------------------------------------------------------------------------------------------------------------------------------- West Virginia Fund Fixed - 3 Year BMA Swap Index, Floating - 7 Day 12/01/07 USD 3,000,000 (2.795%) BMA Swap Index $22,460 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/15/15 USD 3,000,000 (3.702%) BMA Swap Index 34,971 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/22/15 USD 2,000,000 (3.628%) BMA Swap Index 35,470 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 10 Year BMA Swap Index, Floating - 7 Day 6/27/15 USD 3,000,000 (3.809%) BMA Swap Index 11,801 - ----------------------------------------------------------------------------------------------------------------------------------- Fixed - 12 Year BMA Swap Index, Floating - 7 Day 4/06/17 USD 1,500,000 (3.884) BMA Swap Index 3,559 - ----------------------------------------------------------------------------------------------------------------------------------- Total West Virginia Fund $108,261 - ----------------------------------------------------------------------------------------------------------------------------------- At March 31, 2005, the funds had sufficient cash and/or securities to cover any commitments under these contracts.
(8) RESTRICTED SECURITIES At March 31, 2005, each fund owned the following restricted securities which are subject to legal or contractual restrictions on resale, 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 a pricing service, or if not available, in good faith at the direction of the Trustees.
DATE OF PAR FUND DESCRIPTION ACQUISITION AMOUNT COST VALUE - ------------------------------------------------------------------------------------------------------------------------------------ Mississippi Fund Commonwealth of Puerto Rico, ROLS, FGIC, 8.633%, 2016 8/05/02 $3,110,000 $4,023,905 $4,018,742 Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2013 5/20/99 1,000,000 1,072,720 1,171,000 Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2017 1/06/00 750,000 703,620 883,485 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013 9/30/99 500,000 509,110 620,180 - ------------------------------------------------------------------------------------------------------------------------------------ $6,693,407 - ------------------------------------------------------------------------------------------------------------------------------------ New York Fund Commonwealth of Puerto Rico, ROLS, XLCA, 8.543%, 2017 10/22/01 $1,350,000 $1,634,526 $1,726,947 Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2014 5/20/99 500,000 531,950 578,980 Niagra Falls, NY, Bridge Commission Toll Rev., RITES, FGIC, 7.566%, 2015 5/21/99 3,500,000 3,755,920 4,180,400 Triborough Bridge & Tunnel Authority Rev., NY, RITES, ETM, 8.054%, 2017 4/18/00 5,000,000 5,018,300 6,347,500 - ------------------------------------------------------------------------------------------------------------------------------------ $12,833,827 - ------------------------------------------------------------------------------------------------------------------------------------ North Carolina Fund Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., RITES, FSA, 9.089%, 2018 2/26/99 $5,425,000 $7,037,418 $7,512,974 North Carolina Eastern Municipal Power Agency, RITES, AMBAC, 9.066%, 2018 5/26/00 6,500,000 6,552,130 8,716,890 North Carolina Municipal Power Agency, ROLS, 8.096%, 2020 3/03/03 3,000,000 3,376,680 3,425,160 North Carolina Municipal Power Agency, ROLS, MBIA, 8.096%, 2019 3/03/03 5,000,000 5,726,600 5,688,100 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2012 9/30/99 1,500,000 1,471,890 1,902,000 - ------------------------------------------------------------------------------------------------------------------------------------ $27,245,124 - ------------------------------------------------------------------------------------------------------------------------------------ Pennsylvania Fund Commonwealth of Puerto Rico Highway & Transportation Authority, ROLS, MBIA, 8.633%, 2020 4/25/03 $1,500,000 $1,969,560 $1,957,440 Commonwealth of Puerto Rico, ROLS, FGIC, 8.633%, 2015 8/05/02 1,000,000 1,292,920 1,278,080 Commonwealth of Puerto Rico, ROLS, XLCA, 8.543%, 2017 10/22/01 1,000,000 1,210,760 1,279,220 Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2014 5/20/99 2,170,000 2,308,663 2,512,773 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013 9/30/99 500,000 509,110 620,180 - ------------------------------------------------------------------------------------------------------------------------------------ $7,647,693 - ------------------------------------------------------------------------------------------------------------------------------------ South Carolina Fund Commonwealth of Puerto Rico, RITES, ETM, 8.112%, 2009 10/05/00 $2,000,000 $2,066,433 $2,401,240 Commonwealth of Puerto Rico, RITES, ETM, 8.112%, 2009 10/05/00 1,750,000 1,794,108 2,097,410 Commonwealth of Puerto Rico, RITES, MBIA, 8.612%, 2020 3/30/00 2,000,000 2,043,232 2,434,280 Commonwealth of Puerto Rico, RITES, FSA, 9.137%, 2016 1/06/00 850,000 882,124 1,043,834 Puerto Rico Electric Power Authority, RITES, FSA, 7.559%, 2015 9/30/99 1,000,000 976,500 1,121,750 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013 9/30/99 1,375,000 1,398,793 1,705,495 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2019 3/31/99 1,300,000 1,470,326 1,655,966 - ------------------------------------------------------------------------------------------------------------------------------------ $12,459,975 - ------------------------------------------------------------------------------------------------------------------------------------ Virginia Fund Guam Power Authority Rev., RITES, AMBAC, 7.577%, 2015 5/20/99 $1,010,000 $1,058,642 $1,164,308 Puerto Rico Electric Power Authority Rev., RITES, FSA, 8.612%, 2017 8/28/00 2,500,000 2,770,600 3,123,100 Puerto Rico Electric Power Authority Rev., RITES, FSA, 8.362%, 2019 8/28/00 1,270,000 1,345,006 1,524,940 Puerto Rico Electric Power Authority Rev., RITES, FSA, 7.712%, 2020 8/28/00 1,250,000 1,240,075 1,475,000 Puerto Rico Municipal Finance Agency, RITES, FSA, 9.137%, 2016 1/06/00 1,105,000 1,148,670 1,356,984 Puerto Rico Municipal Finance Agency, RITES, FSA, 8.129%, 2017 1/06/00 615,000 576,968 724,458 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2013 9/30/99 2,000,000 2,036,440 2,480,720 Puerto Rico Public Finance Corp., RITES, AMBAC, 7.839%, 2016 3/31/99 500,000 569,030 634,000 Virginia Resources Authority Rev., ROLS, 7.589%, 2021 12/01/03 1,390,000 1,508,372 1,534,921 Virginia Resources Authority Rev., ROLS, 7.589%, 2023 12/01/03 1,520,000 1,612,568 1,658,442 Virginia Resources Authority Rev., ROLS, 7.589%, 2033 12/01/03 2,510,000 2,586,957 2,673,250 - ------------------------------------------------------------------------------------------------------------------------------------ $18,350,123 - ------------------------------------------------------------------------------------------------------------------------------------ West Virginia Fund Commonwealth of Puerto Rico, Public Improvement, RITES, MBIA, 8.612%, 2019 3/30/00 $3,000,000 $3,090,720 $3,651,420 Puerto Rico, Municipal Finance Agency, RITES, FSA, 8.129%, 2017 1/06/00 900,000 844,344 1,060,182 West Virginia Building Commission, "A", RITES, AMBAC, 7.781%, 2018 5/05/99 $4,520,000 $4,888,561 $5,539,441 West Virginia Building Commission, "B", RITES, AMBAC, 7.781%, 2018 5/05/99 1,250,000 1,351,925 1,531,925 - ------------------------------------------------------------------------------------------------------------------------------------ $11,782,968 - ------------------------------------------------------------------------------------------------------------------------------------ At March 31, 2005, 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 - ------------------------------------------------------------------------------------------------------------------ 7.35% 7.09% 7.72% 6.99% 7.72% 5.79% 7.92% - ------------------------------------------------------------------------------------------------------------------
(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 March 31, 2005, 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 - ---------------------------------------------------------------------------------------------------------------------------------- 83.07% 47.66% 47.43% 69.56% 63.33% 53.44% 34.98% 75.22% - ---------------------------------------------------------------------------------------------------------------------------------- For each fund, the greatest exposure to any one institution or agency did not exceed the following percentages of total investments as of March 31, 2005: MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- 20.73% 20.17% 15.53% 20.54% 18.08% 20.21% 14.32% 32.67% - ----------------------------------------------------------------------------------------------------------------------------------
(10) LEGAL PROCEEDINGS On March 31, 2004, MFS settled an administrative proceeding with the Securities and Exchange Commission ("SEC") regarding disclosure of brokerage allocation practices in connection with MFS fund sales (the term "MFS funds" means the open-end registered management investment companies sponsored by MFS). 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 developed by an independent distribution consultant. The brokerage allocation practices which were the subject of this proceeding were discontinued by MFS in November 2003. The agreement with the SEC is reflected in an order of the SEC. The SEC 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 SEC settlement order states that MFS had in place policies designed to obtain best execution of all MFS fund trades. As part of the settlement, MFS retained an independent compliance consultant to review the completeness of its current policies and practices regarding disclosure to MFS fund trustees and to MFS fund shareholders of strategic alliances between MFS or its affiliates and broker-dealers and other financial intermediaries who support the sale of MFS fund shares. Pursuant to the SEC order, on July 28, 2004, MFS transferred these settlement amounts to the SEC, and those MFS funds entitled to these settlement amounts accrued an estimate of their pro rata portion of these amounts. The final distribution plan was approved by the SEC on January 21, 2005, and the affected MFS funds received the payment on February 16, 2005. In addition, in February 2004, MFS reached agreement with the SEC, the New York Attorney General ("NYAG") and the Bureau of Securities Regulation of the State of New Hampshire ("NH") to settle administrative proceedings alleging false and misleading information in certain MFS open-end retail fund ("MFS retail funds") prospectuses regarding market timing and related matters (the "February Settlements"). These regulators alleged that prospectus language for certain MFS retail funds was false and misleading because, although the prospectuses for those funds in the regulators' view indicated that they prohibited market timing, MFS did not limit trading activity in 11 domestic large cap stock, high grade bond and money market retail funds. MFS' former Chief Executive Officer and former President 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. These individuals 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 MFS 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 Board of Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further agreed with 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 retained $250,000 and $750,000 was 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, MFS Fund Distributors, Inc., MFS Service Center, Inc., MFS Corporation Retirement Committee, Sun Life Financial Inc., various MFS funds, certain current and/or former 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 MFS funds during specified periods, as ERISA actions by participants in certain retirement plan accounts on behalf of those accounts, or as derivative actions on behalf of the MFS funds. The lawsuits relating to market timing and related matters have been transferred to, and consolidated before, the United States District Court for the District of Maryland, as part of a multi-district litigation of market timing and related claims involving several other fund complexes (In re Mutual Funds Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam, Allianz Dresdner), No. 1:04-md-15863 (transfer began March 19, 2004)). The market timing cases related to the MFS complex are Riggs v. MFS et al., Case No. 04-cv-01162-JFM (direct), Hammerslough v. MFS et al., Case No. 04-md-01620 (derivative) and Anita Walker v. MFS et al., Case No. 1:04-CV-01758 (ERISA). The plaintiffs in these consolidated lawsuits generally seek injunctive relief including removal of the named Trustees, adviser and distributor, rescission of contracts and 12b-1 Plans, disgorgement of fees and profits, monetary damages, punitive damages, attorney's fees and costs and other equitable and declaratory relief. Two lawsuits alleging improper brokerage allocation practices and excessive compensation are pending in the United States District Court for the District of Massachusetts (Forsythe v. Sun Life Financial Inc., et al., No. 04cv10584 (GAO) (a consolidated action) and Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No. 04cv11458 (GAO)). The plaintiffs in these lawsuits generally seek compensatory damages, punitive damages, recovery of fees, rescission of contracts, an accounting, restitution, declaratory relief, equitable and/or injunctive relief and attorney's fees and costs. The various lawsuits generally allege that some or all of the defendants (i) permitted or acquiesced in market timing and/or late trading in some of the MFS funds, inadequately disclosed MFS' internal policies concerning market timing and such matters (ii) received excessive compensation as fiduciaries to the MFS funds, or (iii) permitted or acquiesced in the improper use of fund assets by MFS to support the distribution of MFS fund shares and inadequately disclosed MFS' use of fund assets in this 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. Insofar as any of the actions is appropriately brought derivatively on behalf of any of the MFS funds, any recovery will inure to the benefit of the MFS funds. 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 certain MFS retail funds for damages that they allegedly sustained as a result of market timing or late trading in certain of the MFS retail funds, and distributed $50 million to affected MFS funds to compensate those funds based upon the amount of brokerage commissions allocated in recognition of MFS 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 MFS 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 MFS funds. - ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTING FIRM - ------------------------------------------------------------------------------- To the Trustees and Shareholders of MFS Municipal Series Trust: We have audited the accompanying statement of assets and liabilities 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, certain of the portfolios of MFS Municipal Series Trust (the "Trust"), including the portfolio of investments, as of March 31, 2005, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of aforementioned portfolios of MFS Municipal Series Trust as of March 31, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts May 24, 2005 - ------------------------------------------------------------------------------- RESULTS OF SHAREHOLDER MEETING (unaudited) - 3/31/05 - ------------------------------------------------------------------------------- At a special meeting of shareholders of MFS Mississippi Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS Pennsylvannia 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, which was held on March 23, 2005, the following actions were taken: ITEM 1. To elect a Board of Trustees: NUMBER OF DOLLARS --------------------------------------- NOMINEE AFFIRMATIVE WITHHOLD AUTHORITY Lawrence H. Cohn 2,338,745,402.20 23,104,899.71 - -------------------------------------------------------------------------------- David H. Gunning 2,340,048,506.07 21,801,795.84 - -------------------------------------------------------------------------------- William R. Gutow 2,339,850,605.62 21,999,696.29 - -------------------------------------------------------------------------------- Michael Hegarty 2,340,213,807.46 21,636,494.45 - -------------------------------------------------------------------------------- J. Atwood Ives 2,338,786,653.70 23,063,648.21 - -------------------------------------------------------------------------------- Amy B. Lane 2,339,960,815.68 21,889,486.23 - -------------------------------------------------------------------------------- Robert J. Manning 2,340,560,593.28 21,289,708.63 - -------------------------------------------------------------------------------- Lawrence T. Perera 2,338,677,013.42 23,173,288.49 - -------------------------------------------------------------------------------- Robert C. Pozen 2,340,797,047.27 21,053,254.64 - -------------------------------------------------------------------------------- J. Dale Sherratt 2,338,746,772.55 23,103,529.36 - -------------------------------------------------------------------------------- Laurie J. Thomsen 2,339,932,511.83 21,917,790.08 - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND, - ---------------------------------------------------------------------------------------------------------------------------------- The Trustees and officers of the Trust, as of May 1, 2005, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
POSITION(s) HELD TRUSTEE/OFFICER PRINCIPAL OCCUPATIONS DURING THE PAST FIVE NAME, DATE OF BIRTH WITH FUND SINCE(1) YEARS & OTHER DIRECTORSHIPS(2) - ------------------- ---------------- --------------- ------------------------------------------ INTERESTED TRUSTEES Robert J. Manning(3) Trustee and President February 2004 Massachusetts Financial Services Company, Chief (born 10/20/63) Executive Officer, President, Chief Investment Officer and Director 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); Bell Canada Enterprises (telecommunication s), Director; Medtronic, Inc. (medical technology), Director; Telesat (satellite communications), Director INDEPENDENT TRUSTEES J. Atwood Ives Trustee and Chair of February 1992 Private investor; Eastern Enterprises (diversified (born 05/01/36) Trustees 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 Cardiac (born 03/11/37) Surgery; Harvard Medical School, Professor of Surgery David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining products and service (born 05/30/42) 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 Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial services and (born 12/21/44) insurance), Vice Chairman and Chief Operating Officer (until May 2001); The Equitable Life Assurance Society (insurance), President and Chief Operating Officer (until May 2001) 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) 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) Laurie J. Thomsen Trustee March 2005 Private investor; Prism Venture Partners (venture (born 08/05/57) capital), Co- founder and General Partner (until June 2004); St. Paul Travelers Companies (commercial property liability insurance), Director OFFICERS Robert J. Manning(3) President and Trustee February 2004 Massachusetts Financial Services Company, Chief (born 10/20/63) Executive Officer, President, Chief Investment Officer and Director Jeffrey N. Carp(3) Secretary and Clerk September 2004 Massachusetts Financial Services Company, Executive (born 12/1/56) Vice President, General Counsel and Secretary (since April 2004); Hale and Dorr LLP (law firm), Partner (prior to April 2004) Stephanie A. DeSisto(3) Assistant Treasurer May 2003 Massachusetts Financial Services Company, Vice (born 10/01/53) 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) James F. DesMarais(3) Assistant Secretary and September 2004 Massachusetts Financial Services Company, Assistant (born 03/09/61) Assistant Clerk General Counsel Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial Services Company, Senior (born 08/29/58) 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) Brian T. Hourihan(3) Assistant Secretary and September 2004 Massachusetts Financial Services Company, Vice (born 11/11/64) Assistant Clerk President, Senior Counsel and Assistant Secretary (since June 2004); Affiliated Managers Group, Inc., Chief Legal Officer/ Centralized Compliance Program (January to April 2004); Fidelity Research & Management Company, Assistant General Counsel (prior to January 2004) Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial Services Company, Vice (born 11/13/57) President Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance services), (born 03/07/44) Compliance Officer Principal (since June 2004); CRA Business Strategies Group (consulting services), Executive Vice President (April 2003 to June 2004); David L. Babson & Co. (investment adviser), Managing Director, Chief Administrative Officer and Director (February 1997 to March 2003) James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial Services Company, Senior (born 06/12/60) 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 the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. Each Trustee has been elected by shareholders and each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Messrs. Ives and Sherratt and Mses. Lane and Thomsen are members of the Trust's Audit Committee. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. As of December 31, 2004, each Trustee served as a board member of 99 funds within the MFS Family of Funds. The Trust held a shareholders" meeting in 2005, and will hold a shareholder's meeting at least once every five years thereafter, to elect Trustees. 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, 225 Franklin Street, Boston, MA 02110 Boston, MA 02116-3741 INDEPENDENT REGISTERED PUBLIC DISTRIBUTOR ACCOUNTING FIRM MFS Fund Distributors, Inc. Deloitte & Touche LLP 500 Boylston Street, 200 Berkeley Street, Boston, MA 02116 Boston, MA 02116-3741 PORTFOLIO MANAGERS Michael L. Dawson Geoffrey L. Schechter
