N-CSR/A 1 d664151.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) Susan S. Newton Massachusetts Financial Services Company 500 Boylston Street Boston, Massachusetts 02116 ------------------------------------------------------------------------------- (Name and address of agents for service) Registrant's telephone number, including area code: (617) 954-5000 ------------------------------------------------------------------------------- Date of fiscal year end: March 31 ------------------------------------------------------------------------------- Date of reporting period: March 31, 2006 ------------------------------------------------------------------------------- This Form N-CSR is being filed for the purpose of amending and restating the Form N-CSR filed on June 6, 2006 (Accession No. 0000950156-06-000251). ITEM 1. REPORTS TO STOCKHOLDERS. MFS(R) MUNICIPAL SERIES TRUST 3/31/06 FOR THE STATES OF: ALABAMA, ARKANSAS, CALIFORNIA, FLORIDA, GEORGIA, MARYLAND, MASSACHUSETTS ANNUAL REPORT (As Restated) ------------------------------------------------------------------------------- LETTER FROM THE CEO 1 ------------------------------------------------------------------------------- PORTFOLIO COMPOSITION 2 ------------------------------------------------------------------------------- MANAGEMENT REVIEW 5 ------------------------------------------------------------------------------- PERFORMANCE SUMMARY 6 ------------------------------------------------------------------------------- FUND EXPENSE TABLES 13 ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS 16 ------------------------------------------------------------------------------- FINANCIAL STATEMENTS 51 ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 72 ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 83 ------------------------------------------------------------------------------- TRUSTEES AND OFFICERS 84 ------------------------------------------------------------------------------- BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 86 ------------------------------------------------------------------------------- PROXY VOTING POLICIES AND INFORMATION 86 ------------------------------------------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE 86 ------------------------------------------------------------------------------- FEDERAL TAX INFORMATION 86 ------------------------------------------------------------------------------- CONTACT INFORMATION BACK COVER ------------------------------------------------------------------------------- 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. M F S(SM) INVESTMENT MANAGEMENT(R) LETTER FROM THE CEO (Not Restated) [Photo of Robert J. Manning] Dear Shareholders, It has been said that change is the only constant in life. As investors have seen, that theme is still accurate today as we recently have experienced shifting economic cycles because of natural disasters and political instability around the globe. Markets worldwide have fluctuated in the past year as devastating hurricanes had a dramatic effect on the international economy, particularly on oil prices. We witnessed political unrest in the Middle East, highlighted by instability in Iraq, and in Africa, the usually stable Nigeria also experienced violence. As a result, energy prices have bounced up and down, with crude oil prices at one point topping a record $70 per barrel. Such cycles are not uncommon and in fact have almost become the norm in our everyday lives. What does all of this mean to you as an investor? In times like these, it helps to know that you're working with a seasoned investment professional who has experience to guide you through difficult times. At MFS(R), we believe our investment management team has the knowledge and confidence to navigate through difficult cycles and at the same time see through adversity to find investment opportunities for our clients and shareholders. Our investment management process, honed over 80 years, combines a unique concept of teamwork with our unwavering focus on the long term. We firmly believe that the best way to realize long-term financial goals - be it a college education, a comfortable retirement, or a secure family legacy - is to follow a three-pronged approach that focuses on longer time horizons. Allocate holdings across the major asset classes - including stocks, bonds, and cash. Diversify within each class to take advantage of different market segments and investing styles. Rebalance assets regularly to maintain a desired asset allocation. Of course, these strategies cannot guarantee a profit or protect against a loss. This long-term approach requires diligence and patience, two traits that in our experience are essential to capitalizing on the many opportunities the financial markets can offer - through both up and down economic cycles. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer and Chief Investment Officer MFS Investment Management(R) May 15, 2006 The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. PORTFOLIO COMPOSITION (As Restated) MFS(R) Alabama Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 106.1% Cash & Other Net Assets (6.1)% TOP FIVE BOND INDUSTRIES (i) Water/Sewer 17.1% ------------------------------------------------ Municipal-Owned Utilities 15.8% ------------------------------------------------ Health/Hospitals 14.6% ------------------------------------------------ General Obligations/General Purpose 14.3% ------------------------------------------------ State & Local Agencies 8.6% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 70.0% ------------------------------------------------ AA 13.3% ------------------------------------------------ A 5.7% ------------------------------------------------ BBB 7.9% ------------------------------------------------ B 0.2% ------------------------------------------------ Not Rated 2.9% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 5.6 ------------------------------------------------ Average Life (m) 14.4 yrs. ------------------------------------------------ Average Maturity (m) 16.6 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA+ ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) Arkansas Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 105.0% Cash & Other Net Assets (5.0)% TOP FIVE BOND INDUSTRIES (i) Universities/Colleges 16.7% ------------------------------------------------ General Obligations/General Purpose 11.5% ------------------------------------------------ Water/Sewer 11.4% ------------------------------------------------ Health/Hospitals 10.5% ------------------------------------------------ Single Family Housing/State 9.2% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 68.4% ------------------------------------------------ AA 10.4% ------------------------------------------------ A 11.6% ------------------------------------------------ BBB 8.3% ------------------------------------------------ BB 0.9% ------------------------------------------------ Not Rated 0.4% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.5 ------------------------------------------------ Average Life (m) 15.6 yrs. ------------------------------------------------ Average Maturity (m) 16.6 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) California Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 105.8% Cash & Other Net Assets (5.8)% TOP FIVE BOND INDUSTRIES (i) General Obligations/Schools 16.9% ------------------------------------------------ State & Local Agencies 13.7% ------------------------------------------------ Health/Hospitals 11.1% ------------------------------------------------ General Obligations/General Purpose 10.9% ------------------------------------------------ Universities/Colleges 8.6% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 53.1% ------------------------------------------------ AA 3.2% ------------------------------------------------ A 18.4% ------------------------------------------------ BBB 16.8% ------------------------------------------------ BB 0.6% ------------------------------------------------ B 0.2% ------------------------------------------------ CCC 0.6% ------------------------------------------------ Not Rated 7.1% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.6 ------------------------------------------------ Average Life (m) 14.9 yrs. ------------------------------------------------ Average Maturity (m) 17.5 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA- ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) Florida Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 106.2% Cash & Other Net Assets (6.2)% TOP FIVE BOND INDUSTRIES (i) Health/Hospitals 17.3% ------------------------------------------------ Water/Sewer 15.6% ------------------------------------------------ General Obligations/General Purpose 11.8% ------------------------------------------------ General Obligations/Schools 9.5% ------------------------------------------------ Transportation/Special Tax 7.4% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 60.2% ------------------------------------------------ AA 10.9% ------------------------------------------------ A 8.7% ------------------------------------------------ BBB 10.5% ------------------------------------------------ BB 0.7% ------------------------------------------------ B 0.3% ------------------------------------------------ Not Rated 8.7% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.9 ------------------------------------------------ Average Life (m) 17.3 yrs. ------------------------------------------------ Average Maturity (m) 18.6 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) Georgia Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 107.0% Cash & Other Net Assets (7.0)% TOP FIVE BOND INDUSTRIES (i) Water/Sewer 32.4% ------------------------------------------------ Universities/Colleges 10.0% ------------------------------------------------ Health/Hospitals 9.3% ------------------------------------------------ General Obligations/Schools 7.7% ------------------------------------------------ Municipal-Owned Utilities 5.9% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 44.9% ------------------------------------------------ AA 31.4% ------------------------------------------------ A 9.3% ------------------------------------------------ BBB 9.9% ------------------------------------------------ B 0.8% ------------------------------------------------ Not Rated 3.7% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.5 ------------------------------------------------ Average Life (m) 15.2 yrs. ------------------------------------------------ Average Maturity (m) 16.8 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) Maryland Municipal Bond Fund (Not Restated) PORTFOLIO STRUCTURE(i) Bonds 97.7% Cash & Other Net Assets 2.3% TOP FIVE BOND INDUSTRIES (i) Health/Hospitals 20.2% ------------------------------------------------ Universities/Colleges 14.3% ------------------------------------------------ General Obligations/Improvement 14.2% ------------------------------------------------ Water/Sewer 5.5% ------------------------------------------------ State & Local Agencies 4.5% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 46.7% ------------------------------------------------ AA 15.2% ------------------------------------------------ A 18.9% ------------------------------------------------ BBB 12.2% ------------------------------------------------ BB 0.3% ------------------------------------------------ B 0.3% ------------------------------------------------ Not Rated 6.4% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.1 ------------------------------------------------ Average Life (m) 14.7 yrs. ------------------------------------------------ Average Maturity (m) 16.2 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) Massachusetts Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 105.8% Cash & Other Net Assets (5.8)% TOP FIVE BOND INDUSTRIES (i) Universities/Colleges 20.2% ------------------------------------------------ General Obligations/General Purpose 13.5% ------------------------------------------------ Health/Hospitals 11.1% ------------------------------------------------ Water/Sewer 8.1% ------------------------------------------------ General Obligations/Improvement 7.5% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 49.1% ------------------------------------------------ AA 26.6% ------------------------------------------------ A 7.8% ------------------------------------------------ BBB 13.2% ------------------------------------------------ BB 1.0% ------------------------------------------------ Not Rated 2.3% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.4 ------------------------------------------------ Average Life (m) 15.3 yrs. ------------------------------------------------ Average Maturity (m) 17.9 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ (a) The average credit quality of rated securities is based upon a market weighted average of portfolio holdings that are rated by public rating agencies. (d) Duration is a measure of how much a bond's price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value. (i) For purposes of this graphical presentation, the bond component includes both accrued interest amounts and the equivalent exposure from any derivative holdings, if applicable. (m) The average maturity shown is calculated using the final stated maturity on the portfolio's holdings without taking into account any holdings which have been pre-refunded to an earlier date or which have a mandatory put date prior to the stated maturity. The average life shown takes into account these earlier dates. (r) Each security is assigned a rating from Moody's Investors Service. If not rated by Moody's, the rating will be that assigned by Standard & Poor's. Likewise, if not assigned a rating by Standard & Poor's, it will be based on the rating assigned by Fitch, Inc. For those portfolios that hold a security which is not rated by any of the three agencies, the security is considered Not Rated. Holdings in U.S. Treasuries and government agency mortgage-backed securities, if any, are included in the "AAA"-rating category. Percentages are based on the total market value of investments as of 3/31/06. Percentages are based on net assets as of 3/31/06, unless otherwise noted. The portfolios are actively managed, and current holdings may be different. MANAGEMENT REVIEW (Not Restated) FACTORS THAT AFFECTED PERFORMANCE During the period, our duration(d) positioning relative to our benchmark, the Lehman Brothers Municipal Bond Index (Lehman Index), had a neutral effect on relative performance for all funds, except the Alabama fund, for which the effect was positive. Yield curve(y) positioning in all of the funds was a strong contributor to relative performance, excluding the Alabama fund, where the effect was negative. Compared to the benchmark, all of the funds, excluding the Alabama and Georgia funds, were more heavily weighted in bonds on the long end of the yield curve (represented by bonds with durations of 11- to 25-years). This helped relative results during the period because long-term municipal bonds increased in price as their yields flattened. The Georgia fund was underweighted in bonds on the short end of the curve (represented by bonds with durations of 0- to 4-years). This positioning helped relative returns as bonds on the short-end of the curve suffered price declines as their yields increased. For the Alabama fund, positioning along the middle part of the yield curve (represented by bonds with durations of 8- to 11-years) hurt relative performance. Credit quality had a neutral effect on relative results for all funds, excluding the California, Florida, and Maryland funds, for which the effect was positive. These three funds benefited from holding lower-quality "BBB"- rated(s) securities and below-investment-grade debt. During the period, spreads in these credit sectors narrowed due to strong demands for higher- yielding securities, causing prices on these securities to appreciate. (The Lehman Index is composed primarily of higher-grade securities with no bonds rated lower than "BBB"). Overall, sector allocation had a positive effect on relative performance for all funds, excluding the Arkansas, Alabama, Georgia and Massachusetts funds, where the effect was neutral. Notable positive contributions to sector allocation came from our overweighted position in the housing sector in the Arkansas fund. In the Florida and California funds, the health care sector boosted relative results. On the negative side, security selection in the credit enhanced sector was an area of weakness in many of the funds. Underweighting the strong-performing tobacco sector also hurt relative results for all funds, except the California fund, where our relative positioning in the sector helped. Respectfully, Michael Dawson Portfolio Manager (d) Duration is a measure of how much a bond's price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value. (s) Bonds rated by S&P as "BBB" or higher are considered investment grade; bonds rated "BB" or lower are considered non-investment grade. (y) A yield curve graphically depicts the yields of different maturity bonds of the same credit quality and type. A normal yield curve is upward sloping, with short-term rates lower than long-term rates. The views expressed in this report are those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market and other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio's current or future investments. PERFORMANCE SUMMARY THROUGH 3/31/06 (Not Restated) 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. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmark comparisons are unmanaged; do not reflect sales charges, commissions or expenses; and cannot be invested in directly. (See Notes to Performance Summary.) It is not possible to invest directly in an index. PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. FOR MOST RECENT MONTH-END PERFORMANCE, PLEASE VISIT MFS.COM. THE PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) Lehman MFS Alabama Brothers Municipal Bond Municipal Bond Fund-Class A Index 3/96 $ 9,525 $10,000 3/97 10,081 10,547 3/98 11,062 11,677 3/99 11,618 12,400 3/00 11,523 12,390 3/01 12,790 13,744 3/02 13,181 14,261 3/03 14,508 15,671 3/04 15,248 16,590 3/05 15,614 17,032 3/06 16,078 17,682 MFS(R) ALABAMA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr ------------------------------------------------------------------------------ A 2/01/90 2.97% 4.68% 5.37% ------------------------------------------------------------------------------ B 9/07/93 2.20% 3.90% 4.58% ------------------------------------------------------------------------------ AVERAGE ANNUAL Comparative Benchmarks ------------------------------------------------------------------------------ Average Alabama municipal debt fund (l) 2.71% 4.46% 4.77% ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% ------------------------------------------------------------------------------ AVERAGE ANNUAL WITH SALES CHARGE Share class ------------------------------------------------------------------------------ A -1.92% 3.67% 4.86% With Initial Sales Charge (4.75%) ------------------------------------------------------------------------------ B -1.74% 3.56% 4.58% With CDSC (Declining over six years from 4% to 0%) ------------------------------------------------------------------------------ CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) Lehman MFS Arkansas Brothers Municipal Bond Municipal Bond Fund-Class A Index 3/96 $ 9,525 $10,000 3/97 9,989 10,547 3/98 10,994 11,677 3/99 11,499 12,400 3/00 11,472 12,390 3/01 12,671 13,744 3/02 13,185 14,261 3/03 14,439 15,671 3/04 15,092 16,590 3/05 15,414 17,032 3/06 15,903 17,682 MFS(R) ARKANSAS MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr ------------------------------------------------------------------------------ A 2/03/92 3.17% 4.65% 5.26% ------------------------------------------------------------------------------ B 9/07/93 2.39% 3.83% 4.45% ------------------------------------------------------------------------------ AVERAGE ANNUAL Comparative Benchmarks ------------------------------------------------------------------------------ Average "other state" municipal debt fund (l) 3.82% 4.88% 5.40% ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% ------------------------------------------------------------------------------ AVERAGE ANNUAL WITH SALES CHARGE Share class ------------------------------------------------------------------------------ A -1.73% 3.64% 4.75% With Initial Sales Charge (4.75%) ------------------------------------------------------------------------------ B -1.56% 3.49% 4.45% With CDSC (Declining over six years from 4% to 0%) ------------------------------------------------------------------------------ CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) Lehman MFS California Brothers Municipal Bond Municipal Bond Fund-Class A Index 3/96 $ 9,525 $10,000 3/97 9,959 10,547 3/98 11,105 11,677 3/99 11,836 12,400 3/00 11,669 12,390 3/01 12,928 13,744 3/02 13,329 14,261 3/03 14,634 15,671 3/04 15,397 16,590 3/05 15,881 17,032 3/06 16,551 17,682 MFS(R) CALIFORNIA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr ------------------------------------------------------------------------------ A 6/18/85 4.22% 5.07% 5.68% ------------------------------------------------------------------------------ B 9/07/93 3.44% 4.26% 4.85% ------------------------------------------------------------------------------ C 1/03/94 3.29% 4.12% 4.72% ------------------------------------------------------------------------------ AVERAGE ANNUAL Comparative Benchmarks ------------------------------------------------------------------------------ Average California municipal debt fund (l) 4.47% 4.85% 5.50% ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% ------------------------------------------------------------------------------ AVERAGE ANNUAL WITH SALES CHARGE Share class ------------------------------------------------------------------------------ A -0.73% 4.05% 5.17% With Initial Sales Charge (4.75%) ------------------------------------------------------------------------------ B -0.53% 3.92% 4.85% With CDSC (Declining over six years from 4% to 0%) ------------------------------------------------------------------------------ C 2.30% 4.12% 4.72% With CDSC (1% for 12 months) (x) ------------------------------------------------------------------------------ CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. (x) Assuming redemption within one year from the end of the prior month of purchase. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) Lehman MFS Florida Brothers Municipal Bond Municipal Bond Fund-Class A Index 3/96 $ 9,525 $10,000 3/97 9,851 10,547 3/98 10,853 11,677 3/99 11,423 12,400 3/00 11,265 12,390 3/01 12,473 13,744 3/02 12,912 14,261 3/03 14,126 15,671 3/04 14,860 16,590 3/05 15,342 17,032 3/06 15,977 17,682 MFS(R) FLORIDA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr ------------------------------------------------------------------------------ A 2/03/92 4.14% 5.08% 5.31% ------------------------------------------------------------------------------ B 9/07/93 3.35% 4.25% 4.47% ------------------------------------------------------------------------------ AVERAGE ANNUAL Comparative Benchmarks ------------------------------------------------------------------------------ Average Florida municipal debt fund (l) 3.11% 4.28% 5.07% ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% ------------------------------------------------------------------------------ AVERAGE ANNUAL WITH SALES CHARGE Share class ------------------------------------------------------------------------------ A -0.81% 4.06% 4.80% With Initial Sales Charge (4.75%) ------------------------------------------------------------------------------ B -0.64% 3.91% 4.47% With CDSC (Declining over six years from 4% to 0%) ------------------------------------------------------------------------------ CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) Lehman MFS Georgia Brothers Municipal Bond Municipal Bond Fund-Class A Index 3/96 $ 9,525 $10,000 3/97 9,951 10,547 3/98 11,047 11,677 3/99 11,589 12,400 3/00 11,436 12,390 3/01 12,671 13,744 3/02 13,055 14,261 3/03 14,357 15,671 3/04 15,065 16,590 3/05 15,407 17,032 3/06 15,797 17,682 MFS(R) GEORGIA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr ------------------------------------------------------------------------------ A 6/06/88 2.53% 4.51% 5.19% ------------------------------------------------------------------------------ B 9/07/93 2.05% 3.78% 4.44% ------------------------------------------------------------------------------ AVERAGE ANNUAL Comparative Benchmarks ------------------------------------------------------------------------------ Average Georgia municipal debt fund (l) 2.92% 4.19% 4.97% ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% ------------------------------------------------------------------------------ AVERAGE ANNUAL WITH SALES CHARGE Share class ------------------------------------------------------------------------------ A -2.34% 3.50% 4.68% With Initial Sales Charge (4.75%) ------------------------------------------------------------------------------ B -1.89% 3.44% 4.44% With CDSC (Declining over six years from 4% to 0%) ------------------------------------------------------------------------------ CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) Lehman MFS Maryland Brothers Municipal Bond Municipal Bond Fund-Class A Index 3/96 $ 9,525 $10,000 3/97 9,882 10,547 3/98 10,926 11,677 3/99 11,466 12,400 3/00 11,320 12,390 3/01 12,482 13,744 3/02 12,930 14,261 3/03 14,121 15,671 3/04 14,822 16,590 3/05 15,171 17,032 3/06 15,634 17,682 MFS(R) MARYLAND MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr ------------------------------------------------------------------------------ A 10/31/84 3.06% 4.61% 5.08% ------------------------------------------------------------------------------ B 9/07/93 2.30% 3.93% 4.40% ------------------------------------------------------------------------------ AVERAGE ANNUAL Comparative Benchmarks ------------------------------------------------------------------------------ Average Maryland municipal debt fund (l) 2.96% 4.17% 4.79% ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% ------------------------------------------------------------------------------ AVERAGE ANNUAL WITH SALES CHARGE Share class ------------------------------------------------------------------------------ A -1.84% 3.59% 4.57% With Initial Sales Charge (4.75%) ------------------------------------------------------------------------------ B -1.62% 3.59% 4.40% With CDSC (Declining over six years from 4% to 0%) ------------------------------------------------------------------------------ CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) Lehman MFS Massachusetts Brothers Municipal Bond Municipal Bond Fund-Class A Index 3/96 $ 9,525 $10,000 3/97 9,944 10,547 3/98 10,934 11,677 3/99 11,494 12,400 3/00 11,313 12,390 3/01 12,494 13,744 3/02 12,860 14,261 3/03 14,200 15,671 3/04 14,885 16,590 3/05 15,278 17,032 3/06 15,863 17,682 MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr ------------------------------------------------------------------------------ A 4/09/85 3.83% 4.89% 5.23% ------------------------------------------------------------------------------ B 9/07/93 3.16% 4.23% 4.55% ------------------------------------------------------------------------------ AVERAGE ANNUAL Comparative Benchmarks ------------------------------------------------------------------------------ Average Massachusetts municipal debt fund (l) 3.09% 4.41% 5.00% ------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% ------------------------------------------------------------------------------ AVERAGE ANNUAL WITH SALES CHARGE Share class ------------------------------------------------------------------------------ A -1.10% 3.88% 4.72% With Initial Sales Charge (4.75%) ------------------------------------------------------------------------------ B -0.81% 3.89% 4.55% With CDSC (Declining over six years from 4% to 0%) ------------------------------------------------------------------------------ CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. NOTES TO PERFORMANCE SUMMARY Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details. A portion of income may be subject to state, federal, and/or alternative minimum tax. Capital gains, if any, are subject to a capital gains tax. From time to time the funds may receive proceeds from litigation settlements, without which performance would be lower. FUND EXPENSE TABLES (As Restated) FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, OCTOBER 1, 2005, THROUGH MARCH 31, 2006. As a shareholder of the funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments and redemption fees on certain exchanges and redemptions, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the funds and to compare these costs with the ongoing costs of investing in other mutual funds. 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, 2005 through March 31, 2006. 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 each fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. MFS(R) ALABAMA MUNICIPAL BOND FUND ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------- Actual 1.09% $1,000.00 $1,008.60 $5.46 A -------------------------------------------------------------------- Hypothetical (h) 1.09% $1,000.00 $1,019.50 $5.49 ------------------------------------------------------------------------------- Actual 1.84% $1,000.00 $1,004.90 $9.20 B -------------------------------------------------------------------- Hypothetical (h) 1.84% $1,000.00 $1,015.76 $9.25 ------------------------------------------------------------------------------- MFS(R) ARKANSAS MUNICIPAL BOND FUND ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------- Actual 0.84% $1,000.00 $1,008.40 $4.21 A -------------------------------------------------------------------- Hypothetical (h) 0.84% $1,000.00 $1,020.74 $4.23 ------------------------------------------------------------------------------- Actual 1.61% $1,000.00 $1,004.50 $8.05 B -------------------------------------------------------------------- Hypothetical (h) 1.61% $1,000.00 $1,016.90 $8.10 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- MFS(R) CALIFORNIA MUNICIPAL BOND FUND ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------- Actual 0.84% $1,000.00 $1,009.40 $4.21 A -------------------------------------------------------------------- Hypothetical (h) 0.84% $1,000.00 $1,020.74 $4.23 ------------------------------------------------------------------------------- Actual 1.61% $1,000.00 $1,005.60 $8.05 B -------------------------------------------------------------------- Hypothetical (h) 1.61% $1,000.00 $1,016.90 $8.10 ------------------------------------------------------------------------------- Actual 1.75% $1,000.00 $1,004.90 $8.75 C -------------------------------------------------------------------- Hypotheti cal (h) 1.75% $1,000.00 $1,016.21 $8.80 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- MFS(R) FLORIDA MUNICIPAL BOND FUND ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------- Actual 0.85% $1,000.00 $1,012.50 $4.26 A -------------------------------------------------------------------- Hypothetical (h) 0.85% $1,000.00 $1,020.69 $4.28 ------------------------------------------------------------------------------- Actual 1.62% $1,000.00 $1,008.60 $8.11 B -------------------------------------------------------------------- Hypothetical (h) 1.62% $1,000.00 $1,016.85 $8.15 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- MFS(R) GEORGIA MUNICIPAL BOND FUND ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------- Actual 1.15% $1,000.00 $1,003.70 $5.74 A -------------------------------------------------------------------- Hypothetical (h) 1.15% $1,000.00 $1,019.20 $5.79 ------------------------------------------------------------------------------- Actual 1.92% $1,000.00 $1,002.80 $9.59 B -------------------------------------------------------------------- Hypothetical (h) 1.92% $1,000.00 $1,015.36 $9.65 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- MFS(R) MARYLAND MUNICIPAL BOND FUND (Not Restated) ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------- Actual 0.93% $1,000.00 $1,008.60 $4.66 A -------------------------------------------------------------------- Hypothetical (h) 0.93% $1,000.00 $1,020.29 $4.68 ------------------------------------------------------------------------------- Actual 1.58% $1,000.00 $1,004.40 $7.90 B -------------------------------------------------------------------- Hypothetical (h) 1.58% $1,000.00 $1,017.05 $7.95 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------- Actual 1.10% $1,000.00 $1,009.70 $5.51 A -------------------------------------------------------------------- Hypothetical (h) 1.10% $1,000.00 $1,019.45 $5.54 ------------------------------------------------------------------------------- Actual 1.75% $1,000.00 $1,006.50 $8.75 B -------------------------------------------------------------------- Hypothetical (h) 1.75% $1,000.00 $1,016.21 $8.80 ------------------------------------------------------------------------------- (h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) ALABAMA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 105.0% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.4% Alabama Docks Department Facilities Rev., MBIA, 5.5%, 2022 $ 1,000,000 $ 1,057,970 Alabama Port Authority Docks Facility MBIA, 5.25%, 2026 1,000,000 1,040,060 ------------ $ 2,098,030 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 14.1% Athens, AL, Warrants, XLCA, 5%, 2031 $ 860,000 $ 881,414 Boaz, AL, School Warrants, "A", XLCA, 5%, 2025 1,000,000 1,034,730 Boaz, AL, School Warrants, "A", XLCA, 5%, 2029 650,000 670,768 Fairfield, AL, Refunding Warrants, AMBAC, 5.25%, 2025 1,030,000 1,091,543 Gadsden, AL, Warrants, "B", AMBAC, 5.125%, 2028 1,500,000 1,581,420 Hoover, AL, "B", 6%, 2010 (c) 500,000 544,690 Houston County, AL, AMBAC, 6.25%, 2009 (c) 750,000 827,190 Jefferson County, AL, School Warrants, FSA, 5.5%, 2020 1,750,000 1,846,810 Mobile County, AL, 6%, 2009 (c) 1,345,000 1,440,791 Morgan County, AL, Warrants, AMBAC, 5%, 2028 1,380,000 1,427,734 Russell County, AL, Warrants, "A", AMBAC, 5%, 2008 (c) 1,000,000 1,039,960 ------------ $ 12,387,050 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 6.1% Birmingham, AL, "A", 5.75%, 2017 $ 1,000,000 $ 1,079,260 Birmingham, AL, "B", 5.75%, 2009 (c) 1,820,000 1,950,203 Birmingham, AL, "B", 5.75%, 2019 180,000 191,713 Montgomery, AL, Warrants, MBIA, 5.1%, 2021 1,005,000 1,058,305 Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 1,000,000 1,067,820 ------------ $ 5,347,301 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.6% Bessemer, AL, School Warrants, AMBAC, 5.5%, 2020 $ 2,015,000 $ 2,160,120 Phenix City, AL, AMBAC, 5.65%, 2021 1,500,000 1,625,025 Tuscaloosa, AL, Warrants, 5.7%, 2018 1,000,000 1,069,210 ------------ $ 4,854,355 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Alabama Special Care Facilities Financing Authority (Daughters of Hospitals - 14.4% Charity), AMBAC, ETM, 5%, 2025 (c) $ 1,500,000 $ 1,515,615 Birmingham Medical Center, East Alabama, Special Health Care Facilities, Eastern Health Systems, "B", 5%, 2018 500,000 495,900 Birmingham, AL, Baptist Health Systems, "A", (Baptist Medical Center), 5.625%, 2015 300,000 316,119 Birmingham, AL, Baptist Medical Center, Special Care Facilities Rev. (Baptist Health Systems, Inc.), "A", 5%, 2030 200,000 195,286 Health Care Authority For Baptist Health, "D", 5%, 2021 400,000 408,244 Houston County, AL, Health Care Authority, AMBAC, 6.125%, 2022 1,000,000 1,082,020 Huntsville, AL, Health Care Authority Rev., 5.625%, 2026 950,000 988,200 Huntsville, AL, Health Care Authority Rev., "A", MBIA, 5%, 2023 1,000,000 1,025,490 Lauderdale County & Florence, AL, Health Care Authority Rev. (Eliza Coffee Memorial Hospital), MBIA, 5.75%, 2008 (c) 1,000,000 1,046,450 Lauderdale County & Florence, AL, Health Care Authority Rev., "A", (Coffee Health Group), MBIA, 5.75%, 2014 1,000,000 1,064,850 Marshall County, AL, Health Care Authority Rev., "A", 5.75%, 2032 1,000,000 1,040,060 Montgomery, AL, Medical Clinic Board Rev. (Jackson Hospital & Clinic), AMBAC, 5.875%, 2016 1,000,000 1,022,390 Montgomery, AL, Special Care Facilities, Financing Authority Rev. (Baptist Health), "A-2", MBIA, 0% to 2007, 5% to 2014 (c) 1,135,000 1,107,544 Montgomery, AL, Special Care Facilities, Financing Authority Rev. (Baptist Health), "C", 5.25%, 2014 (c) 1,000,000 1,087,980 Valley, AL, Special Care Facilities Financing Authority, "A" (Lanier Memorial Hospital), 5.65%, 2022 225,000 219,926 ------------ $ 12,616,074 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Mobile County, AL, Industrial Development Authority Rev. (Ipsco, Inc.), Metals - 0.6% 6.875%, 2030 $ 500,000 $ 530,990 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 0.5% Fairfield, AL, Environment Improvement Rev. (USX Corp.), 5.4%, 2016 $ 400,000 $ 424,068 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Butler, AL, Industrial Development Board, Solid Waste Disposal Rev. Paper - 3.6% (Georgia Pacific Corp.), 5.75%, 2028 $ 200,000 $ 196,272 Camden, AL, Industrial Development Board Exempt Rev., "B" (Weyerhaeuser), 6.375%, 2024 500,000 542,255 Mobile, AL, Industrial Development Board Improvement Rev., "A" (International Paper Co.), 6.35%, 2016 650,000 689,585 Mobile, AL, Industrial Development Board Improvement Rev., "B" (International Paper Co.), 6.45%, 2019 350,000 371,028 Phenix City, AL, Environmental Improvement Rev., "A" (MeadWestvaco), 6.35%, 2035 750,000 810,068 Selma, AL, Industrial Development Board, "A" (International Paper Co.), 6.7%, 2018 500,000 536,945 ------------ $ 3,146,153 ----------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Birmingham, AL, Downtown Redevelopment Authority Rev. (Social Security Other - 2.8% Administrative Building), ETM, 12.5%, 2010 (c) $ 1,410,000 $ 1,639,802 East Central Alabama