- ------------------------------------------------------------------------------- PROXY VOTING POLICIES AND INFORMATION - ------------------------------------------------------------------------------- A general description of the MFS funds' proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the About MFS section of mfs.com or by visiting the SEC's Web site at http://www.sec. gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. - ------------------------------------------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE - ------------------------------------------------------------------------------- The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission Washington, D.C. 20549-0102 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund's Form N-Q is available on the EDGAR database on the Commission's Internet website at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. - ------------------------------------------------------------------------------- FEDERAL TAX INFORMATION (UNAUDITED) In January 2006, 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 2005. The following funds have designated capital gain dividends for the year ended March 31, 2005: CAPITAL GAIN DIVIDENDS ---------------------------------------------------------------- North Carolina Fund $1,238,232 Tennessee Fund 713,987 New York Fund 130,202 For the year ended March 31, 2005, the amount of distributions from income designated as exempt-interest dividends was as follows: EXEMPT-INTEREST DIVIDENDS ---------------------------------------------------------------- Mississippi Fund 100.00% New York Fund 100.00% North Carolina Fund 97.81% Pennsylvania Fund 100.00% South Carolina Fund 99.50% Tennessee Fund 96.44% Virginia Fund 100.00% West Virginia Fund 99.45% ---------------------------------------------------------------- CONTACT INFORMATION INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 55824 Boston, MA 02205-5824 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 - ------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) (C) 2005 MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. MST-B-ANN-05/05 40M MFS(R) MUNICIPAL INCOME FUND 3/31/05 ANNUAL REPORT - ------------------------------------------------------------------------------- [GRAPHIC OMITTED] M F S(SM) INVESTMENT MANAGEMENT(R) THIS REPORT HAS BEEN PREPARED FOR THE GENERAL INFORMATION TO SHAREHOLDERS. IT IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. ANNUAL REPORT LETTER FROM THE CEO 1 ------------------------------------------------------ PORTFOLIO COMPOSITION 4 ------------------------------------------------------ MANAGEMENT REVIEW 5 ------------------------------------------------------ PERFORMANCE SUMMARY 8 ------------------------------------------------------ EXPENSE TABLE 13 ------------------------------------------------------ PORTFOLIO OF INVESTMENTS 15 ------------------------------------------------------ FINANCIAL STATEMENTS 35 ------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS 45 ------------------------------------------------------ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 58 ------------------------------------------------------ RESULTS OF SHAREHOLDER MEETING 59 ------------------------------------------------------ TRUSTEES AND OFFICERS 60 ------------------------------------------------------ PROXY VOTING POLICIES AND INFORMATION 64 ------------------------------------------------------ QUARTERLY PORTFOLIO DISCLOSURE 64 ------------------------------------------------------ FEDERAL TAX INFORMATION 64 ------------------------------------------------------ CONTACT INFORMATION BACK COVER ------------------------------------------------------ - ------------------------------------------------------------------------------- LETTER FROM THE CEO - ------------------------------------------------------------------------------- Dear Shareholders, [Photo of Robert J. Manning] Last summer and fall, I wrote to you about enhancements that MFS(R) was making to its investment process. Our goal, as always, was to deliver strong performance across all asset classes. I am now happy to report to you that 2004 was a very successful year for MFS, relative to our peers in the mutual fund industry. While there will always be room for improvement, we believe the enhancements we have made to our investment process resulted in significantly improved performance across the MFS Family of Funds(R). You may remember some of the enhancements I outlined last year. They included o increasing collaboration and information sharing among our investment personnel across asset classes, through an Investment Management Committee with members from our Domestic Equity, International Equity, Fixed Income, and Quantitative Research teams o increasing the number of analysts supporting our portfolio managers and doubling the average investment experience of our domestic equity analyst staff o making additional use of our most-seasoned portfolio managers to mentor research analysts o combining more quantitative, top-down risk control and security analysis with our traditional bottom-up research process o opening a research office in Mexico City to complement our existing staff in Boston, London, Singapore, and Tokyo The effect of these enhancements, I believe, is evident in the recent performance of our funds. For the 12 months ended March 31, 2005, 68% of MFS domestic equity funds, 88% of MFS international equity funds, and 90% of MFS fixed-income funds delivered results in the top half of their Lipper peer groups. Our longer-term performance also benefited from our ongoing commitment to the MFS Original Research(R) process: 69% of MFS funds were in the top half of their respective Lipper categories over the 3-, 5-, and 10-year periods ended March 31, 2005. Of course, I cannot offer any guarantees that our performance will repeat itself. Still, I am confident that the recent enhancements to our investment process will continue to benefit shareholders in 2005 and beyond. What I can tell you with certainty is that the way you manage your investments will determine how well you take advantage of the performance that financial markets deliver. Historically, individual investors have tended to underperform the markets. For example, a 2003 study by DALBAR, Inc. showed that over the nearly two decades from 1984 through 2002, the average U.S. stock investor earned a 2.6% average annual return at a time when U.S. stocks, as measured by the Standard & Poor's 500 Stock Index, delivered a 12.2% average annual return.(1) This huge discrepancy, in our view, occurred because nonprofessional investors generally did not adhere to the basic principles followed by most professional investors: allocate among asset classes, diversify within each asset class, and rebalance one's portfolio on a routine schedule. I elaborated on this "ADR" theme in fund reports over the last few months of 2004. For more information on how to apply a Disciplined Diversification(SM) strategy to your portfolio using the principles of ADR, I would urge you to contact your own investment professional. You may also want to refer to information on the subject on our Web site, MFS.COM. As always, we appreciate your confidence in MFS, and you can be sure of our continued commitment to do the best we can to help you pursue your long-term financial goals. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer and Chief Investment Officer MFS Investment Management(R) May 16, 2005 It is not possible to invest directly in an index. Lipper rankings and performance are based on historical average annual returns of Class A shares, and do not include any sales charges. Past performance is no guarantee of future results. Asset allocation and diversification cannot guarantee a profit or protect against a loss. The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. (1) Source: DALBAR July 2003 update to its Quantitative Analysis of Investment Behavior; DALBAR, Inc., is a financial-services market research firm headquartered in Boston, MA. - -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE* Bonds 99.0% Cash & Other Net Assets 1.0% TOP 5 BOND INDUSTRIES* Health/Hospitals 20.1% ------------------------------------------------ General Obligations/Schools 8.5% ------------------------------------------------ General Obligations/GP 6.7% ------------------------------------------------ Municipal Owned Utilities 6.4% ------------------------------------------------ State and Local Approp. 6.1% ------------------------------------------------ CREDIT QUALITY OF BONDS** AAA 32.3% ------------------------------------------------ AA 11.6% ------------------------------------------------ A 15.7% ------------------------------------------------ BBB 22.5% ------------------------------------------------ BB 4.6% ------------------------------------------------ B 1.5% ------------------------------------------------ CCC 1.0% ------------------------------------------------ Not Rated 10.8% ------------------------------------------------ PORTFOLIO FACTS Average Duration 6.3 ------------------------------------------------ Average Life 15.3 yrs. ------------------------------------------------ Average Maturity*** 16.9 yrs. ------------------------------------------------ Average Credit Quality**** A+ ------------------------------------------------ Average Credit Quality Short Term Bonds A-1 ------------------------------------------------ * For purposes of this graphical presentation, the bond component includes both accrued interest amounts and the equivalent exposure from any derivative holdings, if applicable. ** Each security is assigned a rating from Moody's Investors Service. If not rated by Moody's, the rating will be that assigned by Standard & Poor's. Likewise, if not assigned a rating by Standard & Poor's, it will be based on the rating assigned by Fitch, Inc. If not rated by any of the three agencies, the security is considered Not Rated. Percentages are based on the total market value of investments as of 3/31/05. *** The average maturity shown is calculated using the final stated maturity on the portfolio's holdings without taking into account any holdings which have been pre-refunded to an earlier date or which have a mandatory put date prior to the stated maturity. The average life shown takes into account these earlier dates. **** The Portfolio Average Credit Quality rating is based upon a market weighted average of portfolio holdings. Percentages are based on net assets as of 3/31/05, unless otherwise noted. The portfolio is actively managed, and current holdings may be different. - ------------------------------------------------------------------------------- MANAGEMENT REVIEW - ------------------------------------------------------------------------------- SUMMARY OF RESULTS For the twelve months ended March 31, 2005, Class A shares of the MFS Municipal Income Fund provided a total return of 3.49%, at net asset value. In comparison, the fund's benchmark, the Lehman Brothers Municipal Bond Index (the Lehman Index), returned 2.67%. The fund's investment objective is to provide as high a level of current income exempt from federal income tax as is considered consistent with prudent investing while seeking protection of shareholders" capital. The fund invests, under normal market conditions, at least 80% of its net assets in securities and other investments, the interest on which is exempt from federal income tax. The fund may invest in municipal securities, which are bonds or other debt obligations of a U.S. state or political subdivision, such as a county, city, town, village or authority. MARKET ENVIRONMENT The U.S. fixed-income market experienced a dramatic flattening of the yield curve during the 12-month period. (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.) On June 30, 2004, the U.S. Federal Reserve Board (the Fed) raised its target federal funds rate for the first time in four years. For the remainder of the period, the Fed continued a steady drumbeat of quarter-point rate hikes. But while the Fed seemed committed to a course of gradually raising short-term rates, we believe several factors caused long-term rates to stagnate or retreat over the period. Job growth, which had shot up in the spring of 2004, faltered; this helped, in our opinion, to push down yields on longer-dated bonds. Another factor that we believe held long-term rates down was overseas demand for U.S. Treasuries, especially from foreign central banks. However, we feel that moderate GDP growth and inflation concerns kept shorter-term interest rates moving up. For the period as a whole, the net effect was a substantial flattening of the yield curve as short-term rates rose significantly while long-term rates were generally flat to down. CONTRIBUTORS TO PERFORMANCE Yield curve positioning was a strong contributor to the fund's relative performance. (A yield curve graphically depicts the yields of different maturity bonds of the same credit quality and type. A normal yield curve is upward sloping, with short-term rates lower than long-term rates.) Compared with our benchmark, the Lehman Brothers Municipal Bond Index (the Lehman Index), the fund was more heavily weighted in bonds on the long end of the curve (represented by bonds with durations of 14-to-25+ years) and underweighted in bonds on the short end of the curve (represented by bonds with durations of 0-to-4 years). (Duration is a measure of a fund's sensitivity to changes in interest rates.) On a relative basis, our overweighting in longer-maturity bonds helped during the period because long-term municipal rates were relatively unchanged. Conversely, our underweighting in bonds on the short end of the curve, which suffered price declines as their yields increased, enhanced relative results. In the area of credit quality, relative performance benefited from the fund's exposure to high yield debt, as the sector outperformed the benchmark, the Lehman Index. While the fund had some holdings in below-investment-grade debt (bonds rated lower than "BBB" or unrated), the index does not contain bonds rated below "BBB". An overweighting in bonds within the strong-performing health care sector also helped relative results during the period. Our selection of individual bonds within the sector also boosted relative returns. Security selection in the utilities sector aided relative performance during the period. In addition, our underweighted position in credit-enhanced bonds also helped results as these high-quality bonds underperformed the overall benchmark. DETRACTORS FROM PERFORMANCE During the period, our duration stance detracted from relative performance. In a period when rates rose and bond prices retreated, our slightly longer duration stance modestly hurt performance. Most of that negative effect on results occurred in the first half of the period, as we later shortened duration and actually ended the period with a lower duration than our benchmark. 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. - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY THROUGH 3/31/05 - ------------------------------------------------------------------------------- The following chart illustrates the historical performance of the fund's original share class in comparison to its benchmark. Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. 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. HIGH SHORT-TERM RETURNS FOR ANY PERIOD MAY BE AND LIKELY WERE ATTRIBUTABLE TO FAVORABLE MARKET CONDITIONS DURING THAT PERIOD, WHICH MAY NOT BE REPEATABLE. THE PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT MFS Lehman Municipal Brothers Income Fund Municipal - Class B Bond Index 3/95 $10,000 $10,000 3/96 10,587 10,838 3/97 10,952 11,429 3/98 12,131 12,653 3/99 12,662 13,438 3/00 12,423 13,427 3/01 13,447 14,893 3/02 13,716 15,461 3/03 14,702 16,990 3/04 15,623 17,986 3/05 16,030 18,465 TOTAL RETURNS - -------------------- Average annual without sales charge - -------------------- Class Share class inception date 1-yr 3-yr 5-yr 10-yr - ------------------------------------------------------------------------------ A 9/07/93 3.49% 6.13% 6.02% 5.64% - ------------------------------------------------------------------------------ B 12/29/86 2.60% 5.33% 5.23% 4.83% - ------------------------------------------------------------------------------ C 1/03/94 2.72% 5.37% 5.25% 4.86% - ------------------------------------------------------------------------------ - -------------------- Average annual - -------------------- Comparative benchmarks - ------------------------------------------------------------------------------ Average general municipal debt fund+ 2.05% 5.27% 5.67% 5.34% - ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index# 2.67% 6.10% 6.58% 6.33% - ------------------------------------------------------------------------------ - -------------------- Average annual with sales charge - -------------------- Share class - ------------------------------------------------------------------------------ A -1.43% 4.42% 5.00% 5.13% - ------------------------------------------------------------------------------ B -1.34% 4.42% 4.90% 4.83% - ------------------------------------------------------------------------------ C 1.73% 5.37% 5.25% 4.86% - ------------------------------------------------------------------------------ - -------------------- Cumulative without sales charge - -------------------- - ------------------------------------------------------------------------------ A 3.49% 19.53% 33.98% 73.12% - ------------------------------------------------------------------------------ B 2.60% 16.87% 29.03% 60.30% - ------------------------------------------------------------------------------ C 2.72% 16.99% 29.15% 60.79% - ------------------------------------------------------------------------------ + Source: Lipper Inc., an independent firm that reports mutual fund performance. # Source: Standard & Poor's Micropal, Inc. INDEX DEFINITION Lehman Brothers Municipal Bond Index - a market-value-weighted index representative of the tax-exempt bond market. It is not possible to invest directly in an index. NOTES TO PERFORMANCE SUMMARY 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 (assuming redemption within one year from the end of the prior 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 When interest rates rise, the prices of municipal securities in the portfolio will generally fall. Conversely, when interest rates fall, the prices of municipal securities in the portfolio will generally rise. Interest rate risk will generally affect the price of a municipal security more if the security has a longer maturity. Municipal securities with longer maturities will therefore be more volatile than other fixed income securities with shorter maturities. Conversely, municipal securities with shorter maturities will be less volatile but generally provide lower returns than municipal securities with longer maturities. The average maturity of the fund's municipal security investments will affect the volatility of the fund's share price. Credit risk is the risk that the issuer of a municipal security will not be able to pay principal and interest when due. Rating agencies assign credit ratings to certain municipal securities to indicate their credit risk. The price of a municipal security will generally fall if the issuer defaults on its obligation to pay principal or interest, the rating agencies downgrade the issuer's credit rating or other news affects the market's perception of the issuer's credit risk. A participation interest is also subject to the risk of default by the issuing bank. The portfolio may invest in municipal bonds that are general obligations backed by the full faith and credit of the municipal issuer. The portfolio may also invest in municipal bonds called revenue obligations which are subject to a higher degree of credit risk than general obligations. Revenue obligations finance specific projects (such as building a hospital or toll roads, water and sewer projects, etc.), and are not backed by the full faith and credit of the municipal issuer. The portfolio may invest in excess of 25% of its assets in revenue bonds relating to any one specific industry (e.g., housing, healthcare, water and sewer, etc.). Because revenue obligations are repaid from the revenues from a facility, they are subject to a risk of default in payments of principal and interest if the facility does not generate enough income. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the project or assets or the inability to collect revenues from the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline significantly in value. The portfolio's investments in municipal securities may include municipal lease obligations. Municipal lease obligations are undivided interests issued by a state or municipality in a lease or installment purchase which generally relates to equipment or facilities. When the portfolio invests in municipal lease obligations, it may have limited recourse in the event of default or termination. In some cases, payments under municipal leases do not have to be made unless the appropriate legislative body specifically approves money for that purpose. Speculative bonds are subject to a higher risk that the issuer will default on payments of principal and interest than higher rated investment grade bonds. Although the issuer's ability to make interest and principal payments appears adequate, an adverse change in economic conditions or other circumstances is more likely to cause a default by the issuer of a speculative bond than the issuer of a higher rated investment grade bond. The fixed income securities purchased by the portfolio may be traded in the over-the-counter market rather than on an organized exchange and are subject to liquidity risk. This means that they may be harder to purchase or sell at a fair price. The inability to purchase or sell these fixed income securities at a fair price could have a negative impact on the portfolio's performance. The portfolio may invest in high yield or lower-rated securities (non-rated, below "BBB"), which may provide greater returns but are subject to greater than average risk. 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. Please see the prospectus for further information regarding these and other risk considerations. - ------------------------------------------------------------------------------- EXPENSE TABLE - ------------------------------------------------------------------------------- FUND EXPENSES BORNE BY SHAREHOLDERS DURING THE PERIOD FROM OCTOBER 1, 2004, THROUGH MARCH 31, 2005. As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments and redemption fees on certain exchanges and redemptions, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period October 1, 2004 through March 31, 2005. ACTUAL EXPENSES The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ----------------- Share Class - ----------------- - -------------------------------------------------------------------------------- Beginning Ending Expenses Annualized Account Account Paid During Expense Value Value Period** Ratio 10/01/04 3/31/05 10/01/04-3/31/05 - -------------------------------------------------------------------------------- Actual 0.80% $1,000 $1,018 $4.02 A ------------------------------------------------------------------------- Hypothetical* 0.80% $1,000 $1,021 $4.03 - -------------------------------------------------------------------------------- Actual 1.55% $1,000 $1,015 $7.79 B ------------------------------------------------------------------------- Hypothetical* 1.55% $1,000 $1,017 $7.79 - -------------------------------------------------------------------------------- Actual 1.55% $1,000 $1,016 $7.79 C ------------------------------------------------------------------------- Hypothetical* 1.55% $1,000 $1,017 $7.79 - -------------------------------------------------------------------------------- * 5% class return per year before expenses. ** Expenses paid is equal to each class" annualized expense ratio for the most recent six month period, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. - ---------------------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - 3/31/05 - ---------------------------------------------------------------------------------------------- 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 - 97.4% - ----------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE - ---------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.1% - ---------------------------------------------------------------------------------------------- Chicago, IL (O'Hare International Airport), RITES, FSA, 8.474%, 2022+(+) $1,500,000 $1,796,365 - ---------------------------------------------------------------------------------------------- Chicago, IL, O'Hare International Airport Rev. (2nd Lien Passenger Facility D), AMBAC, 5.5%, 2019 350,000 376,644 - ---------------------------------------------------------------------------------------------- Louisville & Jefferson County, KY, Regional Airport Authority, "A", MBIA, 6.5%, 2017 3,000,000 3,263,155 - ---------------------------------------------------------------------------------------------- Oklahoma City, OK, Airport Trust, "B", FSA, 5.75%, 2017 1,080,000 1,158,954 - ---------------------------------------------------------------------------------------------- $6,595,118 - ---------------------------------------------------------------------------------------------- Chemicals - 0.3% - ---------------------------------------------------------------------------------------------- Red River Authority, TX, Pollution Control Rev. (Celanese Project), 6.7%, 2030 $1,000,000 $1,037,175 - ---------------------------------------------------------------------------------------------- General Obligations - General Purpose - 6.6% - ---------------------------------------------------------------------------------------------- Chicago IL, (Lakefront Millenium Parking Facilities), MBIA, 5.7%, 2025 $645,000 $662,022 - ---------------------------------------------------------------------------------------------- Chicago, IL (Lakefront Millennium Package Facilities), MBIA, 5%, 2018 4,000,000 4,159,400 - ---------------------------------------------------------------------------------------------- Commonwealth of Massachusetts, 5.875%, 2009(++) 3,205,000 3,562,870 - ---------------------------------------------------------------------------------------------- Commonwealth of Puerto Rico, ROLs, FGIC, 8.633%, 2015+(+) 3,000,000 3,834,240 - ---------------------------------------------------------------------------------------------- Cranston, RI, FGIC, 6.375%, 2014 200,000 227,818 - ---------------------------------------------------------------------------------------------- Houston County, AL, AMBAC, 6.25%, 2009(++) 850,000 971,244 - ---------------------------------------------------------------------------------------------- Interlocken Metropolitan District, CO, Improvement, "C", XLCA, 0%, 2027 510,000 139,633 - ---------------------------------------------------------------------------------------------- Mobile County, AL, 6%, 2009(++) 800,000 888,344 - ---------------------------------------------------------------------------------------------- New York, NY, "J", 5%, 2030 320,000 327,264 - ---------------------------------------------------------------------------------------------- New York, NY, "J", MBIA, 5%, 2017 2,000,000 2,095,140 - ---------------------------------------------------------------------------------------------- San Antonio, TX, 5%, 2020 700,000 723,247 - ---------------------------------------------------------------------------------------------- Southlake, TX, AMBAC, 0%, 2009(++) 3,185,000 1,195,394 - ---------------------------------------------------------------------------------------------- Southlake, TX, AMBAC, 0%, 2009(++) 3,150,000 1,105,776 - ---------------------------------------------------------------------------------------------- State of Wisconsin, "C", 6%, 2010(++) 1,200,000 1,351,344 - ---------------------------------------------------------------------------------------------- $21,243,736 - ---------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.6% - ---------------------------------------------------------------------------------------------- Birmingham, AL, "A", 5.75%, 2017 $1,000,000 $1,105,870 - ---------------------------------------------------------------------------------------------- Worcester, MA, FSA, 6%, 2017 3,475,000 3,895,336 - ---------------------------------------------------------------------------------------------- $5,001,206 - ---------------------------------------------------------------------------------------------- General Obligations - Schools - 8.4% - ---------------------------------------------------------------------------------------------- Detroit, MI, City School District, "B", FGIC, 5%, 2021 $2,000,000 $2,080,680 - ---------------------------------------------------------------------------------------------- Dudley-Charlton, MA, Regional School District, RITES, FGIC, 7.566%, 2017+(+) 1,495,000 1,833,677 - ---------------------------------------------------------------------------------------------- Ferris, TX, Independent School District, PSF, 5.5%, 2034 640,000 683,405 - ---------------------------------------------------------------------------------------------- Florida State Board of Education Capital Outlay, Public Education, "A", 5%, 2019 1,000,000 1,043,340 - ---------------------------------------------------------------------------------------------- Forsyth County, GA, School District, 6%, 2010(++) 400,000 454,016 - ---------------------------------------------------------------------------------------------- Fresno, CA, Unified School District, MBIA, 6.55%, 2020 1,225,000 1,444,422 - ---------------------------------------------------------------------------------------------- Goose Creek, TX, Consolidated School District, PSF, 5%, 2020 2,500,000 2,586,875 - ---------------------------------------------------------------------------------------------- Houston, TX, Independent School District, RITES, PSF, 7.543%, 2017+(+) 2,325,000 2,618,694 - ---------------------------------------------------------------------------------------------- Keller, TX, Independent School District, PSF, 6%, 2017 225,000 251,219 - ---------------------------------------------------------------------------------------------- Knox County, KY, Independent School District, XLCA, 5.5%, 2029 640,000 695,379 - ---------------------------------------------------------------------------------------------- Lancaster, TX, Independent School District, Capital Appreciation, FSA, 0%, 2026 485,000 146,354 - ---------------------------------------------------------------------------------------------- Lancaster, TX, Independent School District, Capital Appreciation, FSA, 0%, 2027 430,000 121,694 - ---------------------------------------------------------------------------------------------- Leander, TX, Independent School District, PSF, 0%, 2018 2,500,000 1,201,450 - ---------------------------------------------------------------------------------------------- Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2027 215,000 245,595 - ---------------------------------------------------------------------------------------------- Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2028 215,000 245,377 - ---------------------------------------------------------------------------------------------- Manistee, MI, Area Public Schools, FGIC, 5.75%, 2009(++) 700,000 767,347 - ---------------------------------------------------------------------------------------------- Marshall, MI, Public School District, 5.5%, 2018 500,000 540,625 - ---------------------------------------------------------------------------------------------- Phenix City, AL, AMBAC, 5.65%, 2021 1,500,000 1,663,620 - ---------------------------------------------------------------------------------------------- Philadelphia, PA, School District, MBIA, 6%, 2010(++) 750,000 839,918 - ---------------------------------------------------------------------------------------------- Roma, TX, Independent School District, PSF, 5.875%, 2020 1,705,000 1,891,629 - ---------------------------------------------------------------------------------------------- Wattsburg, PA, Public School Building Authority Rev., Capital Appreciation, MBIA, 0%, 2029 2,150,000 597,765 - ---------------------------------------------------------------------------------------------- Williamson County, TN, Rural School, 6.125%, 2010(++) 1,665,000 1,873,958 - ---------------------------------------------------------------------------------------------- Williamson County, TN, Rural School, 6.125%, 2010(++) 1,765,000 1,986,508 - ---------------------------------------------------------------------------------------------- Wylie, TX, Independent School District, PSF, 5.25%, 2029 1,080,000 1,126,094 - ---------------------------------------------------------------------------------------------- $26,939,641 - ---------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 19.8% - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), 9.25%, 2022 $350,000 $404,901 - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), 9.25%, 2030 650,000 749,944 - ---------------------------------------------------------------------------------------------- Baldwin County, AL, Eastern Shore Health Care Authority Rev. (Thomas Hospital), 5.75%, 2027 600,000 583,884 - ---------------------------------------------------------------------------------------------- Baxter County, AR, Hospital Rev., 5.375%, 2014 1,000,000 1,039,430 - ---------------------------------------------------------------------------------------------- Chemung County, NY, Civic Facilities Rev. (St. Joseph's Hospital-Elmira), 6%, 2013 665,000 665,665 - ---------------------------------------------------------------------------------------------- Colorado Health Facilities Authority Rev. (Parkview Hospital), 6%, 2005(++) 670,000 693,061 - ---------------------------------------------------------------------------------------------- Colorado Health Facilities Authority Rev. (Parkview Hospital), 6%, 2016 330,000 341,276 - ---------------------------------------------------------------------------------------------- Colorado Health Facilities Authority Rev. (Portercare Adventist Health Systems), 6.625%, 2026 500,000 552,100 - ---------------------------------------------------------------------------------------------- Cullman, AL, Cullman Medical Park South, Medical Clinic Board Rev. (Cullman Regional Medical Center), 6.5%, 2013 330,000 331,323 - ---------------------------------------------------------------------------------------------- Cuyahoga County, OH, Hospital Facilities Rev. (Canton, Inc.), 7.5%, 2030 900,000 1,005,021 - ---------------------------------------------------------------------------------------------- Denver, CO, Health & Hospital Authority Rev., 5.375%, 2018 300,000 305,973 - ---------------------------------------------------------------------------------------------- Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 500,000 512,615 - ---------------------------------------------------------------------------------------------- District of Columbia, Health & Hospital Authority Rev. (Medstar University Hospital), "D", 6.875%, 2007(++) 700,000 752,080 - ---------------------------------------------------------------------------------------------- Fulton County, NY, Industrial Development Agency, Civic Facilities Rev. (Nathan Littauer Hospital), 5.75%, 2009 250,000 247,978 - ---------------------------------------------------------------------------------------------- Gainsville & Hall County, GA, Hospital Authority Rev. (Northeast Georgia Health System, Inc.), 5.5%, 2031 445,000 457,509 - ---------------------------------------------------------------------------------------------- Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), 5.75%, 2031 500,000 521,475 - ---------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority Rev. (Bon Secours) RIBS, FSA, 9.647%, 2027(+) 5,000,000 6,582,200 - ---------------------------------------------------------------------------------------------- Highlands County, FL, Health Facilities Authority Rev. (Adventist/Sunbelt Hospital), 6%, 2031 350,000 376,915 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Condell Medical Center), 6.35%, 2015 1,000,000 1,079,190 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Decatur Memorial Hospital), 5.75%, 2024 350,000 364,588 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Passavant Memorial Area Hospital Associates), 6%, 2024 335,000 363,013 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Riverside Health Systems), 5.75%, 2022 650,000 669,312 - ---------------------------------------------------------------------------------------------- Illinois Health Facilities Authority Rev. (Sinai Health), FHA, 5.15%, 2037 640,000 653,030 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Munster Medical Research Foundation, Inc.), 6.375%, 2031 500,000 520,195 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Munster Medicial Research Foundation, Inc.), 6.375%, 2021 1,700,000 1,752,207 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Riverview Hospital), 5.25%, 2014 400,000 411,760 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority, Hospital Rev. (Riverview Hospital), 6.125%, 2031 250,000 259,455 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Hospital Rev. (Deaconess Hospital) "A", AMBAC, 5.375%, 2034 565,000 598,793 - ---------------------------------------------------------------------------------------------- Kentucky Economic Development Finance Authority, Health Systems Rev. (Norton Healthcare, Inc.), 6.5%, 2020 1,250,000 1,371,238 - ---------------------------------------------------------------------------------------------- Kentucky Economic Development Finance Authority, Health Systems Rev. (Norton Healthcare, Inc.), 6.625%, 2028 250,000 271,320 - ---------------------------------------------------------------------------------------------- Kentucky Economic Development Finance Authority, Refunding & Improvement, "A", MBIA, 5%, 2018 2,400,000 2,536,200 - ---------------------------------------------------------------------------------------------- Knox County, TN, Health Educational Hospital Facility (Baptist Health Systems, East Tennessee), 6.375%, 2022 1,000,000 1,034,620 - ---------------------------------------------------------------------------------------------- Lauderdale County & Florence, AL (Coffee Health Group), "A", MBIA, 5.25%, 2019 1,100,000 1,164,559 - ---------------------------------------------------------------------------------------------- Lufkin, TX, Health Facilities Rev. (Memorial Health System of East Texas), 6.875%, 2026 320,000 335,050 - ---------------------------------------------------------------------------------------------- Macomb County, MI, Hospital Finance Authority Rev. (Mount Clemens General Hospital), 5.75%, 2025 1,000,000 941,030 - ---------------------------------------------------------------------------------------------- Marion County, FL, Hospital District Rev. (Monroe Hospital), 5.625%, 2019 750,000 785,805 - ---------------------------------------------------------------------------------------------- Marshall County, AL, Health Care Rev., "A", 6.25%, 2022 500,000 533,895 - ---------------------------------------------------------------------------------------------- Martin County, FL, Health Facilities Rev. (Martin Memorial Medical Center), "B", 5.75%, 2022 850,000 867,281 - ---------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (Medstar Health), 5.5%, 2033 305,000 315,809 - ---------------------------------------------------------------------------------------------- Maryland Health & Higher Educational Facilities Authority Rev. (University of Maryland Medical System), 6.75%, 2030 1,000,000 1,128,270 - ---------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), 6.5%, 2012 400,000 438,828 - ---------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), 5.7%, 2015 1,000,000 1,030,450 - ---------------------------------------------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare Systems), 5.75%, 2021 400,000 436,088 - ---------------------------------------------------------------------------------------------- Mecosta County, MI, General Hospital Rev., 6%, 2018 300,000 297,348 - ---------------------------------------------------------------------------------------------- Miami Beach, FL, Health Facilities Rev. (Mount Sinai Medical Center), "A", 6.7%, 2019 750,000 811,733 - ---------------------------------------------------------------------------------------------- Michigan Hospital Finance Authority Rev. (Memorial Healthcare Center), 5.75%, 2015 800,000 844,960 - ---------------------------------------------------------------------------------------------- Mississippi Hospital Equipment & Facilities Rev. (Rush Medical Foundation) CONNIE LEE, 6.7%, 2018 1,000,000 1,004,330 - ---------------------------------------------------------------------------------------------- Montgomery, AL, Special Care Facilities, Financing Authority Rev. (Baptist Health), "A-2", MBIA, 0% to 2007, 5% to 2022 1,270,000 1,137,183 - ---------------------------------------------------------------------------------------------- Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial Hospital), 5.625%, 2032 375,000 388,598 - ---------------------------------------------------------------------------------------------- Nassau County, NY, Industrial Development Agency, Civic Facilities Rev. (North Shore Health System), 5.875%, 2011 375,000 407,149 - ---------------------------------------------------------------------------------------------- New Hampshire Health & Educational Facilities Authority Rev. (Covenant Health), 6.5%, 2017 915,000 1,021,415 - ---------------------------------------------------------------------------------------------- New Hampshire Health & Educational Facilities Authority Rev. (Exeter Hospital), 6%, 2024 500,000 539,980 - ---------------------------------------------------------------------------------------------- New Jersey Health Care Facilities (Palisades Medical Center), 6.5%, 2021 500,000 531,805 - ---------------------------------------------------------------------------------------------- North Texas Health Facilities Development Corp. Rev. (United Regional Health Care System, Inc.), 6%, 2023 1,000,000 1,057,350 - ---------------------------------------------------------------------------------------------- Ohio County, WV, County Commission