Industrial Development Authority Rev., Unrefunded Balance, AMBAC, 5.4%, 2015 790,000 820,060 ------------ $ 2,459,862 ----------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Alabama Housing Finance Authority, Multi-Family Residential Development Revenue - 2.5% Rev., "K", (South Bay Apartments), FNMA, 5.875%, 2021 $ 960,000 $ 1,001,213 Alabama Housing Finance Authority, Multi-Family Residential Development Rev., FHA, 7.25%, 2023 1,095,000 1,106,059 Birmingham, AL, Multi-Family Housing Rev., "C" (Beaconview Apartments), 8%, 2030 (d) 395,000 39,500 Puerto Rico Housing Finance Corp., Multi-Family Mortgage Rev., "A-1", FHA, LOC, 7.5%, 2015 70,000 70,155 ------------ $ 2,216,927 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Alabama Housing Finance Authority, Collateral Home Mortgage Bond State - 1.4% Program II, "B", 5.15%, 2019 $ 65,000 $ 65,714 Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program I, "B-1", 5.7%, 2015 420,000 428,534 Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program II, "A-2", GNMA, 5.4%, 2022 660,000 673,853 Alabama Housing Finance Authority, Single Family Mortgage Rev., Collateral Home Mortgage Bond Program II, "B", 5.15%, 2019 70,000 70,769 ------------ $ 1,238,870 ----------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - Alabama Building Renovation Authority, AMBAC, 6%, 2014 $ 1,515,000 $ 1,646,608 8.5% Alabama Public School & College, Capital Improvement, "A", 5%, 2019 500,000 517,930 Alabama Public School & College, Capital Improvement, "C", 5.75%, 2017 1,000,000 1,074,340 Alabama Public School & College, Capital Improvement, "C", 5.75%, 2018 1,035,000 1,111,942 Jefferson County, AL, Board of Education, "A", FSA, 5.8%, 2007 (c) 865,000 898,104 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 1,000,000 1,091,270 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) 1,000,000 1,106,740 ------------ $ 7,446,934 ----------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.2% Virgin Islands Public Finance Authority, "A", 5.5%, 2018 $ 1,000,000 $ 1,037,990 ----------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 455,000 $ 466,425 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Alabama Board of Education Rev., Refunding & Improvement (Southern 8.1% Union State Community College), MBIA, 5%, 2022 $ 1,000,000 $ 1,036,370 Alabama Private Colleges & Universities, Facilities Authority Rev. (Tuskegee University), ASST GTY, 4.75%, 2026 1,000,000 1,004,670 Auburn University, AL, General Fee Rev., AMBAC, 5%, 2034 1,000,000 1,027,570 Auburn University, General Fee Rev., AMBAC, 5%, 2029 1,000,000 1,035,140 Mobile, AL, Spring Hill College, Educational Building Authority Rev., "A", 5.25%, 2034 1,360,000 1,425,824 University of Alabama, General Rev., "A", MBIA, 5%, 2029 1,000,000 1,036,820 University of Alabama, University Rev., General Fee, FGIC, 5%, 2021 525,000 547,685 ------------ $ 7,114,079 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 15.8% Alabama Municipal Electric Power Authority, "A", MBIA, 5%, 2023 $ 1,000,000 $ 1,041,020 Guam Power Authority Rev., AMBAC, 5.25%, 2013 (u) 1,000,000 1,059,090 Guam Power Authority Rev., AMBAC, 5.00%, 2018 (u) 9,000,000 9,328,950 Puerto Rico Electric Power Authority Rev., "II", 5.25%, 2031 875,000 909,615 Southeastern Alabama Gas District Systems Rev., "A", AMBAC, 5.5%, 2020 1,000,000 1,073,410 Tuskegee, AL, Utilities Board, AMBAC, 5.5%, 2022 400,000 412,328 ------------ $ 13,824,413 ----------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Alabama Drinking Water Finance Authority, Revolving Fund Loan, "A", Revenue - 16.9% AMBAC, 6%, 2021 $ 725,000 $ 784,573 Alabama Drinking Water Finance Authority, Revolving Fund Loan, "C", AMBAC, 5.75%, 2018 1,000,000 1,077,140 Alabama Water Pollution Control Authority, Revolving Fund Loan, "B", AMBAC, 5.5%, 2016 1,000,000 1,006,750 Alabama Water Pollution Control Authority, Revolving Fund Loan, "B", AMBAC, 5.5%, 2020 1,380,000 1,389,315 Alabama Water Pollution Control Authority, Revolving Fund Loan, AMBAC, 5.75%, 2019 1,000,000 1,061,260 Alabaster, AL, Sewer Rev., AMBAC, 5%, 2029 750,000 775,942 Bessemer, AL, Water Rev., Warrants, "A", AMBAC, 5.75%, 2026 1,000,000 1,024,720 Birmingham, AL, Waterworks & Sewer Board Rev., "A", FGIC, 5%, 2034 1,365,000 1,415,136 Jasper, AL, Waterworks & Sewer Board, "A", AMBAC, 5.2%, 2020 750,000 789,435 Jefferson County, AL, Sewer Rev., Warrants, "D", FGIC, 5.7%, 2007 (c) 1,000,000 1,026,520 Limestone County, AL, Water Authority, FGIC, 5.5%, 2009 (c) 2,650,000 2,775,398 Madison, AL, Water & Wastewater Board, MBIA, 5.5%, 2019 1,000,000 1,031,820 Orange Beach, AL, Water, Sewer, & Fire Protection Authority Rev., MBIA, 5%, 2030 500,000 519,630 Ozark, AL, Utilities Board Water & Sewer Rev., AMBAC, 5%, 2031 100,000 103,936 ------------ $ 14,781,575 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $87,805,432) $ 91,991,096 ----------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.4% ----------------------------------------------------------------------------------------------------------------------------------- Burke County, GA, Development Authority Pollution Control Rev. (Oglethorpe Power Corp.), "A", 3.22%, due 4/05/06 $ 100,000 $ 100,000 Jefferson County, AL, Sewer Rev., Warrants, "B-4", 3.22%, due 4/06/06 300,000 300,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 400,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $88,205,432) $ 92,391,096 ----------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (5.4)% (4,744,214) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $ 87,646,882 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ----------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $2,000,000 Fixed - 3 Year Floating - 7 day $27,467 BMA Swap Index (2.795%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 21,024 BMA Swap Index (3.742%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 1,000,000 Fixed - 12 Year Floating - 7 Day 19,031 BMA Swap Index (3.861%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 1,000,000 Fixed - 15 Year Floating - 7 Day 15,981 BMA Swap Index (4.011%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 9/07/26 USD 1,000,000 Floating - 3 Month Fixed - 20 Year (26,909) LIBOR Swap Index LIBOR Swap Index (5.268%) ----------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 750,000 Floating - 3 Month Fixed - 20 Year (11,622) LIBOR Swap Index LIBOR Swap Index (5.363%) ----------------------------------------------------------------------------------------------------------------------------------- $44,972 ======= At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) ARKANSAS MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.8% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Airport and Port Revenue - 0.6% Little Rock, AR, Airport Rev., "A", FSA, 5.25%, 2019 $ 800,000 $ 831,872 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 11.4% Arkansas College Savings, "A", 0%, 2017 $ 1,840,000 $ 1,122,455 Commonwealth of Puerto Rico, Infrastructure, ETM, 5.50%, 2019 (u) 2,500,000 2,691,850 Commonwealth of Puerto Rico, Public Improvement, "A", CIFG, 5%, 2034 1,000,000 1,031,260 Commonwealth of Puerto Rico, MBIA, 5.75%, 2010 (c)(u) 6,000,000 6,463,440 Puerto Rico Public Buildings Authority Rev. (State Office Building), "F", XLCA, 5.25%, 2025 2,000,000 2,224,520 Sebastian County, AR, Community Refunding & Improvement, AMBAC, 5.6%, 2007 (c) 1,500,000 1,544,100 ------------ $ 15,077,625 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 6.4% Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) $ 1,470,000 $ 1,569,695 Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 6,500,000 6,940,830 ------------ $ 8,510,525 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.1% Arkansas, Capital Appreciation, College Savings, "B", 0%, 2012 $ 1,200,000 $ 928,548 Arkansas, Capital Appreciation, College Savings, "B", 0%, 2013 1,000,000 737,550 Arkansas, Capital Appreciation, College Savings, "B", 0%, 2014 1,150,000 807,679 Arkansas, Capital Appreciation, College Savings, "B", 0%, 2015 1,100,000 739,805 Little Rock, AR, School District Construction, "C", FSA, 5%, 2017 1,000,000 1,038,070 Little Rock, AR, School District, "A", FSA, 5.4%, 2017 1,000,000 1,054,180 Northwest Arkansas Community College District, Capital Improvement, AMBAC, 5%, 2028 1,380,000 1,437,325 ------------ $ 6,743,157 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Arkansas Development Finance Authority Rev. (Washington Regional Hospitals - 10.3% Medical Center), 7.25%, 2010 (c) $ 500,000 $ 561,360 Arkansas Development Finance Authority, Health Refunding (Sister of Mercy), "A", MBIA, 5%, 2013 4,340,000 4,500,406 Batesville, AR, Medical District Rev. (White River Medical Center), 5.5%, 2024 750,000 772,598 Baxter County, AR, Hospital Rev., Refunding & Improvement, "B", 5.6%, 2021 1,500,000 1,548,150 Crittenden County, AR, Hospital Rev., Refunding & Improvement, 7.15%, 2025 750,000 749,625 Jefferson County, AR, Hospital Rev., Refunding & Improvement (Regional Medical Center), 5.8%, 2021 1,000,000 1,064,360 Little Rock, AR, Health Facilities Hospital Board Rev. (Baptist Medical Center), 6.9%, 2009 400,000 434,912 North Little Rock, AR, Baptist Health Facilities, 5.7%, 2022 500,000 518,815 Pulaski County, AR, Hospital Rev. (Arkansas Childrens Hospital), "B", 5.25%, 2015 500,000 522,555 Pulaski County, AR, Hospital Rev. (Arkansas Childrens Hospital), "B", 5.25%, 2016 1,000,000 1,039,980 Sebastian County, AR, Health Facilities Improvement (Sparks Regional Medical Center), "A", 5.25%, 2021 1,000,000 1,027,910 Washington County, AR, Hospital Rev., Regional Medical Center, "A", 5%, 2035 1,000,000 986,400 ------------ $ 13,727,071 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Arkansas Development Finance Authority Rev. (Evangelical Lutheran Term Care - 1.0% Project), "B", AMBAC, 5.375%, 2019 $ 1,315,000 $ 1,389,166 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev. Other - 0.3% (Hovensa Refinery), 5.875%, 2022 $ 335,000 $ 353,264 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Arkansas State Development Finance Authority, Industrial Facilities Paper - 1.2% Rev. (Potlatch Corp.), "A", 7.75%, 2025 $ 250,000 $ 281,885 Camden, AR, Environmental Improvement Rev. (International Paper Co.), "A", 5%, 2018 750,000 741,015 Pine Bluff, AR, Environmental Improvement (International Paper Co.), "A", 5.55%, 2022 250,000 253,260 Pine Bluff, AR, Environmental Refunding (International Paper Co.), "A", 6.7%, 2020 300,000 324,567 ------------ $ 1,600,727 ----------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Fort Smith, AR, Residential Housing (Gorman Towers), "A", GNMA, Revenue - 0.8% 5.45%, 2037 $ 1,000,000 $ 1,023,150 ----------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 0.7% Stuttgart, AR, Sales and Use Tax Rev., AMBAC, 4.2%, 2031 $ 970,000 $ 943,441 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Harrison, AR, Residential Housing Facilities Board, Single Family Local - 7.5% Mortgage Rev., FGIC, ETM, 7.4%, 2011 (c) $ 4,000,000 $ 4,661,360 Lonoke County, AR, Residential Housing Facilities, FNMA, 7.9%, 2011 92,864 94,754 Pulaski County, AR, Public Facilities Board Rev., "C", FNMA, 0%, 2014 2,750,000 1,857,020 Pulaski County, AR, Public Facilities Board, "A", GNMA, 5.75%, 2034 1,865,000 1,906,664 Sherwood, AR, Residential Housing Facilities Board, Single Family Rev., MBIA, 7.5%, 2010 (c) 1,250,000 1,441,000 ------------ $ 9,960,798 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 9.1% Arkansas Development Finance Authority Rev., "1", 0%, 2011 $ 290,000 $ 192,055 Arkansas Development Finance Authority Single Family Mortgage, "B", GNMA, 4.85%, 2031 1,000,000 989,160 Arkansas Development Finance Authority, Mortgage Backed Securities Program, "B", GNMA, 5%, 2029 225,000 228,377 Arkansas Development Finance Authority, Mortgage Backed Securities Program, "C", GNMA, 5.35%, 2027 1,560,000 1,578,283 Arkansas Development Finance Authority, Mortgage Backed Securities Program, "E", GNMA, 5.4%, 2034 810,000 827,982 Arkansas Development Finance Authority, Single Family Mortgage Rev., "B", GNMA, 5.125%, 2024 445,000 451,817 Arkansas Development Finance Authority, Single Family Mortgage Rev., "B", GNMA, 5.25%, 2035 3,055,000 3,115,520 Arkansas Finance Authority, Mortgage Backed Securities Program, "B", GNMA, 4.45%, 2034 1,265,000 1,266,632 Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, 5.3%, 2023 520,000 526,864 Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, "D", GNMA, 5.85%, 2024 1,055,000 1,069,454 Arkansas Finance Authority, Single Family, Mortgage Backed Securities Program, "I", GNMA, 5.3%, 2033 460,000 464,062 Arkansas Housing Development Agency, Single Family Mortgage Program, ETM, 8.375%, 2011 (c) 1,000,000 1,216,980 Puerto Rico Housing Finance Authority Mortgage Backed Securities, "A", 4.375%, 2017 165,000 161,962 ------------ $ 12,089,148 ----------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - Arkansas Development Finance Authority, Economic Development Rev., 2.5% "B", 5%, 2018 $ 175,000 $ 179,963 Arkansas Development Finance Authority, Economic Development Rev., "B", AMBAC, 5.8%, 2020 500,000 519,505 Arkansas State Development Finance Authority Rev., Environmental State Agency Facilities, "A", AMBAC, 5%, 2040 2,500,000 2,583,025 ------------ $ 3,282,493 ----------------------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 1.5% Arkansas Student Loan Authority, "B", 6.25%, 2006 (c) $ 2,000,000 $ 2,008,120 ----------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 3.3% Little Rock, AR, Hotel & Restaurant Gross Receipts Tax, 7.375%, 2015 $ 2,790,000 $ 3,286,760 Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 1,000,000 1,036,310 ------------ $ 4,323,070 ----------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.4% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 235,000 $ 240,901 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.5%, 2039 290,000 297,789 ------------ $ 538,690 ----------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico Highway & Transportation Authority, "B", Tax - 2.6% MBIA, 5.875%, 2010 (c) $ 2,000,000 $ 2,189,500 Commonwealth of Puerto Rico Highway & Transportation Authority, "G", 5%, 2023 750,000 767,310 Commonwealth of Puerto Rico Highway & Transportation Authority, "G", FGIC, 5%, 2022 500,000 524,715 ------------ $ 3,481,525 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Arkansas State University, Student Fee-ASU (Newport Campus), AMBAC, 16.5% 5%, 2028 $ 700,000 $ 713,629 Conway, AR, Public Facilities Board, Capital Improvement Rev. (Hendrix College), "B", 5%, 2035 1,000,000 1,010,480 Conway, AR, Public Facilities Rev. (Hendrix College), 5.85%, 2006 (c) 1,000,000 1,011,530 Pulaski, AR, Technical College, Student Tuition & Fee Rev., FGIC, 5%, 2029 1,820,000 1,875,182 Siloam Springs, AR, Public Education Facilities, Capital Improvement (John Brown University), AMBAC, 5.35%, 2020 500,000 525,785 University of Arkansas, University Construction Rev. (UAMS Campus), "B", MBIA, 5%, 2026 1,405,000 1,463,589 University of Arkansas, University Construction Rev. (UAMS Campus), "B", MBIA, 5%, 2027 1,000,000 1,039,530 University of Arkansas, University Facilities Rev. (Fayetteville Campus), FGIC, 5%, 2027 3,155,000 3,255,676 University of Arkansas, University Facilities Rev. (Fayetteville Campus), FGIC, 5%, 2032 2,500,000 2,572,500 University of Arkansas, University Facilities Rev. (Monticello), AMBAC, 5%, 2025 1,525,000 1,583,835 University of Arkansas, University Rev. (UAMS Campus), "B", MBIA, 5%, 2034 3,290,000 3,412,947 University of Arkansas, University Revenues Facilities, (UAMS Campus), FGIC, 5%, 2028 2,000,000 2,085,640 University of Central Arkansas, "A", AMBAC, 5%, 2023 1,100,000 1,124,266 University of Central Arkansas, Student Housing Rev., "C", FGIC, 5%, 2034 250,000 254,735 ------------ $ 21,929,324 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Dormitories - 2.5% Arkansas State University Rev., Housing Systems, AMBAC, 5.15%, 2021 $ 1,240,000 $ 1,291,683 Arkansas Tech University Rev., Housing Systems, AMBAC, 5.2%, 2026 1,000,000 1,062,370 Pope County, AR, Residential Housing, Arkansas Tech University Project, "A", 6%, 2027 500,000 490,145 University of Central Arkansas, Student Housing Rev., "C", FGIC, 5.25%, 2029 500,000 520,090 ------------ $ 3,364,288 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Jefferson County, AR, Pollution Control Rev. (Arkansas Power & Light Owned - 0.8% Co.), 6.3%, 2018 $ 1,050,000 $ 1,055,355 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 8.0% Benton, AR, Utilities Rev., AMBAC, 5%, 2030 $ 470,000 $ 484,514 North Little Rock, AR, Electric Rev., "A", MBIA, 6.5%, 2010 2,000,000 2,116,100 North Little Rock, AR, Electric Rev., "A", MBIA, 6.5%, 2015 6,000,000 6,911,820 Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,000,000 1,044,460 ------------ $ 10,556,894 ----------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Arkansas Development Finance Authority, Economic Development Rev., Revenue - 11.3% "I", AMBAC, 5.65%, 2014 $ 375,000 $ 381,840 Arkansas Development Finance Authority, Revolving Loan Fund, "A", 5.85%, 2006 (c) 2,130,000 2,159,202 Fort Smith, AR, Water & Sewer Rev., "C", FSA, 5.25%, 2020 1,315,000 1,395,005 Fort Smith, AR, Water & Sewer Rev., AMBAC, 5.65%, 2009 (c) 1,000,000 1,064,960 Fort Smith, AR, Water & Sewer Rev., Refunding & Construction, "A", FSA, 5%, 2019 2,125,000 2,208,619 Fort Smith, AR, Water & Sewer Rev., Refunding & Construction, "A", FSA, 5%, 2021 2,750,000 2,843,225 Little Rock, AR, Sewer Rev., Refunding & Construction, 5%, 2022 1,750,000 1,806,771 Paragould, AR, Water Sewer & Electric Rev., AMBAC, 5.6%, 2010 (c) 765,000 826,261 South Sebastian County, AR, Water Refunding, MBIA, 5%, 2038 1,000,000 1,019,370 Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 1,250,000 1,302,663 ------------ $ 15,007,916 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $130,820,928) $137,797,619 ----------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.5% ----------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D", 3.22%, due 4/06/06 $ 200,000 $ 200,000 Georgia Municipal Electric Authority, 3.05%, due 4/05/06 100,000 100,000 Illinois Development Finance Authority Rev. (Jewish Federation of Metropolitan Chicago), 3.18%, due 4/03/06 50,000 50,000 Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A", 3.22%, due 4/06/06 700,000 700,000 Jefferson County, AL, Sewer Rev., Warrants, "B-4", 3.22%, due 4/06/06 800,000 800,000 Triborough Bridge & Tunnel Authority, NY, Rev., "F", 3.02%, due 4/06/06 100,000 100,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 1,950,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $132,770,928) $139,747,619 ----------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (5.3)% (7,032,172) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $132,715,447 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ----------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $3,000,000 Fixed - 3 Year Floating - 7 Day $41,188 BMA Swap Index (2.795%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 1,500,000 Fixed - 10 Year Floating - 7 Day 31,536 BMA Swap Index (3.742%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/15/18 USD 3,000,000 Fixed - 12 Year Floating - 7 Day 15,791 BMA Swap Index (4.019%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 2,000,000 Fixed - 12 Year Floating - 7 Day 38,062 BMA Swap Index (3.861%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 1,000,000 Fixed - 15 Year Floating - 7 Day 15,981 BMA Swap Index (4.011%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 9/07/26 USD 1,000,000 Floating - 3 Month Fixed - 20 Year (26,908) LIBOR Swap Index LIBOR Swap Index (5.268%) ----------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 1,500,000 Floating - 3 Month Fixed - 20 Year (23,244) LIBOR Swap Index LIBOR Swap Index (5.363%) ----------------------------------------------------------------------------------------------------------------------------------- $92,406 ======= At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) CALIFORNIA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.9% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 4.0% Long Beach, CA, Harbor Rev., "A" FGIC, 5.25%, 2018 $ 3,500,000 $ 3,681,685 Los Angeles, CA, Department of Airports Rev. (Ontario International Airport), "A", FGIC, 6%, 2017 4,100,000 4,150,594 Los Angeles, CA, Harbor Department Rev.,"B", 5.375%, 2023 3,000,000 3,060,930 Port Oakland, CA, "K", FGIC, 5.75%, 2020 4,000,000 4,225,120 ------------ $ 15,118,329 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 10.8% Commonwealth of Puerto Rico, Series II R 124B, XLCA, 5.50%, 2017 (u) $ 3,000,000 $ 3,340,650 Commonwealth of Puerto Rico, Series II R 184C, FGIC, 5.50%, 2016 (u) 6,600,000 7,377,546 Los Angeles, CA, 5.25%, 2014 (u) 10,810,000 11,838,788 State of California, 10%, 2007 1,055,000 1,147,850 State of California, 5.5%, 2010 (c) 3,000,000 3,235,350 State of California, 5.125%, 2025 2,000,000 2,086,880 State of California, 5.25%, 2029 2,000,000 2,094,320 State of California, AMBAC, 7.2%, 2008 1,600,000 1,711,824 State of California, AMBAC, 6.3%, 2010 3,000,000 3,319,410 State of California, AMBAC, 7%, 2010 2,000,000 2,269,780 State of California, "B", 5.75%, 2009 (c)(u) 2,500,000 2,709,750 ------------ $ 41,132,148 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 16.7% Antelope Valley, CA (Union High School), "A", MBIA, 5%, 2027 $ 1,500,000 $ 1,560,495 Butte Glenn Community College District, "A", MBIA, 5%, 2026 1,885,000 1,963,416 Campbell, CA, Union High School District, Election 2002, "B", FGIC, 5.5%, 2033 2,270,000 2,469,783 Campbell, CA, Union High School District, FSA, 5%, 2021 1,280,000 1,333,888 Capistrano, CA, Union High School District, "A", FGIC, 5.875%, 2020 1,185,000 1,308,619 Chaffey, CA, Union High School District, "C", FSA, 5%, 2027 1,000,000 1,042,270 Colton, CA, Joint Union School District (Election of 2001), "C", FGIC, 0%, 2032 1,000,000 261,110 Colton, CA, Joint Union School District (Election of 2001), "C", FGIC, 0%, 2033 3,000,000 740,610 Colton, CA, Joint Union School District, "A", FGIC, 5.375%, 2026 1,200,000 1,304,352 Coronado, CA, Union School District, "A", 5.7%, 2020 1,285,000 1,407,396 Escondido, CA, Union School District, "A", FSA, 5%, 2026 1,000,000 1,036,650 Folsom Cordova, CA, Union School District, Facilities Improvement, "A", MBIA, 0%, 2025 1,505,000 603,987 Glendale, CA, Union School District, "B", FSA, 5.5%, 2018 4,275,000 4,510,809 Inglewood, CA, Union School District, "A", FGIC, 6%, 2019 1,695,000 1,832,363 Little Lake, CA, City School District, "A", FSA, 6.125%, 2010 (c) 1,035,000 1,145,290 Live Oak, CA, School District, Santa Cruz County, Election 2004, "A", MBIA, 5%, 2033 1,410,000 1,470,743 Los Angeles, CA, Union School District Election of 1997, "E", MBIA, 5.125%, 2027 5,000,000 5,265,250 Los Angeles, CA, Union School District, FSA, 5.25%, 2013 (c)(u) 10,000,000 10,692,700 Moreno Valley, CA, Union School District, Election 2004, "A", FSA, 5%, 2025 1,075,000 1,122,526 Moreno Valley, CA, Union School District, Election 2004, "A", FSA, 5%, 2026 1,715,000 1,788,385 Morgan Hill, CA, Union School District, FGIC, 5.5%, 2020 2,545,000 2,751,196 Natomas Union School District, Election 2002 "B", FGIC, 5%, 2028 1,430,000 1,488,659 Oceanside, CA, Union School District Election of 2000, "C", MBIA, 5.25%, 2032 1,940,000 2,049,746 Perris, CA, Union School District, "A", FGIC, 0%, 2027 3,100,000 1,123,068 Rowland, CA, Union School District, "A", FSA, 5.5%, 2010 (c) 1,250,000 1,356,063 San Gabriel, CA, Union School District, "A", FSA, 5%, 2024 2,000,000 2,083,400 San Ysidro, CA, School District, AMBAC, 6.125%, 2021 960,000 1,097,520 Santa Clara, CA, Union School District, FGIC, 5.5%, 2019 2,210,000 2,371,750 Santa Maria, CA, Joint Union High School District, "A", FSA, 5.375%, 2020 1,120,000 1,233,960 Santa Maria, CA, Joint Union High School District, "A", FSA, 5.375%, 2021 1,210,000 1,331,133 Tehachapi, CA, Union School District, "A", FGIC, 5.625%, 2020 1,100,000 1,172,809 Val Verde, CA, Union School District, COP, "B", FGIC, 5%, 2030 1,000,000 1,032,810 Walnut Valley, CA, Union School District, (Election of 2000), "E", FSA, 0%, 2028 1,535,000 530,128 Washington, CA, Union School District, (Election of 1999), "A", FGIC, 5.625%, 2021 1,000,000 1,095,820 ------------ $ 63,578,704 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 11.0% Abag Finance Authority Rev. (San Diego Hospital), "C", 5.375%, 2020 $ 2,000,000 $ 2,069,500 California Health Facilities Financing Authority Rev., Catholic Healthcare West, "G", 5.25%, 2023 2,000,000 2,070,140 California Health Facilities Financing Authority Rev., Cedars Sinai Medical Center, 5%, 2027 1,000,000 1,019,840 California Health Facilities Financing Authority Rev., Health Facilities (Adventist Health Systems), "A", 5%, 2033 1,750,000 1,752,957 California Statewide Communities Development Authority Rev. (Henry Mayo Newhall Memorial Hospital), "A", CHFC, 5%, 2018 2,000,000 2,078,100 California Statewide Communities Development Authority Rev. (Kaiser Permanente), "A", 5.5%, 2032 2,000,000 2,089,500 California Statewide Communities Development Authority Rev. (Los Angeles Children's Hospital), 5.125%, 2019 4,000,000 4,129,080 California Statewide Communities Development Authority Rev., CHFC, ETM, 0%, 2007 (c) 3,645,000 3,472,519 California Statewide Communities Development Authority Rev., CHFC, ETM, 0%, 2008 (c) 6,345,000 5,797,998 California Statewide Communities Development Authority Rev., Health Facilities (Memorial Health Services), "A", 6%, 2023 1,500,000 1,643,040 California Statewide Communities Development, "B", 5.625%, 2042 4,000,000 4,172,120 California Valley Health Systems, COP, 6.875%, 2023 485,000 485,456 Central California Joint Powers Health Financing (Community Hospitals of Central California), 5.625%, 2021 1,000,000 1,030,650 Kaweah Delta Health Care District Rev., 6%, 2034 2,000,000 2,152,200 Rancho Mirage, CA, Joint Powers (Eisenhower Medical Center), 5.625%, 2029 3,000,000 3,170,730 Tahoe Forest, CA, Hospital District Rev., "A", 5.85%, 2022 1,000,000 1,026,880 Turlock, CA, Health Facilities Rev. (Emanuel Medical Center), 5%, 2024 500,000 499,395 Washington Township, CA, Health Care Rev., 5%, 2018 1,000,000 1,023,040 West Contra Costa California Healthcare District, AMBAC, 5.5%, 2029 2,000,000 2,139,100 ------------ $ 41,822,245 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long California Health Facilities Financing Authority Rev. (Paradise Term Care - 0.7% Valley Estates), 5.125%, 2022 $ 1,000,000 $ 1,042,410 La Verne, CA, COP (Brethren Hillcrest Homes), "B", 6.625%, 2025 1,000,000 1,064,930 Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae), "A", 7.375%, 2027 465,000 484,688 ------------ $ 2,592,028 ----------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.5% California Statewide Communities Development Authority (Prides Industries), 7.125%, 2009 (c) $ 1,640,000 $ 1,802,918 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - California Pollution Control Financing Authority, Solid Waste 1.4% Disposal Rev. (Browning Ferris, Inc.), "A", 5.8%, 2016 $ 2,000,000 $ 1,951,360 California Pollution Control Financing Authority, Solid Waste Disposal Rev. (Waste Management, Inc.), "A", 5.125%, 2031 2,250,000 2,334,960 California Pollution Control Financing Authority, Solid Waste Disposal Rev. (Waste Management, Inc.), "A-2", 5.4%, 2025 1,000,000 1,040,720 ------------ $ 5,327,040 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev. Other - 0.3% (Hovensa Refinery), 5.875%, 2022 $ 960,000 $ 1,012,339 ----------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 0.4% Del Mar, CA, Race Track Authority Rev., 6.2%, 2006 (c) $ 1,365,000 $ 1,405,459 ----------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - San Diego County, CA, COP, (Burnham Institute for Medical Research), Other - 0.9% 5%, 2034 $ 1,000,000 $ 994,140 San Diego County, CA, COP, (Burnham Institute), 6.25%, 2009 (c) 2,300,000 2,510,105 ------------ $ 3,504,245 ----------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing California Housing Finance Agency Rev., Multi-Unit Rental Housing, "B Revenue - 2.7% II", 6.7%, 2015 $ 1,003,000 $ 1,006,329 California Statewide Communities Development Authority Rev. (Irvine Apartments), 5.25%, 2025 6,000,000 6,183,060 San Bernardino County, CA (Equity Residential/Redlands), "A", 5.2%, 2029 3,000,000 3,064,320 ------------ $ 10,253,709 ----------------------------------------------------------------------------------------------------------------------------------- Parking - 0.3% San Francisco, CA, Union Square, MBIA, 6%, 2020 $ 1,000,000 $ 1,094,420 ----------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Contra Costa, CA, Transportation & Sales Tax Rev., "A", ETM, 6.875%, Revenue - 0.1% 2007 (c) $ 480,000 $ 494,510 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - California Rural Home Mortgage Finance Authority Rev., GNMA, Local - 1.1% 7.3%, 2031 $ 35,000 $ 35,801 California Rural Home Mortgage Finance Authority Rev., Mortgage Backed Securities Program, "B4", GNMA, 6.35%, 2029 50,000 50,107 Pomona, CA, Single Family Mortgage Rev., GNMA, ETM, 7.375%, 2010 (c) 1,265,000 1,357,206 Pomona, CA, Single Family Mortgage Rev., GNMA, ETM, 7.5%, 2023 (c) 2,000,000 2,604,800 ------------ $ 4,047,914 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 0.8% California Housing Finance Agency Rev., Home Mortgage, FSA, 0%, 2019 $ 2,885,000 $ 1,257,715 California Housing Finance Agency Rev., Home Mortgage, MBIA, 0%, 2028 5,225,000 1,664,423 ------------ $ 2,922,138 ----------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.9% California Pollution Control Financing Authority, Solid Waste Disposal Rev. (West County Resource Recovery), "A", 5.125%, 2014 $ 1,000,000 $ 1,012,520 South Bayside Waste Management Authority, California Solid Waste System Rev., AMBAC, 5.75%, 2020 2,100,000 2,251,620 ------------ $ 3,264,140 ----------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 2.8% Grossmont, CA, Union High School District, MBIA, 0%, 2006 $ 6,000,000 $ 5,874,120 Pasadena CA, COP, Old Pasadena Parking Facilities Project, 6.25%, 2018 2,995,000 3,338,407 Sacramento County, CA, COP, Capital Projects, AMBAC, 5.75%, 2018 1,500,000 1,623,765 ------------ $ 10,836,292 ----------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 13.5% Banning, CA, COP, Water Systems Improvement Project, AMBAC, 8%, 2019 $ 925,000 $ 1,148,045 California Public Works Board Lease Rev., Department of Corrections State Prison, "A", 7.4%, 2010 5,000,000 5,688,850 California Public Works Board, Department of Justice, "D", 5.25%, 2020 1,565,000 1,644,252 California State Department of Water Resources Power Supply, Rev, "C", 5.25%, 2028 2,500,000 2,616,850 Fortuna & Susanville, CA, COP, "B", 7.375%, 2017 660,000 670,190 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., "A", FSA, 0% to 2010, 4.55% to 2022 3,000,000 2,423,550 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "A", 5%, 2045 3,000,000 3,046,770 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "B", 5.5%, 2013 (c) 7,000,000 7,670,180 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "B", 5.625%, 2013 (c) 5,000,000 5,517,350 Los Angeles, CA, COP, Antelope Valley Courthouse, "A", AMBAC, 5.25%, 2027 3,000,000 3,136,050 Los Angeles, CA, COP, Real Property Program, AMBAC, 5.3%, 2027 3,000,000 3,181,260 Pomona, CA, Public Financing Authority Rev., "P", 6.25%, 2010 4,020,000 4,304,737 Sacramento, CA, City Financing Authority Rev., Capital Improvement, 5.5%, 2010 (c) 1,635,000 1,769,904 Sacramento, CA, City Financing Authority Rev., City Hall & Redevelopment Projects, "A", FSA, 5%, 2032 2,000,000 2,145,940 Salinas, CA, COP, Capital Improvement Projects, "A", 5.7%, 2007 (c) 2,200,000 2,311,408 San Francisco, CA, City & County, COP, (San Bruno Jail No 3), AMBAC, 5.25%, 2033 3,930,000 4,113,610 ------------ $ 51,388,946 ----------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 2.4% Irvine, CA, School District Special Tax Rev., Community Facilities District No. 86-1, AMBAC, 5.8%, 2020 $ 3,500,000 $ 3,679,445 Santa Cruz County, CA, Redevelopment Agency Tax Allocation (Oak/ Soquel Community), 5.6%, 2017 1,455,000 1,524,418 Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 2,000,000 2,072,620 Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,600,000 1,684,896 ------------ $ 8,961,379 ----------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 7.4% Brea, CA, Public Finance Authority Rev., MBIA, 0%, 2006 $ 2,415,000 $ 2,388,217 Duarte, CA, Redevelopment Agency Tax Allocation, Davis Addition Project Area, 6.7%, 2014 605,000 637,247 Fontana, CA, Redevelopment Agency Tax Allocation, Jurupa Hills Redevelopment Project, "A", 5.5%, 2027 3,350,000 3,440,718 Huntington Park, CA, Public Financing Rev. Wastewater Systems Project, "A", 6.2%, 2025 2,000,000 2,045,160 La Mirada, CA, Redevelopment Agency, Special Tax Rev., Community Facilities District No. 89-1, 5.7%, 2020 1,500,000 1,524,720 Modesto, CA, Irrigation District, COP, Refunding & Capital Improvements, "B", 5.3%, 2022 1,720,000 1,721,995 Modesto, CA, Public Financing Authority (John Thurman Field Renovation), 6.125%, 2016 1,255,000 1,295,662 Orange County, CA, Community Facilities District, Special Tax (Rancho Santa Margarita), "A", 5.55%, 2017 1,000,000 1,041,270 Poway, CA, Community Facilities District, Special Tax (Parkway Business Center), 6.5%, 2010 715,000 763,677 Poway, CA, Community Facilities District, Special Tax (Parkway Business Center), 6.75%, 2015 775,000 832,621 Riverside County, CA, Public Financing Authority, Tax Allocation Rev., "A", 5.25%, 2006 (c) 892,500 917,990 Riverside County, CA, Public Financing Authority, Tax Allocation Rev., "A", 5.25%, 2006 (c) 1,655,000 1,702,267 Riverside County, CA, Public Financing Authority, Tax Allocation Rev., "A", 5.25%, 2016 572,500 587,860 Riverside County, CA, Public Financing Authority, Tax Allocation Rev., XLCA, 5%, 2037 3,000,000 3,066,600 Riverside County, CA, Redevelopment Agency, Tax Allocation, "A", XLCA, 5%, 2037 2,000,000 2,051,440 San Diego, CA, Redevelopment Agency, Tax Allocation (Centre City), "B", AMBAC, 5.3%, 2020 1,250,000 1,334,900 San Jose, CA, Redevelopment Agency, Tax Allocation Redevelopment Project, FGIC, 4.9%, 2033 2,675,000 2,744,309 ------------ $ 28,096,653 ----------------------------------------------------------------------------------------------------------------------------------- Tobacco - 2.2% California County, CA, Tobacco Asset Baked L.A. County, "A", 0%, 2041 $ 2,500,000 $ 1,939,350 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "A", 0%, 2050 2,000,000 130,800 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "B", 0%, 2055 2,000,000 69,300 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement "A-1", 6.75%, 2039 2,645,000 2,974,593 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement, "A-1", 6.25%, 2033 2,935,000 3,197,389 ------------ $ 8,311,432 ----------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 0.7% Foothill/Eastern Corridor Agency, California Toll Road Rev., Capital Appreciation, "A", 7.1%, 2010 (c) $ 2,500,000 $ 2,849,950 ----------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Alameda Corridor Transportation Authority, California Rev., Capital Tax - 0.6% Appreciation, "A", AMBAC, 0%, 2030 $ 8,000,000 $ 2,468,240 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - California Educational Facilities Authority Rev. (Dominican 8.6% University), 5%, 2036 $ 1,150,000 $ 1,126,942 California Educational Facilities Authority Rev. (Fresno Pacific University), "A", 6.75%, 2019 2,000,000 2,162,800 California Educational Facilities Authority Rev. (L.A. College of Chiropractic), 5.6%, 2017 2,100,000 2,029,524 California Educational Facilities Authority Rev. (Lutheran University), "C", 5%, 2029 2,500,000 2,524,100 California Educational Facilities Authority Rev. (Pomona College), "B", 5.875%, 2009 (c) 2,000,000 2,158,820 California Educational Facilities Authority Rev. (Santa Clara University), "A", MBIA, 5%, 2027 1,340,000 1,384,300 California Educational Facilities Authority Rev. (University of Los Angeles), "A", 5%, 2029 1,500,000 1,507,785 California Educational Facilities Authority Rev., Pooled College & University Projects, "B", 6.3%, 2007 (c) 1,000,000 1,045,800 California Educational Facilities Authority Rev., Pooled College & University Projects, "B", 6.625%, 2020 1,000,000 1,116,980 California Statewide Communities, Notre Dame De Namur University, 6.625%, 2033 1,000,000 1,021,440 Foothill-De Anza, CA, Community College District, Election of 1999, "B", FGIC, 0%, 2025 1,500,000 612,450 Long Beach, CA, Industrial Development Rev. (CSU Foundation), "A", 5.25%, 2023 1,450,000 1,466,385 Santa Monica, CA, Community College District, 2002 Election, "C", MBIA, 0%, 2027 2,000,000 695,140 University of California Rev., MBIA, 5.125%, 2016 (u) 11,410,000 11,757,663 University of California, COP, San Diego Campus Projects, "A", 5.25%, 2032 1,840,000 1,914,060 ------------ $ 32,524,189 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Secondary California Statewide Communities Development Authority Rev., Aspire Schools - 1.1% Public Schools, (Oakland Project), "A", 7.25%, 2031 $ 975,000 $ 1,004,309 California Statewide Communities, Development Authority Rev. (Escondido Charter High School), 7.5%, 2036 1,000,000 1,059,680 Los Angeles, CA, COP, 5.7%, 2018 1,900,000 1,990,079 ------------ $ 4,054,068 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor California Pollution Control Financing Authority, Pollution Control Owned - 1.6% Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 $ 3,500,000 $ 3,728,165 Chula Vista, CA, Industrial Development Rev. (San Diego Gas), "B", 5%, 2027 2,500,000 2,539,600 ------------ $ 6,267,765 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 3.0% Glendale, CA, Electric Works Rev., MBIA, 5.75%, 2019 $ 1,420,000 $ 1,541,481 Glendale, CA, Electric Works Rev., MBIA, 5.75%, 2020 1,160,000 1,250,178 Northern California Power Agency Public Power Rev., 5.85%, 2010 880,000 934,375 Sacramento, CA, Power Authority, Cogeneration Project Rev., MBIA, 5.875%, 2006 (c) 5,500,000 5,642,065 Virgin Islands Water & Power Authority Rev., 5.5%, 2017 800,000 815,040 Virgin Islands Water & Power Authority Rev., 5.3%, 2018 250,000 249,533 Virgin Islands Water & Power Authority Rev., "A", 5.125%, 2013 1,000,000 1,001,240 ------------ $ 11,433,912 ----------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility California Department of Water Resources, Central Valley Project Revenue - 8.4% Rev., "X", FGIC, 5%, 2029 $ 2,000,000 $ 2,059,160 California Department of Water Resources, Water Systems Rev., 7%, 2012 1,090,000 1,286,320 California Department of Water Resources, Water Systems Rev., ETM, 7%, 2012 (c) 405,000 480,556 Castaic Lake Water Agency, California Rev., Water Systems Improvement Project, AMBAC, 5.125%, 2030 1,725,000 1,787,980 Culver City, CA, Wastewater Facilities Rev, "A", FGIC, 5.6%, 2019 1,000,000 1,075,550 El Monte, CA, Water Authority Rev., Water Systems Project, AMBAC, 6%, 2019 1,065,000 1,175,888 Fairfield-Suisun, CA, Sewer District Rev., "A", MBIA, 0%, 2006 2,080,000 2,074,821 Livermore Amador Valley Water Management Rev., "A", AMBAC, 5%, 2031 4,875,000 5,000,531 Mojave, CA, Water Agency, Improvement District (M - Morongo Basin), FGIC, 5.75%, 2006 (c) 2,625,000 2,701,808 Southern California Metropolitan Water District Rev., 5.75%, 2018 (u) 10,000,000 11,313,500 West Sacramento, CA, Financing Authority Rev., Water Systems Improvement Project, FGIC, 5%, 2032 2,750,000 2,840,530 ------------ $ 31,796,644 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $377,655,227) $398,361,756 ----------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.2% ----------------------------------------------------------------------------------------------------------------------------------- Bay Area Toll Authority, California Toll Bridge Rev., "A", 3.05%, due 4/06/06 $ 100,000 $ 100,000 Orange County, CA, 3.06%, due 4/03/06 100,000 100,000 State of California, Department of Water Resources, Power Supply Rev., "C-2", 3.17%, due 4/06/06 3,500,000 3,500,000 State of California, Department of Water Resources, Power Supply Rev., "C-3", 3.17%, due 4/06/06 1,000,000 1,000,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 4,700,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $382,355,227) $403,061,756 ----------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (6.1)% (23,187,467) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $379,874,289 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ----------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $9,000,000 Fixed - 3 Year Floating - 7 day $123,600 BMA Swap Index (2.795%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 3,000,000 Fixed - 10 Year Floating - 7 Day 63,072 BMA Swap Index (3.742%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 3,000,000 Fixed - 15 Year Floating - 7 Day 47,944 BMA Swap Index (4.011%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 9/07/26 USD 3,000,000 Floating - 3 Month Fixed - 20 Year (80,725) LIBOR Swap Index LIBOR Swap Index (5.268%) ----------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 3,750,000 Floating - 3 Month Fixed - 20 Year (58,111) LIBOR Swap Index LIBOR Swap Index (5.363%) ----------------------------------------------------------------------------------------------------------------------------------- 7/11/36 USD 3,000,000 Floating - 7 day Fixed - 30 Year (96,827) BMA Swap Index BMA Swap Index (4.127%) ----------------------------------------------------------------------------------------------------------------------------------- $(1,047) ======= At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) FLORIDA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 105.1% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 5.2% Greater Orlando Aviation Authority Rev., "A", FGIC, 5.25%, 2018 $ 1,000,000 $ 1,038,820 Hillsborough County, FL, Aviation Authority Rev. (Tampa International Airport), "A", FGIC, 5.875%, 2015 750,000 771,630 Lee County, FL, Airport Rev., "A", FSA, 5.875%, 2018 1,000,000 1,078,300 Miami-Dade County, FL, Aviation Rev., "C", MBIA, 5.25%, 2018 500,000 516,310 Miami-Dade County, FL, Aviation Revenue, "A", CIFG, 5%, 2038 500,000 509,455 Pensacola, FL, Airport Rev., "B", MBIA, 5.625%, 2014 500,000 520,980 ------------ $ 4,435,495 ----------------------------------------------------------------------------------------------------------------------------------- Chemicals - 0.3% Red River Authority, TX, Pollution Control Rev. (Celanese Project), 6.7%, 2030 $ 200,000 $ 211,794 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 11.6% Commonwealth of Puerto Rico, MBIA, 5.75%, 2010 (c)(u) $ 2,000,000 $ 2,154,480 Miami-Dade County, FL, Educational Facilities Authority, "A", AMBAC, 5.5%, 2018 1,400,000 1,492,400 State of Florida, 5.00%, 2017 (u) 6,000,000 6,288,960 ------------ $ 9,935,840 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 9.3% Florida Board of Education, Capital Outlay, 9.125%, 2014 $ 2,600,000 $ 3,190,330 Florida Board of Education, Capital Outlay, ETM, 9.125%, 2014 (c) 400,000 533,648 Florida State Board of Education, Public Education, "J", 5%, 2032 1,000,000 1,031,690 Martin County, FL, School Board Certificate, MBIA, 5%, 2031 1,090,000 1,121,610 Osceola County, FL, School Board Certificate, "A", AMBAC, 5.25%, 2027 1,950,000 2,066,649 ------------ $ 7,943,927 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Birmingham, AL, Baptist Medical Center, Special Care Facilities Rev. Hospitals - 17.0% (Baptist Health Systems, Inc.), "A", 5%, 2030 $ 500,000 $ 488,215 Brevard County, FL, Health Facilities Rev., Health First Inc., 5%, 2034 500,000 507,065 Citrus County, FL, Hospital Development Authority Rev. (Citrus Memorial Hospital), 6.25%, 2023 480,000 511,075 Coral Gables, FL, Health Facilities Authority, Hospital Rev. (Baptist Health South Florida), 5%, 2029 535,000 552,687 Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 250,000 264,812 Highlands County, FL, Health Facilities Authority Rev. (Adventist Health Systems), 5.25%, 2013 500,000 516,065 Hillsborough County, FL, Industrial Development Rev. (University Community Hospital), MBIA, 6.5%, 2019 1,000,000 1,200,510 Indiana Health Facilities Financing Authority, Hospital Rev. (Munster Medical Research Foundation, Inc.), 6.375%, 2031 500,000 524,985 Jacksonville, FL, Health Facilities, Ascencion Health, "A", 5.25%, 2032 1,000,000 1,036,740 Lakeland, FL, Hospital Systems Rev. (Lakeland Regional Health Systems), 5.5%, 2032 1,000,000 1,052,600 Leesburg, FL, Hospital Rev. (Leesburg Regional Medical Center), 5.5%, 2032 750,000 770,227 Marion County, FL, Hospital District Rev., Refunding & Improvement, Health Systems (Monroe Regional Health System), 5.5%, 2014 500,000 522,230 Marshall County, AL, Health Care Rev., "A", 6.25%, 2022 500,000 532,250 Martin County, FL, Health Facilities Rev. (Martin Memorial Medical Center), "B", 5.75%, 2022 500,000 529,960 Miami Beach, FL, Health Facilities Rev. (Mount Sinai Medical Center), "A", 6.7%, 2019 250,000 274,527 Miami, FL, Health Facilities Authority Rev. (Catholic Health East), "B", 5.25%, 2028 650,000 669,266 New Hampshire Health & Educational Facilities Authority Rev. (Exeter Hospital), 6%, 2024 500,000 546,405 Orange County, FL, Health Facilities Authority Hospital Rev. (Orlando Regional Healthcare), 5.75%, 2012 (c) 1,000,000 1,107,470 Rhode Island Health & Education Building Rev., Hospital Financing (Lifespan Obligated Group), 6.5%, 2012 (c) 500,000 572,580 South Dakota Health & Education Facilities Authority Rev. (Prairie Lakes Health Care System), 5.625%, 2032 500,000 514,085 Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Healthcare), 6.25%, 2020 300,000 317,166 Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Regional Medical Center), MBIA, 6.625%, 2013 1,000,000 1,011,620 Wisconsin Health & Educational Facilities Authority Rev. (Marshfield Clinic), "A", 5.375%, 2034 500,000 512,075 ------------ $ 14,534,615 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Orange County, FL, Health Facilities Authority Rev. (Orlando Lutheran), Term Care - 0.3% 5.7%, 2026 $ 250,000 $ 248,192 ----------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.4% Orange County, FL, Health Facilities Authority Rev. (GF/Orlando Healthcare Facilities), 8.875%, 2021 $ 300,000 $ 334,161 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Brazos River, TX, Brazoria County Environmental Rev. (Dow Chemical, Chemicals - 0.7% Co.), "A", 6.625%, 2033 $ 500,000 $ 555,470 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - California Pollution Control Financing Authority, Solid Waste Disposal 1.0% Rev. (Waste Management, Inc.), "B", 5%, 2027 $ 500,000 $ 501,950 Nevada Department of Business Rev. (Republic Services, Inc.), 5.625%, 2026 300,000 322,803 ------------ $ 824,753 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 1.0% Madison County, FL, Rev. (Twin Oaks Project), "A", 6%, 2025 $ 150,000 $ 153,413 Park Creek Metropolitan District, CO, Rev., Custodial Receipts, CR-2, 7.875%, 2032 (a) 160,000 176,827 Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific Corp.), 5.7%, 2026 500,000 523,740 ------------ $ 853,980 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Delta County, MI, Economic Development Corp., Environmental Paper - 0.7% Improvements Rev. (Mead Westvaco Escanaba), "A", 6.25%, 2012 (c) $ 500,000 $ 565,145 ----------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Palm Beach County, FL, Industrial Development Rev. (South Florida Fair Tourism - 1.2% Project), MBIA, 5.5%, 2020 $ 1,000,000 $ 1,058,420 ----------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.2% Summit County, OH, Port Authority Building (Seville), "A", 5.1%, 2025 $ 200,000 $ 202,754 ----------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Bay County, FL, Housing Finance Authority, Multi-family Rev. (Andrews Revenue - 3.3% Place II Apartments), FSA, 5%, 2035 $ 500,000 $ 502,475 Collier County, FL, Housing Finance Authority Rev. (Goodlette Arms Housing Project), "A", FNMA, 4.9%, 2032 500,000 523,815 Florida Housing Finance Corp., Housing Rev. (Augustine Club Apartments), "D", MBIA, 5.5%, 2020 500,000 520,445 Florida Housing Finance Corp., Housing Rev. (Crossing At University Apartments), AMBAC, 5.1%, 2018 1,115,000 1,130,588 Palm Beach County, FL, Housing Finance Rev. (Westlake Apartments Project), Phase II, FSA, 4.3%, 2012 140,000 141,674 ------------ $ 2,818,997 ----------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 4.9% Escambia County, FL, Sales Tax Rev., AMBAC, 5%, 2022 $ 1,160,000 $ 1,213,789 Hillsborough County, FL, Court Facilities Rev., 3%, 2006 300,000 298,713 Miami-Dade County, FL, Special Obligations, Capital Appreciation, "A", MBIA, 0%, 2032 2,000,000 515,800 Pasco County, FL, Sales Tax Rev., Half Central, AMBAC, 5%, 2023 1,000,000 1,045,860 Volusia County, FL, Tourist Development Tax Rev., FSA, 5%, 2034 815,000 840,363 Wyandotte County-Kansas City, KS, Sales Tax 2nd Lien Area B, 5%, 2020 250,000 255,128 ------------ $ 4,169,653 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Local - 3.5% Brevard County, FL, Housing Finance Authority, "B", GNMA, 6.5%, 2022 $ 39,000 $ 39,304 Lee County, FL, Housing Finance Authority Rev., "A", GNMA, 7%, 2031 95,000 96,019 Lee County, FL, Housing Finance Authority, Multi-County Program, "A", GNMA, 7.2%, 2033 35,000 35,429 Manatee County, FL, Housing Finance Mortgage Rev., Single Family, Subordinated Series 3, GNMA, 5.3%, 2028 70,000 70,955 Miami-Dade County, FL, Housing Finance Authority Rev. (Home Ownership Mortgage), "A", GNMA, 5.2%, 2031 485,000 492,314 Palm Beach County, FL, Single Family Rev., "B", GNMA, 5.5%, 2022 235,000 238,133 Pinellas County, FL, Housing Finance Authority Rev., "A-1", GNMA, 4.85%, 2037 1,000,000 984,210 Pinellas County, FL, Housing Finance Authority Rev., Multi-County Program, "A", GNMA, 5.45%, 2034 595,000 611,000 Pinellas County, FL, Housing Finance Authority Rev., Multi-County Program, "B", GNMA, 6.2%, 2031 380,000 386,992 ------------ $ 2,954,356 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Florida Housing Finance Corp. Rev., Homeowner Mortgage, "1", GNMA, State - 2.7% 4.8%, 2031 $ 1,000,000 $ 983,260 Florida Housing Finance Corp. Rev., Homeowner Mortgage, "4", FSA, 5.85%, 2031 400,000 408,392 Florida Housing Finance Corp. Rev., Homeowner Mortgage, "5", 5%, 2034 920,000 938,492 ------------ $ 2,330,144 ----------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.3% Delaware County, PA, Industrial Development Authority, Resource Recovery Facilities Rev. (American Ref-Fuel Co.), "A", 6.2%, 2019 $ 200,000 $ 209,036 ----------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 3.7% Florida Municipal Loan Council Rev., "B", MBIA, 5.625%, 2009 (c) $ 1,000,000 $ 1,074,340 Florida Municipal Loan Council Rev., "C", MBIA, 5.25%, 2022 1,000,000 1,072,100 St. Augustine, FL, Capital Improvement Rev, AMBAC, 5%, 2029 1,000,000 1,040,680 ------------ $ 3,187,120 ----------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 2.0% Orange County, FL, Tourist Development Tax Rev., Subordinated, AMBAC, 5.25%, 2027 $ 1,500,000 $ 1,585,065 Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 130,000 135,049 ------------ $ 1,720,114 ----------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 4.1% Arbor Greene, FL, Community Development District, 5.75%, 2006 $ 46,000 $ 46,000 Arborwood Community Development District, Florida Capital Improvement Rev. (Master Infrastructure Projects), "B", 5.1%, 2014 200,000 197,798 Concord Station Community Development District, FL, Capital Improvement Rev., 5%, 2015 185,000 183,028 Concorde Estates Community Development District, FL, Capital Improvement Rev., "B", 5%, 2011 235,000 234,497 Durbin Crossing Community Development District, "B-1", 4.875%, 2010 250,000 249,012 Fishawk Community Development District II, "B", 5%, 2007 100,000 99,567 Greyhawk Landing Community Development, FL, Special Assessment Rev., "B", 6.25%, 2009 100,000 101,077 Heritage Harbour South Community, Development District, FL, Rev., Capital Improvement, "B", 5.4%, 2008 25,000 24,827 Killarney, FL, Community Development District, "B", 5.125%, 2009 165,000 164,535 Lakes by the Bay South Community Development District, FL, Special Assessment, "B", 5.3%, 2009 180,000 179,690 Middle Village Community Development District, FL, Special Assessment, "B", 5%, 2009 95,000 94,908 Middle Village, FL, Community Development District Rev., "A", 5.8%, 2022 95,000 97,304 New Port Tampa Bay Community Development District, FL, Special Assessment, "B", 5.3%, 2012 200,000 198,724 North Springs Improvement District, FL, Special Assessment Rev. (Parkland Golf Country Club), "B-2", 5.125%, 2015 250,000 247,825 Old Palm Community Development District, FL, Special Assessment (Palm Beach Gardens), "B", 5.375%, 2014 $ 155,000 $ 155,888 Palm Glades Community Development District, FL, Special Assessment, "A", 5.3%, 2036 200,000 200,732 Panther Trace, FL, Community Development District Rev., 5.4%, 2008 10,000 9,938 Panther Trace, FL, Community Development District Rev., "B", 5%, 2010 200,000 198,862 Parkway Center, FL, Community Development District Rev., "B", 5.625%, 2014 100,000 101,130 Renaissance Community Development, FL, "B", 6.25%, 2008 100,000 100,687 Tuscany Reserve Community Development District, FL, "B", 5.25%, 2016 250,000 250,453 Villa Portofino West Community Development District, FL, Special Assessment, "A", 5.35%, 2036 200,000 200,948 Watergrass Community Development District, FL, Special Assessment Rev., "B", 4.875%, 2010 200,000 198,570 ------------ $ 3,536,000 ----------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Louisiana Tobacco Settlement Authority, "B", 5.875%, 2039 $ 250,000 $ 263,573 South Carolina Tobacco Settlement Authority, "B", 6.375%, 2030 250,000 280,133 ------------ $ 543,706 ----------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 1.2% Lee County, FL, Transportation Facilities Rev., "A", AMBAC, 5%, 2027 $ 1,000,000 $ 1,043,560 ----------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation, Railroad II R Tax - 7.3% 227 1, MBIA, 5.50%, 2020 (u) $ 5,000,000 $ 5,685,200 St. Johns County, FL, Rev. Transportation Improvement, AMBAC, 5%, 2027 500,000 520,255 ------------ $ 6,205,455 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Florida Board Regents, Housing Rev. (University of Central Florida), Dormitories - 3.5% FGIC, 5.25%, 2020 $ 1,185,000 $ 1,270,877 Florida Board Regents, Housing Rev., MBIA, 5.3%, 2020 610,000 653,401 Florida Finance Authority, Capital Loan Projects, "F", MBIA, 5.125%, 2021 1,000,000 1,025,380 ------------ $ 2,949,658 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Brazos River Authority, TX, Pollution Control Rev. (Texas Utility Co.), Owned - 0.5% "C", 6.75%, 2038 $ 215,000 $ 241,359 Port Morrow, OR, Pollution Control Rev. (Portland General Electric), 5.2%, 2033 200,000 206,576 ------------ $ 447,935 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 3.1% Palm Coast, FL, Utility Systems Rev., MBIA, 5%, 2024 $ 250,000 $ 261,265 Port St. Lucie, FL, Utility Rev., Capital Appreciation, "A", FGIC, 0%, 2006 (c) 1,405,000 568,154 Port St. Lucie, FL, Utility Rev., MBIA, 5%, 2022 1,000,000 1,042,670 St. Lucie West, FL, Utility Rev., MBIA, 5.25%, 2034 720,000 768,204 ------------ $ 2,640,293 ----------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 15.5% Bay County, FL, Water Systems Rev., AMBAC, 5.625%, 2010 (c) $ 1,000,000 $ 1,085,640 Florida Community Services Corp., AMBAC, 5.5%, 2018 1,125,000 1,209,229 Lee County, FL, Industrial Development Authority (Bonita Springs Utilities Project), MBIA, 6.05%, 2015 1,000,000 1,021,970 Miami Beach, FL, Stormwater Rev., FGIC, 5.25%, 2020 1,000,000 1,059,640 Miami-Dade County, FL, Stormwater Utility Rev., MBIA, 5%, 2028 2,000,000 2,076,240 Orlando, FL, Utilities Commission, Water & Electric Rev. "C", 5%, 2027 1,000,000 1,035,830 Pinellas County, FL, Sewer Rev., FSA, 5%, 2032 1,500,000 1,549,155 Polk County, FL, Utility Systems Rev., "A", FGIC, 5%, 2030 1,000,000 1,039,240 Polk County, FL, Utility Systems Rev., FGIC, 5%, 2023 1,000,000 1,045,060 Seminole County, FL, Water & Sewer Rev., MBIA, 6%, 2019 940,000 1,080,088 Tohopekaliga Water Authority, Florida Utility System Rev., "A", FSA, 5%, 2024 1,000,000 1,045,060 ------------ $ 13,247,152 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $86,092,289) $ 89,707,725 ----------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 2.1% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Burke County, GA, Development Authority Pollution Control Rev. (Oglethorpe Power Corp.), "A", 3.22%, due 4/05/06 $ 1,000,000 $ 1,000,000 Georgia Municipal Electric Authority, 3.05%, due 4/05/06 100,000 100,000 Jefferson County, AL, Sewer Rev., Warrants, "B-4", 3.22%, due 4/06/06 100,000 100,000 Lincoln County, WY, Pollution Control Rev. (Exxon Mobile Corp.), 3.13%, due 4/03/06 600,000 600,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 1,800,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $87,892,289) $ 91,507,725 ----------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (7.2)% (6,135,606) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $ 85,372,119 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ----------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $2,000,000 Fixed - 3 Year Floating - 7 day $27,467 BMA Swap Index (2.795%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/06/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 5,302 BMA Swap Index (3.938%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/16/16 USD 1,500,000 Fixed - 10 Year Floating - 7 Day 3,864 BMA Swap Index (3.977%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 21,024 BMA Swap Index (3.742%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/30/16 USD 1,500,000 Fixed - 10 Year Floating - 7 Day 11,519 BMA Swap Index (3.926%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/15/18 USD 1,500,000 Fixed - 12 Year Floating - 7 Day 7,896 BMA Swap Index (4.019%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 1,000,000 Fixed - 15 Year Floating - 7 Day 15,981 BMA Swap Index (4.011%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 850,000 Floating - 3 Month Fixed - 20 Year (13,172) LIBOR Swap Index LIBOR Swap Index (5.363%) ----------------------------------------------------------------------------------------------------------------------------------- $79,881 ======= At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) GEORGIA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes. Municipal Bonds - 105.5% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 5.7% Atlanta, GA, Airport Passenger Facilities Rev., "J", FSA, 5%, 2029 $ 750,000 $ 776,250 Atlanta, GA, Airport Passenger Facilities Rev., "J", FSA, 5%, 2034 1,250,000 1,288,287 Atlanta, GA, Airport Rev., "B", FSA, 5.25%, 2033 1,000,000 1,057,430 Augusta, GA, Airport Rev., "B", 5.35%, 2028 350,000 352,887 ------------ $ 3,474,854 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 5.1% Columbia County, GA (Courthouse Detention Center), 5.625%, 2020 $ 1,490,000 $ 1,567,063 Gilmer County, GA, Building Authority Rev., Courthouse Project, "A", XLCA, 5%, 2029 500,000 520,190 Macon Bibb County, GA, Urban Development Rev. (Bibb County Public Facilities Project), 5.5%, 2022 1,000,000 1,073,110 ------------ $ 3,160,363 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 3.0% Puerto Rico Municipal Finance Agency, FSA, 6%, 2009 (c)(u) $ 1,000,000 $ 1,083,340 Suwanee, GA, MBIA, 5.25%, 2032 750,000 786,623 ------------ $ 1,869,963 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 7.6% Fayette County, GA, School District Rev., FSA, 0% to 2010, 4.9% to 2024 $575,000 $465,830 Forsyth County, GA, School District, 6%, 2010 (c) 750,000 823,387 Fulton County, GA, School District, 6.375%, 2010 2,000,000 2,198,880 Wilkes County, GA, School District, 5%, 2024 1,115,000 1,167,951 ------------ $ 4,656,048 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Athens Clarke County, GA (United Catholic Health East Issue), Hospitals - 9.2% 5.5%, 2032 $ 500,000 $ 522,765 Chatham County, GA, Hospital Authority Rev. (Memorial Health Medical Center), "A", 6%, 2017 350,000 375,819 Chatham County, GA, Hospital Authority Rev., Hospital Improvement (Memorial Health University), "A", 5.375%, 2026 200,000 207,870 Cobb County, GA, Hospital Authority Revolving, Refunding & Improvement Rev., Anticipation Certificates, AMBAC, 5.25%, 2023 750,000 803,707 Coffee County, GA, Hospital Authority Rev. (Coffee Regional Medical Center, Inc.), 5%, 2026 350,000 345,978 Gainesville & Hall County, GA, Hospital Authority Rev. (Northeast Georgia Health System, Inc.), 5.5%, 2031 500,000 515,900 Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare System, Inc.), 6.125%, 2009 280,000 279,093 Tift County, GA, Hospital Authority Rev., Anticipation Certificates, AMBAC, 5%, 2022 2,000,000 2,079,800 Valdosta & Lowdes County, GA, Hospital Authority Rev. (Southern Georgia Medical Center Project), AMBAC, 5.25%, 2027 500,000 528,170 ------------ $ 5,659,102 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Fulton County, GA, Residential Care Facilities (Canterbury Court), "A", Term Care - 0.2% 6.125%, 2034 $ 150,000 $ 150,681 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - Savannah, GA, Economic Development Authority, Solid Waste Disposal Rev. 0.9% (Georgia Waste Management Project), "A", 5.5%, 2016 $ 500,000 $ 525,120 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Cartersville, GA, Development Authority Waste (Anheuser Busch Project), Other - 1.6% 5.95%, 2032 $ 750,000 $ 813,090 Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 160,000 168,723 ------------ $ 981,813 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Effingham County, GA, Development Authority, Solid Waste Disposal Rev. Paper - 2.0% (Fort James), 5.625%, 2018 $ 150,000 $ 147,460 Savannah, GA, Economic Development Pollution (Union Camp Corp.), 6.15%, 2017 1,000,000 1,101,020 ------------ $ 1,248,480 ----------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing De Kalb County, GA, Housing Authority Multi-Family Housing Rev. Revenue - 3.8% (Castaways Apartments), "A", GNMA, 5.4%, 2029 $ 595,000 $ 615,986 Hinesville, GA, Leased Housing Corp., "A", FHA, 6.7%, 2017 900,000 902,016 Savannah, GA, Housing Authority (Chatham Gardens Project), FNMA, 5.625%, 2031 750,000 794,205 ------------ $ 2,312,207 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 4.8% Georgia Housing & Finance Authority Rev., 5.5%, 2032 $ 1,000,000 $ 1,005,710 Georgia Housing & Finance Authority Rev., Single Family Mortgage, "A", 5.6%, 2032 675,000 687,501 Georgia Housing & Finance Authority Rev., Single Family Mortgage, "A-2", 4.85%, 2037 500,000 488,420 Georgia Housing & Finance Authority Rev., Single Family Mortgage, "C", 5.1%, 2022 750,000 756,263 ------------ $ 2,937,894 ----------------------------------------------------------------------------------------------------------------------------------- State & Agency - County Commissioners of Georgia Assoc., Leasing Program, Rockdale Other - 2.6% County, GA (Public Purpose Project), AMBAC, 5.625%, 2020 $ 500,000 $ 534,375 Fulton County, GA, Facilities Corp., Fulton County, GA (Public Purpose Project), AMBAC, 5.9%, 2019 1,000,000 1,073,540 ------------ $ 1,607,915 ----------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 3.8% Clayton County, GA, Development Authority Rev., "A", 6.25%, 2009 (c) $ 500,000 $ 549,165 College Park, GA, Bus & Industrial Development Civic Center Project, "N", AMBAC, 5.25%, 2025 500,000 539,055 De Kalb County, GA, Public Safety & Judicial Facilities Authority Rev., 5%, 2029 400,000 417,096 Fayette County, GA, Public Facilities Authority (Criminal Justice Center Project), 6.25%, 2010 (c) 755,000 835,891 ------------ $ 2,341,207 ----------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 2.9% Puerto Rico Convention Center, District Authority Hotel Occupancy Tax Rev., "A", CIFG, 4.5%, 2036 $ 750,000 $ 730,598 Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 1,000,000 1,050,330 ------------ $ 1,780,928 ----------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 0.5% Atlanta, GA, Tax Allocation (Eastside Project), "B", 5.6%, 2030 $ 150,000 $ 153,306 Atlanta, GA, Tax Allocation (Princeton Lakes Project), 5.5%, 2031 150,000 150,510 ------------ $ 303,816 ----------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 365,000 $ 374,165 ----------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Commonwealth of Puerto Rico Highway & Transportation Authority, "Y", Tax - 1.1% 5.5%, 2036 $ 610,000 $ 652,328 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Atlanta, GA, Development Authority Rev. (Tuff Yamacraw LLC Project), 9.8% "A", AMBAC, 5%, 2027 $ 335,000 $ 359,760 Fulton County, GA (Morehouse College), AMBAC, 6.25%, 2021 980,000 1,087,516 Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation Funding), "A", 5%, 2031 265,000 272,815 Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation), "A", 5.75%, 2017 1,000,000 1,089,730 Private Colleges & University Authority (Emory University), "A", 5.75%, 2009 (c) 1,000,000 1,076,750 Private Colleges & University Authority (Emory University), "A", 5.75%, 2010 (c) 1,000,000 1,091,280 Private Colleges & University Authority (Mercer University), 5.75%, 2021 500,000 535,400 Savannah, GA, Economic Development Authority Rev. (College of Art & Design, Inc.), ETM, 6.2%, 2009 (c) 500,000 519,330 ------------ $ 6,032,581 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Georgia Private College & University Authority Rev. (Mercer Housing Dormitories - 2.6% Corp.), "A", 6%, 2021 $ 500,000 $ 529,275 Marietta, GA, Development Authority Rev., Student Housing (Southern Polytech University), "A", 6.25%, 2007 (c) 1,000,000 1,058,240 ------------ $ 1,587,515 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 5.8% Georgia Municipal Electric Authority Power Rev., "A", MBIA, 6.5%, 2020 $ 1,250,000 $ 1,537,375 Griffin, GA, Combined Public Utility Rev., Refunding & Improvement, AMBAC, 5%, 2025 500,000 521,905 Monroe County, GA, Pollution Control Rev. (Oglethorpe Power Corp.), "A", 6.8%, 2012 1,000,000 1,136,740 Summerville, GA, Public Utility Rev., Refunding & Improvement, 5.75%, 2026 350,000 372,950 ------------ $ 3,568,970 ----------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 31.9% Atlanta, GA, Water & Wastewater Rev., "A", MBIA, 5%, 2033 $ 500,000 $ 514,210 Atlanta, GA, Water & Wastewater Rev., FGIC, 5.5%, 2016 (u) 8,000,000 8,744,400 Augusta, GA, Water & Sewer Rev., FSA, 5.25%, 2034 1,000,000 1,064,770 Clayton County, GA, Water Authority, Water & Sewer Rev., 6.25%, 2010 (c) 1,000,000 1,103,360 Columbia County, GA, Water & Sewer Rev., FGIC, 6.25%, 2010 (c) 470,000 516,314 De Kalb County, GA, Water & Sewer Rev., 5.125%, 2031 1,200,000 1,257,504 Fairburn, GA, Utility Rev., 5.75%, 2020 500,000 527,990 Forsyth County, GA, Water & Sewer Authority, 6.25%, 2010 (c) 1,105,000 1,217,290 Fulton County, GA, Water & Sewer Rev., FGIC, 6.375%, 2014 100,000 111,947 Fulton County, GA, Water & Sewer Rev., FGIC, ETM, 6.375%, 2014 (c) 2,150,000 2,410,430 Gainesville, GA, Water & Sew Rev., FGIC, 5.625%, 2019 1,000,000 1,074,990 Jackson County, GA, Water & Sewer Authority, "A", AMBAC, 5.75%, 2017 1,000,000 1,094,890 ------------ $ 19,638,095 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $61,483,781) $ 64,864,045 ----------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.5% ----------------------------------------------------------------------------------------------------------------------------------- Georgia Municipal Electric Authority, 3.05%, due 4/05/06 $ 100,000 $ 100,000 Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A", 3.22%, due 4/06/06 200,000 200,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 300,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $61,783,781) $ 65,164,045 ----------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (6.0)% (3,667,632) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $ 61,496,413 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS
NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ----------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $1,000,000 Fixed - 3 Year Floating - 7 day $13,733 BMA Swap Index (2.795%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/16/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 2,576 BMA Swap Index (3.977%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 21,024 BMA Swap Index (3.742%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/30/16 USD 1,500,000 Fixed - 10 Year Floating - 7 Day 11,519 BMA Swap Index (3.926%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/15/18 USD 1,500,000 Fixed - 12 Year Floating - 7 Day 7,896 BMA Swap Index (4.019%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 1,000,000 Fixed - 12 Year Floating - 7 Day 19,031 BMA Swap Index (3.861%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 600,000 Floating - 3 Month Fixed - 20 Year (9,298) LIBOR Swap Index LIBOR Swap Index (5.363%) ----------------------------------------------------------------------------------------------------------------------------------- $66,481 ======= At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) MARYLAND MUNICIPAL BOND FUND (Not Restated) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes. Municipal Bonds - 96.6% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Airport and Port Maryland Transportation Authority Rev. (Baltimore/Washington Revenue - 0.8% International Airport), "A", AMBAC, 5%, 2027 $ 1,000,000 $ 1,035,430 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 4.1% Baltimore, MD, "B", 7.15%, 2009 $ 2,120,000 $ 2,350,910 Baltimore, MD, Public Improvement, "A", MBIA, 7%, 2009 1,000,000 1,110,980 Frederick County, MD, Public Facilities, 5.25%, 2009 (c) 2,000,000 2,114,600 ------------ $ 5,576,490 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 14.1% Howard County, MD, "B", 0%, 2008 $ 1,000,000 $ 914,320 Howard County, MD, Consolidated Public Improvement, "A", 5.5%, 2008 (c) 1,000,000 1,043,770 Howard County, MD, Consolidated Public Improvement, "A", 5.5%, 2008 (c) 2,000,000 2,087,540 Prince George's County, MD, 0%, 2007 5,110,000 4,887,255 Prince George's County, MD, Consolidated Public Improvement, "A", 5%, 2023 2,000,000 2,112,420 Prince George's County, MD, Unrefunded Balance, Public Improvement, FSA, 5.375%, 2015 80,000 85,322 Puerto Rico Municipal Finance Agency, Rites, FSA, 7.101%, 2019 (v)(z) 1,000,000 1,135,640 Washington Suburban Sanitation District, General Construction Rev., 5%, 2027 930,000 973,766 Washington Suburban Sanitation District, General Construction Rev., 5%, 2028 980,000 1,024,619 Washington Suburban Sanitation District, General Construction Rev., 5%, 2029 1,025,000 1,070,090 Worcester County, MD, Public Improvement, 5.625%, 2010 (c) 1,620,000 1,748,255 Worcester County, MD, Public Improvement, 5.625%, 2010 (c) 2,030,000 2,190,715 ------------ $ 19,273,712 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Maryland Health & Higher Educational Facilities Authority Rev. Hospitals - 19.9% (Peninsula Regional Medical Center), 5%, 2036 $ 1,000,000 $ 1,018,390 Maryland Health & Higher Educational Facilities Authority Rev. (Adventist Healthcare), "A", 5.75%, 2025 1,000,000 1,052,800 Maryland Health & Higher Educational Facilities Authority Rev. (Anne Arundel Health Systems), "A", FSA, 5%, 2023 1,000,000 1,044,540 Maryland Health & Higher Educational Facilities Authority Rev. (Calvert Health Systems), 5.5%, 2039 1,000,000 1,048,480 Maryland Health & Higher Educational Facilities Authority Rev. (Carroll County General Hospital), 6%, 2037 1,000,000 1,058,430 Maryland Health & Higher Educational Facilities Authority Rev. (Doctors Community Hospital), 5.5%, 2024 1,000,000 1,001,800 Maryland Health & Higher Educational Facilities Authority Rev. (Frederick Memorial Hospital), 5.125%, 2035 1,000,000 1,007,620 Maryland Health & Higher Educational Facilities Authority Rev. (Good Samaritan Hospital), ETM, 5.7%, 2009 (c) 1,085,000 1,133,706 Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins Hospital), 5%, 2021 750,000 772,440 Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins Medical Institutions), "A", 5%, 2037 750,000 763,140 Maryland Health & Higher Educational Facilities Authority Rev. (Lifebridge Health), "A", 5.125%, 2034 1,000,000 1,018,420 Maryland Health & Higher Educational Facilities Authority Rev. (Medlantic/Helix Issue), "B", AMBAC, 5.25%, 2038 1,500,000 1,668,660 Maryland Health & Higher Educational Facilities Authority Rev. (Medstar Health), 5.5%, 2033 800,000 829,224 Maryland Health & Higher Educational Facilities Authority Rev. (Mercy Medical Center), FSA, 5.625%, 2017 1,800,000 1,843,650 Maryland Health & Higher Educational Facilities Authority Rev. (North Arundel Hospital), 6.5%, 2010 (c) 500,000 557,455 Maryland Health & Higher Educational Facilities Authority Rev. (Suburban Hospital), "A", 5.5%, 2016 1,000,000 1,077,410 Maryland Health & Higher Educational Facilities Authority Rev. (Union Hospital of Cecil County Issue), 5.625%, 2032 1,000,000 1,045,590 Maryland Health & Higher Educational Facilities Authority Rev. (Union Hospital of Cecil County Issue), 5%, 2035 500,000 506,980 Maryland Health & Higher Educational Facilities Authority Rev. (University of Maryland Medical Systems), 6.625%, 2010 (c) 1,000,000 1,106,890 Maryland Health & Higher Educational Facilities Authority Rev. (University of Maryland Medical Systems), "B", AMBAC, 5%, 2024 1,000,000 1,048,160 Maryland Health & Higher Educational Facilities Authority Rev. (Upper Chesapeake Hospital), "A", FSA, 5.5%, 2020 2,000,000 2,078,040 Maryland Health & Higher Educational Facilities Rev. (Helix Health Issue), AMBAC, ETM, 5%, 2027 (c) 1,000,000 1,062,920 Maryland Industrial Development Authority, Economic Development Rev., RIBS, FSA, 8.36%, 2022 (p) 1,400,000 1,776,180 Maryland State Health & Higher Educational Facilities Authority Rev. (Catholic Health), "A", 6%, 2020 245,000 269,904 Maryland State Health & Higher Educational Facilities Authority Rev. (Catholic Health), "A", ETM, 6%, 2020 (c) 755,000 820,723 Montgomery County, MD, Economic Development (Trinity Healthcare Group), 5.125%, 2022 500,000 517,945 ------------ $ 27,129,497 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Maryland Health & Higher Educational Facilities Authority Rev. Term Care - 1.1% (Bradford Oaks Nursing & Rehabilitation Center), 6.375%, 2027 $ 1,000,000 $ 1,004,230 Maryland Health & Higher Educational Facilities Authority Rev. (Mercy Ridge), "A", 6%, 2035 150,000 155,106 Westminster, MD, Economic Development Rev. (Carroll Lutheran Village), "A", 6.25%, 2034 400,000 410,968 ------------ $ 1,570,304 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Baltimore, MD, Port Facilities Rev., Consolidated Coal Sales, "B", Chemicals - 1.2% 6.5%, 2011 $ 1,500,000 $ 1,587,675 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - Northeast Maryland Waste Disposal Authority Resources Recovery Rev. 0.5% (Baltimore Resco Retrofit Project), 5%, 2012 $ 690,000 $ 703,848 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev. Other - 0.3% (Hovensa Refinery), 5.875%, 2022 $ 375,000 $ 395,445 ----------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Maryland Industrial Development Authority Economic Development Tourism - 0.8% (Baltimore Aquarium Project), 5.2%, 2026 $ 1,000,000 $ 1,042,880 ----------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 4.4% Baltimore, MD, Convention Center Hotel Rev., "A", XLCA, 5.25%, 2039 $ 1,000,000 $ 1,066,010 Baltimore, MD, Convention Center Hotel Rev., "B", 5.875%, 2039 300,000 310,464 Harford County MD, Economic Development Rev. (Battelle Memorial Institute Project), 5.25%, 2034 1,600,000 1,669,952 Maryland Industrial Authority Economic Development Rev. (YMCA Baltimore), 8%, 2006 (c) 2,825,000 2,920,937 ------------ $ 5,967,363 ----------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 4.3% Baltimore, MD, City Housing Corp. Rev., "A", FHA, 7.25%, 2023 $ 1,040,000 $ 1,041,830 Baltimore, MD, City Housing Corp. Rev., FHA, 7.75%, 2009 420,000 418,669 Maryland Community Development Administration (Waters Landing II Apartments), "A", GNMA, 5.875%, 2033 1,500,000 1,570,275 Maryland Community Development Administration, "A", 5%, 2034 910,000 911,665 Maryland Community Development Administration, "A", 5.1%, 2044 970,000 972,386 Maryland Community Development Administration, "D", 5%, 2032 1,000,000 997,020 ------------ $ 5,911,845 ----------------------------------------------------------------------------------------------------------------------------------- Parking - 1.1% Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins Medical Institutions), AMBAC, 5%, 2034 $ 1,500,000 $ 1,554,195 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Prince George's County, MD, Housing Single Family Collateral, "A", Local - 0.3% 7.4%, 2032 $ 40,000 $ 40,204 Prince George's County, MD, Housing Single Family Collateral, "A", GNMA, 5.6%, 2034 85,000 85,811 Prince George's County, MD, Housing Single Family, "A", GNMA, 5.375%, 2018 240,000 244,598 ------------ $ 370,613 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Maryland Community Development Administration Housing, "A", State - 3.3% 5.875%, 2016 $ 1,155,000 $ 1,184,568 Maryland Community Development Administration Residential, "B", 4.75%, 2019 785,000 787,261 Maryland Community Development Administration Single Family Program, First Series, 5.15%, 2018 2,000,000 2,024,520 Puerto Rico Housing Finance Authority Home Mortgage Rev., Mortgage Backed Securities, "A", 4.75%, 2023 180,000 180,254 Puerto Rico Housing Finance Authority Mortgage Backed Securities, "A", 4.375%, 2017 305,000 299,385 ------------ $ 4,475,988 ----------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.8% Northeast Maryland Waste Disposal Authority Solid Waste Rev., 6%, 2006 $ 1,100,000 $ 1,105,126 ----------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 4.2% Howard County, MD, COP, 8%, 2019 $ 805,000 $ 1,115,295 Howard County, MD, COP, 8%, 2019 385,000 533,402 Howard County, MD, COP, 8%, 2019 680,000 942,113 Howard County, MD, COP, 8.15%, 2021 450,000 640,004 Prince George's County, MD, COP, "A", MBIA, 0%, 2006 2,490,000 2,469,532 ------------ $ 5,700,346 ----------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - Maryland Stadium Authority, Lease Rev. (Convention Center Expansion), 4.5% AMBAC, 5.875%, 2012 $ 1,000,000 $ 1,011,290 Prince George's County, MD, Lease Development Authority Rev., MBIA, 0%, 2009 1,500,000 1,321,230 Puerto Rico Public Finance Corp., Commonwealth Appropriation, "E", 5.7%, 2010 (c) 1,235,000 1,323,574 Puerto Rico Public Finance Corp., Rites, AMBAC, 6.826%, 2013 (v)(z) 500,000 591,270 Puerto Rico Public Finance Corp., Rited, AMBAC, 6.826%, 2016 (v)(z) 1,520,000 1,844,490 ------------ $ 6,091,854 ----------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.5% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $ 1,000,000 $ 1,036,310 Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,000,000 1,053,060 ------------ $ 2,089,370 ----------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 1.6% Anne Arundel County, MD, Special Obligations (Arundel Mills Project), 5.125%, 2029 $ 1,555,000 $ 1,639,794 Prince George's County, MD, Special Obligations (National Harbor Project), 5.2%, 2034 500,000 498,710 ------------ $ 2,138,504 ----------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 235,000 $ 240,901 Guam Economic Development Authority Tobacco Settlement, "B", 5.5%, 2041 400,000 408,220 Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 235,000 236,781 ------------ $ 885,902 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Annapolis, MD, Economic Development Rev. (St. John's College), 14.2% 5.5%, 2018 $ 750,000 $ 771,735 Anne Arundel County, MD, Economic Development (Community College Project), 5.25%, 2028 1,600,000 1,691,168 Frederick County, MD, Educational Facilities Rev. (Mount St. Mary's College), "A", 5.7%, 2020 850,000 880,039 Maryland Health & Higher Education (College Of Art), 5%, 2030 750,000 758,888 Maryland Health & Higher Education (Loyola College), "A", 5%, 2040 1,000,000 1,012,050 Maryland Health & Higher Educational Facilities Authority Rev. (Goucher College), 5.375%, 2025 500,000 530,155 Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins University), 5.625%, 2027 1,400,000 1,446,536 Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins University), "A", 5%, 2032 2,000,000 2,066,920 Maryland Health & Higher Educational Facilities Authority Rev. (Loyola College), "A", MBIA, 5.5%, 2006 (c) 3,000,000 3,089,280 Montgomery County, MD, Rev. Authority (College Arts Center Project), "A", 5%, 2027 1,950,000 2,030,750 Morgan State University, MD, Academic, "A", MBIA, ETM, 0%, 2006 (c) 1,135,000 1,125,591 Morgan State University, MD, Academic, "A", MBIA, ETM, 0%, 2008 (c) 1,400,000 1,289,106 Morgan State University, MD, Academic, MBIA, 6.05%, 2015 1,500,000 1,676,100 Westminster, MD, Educational Facilities Rev. (McDaniel College), 5.5%, 2032 1,000,000 1,038,630 ------------ $ 19,406,948 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Maryland Economic Development Corp. (Morgan State University Dormitories - 3.7% Project), "A", 6%, 2034 $ 1,000,000 $ 1,037,550 Maryland Economic Development Corp. (University of Maryland College Park Project), AMBAC, 5%, 2019 1,850,000 1,928,551 Maryland Economic Development Corp., Collegiate Housing (Salisbury), "A", 6%, 2019 1,000,000 1,041,910 Maryland Economic Development Corp., Collegiate Housing Rev. (Towson University), "A", 5.75%, 2029 1,000,000 1,008,950 ------------ $ 5,016,961 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Secondary Maryland Industrial Development Financing Authority, Economic Schools - 0.3% Development Authority Rev., (Our Lady of Good Council), "A", 6%, 2035 $ 400,000 $ 424,272 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 3.6% Guam Power Authority Rev., Rites, AMBAC, 6.565%, 2015 (v)(z) $ 1,680,000 $ 1,875,149 Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,500,000 1,566,690 Puerto Rico Electric Power Authority Rev., RITES, FSA, 6.559%, 2015 (v)(z) 1,400,000 1,497,244 ------------ $ 4,939,083 ----------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Baltimore, MD, Project Rev., Refunding Water Projects, "A", FGIC, Revenue - 5.4% 5.125%, 2032 $ 1,000,000 $ 1,044,100 Baltimore, MD, Rev., LEVRRS, MBIA, 7.9%, 2020 (p) 3,000,000 3,752,880 Baltimore, MD, Wastewater Rev. Project, "A", MBIA, 5.65%, 2020 2,000,000 2,250,960 Puerto Rico Aqueduct & Sewer Authority Rev., ETM, 10.25%, 2009 (c) 250,000 277,590 ------------ $ 7,325,530 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $129,207,028) $131,719,181 ----------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.6% ----------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "A", 3.22%, due 4/06/06 $ 300,000 $ 300,000 Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "B", 3.22%, due 4/06/06 400,000 400,000 Triborough Bridge & Tunnel Authority, NY, Rev., "F", 3.16%, due 4/06/06 100,000 100,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 800,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $125,232,764) $132,519,181 ----------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (2.8)% 3,798,079 ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $136,317,260 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS
NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ----------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $3,000,000 Fixed - 3 Year Floating - 7 Day $41,200 BMA Swap Index (2.795%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/16/16 USD 1,500,000 Fixed - 10 Year Floating - 7 Day 3,864 BMA Swap Index (3.977%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 21,024 BMA Swap Index (3.742%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/30/16 USD 1,500,000 Fixed - 10 Year Floating - 7 Day 11,519 BMA Swap Index (3.926%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 2,000,000 Fixed - 12 Year Floating - 7 Day 38,062 BMA Swap Index (3.861%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 1,000,000 Fixed - 15 Year Floating -7 Day 15,981 BMA Swap Index (4.011%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 1,250,000 Floating - 3 Month Fixed - 20 Year (19,370) LIBOR Swap Index LIBOR Swap Index (5.363%) ----------------------------------------------------------------------------------------------------------------------------------- $112,280 ======== At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.7% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 4.3% Massachusetts Port Authority Rev., 6.125%, 2010 (c) $ 1,460,000 $ 1,594,130 Massachusetts Port Authority Rev., "A", AMBAC, 5%, 2035 2,000,000 2,056,480 Massachusetts Port Authority Rev., "A", FSA, 5.125%, 2017 1,275,000 1,335,257 Massachusetts Port Authority Rev., "A", MBIA, 5%, 2033 3,000,000 3,071,100 Massachusetts Port Authority Rev., "C", 6%, 2010 (c) 1,000,000 1,087,550 Massachusetts Port Authority Rev., ETM, 13%, 2013 (c) 660,000 889,786 ------------ $ 10,034,303 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 13.4% Boston, MA, "A", 5.75%, 2010 (c) $ 3,645,000 $ 3,912,871 Brookline, MA, 5.375%, 2019 1,800,000 1,938,906 Commonwealth of Massachusetts, 5.875%, 2009 (c) 1,000,000 1,076,120 Commonwealth of Massachusetts, "B", 5.25%, 2028 2,500,000 2,792,375 Commonwealth of Massachusetts, FGIC, ETM, 7%, 2009 (c) 1,150,000 1,224,865 Greater Lawrence, MA, San District, MBIA, 5.625%, 2020 1,640,000 1,759,703 Lynn, MA, AMBAC, 5.125%, 2018 3,690,000 3,864,426 Middleborough, MA, FGIC, 5.6%, 2010 (c) 75,000 80,712 Salisbury, MA, MBIA, 5.25%, 2031 2,790,000 2,975,033 State of Massachusetts, Consolidated Loan, "A", 6%, 2010 (c) 3,000,000 3,261,900 State of Massachusetts, Consolidated Loan, "B", 5.75%, 2010 (c) 1,000,000 1,079,440 State of Massachusetts, Consolidated Loan, "C", 5.75%, 2010 (c) 1,500,000 1,622,235 Sutton, MA, MBIA, 5.5%, 2017 1,000,000 1,069,060 Sutton, MA, MBIA, 5.5%, 2019 1,000,000 1,066,000 Westford, MA, FGIC, 5.25%, 2020 2,250,000 2,395,080 Weymouth, MA, MBIA, 5.375%, 2020 1,250,000 1,331,375 ------------ $ 31,450,101 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 7.5% Massachusetts Bay Transportation Authority, 6.20%, 2016 (u) $ 9,670,000 $ 11,028,828 Massachusetts Bay Transportation Authority, Unrefunded Balance, "A", 5.75%, 2018 320,000 343,939 Maynard, MA, MBIA, 5.5%, 2021 1,000,000 1,089,480 Springfield, MA, FSA, 6.25%, 2009 (c) 1,600,000 1,749,216 Worcester, MA, "A", FSA, 6%, 2016 2,955,000 3,233,863 ------------ $ 17,445,326 ----------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 6.8% Belmont, MA, 5%, 2015 $ 2,165,000 $ 2,195,569 Dudley-Charlton, MA, Regional School District, FGIC, 5.25%, 2015 (u) 2,730,000 2,983,617 Dudley-Charlton, MA, Regional School District, FGIC, 5.25%, 2016 (u) 2,860,000 3,136,619 Dudley-Charlton, MA, Regional School District, FGIC, 5.25%, 2018 (u) 3,130,000 3,453,517 Narragansett, MA, Regional School District, AMBAC, 6%, 2019 1,720,000 1,877,414 Tantasquama, MA, Regional School District, FSA, 5.375%, 2010 (c) 2,000,000 2,149,900 ------------ $ 15,796,636 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Massachusetts Development Finance Agency, Massachusetts Biomedical Hospitals - 10.9% Research, "C", 6.375%, 2016 $ 50,000 $ 54,672 Massachusetts Health & Educational Facilities Authority Rev. (Baystate Medical Center), "F", 5.75%, 2033 2,000,000 2,103,420 Massachusetts Health & Educational Facilities Authority Rev. (Berkshire Health Systems), 6.25%, 2031 1,350,000 1,431,756 Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), 6.5%, 2012 500,000 541,735 Massachusetts Health & Educational Facilities Authority Rev. (Caritas Christi), "B", 6.25%, 2022 20,000 21,493 Massachusetts Health & Educational Facilities Authority Rev. (Catholic Health East Issue), 5.5%, 2032 1,575,000 1,646,710 Massachusetts Health & Educational Facilities Authority Rev. (Covenant Health Systems, Inc.), 6.5%, 2017 75,000 83,288 Massachusetts Health & Educational Facilities Authority Rev. (Covenant Health Systems, Inc.), 6%, 2031 1,000,000 1,080,680 Massachusetts Health & Educational Facilities Authority Rev. (Jordan Hospital), 5.25%, 2018 1,330,000 1,325,465 Massachusetts Health & Educational Facilities Authority Rev. (Milford Whitinsville Hospital), 6.35%, 2032 50,000 52,946 Massachusetts Health & Educational Facilities Authority Rev. (Milford-Whitinsville Regional Hospital), "C", 5.25%, 2018 1,500,000 1,483,845 Massachusetts Health & Educational Facilities Authority Rev. (Milton Hospital), "C", 5.5%, 2016 800,000 817,280 Massachusetts Health & Educational Facilities Authority Rev. (New England Medical Center Hospital), "H", FGIC, 5.375%, 2018 1,000,000 1,072,730 Massachusetts Health & Educational Facilities Authority Rev. (New England Medical Center Hospital), "H", FGIC, 5.375%, 2019 815,000 873,819 Massachusetts Health & Educational Facilities Authority Rev. (New England Medical Center Hospital), "H", FGIC, 5%, 2025 1,135,000 1,174,782 Massachusetts Health & Educational Facilities Authority Rev. (Newton Wellesley Hospital), "G", MBIA, 6.125%, 2015 1,000,000 1,047,890 Massachusetts Health & Educational Facilities Authority Rev. (North Adams Regional Hospital), "C", 6.625%, 2018 475,000 485,811 Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare Systems), 5.75%, 2021 100,000 109,053 Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare Systems), "A", MBIA, 5.375%, 2018 2,000,000 2,057,480 Massachusetts Health & Educational Facilities Authority Rev. (South Shore Hospital), "F", 5.625%, 2019 2,000,000 2,110,280 Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts Memorial Hospital), 6.5%, 2021 1,000,000 1,095,260 Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "D", 5%, 2033 500,000 493,370 Massachusetts Industrial Finance Agency Rev., Capital Appreciation (Mass Biomedical Research), "A", 0%, 2010 5,300,000 4,409,759 ------------ $ 25,573,524 ----------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Boston, MA, Industrial Development Finance Authority, Alzheimer's Term Care - 0.3% Center Project, FHA, 5.5%, 2012 $ 140,000 $ 140,189 Massachusetts Development Finance Agency Rev., First Mortgage, (Loomis Communities Project), "A", 6.9%, 2032 530,000 569,697 ------------ $ 709,886 ----------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.4% Massachusetts Health & Educational Facilities Authority Rev. (Learning Center for Deaf Children), 6.1%, 2019 $ 1,000,000 $ 1,016,200 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Airlines - 1.4% Massachusetts Port Authority Rev. (U.S. Airways), MBIA, 5.875%, 2016 $ 1,900,000 $ 2,000,339 Massachusetts Port Authority Rev., Special Facilities (U.S. Airways), "A", MBIA, 5.625%, 2011 1,140,000 1,170,529 ------------ $ 3,170,868 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Massachusetts Development Finance Agency Rev. (Waste Management, Environmental Services - Inc.), 5.5%, 2027 $ 750,000 $ 797,138 0.8% Massachusetts Development Finance Agency Rev., Resource Recovery Rev. (Waste Management, Inc.), 6.9%, 2029 1,000,000 1,089,130 ------------ $ 1,886,268 ----------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Massachusetts Development Finance Agency, Resource Recovery Rev. Other - 2.0% (Flour Corp.), 5.625%, 2019 $ 1,675,000 $ 1,747,427 Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.), 5.6%, 2017 2,100,000 2,179,443 Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 595,000 627,439 ------------ $ 4,554,309 ----------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 1.7% Martha's Vineyard, MA, Land Bank Rev., AMBAC, 5%, 2029 $ 785,000 $ 814,523 Massachusetts Development Finance Agency Rev. (WGBH Educational Foundation), "A", AMBAC, 5.375%, 2042 (c) 3,000,000 3,156,030 ------------ $ 3,970,553 ----------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Massachusetts Development Finance Agency (Morville House Apartments), Revenue - 4.8% "A", LOC, 4.95%, 2023 $ 2,500,000 $ 2,475,400 Massachusetts Development Finance Agency Rev. (Credit Housing-Chelsea Homes), "I-A", 5%, 2024 1,185,000 1,173,553 Massachusetts Housing Finance Agency Rev., "F", 5.125%, 2034 720,000 729,288 Massachusetts Housing Finance Agency Rev., "P", 5%, 2023 1,240,000 1,256,294 Massachusetts Housing Finance Agency Rev., "P", 5.1%, 2033 1,565,000 1,578,428 Massachusetts Housing Finance Agency Rev., "P", 5.2%, 2045 1,445,000 1,456,921 Massachusetts Housing Finance Agency Rev., Rental Mortgage, "A", AMBAC, 5.7%, 2020 1,475,000 1,502,391 Massachusetts Housing Finance Agency, Rev., "E", 5%, 2028 1,000,000 991,900 ------------ $ 11,164,175 ----------------------------------------------------------------------------------------------------------------------------------- Parking - 0.6% Rail Connections, Inc., Massachusetts Rev. (Route 128 Parking Garage), "A", 6%, 2009 (c) $ 450,000 $ 490,005 Rail Connections, Inc., Massachusetts Rev. (Route 128 Parking Garage), "A", 6%, 2009 (c) 500,000 544,450 Rail Connections, Inc., Massachusetts Rev. (Route 128 Parking Garage), "A", 6%, 2009 (c) 250,000 272,225 ------------ $ 1,306,680 ----------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Massachusetts Bay Transportation Authority, Sales Tax Rev., Revenue - 1.6% "A", 5%, 2012 (c) $ 2,020,000 $ 2,147,623 Route 3 North Transportation Improvement Associates, MBIA, 5.625%, 2010 (c) 1,500,000 1,610,535 ------------ $ 3,758,158 ----------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Massachusetts Housing Finance Agency, Single Family Housing Rev., State - 2.4% "102", 5%, 2029 $ 1,500,000 $ 1,503,270 Massachusetts Housing Finance Agency, Single Family Housing Rev., "118", 4.75%, 2030 1,500,000 1,461,630 Massachusetts Housing Finance Agency, Single Family Housing Rev., "91", 5.5%, 2031 660,000 664,719 Massachusetts Housing Finance Agency, Single Family, "122", 4.85%, 2031 2,000,000 1,995,220 ------------ $ 5,624,839 ----------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 1.1% Massachusetts Development Finance Agency Rev. (Ogden Haverhill Associates), 6.7%, 2014 $ 600,000 $ 655,470 Massachusetts Industrial Finance Agency, Resource Recovery Rev. (Ogden Haverhill Associates), 5.5%, 2013 25,000 26,113 Massachusetts Industrial Finance Agency, Resource Recovery Rev. (Ogden Haverhill Associates), 5.6%, 2019 1,925,000 1,990,123 ------------ $ 2,671,706 ----------------------------------------------------------------------------------------------------------------------------------- State & Agency - Massachusetts Development Finance Agency Rev., Visual & Performing Other - 0.6% Arts Project, 6%, 2015 $ 1,235,000 $ 1,406,986 ----------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 3.7% Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) $ 5,000,000 $ 5,533,700 University of Massachusetts, Building Authority Project, "1", AMBAC, 5.25%, 2023 1,500,000 1,604,220 University of Massachusetts, Building Authority Project, "B", AMBAC, 5.5%, 2018 1,400,000 1,504,454 ------------ $ 8,642,374 ----------------------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 0.7% Massachusetts Educational Financing Authority, Education Loan Rev., "E", AMBAC, 5%, 2015 $ 90,000 $ 91,383 Massachusetts Educational Financing Authority, Education Loan Rev., "Issue E", AMBAC, 5.3%, 2016 1,490,000 1,513,021 Massachusetts Educational Financing Authority, Education Loan Rev., "Issue G", "A", MBIA, 6.05%, 2017 60,000 61,114 ------------ $ 1,665,518 ----------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.9% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $ 2,950,000 $ 3,057,115 Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,420,000 1,495,345 ------------ $ 4,552,460 ----------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 3.5% Massachusetts Bay Transportation Authority Assessment, "A", 5.25%, 2030 $ 615,000 $ 641,980 Massachusetts Bay Transportation Authority Assessment, "A", 5.75%, 2010 (c) 3,460,000 3,734,274 Massachusetts Bay Transportation Authority, "A", 5%, 2014 (c) 3,500,000 3,748,465 ------------ $ 8,124,719 ----------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 675,000 $ 691,949 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.5%, 2039 400,000 410,744 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "A", 0%, 2050 2,000,000 130,800 ------------ $ 1,233,493 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - Massachusetts College Building Authority Project Rev., "A", MBIA, 20.0% 5.625%, 2009 (c) $ 1,650,000 $ 1,759,610 Massachusetts College Building Authority Project Rev., "A", XLCA, 5.25%, 2023 1,000,000 1,060,500 Massachusetts Development Finance Agency Rev. (Boston University), XLCA, 6%, 2059 1,500,000 1,781,820 Massachusetts Development Finance Agency Rev. (Hampshire College), 5.7%, 2034 1,000,000 1,047,930 Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), 6.625%, 2010 (c) 50,000 55,551 Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), "C", 5.75%, 2033 1,000,000 1,055,580 Massachusetts Development Finance Agency Rev. (Mount Holyoke College), 5.125%, 2021 1,000,000 1,051,670 Massachusetts Development Finance Agency Rev. (Suffolk University), 5.75%, 2009 (c) 1,000,000 1,069,270 Massachusetts Development Finance Agency Rev. (Suffolk University), 5.85%, 2009 (c) 1,000,000 1,072,290 Massachusetts Development Finance Agency Rev. (Western New England College), 6.125%, 2032 1,115,000 1,264,243 Massachusetts Development Finance Agency Rev., (Olin College), "B", XLCA, 5.25%, 2033 3,000,000 3,158,310 Massachusetts Development Finance Agency Rev., Higher Education (Smith College), 5.5%, 2010 (c) 1,210,000 1,304,513 Massachusetts Development Finance Agency, (Clark University), "N", XLCA, 5.125%, 2025 1,500,000 1,576,485 Massachusetts Health & Educational Authority Rev. (University of Massachusetts), "A", FGIC, 5.625%, 2010 (c) 2,170,000 2,354,081 Massachusetts Health & Educational Facilities Authority Rev. (Boston College), "K", 5.25%, 2023 4,350,000 4,354,959 Massachusetts Health & Educational Facilities Authority Rev. (Simmons College), "D", AMBAC, 6.05%, 2010 (c) 1,745,000 1,927,213 Massachusetts Health & Educational Facilities Authority Rev. (Simmons College), "F", FGIC, 5%, 2023 500,000 524,160 Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts Worcester Campus), "B", FGIC, 5.125%, 2019 1,780,000 1,879,591 Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "A", FGIC, 5.75%, 2010 (c) 2,395,000 2,610,430 Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "A", FGIC, 5.85%, 2010 (c) 1,200,000 1,312,860 Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "C", MBIA, 5.25%, 2031 3,000,000 3,175,530 Massachusetts Health & Educational Facilities Authority Rev. (University of Massachusetts), "D", FGIC, 5%, 2029 1,500,000 1,556,715 Massachusetts Health & Educational Facilities Authority Rev. (Wellesley College), "H", 5%, 2033 1,000,000 1,031,150 Massachusetts Health & Educational Facilities Authority Rev. (Wheelock College), "B", MBIA, 5.5%, 2021 3,275,000 3,484,698 Massachusetts Health & Educational Facilities Authority Rev. (Williams College), "H", 5%, 2028 1,000,000 1,038,670 Massachusetts Industrial Finance Agency Rev. (Brandeis University), "C", MBIA, 0%, 2009 1,000,000 870,350 Massachusetts Industrial Finance Agency Rev. (Brandeis University), "C", MBIA, 0%, 2010 1,000,000 831,620 Massachusetts Industrial Finance Agency Rev. (Brandeis University), "C", MBIA, 0%, 2011 500,000 397,790 Massachusetts State College Building Authority Project Rev., "A", XLCA, 5%, 2043 2,110,000 2,155,281 ------------ $ 46,762,870 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Secondary Massachusetts Development Finance Agency Rev. (Deerfield Academy), Schools - 4.6% "A", 5%, 2028 $ 1,000,000 $ 1,037,590 Massachusetts Development Finance Agency Rev. (Williston Northampton School), 6.5%, 2008 (c) 1,300,000 1,410,487 Massachusetts Development Finance Agency Rev. (Xaverian Brothers High School), 5.55%, 2019 1,000,000 1,044,820 Massachusetts Development Finance Agency Rev. (Xaverian Brothers High School), 5.65%, 2029 1,000,000 1,035,840 Massachusetts Development Finance Agency Rev., Middlesex School Education Project, 5.125%, 2023 500,000 528,505 Massachusetts Industrial Finance Agency Rev. (Belmont Hill School), 5.625%, 2020 1,150,000 1,205,568 Massachusetts Industrial Finance Agency Rev. (Concord Academy), 5.5%, 2027 2,000,000 2,078,360 Massachusetts Industrial Finance Agency Rev. (Dana Hall School), 5.9%, 2007 (c) 1,340,000 1,401,734 Massachusetts Industrial Finance Agency Rev. (Tabor Academy), 5.4%, 2018 1,000,000 1,051,330 ------------ $ 10,794,234 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Massachusetts Development Finance Agency Dominion Energy Brayton Owned - 0.9% Point, 5%, 2036 $ 2,000,000 $ 2,013,760 ----------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Massachusetts Development Finance Agency Rev. (Devens Electric Owned - 0.3% Systems), 5.625%, 2016 $ 725,000 $ 766,934 ----------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 8.0% Massachusetts State Water Authority General, "A", MBIA, 5%, 2028 $ 800,000 $ 838,024 Massachusetts State Water Pollution Abatement Trust, (Pool Program Bonds), "10", 5%, 2029 1,000,000 1,039,960 Massachusetts State Water Pollution Abatement Trust, MWRA Program, "A", 5%, 2032 1,510,000 1,556,070 Massachusetts State Water Resources Authority, "B", MBIA, 5%, 2035 1,000,000 1,039,410 Massachusetts Water Pollution Abatement Trust (Pool Program Bonds), "10", 5%, 2034 1,000,000 1,035,030 Massachusetts Water Pollution Abatement Trust, Series "5", 5.75%, 2009 (c) 975,000 1,047,101 Massachusetts Water Pollution Abatement Trust, Unrefunded Balance, Series "5", 5.75%, 2017 25,000 26,695 Massachusetts Water Resources Authority, "A", FGIC, 6%, 2010 (c) 1,000,000 1,097,040 Massachusetts Water Resources Authority, General, "J", FSA, 5%, 2023 500,000 520,290 Massachusetts Water Resources Authority, FGIC, 6.5%, 2019 (u) 8,020,000 9,532,011 Springfield, MA, Street & Sewer Commission, General, "A", AMBAC, 5%, 2021 1,000,000 1,051,860 ------------ $ 18,783,491 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $230,143,959) $244,880,371 ----------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.7% ----------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A", 3.22%, due 4/06/06 $ 650,000 $ 650,000 Jefferson County, AL, Sewer Rev., Warrants, "B-4", 3.22%, due 4/06/06 200,000 200,000 Triborough Bridge & Tunnel Authority, NY, Rev., "F", 3.16%, due 4/06/06 700,000 700,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 1,550,000 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $231,693,959) $246,430,371 ----------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (5.4)% (12,514,742) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $233,915,629 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ----------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $5,000,000 Fixed - 3 Year Floating - Day $68,667 BMA Swap Index (2.795%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/06/16 USD 2,000,000 Fixed - 10 Year Floating - 7 Day 10,603 BMA Swap Index (3.938%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/16/16 USD 3,000,000 Fixed - 10 Year Floating - 7 Day 7,728 BMA Swap Index (3.977%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 21,024 BMA Swap Index (3.742%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 6/15/18 USD 5,000,000 Fixed - 12 Year Floating - 7 Day 26,319 BMA Swap Index (4.019%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 2,000,000 Fixed - 15 Year Floating - 7 Day 31,962 BMA Swap Index (4.011%) BMA Swap Index ----------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 2,250,000 Floating - 3 Month Fixed - 20 Year (34,867) LIBOR Swap Index (4.900%) LIBOR Swap Index ----------------------------------------------------------------------------------------------------------------------------------- $131,436 ======== At March 31, 2006 the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. The following abbreviations are used in the Portfolio of Investments and are defined: BMA Bond Market Assn. COP Certificate of Participation ETM Escrowed to Maturity LIBOR London Interbank Offered Rate LOC Letter of Credit Insurers Inverse Floaters -------------------------------------------------------------------------------------------------------------------------------- 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 Security CIFG CDS IXIS Financial Guaranty FGIC Financial Guaranty Insurance Co. FHA Federal Housing Administration FNMA Federal National Mortgage Assn. FSA Financial Security Assurance, Inc. GNMA Government National Mortgage Assn. MBIA MBIA Insurance Corp. XLCA XL Capital Insurance Co. Portfolio Footnotes: (a) SEC Rule 144A restriction. (c) Refunded bond. (d) Non-income producing security - in default. (p) Primary inverse floater. (u) As restated - (See Note 8). Underlying security deposited into special purpose trust ("the trust") by investment banker upon creation of self-deposited inverse floaters. (See Note 7). (v) Secondary market inverse floater. (z) Restricted securities (excluding 144A issues) are not registered under the Securities Act of 1933 and are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. Maryland Fund holds the following restricted securities: ACQUISITION ACQUISITION CURRENT TOTAL % FUND SECURITY DATE COST MARKET VALUE OF NET ASSETS ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- Maryland Fund Guam Power Authority Rev., RITES, AMBAC, 6.565%, 2015 5/20/99 $1,760,909 $1,875,149 Puerto Rico Electric Power Authority Rev., RITES, FSA, 6.559%, 2015 9/16/99 1,367,100 1,497,244 1.1% Puerto Rico Municipal Finance Agency, RITES, FSA, 7.101%, 2019 1/06/00 905,080 1,135,640 Puerto Rico Public Finance Corp., RITES, AMBAC, 6.826%, 2013 9/30/99 509,110 591,270 Puerto Rico Public Finance Corp., RITES, AMBAC, 6.826%, 2016 3/31/99 1,729,851 1,844,490 ----------------------------------------------------------------------------------------------------------------------------------- Total Restricted Securities $6,943,793 5.1% ========== === SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (As Restated - See Note 8) 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 3/31/06 FUND FUND FUND FUND ASSETS -------------------------------------------------------------------------------------------------------------------------------- Investments - Identified cost $88,205,432 $132,770,928 $382,355,227 $87,892,289 Unrealized appreciation (depreciation) 4,185,664 6,976,691 20,706,529 3,615,436 -------------------------------------------------------------------------------------------------------------------------------- Total investments, at value $92,391,096 $139,747,619 $403,061,756 $91,507,725 Cash 68,561 3,614 645 42,965 Receivable for investments sold 620,000 34,203 -- 525,204 Receivable for fund shares sold 72,146 154,565 176,665 35,711 Interest receivable 1,385,167 1,953,548 5,037,540 1,579,536 Unrealized appreciation on interest rate swaps 88,161 149,546 255,578 97,711 -------------------------------------------------------------------------------------------------------------------------------- Total assets $94,625,131 $142,043,095 $408,532,184 $93,788,852 -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES -------------------------------------------------------------------------------------------------------------------------------- Distributions payable $130,620 $212,967 $639,062 $159,705 Payable for investments purchased -- -- -- 1,200,000 Payable to the holder of the floating rate certificate from trust assets 6,500,000 8,235,000 27,160,000 6,500,000 Payable for fund shares reacquired 130,265 668,836 292,150 406,663 Unrealized depreciation on interest rate swaps 43,189 57,140 256,625 17,830 Payable to affiliates - Management fee 1,319 1,088 3,117 705 Shareholder servicing costs 8,030 9,642 24,434 6,439 Distribution and service fees 876 3,719 18,644 780 Administrative services fee 54 56 113 46 Payable for independent trustees' compensation 11,629 10,896 22,421 10,816 Payable for interest expense and fees 93,947 65,234 152,536 52,732 Accrued expenses and other liabilities 58,320 63,070 88,793 61,017 -------------------------------------------------------------------------------------------------------------------------------- Total liabilities $6,978,249 $9,327,648 $28,657,895 $8,416,733 -------------------------------------------------------------------------------------------------------------------------------- Net assets $87,646,882 $132,715,447 $379,874,289 $85,372,119 -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF -------------------------------------------------------------------------------------------------------------------------------- Paid-in capital $83,359,647 $125,959,954 $362,138,585 $82,164,042 Unrealized appreciation (depreciation) on investments 4,230,636 7,069,097 20,705,482 3,695,317 Accumulated net realized gain (loss) on investments 214,781 (385,547) (2,368,038) (385,775) Accumulated undistributed (distributions in excess of) net investment income (158,182) 71,943 (601,740) (101,465) -------------------------------------------------------------------------------------------------------------------------------- Net assets $87,646,882 $132,715,447 $379,874,289 $85,372,119 --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (As Restated - See Note 8) - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA FUND FUND FUND FUND Net assets Class A $74,203,651 $122,067,032 $291,656,588 $70,401,793 Class B 13,443,231 10,648,415 58,337,772 14,970,326 Class C -- -- 29,879,929 -- -------------------------------------------------------------------------------------------------------------------------------- Total net assets $87,646,882 $132,715,447 $379,874,289 $85,372,119 -------------------------------------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding Class A 7,088,318 12,162,073 49,972,336 7,002,547 Class B 1,284,386 1,059,820 9,991,128 1,489,014 Class C -- -- 5,102,071 -- -------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 8,372,704 13,221,893 65,065,535 8,491,561 -------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $10.47 $10.04 $5.84 $10.05 -------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25Xnet asset value per share) $10.99 $10.54 $6.13 $10.55 -------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $10.47 $10.05 $5.84 $10.05 -------------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $-- $5.86 $-- -------------------------------------------------------------------------------------------------------------------------------- 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 (As Restated - See Note 8) - continued
GEORGIA MARYLAND MASSACHUSETTS At 3/31/06 FUND FUND FUND (Not Restated) ASSETS ----------------------------------------------------------------------------------------------------------------------------------- Investments - Identified cost $61,783,781 $125,232,764 $231,693,959 Unrealized appreciation (depreciation) 3,380,264 7,286,417 14,736,412 ----------------------------------------------------------------------------------------------------------------------------------- Total investments, at value $65,164,045 $132,519,181 $246,430,371 Cash 54,250 10,346 75,124 Receivable for investments sold -- 1,990,060 -- Receivable for fund shares sold 35,215 221,015 38,886 Interest receivable 1,107,558 1,811,021 3,629,093 Unrealized appreciation on interest rate swaps 78,108 138,638 177,949 ----------------------------------------------------------------------------------------------------------------------------------- Total assets $66,439,176 $136,690,263 $250,351,423 ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES ----------------------------------------------------------------------------------------------------------------------------------- Distributions payable $74,291 $195,558 $379,043 Payable for fund shares reacquired 219,553 51,437 86,480 Payable to the holder of the floating rate certificate from trust assets 4,500,000 -- 15,705,000 Unrealized depreciation on interest rate swaps 11,627 26,358 46,513 Payable to affiliates - Management fee 2,973 1,117 1,921 Shareholder servicing costs 5,163 11,472 14,333 Distribution and service fees 624 2,134 2,899 Administrative services fee 39 58 79 Payable for independent trustees' compensation 13,270 16,074 16,494 Payable for interest expense and fees 57,698 -- 110,287 Accrued expenses and other liabilities 57,525 68,793 72,745 ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities $4,942,763 $373,001 $16,435,794 ----------------------------------------------------------------------------------------------------------------------------------- Net assets $61,496,413 $136,317,260 $233,915,629 ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF ----------------------------------------------------------------------------------------------------------------------------------- Paid-in capital $58,325,749 $129,113,504 $220,161,630 Unrealized appreciation (depreciation) on investments 3,446,745 7,398,697 14,867,848 Accumulated net realized gain (loss) on investments (101,876) 75,408 (636,590) Accumulated distributions in excess of net investment income (174,205) (270,349) (477,259) ----------------------------------------------------------------------------------------------------------------------------------- Net assets $61,496,413 $136,317,260 $233,915,629 -----------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (As Restated - See Note 8) - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND (Not Restated) Net assets Class A $51,680,550 $115,306,646 $196,991,730 Class B 9,815,863 21,010,614 36,923,899 ----------------------------------------------------------------------------------------------------------------------------------- Total net assets $61,496,413 $136,317,260 $233,915,629 ----------------------------------------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding Class A 4,783,583 10,230,813 17,554,782 Class B 905,305 1,865,219 3,285,201 ----------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 5,688,888 12,096,032 20,839,983 ----------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $10.80 $11.27 $11.22 ----------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25Xnet asset value per share) $11.34 $11.83 $11.78 ----------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $10.84 $11.26 $11.24 ----------------------------------------------------------------------------------------------------------------------------------- On sales of $100,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A and Class B shares. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS (As Restated - See Note 8) This statement describes how much your fund received in investment income and paid in expenses. It also describes any gains or losses generated by fund operations.