Health System Rev. (Ohio Valley Medical Center), 5.75%, 2013 900,000 842,013 - ---------------------------------------------------------------------------------------------- Oklahoma Development Finance Authority Rev. (Comanche County Hospital), 6%, 2014 600,000 664,194 - ---------------------------------------------------------------------------------------------- Oklahoma Development Finance Authority Rev. (Comanche County Hospital), 6.6%, 2031 255,000 278,417 - ---------------------------------------------------------------------------------------------- Palm Beach County, FL, Health Facilities Rev. (Boca Raton Hospital), 5.5%, 2021 500,000 521,845 - ---------------------------------------------------------------------------------------------- Rhode Island Health & Education Building Rev., Hospital Financing (Lifespan Obligated Group), 6.5%, 2032 1,500,000 1,652,550 - ---------------------------------------------------------------------------------------------- Richardson, TX, Hospital Authority Rev. (Baylor- Richardson), 5.25%, 2013 600,000 631,476 - ---------------------------------------------------------------------------------------------- Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare Systems, Inc.), 6.5%, 2027 290,000 280,624 - ---------------------------------------------------------------------------------------------- Shelby County, TN, Educational & Housing Facilities Board Hospital Rev. (Methodist Healthcare), 6%, 2012(++) 500,000 574,230 - ---------------------------------------------------------------------------------------------- Shelby County, TN, Educational & Housing Facilities Board Hospital Rev. (Methodist Healthcare), ETM, 6%, 2016(++) 300,000 342,075 - ---------------------------------------------------------------------------------------------- South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031 500,000 536,105 - ---------------------------------------------------------------------------------------------- Steubenville, OH, Hospital Rev. (Trinity Hospital), 6.375%, 2020 300,000 333,084 - ---------------------------------------------------------------------------------------------- Stillwater, OK, Medical Center Authority (Stillwater Medical Center), 6.5%, 2019 1,000,000 1,077,800 - ---------------------------------------------------------------------------------------------- Suffolk County, NY, Industrial Development Agency Rev. (Southampton Hospital), 7.25%, 2020 720,000 735,257 - ---------------------------------------------------------------------------------------------- Suffolk County, NY, Industrial Development Agency Rev. (Southampton Hospital), 7.625%, 2030 245,000 255,065 - ---------------------------------------------------------------------------------------------- Suffolk County, NY, Industrial Development Agency, Civic Facilities Rev. (Huntington Hospital), "C", 5.875%, 2032 1,000,000 1,041,130 - ---------------------------------------------------------------------------------------------- Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Healthcare), 6.25%, 2020 1,000,000 1,030,560 - ---------------------------------------------------------------------------------------------- Tom Green County, TX, Health Facilities Rev. (Shannon Health System), 6.75%, 2021 400,000 428,572 - ---------------------------------------------------------------------------------------------- Upper Illinois River Valley Development, Health Facilities Rev. (Morris Hospital), 6.625%, 2031 500,000 543,165 - ---------------------------------------------------------------------------------------------- Valley, AL, Special Care Facilities Financing (Lanier Memorial Hospital), 5.5%, 2007 500,000 503,905 - ---------------------------------------------------------------------------------------------- Wapello County, IA, Hospital Authority Rev. (Ottumwa Regional Health Center), 6.375%, 2031 750,000 785,153 - ---------------------------------------------------------------------------------------------- Weirton, WV, Municipal Hospital Building, Commission Rev. (Weirton Hospital Medical Center), 6.375%, 2031 500,000 495,830 - ---------------------------------------------------------------------------------------------- West Plains, MO, Industrial Development Authority Rev. (Ozarks Medical Center), 6.75%, 2024 195,000 199,142 - ---------------------------------------------------------------------------------------------- West Shore, PA, Hospital Authority (Holy Spirit Hospital), 6.25%, 2032 1,000,000 1,063,040 - ---------------------------------------------------------------------------------------------- Wichita, KS, Hospital Authority Rev. (Via Christi Health System), 6.25%, 2019 1,500,000 1,677,090 - ---------------------------------------------------------------------------------------------- Wisconsin Health & Educational Facilities Authority Rev. (Agnesian Healthcare, Inc.), 6%, 2017 325,000 348,316 - ---------------------------------------------------------------------------------------------- Wisconsin Health & Educational Facilities Authority Rev. (Aurora Health Care, Inc.), 6.875%, 2030 750,000 858,563 - ---------------------------------------------------------------------------------------------- Wisconsin Health & Educational Facilities Authority Rev. (Wheaton Franciscan Services), 6.25%, 2022 1,000,000 1,093,520 - ---------------------------------------------------------------------------------------------- Yonkers, NY, Industrial Development Agency, Civic Facilities Rev. (St. John's Riverside Hospital), 6.8%, 2016 435,000 449,151 - ---------------------------------------------------------------------------------------------- $63,269,059 - ---------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 2.1% - ---------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 7.75%, 2006 $65,000 $62,980 - ---------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 8.125%, 2016 505,000 442,643 - ---------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 8.5%, 2026 1,130,000 975,145 - ---------------------------------------------------------------------------------------------- Colorado Health Facilities Authority Rev. (Evangelical Lutheran), 6.9%, 2025 500,000 570,575 - ---------------------------------------------------------------------------------------------- Cumberland County, PA, Retirement Community Rev. (Wesley Affiliated Services), 7.25%, 2035 375,000 393,863 - ---------------------------------------------------------------------------------------------- Eden Prairie, MN, Multi-Family Housing Rev. (Coll-Rolling Hills), "A", GNMA, 6%, 2021 200,000 215,668 - ---------------------------------------------------------------------------------------------- Indiana Health Facilities Financing Authority Rev. (Hoosier Care), 7.125%, 2034 815,000 697,257 - ---------------------------------------------------------------------------------------------- Iowa Finance Authority, Health Care Facilities Rev. (Care Initiatives Project), 9.25%, 2025 490,000 590,842 - ---------------------------------------------------------------------------------------------- Jefferson County, KY, Health Care Authority Rev. (Beverly Enterprises, Inc.), 5.875%, 2007 120,000 120,244 - ---------------------------------------------------------------------------------------------- Luzerne County, PA, Industrial Development Authority Rev. (Beverly Enterprise, Inc.), 6.75%, 2008 245,000 245,054 - ---------------------------------------------------------------------------------------------- Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae), 7.375%, 2027 960,000 1,007,030 - ---------------------------------------------------------------------------------------------- Shelby County, TN, Health Educational Rev. (Germantown Village), 7.25%, 2034 385,000 399,518 - ---------------------------------------------------------------------------------------------- Tennessee Veterans Home Board Rev. (Humboldt), 6.75%, 2006(++) 1,000,000 1,053,920 - ---------------------------------------------------------------------------------------------- $6,774,739 - ---------------------------------------------------------------------------------------------- Human Services - 0.4% - ---------------------------------------------------------------------------------------------- Nassau County, NY, Industrial Development Civic (Special Needs Facilities), 6.1%, 2012 $295,000 $304,328 - ---------------------------------------------------------------------------------------------- Orange County, FL, Health Facilities Authority Rev. (GF/ Orlando Healthcare Facilities), 9%, 2031 1,000,000 1,021,120 - ---------------------------------------------------------------------------------------------- $1,325,448 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Airlines - 0.6% - ---------------------------------------------------------------------------------------------- Cleveland, OH, Airport Special Rev. (Continental Airlines, Inc.), 5.7%, 2019 $1,000,000 $789,270 - ---------------------------------------------------------------------------------------------- Los Angeles, CA, Regional Airport Lease Rev. (American Airlines, Inc.), 7%, 2012 300,000 292,119 - ---------------------------------------------------------------------------------------------- Tulsa, OK, Municipal Airport Trust Rev. (American Airlines, Inc.) "B", 5.65%, 2035 1,000,000 943,200 - ---------------------------------------------------------------------------------------------- $2,024,589 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Chemicals - 0.7% - ---------------------------------------------------------------------------------------------- Brazos River, TX, Harbor Navigation District (Dow Chemical Co.), 5.7%, 2033 $1,000,000 $1,087,500 - ---------------------------------------------------------------------------------------------- Sweetwater County, WY, Solid Waste Disposal Rev. (FMC Corp.), "A", 7%, 2024 1,000,000 1,011,530 - ---------------------------------------------------------------------------------------------- $2,099,030 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - 1.7% - ---------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Solid Waste Disposal Rev. (Waste Management, Inc.), "A-2", 5.4%, 2025 $215,000 217,685 - ---------------------------------------------------------------------------------------------- Carbon County, UT, Solid Waste Disposal Rev. (Laidlaw Environmental), 7.45%, 2017 2,500,000 2,568,425 - ---------------------------------------------------------------------------------------------- Charles City County, VA, Industrial Development Authority, Solid Waste Disposal Facility Rev. (Waste Management, Inc.), 6.25%, 2027 500,000 546,640 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority, Solid Waste Rev. (Waste Management, Inc.), 5.7%, 2018 230,000 241,438 - ---------------------------------------------------------------------------------------------- Gloucester County, NJ, Solid Waste Resource Recovery Rev. (Waste Management, Inc.), 6.85%, 2029 150,000 166,802 - ---------------------------------------------------------------------------------------------- Henrico County, VA, Industrial Development Authority Rev. (Browning Ferris, Inc.), 5.3%, 2011 1,000,000 1,003,270 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Resource Recovery Rev. (Waste Management, Inc.), 6.9%, 2029 300,000 334,233 - ---------------------------------------------------------------------------------------------- Nevada Department of Business (Republic Services, Inc.), 5.625%, 2026 450,000 478,184 - ---------------------------------------------------------------------------------------------- $5,556,677 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Metals - 0% - ---------------------------------------------------------------------------------------------- Burns Harbor, IN, Solid Waste Disposal Facilities Rev. (Bethlehem Steel), 8%, 2024* $3,000,000 $3,000 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Other - 2.6% - ---------------------------------------------------------------------------------------------- Bucks County, PA, Industrial Development Authority Rev. (USX Corp.), 5.4%, 2017 $500,000 $545,265 - ---------------------------------------------------------------------------------------------- Gulf Coast, TX, Industrial Development Authority (Valero Energy Corp.), 5.6%, 2031 500,000 504,855 - ---------------------------------------------------------------------------------------------- Hardeman County, TN, Correctional Facilities Corp. (Corrections Corp. of America), 7.375%, 2017 500,000 513,240 - ---------------------------------------------------------------------------------------------- Lehigh County, PA, Industrial Development Authority Pollution Control Rev. (PPL Electric Utility Corp.), "A", FGIC, 4.7%, 2029 320,000 314,061 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., Resource Recovery Rev. (Flour Corp.), 5.625%, 2019 2,895,000 3,033,352 - ---------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.), 5.6%, 2017 1,300,000 1,397,695 - ---------------------------------------------------------------------------------------------- Park Creek Metropolitan District, CO, Rev., Custodial Receipts, "CR", 7.875%, 2032## 400,000 409,928 - ---------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority Rev. (Amtrak), 6.125%, 2021 550,000 572,176 - ---------------------------------------------------------------------------------------------- Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific Corp.), 5.7%, 2026 980,000 1,016,926 - ---------------------------------------------------------------------------------------------- $8,307,498 - ---------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 2.4% - ---------------------------------------------------------------------------------------------- Beauregard Parish, LA (Boise Cascade Corp.), 6.8%, 2027 $500,000 $534,085 - ---------------------------------------------------------------------------------------------- Butler, AL, Industrial Development Board, Solid Waste Disposal Rev. (Georgia Pacific Corp.), 5.75%, 2028 260,000 259,745 - ---------------------------------------------------------------------------------------------- Delta County, MI, Economic Development Corp., Environmental Improvements Rev. (Mead Westvaco Escanaba), 6.25%, 2027 900,000 1,007,199 - ---------------------------------------------------------------------------------------------- Mobile, AL, Industrial Development Board Improvement Rev., "B" (International Paper Co.), 6.45%, 2019 2,000,000 2,155,300 - ---------------------------------------------------------------------------------------------- Navajo County, AZ, Industrial Development Authority (Stone Container Corp.), 7.4%, 2026 1,500,000 1,546,980 - ---------------------------------------------------------------------------------------------- Navajo County, AZ, Industrial Development Authority (Stone Container Corp.), 7.2%, 2027 500,000 519,885 - ---------------------------------------------------------------------------------------------- Onondaga County, NY, Industrial Development Authority Rev., Solid Waste Disposal Rev. (Solvay Paperboard LLC), 6.8%, 2014 1,000,000 1,056,060 - ---------------------------------------------------------------------------------------------- West Point, VA, Industrial Development Authority, Solid Waste Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 550,000 553,867 - ---------------------------------------------------------------------------------------------- $7,633,121 - ---------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 0.5% - ---------------------------------------------------------------------------------------------- Capital Trust Agency of Florida Rev. (Seminole Tribe Convention), 10%, 2033 $700,000 $785,316 - ---------------------------------------------------------------------------------------------- Harris County-Houston, TX, Sports Authority Rev., MBIA, 0%, 2032 1,595,000 349,082 - ---------------------------------------------------------------------------------------------- Sandoval County, NM (Santa Ana Pueblo), 7.75%, 2015## 320,000 327,574 - ---------------------------------------------------------------------------------------------- $1,461,972 - ---------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.5% - ---------------------------------------------------------------------------------------------- Austin, TX, Convention Center (Convention Enterprises, Inc.), 6.6%, 2021 $300,000 $320,886 - ---------------------------------------------------------------------------------------------- Austin, TX, Convention Center (Convention Enterprises, Inc.), 6.7%, 2028 400,000 428,172 - ---------------------------------------------------------------------------------------------- Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013## 710,000 708,566 - ---------------------------------------------------------------------------------------------- $1,457,624 - ---------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 3.1% - ---------------------------------------------------------------------------------------------- California Statewide Communities Development Authority Rev. (Irvine Apartments), 5.25%, 2025 $1,000,000 $1,038,630 - ---------------------------------------------------------------------------------------------- Charter Mac Equity Issuer Trust, 6.625%, 2009 2,000,000 2,138,220 - ---------------------------------------------------------------------------------------------- Eaglebend, CO, Affordable Housing Corp., 6.2%, 2012 1,000,000 981,640 - ---------------------------------------------------------------------------------------------- GMAC Municipal Mortgage Trust, "C-1", 5.7%, 2040## 500,000 494,735 - ---------------------------------------------------------------------------------------------- GMAC Municipal Mortgage Trust, "B-1", 5.6%, 2039## 1,000,000 1,005,900 - ---------------------------------------------------------------------------------------------- Munimae TE Bond Subsidiary LLC, "A-2", 4.9%, 2049## 2,000,000 1,929,780 - ---------------------------------------------------------------------------------------------- Newark, NJ, Housing Authority Port Authority (Newark Marine Terminal), MBIA, 5.5%, 2028 215,000 233,288 - ---------------------------------------------------------------------------------------------- Panhandle, TX, Regional Housing Finance Rev., 6.625%, 2020 330,000 345,860 - ---------------------------------------------------------------------------------------------- Panhandle, TX, Regional Housing Finance Rev., 6.75%, 2031 1,245,000 1,300,714 - ---------------------------------------------------------------------------------------------- Ridgeland, MS, Urban Renewal (Northbrook I & II Apartments), 6.15%, 2019** 1,250,000 600,000 - ---------------------------------------------------------------------------------------------- $10,068,767 - ---------------------------------------------------------------------------------------------- Parking - 0.1% - ---------------------------------------------------------------------------------------------- Rail Connections, Inc., MA Rev., 0%, 2009(++) $100,000 $56,678 - ---------------------------------------------------------------------------------------------- Rail Connections, Inc., MA Rev., 0%, 2009(++) 210,000 111,292 - ---------------------------------------------------------------------------------------------- Rail Connections, Inc., MA Rev., 0%, 2009(++) 300,000 148,905 - ---------------------------------------------------------------------------------------------- $316,875 - ---------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 0.4% - ---------------------------------------------------------------------------------------------- Austin, TX, Town Community Events Center Venue, FGIC, 6%, 2019 $1,015,000 $1,127,624 - ---------------------------------------------------------------------------------------------- Single Family Housing - Local - 3.1% - ---------------------------------------------------------------------------------------------- Adams County, CO, Single Family Mortgage Rev., ETM, 8.875%, 2011(++) $2,510,000 $3,227,860 - ---------------------------------------------------------------------------------------------- Brevard County, FL, Housing Finance Authority, "B", GNMA, 6.5%, 2022 236,000 236,739 - ---------------------------------------------------------------------------------------------- Calcasieu Parish, LA, Public Trust Authority, Single Family Mortgage Rev. "A", GNMA, 6.05%, 2032 540,000 571,558 - ---------------------------------------------------------------------------------------------- California Rural Home Mortgage Finance Authority Rev., GNMA, 6.55%, 2030 170,000 178,947 - ---------------------------------------------------------------------------------------------- Chicago, IL, Single Family Mortgage Rev., GNMA, 7.05%, 2030 15,000 15,068 - ---------------------------------------------------------------------------------------------- Cook County, IL, Single Family Mortgage Rev., "A", 0%, 2015 550,000 106,651 - ---------------------------------------------------------------------------------------------- Jefferson Parish, LA, Single Family Mortgage Rev., GNMA, 6.625%, 2023 370,000 392,300 - ---------------------------------------------------------------------------------------------- Jefferson Parish, LA, Single Family Mortgage Rev., GNMA, 6.75%, 2030 180,000 190,858 - ---------------------------------------------------------------------------------------------- Lee County, FL, Housing Finance Authority Rev., "A", GNMA, 7%, 2031 35,000 35,573 - ---------------------------------------------------------------------------------------------- Maricopa County, AZ, Single