ALABAMA ARKANSAS CALIFORNIA FLORIDA FUND FUND FUND FUND For year ended 3/31/06 NET INVESTMENT INCOME -------------------------------------------------------------------------------------------------------------------------------- Interest $4,972,480 $7,305,117 $21,505,780 $4,626,502 -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $502,775 $759,174 $2,142,271 $479,444 Distribution and service fees 335,896 222,686 1,165,659 132,855 Shareholder servicing costs 136,331 184,594 526,298 121,782 Administrative services fee 17,808 23,073 51,617 17,317 Independent trustees' compensation 5,020 7,545 15,656 5,433 Custodian fee 34,535 47,487 160,938 38,608 Shareholder communications 8,865 17,412 38,975 10,681 Auditing fees 44,324 44,334 43,592 44,322 Legal fees 6,539 6,234 19,841 6,956 Interest expense and fees 195,165 245,723 814,958 195,445 Miscellaneous 38,979 44,217 61,870 48,050 -------------------------------------------------------------------------------------------------------------------------------- Total expenses $1,326,237 $1,602,479 $5,041,675 $1,100,893 -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (7,220) (11,458) (51,458) (8,011) Reduction of expenses by investment adviser (230,537) (345,913) (976,123) (218,447) -------------------------------------------------------------------------------------------------------------------------------- Net expenses $1,088,480 $1,245,108 $4,014,094 $874,435 -------------------------------------------------------------------------------------------------------------------------------- Net investment income $3,884,000 $6,060,009 $17,491,686 $3,752,067 -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -------------------------------------------------------------------------------------------------------------------------------- Realized gain (loss) (identified cost basis) - Investment transactions $262,160 $399,844 $(1,611,564) $721,513 Swap transactions (29,612) 118,119 432,384 77,734 -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $232,548 $517,963 $(1,179,180) $799,247 -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $(1,547,321) $(2,271,359) $(1,078,662) $(1,100,601) Swap transactions (31,266) (40,094) 9,311 (22,481) -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(1,578,587) $(2,311,453) $(1,069,351) $(1,123,082) -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(1,346,039) $(1,793,490) $(2,248,531) $(323,835) -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $2,537,961 $4,266,519 $15,243,155 $3,428,232 -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Operations (As Restated - See Note 8) - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND (Not Restated) For year ended 3/31/06 NET INVESTMENT INCOME -------------------------------------------------------------------------------------------------------------------------------- Interest $3,535,423 $7,706,790 $13,018,066 -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $363,158 $798,552 $1,347,164 Distribution and service fees 250,537 659,530 1,111,313 Shareholder servicing costs 93,229 213,835 345,799 Administrative services fee 14,882 23,971 35,281 Independent trustees' compensation 5,915 9,684 15,175 Custodian fee 28,411 57,213 89,527 Shareholder communications 8,404 19,917 28,728 Auditing fees 44,319 44,337 43,559 Legal fees 9,349 8,201 8,382 Interest expense and fees 136,455 -- 470,985 Miscellaneous 44,357 46,892 52,730 -------------------------------------------------------------------------------------------------------------------------------- Total expenses $999,016 $1,882,132 $3,548,643 -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (7,457) (12,121) (20,035) Reduction of expenses by investment adviser (166,822) (363,950) (613,881) -------------------------------------------------------------------------------------------------------------------------------- Net expenses $824,737 $1,506,061 $2,914,727 -------------------------------------------------------------------------------------------------------------------------------- Net investment income $2,710,686 $6,200,729 $10,103,339 -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -------------------------------------------------------------------------------------------------------------------------------- Realized gain (loss) (identified cost basis) - Investment transactions $49,753 $584,002 $1,150,361 Swap transactions 55,181 55,409 618,028 -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $104,934 $639,411 $1,768,389 -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $(1,169,922) $(2,711,507) $(2,758,406) Swap transactions 1,406 83,165 5,430 -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(1,168,516) $(2,628,342) $(2,752,976) -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(1,063,582) $(1,988,931) $(984,587) -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $1,647,104 $4,211,798 $9,118,752 -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS (Not Restated) The 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 3/31/06 CHANGE IN NET ASSETS FROM OPERATIONS ----------------------------------------------------------------------------------------------------------------------- Net investment income $3,884,000 $6,060,009 $17,491,686 $3,752,067 Net realized gain (loss) on investments 232,548 517,963 (1,179,180) 799,247 Net unrealized gain (loss) on investments (1,578,587) (2,311,453) (1,069,351) (1,123,082) ----------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $2,537,961 $4,266,519 $15,243,155 $3,428,232 ----------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS ----------------------------------------------------------------------------------------------------------------------- From net investment income Class A $(3,354,087) $(5,605,194) $(13,643,612) $(3,110,488) Class B (517,644) (401,413) (2,512,572) (644,130) Class C -- -- (1,210,439) -- ----------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- -- (498,302) -- Class B -- -- (106,987) -- Class C -- -- (52,867) -- ----------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(3,871,731) $(6,006,607) $(18,024,779) $(3,754,618) ----------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(3,636,892) $(3,878,943) $(14,978,975) $(1,765,570) ----------------------------------------------------------------------------------------------------------------------- Total change in net assets $(4,970,662) $(5,619,031) $(17,760,599) $(2,091,956) ----------------------------------------------------------------------------------------------------------------------- NET ASSETS ----------------------------------------------------------------------------------------------------------------------- At beginning of period 92,617,544 138,334,478 397,634,888 87,464,075 At end of period $87,646,882 $132,715,447 $379,874,289 $85,372,119 ----------------------------------------------------------------------------------------------------------------------- Accumulated undistributed (distributions in excess of) net investment income included in net assets at end of period $(158,182) $71,943 $(601,740) $(101,465) ----------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets (Not Restated) - continued
GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND For year ended 3/31/06 CHANGE IN NET ASSETS FROM OPERATIONS ------------------------------------------------------------------------------------------------------- Net investment income $2,710,686 $6,200,729 $10,103,339 Net realized gain (loss) on investments 104,934 639,411 1,768,389 Net unrealized gain (loss) on investments (1,168,516) (2,628,342) (2,752,976) ------------------------------------------------------------------------------------------------------- Change in net assets from operations $1,647,104 $4,211,798 $9,118,752 ------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS ------------------------------------------------------------------------------------------------------- From net investment income Class A $(2,297,243) $(5,277,930) $(8,657,757) Class B (404,404) (856,271) (1,391,165) ------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- (725,708) (709,997) Class B -- (137,622) (137,074) ------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(2,701,647) $(6,997,531) $(10,895,993) ------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(3,918,543) $(10,873,307) $(15,175,916) ------------------------------------------------------------------------------------------------------- Total change in net assets $(4,973,086) $(13,659,040) $(16,953,157) ------------------------------------------------------------------------------------------------------- NET ASSETS ------------------------------------------------------------------------------------------------------- At beginning of period 66,469,499 149,976,300 250,868,786 At end of period $61,496,413 $136,317,260 $233,915,629 ------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(174,205) $(270,349) $(477,259) ------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets (Not Restated) - continued
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) ----------------------------------------------------------------------------------------------------------------------- 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
Statement of Changes in Net Assets (Not Restated) - 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) ------------------------------------------------------------------------------------------------------- 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 FINANCIAL HIGHLIGHTS, MFS(R) ALABAMA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 -------------------------------------------------------------------- 2006 2005 2004 2003 2002 CLASS A Net asset value, beginning of period $10.62 $10.88 $10.82 $10.31 $10.53 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.46 $0.48 $0.48 $0.48 $0.51 Net realized and unrealized gain (loss) on investments (0.15) (0.22) 0.06 0.54 (0.19) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.31 $0.26 $0.54 $1.02 $0.32 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.46) $(0.48) $(0.48) $(0.50) $(0.54) From net realized gain on investments -- (0.04) -- (0.01) -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.46) $(0.52) $(0.48) $(0.51) $(0.54) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.47 $10.62 $10.88 $10.82 $10.31 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 2.97 2.40 5.11 10.06 3.05 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.33 1.21 1.17 1.18 1.23 Expenses after expense reductions (f) 1.08 0.96 0.96 0.98 1.03 Expenses after expense reductions and excluding interest and fees (f)(l) 0.87 0.84 0.88 0.88 0.88 Net investment income 4.37 4.46 4.38 4.49 4.87 Portfolio turnover 9 17 10 21 20 Net assets at end of period (000 Omitted) $74,204 $77,499 $80,704 $84,474 $83,146 -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ALABAMA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 -------------------------------------------------------------------- 2006 2005 2004 2003 2002 CLASS B Net asset value, beginning of period $10.62 $10.88 $10.82 $10.31 $10.53 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.38 $0.40 $0.39 $0.40 $0.43 Net realized and unrealized gain (loss) on investments (0.15) (0.23) 0.07 0.54 (0.19) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.23 $0.17 $0.46 $0.94 $0.24 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.38) $(0.39) $(0.40) $(0.42) $(0.46) From net realized gain on investments -- (0.04) -- (0.01) -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.38) $(0.43) $(0.40) $(0.43) $(0.46) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.47 $10.62 $10.88 $10.82 $10.31 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 2.20 1.63 4.32 9.14 2.38 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.08 1.96 1.91 1.93 1.98 Expenses after expense reductions (f) 1.83 1.71 1.71 1.73 1.78 Expenses after expense reductions and excluding interest and fees (f)(l) 1.62 1.59 1.63 1.63 1.63 Net investment income 3.61 3.71 3.63 3.74 4.09 Portfolio turnover 9 17 10 21 20 Net assets at end of period (000 Omitted) $13,443 $15,118 $17,339 $16,163 $13,579 -------------------------------------------------------------------------------------------------------------------------------- (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ARKANSAS MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------------- 2006 2005 2004 2003 2002 CLASS A Net asset value, beginning of period $10.17 $10.41 $10.40 $9.97 $10.08 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.45 $0.45 $0.45 $0.47 $0.51 Net realized and unrealized gain (loss) on investments (0.13) (0.23) 0.01 0.46 (0.11) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.32 $0.22 $0.46 $0.93 $0.40 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.45) $(0.46) $(0.45) $(0.50) $(0.51) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.04 $10.17 $10.41 $10.40 $9.97 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.17 2.14 4.53 9.51 4.06 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.10 1.00 0.99 1.02 1.06 Expenses after expense reductions (f) 0.85 0.75 0.79 0.82 0.86 Expenses after expense reductions and excluding interest and fees (f)(l) 0.67 0.65 0.72 0.73 0.72 Net investment income 4.45 4.47 4.31 4.59 5.05 Portfolio turnover 10 13 19 15 15 Net assets at end of period (000 Omitted) $122,067 $127,075 $139,333 $134,521 $119,328 -------------------------------------------------------------------------------------------------------------------------------- YEARS ENDED 3/31 ------------------------------------------------------------- 2006 2005 2004 2003 2002 CLASS B Net asset value, beginning of period $10.18 $10.42 $10.41 $9.98 $10.09 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.38 $0.38 $0.37 $0.39 $0.43 Net realized and unrealized gain (loss) on investments (0.14) (0.24) 0.01 0.46 (0.11) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.24 $0.14 $0.38 $0.85 $0.32 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.37) $(0.38) $(0.37) $(0.42) $(0.43) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.05 $10.18 $10.42 $10.41 $9.98 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 2.39 1.37 3.68 8.62 3.24 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.87 1.76 1.80 1.83 1.84 Expenses after expense reductions (f) 1.62 1.51 1.60 1.63 1.64 Expenses after expense reductions and excluding interest and fees (f)(l) 1.44 1.41 1.53 1.54 1.50 Net investment income 3.68 3.71 3.50 3.77 4.26 Portfolio turnover 10 13 19 15 15 Net assets at end of period (000 Omitted) $10,648 $11,259 $12,554 $12,049 $8,700 -------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------- 2006 2005 2004 2003 2002 CLASS A Net asset value, beginning of period $5.88 $5.98 $5.96 $5.70 $5.81 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.28 $0.29 $0.28 $0.28 $0.28 Net realized and unrealized gain (loss) on investments (0.03) (0.11) 0.02 0.27 (0.10) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.25 $0.18 $0.30 $0.55 $0.18 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.28) $(0.28) $(0.28) $(0.29) $(0.29) From net realized gain on investments (0.01) -- -- -- -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.29) $(0.28) $(0.28) $(0.29) $(0.29) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.84 $5.88 $5.98 $5.96 $5.70 -------------------------------------------------------------------------------------------------------------------------------- Total return (%)(t)(s)(r) 4.22 3.14 5.22 9.79 3.11 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.09 0.97 0.96 0.96 0.99 Expenses after expense reductions (f) 0.84 0.72 0.76 0.76 0.79 Expenses after expense reductions and excluding interest and fees (f)(l) 0.63 0.61 0.67 0.67 0.67 Net investment income 4.69 4.91 4.71 4.73 4.87 Portfolio turnover 9 12 8 22 12 Net assets at end of period (000 Omitted) $291,656 $295,332 $314,108 $333,350 $305,699 -------------------------------------------------------------------------------------------------------------------------------- YEARS ENDED 3/31 ------------------------------------------------------------ 2006 2005 2004 2003 2002 CLASS B Net asset value, beginning of period $5.88 $5.98 $5.96 $5.70 $5.81 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.23 $0.25 $0.23 $0.23 $0.24 Net realized and unrealized gain (loss) on investments (0.03) (0.11) 0.03 0.27 (0.11) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.20 $0.14 $0.26 $0.50 $0.13 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.23) $(0.24) $(0.24) $(0.24) $(0.24) From net realized gain on investments (0.01) -- -- -- -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.24) $(0.24) $(0.24) $(0.24) $(0.24) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.84 $5.88 $5.98 $5.96 $5.70 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.44 2.38 4.38 8.93 2.30 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.85 1.70 1.76 1.75 1.77 Expenses after expense reductions (f) 1.60 1.45 1.56 1.55 1.57 Expenses after expense reductions and excluding interest and fees (f)(l) 1.39 1.34 1.47 1.46 1.45 Net investment income 3.94 4.17 3.91 3.94 4.09 Portfolio turnover 9 12 8 22 12 Net assets at end of period (000 Omitted) $58,338 $69,142 $85,106 $98,888 $84,123 -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 ------------------------------------------------------------ 2006 2005 2004 2003 2002 CLASS C Net asset value, beginning of period $5.90 $6.00 $5.98 $5.72 $5.83 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.23 $0.24 $0.23 $0.23 $0.23 Net realized and unrealized gain (loss) on investments (0.04) (0.11) 0.02 0.27 (0.10) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.19 $0.13 $0.25 $0.50 $0.13 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.22) $(0.23) $(0.23) $(0.24) $(0.24) From net realized gain on investments (0.01) -- -- -- -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.23) $(0.23) $(0.23) $(0.24) $(0.24) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.86 $5.90 $6.00 $5.98 $5.72 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.29 2.22 4.27 8.78 2.17 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.99 1.87 1.86 1.86 1.89 Expenses after expense reductions (f) 1.74 1.62 1.65 1.66 1.69 Expenses after expense reductions and excluding interest and fees (f)(l) 1.53 1.51 1.56 1.57 1.57 Net investment income 3.79 4.01 3.81 3.83 3.97 Portfolio turnover 9 12 8 22 12 Net assets at end of period (000 Omitted) $29,880 $33,162 $36,363 $40,804 $35,022 -------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2004 and 2005 fiscal years resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) FLORIDA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period. YEARS ENDED 3/31 ------------------------------------------------------------ 2006 2005 2004 2003 2002 CLASS A Net asset value, beginning of period $10.09 $10.24 $10.19 $9.78 $9.95 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.45 $0.47 $0.47 $0.48 $0.50 Net realized and unrealized gain (loss) on investments (0.04) (0.15) 0.05 0.44 (0.16) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.41 $0.32 $0.52 $0.92 $0.34 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.45) $(0.47) $(0.47) $(0.51) $(0.51) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.05 $10.09 $10.24 $10.19 $9.78 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 4.14 3.25 5.20 9.40 3.52 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.11 0.94 0.98 0.88 0.93 Expenses after expense reductions (f) 0.86 0.69 0.77 0.68 0.73 Expenses after expense reductions and excluding interest and fees (f)(l) 0.64 0.57 0.64 0.62 0.63 Net investment income 4.46 4.68 4.58 4.78 5.09 Portfolio turnover 17 18 31 27 16 Net assets at end of period (000 Omitted) $70,402 $69,082 $79,155 $86,045 $69,959 --------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED 3/31 ------------------------------------------------------------ 2006 2005 2004 2003 2002 CLASS B Net asset value, beginning of period $10.09 $10.24 $10.19 $9.78 $9.95 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.38 $0.40 $0.39 $0.40 $0.43 Net realized and unrealized gain (loss) on investments (0.04) (0.16) 0.05 0.43 (0.17) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.34 $0.24 $0.44 $0.83 $0.26 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.38) $(0.39) $(0.39) $(0.42) $(0.43) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.05 $10.09 $10.24 $10.19 $9.78 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.35 2.45 4.36 8.64 2.58 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.87 1.71 1.77 1.68 1.73 Expenses after expense reductions (f) 1.62 1.46 1.57 1.48 1.53 Expenses after expense reductions and excluding interest and fees (f)(l) 1.40 1.34 1.44 1.42 1.43 Net investment income 3.70 3.92 3.78 3.97 4.29 Portfolio turnover 17 18 31 27 16 Net assets at end of period (000 Omitted) $14,970 $18,382 $22,312 $25,175 $22,151 -------------------------------------------------------------------------------------------------------------------------------- (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) GEORGIA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ------------------------------------------------------------ 2006 2005 2004 2003 2002 CLASS A Net asset value, beginning of period $10.99 $11.22 $11.17 $10.63 $10.82 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.46 $0.48 $0.49 $0.49 $0.50 Net realized and unrealized gain (loss) on investments (0.18) (0.23) 0.05 0.55 (0.17) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.28 $0.25 $0.54 $1.04 $0.33 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.47) $(0.48) $(0.49) $(0.50) $(0.52) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.80 $10.99 $11.22 $11.17 $10.63 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 2.53 2.27 4.93 9.97 3.03 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.39 1.24 1.20 1.22 1.29 Expenses after expense reductions (f) 1.14 0.99 0.99 1.02 1.09 Expenses after expense reductions and excluding interest and fees (f)(l) 0.93 0.88 0.91 0.92 0.93 Net investment income 4.22 4.35 4.35 4.43 4.67 Portfolio turnover 5 18 12 25 19 Net assets at end of period (000 Omitted) $51,681 $53,190 $55,659 $57,636 $54,179 -------------------------------------------------------------------------------------------------------------------------------- YEARS ENDED 3/31 ------------------------------------------------------------ 2006 2005 2004 2003 2002 CLASS B Net asset value, beginning of period $11.00 $11.23 $11.18 $10.64 $10.83 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.41 $0.40 $0.40 $0.40 $0.42 Net realized and unrealized gain (loss) on investments (0.18) (0.24) 0.06 0.56 (0.18) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.23 $0.16 $0.46 $0.96 $0.24 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.39) $(0.39) $(0.41) $(0.42) $(0.43) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.84 $11.00 $11.23 $11.18 $10.64 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 2.05 1.51 4.15 9.15 2.26 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.14 1.99 1.94 1.97 2.04 Expenses after expense reductions (f) 1.89 1.74 1.74 1.77 1.84 Expenses after expense reductions and excluding interest and fees (f)(l) 1.68 1.63 1.66 1.67 1.68 Net investment income 3.72 3.60 3.60 3.68 3.91 Portfolio turnover 5 18 12 25 19 Net assets at end of period (000 Omitted) $9,816 $13,280 $16,759 $18,077 $16,031 -------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2004 and 2005 fiscal years resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MARYLAND MUNICIPAL BOND FUND (Not Restated) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------- 2006 2005 2004 2003 2002 CLASS A Net asset value, beginning of period $11.49 $11.74 $11.69 $11.21 $11.35 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.50 $0.52 $0.51 $0.52 $0.54 Net realized and unrealized gain (loss) on investments (0.15) (0.25) 0.06 0.50 (0.14) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.35 $0.27 $0.57 $1.02 $0.40 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.50) $(0.51) $(0.52) $(0.54) $(0.54) From net realized gain on investments (0.07) (0.01) -- -- -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.57) $(0.52) $(0.52) $(0.54) $(0.54) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.27 $11.49 $11.74 $11.69 $11.21 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.06 2.36 4.96 9.21 3.59 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.19 1.14 1.17 1.15 1.15 Expenses after expense reductions (f) 0.94 0.89 0.96 0.95 0.95 Net investment income 4.38 4.48 4.35 4.51 4.73 Portfolio turnover 9 12 21 12 8 Net assets at end of period (000 Omitted) $115,307 $124,261 $138,201 $138,666 $128,750 -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MARYLAND MUNICIPAL BOND FUND - CONTINUED (Not Restated)
YEARS ENDED 3/31 ------------------------------------------------------------ 2006 2005 2004 2003 2002 CLASS B Net asset value, beginning of period $11.49 $11.74 $11.68 $11.20 $11.34 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.43 $0.44 $0.43 $0.45 $0.46 Net realized and unrealized gain (loss) on investments (0.17) (0.25) 0.07 0.49 (0.13) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.26 $0.19 $0.50 $0.94 $0.33 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.42) $(0.44) $(0.44) $(0.46) $(0.47) From net realized gain on investments (0.07) (0.00)(w) -- -- -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.49) $(0.44) $(0.44) $(0.46) $(0.47) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.26 $11.49 $11.74 $11.68 $11.20 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 2.30 1.69 4.37 8.52 2.92 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.84 1.79 1.81 1.80 1.80 Expenses after expense reductions (f) 1.59 1.54 1.61 1.60 1.60 Net investment income 3.72 3.83 3.70 3.86 4.08 Portfolio turnover 9 12 21 12 8 Net assets at end of period (000 Omitted) $21,011 $25,716 $31,697 $34,033 $31,542 -------------------------------------------------------------------------------------------------------------------------------- (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. (w) Per share amount was less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------- 2006 2005 2004 2003 2002 CLASS A Net asset value, beginning of period $11.31 $11.52 $11.49 $10.90 $11.11 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.48 $0.51 $0.51 $0.52 $0.53 Net realized and unrealized gain (loss) on investments (0.05) (0.22) 0.03 0.60 (0.21) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.43 $0.29 $0.54 $1.12 $0.32 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.48) $(0.50) $(0.51) $(0.53) $(0.53) From net realized gain on investments (0.04) -- -- -- -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.52) $(0.50) $(0.51) $(0.53) $(0.53) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.22 $11.31 $11.52 $11.49 $10.90 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.83 2.63 4.82 10.42 2.93 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.34 1.19 1.23 1.21 1.26 Expenses after expense reductions (f) 1.09 0.94 1.02 1.01 1.06 Expenses after expense reductions and excluding interest and fees (f)(l) 0.90 0.84 0.95 0.92 0.92 Net investment income 4.23 4.48 4.39 4.56 4.73 Portfolio turnover 10 11 14 15 13 Net assets at end of period (000 Omitted) $196,992 $210,103 $224,923 $233,500 $210,269 -------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 ------------------------------------------------------------- 2006 2005 2004 2003 2002 CLASS B Net asset value, beginning of period $11.33 $11.54 $11.51 $10.92 $11.12 -------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.41 $0.43 $0.43 $0.44 $0.46 Net realized and unrealized gain (loss) on investments (0.05) (0.21) 0.04 0.60 (0.20) -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.36 $0.22 $0.47 $1.04 $0.26 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.41) $(0.43) $(0.44) $(0.45) $(0.46) From net realized gain on investments (0.04) -- -- -- -- -------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.45) $(0.43) $(0.44) $(0.45) $(0.46) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.24 $11.33 $11.54 $11.51 $10.92 -------------------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.16 1.97 4.14 9.69 2.35 -------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: -------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.99 1.84 1.87 1.86 1.91 Expenses after expense reductions (f) 1.74 1.59 1.67 1.66 1.71 Expenses after expense reductions and excluding interest and fees (f)(l) 1.55 1.49 1.60 1.57 1.57 Net investment income 3.58 3.83 3.74 3.91 4.13 Portfolio turnover 10 11 14 15 13 Net assets at end of period (000 Omitted) $36,924 $40,766 $46,253 $47,612 $37,487 -------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2004 and 2005 fiscal years resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS (1) BUSINESS AND ORGANIZATION MFS Alabama Municipal Bond Fund (Alabama Fund), MFS Arkansas Municipal Bond Fund (Arkansas Fund), MFS California Municipal Bond Fund (California Fund), MFS Florida Municipal Bond Fund (Florida Fund), MFS Georgia Municipal Bond Fund (Georgia Fund), MFS Maryland Municipal Bond Fund (Maryland Fund), and MFS Massachusetts Municipal Bond Fund (Massachusetts Fund) are each a series of MFS Municipal Series Trust which is organized as a Massachusetts business Trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. (2) SIGNIFICANT ACCOUNTING POLICIES General - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Because each fund invests primarily in the securities of a single state and its political subdivisions, each fund is vulnerable to the effects of changes in the legal and economic environment of the particular state. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the projects or assets or the inability to collect revenues for the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, the security could decline in value, interest from the security could become taxable and the funds may be required to issue Forms 1099-DIV. Investment Valuations - Debt instruments (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated bid price as reported by an independent pricing service. Values of debt instruments obtained from pricing services can utilize both dealer-supplied valuations and electronic data processing techniques which take into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Short-term instruments with a maturity at issuance of 365 days or less are generally valued at amortized cost, which approximates market value. Swaps are generally valued on the basis of quotations from brokers and dealers. Securities and other assets generally valued on the basis of information from an independent pricing service may also be valued on the basis of information from brokers and dealers. 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. Derivative Risk - Each fund may invest in derivatives for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the funds use derivatives as an investment to gain market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative's original cost. Derivative instruments include swap agreements. Swap Agreements - Each fund may enter into swap agreements. A swap is an exchange of cash payments between the fund and another party. Net cash payments are exchanged at specified intervals and are recorded as a realized gain or loss in the Statement of Operations. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation in the Statement of Operations. 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. Interest Rate Swap Agreements - Interest rate swap agreements are agreements to exchange cash flows periodically based on a notional principal amount, such as 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 recorded as an unrealized gain or loss, and any payments received or made are recorded as realized gains or losses, in the Statement of Operations. The primary risk associated with interest rate swap agreements is that unfavorable changes in the fluctuation of interest rates could adversely impact the funds. 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 each 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 or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. Each fund may receive proceeds from litigation settlements 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. Interest Expense and Fees - Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets in connection with self-deposited inverse floater transactions. Interest expense and fees are recorded as incurred. Fees Paid Indirectly - Each fund's custody fee is reduced according to an arrangement that measures the value of cash deposited with the custodian by each fund. This amount, for the year ended March 31, 2006, is shown as a reduction of total expenses on the Statement of Operations. Tax Matters and Distributions - Each fund intends to continue to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable and tax-exempt income, including realized capital gains. Accordingly, no provision for federal income tax is required in the financial statements. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Book/tax differences primarily relate to expiration of capital loss carryforwards, amortization and accretion of debt securities, defaulted bonds, secured borrowings, and treating a portion of the proceeds from redemptions as a distribution for tax purposes. The tax character of distributions declared to shareholders is as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS YEAR ENDED MARCH 31, 2006 FUND FUND FUND FUND FUND FUND FUND Ordinary income (including any short-term capital gains) $-- $-- $-- $49,709 $-- $-- $-- Tax-exempt income 3,871,731 6,006,607 17,366,623 3,704,909 2,701,647 6,134,201 10,048,922 Long-term capital gain -- -- 658,156 -- -- 863,330 847,071 ----------------------------------------------------------------------------------------------------------------------------------- Total distributions $3,871,731 $6,006,607 $18,024,779 $3,754,618 $2,701,647 $6,997,531 $10,895,993 YEAR ENDED MARCH 31, 2005 Ordinary income (including any short-term capital gains) $63,872 $214,789 $55,853 $-- $-- $70,072 $252,507 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 -- ----------------------------------------------------------------------------------------------------------------------------------- Total distributions $4,418,138 $6,191,790 $18,839,012 $4,058,369 $2,840,491 $6,883,467 $11,140,544
The federal tax cost and the tax basis components of distributable earnings were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS AS OF MARCH 31, 2006 FUND FUND FUND FUND FUND FUND FUND Cost of investments $81,630,945 $124,419,290 $356,158,426 $81,513,307 $57,318,687 $125,156,444 $216,977,632 ----------------------------------------------------------------------------------------------------------------------------------- Gross appreciation $4,697,020 $7,185,673 $20,031,371 $3,634,491 $3,381,056 $7,506,728 $13,897,006 Gross depreciation (436,869) (92,344) (288,041) (140,073) (35,698) (143,991) (149,267) ----------------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) $4,260,151 $7,093,329 $19,743,330 $3,494,418 $3,345,358 $7,362,737 $13,747,739 Undistributed ordinary income $-- $-- $-- $-- $-- $-- $372,024 Undistributed tax-exempt income 282,450 570,738 818,897 214,900 53,805 227,456 339,371 Undistributed long-term capital gain 140,902 -- -- -- -- -- -- Capital loss carryforwards -- (501,285) (1,402,103) (264,149) (66,666) -- -- Post-October capital loss deferral -- -- -- -- -- -- (18,421) Other temporary differences (396,268) (407,289) (1,424,420) (237,092) (161,833) (386,437) (686,714)
As of March 31, 2006, certain funds had available capital loss carryforwards to offset future realized gains. Such losses expire as follows: ARKANSAS CALIFORNIA FLORIDA GEORGIA EXPIRATION DATE FUND FUND FUND FUND March 31, 2008 $-- $(229,685) $-- $-- March 31, 2009 -- -- -- (66,666) March 31, 2010 -- -- (142,514) -- March 31, 2011 -- -- (121,635) -- March 31, 2012 (501,285) -- -- -- March 31, 2014 -- (1,172,418) -- -- ------------------------------------------------------------------------------- Total $(501,285) $(1,402,103) $(264,149) $(66,666) 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 - Each fund has an investment advisory agreement with 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, MFS has agreed to reduce the management fee to 0.30% of each fund's average daily net assets for the period March 1, 2004 through February 28, 2009. For the year ended March 31, 2006, this waiver amounted to the following for each fund and is reflected as a reduction of total expenses in the Statement of Operations. ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND $229,879 $345,100 $973,826 $217,935 $166,435 $363,030 $612,409 The management fee incurred for the year ended March 31, 2006 was equivalent to an annual effective rate of 0.30% of the fund's average daily net assets. Distributor - MFS Fund Distributors, Inc. (MFD), a wholly owned subsidiary of MFS, as distributor, received the following amounts for the year ended March 31, 2006, as its portion of the initial sales charge on sales of Class A shares of the funds. ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND $21,270 $53,465 $87,854 $34,849 $19,343 $27,698 $46,201 The Board of Trustees has adopted a distribution plan for certain class shares pursuant to Rule 12b-1 of the Investment Company Act of 1940. Each fund's distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. DISTRIBUTION FEE PLAN TABLE:
CLASS A -------------------------------------------------------------------------------------------- TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE Alabama Fund 0.10% 0.25% 0.35% 0.25% $192,363 Arkansas Fund 0.10% 0.25% 0.35% 0.10% 127,022 California Fund 0.10% 0.25% 0.35% 0.10% 292,962 Florida Fund 0.10% 0.25% 0.35% 0.00% -- Georgia Fund 0.10% 0.25% 0.35% 0.25% 135,068 Maryland Fund 0.10% 0.25% 0.35% 0.35% 426,576 Massachusetts Fund 0.10% 0.25% 0.35% 0.35% 720,392 CLASS B -------------------------------------------------------------------------------------------- TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE Alabama Fund 0.75% 0.25% 1.00% 1.00% $143,533 Arkansas Fund 0.75% 0.25% 1.00% 0.87% 95,664 California Fund 0.75% 0.25% 1.00% 0.86% 550,533 Florida Fund 0.75% 0.25% 1.00% 0.76% 132,855 Georgia Fund 0.75% 0.25% 1.00% 1.00% 115,469 Maryland Fund 0.75% 0.25% 1.00% 1.00% 232,954 Massachusetts Fund 0.75% 0.25% 1.00% 1.00% 390,921 CLASS C -------------------------------------------------------------------------------------------- TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE California Fund 0.75% 0.25% 1.00% 1.00% $322,164 ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND Total Distribution and Service Fees $335,896 $222,686 $1,165,659 $132,855 $250,537 $659,530 $1,111,313
(1) In accordance with the distribution plan for certain classes, each fund pays distribution and/or service fees up to these annual percentage rates of each class' average daily net assets. (2) The annual effective rates represent actual fees incurred under the distribution plan for the year ended March 31, 2006 based on each class' average daily net assets. Payment of the Alabama Fund's, Arkansas Fund's, California Fund's, Florida Fund's, and Georgia Fund's 0.10% annual Class A distribution fee is not yet implemented and will commence on such date as the Board of Trustees may determine. Payment of Florida Fund's 0.25% annual Class A service fee is not yet implemented and will commence on such date as the Board of Trustees may determine. Payment of Arkansas Fund's and California Fund's 0.10% of the Class A service fee is currently being paid by each fund, payment of the remaining 0.15% of the Class A service fee is not yet implemented and will commence on such date as the Board of Trustees may determine. Except in the case of the 0.25% annual Class B service fee paid by the Florida Fund upon the sale of Class B shares in the first year, payment of the Class B service fee will not be implemented until such date as the Board of Trustees may determine. Except in the case of the 0.25% annual Class B service fee paid by Arkansas Fund and California Fund upon the sale of Class B shares in the first year, the Class B service fee has been set at 0.10% annually and may be increased to a maximum of 0.25% annually on such date as the Board of Trustees may determine. Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within 12 months of purchase. Class B shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the year ended March 31, 2006, were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND Class A $-- $-- $6,153 $4,160 $-- $-- $-- Class B 18,376 25,043 105,552 38,519 28,884 41,816 70,385 Class C N/A N/A 2,560 N/A N/A N/A N/A
Shareholder Servicing Agent - Each fund pays a portion of shareholder servicing costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS. MFSC receives a fee from the funds, for its services as shareholder servicing agent, set periodically under the supervision of the funds' Board of Trustees. For the year ended March 31, 2006, each fund paid MFSC the following fee, which equated to the following annual percentage of each fund's average daily net assets for shareholder services.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND Expenses Paid $96,310 $145,503 $410,922 $91,868 $69,126 $153,392 $258,652 Percentage of average daily net assets 0.1055% 0.1054% 0.1055% 0.1054% 0.1054% 0.1057% 0.1056%
MFSC also receives payment from the funds for out-of-pocket and sub-accounting expenses paid by MFSC on behalf of the funds. For the year ended March 31, 2006, these costs amounted to the following:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND $36,425 $33,428 $95,308 $25,167 $20,942 $51,227 $74,238
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, the funds may partially reimburse MFS the costs incurred to provide these services, subject to review and approval by the Board of Trustees. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. Effective July 1, 2005, each fund's annual fixed amount is $10,000. The administrative services fee incurred for the year ended March 31, 2006 was equivalent to the following annual effective rates of each fund's average daily net assets:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND Percentage of average daily net assets 0.0195% 0.0167% 0.0133% 0.0199% 0.0227% 0.0165% 0.0144%
Trustees' and Officers' Compensation - Each fund pays compensation to Independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The funds do not pay compensation directly to Trustees who are officers of the investment adviser, or to officers of each fund, all of whom receive remuneration for their services to the funds from MFS. Certain officers and Trustees of the funds are officers or directors of MFS, MFD, and MFSC. Each fund has an unfunded, defined benefit plan for retired Independent Trustees which resulted in the following pension expense for the funds. These amounts are included in Independent trustees' compensation for the year ended March 31, 2006.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND $1,590 $1,388 $3,363 $1,384 $1,597 $3,093 $3,135
The deferred liability for retirement benefits payable to retired Trustees amounted to the following for each fund at March 31, 2006, and is included in payable for independent trustees' compensation.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND $11,185 $10,659 $21,323 $10,645 $12,819 $15,431 $15,354
Other - These funds and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the year ended March 31, 2006, the fees paid to Tarantino LLC amounted to the following:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND $699 $926 $2,627 $582 $439 $975 $1,655
MFS has agreed to reimburse the funds for a portion of the payments made by each fund to Tarantino LLC in the following amounts, which are shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS FUND FUND FUND FUND FUND FUND FUND $658 $813 $2,297 $512 $387 $920 $1,472
(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 $8,044,469 $12,862,683 $35,732,650 $14,429,891 $3,481,046 $12,856,377 $24,674,924 --------------------------------------------------------------------------------------------------------------------------------- Sales $10,510,710 $15,604,340 $52,726,768 $15,254,182 $6,137,950 $25,647,080 $35,741,140 ---------------------------------------------------------------------------------------------------------------------------------
(5) SHARES OF BENEFICIAL INTEREST Each fund's Declaration permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in each funds' shares were as follows:
ALABAMA FUND ARKANSAS FUND --------------------------------------------------------- --------------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2006 MARCH 31, 2005 MARCH 31, 2006 MARCH 31, 2005 --------------------------- --------------------------- --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold Class A 453,164 $4,807,670 633,888 $6,775,648 1,098,066 $11,184,396 995,533 $10,203,706 Class B 47,894 508,335 139,584 1,483,702 127,141 1,292,625 131,045 1,342,758 ----------------------------------------------------------------------------------------------------------------------------------- 501,058 $5,316,005 773,472 $8,259,350 1,225,207 $12,477,021 1,126,578 $11,546,464 Shares issued to shareholders in reinvestment of distributions Class A 183,725 $1,948,887 228,052 $2,438,067 306,870 $3,122,224 373,158 $3,817,869 Class B 27,249 289,073 37,666 402,644 24,788 252,510 27,514 281,798 ----------------------------------------------------------------------------------------------------------------------------------- 210,974 $2,237,960 265,718 $2,840,711 331,658 $3,374,734 400,672 $4,099,667 Shares reacquired Class A (842,942) $(8,923,169) (983,413) $(10,502,049) (1,743,455) $(17,710,230) (2,249,074) $(22,990,694) Class B (213,823) (2,267,688) (347,499) (3,708,960) (198,441) (2,020,468) (256,542) (2,624,713) ----------------------------------------------------------------------------------------------------------------------------------- (1,056,765) $(11,190,857) (1,330,912) $(14,211,009) (1,941,896) $(19,730,698) (2,505,616) $(25,615,407) Net change Class A (206,053) $(2,166,612) (121,473) $(1,288,334) (338,519) $(3,403,610) (880,383) $(8,969,119) Class B (138,680) (1,470,280) (170,249) (1,822,614) (46,512) (475,333) (97,983) (1,000,157) ----------------------------------------------------------------------------------------------------------------------------------- (344,733) $(3,636,892) (291,722) $(3,110,948) (385,031) $(3,878,943) (978,366) $(9,969,276) CALIFORNIA FUND FLORIDA FUND --------------------------------------------------------- --------------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2006 MARCH 31, 2005 MARCH 31, 2006 MARCH 31, 2005 --------------------------- --------------------------- --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold Class A 5,540,422 $32,768,817 3,679,642 $21,728,685 1,343,743 $13,639,634 971,884 $9,841,457 Class B 341,572 2,022,416 386,452 2,273,545 116,876 1,188,551 190,084 1,920,916 Class C 501,717 2,981,705 642,391 3,786,792 -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- 6,383,711 $37,772,938 4,708,485 $27,789,022 1,460,619 $14,828,185 1,161,968 $11,762,373 Shares issued to shareholders in reinvestment of distributions Class A 1,269,372 $7,511,470 1,398,671 $8,246,933 142,752 $1,450,063 164,846 $1,665,046 Class B 262,673 1,555,229 330,068 1,945,699 27,817 282,641 36,036 363,956 Class C 129,873 771,330 147,165 870,734 -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- 1,661,918 $9,838,029 1,875,904 $11,063,366 170,569 $1,732,704 200,882 $2,029,002 Shares reacquired Class A (7,053,114) $(41,766,637) (7,403,226) $(43,515,183) (1,327,818) $(13,490,043) (2,025,356) $(20,328,622) Class B (2,363,896) (14,014,351) (3,197,035) (18,786,884) (476,733) (4,836,416) (584,841) (5,879,347) Class C (1,149,084) (6,808,954) (1,232,114) (7,248,025) -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- (10,566,094) $(62,589,942) (11,832,375) $(69,550,092) (1,804,551) $(18,326,459) (2,610,197) $(26,207,969) Net change Class A (243,320) $(1,486,350) (2,324,913) $(13,539,565) 158,677 $1,599,654 (888,626) $(8,822,119) Class B (1,759,651) (10,436,706) (2,480,515) (14,567,640) (332,040) (3,365,224) (358,721) (3,594,475) Class C (517,494) (3,055,919) (442,558) (2,590,499) -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- (2,520,465) $(14,978,975) (5,247,986) $(30,697,704) (173,363) $(1,765,570) (1,247,347) $(12,416,594) GEORGIA FUND MARYLAND FUND --------------------------------------------------------- --------------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2006 MARCH 31, 2005 MARCH 31, 2006 MARCH 31, 2005 --------------------------- --------------------------- --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold Class A 460,892 $5,066,357 329,030 $3,641,888 730,679 $8,394,007 580,758 $6,707,670 Class B 28,232 312,944 33,020 365,147 83,527 958,062 101,049 1,161,791 ----------------------------------------------------------------------------------------------------------------------------------- 489,124 $5,379,301 362,050 $4,007,035 814,206 $9,352,069 681,807 $7,869,461 Shares issued to shareholders in reinvestment of distributions Class A 137,577 $1,511,329 148,053 $1,634,914 299,543 $3,427,995 317,868 $3,668,412 Class B 20,316 223,644 29,129 321,863 48,765 557,986 58,752 677,734 ----------------------------------------------------------------------------------------------------------------------------------- 157,893 $1,734,973 177,182 $1,956,777 348,308 $3,985,981 376,620 $4,346,146 Shares reacquired Class A (655,008) $(7,177,983) (597,886) $(6,573,646) (1,610,274) $(18,401,179) (1,856,776) $(21,368,626) Class B (350,537) (3,854,834) (347,203) (3,839,840) (505,608) (5,810,178) (622,058) (7,173,195) ----------------------------------------------------------------------------------------------------------------------------------- (1,005,545) $(11,032,817) (945,089) $(10,413,486) (2,115,882) $(24,211,357) (2,478,834) $(28,541,821) Net change Class A (56,539) $(600,297) (120,803) $(1,296,844) (580,052) $(6,579,177) (958,150) $(10,992,544) Class B (301,989) (3,318,246) (285,054) (3,152,830) (373,316) (4,294,130) (462,257) (5,333,670) ----------------------------------------------------------------------------------------------------------------------------------- (358,528) $(3,918,543) (405,857) $(4,449,674) (953,368) $(10,873,307) (1,420,407) $(16,326,214) MASSACHUSETTS FUND --------------------------------------------------------- YEAR ENDED YEAR ENDED MARCH 31, 2006 MARCH 31, 2005 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT Shares sold Class A 1,762,892 $20,057,220 1,137,090 $12,908,079 Class B 181,196 2,072,498 196,932 2,239,325 ----------------------------------------------------------------------- 1,944,088 $22,129,718 1,334,022 $15,147,404 Shares issued to shareholders in reinvestment of distributions Class A 405,376 $4,607,951 426,503 $4,841,396 Class B 81,697 930,076 95,377 1,084,111 ----------------------------------------------------------------------- 487,073 $5,538,027 521,880 $5,925,507 Shares reacquired Class A (3,187,918) $(36,274,707) (2,509,529) $(28,364,705) Class B (575,954) (6,568,954) (701,985) (7,958,101) ----------------------------------------------------------------------- (3,763,872) $(42,843,661) (3,211,514) $(36,322,806) Net change Class A (1,019,650) $(11,609,536) (945,936) $(10,615,230) Class B (313,061) (3,566,380) (409,676) (4,634,665) ----------------------------------------------------------------------- (1,332,711) $(15,175,916) (1,355,612) $(15,249,895)
(6) LINE OF CREDIT Each fund and other affiliated funds participate in a $1 billion unsecured line of credit provided by a syndication of banks under a 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 0.35%. 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, 2006 ranged from $461 to $2,521, and is included in miscellaneous expense on the Statement of Operations. None of the funds had significant borrowings on the line of credit during the year ended March 31, 2006. (7) INVERSE FLOATERS The funds invest in municipal inverse floating rate securities which are structured by the issuer (known as primary market inverse floating rate securities) or by an investment banker utilizing municipal bonds which have already been issued (known as secondary market inverse floating rate securities) to have variable rates of interest which typically move in the opposite direction of short term interest rates. A secondary market inverse floating rate security is created when an investment banker transfers a fixed rate municipal bond to a special purpose trust, and causes the trust to (a) issue floating rate certificates to third parties, in an amount equal to a fraction of the par amount of the deposited bonds (these certificates usually pay tax-exempt interest at short-term interest rates that typically reset weekly; and the certificate holders typically, on seven days notice, have the option to tender their certificates to the investment banker or another party for redemption at par plus accrued interest), and (b) issue inverse floating rate certificates (sometimes referred to as "inverse floaters"). If the holder of the inverse floater transfers the municipal bonds to an investment banker for the purpose of depositing the municipal bonds into the special purpose trust, the inverse floating rate certificates that are issued by the trust are referred to as "self-deposited inverse floaters." If the bonds held by the trust are purchased by the investment banker for deposit into the trust from someone other than the purchasers of the inverse floaters, the inverse floating rate certificates that are issued by the trust are referred to as "externally deposited inverse floaters." Certain self-deposited inverse floaters held by the funds are accounted for as secured borrowings, with the municipal bonds reflected in the investments of the funds and amounts owed to the holder of the floating rate certificate under the provisions of the trust, which amounts are paid solely from the assets of the trust, reflected as liabilities of the funds in the Statements of Assets and Liabilities under the caption, "Payable to the holder of the floating rate certificate from trust assets". At March 31, 2006, the funds' Statements of Assets and Liabilities impacts were as follows:
PAYABLE TO THE HOLDER WEIGHTED AVERAGE OF THE FLOATING RATE INTEREST RATE ON FLOATING VALUE OF BONDS CERTIFICATE FROM RATE CERTIFICATES ISSUED TRANSFERRED TO FUND TRUST ASSETS BY THE TRUST THE TRUST Alabama Fund $6,500,000 3.68% $13,653,870 Arkansas Fund $8,235,000 3.66% $17,665,815 California Fund $27,160,000 3.50% $59,030,597 Florida Fund $6,500,000 3.45% $14,128,640 Georgia Fund $4,500,000 3.72% $9,827,740 Maryland Fund $0 -- $0 Massachusetts Fund $15,705,000 3.75% $35,668,292
Primary and certain secondary market inverse floaters held by the funds are not accounted for as secured borrowings. (8) RESTATEMENT INFORMATION After the funds issued their March 31, 2006 financial statements, certain of the funds determined that the criteria for sale accounting in FASB Statement No. 140 had not been met for certain transfers of municipal bonds during the fiscal year ended March 31, 2006 and that its transfers of municipal bonds in connection with self-deposited inverse floaters should have been accounted for as secured borrowings rather than as sales. Accordingly, certain of the funds have restated the Statements of Assets and Liabilities, including the Portfolios of Investments, as of March 31, 2006, the related Statements of Operations for the year then ended, and certain Financial Highlights for each of the applicable periods in the five years then ended, to give effect to this change, including recording interest on the bonds as interest income and interest paid to the holder of the floating rate certificate from trust assets as interest expense in the Statements of Operations. The funds' Statements of Changes in Net Assets were not restated. The restatement did not affect the funds' reported net investment income, annual total return or net asset value.
ALABAMA FUND ARKANSAS FUND --------------------------- --------------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2006 Investments, identified cost $81,650,077 $88,205,432 $124,462,930 $132,770,928 Unrealized appreciation 4,241,019 4,185,664 7,049,689 6,976,691 Investments, at value $85,891,096 $92,391,096 $131,512,619 $139,747,619 Interest receivable 1,291,220 1,385,167 1,888,314 1,953,548 Total assets $88,031,184 $94,625,131 $133,742,861 $142,043,095 Payable to the holder of the floating rate certificate from trust assets -- 6,500,000 -- 8,235,000 Payable for interest expense and fees -- 93,947 -- 65,234 Total liabilities $384,302 $6,978,249 $1,027,414 $9,327,648 Unrealized appreciation (depreciation) on investments $4,285,991 $4,230,636 $7,142,095 $7,069,097 Accumulated net realized gain (loss) on investments $159,426 $214,781 $(458,545) $(385,547) STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2006 Interest income $4,777,315 $4,972,480 $7,059,394 $7,305,117 Interest expense and fees $-- $195,165 $-- $245,723 Total expenses $1,131,072 $1,326,237 $1,356,756 $1,602,479 Net expenses $893,315 $1,088,480 $999,385 $1,245,108 CALIFORNIA FUND FLORIDA FUND --------------------------- --------------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2006 Investments, identified cost $356,222,967 $382,355,227 $81,513,329 $87,892,289 Unrealized appreciation 19,678,789 20,706,529 3,494,396 3,615,436 Investments, at value $375,901,756 $403,061,756 $85,007,725 $91,507,725 Interest receivable 4,885,004 5,037,540 1,526,804 1,579,536 Total assets $381,219,648 $408,532,184 $87,236,120 $93,788,852 Payable to the holder of the floating rate certificate from trust assets -- 27,160,000 -- 6,500,000 Payable for interest expense and fees -- 152,536 -- 52,732 Total liabilities $1,345,359 $28,657,895 $1,864,001 $8,416,733 Unrealized appreciation (depreciation) on investments $19,677,742 $20,705,482 $3,574,277 $3,695,317 Accumulated net realized gain (loss) on investments $(1,340,298) $(2,368,038) $(264,735) $(385,775) STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2006 Interest income $20,690,822 $21,505,780 $4,431,057 $4,626,502 Interest expense and fees $-- $814,958 $-- $195,445 Total expenses $4,226,717 $5,041,675 $905,448 $1,100,893 Net expenses $3,199,136 $4,014,094 $678,990 $874,435 GEORGIA FUND MASSACHUSETTS FUND --------------------------- --------------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2006 Investments, identified cost $57,318,161 $61,783,781 $217,071,616 $231,693,959 Unrealized appreciation 3,345,884 3,380,264 13,653,755 14,736,412 Investments, at value $60,664,045 $65,164,045 $230,725,371 $246,430,371 Interest receivable 1,049,860 1,107,558 3,518,806 3,629,093 Total assets $61,881,478 $66,439,176 $234,536,136 $250,351,423 Payable to the holder of the floating rate certificate from trust assets -- 4,500,000 -- 15,705,000 Payable for interest expense and fees -- 57,698 -- 110,287 Total liabilities $385,065 $4,942,763 $620,507 $16,435,794 Unrealized appreciation (depreciation) on investments $3,412,365 $3,446,745 $13,785,191 $14,867,848 Accumulated net realized gain (loss) on investments $(67,496) $(101,876) $446,067 $(636,590) STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2006 Interest income $3,398,968 $3,535,423 $12,547,081 $13,018,066 Interest expense and fees $-- $136,455 $-- 470,985 Total expenses $862,561 $999,016 $3,077,658 $3,548,643 Net expenses $688,282 $824,737 $2,443,742 $2,914,727
FINANCIAL HIGHLIGHTS
YEARS ENDED 3/31 -------------------------------------------------------------------- ALABAMA FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.12 1.33 1.09 1.21 1.09 1.17 Expenses after expense reductions 0.87 1.08 0.84 0.96 0.88 0.96 CLASS B Expenses before expense reductions 1.87 2.08 1.84 1.96 1.83 1.91 Expenses after expense reductions 1.62 1.83 1.59 1.71 1.63 1.71 YEARS ENDED 3/31 -------------------------------------------- ALABAMA FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.08 1.18 1.08 1.23 Expenses after expense reductions 0.88 0.98 0.88 1.03 CLASS B Expenses before expense reductions 1.83 1.93 1.83 1.98 Expenses after expense reductions 1.63 1.73 1.63 1.78 YEARS ENDED 3/31 -------------------------------------------------------------------- ARKANSAS FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.92 1.10 0.90 1.00 0.92 0.99 Expenses after expense reductions 0.67 0.85 0.65 0.75 0.72 0.79 CLASS B Expenses before expense reductions 1.69 1.87 1.66 1.76 1.73 1.80 Expenses after expense reductions 1.44 1.62 1.41 1.51 1.53 1.60 YEARS ENDED 3/31 -------------------------------------------- ARKANSAS FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.93 1.02 0.92 1.06 Expenses after expense reductions 0.73 0.82 0.72 0.86 CLASS B Expenses before expense reductions 1.74 1.83 1.70 1.84 Expenses after expense reductions 1.54 1.63 1.50 1.64 YEARS ENDED 3/31 -------------------------------------------------------------------- CALIFORNIA FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.88 1.09 0.86 0.97 0.87 0.96 Expenses after expense reductions 0.63 0.84 0.61 0.72 0.67 0.76 CLASS B Expenses before expense reductions 1.64 1.85 1.59 1.70 1.67 1.76 Expenses after expense reductions 1.39 1.60 1.34 1.45 1.47 1.56 CLASS C Expenses before expense reductions 1.78 1.99 1.76 1.87 1.77 1.86 Expenses after expense reductions 1.53 1.74 1.51 1.62 1.56 1.65 YEARS ENDED 3/31 -------------------------------------------- CALIFORNIA FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.87 0.96 0.87 0.99 Expenses after expense reductions 0.67 0.76 0.67 0.79 CLASS B Expenses before expense reductions 1.66 1.75 1.65 1.77 Expenses after expense reductions 1.46 1.55 1.45 1.57 CLASS C Expenses before expense reductions 1.77 1.86 1.77 1.89 Expenses after expense reductions 1.57 1.66 1.57 1.69 YEARS ENDED 3/31 -------------------------------------------------------------------- FLORIDA FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.89 1.11 0.82 0.94 0.85 0.98 Expenses after expense reductions 0.64 0.86 0.57 0.69 0.64 0.77 CLASS B Expenses before expense reductions 1.65 1.87 1.59 1.71 1.64 1.77 Expenses after expense reductions 1.40 1.62 1.34 1.46 1.44 1.57 YEARS ENDED 3/31 -------------------------------------------- FLORIDA FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.82 0.88 0.83 0.93 Expenses after expense reductions 0.62 0.68 0.63 0.73 CLASS B Expenses before expense reductions 1.62 1.68 1.63 1.73 Expenses after expense reductions 1.42 1.48 1.43 1.53 YEARS ENDED 3/31 -------------------------------------------------------------------- GEORGIA FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.18 1.39 1.13 1.24 1.12 1.20 Expenses after expense reductions 0.93 1.14 0.88 0.99 0.91 0.99 CLASS B Expenses before expense reductions 1.93 2.14 1.88 1.99 1.86 1.94 Expenses after expense reductions 1.68 1.89 1.63 1.74 1.66 1.74 YEARS ENDED 3/31 -------------------------------------------- GEORGIA FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.12 1.22 1.13 1.29 Expenses after expense reductions 0.92 1.02 0.93 1.09 CLASS B Expenses before expense reductions 1.87 1.97 1.88 2.04 Expenses after expense reductions 1.67 1.77 1.68 1.84 YEARS ENDED 3/31 -------------------------------------------------------------------- MASSACHUSETTS FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.15 1.34 1.09 1.19 1.16 1.23 Expenses after expense reductions 0.90 1.09 0.84 0.94 0.95 1.02 CLASS B Expenses before expense reductions 1.80 1.99 1.74 1.84 1.80 1.87 Expenses after expense reductions 1.55 1.74 1.49 1.59 1.60 1.67 YEARS ENDED 3/31 -------------------------------------------- MASSACHUSETTS FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.12 1.21 1.12 1.26 Expenses after expense reductions 0.92 1.01 0.92 1.06 CLASS B Expenses before expense reductions 1.77 1.86 1.77 1.91 Expenses after expense reductions 1.57 1.66 1.57 1.71
While the "Statements of Assets and Liabilities" as of March 31, 2005, 2004, 2003 and 2002 (not presented herein) have not been reissued to give effect to the restatement, the principal effects of the restatement would be to increase investments and payable to the holder of the floating rate certificate from trust assets by corresponding amounts each year end, with no effect on previously reported net assets. The "Statements of Operations" for the years ended March 31, 2005, 2004, 2003 and 2002 (not presented herein) have not been reissued to give effect to the restatement, but the principal effects of the restatement would be to increase interest income and interest expense and fees by corresponding amounts each year, with no effect on previously reported net investment income. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNT FIRM To the Trustees and Shareholders of MFS Municipal Series Trust: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of MFS Alabama Municipal Bond Fund, MFS Arkansas Municipal Bond Fund, MFS California Municipal Bond Fund, MFS Florida Municipal Bond Fund, MFS Georgia Municipal Bond Fund, MFS Maryland Municipal Bond Fund and MFS Massachusetts Municipal Bond Fund, certain of the portfolios of MFS Municipal Series Trust (the "Trust"), as of March 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2006, 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, such financial statements and financial highlights present fairly, in all material respects, the financial positions 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 as of March 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 8, for each of the funds except the MFS Maryland Municipal Bond Fund, the statements of assets and liabilities, including the portfolios of investments, as of March 31, 2006, and the related statements of operations for the year then ended have been restated; additionally, certain financial highlights for these funds for certain of the years in the five year period ended March 31, 2006 have also been restated. DELOITTE & TOUCHE LLP Boston, Massachusetts May 23, 2006 (February 2, 2007 as to the effects of the restatement discussed in Note 8) TRUSTEES AND OFFICERS-- IDENTIFICATION AND BACKGROUND (Not Restated) The Trustees and officers of the Trust, as of May 1, 2006, 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 YEARS & NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j) --------------------- -------------------- --------------- ---------------------------------------------------------- INTERESTED TRUSTEES Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services Company, Chief (born 10/20/63) Executive Officer, President, Chief Investment Officer and Director Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services Company, Chairman (born 08/08/46) (since February 2004); 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 Enterprises (diversified (born 05/01/36) of Trustees services company), Chairman, Trustee and Chief Executive Officer (until November 2000) Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and compliance matters (since (born 11/29/41) July 2002); PricewaterhouseCoopers LLP (professional services firm), Partner (November 2000 until June 2002) Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Senior Cardiac Surgeon, (born 03/11/37) Chief of Cardiac Surgery (until 2005); Harvard Medical School, Professor of Surgery; Brigham and Women's Hospital Physicians' Organization, Chair (2000 to 2004) 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 William R. Gutow Trustee December 1993 Private investor and real estate consultant; Capitol (born 09/27/41) 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) 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 Robert W. Uek Trustee January 2006 Retired (since 1999); PricewaterhouseCoopers LLP (born 05/18/41) (professional services firm), Partner (until 1999); Consultant to investment company industry (since 2000); TT International Funds (mutual fund complex), Trustee (2000 until 2005); Hillview Investment Trust II Funds (mutual fund complex), Trustee (2000 until 2005) OFFICERS Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services Company, Executive Vice (born 12/01/58) President and Chief Regulatory Officer (since March 2004); Fidelity Management & Research Company, Vice President (prior to March 2004); Fidelity Group of Funds, President and Treasurer (prior to March 2004) Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services Company, Senior Vice (born 12/30/64) President (since September 2004); PricewaterhouseCoopers LLP, Partner (prior to September 2004) Christopher R. Bohane(k) Assistant Secretary July 2005 Massachusetts Financial Services Company, Vice President (born 1/18/74) and Assistant Clerk and Senior Counsel (since April 2003); Kirkpatrick & Lockhart LLP (law firm), Associate (prior to April 2003); Nvest Services Company, Assistant Vice President and Associate Counsel (prior to January 2001) Ethan D. Corey(k) Assistant Secretary July 2005 Massachusetts Financial Services Company, Special (born 11/21/63) and Assistant Clerk Counsel (since December 2004); Dechert LLP (law firm), Counsel (prior to December 2004) David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services Company, Vice President (born 8/10/68) (since June 2005); JP Morgan Investor Services, Vice President (January 2001 to June 2005); State Street Bank, Vice President and Corporate Audit Manager (prior to January 2001) Timothy M. Fagan(k) Assistant Secretary September 2005 Massachusetts Financial Services Company, Vice President (born 7/10/68) and Assistant Clerk and Senior Counsel (since September 2005); John Hancock Advisers, LLC, Vice President and Chief Compliance Officer (September 2004 to August 2005), Senior Attorney (prior to September 2004); John Hancock Group of Funds, Vice President and Chief Compliance Officer (September 2004 to December 2004) Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services Company, Vice President (born 10/27/70) (since May 2005); JP Morgan Investment Management Company, Vice President (prior to May 2005) Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services Company, Senior Vice (born 11/13/57) President Susan S. Newton(k) Assistant Secretary May 2005 Massachusetts Financial Services Company, Senior Vice (born 03/07/50) and Assistant Clerk President and Associate General Counsel (since April 2005); John Hancock Advisers, LLC, Senior Vice President, Secretary and Chief Legal Officer (prior to April 2005); John Hancock Group of Funds, Senior Vice President, Secretary and Chief Legal Officer (prior to April 2005) Susan A. Pereira(k) Assistant Secretary July 2005 Massachusetts Financial Services Company, Vice President (born 11/05/70) and Assistant Clerk and Senior Counsel (since June 2004); Bingham McCutchen LLP (law firm), Associate (January 2001 to June 2004); Preti, Flaherty, Beliveau, Pachios & Haley, LLC, Associate (prior to January 2001) Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services Company, Executive Vice (born 05/01/52) President, General Counsel and Secretary (since January 2006); Wilmer Cutler Pickering Hale and Dorr LLP (law firm), Partner (prior to January 2006) Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance services), (born 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(k) Assistant Treasurer September 1990 Massachusetts Financial Services Company, Senior Vice (born 06/12/60) President
---------- (h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously since appointment unless indicated otherwise. (j) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public companies"). (k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. (n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant retained by MFS pursuant to its settlement with the SEC concerning market timing and related matters. The terms of that settlement required that compensation and expenses related to the independent compliance consultant be borne exclusively by MFS and, therefore, MFS paid Mr. Butler for the services he rendered to the independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total of $351,119.29. Each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Messrs. Butler, Sherratt and Uek and Ms. Thomsen are members of the Trust's Audit Committee. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. As of December 31, 2005, each Trustee served as a board member of 98 funds within the MFS Family of Funds. The Trust held a shareholders' meeting in 2005, and will hold a shareholders' 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 Massachusetts Financial Services Company 500 Boylston Street, Boston, MA 02116-3741 DISTRIBUTOR MFS Fund Distributors, Inc. 500 Boylston Street, Boston, MA 02116-3741 PORTFOLIO MANAGER Michael L. Dawson CUSTODIAN State Street Bank and Trust Company 225 Franklin Street, Boston, MA 02110 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP 200 Berkeley Street, Boston, MA 02116 BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT A discussion regarding the Board's most recent review and renewal of the Fund's investment advisory agreement is available by clicking on the fund's name under "Select a fund" on the MFS Web site (mfs.com). PROXY VOTING POLICIES AND INFORMATION A general description of the MFS funds' proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission 100 F Street, NE Room 1580 Washington, D.C. 20549 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-551-5850. The fund's Form N-Q is available on the EDGAR database on the Commission's Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. FEDERAL TAX INFORMATION (Not Restated) The funds will notify shareholders of amounts for use in preparing 2006 income tax forms in January 2007. The following information is provided pursuant to provisions of the Internal Revenue Code. The funds below designated the following amounts as capital gain dividends paid during the fiscal year. CAPITAL GAINS --------------------------------------------------------- Alabama Fund 33,574 California Fund 658,156 Maryland Fund 863,330 Massachusetts Fund 1,019,498 Of the dividends paid from net investment income during the fiscal year, the following percentages were designated as exempt interest dividends for federal income tax purposes. If each fund had earned income on private activity bonds, a portion of the dividends paid may be considered a tax preference item for purposes of computing a shareholder's alternative minimum tax. EXEMPT INTEREST DIVIDENDS --------------------------------------------------------- Alabama Fund 100.00% Arkansas Fund 100.00% California Fund 100.00% Florida Fund 98.68% Georgia Fund 100.00% Maryland Fund 100.00% Massachusetts Fund 100.00% 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 -------------------------------------------------------------------------------------------------------------------- Share prices, account balances, exchanges 1-800-MFS-TALK (1-800-637-8255) or stock and bond outlooks touch-tone required 24 hours a day, 365 days a year --------------------------------------------------------------------------------------------------------------------