Family Mortgage Rev. "B", GNMA, 6.2%, 2034 290,000 301,325 - ---------------------------------------------------------------------------------------------- Phoenix, AZ, Single Family Mortgage Rev., GNMA, 6.1%, 2028 5,000 5,052 - ---------------------------------------------------------------------------------------------- Pima County, AZ, Industrial Development Authority, GNMA, 7.05%, 2030 465,000 495,997 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A", GNMA, 4% to 2005, 5.8% to 2036 645,000 692,285 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-5", GNMA, 3% to 2005, 5.8% to 2027 325,000 346,401 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-5", GNMA, 4% to 2005, 5.7% to 2036 665,000 703,617 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "B", GNMA, 5.45%, 2027 390,000 410,693 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., GNMA, 6.875%, 2026 185,000 191,292 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., GNMA, 6.45%, 2029 795,000 834,623 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., GNMA, 6.45%, 2033 455,000 482,996 - ---------------------------------------------------------------------------------------------- Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., GNMA, 6%, 2035 480,000 518,650 - ---------------------------------------------------------------------------------------------- $9,938,485 - ---------------------------------------------------------------------------------------------- Single Family Housing - State - 2.3% - ---------------------------------------------------------------------------------------------- California Housing Finance Agency Rev., Home Mortgage, MBIA, 0%, 2028 $2,170,000 $646,812 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 7.15%, 2014 12,000 12,155 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 7.45%, 2016 45,000 45,180 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.75%, 2021 55,000 57,036 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 5.9%, 2023 205,000 210,746 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.1%, 2023 120,000 123,983 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 7.4%, 2027 30,000 30,050 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.875%, 2028 130,000 133,182 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.8%, 2030 115,000 118,801 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.6%, 2032 210,000 214,845 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.375%, 2033 115,000 119,204 - ---------------------------------------------------------------------------------------------- Colorado Housing & Finance Authority Rev., 6.55%, 2033 125,000 130,518 - ---------------------------------------------------------------------------------------------- Louisiana Housing Finance Agency, Single Family Mortgage Rev., GNMA, 7.55%, 2031 185,000 197,882 - ---------------------------------------------------------------------------------------------- Louisiana Housing Finance Agency, Single Family Mortgage Rev., GNMA, 6.4%, 2032 260,000 269,004 - ---------------------------------------------------------------------------------------------- Minnesota Housing Finance Agency Rev., Residential Housing Finance "B", 4.8%, 2023 255,000 258,838 - ---------------------------------------------------------------------------------------------- Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), 6.35%, 2032 260,000 271,250 - ---------------------------------------------------------------------------------------------- Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.7%, 2030 255,000 260,908 - ---------------------------------------------------------------------------------------------- Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.85%, 2032 225,000 234,493 - ---------------------------------------------------------------------------------------------- Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.75%, 2034 135,000 138,706 - ---------------------------------------------------------------------------------------------- New Hampshire Housing Finance Authority Rev., 5.875%, 2030 125,000 127,673 - ---------------------------------------------------------------------------------------------- New Hampshire Housing Finance Authority Rev., 6.3%, 2031 125,000 127,210 - ---------------------------------------------------------------------------------------------- New Mexico Mortgage Finance Authority Rev., GNMA, 7.1%, 2030 100,000 104,815 - ---------------------------------------------------------------------------------------------- New Mexico Mortgage Finance Authority Rev., GNMA, 6.25%, 2032 450,000 467,942 - ---------------------------------------------------------------------------------------------- New Mexico Mortgage Finance Authority Rev., GNMA, 6.35%, 2033 210,000 217,610 - ---------------------------------------------------------------------------------------------- North Dakota Housing Finance Agency Rev., Housing Finance, 5%, 2033 480,000 483,518 - ---------------------------------------------------------------------------------------------- Oklahoma Housing Finance Agency, 6.65%, 2029 1,045,000 1,114,984 - ---------------------------------------------------------------------------------------------- Texas Housing & Community Affairs, Residential Mortgage Rev., GNMA, 7.1%, 2021 905,000 969,662 - ---------------------------------------------------------------------------------------------- Vermont Housing Finance Agency Rev., FSA, 4.95%, 2032 355,000 361,628 - ---------------------------------------------------------------------------------------------- $7,448,635 - ---------------------------------------------------------------------------------------------- Solid Waste Revenue - 1.0% - ---------------------------------------------------------------------------------------------- Delaware County, PA, Industrial Development Authority Rev., Resource Recovery Facilities (American Ref-Fuel Co.), "A", 6.2%, 2019 $500,000 $517,555 - ---------------------------------------------------------------------------------------------- Hudson County, NJ, Solid Waste System Rev., 5.9%, 2015 855,000 854,171 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Ogden Haverhill Associates), 6.7%, 2014 700,000 742,882 - ---------------------------------------------------------------------------------------------- Massachusetts Industrial Finance Agency Rev., Resource Recovery Rev. (Ogden Haverhill Associates), 5.6%, 2019 1,000,000 1,004,730 - ---------------------------------------------------------------------------------------------- $3,119,338 - ---------------------------------------------------------------------------------------------- State & Agency - Other - 0.8% - ---------------------------------------------------------------------------------------------- Massachusetts State Development Finance Agency (Visual & Performing Arts), 6%, 2021 $1,000,000 $1,182,270 - ---------------------------------------------------------------------------------------------- Michigan State Certificates of Participation, AMBAC, 5.5%, 2020 1,250,000 1,344,938 - ---------------------------------------------------------------------------------------------- $2,527,208 - ---------------------------------------------------------------------------------------------- State & Local Agencies - 6.1% - ---------------------------------------------------------------------------------------------- Alabama Building Renovation Authority, AMBAC, 6%, 2018 $760,000 $855,289 - ---------------------------------------------------------------------------------------------- Alabama State Public School & College, Capital Improvement, "D", 6%, 2015 2,850,000 3,187,212 - ---------------------------------------------------------------------------------------------- Chicago, IL, Public Building Commission Rev., RITES, FGIC, 8.981%, 2016+(+) 1,500,000 1,822,050 - ---------------------------------------------------------------------------------------------- Chicago, IL, Public Building Commission Rev., RITES, FGIC, 8.981%, 2017+(+) 1,250,000 1,517,950 - ---------------------------------------------------------------------------------------------- Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "B", 5.375%, 2028 1,500,000 1,558,530 - ---------------------------------------------------------------------------------------------- Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "B", 5.5%, 2043 1,075,000 1,129,804 - ---------------------------------------------------------------------------------------------- Houston, TX, Certificates of Participation, 6.3%, 2020 1,000,000 1,083,390 - ---------------------------------------------------------------------------------------------- Indianapolis, IN, Public Improvement Bond Bank, "C", AMBAC, 6%, 2017 500,000 556,970 - ---------------------------------------------------------------------------------------------- New Mexico Finance Authority Rev., Court Facilities Fee Rev., MBIA, 5.5%, 2020 475,000 514,264 - ---------------------------------------------------------------------------------------------- New York State Urban Development Corp., Correctional Facilities Service Contract C, AMBAC, 5.875%, 2009(++) 1,000,000 1,107,990 - ---------------------------------------------------------------------------------------------- Stafford, TX, Economic Development Corp., FGIC, 6%, 2015 525,000 611,688 - ---------------------------------------------------------------------------------------------- Virginia College Building Authority, VA, Public Higher Education Financing, "A", 5.75%, 2009(++) 2,295,000 2,534,621 - ---------------------------------------------------------------------------------------------- Warren Township, IN (Vision 2005 School Building Corp.), FGIC, 5.5%, 2011(++) 2,600,000 2,878,330 - ---------------------------------------------------------------------------------------------- $19,358,088 - ---------------------------------------------------------------------------------------------- Student Loan Revenue - 0.9% - ---------------------------------------------------------------------------------------------- Access to Loans for Learning, California Student Loan Rev., 7.95%, 2030 $650,000 $681,870 - ---------------------------------------------------------------------------------------------- Arizona Student Loan Acquisition Authority Rev., 5.8%, 2016 675,000 721,886 - ---------------------------------------------------------------------------------------------- Arizona Student Loan Acquisition Authority Rev., 5.85%, 2017 700,000 748,251 - ---------------------------------------------------------------------------------------------- Massachusetts Educational Financing Authority, Refunding Issue G, "A", MBIA, 6.1%, 2018 700,000 728,854 - ---------------------------------------------------------------------------------------------- $2,880,861 - ---------------------------------------------------------------------------------------------- Tax - Other - 1.1% - ---------------------------------------------------------------------------------------------- New Jersey Economic Development Authority Rev. Cigarette Tax, 5.5%, 2024 $250,000 $257,143 - ---------------------------------------------------------------------------------------------- New Jersey Economic Development Authority Rev. Cigarette Tax, 5.75%, 2029 450,000 467,973 - ---------------------------------------------------------------------------------------------- New Jersey Economic Development Authority Rev. Cigarette Tax, 5.5%, 2031 200,000 203,196 - ---------------------------------------------------------------------------------------------- New Jersey Economic Development Authority Rev. Cigarette Tax, 5.75%, 2034 300,000 309,543 - ---------------------------------------------------------------------------------------------- New York, NY, Transitional, Future Tax Secured, "A", 6%, 2009(++) 2,000,000 2,248,800 - ---------------------------------------------------------------------------------------------- $3,486,655 - ---------------------------------------------------------------------------------------------- Tax Assessment - 2.3% - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh Mills), 5.1%, 2014 $75,000 $76,358 - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh Mills), 5.6%, 2023 50,000 51,816 - ---------------------------------------------------------------------------------------------- Broadview, IL, Tax Increment Rev., 5.25%, 2012 1,000,000 1,033,490 - ---------------------------------------------------------------------------------------------- Capital Region Community Development District of FL, Capital Improvement Rev., 5.95%, 2006 100,000 100,695 - ---------------------------------------------------------------------------------------------- Fishhawk Community Development District of FL, 5.125%, 2009 440,000 440,128 - ---------------------------------------------------------------------------------------------- Greyhawk Landing Community Development, FL Special Assessment Rev., "B", 6.25%, 2009 285,000 290,210 - ---------------------------------------------------------------------------------------------- Katy, TX, Development Authority Rev., 5.8%, 2011 915,000 949,889 - ---------------------------------------------------------------------------------------------- Katy, TX, Development Authority Rev., 6%, 2018 1,200,000 1,245,996 - ---------------------------------------------------------------------------------------------- Killarney, FL, Community Development District, "B", 5.125%, 2009 310,000 310,465 - ---------------------------------------------------------------------------------------------- Lakes By The Bay South Community Development District, Florida Special Assessment, "B", 5.3%, 2009 285,000 285,829 - ---------------------------------------------------------------------------------------------- Panther Trace, FL, Community Development District Rev., "B", 6.5%, 2009 145,000 147,319 - ---------------------------------------------------------------------------------------------- Panther Trace, FL, Community Development District Rev., "B", 5%, 2010 525,000 525,315 - ---------------------------------------------------------------------------------------------- Parkway Center, FL, Community Development District Rev., "B", 5.625%, 2014 935,000 940,881 - ---------------------------------------------------------------------------------------------- Preserve At Wilderness Lake, FL, Community Development District, Capital Improvement,"B", 5%, 2009 525,000 520,238 - ---------------------------------------------------------------------------------------------- Renaissance Community Development of Florida, "B", 6.25%, 2008 480,000 492,067 - ---------------------------------------------------------------------------------------------- $7,410,696 - ---------------------------------------------------------------------------------------------- Tobacco - 1.3% - ---------------------------------------------------------------------------------------------- Badger Tobacco, WI (Asset Securitization Corp.), 6.125%, 2027 $1,115,000 $1,131,223 - ---------------------------------------------------------------------------------------------- District of Columbia, Tobacco Settlement, 6.25%, 2024 420,000 426,418 - ---------------------------------------------------------------------------------------------- Guam Economic Development Authority, 5%, 2022 165,000 166,884 - ---------------------------------------------------------------------------------------------- Iowa Tobacco Settlement Authority, Tobacco Settlement Rev., Asset Backed, "B", 5.3%, 2025 750,000 696,353 - ---------------------------------------------------------------------------------------------- Louisiana Tobacco Settlement Authority, 5.5%, 2030 415,000 405,613 - ---------------------------------------------------------------------------------------------- New Jersey Tobacco Settlement Authority, 5.75%, 2032 710,000 706,152 - ---------------------------------------------------------------------------------------------- South Carolina Tobacco Settlement Authority, 6.375%, 2028 500,000 507,750 - ---------------------------------------------------------------------------------------------- Washington Tobacco Settlement Authority, 6.5%, 2026 70,000 72,892 - ---------------------------------------------------------------------------------------------- $4,113,285 - ---------------------------------------------------------------------------------------------- Toll Roads - 0.5% - ---------------------------------------------------------------------------------------------- New Jersey Turnpike Authority Rev., MBIA, 6.5%, 2016 $315,000 $376,034 - ---------------------------------------------------------------------------------------------- Northwest Parkway Public Highway Authority Co. Rev., Capital Appreciation "B", AMBAC, 0%, 2018 750,000 383,858 - ---------------------------------------------------------------------------------------------- San Joaquin Hills, CA, Transportation Corridor Agency, Toll Road Rev., ETM, 0%, 2009(++) 1,000,000 879,950 - ---------------------------------------------------------------------------------------------- $1,639,842 - ---------------------------------------------------------------------------------------------- Transportation - Special Tax - 1.1% - ---------------------------------------------------------------------------------------------- Allegheny County, PA, Port Authority Special Rev., MBIA, 6.25%, 2009(++) $1,000,000 $1,123,860 - ---------------------------------------------------------------------------------------------- New Jersey Economic Development Authority Rev., Transportation Project Sublease "A", FSA, 6%, 2009(++) 325,000 358,953 - ---------------------------------------------------------------------------------------------- Pennsylvania State Turnpike Commission Oil, "A", AMBAC, 5.25%, 2018 850,000 908,072 - ---------------------------------------------------------------------------------------------- Pennsylvania State Turnpike Commission Oil, "A", AMBAC, ETM, 5.25%, 2018(++) 1,150,000 1,231,029 - ---------------------------------------------------------------------------------------------- $3,621,914 - ---------------------------------------------------------------------------------------------- Universities - Colleges - 4.3% - ---------------------------------------------------------------------------------------------- Amherst, NY, Industrial Development Agency Rev. (Daemen College), "A", 6%, 2021 $1,000,000 $1,063,500 - ---------------------------------------------------------------------------------------------- California Educational Facilities Authority Rev. (L.A. College of Chiropractic), 5.6%, 2017 250,000 240,943 - ---------------------------------------------------------------------------------------------- Houston, TX, Community College Systems, MBIA, 7.875%, 2025 1,650,000 2,087,481 - ---------------------------------------------------------------------------------------------- Illinois Finance Authority Rev. (Univeristy of Chicago), "A", 5%, 2034 215,000 219,773 - ---------------------------------------------------------------------------------------------- Islip, NY, Community Development Agency Rev. (New York Institute of Technology), 7.5%, 2006(++) 2,000,000 2,127,080 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Boston University), XLCA, 6%, 2059 1,250,000 1,468,488 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), 6.625%, 2010(++) 100,000 115,421 - ---------------------------------------------------------------------------------------------- Massachusetts Development Finance Agency Rev., (Olin College), "B", XLCA, 5.25%, 2033 2,000,000 2,103,580 - ---------------------------------------------------------------------------------------------- Northern Illinois University Rev., Auxiliary Facilities Systems, AMBAC, 5.875%, 2018 1,370,000 1,499,766 - ---------------------------------------------------------------------------------------------- Savannah, GA, Economic Development Authority Rev. (College of Art & Design, Inc.), 6.5%, 2009(++) 500,000 567,010 - ---------------------------------------------------------------------------------------------- St. Joseph County, IN, Educational Facilities Rev. (University of Notre Dame), 6.5%, 2026 1,000,000 1,277,050 - ---------------------------------------------------------------------------------------------- Upland, IN, Economic Development Rev. (Taylor University), 6%, 2018 435,000 483,985 - ---------------------------------------------------------------------------------------------- Upland, IN, Economic Development Rev. (Taylor University), 6.25%, 2023 520,000 573,134 - ---------------------------------------------------------------------------------------------- $13,827,211 - ---------------------------------------------------------------------------------------------- Universities - Secondary Schools - 1.8% - ---------------------------------------------------------------------------------------------- California Statewide Communities, Development Authority Rev. (Escondido Charter High School), 7.5%, 2036 $500,000 $507,040 - ---------------------------------------------------------------------------------------------- Clark County, NV, Economic Development Rev. (Alexander Dawson School), 5.5%, 2020 1,500,000 1,578,525 - ---------------------------------------------------------------------------------------------- Maine Finance Authority, Educational Rev. (Waynflete School), 6.4%, 2019 1,000,000 1,079,590 - ---------------------------------------------------------------------------------------------- Maine Finance Authority, Educational Rev. (Waynflete School), 6.5%, 2029 1,000,000 1,074,920 - ---------------------------------------------------------------------------------------------- Michigan Municipal Bond Authority Rev. (Detroit Academy of Arts & Sciences), 8%, 2031 300,000 314,838 - ---------------------------------------------------------------------------------------------- Michigan Municipal Bond Authority Rev. (YMCA Service Learning Academy), 7.625%, 2021 400,000 427,768 - ---------------------------------------------------------------------------------------------- New Hampshire Health & Education (Derryfield School), 6.5%, 2010 360,000 364,079 - ---------------------------------------------------------------------------------------------- Pima County, AZ, Industrial Development Authority Education Rev. (Arizona Charter Schools), "C", 6.75%, 2031 500,000 522,460 - ---------------------------------------------------------------------------------------------- $5,869,220 - ---------------------------------------------------------------------------------------------- Utilities - Cogeneration - 0.7% - ---------------------------------------------------------------------------------------------- Carbon County, PA, Industrial Development Authority Rev. (Panther Creek Partners), 6.65%, 2010 $635,000 $682,542 - ---------------------------------------------------------------------------------------------- Klamath Falls, OR, Electric Rev. (Klamath Cogeneration), 6%, 2025 1,475,000 1,476,106 - ---------------------------------------------------------------------------------------------- $2,158,648 - ---------------------------------------------------------------------------------------------- Utilities - Investor Owned - 5.5% - ---------------------------------------------------------------------------------------------- Apache County, AZ, Industrial Development Authority, Pollution Control Rev. (Tucson Electric Power Co.), 5.875%, 2033 $1,000,000 $997,890 - ---------------------------------------------------------------------------------------------- Brazos River Authority, TX, Pollution Control Rev. (Texas Utility Co.), "B", 6.3%, 2032 250,000 265,548 - ---------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Pollution Control Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 1,600,000 1,704,768 - ---------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Pollution Control Rev. (Southern California Edison Co.), 6.4%, 2024 500,000 502,470 - ---------------------------------------------------------------------------------------------- Connecticut Development Authority, Pollution Control Rev. (Connecticut Light & Power Co.), 5.85%, 2028 1,000,000 1,058,590 - ---------------------------------------------------------------------------------------------- Farmington, NM, Pollution Control Rev. (New Mexico Public Service), 5.8%, 2022 500,000 509,785 - ---------------------------------------------------------------------------------------------- Farmington, NM, Pollution Control Rev. (New Mexico Public Service), 6.375%, 2022 1,000,000 1,076,250 - ---------------------------------------------------------------------------------------------- Farmington, NM, Pollution Control Rev. (New Mexico Public Service), "A", 6.3%, 2016 565,000 603,618 - ---------------------------------------------------------------------------------------------- Matagorda County, TX, Pollution Control Rev. (Central Power & Light Co.), 4.55%, 2029 1,000,000 1,022,530 - ---------------------------------------------------------------------------------------------- Matagorda County, TX, Pollution Control Rev. (Reliant Energy), 5.95%, 2030 750,000 754,155 - ---------------------------------------------------------------------------------------------- Mecklenburg County, VA, Industrial Development Authority Rev. (UAE Mecklenburg, LP), 6.5%, 2017 700,000 774,431 - ---------------------------------------------------------------------------------------------- New Hampshire Industrial Development Authority, Pollution Control (CT Light and Power), 5.9%, 2016 500,000 519,270 - ---------------------------------------------------------------------------------------------- Pennsylvania Economic Development Financing Authority Rev. (Reliant Energy Seward), "A", 6.75%, 2036 560,000 597,201 - ---------------------------------------------------------------------------------------------- Pima County, AZ, Industrial Development Authority Rev. (Tucson Electric Power Co.), 6.1%, 2025 2,000,000 2,000,600 - ---------------------------------------------------------------------------------------------- Pittsylvania County, VA, Industrial Development Authority Rev. (Multi-trade of Pittsylvania), 7.5%, 2014 2,000,000 2,064,400 - ---------------------------------------------------------------------------------------------- Port Morrow, OR, Pollution Control Rev. (Portland General Electric), 5.2%, 2033 350,000 367,171 - ---------------------------------------------------------------------------------------------- Sabine River Authority, TX, Pollution Control Rev. (TXU Electric Co.) "A", 5.5%, 2022 500,000 534,540 - ---------------------------------------------------------------------------------------------- West Feliciana Parish, LA, Pollution Control Rev. (Energy Gulf States), 6.6%, 2028 1,665,000 1,689,908 - ---------------------------------------------------------------------------------------------- West Feliciana Parish, LA, Pollution Control Rev. (Gulf States Utilities Co.), 7.7%, 2014 450,000 453,416 - ---------------------------------------------------------------------------------------------- $17,496,541 - ---------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.3% - ---------------------------------------------------------------------------------------------- Austin, TX, Utility Systems Rev., AMBAC, 6.75%, 2011 $1,500,000 $1,765,095 - ---------------------------------------------------------------------------------------------- California State, Department of Water Resources Power Supply Rev., "A", 5.125%, 2018 750,000 791,280 - ---------------------------------------------------------------------------------------------- Georgia Municipal Electric Power Authority Rev., MBIA, 6.375%, 2016 2,000,000 2,407,360 - ---------------------------------------------------------------------------------------------- Georgia Municipal Electric Power Authority Rev., MBIA, 6.5%, 2020 7,350,000 9,110,252 - ---------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., 6.375%, 2013 750,000 833,738 - ---------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 7%, 2007 3,250,000 3,481,043 - ---------------------------------------------------------------------------------------------- North Carolina Municipal Power Agency, ROLs, MBIA, 8.096%, 2019+(+) 1,500,000 1,706,430 - ---------------------------------------------------------------------------------------------- $20,095,198 - ---------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 4.4% - ---------------------------------------------------------------------------------------------- Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 8.043%, 2016+(+) $1,000,000 $1,271,180 - ---------------------------------------------------------------------------------------------- Augusta, GA, Water & Sewer Rev., FSA, 5.25%, 2039 430,000 456,389 - ---------------------------------------------------------------------------------------------- Forsyth County, GA, Water & Sewage Authority, 6.25%, 2010(++) 1,170,000 1,335,766 - ---------------------------------------------------------------------------------------------- Massachusetts Water Resources Authority, 6.5%, 2019 5,965,000 7,183,053 - ---------------------------------------------------------------------------------------------- New York State Environmental Facilities, 5%, 2016 430,000 454,145 - ---------------------------------------------------------------------------------------------- New York State Environmental Facilities, ETM, 5%, 2016(++) 570,000 607,837 - ---------------------------------------------------------------------------------------------- Pittsburgh, PA, Water & Sewer Authority Rev., "C", FSA, 5.25%, 2022 2,000,000 2,081,220 - ---------------------------------------------------------------------------------------------- Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA, 5.25%, 2030 255,000 270,433 - ---------------------------------------------------------------------------------------------- West Wilson Utility District, TN, Waterworks Rev., MBIA, 5.25%, 2030 480,000 507,850 - ---------------------------------------------------------------------------------------------- $14,167,873 - ---------------------------------------------------------------------------------------------- Total Municipal Bonds (Identified Cost, $291,155,371) $311,402,597 - ---------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.4% - ---------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 2.22%, due 4/07/05 $900,000 $900,000 - ---------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White Hospital), 2.3%, due 4/01/05 600,000 600,000 - ---------------------------------------------------------------------------------------------- Irvine, CA, Improvement Building Act 1915, 2.28%, due 4/06/05 1,850,000 1,850,000 - ---------------------------------------------------------------------------------------------- Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital Loan Program, 2.3%, due 4/01/05 400,000 400,000 - ---------------------------------------------------------------------------------------------- San Francisco, CA, City & County Financial Corp., Lease Rev. (Moscone Center Expansion), 2.28%, due 4/07/05 800,000 800,000 - ---------------------------------------------------------------------------------------------- Total Floating Rate Demand Notes, at Identified Cost $4,550,000 - ---------------------------------------------------------------------------------------------- Total Investments (Identified Cost, $295,705,371) $315,952,597 - ---------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.2% 3,738,238 - ---------------------------------------------------------------------------------------------- Net Assets - 100.0% $319,690,835 - ---------------------------------------------------------------------------------------------- * Non-income producing security - in default. + Restricted security. (+) Inverse floating rate security. (++) Refunded bond. ## SEC Rule 144A restriction. ** Interest received was less than stated coupon rate. The following abbreviations are used in the Portfolio of Investments and are defined: ETM = Escrowed to Maturity Insurers AMBAC = AMBAC Indemnity Corp. CONNIE LEE = Connie Lee Insurance Co. 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. Inverse Floaters RIBS = Residual Interest Bonds RITES = Residual Interest Tax-Exempt Security ROLS = Residual Option Longs 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 the fund. AT 3/31/05 ASSETS Investments, at value (identified cost, $295,705,371) $315,952,597 - --------------------------------------------------------------------------------------------------- Cash 20,729 - --------------------------------------------------------------------------------------------------- Receivable for investments sold 201,144 - --------------------------------------------------------------------------------------------------- Receivable for fund shares sold 222,764 - --------------------------------------------------------------------------------------------------- Interest receivable 4,675,701 - --------------------------------------------------------------------------------------------------- Unrealized appreciation on interest rate swap agreements 511,419 - --------------------------------------------------------------------------------------------------- Other assets 2,558 - --------------------------------------------------------------------------------------------------- Total assets $321,586,912 - --------------------------------------------------------------------------------------------------- LIABILITIES Distributions payable $538,175 - --------------------------------------------------------------------------------------------------- Payable for investments purchased 907,859 - --------------------------------------------------------------------------------------------------- Payable for fund shares reacquired 261,140 - --------------------------------------------------------------------------------------------------- Unrealized depreciation on interest rate swap agreements 13,975 - --------------------------------------------------------------------------------------------------- Payable to affiliates - --------------------------------------------------------------------------------------------------- Management fee 2,572 - --------------------------------------------------------------------------------------------------- Shareholder servicing costs 34,239 - --------------------------------------------------------------------------------------------------- Distribution and service fee 3,781 - --------------------------------------------------------------------------------------------------- Administrative fee 118 - --------------------------------------------------------------------------------------------------- Accrued expenses and other liabilities 134,218 - --------------------------------------------------------------------------------------------------- Total liabilities $1,896,077 - --------------------------------------------------------------------------------------------------- Net assets $319,690,835 - --------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: Paid-in capital $303,498,127 - --------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) on investments 20,744,670 - --------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments (4,335,816) - --------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income (216,146) - --------------------------------------------------------------------------------------------------- Net assets $319,690,835 - --------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding 37,233,628 - ---------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued Class A shares Net assets $241,849,769 - --------------------------------------------------------------------------------------------------- Shares outstanding 28,181,232 - --------------------------------------------------------------------------------------------------- Net asset value per share $8.58 - --------------------------------------------------------------------------------------------------- Offering price per share (100/95.25X$8.58) $9.01 - --------------------------------------------------------------------------------------------------- Class B shares Net assets $43,930,363 - --------------------------------------------------------------------------------------------------- Shares outstanding 5,111,814 - --------------------------------------------------------------------------------------------------- Net asset value and offering price per share $8.59 - --------------------------------------------------------------------------------------------------- Class C shares Net assets $33,910,703 - --------------------------------------------------------------------------------------------------- Shares outstanding 3,940,582 - --------------------------------------------------------------------------------------------------- Net asset value and offering price per share $8.61 - --------------------------------------------------------------------------------------------------- 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
- -------------------------------------------------------------------------------------------------- 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. YEAR ENDED 3/31/05 NET INVESTMENT INCOME - -------------------------------------------------------------------------------------------------- Interest income $18,855,772 - -------------------------------------------------------------------------------------------------- Expenses - -------------------------------------------------------------------------------------------------- Management fee $1,823,568 - -------------------------------------------------------------------------------------------------- Trustees" compensation 14,315 - -------------------------------------------------------------------------------------------------- Shareholder servicing costs 397,578 - -------------------------------------------------------------------------------------------------- Distribution and service fee (Class A) 624,686 - -------------------------------------------------------------------------------------------------- Distribution and service fee (Class B) 469,881 - -------------------------------------------------------------------------------------------------- Distribution and service fee (Class C) 346,586 - -------------------------------------------------------------------------------------------------- Administrative fee 26,315 - -------------------------------------------------------------------------------------------------- Custodian fee 114,058 - -------------------------------------------------------------------------------------------------- Printing 46,891 - -------------------------------------------------------------------------------------------------- Postage 7,324 - -------------------------------------------------------------------------------------------------- Auditing fees 46,379 - -------------------------------------------------------------------------------------------------- Legal fees 8,338 - -------------------------------------------------------------------------------------------------- Miscellaneous 132,247 - -------------------------------------------------------------------------------------------------- Total expenses $4,058,166 - -------------------------------------------------------------------------------------------------- Fees paid indirectly (7,275) - -------------------------------------------------------------------------------------------------- Reduction of expenses by investment adviser (830,332) - -------------------------------------------------------------------------------------------------- Net expenses $3,220,559 - -------------------------------------------------------------------------------------------------- Net investment income $15,635,213 - -------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) (identified cost basis) - -------------------------------------------------------------------------------------------------- Investment transactions $3,782,435 - -------------------------------------------------------------------------------------------------- Swap transactions (1,906,963) - -------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $1,875,472 - -------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - -------------------------------------------------------------------------------------------------- Investments $(8,742,866) - -------------------------------------------------------------------------------------------------- Swap transactions 1,512,184 - -------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(7,230,682) - -------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(5,355,210) - -------------------------------------------------------------------------------------------------- Change in net assets from operations $10,280,003 - -------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------- FINANCIAL STATEMENTS STATEMENTS 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.
YEAR ENDED YEAR ENDED 3/31/05 3/31/04 CHANGE IN NET ASSETS FROM OPERATIONS Net investment income $15,635,213 $16,994,651 - -------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 1,875,472 (1,682,213) - -------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments (7,230,682) 8,784,137 - --------------------------------------------------------- ------------ ------------ Change in net assets from operations $10,280,003 $24,096,575 - --------------------------------------------------------- ------------ ------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income - -------------------------------------------------------------------------------------------------- Class A $(12,056,821) $(13,264,818) - -------------------------------------------------------------------------------------------------- Class B (1,913,952) (2,354,471) - -------------------------------------------------------------------------------------------------- Class C (1,411,847) (1,644,710) - -------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(15,382,620) $(17,263,999) - --------------------------------------------------------- ------------ ------------ Change in net assets from fund share transactions $(30,106,846) $(25,385,914) - --------------------------------------------------------- ------------ ------------ Redemption fees $691 $-- - --------------------------------------------------------- ------------ ------------ Total change in net assets $(35,208,772) $(18,553,338) - --------------------------------------------------------- ------------ ------------ NET ASSETS At beginning of period $354,899,607 $373,452,945 - -------------------------------------------------------------------------------------------------- At end of period (including accumulated distributions in excess of net investment income of $216,146 and $575,902, respectively) $319,690,835 $354,899,607 - -------------------------------------------------------------------------------------------------- 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 registered public accounting firm, whose report, together with the fund's financial statements, are included in this report.
YEARS ENDED 3/31 --------------------------------------------------------------------------------- CLASS A 2005 2004 2003 2002 2001 Net asset value, beginning of period $8.70 $8.54 $8.32 $8.54 $8.33 - ----------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS(S)(S)# Net investment income(S) $0.42 $0.41 $0.41 $0.44 $0.46 - ----------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.13) 0.17 0.25 (0.20) 0.27 - --------------------------------------------- ------ ------ ------ ------ ------ Total from investment operations $0.29 $0.58 $0.66 $0.24 $0.73 - --------------------------------------------- ------ ------ ------ ------ ------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.41) $(0.42) $(0.44) $(0.46) $(0.47) - ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- -- -- -- (0.02) - ----------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- (0.03) - --------------------------------------------- ------ ------ ------ ------ ------ Total distributions declared to shareholders $(0.41) $(0.42) $(0.44) $(0.46) $(0.52) - --------------------------------------------- ------ ------ ------ ------ ------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - --------------------------------------------- ------ ------ ------ ------ ------ Net asset value, end of period $8.58 $8.70 $8.54 $8.32 $8.54 - --------------------------------------------- ------ ------ ------ ------ ------ Total return (%)(+)& 3.49 6.94 8.00 2.78 9.06 - -----------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
YEARS ENDED 3/31 --------------------------------------------------------------------------------- CLASS A (CONTINUED) 2005 2004 2003 2002 2001 RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 0.79 0.88 0.90 0.91 0.89 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.90 4.80 4.85 5.12 5.55 - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 8 9 13 15 15 - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $241,850 $264,797 $274,442 $276,719 $255,799 - ----------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for substantially all of its proportional share of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.40 $0.40 $0.40 $0.41 $0.44 - ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS): Expenses## 1.04 1.04 1.05 1.15 1.20 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.65 4.64 4.70 4.88 5.24 - ----------------------------------------------------------------------------------------------------------------------------- (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 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 do not include the applicable sales charge. If the charge had been included, the results would have been lower. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
YEARS ENDED 3/31 ----------------------------------------------------------------------------- CLASS B 2005 2004 2003 2002 2001 Net asset value, beginning of period $8.72 $8.55 $8.33 $8.55 $8.34 - ----------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS(S)(S)# Net investment income(S) $0.36 $0.35 $0.35 $0.37 $0.40 - ----------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.14) 0.18 0.24 (0.20) 0.27 - --------------------------------------------- ------ ------ ------ ------ ------ Total from investment operations $0.22 $0.53 $0.59 $0.17 $0.67 - --------------------------------------------- ------ ------ ------ ------ ------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.35) $(0.36) $(0.37) $(0.39) $(0.41) - ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- -- -- -- (0.02) - ----------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- (0.03) - --------------------------------------------- ------ ------ ------ ------ ------ Total distributions declared to shareholders $(0.35) $(0.36) $(0.37) $(0.39) $(0.46) - --------------------------------------------- ------ ------ ------ ------ ------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - --------------------------------------------- ------ ------ ------ ------ ------ Net asset value, end of period $8.59 $8.72 $8.55 $8.33 $8.55 - --------------------------------------------- ------ ------ ------ ------ ------ Total return (%)& 2.60 6.27 7.19 2.00 8.24 - -----------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
YEARS ENDED 3/31 ---------------------------------------------------------------------------- CLASS B (CONTINUED) 2005 2004 2003 2002 2001 RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.54 1.63 1.65 1.66 1.64 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.15 4.05 4.10 4.37 4.82 - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 8 9 13 15 15 - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $43,930 $52,594 $59,591 $61,627 $75,858 - ----------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for substantially all of its proportional share of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.33 $0.34 $0.34 $0.35 $0.38 - ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS): Expenses## 1.79 1.79 1.80 1.90 1.95 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.90 3.89 3.95 4.13 4.51 - ----------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
YEARS ENDED 3/31 ----------------------------------------------------------------------------- CLASS C 2005 2004 2003 2002 2001 Net asset value, beginning of period $8.73 $8.56 $8.34 $8.56 $8.35 - ----------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS(S)(S)# Net investment income(S) $0.36 $0.35 $0.35 $0.37 $0.40 - ----------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.13) 0.18 0.24 (0.20) 0.27 - --------------------------------------------- ------ ------ ------ ------ ------ Total from investment operations $0.23 $0.53 $0.59 $0.17 $0.67 - --------------------------------------------- ------ ------ ------ ------ ------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income $(0.35) $(0.36) $(0.37) $(0.39) $(0.41) - ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- -- -- -- (0.02) - ----------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- (0.03) - --------------------------------------------- ------ ------ ------ ------ ------ Total distributions declared to shareholders $(0.35) $(0.36) $(0.37) $(0.39) $(0.46) - --------------------------------------------- ------ ------ ------ ------ ------ Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- - --------------------------------------------- ------ ------ ------ ------ ------ Net asset value, end of period $8.61 $8.73 $8.56 $8.34 $8.56 - --------------------------------------------- ------ ------ ------ ------ ------ Total return (%)& 2.72 6.27 7.18 2.00 8.23 - -----------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
YEARS ENDED 3/31 ---------------------------------------------------------------------------- CLASS C (CONTINUED) 2005 2004 2003 2002 2001 RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S): Expenses## 1.54 1.63 1.65 1.66 1.64 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 4.15 4.05 4.10 4.37 4.80 - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover 8 9 13 15 15 - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000 Omitted) $33,911 $37,508 $39,420 $36,146 $29,257 - ----------------------------------------------------------------------------------------------------------------------------- (S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for substantially all of its proportional share of Independent Chief Compliance Officer service fees paid to Tarantino LLC. 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) $0.33 $0.34 $0.34 $0.35 $0.37 - ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS): Expenses## 1.79 1.79 1.80 1.90 1.95 - ----------------------------------------------------------------------------------------------------------------------------- Net investment income(S)(S) 3.90 3.89 3.95 4.13 4.49 - ----------------------------------------------------------------------------------------------------------------------------- (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. & From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. 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 U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the projects or assets or the inability to collect revenues for the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline in value. INVESTMENT VALUATIONS - 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. 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 approximates market value as determined by the Board of Trustees. When pricing service information or market quotations are not readily available, securities are priced at fair value as determined under the direction of 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 and foreign exchange 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 fund. RATE LOCK SWAPS - 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. SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April 1, 2005, the fund will charge a 2% redemption fee (which is retained by the fund) on proceeds from Class A, Class B, and Class C shares redeemed or exchanged within 5 business days following their acquisition (either by purchase or exchange). Effective April 1, 2005, the fund will no longer charge a redemption fee. See the fund's prospectus for details. Any redemption fees charged are accounted for as an addition to paid-in capital. 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 and accreted for financial statement purposes in accordance with generally accepted accounting principles. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. The fund may receive proceeds from litigation settlements involving its portfolio holdings. Any proceeds received are reflected in realized gain/loss in the statement of operations, or in unrealized gain/loss if the security is still held by the fund. 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, 2005, 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, defaulted bonds, amortization and accretion on debt securities and treating a portion of the proceeds from redemptions as a distribution for tax purposes. The tax character of distributions declared for the years ended March 31, 2005 and March 31, 2004 was as follows: 3/31/05 3/31/04 Distributions declared from: ------------------------------------------------------------------ Tax-exempt income $15,355,366 $17,263,999 ------------------------------------------------------------------ Ordinary income 27,254 -- ------------------------------------------------------------------ Total distributions declared $15,382,620 $17,263,999 ------------------------------------------------------------------ During the year ended March 31, 2005, accumulated distributions in excess of net investment income decreased by $107,163 and accumulated net realized loss on investments and paid-in capital increased by $145,643 and $38,480, respectively due to differences between book and tax accounting for derivatives, defaulted bonds, amortization and accretion on debt securities and the treatment of a portion of the proceeds from redemptions as a distribution for tax purposes. This change had no effect on the net assets or net asset value per share. As of March 31, 2005, the components of distributable earnings (accumulated losses) on a tax basis were as follows: Undistributed tax-exempt income $1,116,179 -------------------------------------------------------- Capital loss carryforward (4,741,158) -------------------------------------------------------- Unrealized appreciation (depreciation) 20,590,564 -------------------------------------------------------- Other temporary differences (772,877) -------------------------------------------------------- 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 as follows: March 31, 2011, ($655,485) 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 generally due to differences in separate class expenses. Class B shares will convert to Class A shares approximately eight years after purchase. (3) TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISER - The fund has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to provide overall investment 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. As part of a settlement agreement with the New York Attorney General concerning market timing and related matters (See Legal Proceedings footnote), MFS has agreed to reduce the management fee to 0.30% of average daily net assets for the period March 1, 2004 through February 28, 2009, which is shown as a reduction of total expenses in the Statement of Operations. 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. The fund pays compensation to its Independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons, 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 $3,705 for retired Independent Trustees for the year ended March 31, 2005. This fund and certain other MFS funds (the "funds") have entered into a services agreement (the "Agreement") which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. MFS has agreed to reimburse each of the funds for a proportional share of substantially all of the payments made by the funds to Tarantino LLC and also to provide office space and other administrative support and supplies to the ICCO. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. 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. The fund paid MFS an administrative fee up to the following annual percentage rates of the fund's average daily net assets: 4/01/04 THROUGH EFFECTIVE DATE 2/28/05 3/01/05 First $2 billion 0.01120% 0.01626% - --------------------------------------------------------------------------- Next $2.5 billion 0.00832% 0.01206% - --------------------------------------------------------------------------- Next $2.5 billion 0.00032% 0.00056% - --------------------------------------------------------------------------- In excess of $7 billion 0.00000% 0.00000% - --------------------------------------------------------------------------- For the year ended March 31, 2005, the fund paid MFS $26,315 equivalent to 0.00794% of average daily net assets, to partially reimburse MFS for the costs of providing administrative services. DISTRIBUTOR - MFD, a wholly owned subsidiary of MFS, as distributor, received $28,629 for the year ended March 31, 2005, 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 as compensation for services provided by MFD and financial intermediaries in connection with the distribution and servicing of its shares. One component of the plan is a distribution fee and another is a service fee paid by MFD to financial intermediaries that enter into sales or service agreements with MFD or its affiliates based on the average daily net assets of accounts attributable to such intermediaries. The 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 may retain all or a portion of the service fee, including for accounts for which there is no financial intermediary of record. Service fees retained by MFD for the year ended March 31, 2005, amounted to: CLASS A CLASS B CLASS C Service Fee Retained by MFD $19,770 $367 $140 - ------------------------------------------------------------------------------ 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. Fees incurred under the distribution plan during the year ended March 31, 2005 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 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 of purchase. MFD receives all contingent deferred sales charges. Contingent deferred sales charges imposed during the year ended March 31, 2005 were as follows: CLASS A CLASS B CLASS C Contingent Deferred Sales Charges Imposed $3,310 $80,573 $10,670 - ------------------------------------------------------------------------------ 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 fund's Trustees. For the period April 1, 2004 through June 30, 2004, the fee was set at 0.10% of the fund's average daily net assets. For the period July 1, 2004 through December 31, 2004, the fund was charged up to 0.0861% of its average daily net assets. For the period January 1, 2005 through February 28, 2005, the fund is charged up to 0.1035% of its average daily net assets. Effective March 1, 2005, the fund is charged up to 0.1159% of its average daily net assets. For the year ended March 31, 2005, the fund paid MFSC a fee of $311,912 for shareholder services which equated to 0.0941% of the fund's average daily net assets. Shareholder service costs include out of pocket expenses and sub accounting services expenses paid by MFSC on behalf of the fund and subsequently reimbursed to MFSC which amounted to $62,465 and other costs paid by the fund directly to unaffiliated vendors for the year ended March 31, 2005. (4) PORTFOLIO SECURITIES Purchases and sales of investments, other than U.S. government securities, purchased option transactions, and short-term obligations, aggregated $26,916,168 and $61,862,191, 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 $295,362,033 ---------------------------------------------------------- Gross unrealized appreciation $25,086,288 ---------------------------------------------------------- Gross unrealized depreciation (4,495,724) ---------------------------------------------------------- Net unrealized appreciation (depreciation) $20,590,564 ---------------------------------------------------------- (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 3/31/05 Year ended 3/31/04 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Shares sold 1,567,579 $ 13,461,021 3,923,574 $ 33,678,836 - ------------------------------------------------------------------------------ Shares issued to shareholders in reinvestment of distributions 849,343 7,292,898 867,292 7,450,143 - ------------------------------------------------------------------------------ Shares reacquired (4,659,350) (39,924,894) (6,505,143) (55,872,881) - ------------------------------------------------------------------------------ Net change (2,242,428) $(19,170,975) $ (1,714,277) (14,743,902) - ------------------------------------------------------------------------------ CLASS B SHARES Shares sold 454,146 $ 3,903,573 534,325 $ 4,621,956 - ------------------------------------------------------------------------------ Shares issued to shareholders in reinvestment of distributions 118,406 1,017,998 133,556 1,149,141 - ------------------------------------------------------------------------------ Shares reacquired (1,495,083) (12,809,285) (1,602,274) (13,788,797) - ------------------------------------------------------------------------------ Net change (922,531) $ (7,887,714) (934,393) $ (8,017,700) - ------------------------------------------------------------------------------ CLASS C SHARES Shares sold 544,452 $ 4,690,961 1,083,331 $ 9,355,388 - ------------------------------------------------------------------------------ Shares issued to shareholders in reinvestment of distributions 119,904 1,032,616 125,956 1,084,943 - ------------------------------------------------------------------------------ Shares reacquired (1,021,41) (8,771,734) (1,515,353) (13,064,643) - ------------------------------------------------------------------------------ Net change (357,135) $ (3,048,157) (306,066) $ (2,624,312) - ------------------------------------------------------------------------------ (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 Federal Reserve funds 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, 2005 was $1,430 and is included in miscellaneous expense. The fund had no significant borrowings during the year ended March 31, 2005. (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 and foreign currency exchange 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 Swaps
UNREALIZED NOTIONAL PRINCIPAL CASH FLOWS PAID CASH FLOWS RECEIVED APPRECIATION EXPIRATION AMOUNT OF CONTRACT BY THE FUND BY THE FUND (DEPRECIATION) 12/01/07 USD 6,000,000 Fixed - 3 Year BMA Floating - 7 day BMA $44,921 Swap Index - 2.795% Swap Index - --------------------------------------------------------------------------------------------------------- 6/22/15 USD 8,000,000 Fixed - 10 Year BMA Floating - 7 day BMA 141,878 Swap Index - 3.628% Swap Index - --------------------------------------------------------------------------------------------------------- 4/06/17 USD 9,000,000 Fixed - 12 Year BMA Floating - 7 day BMA 21,352 Swap Index - 3.884% Swap Index - --------------------------------------------------------------------------------------------------------- 4/20/17 USD 16,000,000 Fixed - 12 Year BMA Floating - 7 day BMA 289,293 Swap Index - 3.714% Swap Index - --------------------------------------------------------------------------------------------------------- $497,444 - ---------------------------------------------------------------------------------------------------------
At March 31, 2005, the fund had sufficient cash and/or securities to cover any commitments under these contracts. (8) RESTRICTED SECURITIES At March 31, 2005, the fund owned the following restricted securities which are subject to legal or contractual restrictions on resale, excluding securities issued under Rule 144A, constituting 5.1% 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 a pricing service, or if not available, in good faith at the direction of the Trustees. DATE OF DESCRIPTION ACQUISITION PAR AMOUNT COST VALUE Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 8.043%, 2016 4/20/99 1,000,000 $1,167,100 $1,271,180 - ------------------------------------------------------------------------------ Chicago, IL (O'Hare International Airport), RITES, FSA, 8.474%, 2022 8/21/03 1,500,000 1,599,510 1,796,365 - ------------------------------------------------------------------------------ Chicago, IL, Public Building Commission Rev., RITES, FGIC, 8.981%, 2016 3/10/99 1,500,000 1,619,550 1,822,050 - ------------------------------------------------------------------------------ Chicago, IL, Public Building Commission Rev., RITES, FGIC, 8.981%, 2017 3/10/99 1,250,000 1,337,550 1,517,950 - ------------------------------------------------------------------------------ Commonwealth of Puerto Rico, ROLs, FGIC, 8.633% 2015 8/15/02 3,000,000 3,878,760 3,834,240 - ------------------------------------------------------------------------------ Dudley-Charlton, MA, Regional School District, RITES, FGIC, 7.566%, 2017 5/05/99 1,495,000 1,615,945 1,833,677 - ------------------------------------------------------------------------------ Houston, TX, Independent School District, RITES, PSF, 7.543%, 2017 2/26/99 2,325,000 2,440,832 2,618,694 - ------------------------------------------------------------------------------ North Carolina Municipal Power Agency, ROLs, MBIA, 8.096%, 2019 3/03/03 1,500,000 1,717,980 1,706,430 - ------------------------------------------------------------------------------ $16,400,586 - ------------------------------------------------------------------------------ (9) CONCENTRATION OF CREDIT RISK At March 31, 2005, 34.0% 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 13.7% of total investments. (10) LEGAL PROCEEDINGS On March 31, 2004, MFS settled an administrative proceeding with the Securities and Exchange Commission ("SEC") regarding disclosure of brokerage allocation practices in connection with MFS fund sales (the term "MFS funds" means the open-end registered management investment companies sponsored by MFS). 