M F S(SM) INVESTMENT MANAGEMENT(R) MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. MST-A-ANN-5/06 22M MFS(R) MUNICIPAL SERIES TRUST 3/31/06 FOR THE STATES OF: MISSISSIPPI, NEW YORK, NORTH CAROLINA, PENNSYLVANIA, SOUTH CAROLINA, TENNESSEE, VIRGINIA, AND WEST VIRGINIA ANNUAL REPORT (As Restated) ---------------------------------------------------- LETTER FROM THE CEO 1 ---------------------------------------------------- PORTFOLIO COMPOSITION 2 ---------------------------------------------------- MANAGEMENT REVIEW 5 ---------------------------------------------------- PERFORMANCE SUMMARY 6 ---------------------------------------------------- FUND EXPENSE TABLES 14 ---------------------------------------------------- PORTFOLIO OF INVESTMENTS 17 ---------------------------------------------------- FINANCIAL STATEMENTS 56 ---------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 83 ---------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 96 ---------------------------------------------------- TRUSTEES AND OFFICERS 97 ---------------------------------------------------- BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 99 ---------------------------------------------------- PROXY VOTING POLICIES AND INFORMATION 99 ---------------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE 99 ---------------------------------------------------- FEDERAL TAX INFORMATION 99 ---------------------------------------------------- CONTACT INFORMATION BACK COVER ---------------------------------------------------- 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. M F S(SM) INVESTMENT MANAGEMENT(R) LETTER FROM THE CEO (Not Restated) [Photo of Robert J. Manning] Dear Shareholders, It has been said that change is the only constant in life. As investors have seen, that theme is still accurate today as we recently have experienced shifting economic cycles because of natural disasters and political instability around the globe. Markets worldwide have fluctuated in the past year as devastating hurricanes had a dramatic effect on the international economy, particularly on oil prices. We witnessed political unrest in the Middle East, highlighted by instability in Iraq, and in Africa, the usually stable Nigeria also experienced violence. As a result, energy prices have bounced up and down, with crude oil prices at one point topping a record $70 per barrel. Such cycles are not uncommon and in fact have almost become the norm in our everyday lives. What does all of this mean to you as an investor? In times like these, it helps to know that you're working with a seasoned investment professional who has experience to guide you through difficult times. At MFS(R), we believe our investment management team has the knowledge and confidence to navigate through difficult cycles and at the same time see through adversity to find investment opportunities for our clients and shareholders. Our investment management process, honed over 80 years, combines a unique concept of teamwork with our unwavering focus on the long term. We firmly believe that the best way to realize long-term financial goals - be it a college education, a comfortable retirement, or a secure family legacy - is to follow a three-pronged approach that focuses on longer time horizons. Allocate holdings across the major asset classes - including stocks, bonds, and cash. Diversify within each class to take advantage of different market segments and investing styles. Rebalance assets regularly to maintain a desired asset allocation. Of course, these strategies cannot guarantee a profit or protect against a loss. This long-term approach requires diligence and patience, two traits that in our experience are essential to capitalizing on the many opportunities the financial markets can offer - through both up and down economic cycles. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer and Chief Investment Officer MFS Investment Management(R) May 15, 2006 The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. PORTFOLIO COMPOSITION (As Restated) MFS(R) Mississippi Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 105.0% Cash & Other Net Assets (5.0)% TOP FIVE BOND INDUSTRIES (i) General Obligations/General Purpose 17.0% ------------------------------------------------ Health/Hospitals 16.4% ------------------------------------------------ State & Local Agencies 14.1% ------------------------------------------------ Water/Sewer 11.2% ------------------------------------------------ Universities/Colleges 11.1% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 80.6% ------------------------------------------------ AA 2.5% ------------------------------------------------ A 6.9% ------------------------------------------------ BBB 8.5% ------------------------------------------------ Not Rated 1.5% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.5 ------------------------------------------------ Average Life (m) 14.8 yrs. ------------------------------------------------ Average Maturity (m) 16.1 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA+ ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) New York Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 104.8% Cash & Other Net Assets (4.8)% TOP FIVE BOND INDUSTRIES (i) Toll Roads 13.8% ------------------------------------------------ Water/Sewer 13.2% ------------------------------------------------ State & Local Agencies 12.1% ------------------------------------------------ General Obligations/General Purpose 8.2% ------------------------------------------------ Transportation/Special Tax 7.7% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 43.8% ------------------------------------------------ AA 20.3% ------------------------------------------------ A 19.0% ------------------------------------------------ BBB 9.8% ------------------------------------------------ BB 2.2% ------------------------------------------------ B 0.6% ------------------------------------------------ Not Rated 4.3% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.6 ------------------------------------------------ Average Life (m) 15.6 yrs. ------------------------------------------------ Average Maturity (m) 17.2 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) North Carolina Municipal Bond Fund PORTFOLIO STRUCTURE (i) Bonds 105.8% Cash & Other Net Assets (5.8)% TOP FIVE BOND INDUSTRIES (i) Health/Hospitals 23.0% ------------------------------------------------ Municipal-owned utilities 18.2% ------------------------------------------------ Universities/Colleges 10.1% ------------------------------------------------ Water/Sewer 9.3% ------------------------------------------------ State & Local Agencies 8.2% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 40.3% ------------------------------------------------ AA 33.8% ------------------------------------------------ A 8.6% ------------------------------------------------ BBB 16.4% ------------------------------------------------ Not Rated 0.9% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.1 ------------------------------------------------ Average Life (m) 14.2 yrs. ------------------------------------------------ Average Maturity (m) 15.5 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) Pennsylvania Municipal Bond Fund PORTFOLIO STRUCTURE (i) Bonds 104.2% Cash & Other Net Assets (4.2)% TOP FIVE BOND INDUSTRIES (i) General Obligations/Schools 21.8% ------------------------------------------------ Universities/Colleges 13.9% ------------------------------------------------ Health/Hospitals 11.7% ------------------------------------------------ General Obligations/General Purpose 9.5% ------------------------------------------------ Water/Sewer 9.4% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 68.1% ------------------------------------------------ AA 14.0% ------------------------------------------------ A 5.9% ------------------------------------------------ BBB 9.0% ------------------------------------------------ BB 0.6% ------------------------------------------------ B 0.2% ------------------------------------------------ CCC 0.5% ------------------------------------------------ Not Rated 1.7% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 7.0 ------------------------------------------------ Average Life (m) 16.9 yrs. ------------------------------------------------ Average Maturity (m) 18.0 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) South Carolina Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 105.4% Cash & Other Net Assets (5.4)% TOP FIVE BOND INDUSTRIES (i) Health/Hospitals 20.9% ------------------------------------------------ Water/Sewer 14.6% ------------------------------------------------ Universities/Colleges 11.7% ------------------------------------------------ Municipal-owned Utilities 11.3% ------------------------------------------------ General Obligations/Schools 10.2% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 76.1% ------------------------------------------------ AA 11.8% ------------------------------------------------ A 6.2% ------------------------------------------------ BBB 2.8% ------------------------------------------------ B 0.6% ------------------------------------------------ Not Rated 2.5% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.8 ------------------------------------------------ Average Life (m) 18.1 yrs. ------------------------------------------------ Average Maturity (m) 19.3 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA+ ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) Tennessee Municipal Bond Fund (Not Restated) PORTFOLIO STRUCTURE(i) Bonds 99.1% Cash & Other Net Assets 0.9% TOP FIVE BOND INDUSTRIES (i) Water/Sewer 19.3% ------------------------------------------------ Health/Hospitals 14.0% ------------------------------------------------ General Obligations/Schools 12.9% ------------------------------------------------ Single Family Housing/State 12.7% ------------------------------------------------ General Obligations/General Purpose 8.4% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 56.8% ------------------------------------------------ AA 28.9% ------------------------------------------------ A 4.3% ------------------------------------------------ BBB 7.1% ------------------------------------------------ B 0.9% ------------------------------------------------ Not Rated 2.0% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 5.9 ------------------------------------------------ Average Life (m) 12.8 yrs. ------------------------------------------------ Average Maturity (m) 15.9 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) Virginia Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 103.5% Cash & Other Net Assets (3.5)% TOP FIVE BOND INDUSTRIES (i) State & Local Agencies 24.6% ------------------------------------------------ General Obligations/Improvement 13.4% ------------------------------------------------ Health/Hospitals 12.4% ------------------------------------------------ Water/Sewer 10.2% ------------------------------------------------ Airport 8.5% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 48.3% ------------------------------------------------ AA 27.1% ------------------------------------------------ A 12.0% ------------------------------------------------ BBB 5.0% ------------------------------------------------ BB 1.1% ------------------------------------------------ B 1.0% ------------------------------------------------ CCC 0.6% ------------------------------------------------ Not Rated 4.9% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.2 ------------------------------------------------ Average Life (m) 14.5 yrs. ------------------------------------------------ Average Maturity (m) 16.5 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ MFS(R) West Virginia Municipal Bond Fund PORTFOLIO STRUCTURE(i) Bonds 105.6% Cash & Other Net Assets (5.6)% TOP FIVE BOND INDUSTRIES (i) State & Local Agencies 24.5% ------------------------------------------------ General Obligations/General Purpose 24.3% ------------------------------------------------ Universities/Colleges 23.4% ------------------------------------------------ Water/Sewer 8.2% ------------------------------------------------ Health/Hospitals 5.4% ------------------------------------------------ CREDIT QUALITY OF BONDS (r) AAA 79.0% ------------------------------------------------ AA 6.4% ------------------------------------------------ A 9.2% ------------------------------------------------ BBB 3.8% ------------------------------------------------ BB 0.2% ------------------------------------------------ B 0.6% ------------------------------------------------ Not Rated 0.8% ------------------------------------------------ PORTFOLIO FACTS Average Duration (d) 6.2 ------------------------------------------------ Average Life (m) 15.8 yrs. ------------------------------------------------ Average Maturity (m) 16.8 yrs. ------------------------------------------------ Average Credit Quality of Rated Securities (a) AA+ ------------------------------------------------ Average Short Term Credit Quality A-1 ------------------------------------------------ (a) The average credit quality of rated securities is based upon a market weighted average of portfolio holdings that are rated by public rating agencies. (d) Duration is a measure of how much a bond's price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value. (i) For purposes of this graphical presentation, the bond component includes both accrued interest amounts and the equivalent expo sure from any derivative holdings, if applicable. (m) The average maturity shown is calculated using the final stated maturity on the portfolio's holdings without taking into accou nt any holdings which have been pre-refunded to an earlier date or which have a mandatory put date prior to the stated maturity. The average life shown takes into account these earlier dates. (r) Each security is assigned a rating from Moody's Investors Service. If not rated by Moody's, the rating will be that assigned b y Standard & Poor's. Likewise, if not assigned a rating by Standard & Poor's, it will be based on the rating assigned by Fitch, Inc. For th ose portfolios that hold a security which is not rated by any of the three agencies, the security is considered Not Rated. Holding s in U.S. Treasuries and government agency mortgage-backed securities, if any, are included in the "AAA"-rating category. Percentages are based on the total market value of investments as of 3/31/06. Percentages are based on net assets as of 3/31/06, unless otherwise noted. The portfolios are actively managed, and current holdings may be different. MANAGEMENT REVIEW (Not Restated) FACTORS THAT AFFECTED PERFORMANCE During the period, our duration(d) positioning relative to our benchmark, the Lehman Brothers Municipal Bond Index (Lehman Index), had a positive effect on relative performance for the North Carolina and Tennessee funds, and a negative effect on results for the Pennsylvania fund. For all other funds, duration positioning had a neutral effect on performance. Yield-curve(y) positioning was a strong contributor to relative results in all funds, with the exception of the Virginia and Tennessee funds, in which the positioning had a neutral and negative effect, respectively. Compared to the benchmark, all of the funds, excluding the South Carolina, Tennessee, and Virginia funds, were underweighted in bonds on the short end of the yield- curve (represented by bonds with durations of 0- to 4- years). This positioning helped relative returns as bonds on the short-end of the curve suffered price declines as their yields increased. The South Carolina fund was overweighted in bonds on the long end of the curve (represented by bonds with durations of 11- to 25- years). This helped relative results during the period because long-term municipal bonds increased in price as their yields flattened. 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 for all funds with the exception of the South Carolina and Virginia funds, where credit quality hurt results. Sector allocation benefited the Mississippi and New York funds, where our underweighted positions in the general obligation sector aided results. The Virginia fund benefited from an overweighting in the utilities sector. On the negative side, security selection in the credit enhanced sector was an area of weakness for many of the funds. Underweighting the strong-performing tobacco sector hurt results for all funds, except the New York and Tennessee funds, where the sector had a neutral impact on performance. Security selection in the pre-refunded bonds sector also negatively impacted relative returns for the New York, South Carolina, and West Virginia funds. Overweighting this sector in the Tennessee fund also dampened results. Respectfully, Michael Dawson Portfolio Manager (d) Duration is a measure of how much a bond's price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value. (y) A yield curve graphically depicts the yields of different maturity bonds of the same credit quality and type. A normal yield curve is upward sloping, with short-term rates lower than long-term rates. The views expressed in this report are those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market and other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio's current or future investments. PERFORMANCE SUMMARY THROUGH 3/31/06 (Not Restated) 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. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmark comparisons are unmanaged; do not reflect sales charges, commissions or expenses; and cannot be invested in directly. (See Notes to Performance Summary.) It is not possible to invest directly in an index. PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. FOR MOST RECENT MONTH-END PERFORMANCE, PLEASE VISIT MFS.COM. THE PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) MFS Mississippi Lehman Brothers Municipal Bond Municipal Bond Fund - Class A Bond Index 3/96 $ 9,525 $10,000 3/97 10,022 10,547 3/98 11,126 11,677 3/99 11,751 12,400 3/00 11,683 12,390 3/01 12,854 13,744 3/02 13,298 14,261 3/03 14,558 15,671 3/04 15,252 16,590 3/05 15,674 17,032 3/06 16,237 17,682 MFS(R) MISSISSIPPI BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 8/06/92 3.59% 4.78% 5.48% ---------------------------------------------------------------------------- B 9/07/93 2.71% 3.95% 4.64% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative Benchmarks -------------------------------------------------------------------------------- Average "other state" municipal debt fund (l) 3.82% 4.88% 5.40% ---------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class -------------------------------------------------------------------------------- A -1.33% 3.77% 4.97% With Initial Sales Charge (4.75%) ---------------------------------------------------------------------------- B -1.25% 3.61% 4.64% With CDSC (Declining over six years from 4% to 0%) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) MFS New York Lehman Brothers Municipal Bond Municipal Fund - Class A Bond Index 3/96 $ 9,525 $10,000 3/97 9,971 10,547 3/98 11,126 11,677 3/99 11,698 12,400 3/00 11,574 12,390 3/01 12,819 13,744 3/02 13,224 14,261 3/03 14,553 15,671 3/04 15,267 16,590 3/05 15,641 17,032 3/06 16,157 17,682 MFS(R) NEW YORK MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 6/06/88 3.30% 4.74% 5.43% ---------------------------------------------------------------------------- B 9/07/93 2.43% 3.90% 4.60% ---------------------------------------------------------------------------- C 12/11/00 2.43% 3.94% 4.61% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative Benchmarks -------------------------------------------------------------------------------- Average New York municipal debt fund (l) 3.89% 4.64% 5.20% ---------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class -------------------------------------------------------------------------------- A -1.61% 3.72% 4.91% With Initial Sales Charge (4.75%) ---------------------------------------------------------------------------- B -1.51% 3.56% 4.60% With CDSC (Declining over six years from 4% to 0%) ---------------------------------------------------------------------------- C 1.45% 3.94% 4.61% With CDSC (1% for 12 months) (x) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. (x) Assuming redemption within one year from the end of the prior month of purchase. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) MFS North Carolina Lehman Brothers Municipal Bond Municipal Fund - Class A Bond Index 3/96 $ 9,525 $10,000 3/97 10,010 10,547 3/98 11,047 11,677 3/99 11,572 12,400 3/00 11,379 12,390 3/01 12,539 13,744 3/02 12,926 14,261 3/03 14,181 15,671 3/04 14,891 16,590 3/05 15,211 17,032 3/06 15,742 17,682 MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 10/31/84 3.49% 4.65% 5.15% ---------------------------------------------------------------------------- B 9/07/93 2.73% 3.94% 4.46% ---------------------------------------------------------------------------- C 1/03/94 2.82% 3.96% 4.48% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative Benchmarks -------------------------------------------------------------------------------- Average North Carolina municipal debt fund (l) 3.14% 4.23% 4.89% ---------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class -------------------------------------------------------------------------------- A -1.43% 3.64% 4.64% With Initial Sales Charge (4.75%) ---------------------------------------------------------------------------- B -1.22% 3.60% 4.46% With CDSC (Declining over six years from 4% to 0%) ---------------------------------------------------------------------------- C 1.83% 3.96% 4.48% With CDSC (1% for 12 months) (x) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. (x) Assuming redemption within one year from the end of the prior month of purchase. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) MFS Pennsylvania Lehman Brothers Municipal Bond Municipal Fund - Class A Bond Index 3/96 $ 9,525 $10,000 3/97 9,970 10,547 3/98 11,131 11,677 3/99 11,782 12,400 3/00 11,730 12,390 3/01 13,002 13,744 3/02 13,502 14,261 3/03 14,868 15,671 3/04 15,629 16,590 3/05 16,093 17,032 3/06 16,750 17,682 MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 2/01/93 4.08% 5.20% 5.81% ---------------------------------------------------------------------------- B 9/07/93 3.30% 4.36% 4.97% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative Benchmarks -------------------------------------------------------------------------------- Average Pennsylvania municipal debt fund (l) 3.66% 4.79% 5.03% ---------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class -------------------------------------------------------------------------------- A -0.86% 4.18% 5.29% With Initial Sales Charge (4.75%) ---------------------------------------------------------------------------- B -0.69% 4.02% 4.97% With CDSC (Declining over six years from 4% to 0%) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) MFS South Carolina Lehman Brothers Municipal Bond Municipal Fund - Class A Bond Index 3/96 $ 9,525 $10,000 3/97 9,949 10,547 3/98 11,006 11,677 3/99 11,482 12,400 3/00 11,222 12,390 3/01 12,373 13,744 3/02 12,828 14,261 3/03 14,048 15,671 3/04 14,793 16,590 3/05 15,166 17,032 3/06 15,694 17,682 MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 10/31/84 3.48% 4.87% 5.12% ---------------------------------------------------------------------------- B 9/07/93 2.73% 4.19% 4.43% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative Benchmarks -------------------------------------------------------------------------------- Average South Carolina municipal debt fund (l) 3.16% 4.47% 4.97% ---------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class -------------------------------------------------------------------------------- A -1.44% 3.85% 4.61% With Initial Sales Charge (4.75%) ---------------------------------------------------------------------------- B -1.23% 3.85% 4.43% With CDSC (Declining over six years from 4% to 0%) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) MFS Tennessee Lehman Brothers Municipal Bond Municipal Fund - Class A Bond Index 3/96 $ 9,525 $10,000 3/97 9,952 10,547 3/98 11,058 11,677 3/99 11,589 12,400 3/00 11,386 12,390 3/01 12,510 13,744 3/02 12,930 14,261 3/03 14,138 15,671 3/04 14,816 16,590 3/05 15,191 17,032 3/06 15,666 17,682 MFS(R) TENNESSEE MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 8/12/88 3.13% 4.60% 5.10% ---------------------------------------------------------------------------- B 9/07/93 2.56% 3.95% 4.43% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative Benchmarks -------------------------------------------------------------------------------- Average Tennessee municipal debt fund (l) 2.89% 4.27% 4.94% ---------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class -------------------------------------------------------------------------------- A -1.77% 3.59% 4.59% With Initial Sales Charge (4.75%) ---------------------------------------------------------------------------- B -1.39% 3.60% 4.43% With CDSC (Declining over six years from 4% to 0%) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) MFS Virginia Lehman Brothers Municipal Bond Municipal Fund - Class A Bond Index 3/96 $ 9,525 $10,000 3/97 9,903 10,547 3/98 10,925 11,677 3/99 11,440 12,400 3/00 11,315 12,390 3/01 12,510 13,744 3/02 12,751 14,261 3/03 13,412 15,671 3/04 14,705 16,590 3/05 15,120 17,032 3/06 15,641 17,682 MFS(R) VIRGINIA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 10/31/84 3.45% 4.76% 5.09% ---------------------------------------------------------------------------- B 9/07/93 2.78% 4.08% 4.39% ---------------------------------------------------------------------------- C 1/03/94 2.78% 4.08% 4.41% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative Benchmarks -------------------------------------------------------------------------------- Average Virginia municipal debt fund (l) 3.16% 4.27% 4.93% ---------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class -------------------------------------------------------------------------------- A -1.47% 3.75% 4.57% With Initial Sales Charge (4.75%) ------------------------------------------------------------------------------ B -1.19% 3.74% 4.39% With CDSC (Declining over six years from 4% to 0%) ------------------------------------------------------------------------------ C 1.79% 4.08% 4.41% With CDSC (1% for 12 months) (x) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. (x) Assuming redemption within one year from the end of the prior month of purchase. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (FOR THE 10-YEAR PERIOD ENDED 3/31/06) MFS West Virginia Lehman Brothers Municipal Bond Municipal Fund - Class A Bond Index 3/96 $ 9,525 $10,000 3/97 10,021 10,547 3/98 10,965 11,677 3/99 11,483 12,400 3/00 11,266 12,390 3/01 12,398 13,744 3/02 12,868 14,261 3/03 14,031 15,671 3/04 14,710 16,590 3/05 15,046 17,032 3/06 15,528 17,682 MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 10/31/84 3.21% 4.61% 5.01% ---------------------------------------------------------------------------- B 9/07/93 2.45% 3.93% 4.32% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative Benchmarks -------------------------------------------------------------------------------- Average "other state" municipal debt fund (l) 3.82% 4.88% 5.40% ---------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class -------------------------------------------------------------------------------- A -1.69% 3.59% 4.50% With Initial Sales Charge (4.75%) ---------------------------------------------------------------------------- B -1.50% 3.58% 4.32% With CDSC (Declining over six years from 4% to 0%) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. NOTES TO PERFORMANCE SUMMARY Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the funds' performance results would be less favorable. Please see the prospectus and financial statements for complete details. A portion of income may be subject to state, federal, and/or alternative minimum tax. Capital gains, if any, are subject to a capital gains tax. From time to time the funds may receive proceeds from litigation settlements, without which performance would be lower. For the MFS New York Municipal Bond Fund only: Performance for Class C shares includes the performance of the fund's Class B shares prior to their offering. This blended class performance has been adjusted to take into account differences in sales loads, if any, applicable to these share classes, but has not been adjusted to take into account differences in class specific operating expenses (such as Rule 12b-1 fees). Compared to performance these share classes would have experienced had they been offered for the entire period, the use of blended performance generally results in higher performance for share classes with higher operating expenses than the share class to which it is blended, and lower performance for share classes with lower operating expenses than the share class to which it is blended. FUND EXPENSE TABLES (As Restated) FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, OCTOBER 1, 2005, THROUGH MARCH 31, 2006. As a shareholder of the funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments and redemption fees on certain exchanges and redemptions, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the funds and to compare these costs with the ongoing costs of investing in other mutual funds. 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, 2005 through March 31, 2006. 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 each fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------------------- Actual 0.83% $1,000.0 $1,009.90 $4.16 A ------------------------------------------------------------------------------- Hypothetical (h) 0.83% $1,000.00 $1,020.79 $4.18 ------------------------------------------------------------------------------------------- Actual 1.59% $1,000.00 $1,006.10 $7.95 B ------------------------------------------------------------------------------- Hypothetical (h) 1.59% $1,000.00 $1,017.00 $8.00 ------------------------------------------------------------------------------------------- (h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. MFS(R) NEW YORK MUNICIPAL BOND FUND ------------------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------------------- Actual 1.01% $1,000.00 $1,006.80 $5.05 A ------------------------------------------------------------------------------- Hypothetical (h) 1.01% $1,000.00 $1,019.90 $5.09 ------------------------------------------------------------------------------------------- Actual 1.76% $1,000.00 $1,003.00 $8.79 B ------------------------------------------------------------------------------- Hypothetical (h) 1.76% $1,000.00 $1,016.16 $8.85 ------------------------------------------------------------------------------------------- Actual 1.76% $1,000.00 $1,003.00 $8.79 C ------------------------------------------------------------------------------- Hypothetical (h) 1.76% $1,000.00 $1,016.16 $8.85 ------------------------------------------------------------------------------------------- MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND ------------------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------------------- Actual 1.06% $1,000.00 $1,009.20 $5.31 A ------------------------------------------------------------------------------- Hypothetical (h) 1.06% $1,000.00 $1,019.65 $5.34 ------------------------------------------------------------------------------------------- Actual 1.72% $1,000.00 $1,006.00 $8.60 B ------------------------------------------------------------------------------- Hypothetical (h) 1.72% $1,000.00 $1,016.36 $8.65 ------------------------------------------------------------------------------------------- Actual 1.71% $1,000.00 $1,006.00 $8.55 C ------------------------------------------------------------------------------- Hypothetical (h) 1.71% $1,000.00 $1,016.40 $8.60 ------------------------------------------------------------------------------------------- MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND ------------------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------------------- Actual 0.75% $1,000.00 $1,013.20 $3.76 A ------------------------------------------------------------------------------- Hypothetical (h) 0.75% $1,000.00 $1,021.19 $3.78 ------------------------------------------------------------------------------------------- Actual 1.51% $1,000.00 $1,010.40 $7.57 B ------------------------------------------------------------------------------- Hypothetical (h) 1.51% $1,000.00 $1,017.40 $7.59 ------------------------------------------------------------------------------------------- MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND ------------------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------------------- Actual 1.08% $1,000.00 $1,009.50 $5.41 A ------------------------------------------------------------------------------- Hypothetical (h) 1.08% $1,000.00 $1,019.55 $5.44 ------------------------------------------------------------------------------------------- Actual 1.74% $1,000.00 $1,006.20 $8.70 B ------------------------------------------------------------------------------- Hypothetical (h) 1.74% $1,000.00 $1,016.26 $8.75 ------------------------------------------------------------------------------------------- (h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. MFS(R) TENNESSEE MUNICIPAL BOND FUND (Not Restated) ------------------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------------------- Actual 0.93% $1,000.00 $1,006.70 $4.65 A ------------------------------------------------------------------------------- Hypothetical (h) 0.93% $1,000.00 $1,020.29 $4.68 ------------------------------------------------------------------------------------------- Actual 1.58% $1,000.00 $1,003.40 $7.89 B ------------------------------------------------------------------------------- Hypothetical (h) 1.58% $1,000.00 $1,017.05 $7.95 ------------------------------------------------------------------------------------------- MFS(R) VIRGINIA MUNICIPAL BOND FUND ------------------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------------------- Actual 1.03% $1,000.00 $1,008.40 $5.16 A ------------------------------------------------------------------------------- Hypothetical (h) 1.03% $1,000.00 $1,019.80 $5.19 ------------------------------------------------------------------------------------------- Actual 1.68% $1,000.00 $1,005.10 $8.40 B ------------------------------------------------------------------------------- Hypothetical (h) 1.68% $1,000.00 $1,016.55 $8.45 ------------------------------------------------------------------------------------------- Actual 1.67% $1,000.00 $1,006.00 $8.35 C ------------------------------------------------------------------------------- Hypothetical (h) 1.67% $1,000.00 $1,016.60 $8.40 ------------------------------------------------------------------------------------------- MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND ------------------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period (p) Expense Account Value Account Value 10/01/05- Share Class Ratio 10/01/05 3/31/06 3/31/06 ------------------------------------------------------------------------------------------- Actual 1.08% $1,000.00 $1,010.20 $5.41 A ------------------------------------------------------------------------------- Hypothetical (h) 1.08% $1,000.00 $1,019.55 $5.44 ------------------------------------------------------------------------------------------- Actual 1.74% $1,000.00 $1,006.00 $8.70 B ------------------------------------------------------------------------------- Hypothetical (h) 1.74% $1,000.00 $1,016.26 $8.75 ------------------------------------------------------------------------------------------- (h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher.
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) MISSISSIPPI MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.7% --------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) --------------------------------------------------------------------------------------------------------------------------------- Airport and Port Jackson, MS, Municipal Airport Authority, Airport Rev., "A", AMBAC, Revenue - 3.0% 5%, 2031 $ 2,510,000 $ 2,590,370 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 16.8% Commonwealth of Puerto Rico, FGIC, 5.5%, 2016 (u) $ 6,220,000 $ 6,952,778 Hinds County, MS, MBIA, 6.25%, 2010 1,660,000 1,809,400 Hinds County, MS, MBIA, 6.25%, 2011 1,285,000 1,425,849 Mississippi Development Bank Special Obligations (Jackson, Mississippi) FSA, 5.25%, 2018 600,000 657,348 Mississippi Development Bank Special Obligations (Jackson, Mississippi) FSA, 5.25%, 2019 1,260,000 1,382,812 Mississippi Development Bank Special Obligations (Jackson, Mississippi) FSA, 5.25%, 2020 620,000 681,826 Mississippi Development Bank Special Obligations, Harrison County Mississippi Highway Construction, "N", FGIC, 5%, 2026 1,000,000 1,037,410 Puerto Rico Commonwealth Public Improvement, "A", CIFG, 5%, 2025 500,000 524,385 ------------ $ 14,471,808 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 4.0% Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) $ 1,500,000 $ 1,601,730 State of Mississippi, Capital Improvement, 5.5%, 2010 (c) 750,000 802,702 State of Mississippi, Capital Improvement, "I", 6%, 2009 (c) 1,000,000 1,074,540 ------------ $ 3,478,972 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.8% Biloxi, MS, Public School District, MBIA, 5%, 2021 $ 1,000,000 $ 1,029,320 Jackson, MS, Public School District, "B", AMBAC, 5.75%, 2010 (c) 1,000,000 1,083,640 Jackson, MS, Public School District, "B", AMBAC, 0%, 2022 2,000,000 850,980 Jackson, MS, Public School District, "B", AMBAC, 0%, 2023 1,000,000 398,440 Madison County, MS, School District, "A", MBIA, 5.875%, 2016 1,500,000 1,605,915 ------------ $ 4,968,295 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 16.2% Alcorn County, MS, Corinth Hospital Rev. (Magnolia Regional Health Center), AMBAC, 5.75%, 2013 $ 1,000,000 $ 1,021,090 Corinth & Alcorn County, MS, Hospital Rev. (Magnolia Regional Health Center), 5.5%, 2021 400,000 402,128 Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), 5.75%, 2031 500,000 511,965 Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital) MBIA, 6.125%, 2015 2,250,000 2,265,322 Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital) MBIA, 6.2%, 2018 1,000,000 1,006,990 Hinds County, MS, Rev. (Methodist Hospital & Rehabilitation) AMBAC, 5.6%, 2012 2,055,000 2,133,994 Jones County, MS, Hospital Rev. (South Central Regional Medical Center), 5.5%, 2017 1,000,000 1,017,480 Mississippi Development Bank Special Obligations (Adams County Hospital) FSA, 5.75%, 2016 1,000,000 1,014,640 Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Medical Center) MBIA, 6.5%, 2010 1,190,000 1,204,625 Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Medical Center) MBIA, 6%, 2013 750,000 758,955 Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Memorial Healthcare), "B-1", 5%, 2024 1,000,000 1,012,270 Mississippi Hospital Equipment & Facilities Authority Rev. (Forrest County General Hospital) FSA, 5.625%, 2020 1,000,000 1,074,600 Mississippi Hospital Equipment & Facilities Authority Rev., Refunding & Improvement, Southwest Regional Medical Center, 5.5%, 2019 250,000 260,320 Mississippi Hospital Equipment & Facilities Authority, Refunding & Improvement, Southwest Regional Medical Center, 5.75%, 2023 250,000 261,220 ------------ $ 13,945,599 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - Mississippi Business Finance Corp. (Solid Waste Management, Inc.), 0.3% 4.4%, 2027 $ 250,000 $ 250,868 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 0.3% Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 $ 210,000 $ 221,449 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 3.2% Jones County, MS, Solid Waste Disposal Rev. (International Paper Co.) "A", 5.8%, 2021 $ 500,000 $ 511,215 Lowndes County, MS, Solid Waste Disposal & Pollution Control Rev. (Weyerhaeuser Co.), 6.8%, 2022 1,250,000 1,486,488 Warren County, MS, Environmental Improvement Rev. (International Paper Co.), "A", 4.4%, 2015 750,000 714,082 ------------ $ 2,711,785 --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 1.4% Mississippi Development Bank, Special Obligation (Diamond Lakes Utilities), 6.25%, 2017 $ 1,150,000 $ 1,173,161 --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 2.0% Gulfport, MS, Community Development Urban Renewal Rev. (Oakview Apartments) FNMA, 7.4%, 2025 $ 1,720,000 $ 1,723,079 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 6.9% Mississippi Home Corp. Rev., Single Family Rev, "B-2", GNMA, 6.375%, 2032 $ 550,000 $ 570,922 Mississippi Home Corp. Rev., Single Family Rev., "A", GNMA, 6.3%, 2031 205,000 214,301 Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 5.3%, 2023 780,000 796,887 Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.95%, 2031 330,000 339,781 Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.5%, 2032 320,000 331,219 Mississippi Home Corp. Rev., Single Family Rev., "B", GNMA, 6.625%, 2027 235,000 236,981 Mississippi Home Corp. Rev., Single Family Rev., "B", GNMA, 5.3%, 2035 860,000 879,513 Mississippi Home Corp. Rev., Single Family Rev., "B-2", GNMA, 6.45%, 2033 585,000 612,612 Mississippi Home Corp. Rev., Single Family Rev., "C", GNMA, 4.95%, 2025 885,000 889,425 Mississippi Home Corp. Rev., Single Family Rev., "F", GNMA, 7.55%, 2027 174,000 176,563 Mississippi Home Corp. Rev., Single Family Rev., GNMA, 6.5%, 2024 890,000 891,104 ------------ $ 5,939,308 --------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 13.9% Lamar County, MS, (Jail Project) MBIA, 5.1%, 2021 $ 430,000 $ 447,428 Mississippi Development Bank Special Obligations (Correctional Facilities), "A", AMBAC, 5.125%, 2025 1,000,000 1,047,450 Mississippi Development Bank Special Obligations (Hinds County Public Improvements), FSA, 5.25%, 2030 1,110,000 1,172,837 Mississippi Development Bank Special Obligations (Mississippi, Ltd. Tax Hospital Rev.), 5.1%, 2020 1,000,000 1,037,280 Mississippi Development Bank Special Obligations (Natchez Mississippi Convention Center) AMBAC, 6%, 2021 750,000 819,360 Mississippi Development Bank Special Obligations (Public Improvement Board), 5%, 2023 750,000 750,323 Mississippi Development Bank Special Obligations (Southaven, MS, Recreation Facilities), 5.875%, 2014 375,000 395,670 Mississippi Development Bank Special Obligations (Southaven, MS, Recreation Facilities), 6.2%, 2020 400,000 426,268 Mississippi Development Bank Special Obligations (Tunica County Highway Construction Project), FGIC, 5%, 2024 1,000,000 1,041,600 Mississippi Development Bank Special Obligations (Tunica County Highway Construction Project), FGIC, 5%, 2025 1,000,000 1,039,390 Mississippi Development Bank Special Obligations (Tupelo Fairgrounds), "A", AMBAC, 5%, 2017 785,000 812,342 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 1,000,000 1,091,270 Walnut Grove, MS, Correctional Authority, AMBAC, 6%, 2009 (c) 1,750,000 1,914,185 ------------ $ 11,995,403 --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.0% Puerto Rico Convention Center, District Authority Hotel Occupancy Tax Rev., "A", CIFG, 4.5%, 2036 $ 750,000 $ 730,597 Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 135,000 140,243 ------------ $ 870,840 --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.7% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 235,000 $ 240,901 Guam Economic Development Authority Tobacco Settlement, "B", 5.5%, 2041 350,000 357,193 ------------ $ 598,094 --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 1.4% Mississippi Development Bank Special Obligations, Madison County (Road & Bridge) AMBAC, 5.1%, 2019 $ 1,175,000 $ 1,234,526 --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 11.0% Jackson State University, Educational Building Corp. Rev., (Campus Facilities), "A", FGIC, 5%, 2029 $ 3,100,000 $ 3,196,565 Jackson State University, Educational Building Corp. Rev., (Student Recreation Center), AMBAC, 5.125%, 2027 750,000 779,483 Medical Center, Educational Building Corp. Rev. (University of Mississippi Medical Center), "B", AMBAC, 5.5%, 2023 1,000,000 1,134,000 Mississippi State University Educational Building Corp. Rev. (Athletic Facilities), "A", 6.2%, 2006 (c) 1,000,000 1,024,120 Mississippi State University Educational Building Corp. Rev., AMBAC, 5.5%, 2016 1,000,000 1,066,270 Mississippi State University Educational Building Corp. Rev., AMBAC, 5%, 2021 250,000 258,352 Mississippi Valley State University, Educational Building Corp., MBIA, 5.5%, 2021 890,000 941,575 University of Mississippi, Educational Building Corp. (Performing Arts Center) AMBAC, 5.25%, 2018 1,000,000 1,038,150 ------------ $ 9,438,515 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 4.7% Guam Power Authority Rev., AMBAC, 5.25%, 2013 (u) $ 2,000,000 $ 2,118,180 Mississippi Development Bank Special