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 developed by an independent distribution consultant. The brokerage allocation practices which were the subject of this proceeding were discontinued by MFS in November 2003. The agreement with the SEC is reflected in an order of the SEC. The SEC 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 SEC settlement order states that MFS had in place policies designed to obtain best execution of all MFS fund trades. As part of the settlement, MFS retained an independent compliance consultant to review the completeness of its current policies and practices regarding disclosure to MFS fund trustees and to MFS fund shareholders of strategic alliances between MFS or its affiliates and broker-dealers and other financial intermediaries who support the sale of MFS fund shares. Pursuant to the SEC order, on July 28, 2004, MFS transferred these settlement amounts to the SEC, and those MFS funds entitled to these settlement amounts accrued an estimate of their pro rata portion of these amounts. The final distribution plan was approved by the SEC on January 21, 2005, and the affected MFS funds received the payment on February 16, 2005. In addition, in February 2004, MFS reached agreement with the SEC, the New York Attorney General ("NYAG") and the Bureau of Securities Regulation of the State of New Hampshire ("NH") to settle administrative proceedings alleging false and misleading information in certain MFS open-end retail fund ("MFS retail funds") prospectuses regarding market timing and related matters (the "February Settlements"). These regulators alleged that prospectus language for certain MFS retail funds was false and misleading because, although the prospectuses for those funds in the regulators" view indicated that they prohibited market timing, MFS did not limit trading activity in 11 domestic large cap stock, high grade bond and money market retail funds. MFS' former Chief Executive Officer and former President 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. These individuals 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 MFS 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 Board of Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further agreed with 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 retained $250,000 and $750,000 was 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, MFS Fund Distributors, Inc., MFS Service Center, Inc., MFS Corporation Retirement Committee, Sun Life Financial Inc., various MFS funds, certain current and/or former 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 MFS funds during specified periods, as ERISA actions by participants in certain retirement plan accounts on behalf of those accounts, or as derivative actions on behalf of the MFS funds. The lawsuits relating to market timing and related matters have been transferred to, and consolidated before, the United States District Court for the District of Maryland, as part of a multi-district litigation of market timing and related claims involving several other fund complexes (In re Mutual Funds Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam, Allianz Dresdner), No. 1:04-md-15863 (transfer began March 19, 2004)). The market timing cases related to the MFS complex are Riggs v. MFS et al., Case No. 04-cv-01162-JFM (direct), Hammerslough v. MFS et al., Case No. 04-md-01620 (derivative) and Anita Walker v. MFS et al., Case No. 1:04-CV-01758 (ERISA). The plaintiffs in these consolidated lawsuits generally seek injunctive relief including removal of the named Trustees, adviser and distributor, rescission of contracts and 12b-1 Plans, disgorgement of fees and profits, monetary damages, punitive damages, attorney's fees and costs and other equitable and declaratory relief. Two lawsuits alleging improper brokerage allocation practices and excessive compensation are pending in the United States District Court for the District of Massachusetts (Forsythe v. Sun Life Financial Inc., et al., No. 04cv10584 (GAO) (a consolidated action) and Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No. 04cv11458 (GAO)). The plaintiffs in these lawsuits generally seek compensatory damages, punitive damages, recovery of fees, rescission of contracts, an accounting, restitution, declaratory relief, equitable and/or injunctive relief and attorney's fees and costs. The various lawsuits generally allege that some or all of the defendants (i) permitted or acquiesced in market timing and/or late trading in some of the MFS funds, inadequately disclosed MFS' internal policies concerning market timing and such matters (ii) received excessive compensation as fiduciaries to the MFS funds, or (iii) permitted or acquiesced in the improper use of fund assets by MFS to support the distribution of MFS fund shares and inadequately disclosed MFS' use of fund assets in this 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. Insofar as any of the actions is appropriately brought derivatively on behalf of any of the MFS funds, any recovery will inure to the benefit of the MFS funds. 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 certain MFS retail funds for damages that they allegedly sustained as a result of market timing or late trading in certain of the MFS retail funds, and distributed $50 million to affected MFS funds to compensate those funds based upon the amount of brokerage commissions allocated in recognition of MFS 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 MFS 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 MFS funds. - ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - ------------------------------------------------------------------------------- To the Trustees and the Shareholders of MFS Municipal Income Fund: We have audited the accompanying statement of assets and liabilities of MFS Municipal Income Fund, one of the series comprising MFS Series Trust IV (the "Trust"), including the portfolio of investments, as of March 31, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of MFS Municipal Income Fund as of March 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts May 24, 2005 - ------------------------------------------------------------------------------ RESULTS OF SHAREHOLDER MEETING (unaudited) - 3/31/05 - ------------------------------------------------------------------------------ At a special meeting of shareholders of MFS Municipal Income Fund, which was held on March 23, 2005, the following actions were taken: ITEM 1. To elect a Board of Trustees: NUMBER OF DOLLARS -------------------------------------- NOMINEE AFFIRMATIVE WITHHOLD AUTHORITY Lawrence H. Cohn 2,338,745,402.20 23,104,899.71 - ------------------------------------------------------------------------------ David H. Gunning 2,340,048,506.07 21,801,795.84 - ------------------------------------------------------------------------------ William R. Gutow 2,339,850,605.62 21,999,696.29 - ------------------------------------------------------------------------------ Michael Hegarty 2,340,213,807.46 21,636,494.45 - ------------------------------------------------------------------------------ J. Atwood Ives 2,338,786,653.70 23,063,648.21 - ------------------------------------------------------------------------------ Amy B. Lane 2,339,960,815.68 21,889,486.23 - ------------------------------------------------------------------------------ Robert J. Manning 2,340,560,593.28 21,289,708.63 - ------------------------------------------------------------------------------ Lawrence T. Perera 2,338,677,013.42 23,173,288.49 - ------------------------------------------------------------------------------ Robert C. Pozen 2,340,797,047.27 21,053,254.64 - ------------------------------------------------------------------------------ J. Dale Sherratt 2,338,746,772.55 23,103,529.36 - ------------------------------------------------------------------------------ Laurie J. Thomsen 2,339,932,511.83 21,917,790.08 - ------------------------------------------------------------------------------ - --------------------------------------------------------------------------------------------------------------- TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND - --------------------------------------------------------------------------------------------------------------- The Trustees and officers of the Trust, as of May 1, 2005, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING POSITION(s) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS & NAME, DATE OF BIRTH WITH FUND SINCE(1) OTHER DIRECTORSHIPS(2) - ------------------- ---------------- --------------- ---------------------------- INTERESTED TRUSTEES Robert J. Manning(3) Trustee and February 2004 Massachusetts Financial Services (born 10/20/63) President Company, Chief Executive Officer, President, Chief Investment Officer and Director Robert C. Pozen(3) Trustee February 2004 Massachusetts Financial Services (born 08/08/46) Company, 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); Bell Canada Enterprises (telecommunications), Director; Medtronic, Inc. (medical technology), Director; Telesat (satellite communications), Director INDEPENDENT TRUSTEES J. Atwood Ives Trustee and Chair February 1992 Private investor; Eastern (born 05/01/36) of Trustees 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, (born 03/11/37) Chief of Cardiac Surgery; Harvard Medical School, Professor of Surgery David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining (born 05/30/42) products and 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 (born 09/27/41) consultant; Capitol Entertainment Management Company (video franchise), Vice Chairman Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial (born 12/21/44) services and insurance), Vice Chairman and Chief Operating Officer (until May 2001); The Equitable Life Assurance Society (insurance), President and Chief Operating Officer (until May 2001) Amy B. Lane Trustee January 2004 Retired; Merrill Lynch & Co., (born 02/08/53) Inc., Managing 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), (born 06/23/35) Partner J. Dale Sherratt Trustee August 1993 Insight Resources, Inc. (born 09/23/38) (acquisition planning specialists), President; Wellfleet Investments (investor in health care companies), Managing General Partner (since 1993); Cambridge Nutraceuticals (professional nutritional products), Chief Executive Officer (until May 2001) Laurie J. Thomsen Trustee March 2005 Private investor; Prism Venture (born 08/05/57) Partners (venture capital), Co- founder and General Partner (until June 2004); St. Paul Travelers Companies (commercial property liability insurance), Director OFFICERS Robert J. Manning(3) President and February 2004 Massachusetts Financial Services (born 10/20/63) Trustee Company, Chief Executive Officer, President, Chief Investment Officer and Director Jeffrey N. Carp(3) Secretary and September 2004 Massachusetts Financial Services (born 12/1/56) Clerk Company, Executive Vice President, General Counsel and Secretary (since April 2004); Hale and Dorr LLP (law firm), Partner (prior to April 2004) Stephanie A. DeSisto(3) Assistant May 2003 Massachusetts Financial Services (born 10/01/53) Treasurer Company, 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) James F. DesMarais(3) Assistant September 2004 Massachusetts Financial Services (born 03/09/61) Secretary and Company, Assistant General Counsel Assistant Clerk Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial Services (born 08/29/58) Company, 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) Brian T. Hourihan(3) Assistant September 2004 Massachusetts Financial Services (born 11/11/64) Secretary and Company, Vice President, Senior Assistant Clerk Counsel and Assistant Secretary (since June 2004); Affiliated Managers Group, Inc., Chief Legal Officer/Centralized Compliance Program (January to April 2004); Fidelity Research & Management Company, Assistant General Counsel (prior to January 2004) Ellen Moynihan(3) Assistant April 1997 Massachusetts Financial Services (born 11/13/57) Treasurer Company, Vice President Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of (born 03/07/44) Compliance compliance services), Principal Officer (since June 2004); CRA Business Strategies Group (consulting services), Executive Vice President (April 2003 to June 2004); David L. Babson & Co. (investment adviser), Managing Director, Chief Administrative Officer and Director (February 1997 to March 2003) James O. Yost(3) Assistant September 1990 Massachusetts Financial Services (born 06/12/60) Treasurer Company, 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 the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. Each Trustee has been elected by shareholders and each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Messrs. Ives and Sherratt and Mses. Lane and Thomsen are members of the Trust's Audit Committee. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. As of December 31, 2004, each Trustee served as a board member of 99 funds within the MFS Family of Funds. The Trust held a shareholders' meeting in 2005, and will hold a shareholder's meeting at least once every five years thereafter, to elect Trustees. 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 INDEPENDENT REGISTERED PUBLIC DISTRIBUTOR ACCOUNTING FIRM 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
- ------------------------------------------------------------------------------ PROXY VOTING POLICIES AND INFORMATION - ------------------------------------------------------------------------------ A general description of the MFS funds' proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the About MFS section of mfs.com or by visiting the SEC's Web site at http://www.sec. gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. - ------------------------------------------------------------------------------ QUARTERLY PORTFOLIO DISCLOSURE - ------------------------------------------------------------------------------ The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission Washington, D.C. 20549-0102 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund's Form N-Q is available on the EDGAR database on the Commission's Internet website at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. - -------------------------------------------------------------------------------- FEDERAL TAX INFORMATION (UNAUDITED) In January 2006, 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 2005. For the year ended 3/31/05, 99.82% of the distributions from income are designated as exempt-interest dividends. - -------------------------------------------------------------------------------- CONTACT INFORMATION INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 55824 Boston, MA 02205-5824 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 - ------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) (C) 2005 MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. LMB-ANN-05/05 12M ITEM 2. CODE OF ETHICS. The Registrant has adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the Registrant's principal executive officer and principal financial and accounting officer. The Registrant has amended its Code of Ethics to reflect that the Registrant's Principal Financial Officer has changed. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Mr. J. Atwood Ives and Mses. Amy B. Lane and Laurie J. Thomsen, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of "audit committee financial expert" as such term is defined in Form N-CSR. In addition, Mr. Ives and Mses. Lane and Thomsen are "independent" members of the Audit Committee as defined in 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 each series (the "Funds") of the Registrant (hereinafter the "Registrant"). The tables below set forth the audit fees billed to the Funds as well as fees for non-audit services provided to the Funds and/or to the Funds' investment adviser, Massachusetts Financial Services Company ("MFS") and to various entities either controlling, controlled by, or under common control with MFS that provide ongoing services to the Funds ("MFS Related Entities"). For the fiscal years ended March 31, 2005 and 2004, audit fees billed to the Funds by Deloitte were as follows: Audit Fees FEES BILLED BY DELOITTE: 2005 2004 ---- ---- MFS Alabama Municipal Bond $33,754 $30,490 Fund MFS Arkansas Municipal 33,754 30,490 Bond Fund MFS California Municipal 33,754 30,490 Bond Fund MFS Florida Municipal Bond 33,754 30,490 Fund MFS Georgia Municipal Bond 33,754 30,490 Fund MFS Maryland Municipal 33,754 30,490 Bond Fund MFS Massachusetts Municipal 33,754 30,490 Bond Fund MFS Mississippi Municipal 33,754 30,490 Bond Fund MFS Municipal Income Fund 36,917 33,365 MFS New York Municipal 33,754 30,490 Bond Fund MFS North Carolina Municipal 33,754 30,490 Bond Fund MFS Pennsylvania Municipal 33,754 30,490 Bond Fund MFS South Carolina Municipal 33,754 30,490 Bond Fund MFS Tennessee Municipal 33,754 30,490 Bond Fund MFS Virginia Municipal 33,754 30,490 Bond Fund MFS West Virginia Municipal 33,754 30,490 Bond Fund TOTAL $543,227 $490,715 For the fiscal years ended March 31, 2005 and 2004, fees billed by Deloitte for audit-related, tax and other services provided to the Funds and for audit-related, tax and other services provided to MFS and MFS Related Entities were as follows:
AUDIT-RELATED FEES(1) TAX FEES(2) ALL OTHER FEES(3) FEES BILLED BY DELOITTE: 2005 2004 2005 2004 2005 2004 ---- ---- ---- ---- ---- ---- To MFS Alabama $0 $0 $9,550 $4,950 $0 $0 Municipal Bond Fund To MFS Arkansas 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS California 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Florida 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Georgia 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Maryland 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Massachusetts 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Mississippi 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Municipal 0 0 9,550 4,950 0 0 Income Fund To MFS New York 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS North Carolina 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Pennsylvania 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS South Carolina 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Tennessee 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS Virginia 0 0 9,550 4,950 0 0 Municipal Bond Fund To MFS West Virginia 0 0 9,550 4,950 0 0 Municipal Bond Fund TOTAL FEES BILLED BY DELOITTE $0 $0 $152,800 $79,200 $0 $0 TO ABOVE FUNDS To MFS and MFS Related $1,277,066 $356,150 $62,000 $55,000 $602,500 $0 Entities of MFS Alabama Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Arkansas Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS California Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Florida Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Georgia Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Maryland Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Massachusetts Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Mississippi Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Municipal Income Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS New York Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS North Carolina Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Pennsylvania Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS South Carolina Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Tennessee Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS Virginia Municipal Bond Fund* To MFS and MFS Related 1,277,066 356,150 62,000 55,000 602,500 0 Entities of MFS West Virginia Municipal Bond Fund* AGGREGATE FEES FOR NON-AUDIT SERVICES: 2005 2004 ---- ---- $1,988,717 $526,295 To MFS Alabama Municipal Bond Fund, MFS and MFS Related Entities# To MFS Arkansas 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS California 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Florida 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Georgia 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Maryland 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Massachusetts 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Mississippi 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Municipal 1,988,717 526,295 Income Fund, MFS and MFS Related Entities# To MFS New York 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS North Carolina 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Pennsylvania 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS South Carolina 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Tennessee 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS Virginia 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# To MFS West Virginia 1,988,717 526,295 Municipal Bond Fund, MFS and MFS Related Entities# * This amount reflects the fees billed to MFS and MFS Related Entities for non-audit services relating directly to the operations and financial reporting of the Funds (portions of which services also related to the operations and financial reporting of other funds within the MFS Funds complex). # This amounts reflects the aggregate fees billed by Deloitte for non-audit services rendered to the Funds and for non-audit services rendered to MFS and the MFS Related Entities. (1) The fees included under "Audit-Related Fees" are fees related to assurance and related services that are reasonably related to the performance of the audit or review of financial statements, but not reported under "Audit Fees," including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters and internal control reviews. (2) The fees included under "Tax Fees" are fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews and tax distribution and analysis. (3) The fees included under "All Other Fees" are fees for products and services provided by Deloitte other than those reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees."
For periods prior to May 6, 2003, the amounts shown above under "Audit-Related Fees," "Tax Fees" and "All Other Fees" relate to permitted non-audit services that would have been subject to pre-approval if the Securities and Exchange Commission's rules relating to pre-approval of non-audit services had been in effect. ITEM 4(E)(1): Set forth below are the policies and procedures established by the Audit Committee of the Board of Trustees relating to the pre-approval of audit and non-audit related services: To the extent required by applicable law, pre-approval by the Audit Committee of the Board is needed for all audit and permissible non-audit services rendered to the Funds and all permissible non-audit services rendered to MFS or MFS Related Entities if the services relate directly to the operations and financial reporting of the Registrant. Pre-approval is currently on an engagement-by-engagement basis. In the event pre-approval of such services is necessary between regular meetings of the Audit Committee and it is not practical to wait to seek pre-approval at the next regular meeting of the Audit Committee, pre-approval of such services may be referred to the Chair of the Audit Committee for approval; provided that the Chair may not pre-approve any individual engagement for such services exceeding $50,000 or multiple engagements for such services in the aggregate exceeding $100,000 between such regular meetings of the Audit Committee. Any engagement pre-approved by the Chair between regular meetings of the Audit Committee shall be presented for ratification by the entire Audit Committee at its next regularly scheduled meeting. ITEM 4(E)(2): None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and All Other Fees paid by the Fund and MFS and MFS Related Entities relating directly to the operations and financial reporting of the Registrant disclosed above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (which permits audit committee approval after the start of the engagement with respect to services other than audit review or attest services, if certain conditions are satisfied). ITEM 4(F): Not applicable. ITEM 4(H): The Registrant's Audit Committee has considered whether the provision by a Registrant's independent registered public accounting firm of non-audit services to MFS and MFS Related Entities that were not pre-approved by the Committee (because such services were provided prior to the effectiveness of SEC rules requiring pre-approval or because such services did not relate directly to the operations and financial reporting of the Registrant) was compatible with maintaining the independence of the independent registered public accounting firm as the Registrant's principal auditors. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the Registrant. ITEM 6. SCHEDULE OF INVESTMENTS A schedule of investments of the Registrant is included as part of the report to shareholders of such series under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the Registrant. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant's Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) Based upon their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act) 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 second fiscal quarter covered by the report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Code of Ethics attached hereto. (2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2): Attached hereto. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: Attached hereto. 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, 2005 ------------ 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, 2005 ------------ By (Signature and Title)* MARIA F. DWYER ----------------------------------------------------- Maria F. Dwyer, Treasurer (Principal Financial Officer and Accounting Officer) Date: May 24, 2005 ------------ * Print name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 ex99_ethics-626111.txt CODE OF ETHICS EXHIBIT 12(a)(1) SEPTEMBER 2003 (AS REVISED FEBRUARY, 2004 AND MAY, 2005) 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: Maria F. Dwyer EX-99.CERT 3 ex99_cert-626111.txt CERTIFICATION EX-99.CERT MFS MUNICIPAL SERIES TRUST CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Maria F. Dwyer, 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. 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 d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the 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, 2005 MARIA F. DWYER ------------ ------------------------------------------ Maria F. Dwyer 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. 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 d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the 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, 2005 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, Maria F. Dwyer, certify that, to my knowledge: 1. The Form N-CSR (the "Report") of MFS Municipal Series Trust (the "Registrant") fully complies for the period covered by the Report 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, 2005 MARIA F. DWYER ------------ ------------------------------------------ Maria F. Dwyer 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 for the period covered by the Report 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, 2005 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-----