Obligations (Okolona Electric System), 5.2%, 2016 1,010,000 1,056,985 Puerto Rico Electric Power Authority Rev., "II", 5.25%, 2031 875,000 909,615 ------------ $ 4,084,780 --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 11.1% Jackson, MS, Water & Sewer Systems Rev., FGIC, 5.25%, 2009 (c) $ 420,000 $ 441,323 Mississippi Development Bank Special Obligations (Combined Water Sewer & Solid Waste Management) FSA, 5.25%, 2021 1,270,000 1,369,454 Mississippi Development Bank Special Obligations (Combined Water Sewer & Solid Waste Management) FSA, 5.05%, 2027 1,610,000 1,693,028 Mississippi Development Bank Special Obligations (Gulfport Water & Sewer Project) FSA, 5.625%, 2012 (c) 500,000 556,655 Mississippi Development Bank Special Obligations (Gulfport Water & Sewer Project), "A", FGIC, 5.25%, 2012 (c) 2,000,000 2,153,860 Mississippi Development Bank Special Obligations (Jackson Water & Sewer System Project) FSA, 5%, 2029 2,000,000 2,063,600 Mississippi Development Bank Special Obligations (Jackson Water & Sewer System Project), FGIC, 5%, 2032 250,000 257,160 Mississippi Development Bank Special Obligations, Grenada, MS, Water & Sewer Systems Project, "N", FSA, 5%, 2030 1,000,000 1,037,181 ------------ $ 9,572,261 --------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $86,009,966) $ 89,269,113 --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.8% --------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., 3.22%, due 4/06/06 $ 300,000 $ 300,000 Oklahoma Industries Authority, Health System Rev. (Integris Baptist Medical Center), "B", 3.18%, due 4/03/06 400,000 400,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 700,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $86,709,966) $ 89,969,113 --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (4.5)% (3,907,593 --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $ 86,061,520 --------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $2,000,000 Fixed - 3 Year Floating - 7 Day $ 27,467 BMA Swap Index (2.795%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 21,024 BMA Swap Index (3.742%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/15/18 USD 2,000,000 Fixed - 12 Year Floating - 7 Day 10,528 BMA Swap Index (4.019%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 1,000,000 Fixed - 12 Year Floating - 7 Day 19,031 BMA Swap Index (3.861%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 9/07/26 USD 1,000,000 Floating - 3 Month Fixed - 20 Year (26,908) LIBOR Swap Index LIBOR Swap Index (5.268%) ------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 850,000 Floating - 3 Month Fixed - 20 Year (13,173) LIBOR Swap Index LIBOR Swap Index (5.363%) ------------------------------------------------------------------------------------------------------------------------------- $ 37,969 ======== At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) NEW YORK MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.5% --------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 3.5% New York City, NY, City Industrial Development Agency, Special Facilities Rev. (Terminal One Group), 5.5%, 2024 1,000,000 1,050,690 Port Authority NY & NJ, (120th Series) MBIA, 5.5%, 2018 1,500,000 1,548,705 Port Authority NY & NJ, (132nd Series), 5%, 2033 2,000,000 2,068,160 Port Authority NY & NJ, Special Obligation Rev. (JFK International), MBIA, 6.25%, 2015 1,000,000 1,148,430 ------------ $ 5,815,985 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 8.1% Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) $ 2,700,000 $ 3,006,585 Nassau County, NY, Health Systems Rev. (Nassau County), FSA, 6%, 2009 (c) 1,000,000 1,090,570 New York NY, "N", 5%, 2026 1,500,000 1,550,730 New York, NY, "D", 5%, 2028 2,000,000 2,057,500 New York, NY, "A", 6%, 2010 (c) 990,000 1,085,763 New York, NY, "B", 5.375%, 2017 1,250,000 1,332,162 New York, NY, "C-1", 5.25%, 2025 1,000,000 1,060,310 New York, NY, "G", 5%, 2028 2,000,000 2,057,900 New York, NY, "J", FGIC, 5.5%, 2026 200,000 203,386 New York, NY, Unrefunded, "A", 6%, 2019 10,000 10,804 ------------ $ 13,455,710 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 0.1% Erie County, NY, Public Improvement, "A", FGIC, 5%, 2019 $ 140,000 $ 146,556 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.5% Genesee Valley, NY, Central School District (Angelica Belmont), FGIC, 5.25%, 2028 $ 1,720,000 $ 1,850,290 North Babylon, NY, Union Free School District, "A", FGIC, 5.5%, 2018 2,415,000 2,564,899 Port Byron, NY, Central School District, AMBAC, ETM, 7.4%, 2012 (c) 500,000 598,480 Port Byron, NY, Central School District, AMBAC, ETM, 7.4%, 2013 (c) 500,000 609,525 Port Byron, NY, Central School District, AMBAC, ETM, 7.4%, 2014 (c) 500,000 620,510 Port Byron, NY, Central School District, AMBAC, ETM, 7.4%, 2015 (c) 500,000 629,670 Rome, NY, City School District, FSA, 5.5%, 2009 (c) 1,000,000 1,065,720 Washingtonville, NY, Central School Central District, FGIC, 7.35%, 2008 550,000 593,346 Washingtonville, NY, Central School Central District, FGIC, 7.35%, 2009 550,000 611,320 ------------ $ 9,143,760 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 6.6% Chautauqua County, NY, Industrial Development Agency, Civic Facilities Rev. (Women's Christian Assn.), "A", 6.35%, 2017 $ 155,000 $ 157,006 Chautauqua County, NY, Industrial Development Agency, Civic Facilities Rev. (Women's Christian Assn.), "A", 6.4%, 2029 490,000 485,605 Chemung County, NY, Industrial Development Agency, Civic Facilities Rev. (Arnot Ogden Medical Center), "A", 5%, 2029 750,000 754,672 Chemung County, NY, Industrial Development Agency, Civic Facilities Rev. (Arnot Ogden Medical Center), "B", 5%, 2029 1,000,000 1,006,230 Fulton County, NY, Industrial Development Agency, Civic Facilities Rev. (Nathan Littauer Hospital), "A", 5.75%, 2009 615,000 613,383 Monroe County, NY, Industrial Development Agency, Civic Facilities Rev. (Highland Hospital of Rochester), 5%, 2025 1,000,000 1,007,340 Nassau County, NY, Industrial Development Agency, Civic Facilities Rev. (North Shore Health Systems), "D", 5.625%, 2010 500,000 528,280 New York City, NY, Industrial Development Agency, Civic Facilities Rev. (Staten Island University Hospital), "B", 6.375%, 2031 500,000 507,290 New York City, NY, Health & Hospital Corp. Rev., "A", 5.25%, 2017 760,000 789,260 New York Dormitory Authority Rev. (Montefiore Medical Center), AMBAC, 5.25%, 2019 810,000 852,136 New York Dormitory Authority Rev. (North Shore Long Island Jewish Group), 5.5%, 2033 $ 250,000 $ 263,290 New York Dormitory Authority Rev. (White Plains Hospital), FHA, 5.375%, 2043 1,500,000 1,579,215 New York State Dormitory Authority Rev., Non State Supported Debt (Mt. Sinai NYU Health), 5.5%, 2026 250,000 253,760 New York State Dormitory Authority Rev., Non State Supported Debt (Mt. Sinai NYU Health), "C", 5.5%, 2026 500,000 507,520 Suffolk County, NY, Industrial Development Agency, Civic Facilities Rev. (Huntington Hospital), "C", 5.875%, 2032 1,000,000 1,046,180 Yonkers, NY, Industrial Development Agency, Civic Facilities Rev. (St. John's Riverside Hospital), "A", 7.125%, 2031 500,000 519,640 ------------ $ 10,870,807 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 0.4% Suffolk County, NY, Industrial Development Agency, Civic Facilities Rev. (Gurwin Jewish Phase II), 6.7%, 2039 $ 385,000 $ 406,256 Westchester County, NY, Industrial Development Agency, Civic Facilities Rev., Continuing Care Retirement (Kendal On Hudson), "A", 6.5%, 2034 300,000 311,640 ------------ $ 717,896 --------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.9% Nassau County, NY, Industrial Development Agency, Civic Facility Rev. (Special Needs Facility), "B-1", 6.5%, 2017 $ 205,000 $ 212,558 New York Dormitory Authority Rev. (Jewish Board of Families & Children), AMBAC, 5%, 2023 695,000 725,823 New York, NY, Industrial Development Agency (PSCH, Inc.), 6.375%, 2033 500,000 519,400 ------------ $ 1,457,781 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Airlines - 0.2% New York City, NY, Industrial Development Agency Rev. (American Airlines, Inc.), 7.625%, 2025 $ 350,000 $ 384,608 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 1.0% Onondaga County, NY, Industrial Development Agency, Sewer Facilities Rev. (Bristol-Meyers Squibb Co.), 5.75%, 2024 $ 1,000,000 $ 1,120,930 Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 430,000 453,444 ------------ $ 1,574,374 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 1.6% Essex County, NY, Industrial Development Agency, Pollution Control Rev. (International Paper Corp.), 5.55%, 2014 $ 750,000 $ 787,425 Essex County, NY, Industrial Development Agency, Pollution Control Rev. (International Paper Corp.), 6.15%, 2021 1,000,000 1,030,690 Essex County, NY, Industrial Development Agency, Pollution Control Rev. (International Paper Corp.), 6.45%, 2023 700,000 747,810 ------------ $ 2,565,925 --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & New York City, NY, City Industrial Development Agency Rev., Liberty Tourism - 0.3% IAC/InterActiveCorp, 5%, 2035 $ 500,000 $ 489,655 --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.6% New York City, NY, Industrial Development Agency, Civic Facilities Rev. (United Jewish Appeal), "A", 5%, 2027 $ 1,000,000 $ 1,041,720 --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 2.6% New York City, NY, City Housing Development Corp., "E", 4.65%, 2025 $ 1,000,000 $ 1,000,730 New York City, NY, Housing Development Corp., Multi-Family Housing Rev., 5.5%, 2034 2,000,000 2,045,440 New York City, NY, Housing Development Corp., Multi-Family Housing Rev., "C", 5.6%, 2019 400,000 420,744 New York State Housing Finance Agency Rev. Multi Family Housing, "A", 5.1%, 2041 840,000 846,418 ------------ $ 4,313,332 --------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 0.3% Schenectady, NY, Metroplex Development Authority Rev., "A", MBIA, 5.375%, 2021 $ 475,000 $ 513,000 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 4.8% New York Mortgage Agency Rev., 4.6%, 2015 $ 2,000,000 $ 2,009,620 New York Mortgage Agency Rev., 5.8%, 2020 1,555,000 1,598,913 New York Mortgage Agency Rev., 5.1%, 2024 2,000,000 2,022,220 New York Mortgage Agency Rev., "130", 4.75%, 2030 1,500,000 1,468,110 New York Mortgage Agency Rev., "B", 5.85%, 2018 845,000 877,296 ------------ $ 7,976,159 --------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.5% Niagara County, NY, Industrial Development Agency, Solid Waste Disposal Rev., (American Ref-fuel), "C", 5.625%, 2024 $ 850,000 $ 883,728 --------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 5.7% New York Dormitory Authority (City University), AMBAC, 5.75%, 2018 $ 800,000 $ 907,160 New York Dormitory Authority (Pace University), MBIA, 6%, 2010 (c) 1,700,000 1,869,354 New York Dormitory Authority (School Program), 6.25%, 2020 1,690,000 1,858,713 New York Dormitory Authority (State University), 5.375%, 2010 (c) 1,500,000 1,612,605 New York Dormitory Authority (State University), 5.875%, 2017 1,130,000 1,290,144 New York Dormitory Authority (Upstate Community Colleges), "A", FSA, 6%, 2010 (c) 1,010,000 1,110,616 New York Municipal Bond Bank Agency, Special Program Rev., "A", AMBAC, 5.25%, 2015 715,000 757,271 ------------ $ 9,405,863 --------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 12.0% New York City Industrial Development Agency (American National Red Cross Project), AMBAC, 5%, 2036 $ 500,000 $ 518,435 New York Dormitory Authority (City University), "A", 5.625%, 2016 2,450,000 2,724,988 New York Dormitory Authority (Judicial Institute at Pace), AMBAC, 5.5%, 2020 2,500,000 2,672,925 New York Dormitory Authority Rev., Mental Health Services, "A", MBIA, 5.75%, 2010 (c) 5,000 5,380 New York Dormitory Authority Rev., Mental Health Services, "B", MBIA, 5.25%, 2011 (c) 385,000 413,374 New York Dormitory Authority Rev., Mental Health Services, "D", FSA, 5.25%, 2010 (c) 35,000 37,223 New York Dormitory Authority Rev., Mental Health Services, Unrefunded, "B", MBIA, 5.25%, 2031 830,000 866,943 New York Dormitory Authority Rev., Mental Health Services, Unrefunded, "D", FSA, 5.25%, 2030 70,000 73,352 New York Dormitory Authority, Mental Health Services Facilities Improvement, "B", MBIA, 5.25%, 2011 (c) 785,000 840,884 New York Dormitory Authority, Mental Health Services Facilities Improvement, "D", FSA, 5.25%, 2010 (c) 895,000 951,841 New York Municipal Bond Bank Agency, Special School Purpose Rev., 5.25%, 2022 1,000,000 1,056,660 New York Urban Development Corp. (Correctional Facilities), AMBAC, 0%, 2009 5,000,000 4,504,100 New York Urban Development Corp. (State Facilities), AMBAC, 5.6%, 2015 2,750,000 3,032,123 Tobacco Settlement Financing Corp., NY, "A-1", 5.5%, 2018 2,000,000 2,150,860 ------------ $ 19,849,088 --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 2.4% New York City, NY, Transitional Finance Authority Rev., "A", 5.75%, 2009 (c) $ 2,730,000 $ 2,938,326 New York City, NY, Transitional Finance Authority Rev., "A", 5%, 2026 1,000,000 1,040,330 ------------ $ 3,978,656 --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 1.9% Erie County, NY, Tobacco Asset Securitization Corp., 0%, 2047 $ 8,000,000 $ 664,000 Guam Economic Development Authority Tobacco Settlement, "B", 5.5%, 2041 400,000 408,220 New York County Tobacco Trust II, 5.625%, 2035 800,000 818,344 Rockland Tobacco Asset Securitization Corp., NY, Tobacco Asset Backed, "C", 0%, 2060 5,000,000 86,550 TSASC, Inc., NY, "1", 5%, 2034 750,000 729,128 Westchester, NY, Tobacco Asset Securitization Corp., 5.125%, 2045 500,000 486,570 ------------ $ 3,192,812 --------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 13.6% New York Thruway Authority, General Rev., "E", 5.25%, 2008 (c) $ 200,000 $ 207,486 New York Thruway Authority, General Rev., "E", 5.25%, 2015 1,300,000 1,344,200 Niagara Falls, NY, Bridge Commission Toll Rev., FGIC, 5.25%, 2015 (u) 7,000,000 7,555,940 Triborough Bridge & Tunnel Authority Rev., NY, "B", 5%, 2032 1,000,000 1,026,550 Triborough Bridge & Tunnel Authority Rev., NY, ETM, 6%, 2012 (c) 1,000,000 1,087,340 Triborough Bridge & Tunnel Authority Rev., NY, ETM, 5.5%, 2017 (c)(u) 10,000,000 11,042,800 Triborough Bridge & Tunnel Authority Rev., NY, Unrefunded "A", MBIA, 5%, 2032 310,000 319,799 ------------ $ 22,584,115 --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 7.6% Metropolitan Transportation Authority Rev., NY, AMBAC, ETM, 5.75%, 2013 (c) $ 825,000 $ 892,122 Metropolitan Transportation Authority Rev., NY, Dedicated Tax Fund Rev., 5.5%, 2015 (c) 750,000 833,070 Metropolitan Transportation Authority Rev., NY, ETM, 7.375%, 2008 (c) 1,095,000 1,141,943 Metropolitan Transportation Authority Rev., NY, FGIC, 5.875%, 2010 (c) 2,000,000 2,166,100 Metropolitan Transportation Authority Rev., NY, FGIC, 5%, 2025 2,500,000 2,597,475 Metropolitan Transportation Authority, NY, Commuter Facilities Rev., FGIC, 5.25%, 2011 (c) 1,000,000 1,074,620 New York Thruway Authority, General Rev., Highway & Bridges, "A", FSA, 5.8%, 2010 (c) 20,000 21,740 New York Thruway Authority, General Rev., Highway & Bridges, "B-1", FGIC, 5.4%, 2010 (c) 2,000,000 2,148,460 Puerto Rico Highway & Transportation Authority Rev., "Y", 5%, 2036 1,700,000 1,710,710 ------------ $ 12,586,240 --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 4.6% Amherst, NY, Industrial Development Agency Rev. (Daemen College), "A", 6%, 2021 $ 1,000,000 $ 1,065,030 Cattaraugus County, NY, Industrial Development Agency Rev. (Jamestown Community College), "A", 6.4%, 2019 500,000 559,780 Hempstead Town, NY, Industrial Development Agency, Civic Facilities Rev. (Hofstra University), MBIA, 5.8%, 2015 1,500,000 1,537,620 New York Dormitory Authority Rev. (Fordham University), AMBAC, 7.2%, 2015 40,000 40,081 New York Dormitory Authority Rev. (St. John's University), "A", MBIA, 5%, 2017 300,000 315,048 New York Dormitory Authority Rev. (Yeshiva University), AMBAC, 5.125%, 2034 1,000,000 1,055,240 Onondaga County, NY, Industrial Development Agency Rev. (Le Moyne College), 5.625%, 2021 750,000 803,318 Schenectady, NY, Industrial Development Agency, Civic Facilities Rev. (Union College), "A", AMBAC, 5%, 2032 2,000,000 2,068,560 Utica, NY, Industrial Development Agency, Civic Facilities Rev. (Utica College), "A", 5.3%, 2008 110,000 111,179 ------------ $ 7,555,856 --------------------------------------------------------------------------------------------------------------------------------- Universities - Dormitories - 0.6% New York Dormitory Authority Rev. (New York University), "A", FGIC, 5%, 2029 $ 1,000,000 $ 1,041,720 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Owned - 1.5% New York Environmental Facilities, Water Facilities Rev. (NY American Water Co.), 8.85%, 2015 $ 2,500,000 $ 2,507,525 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 3.6% Guam Power Authority Rev., "B-1", AMBAC, 5.25%, 2014 (u) $ 1,000,000 $ 1,057,410 Long Island Power Authority, Electrical Systems Rev., "C", 5.5%, 2021 400,000 430,152 New York Power Authority Rev., 5.25%, 2040 3,000,000 3,148,620 New York Power Authority Rev., "A", 5%, 2021 1,000,000 1,048,660 Virgin Islands Water & Power Authority Rev., 5.5%, 2017 200,000 203,760 ------------ $ 5,888,602 --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 13.0% New York City, NY, Municipal Water & Sewer Finance Authority Rev., 5.5%, 2010 (c) $ 1,850,000 $ 1,997,038 New York City, NY, Municipal Water & Sewer Finance Authority Rev., "A", 5%, 2027 1,500,000 1,551,150 New York City, NY, Municipal Water & Sewer Finance Authority Rev., "A", ETM, 6%, 2010 (c) 620,000 675,899 New York City, NY, Municipal Water & Sewer Finance Authority Rev., "B", AMBAC, 5%, 2028 1,500,000 1,565,445 New York City, NY, Municipal Water & Sewer Finance Authority Rev., "C", 4.75%, 2033 1,500,000 1,511,970 New York City, NY, Municipal Water & Sewer Finance Authority Rev., AMBAC, ETM, 6.75%, 2014 (c) 1,000,000 1,152,370 New York City, NY, Municipal Water & Sewer Finance Authority Rev., FGIC, 5.25%, 2033 2,000,000 2,091,260 New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2024 1,005,000 1,048,004 New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2025 1,500,000 1,566,180 New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2029 2,000,000 2,085,880 New York Environmental Facilities Corp., Pollution Control Rev., 5.75%, 2010 175,000 189,374 New York Environmental Facilities Corp., Pollution Control Rev., 6.875%, 2010 220,000 220,396 New York Environmental Facilities Corp., Pollution Control Rev., 7.25%, 2010 70,000 70,137 New York Environmental Facilities Corp., Pollution Control Rev., ETM, 5.75%, 2010 (c) 945,000 1,021,091 New York Environmental Facilities Corp., Pollution Control Rev., ETM, 5.75%, 2010 (c) 1,115,000 1,204,780 New York Environmental Facilities Corp., Water Facilities Rev., 6%, 2031 1,005,000 1,069,642 New York Environmental Facilities Corp., Water Facilities Rev. (Spring Valley Water Co.), "B", AMBAC, 6.15%, 2024 1,500,000 1,513,950 Suffolk County, NY, Water Authority Rev., MBIA, 5.1%, 2012 660,000 706,292 Suffolk County, NY, Water Authority Rev., MBIA, ETM, 5.1%, 2012 (c) 235,000 252,150 ------------ $ 21,493,008 --------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $161,256,114) $171,434,481 --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.1% --------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A", 3.22%, due 4/06/06 $ 250,000 $ 250,000 New York City, NY, Municipal Water & Sewer Finance Authority Rev., 3.08%, due 4/03/06 700,000 700,000 Washington State Health Care Facilities, "A", 3.12%, due 4/03/06 900,000 900,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 1,850,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $163,106,114) $173,284,481 --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (4.6)% (7,699,190) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $165,585,291 --------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ---------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $3,000,000 Fixed - 3 Year Floating - 7 Day $ 41,200 BMA Swap Index (2.795%) BMA Index ---------------------------------------------------------------------------------------------------------------------------------- 6/06/16 USD 2,000,000 Fixed - 10 Year Floating - 7 Day 10,603 BMA Swap Index (3.938%) BMA Swap Index ---------------------------------------------------------------------------------------------------------------------------------- 6/16/16 USD 1,500,000 Fixed - 10 Year Floating - 7 Day 3,865 BMA Swap Index (3.977%) BMA Swap Index ---------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 1,000,000 Fixed - 10 Year Floating - 7 Day 21,024 BMA Swap Index (3.742%) BMA Swap Index ---------------------------------------------------------------------------------------------------------------------------------- 8/30/16 USD 1,500,000 Fixed - 10 Year Floating - 7 Day 11,519 BMA Swap Index (3.926%) BMA Swap Index ---------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 2,000,000 Fixed - 12 Year Floating - 7 Day 38,062 BMA Swap Index (3.861%) BMA Swap Index ---------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 1,000,000 Fixed - 15 Year Floating - 7 Day 15,981 BMA Swap Index (4.011%) BMA Swap Index ---------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 1,650,000 Floating - 3 Month Fixed - 20 Year (25,569) LIBOR Swap Index LIBOR Swap Index (5.363%) ---------------------------------------------------------------------------------------------------------------------------------- $116,685 ======== At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.5% --------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 5.3% Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2029 $ 2,000,000 $ 2,075,040 Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2034 4,485,000 4,628,296 Charlotte, NC, Airport Rev., "B", MBIA, 5.875%, 2019 1,000,000 1,064,840 Charlotte, NC, Airport Rev., "B", MBIA, 5.875%, 2020 3,775,000 4,016,223 Raleigh Durham, NC, Airport Authority Rev., "A", AMBAC, 5%, 2030 3,000,000 3,124,230 Raleigh Durham, NC, Airport Authority Rev., "A", FGIC, 5.25%, 2018 2,700,000 2,862,783 ------------ $ 17,771,412 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 1.0% Charlotte, NC, 5.5%, 2010 (c) $ 3,100,000 $ 3,369,948 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.4% New Hanover County, NC, Public Improvement, 5.8%, 2010 (c) $ 4,200,000 $ 4,636,926 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 3.8% Brunswick County, NC, FGIC, 5%, 2020 $ 2,800,000 $ 2,961,168 Cumberland County, NC, 5.8%, 2010 (c) 4,400,000 4,805,856 Johnston County, NC, FGIC, 5.6%, 2010 (c) 2,000,000 2,173,880 New Hanover County, NC, Public Improvement, 5%, 2021 1,435,000 1,499,790 New Hanover County, NC, School Improvement, 5%, 2019 1,255,000 1,327,301 ------------ $ 12,767,995 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 22.8% Catawba County, NC, Hospital Rev. (Catawba Memorial Hospital), AMBAC, 5%, 2017 $ 1,200,000 $ 1,242,816 Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A", 5.125%, 2022 1,000,000 1,028,330 Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A", 5%, 2031 3,500,000 3,577,210 Cumberland County, NC, Hospital Facilities Rev. (Cumberland Hospital), MBIA, 0%, 2009 1,800,000 1,563,948 New Hanover County, NC, Hospital Rev. (New Hanover Regional Medical Center), MBIA, 5%, 2019 6,225,000 6,412,310 North Carolina Medical Care Commission (Cleveland County Healthcare), "A", AMBAC, 5%, 2035 1,305,000 1,343,080 North Carolina Medical Care Commission (Morehead Memorial Hospital), FHA, 5%, 2026 2,000,000 2,078,280 North Carolina Medical Care Commission (Northeast Medical Center), 5.25%, 2029 2,000,000 2,082,540 North Carolina Medical Care Commission (Novant Health), "A", MBIA, 5%, 2018 1,975,000 2,038,753 North Carolina Medical Care Commission (Novant Health), Obligations Group A, 5%, 2020 500,000 517,500 North Carolina Medical Care Commission, Health Care Facilities Rev. (Wakemed), AMBAC, 5%, 2021 3,500,000 3,661,630 North Carolina Medical Care Commission, Hospital Rev. (Betsy Johnson Health Care System), FSA, 5.125%, 2032 1,500,000 1,567,770 North Carolina Medical Care Commission, Hospital Rev. (Duke University), "C", 5.25%, 2021 5,975,000 5,992,029 North Carolina Medical Care Commission, Hospital Rev. (Gaston Memorial Hospital), 5.5%, 2015 5,790,000 5,938,687 North Carolina Medical Care Commission, Hospital Rev. (Gaston Memorial Hospital), 5.5%, 2019 6,500,000 6,666,465 North Carolina Medical Care Commission, Hospital Rev. (Mission-St. Joseph Health Systems), 5.5%, 2021 2,825,000 3,001,563 North Carolina Medical Care Commission, Hospital Rev. (Mission-St. Joseph Health Systems), MBIA, 5.1%, 2018 1,500,000 1,550,505 North Carolina Medical Care Commission, Hospital Rev. (Pitt County Memorial Hospital), "B", 5%, 2008 (c) 3,000,000 3,131,070 North Carolina Medical Care Commission, Hospital Rev. (Rex Healthcare), AMBAC, 5%, 2017 5,000,000 5,152,100 North Carolina Medical Care Commission, Hospital Rev. (Southeastern Regional Medical Center), 5.375%, 2032 3,330,000 3,436,427 North Carolina Medical Care Commission, Hospital Rev. (Wilson Memorial Hospital), AMBAC, 0%, 2013 1,000,000 718,700 North Carolina Medical Care Commission, Hospital Rev. (Wilson Memorial Hospital), AMBAC, 0%, 2015 1,140,000 739,712 Northern Hospital District Surry County, NC, Health Care Facilities Rev., ASST GTY, 5.5%, 2019 1,250,000 1,308,338 Northern Hospital District Surry County, NC, Health Care Facilities Rev., ASST GTY, 5.1%, 2021 1,000,000 1,037,420 Pitt County, NC, Rev., Pitt County Memorial Hospital, ETM, 5.25%, 2021 (c) 10,135,000 10,611,649 ------------ $ 76,398,832 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 1.1% North Carolina Medical Care Commission, Health Care Facilities Rev. (Arbor Acres Community), 6.375%, 2032 $ 1,000,000 $ 1,037,840 North Carolina Medical Care Commission, Health Care Facilities Rev. (Deerfield), "A", 5%, 2023 1,000,000 1,023,770 North Carolina Medical Care Commission, Health Care Facilities Rev. (Givens Estates), 6.5%, 2032 800,000 836,848 North Carolina Medical Care Commission, Health Care Facilities Rev., "A", 6.125%, 2035 750,000 773,123 ------------ $ 3,671,581 --------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.7% Cumberland County, NC, Finance Corp., Installment Payment Rev. (Detention Center & Mental Health), AMBAC, 5.625%, 2019 $ 2,125,000 $ 2,250,885 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 0.3% Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 $ 860,000 $ 906,887 -------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 2.2% Columbus County, NC, Industrial Facilities & Pollution Control Financing Authority Rev. (International Paper Co.), "A", 5.8%, 2016 $ 2,000,000 $ 2,072,840 Haywood County, NC, Industrial Facilities & Pollution Control Financing Authority Rev. (Champion International Corp.), "A", 5.75%, 2025 5,400,000 5,446,980 ------------ $ 7,519,820 --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 2.4% Charlotte, NC, Housing Authority Rev., Mortgage Rocky Branch II, GNMA, 4.65%, 2035 $ 2,000,000 $ 1,940,560 Mecklenburg County, NC (Little Rock Apartments), FNMA, 5.15%, 2022 1,000,000 1,025,510 North Carolina Housing Finance Agency, "H", FHA, 6.05%, 2028 3,920,000 3,986,993 North Carolina Medical Care Commission, Health Care Facilities Rev., "A", 5.8%, 2034 1,000,000 1,052,900 ------------ $ 8,005,963 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 6.1% North Carolina Housing Finance Agency Rev., "14-A", AMBAC, 4.35%, 2028 $ 3,070,000 $ 3,075,587 North Carolina Housing Finance Agency Rev., "15-A", FSA, 4.95%, 2032 435,000 436,357 North Carolina Housing Finance Agency Rev., "19-A", 5.1%, 2030 2,430,000 2,453,012 North Carolina Housing Finance Agency Rev., "22-A", 4.8%, 2026 2,000,000 2,007,960 North Carolina Housing Finance Agency Rev., "23-A", 4.8%, 2037 3,000,000 2,951,460 North Carolina Housing Finance Agency Rev., "5-A", 5.55%, 2019 3,080,000 3,140,892 North Carolina Housing Finance Agency Rev., "7-A", 6.15%, 2020 695,000 716,260 North Carolina Housing Finance Agency Rev., "A", 5.25%, 2020 1,430,000 1,439,052 North Carolina Housing Finance Agency Rev., "A", 5.375%, 2023 245,000 248,795 North Carolina Housing Finance Agency Rev., "PP", FHA, 6.15%, 2017 1,420,000 1,455,855 North Carolina Housing Finance Agency Rev., "RR", 5.85%, 2028 2,485,000 2,517,206 ------------ $ 20,442,436 --------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 8.2% Brunswick County, NC, Certificates of Participation, FSA, 5.5%, 2020 $ 1,000,000 $ 1,078,480 Cabarrus County, NC, Installment Financing Contract, 5%, 2021 5,500,000 5,750,525 Carteret County, NC, AMBAC, 5.625%, 2020 1,010,000 1,080,377 Charlotte, NC, Certificates of Participation (Convention Facilities), AMBAC, 0%, 2006 1,075,000 1,050,555 Charlotte, NC, Certificates of Participation (Convention Facilities), AMBAC, 0%, 2008 3,000,000 2,708,250 Charlotte, NC, Certificates of Participation (Public Safety Facilities), "D", 5.5%, 2010 (c) 3,000,000 3,235,440 Charlotte, NC, Certificates of Participation (Transit Projects), "E", 5%, 2035 1,990,000 2,045,820 Harnett County, NC, Certificates of Participation, FSA, 5.25%, 2015 1,020,000 1,116,033 Harnett County, NC, Certificates of Participation, FSA, 5.5%, 2016 1,225,000 1,315,711 Pitt County, NC, Certificates of Participation (School Facilities Improvement), "A", FSA, 5.5%, 2020 1,250,000 1,326,788 Pitt County, NC, Certificates of Participation (School Facilities Improvement), "B", FSA, 5.75%, 2018 1,390,000 1,501,937 Pitt County, NC, Certificates of Participation (School Facilities Improvement), "B", FSA, 5.75%, 2019 1,390,000 1,500,866 Randolph County, NC, Certificates of Participation, FSA, 5.6%, 2009 (c) 3,000,000 3,201,330 Rockingham, NC, Certificates of Participation, AMBAC, 5.125%, 2024 350,000 371,389 ------------ $ 27,283,501 --------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 6.1% Cabarrus County, NC, Development Corp., AMBAC, 5.3%, 2019 $ 1,250,000 $ 1,322,425 Forsyth County, NC, Certificates of Participation (Public Facilities & Equipment Project), 5.25%, 2013 (c) 775,000 842,402 Forsyth County, NC, Certificates of Participation (Public Facilities & Equipment Project), 5.25%, 2013 (c) 1,230,000 1,336,973 Iredell County, NC, Public Facilities (School Projects), AMBAC, 5.5%, 2010 (c) 1,000,000 1,078,480 New Hanover County, NC, Certificates of Participation (New Hanover County Projects), AMBAC, 5.25%, 2011 (c) 1,635,000 1,770,362 Puerto Rico Housing Bank & Finance Agency (Kidder), 7.5%, 2006 7,000,000 7,138,110 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) 3,000,000 3,320,220 Rutherford County, NC, Certificates of Participation (Rutherford County School), AMBAC, 5%, 2023 840,000 879,598 Winston Salem, NC, Certificates of Participation, "C", 5%, 2018 2,575,000 2,686,446 ------------ $ 20,375,016 --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.8% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $ 1,650,000 $ 1,709,912 Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 1,000,000 1,050,330 ------------ $ 2,760,242 --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.6% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 1,820,000 $ 1,865,700 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "A", 0%, 2050 2,000,000 130,800 ------------ $ 1,996,500 --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 3.8% Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., FSA, 6%, 2018 (u) $10,850,000 $ 12,760,251 ----------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 10.0% Appalachian State University, NC, "A", FGIC, 5.125%, 2022 $ 1,260,000 $ 1,338,561 Appalachian State University, NC, Rev., "C", MBIA, 5%, 2030 1,000,000 1,043,690 Appalachian State University, NC, Rev., FSA, 5.6%, 2010 (c) 2,285,000 2,473,764 East Carolina University, NC, Rev., "A", AMBAC, 5.25%, 2021 1,375,000 1,472,254 North Carolina Capital Facilities, Finance Agency Rev. (Duke University), "A", 5%, 2041 2,000,000 2,057,840 North Carolina Capital Facilities, Finance Agency Rev. (Duke University), "A", 5.125%, 2041 5,000,000 5,145,550 North Carolina Capital Facilities, Finance Agency Rev. (Duke University), "A", 5.25%, 2042 2,000,000 2,092,760 North Carolina Capital Facilities, Finance Agency Rev. (High Point University), 5.125%, 2018 510,000 536,658 North Carolina Capital Facilities, Finance Agency Rev. (High Point University), 5.125%, 2021 300,000 315,084 North Carolina Capital Facilities, Finance Agency Rev. (Johnson & Wales University), "A", XLCA, 5.25%, 2021 775,000 829,653 North Carolina Capital Facilities, Finance Agency Rev. (Johnson & Wales University), "A", XLCA, 5.25%, 2022 1,870,000 1,998,357 North Carolina Capital Facilities, Finance Agency Rev. (Johnson & Wales University), "A", XLCA, 5%, 2033 3,385,000 3,481,439 Puerto Rico Industrial Tourist Authority (University Plaza), "A", MBIA, 5%, 2020 2,180,000 2,270,993 University of North Carolina, Greensboro Rev., "A", FSA, 5%, 2020 2,835,000 2,969,266 University of North Carolina, Systems Pool Rev., "C", AMBAC, 5%, 2029 2,000,000 2,076,000 University of North Carolina, University Rev., 5%, 2028 2,000,000 2,081,120 University of North Carolina, Wilmington Rev., "A", AMBAC, 5%, 2019 1,375,000 1,441,358 ------------ $ 33,624,347 ---------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Owned - 0.8% Wake County, NC, Industrial Facilities & Pollution Control Rev. (Carolina Power & Light Co.), 5.375%, 2017 $ 2,500,000 $ 2,631,400 -------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 18.0% North Carolina Eastern Municipal Power Agency, "A", ETM, 7.5%, 2010 (c) $ 2,595,000 $ 2,939,071 North Carolina Eastern Municipal Power Agency, "A", ETM, 5%, 2017 (c) 3,120,000 3,354,094 North Carolina Eastern Municipal Power Agency, "A", MBIA, 7.5%, 2010 3,005,000 3,394,478 North Carolina Eastern Municipal Power Agency, "B", MBIA, 7.25%, 2007 5,000,000 5,133,700 North Carolina Eastern Municipal Power Agency, AMBAC, 6%, 2018 1,245,000 1,448,408 North Carolina Eastern Municipal Power Agency, AMBAC, 6%, 2018 (u) 13,000,000 15,123,940 North Carolina Municipal Power Agency, Catawba Electric Rev., 6.375%, 2013 1,000,000 1,087,360 North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 7%, 2007 5,000,000 5,124,700 North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 6%, 2011 5,000,000 5,488,500 North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 5.25%, 2019 (u) 10,000,000 10,652,300 North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 5.25%, 2020 (u) 6,000,000 6,384,120 ------------ $ 60,130,671 --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 9.1% Broad River, NC, Water Authority Rev., MBIA, 5.75%, 2010 (c) $ 1,490,000 $ 1,621,180 Cary, NC, Combined Enterprise Systems Rev., 5%, 2026 1,000,000 1,038,320 Charlotte, NC, Storm Water Fee Rev., 6%, 2010 (c) 3,180,000 3,490,336 Charlotte, NC, Storm Water Fee Rev., 5%, 2034 3,675,000 3,806,675 Charlotte, NC, Water & Sewer Systems Rev., 5.75%, 2009 (c) 2,000,000 2,143,080 Charlotte, NC, Water & Sewer Systems Rev., 5.75%, 2010 (c) 3,075,000 3,345,723 Charlotte, NC, Water & Sewer Systems Rev., 5.5%, 2017 1,650,000 1,771,242 Durham County, NC, Enterprise Systems Rev., MBIA, 5%, 2023 1,675,000 1,758,047 Greensboro, NC, Enterprise Systems Rev., "A", 5.125%, 2018 1,490,000 1,575,899 Greensboro, NC, Enterprise Systems Rev., "A", 5.125%, 2019 1,750,000 1,848,368 Greenville, NC, Combined Enterprise Systems Rev., FSA, 5%, 2016 1,005,000 1,061,260 Greenville, NC, Combined Enterprise Systems Rev., FSA, 5.25%, 2019 1,170,000 1,256,358 Harnett County, NC, Water & Sewer Systems Rev., AMBAC, 5%, 2028 700,000 728,483 Kannapolis, NC, Water & Sewer Rev., "B", FSA, 5.25%, 2021 1,000,000 1,051,370 Raleigh, NC, Combined Enterprise Systems Rev., 5.125%, 2007 (c) 2,000,000 2,066,500 Raleigh, NC, Combined Enterprise Systems Rev., 5%, 2024 385,000 403,938 Winston Salem, NC, Water & Sewer Systems Rev., 5%, 2033 1,600,000 1,664,264 ------------ $ 30,631,043 --------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $331,633,980) $349,935,656 --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.0% --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "B", 3.22%, due 4/06/06, at Identified Cost $ 100,000 $ 100,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $331,733,980) $350,035,656 --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (4.5)% (15,078,957) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $334,956,699 --------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $7,000,000 Fixed - 3 Year Floating - 7 Day $ 96,106 BMA Swap Index (2.795%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/16/16 USD 2,500,000 Fixed - 10 Year Floating - 7 Day 6,440 BMA Swap Index (3.977%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 2,500,000 Fixed - 10 Year Floating - 7 Day 52,560 BMA Swap Index (3.742%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 3,000,000 Fixed - 12 Year Floating - 7 Day 57,092 BMA Swap Index (3.861%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 3,000,000 Fixed - 15 Year Floating - 7 Day 47,944 BMA Swap Index (4.011%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 3,300,000 Floating - 3 Month Fixed - 20 Year (51,138) LIBOR Swap Index LIBOR Swap Index (5.363%) ------------------------------------------------------------------------------------------------------------------------------- $209,004 ======== At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.0% --------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 2.1% Allegheny County PA, Airport Rev. (Pittsburgh International Airport), FGIC, 6.125%, 2017 $ 500,000 $ 533,645 Allegheny County PA, Airport Rev. (Pittsburgh International Airport), MBIA, 5.75%, 2014 1,000,000 1,085,610 Susquehanna Area Regional Airport, 5.375%, 2018 200,000 204,344 Susquehanna Area Regional Airport, AMBAC, 5.375%, 2023 500,000 525,155 ------------ $ 2,348,754 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 9.4% Allegheny County, PA, Unrefunded Balance, "C53", FGIC, 5.3%, 2018 $ 285,000 $ 302,972 Allegheny County, PA, Unrefunded Balance, "C53", FGIC, 5.4%, 2019 290,000 309,198 Beaver County, PA, MBIA, 5.75%, 2006 (c) 250,000 252,823 Bedford County PA, "N", AMBAC, 5%, 2028 1,000,000 1,044,980 Commonwealth of Puerto Rico, FGIC, 5.5%, 2015 (u) 2,000,000 2,224,780 Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) 2,000,000 2,227,100 Erie County, PA, Convention Center, FGIC, 5%, 2025 500,000 521,985 Erie County, PA, Convention Center, FGIC, 5%, 2026 500,000 520,875 Luzerne County, PA, MBIA, 5.25%, 2025 500,000 528,825 North Huntingdon Township, PA, AMBAC, 5.25%, 2019 500,000 534,775 Pennsylvania, 6%, 2010 (c) 1,000,000 1,090,150 Pennsylvania, 6.25%, 2010 300,000 329,613 Pennsylvania State Finance Authority Rev. (Penn Hills), "A", FGIC, 5.45%, 2010 (c) 85,000 91,266 Pennsylvania State Finance Authority Rev. (Penn Hills), "A", FGIC, 5.45%, 2019 415,000 441,058 ------------ $ 10,420,400 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 0.5% Pittsburgh, PA, FGIC, 5.75%, 2009 (c) $ 500,000 $ 533,320 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 21.6% Allegheny Valley, PA, School District, "A", MBIA, 5%, 2028 $ 1,000,000 $ 1,041,700 Ambridge, PA, Area School District, MBIA, 5%, 2034 750,000 778,028 Butler, PA, School District, FGIC, 5.375%, 2018 500,000 519,980 Chambersburg, PA, School District, FSA, 5%, 2011 (c) 500,000 529,950 Chester County, PA, School Authority (School Intermediate Unit Project), "N", AMBAC, 5%, 2025 750,000 785,190 Downingtown, PA, School District, AMBAC, 5.65%, 2008 (c) 500,000 523,165 Exeter Township, PA, School District, FGIC, 5%, 2025 1,000,000 1,042,350 Garnet Valley, PA, School District, FGIC, 5.5%, 2015 750,000 813,540 Gateway, PA, Allegheny School District, FGIC, 5.2%, 2023 1,000,000 1,063,960 Gateway, PA, Allegheny School District, FGIC, 5%, 2032 1,890,000 1,955,848 North Allegheny, PA, School District, FGIC, 5.05%, 2022 590,000 611,700 North Pocono, PA, School District, FGIC, 5%, 2013 (c) 500,000 533,165 North Schuylkill, PA, School District, FGIC, 5%, 2028 650,000 670,319 Palmyra, PA, School District, FGIC, 5.375%, 2016 820,000 882,976 Pennridge, PA, School District, MBIA, 5%, 2020 500,000 523,300 Pennridge, PA, School District, MBIA, 5%, 2021 500,000 522,695 Pennsylvania Public School Building (Garnet Valley School District), AMBAC, 5.5%, 2011 (c) 1,005,000 1,083,249 Perkiomen Valley, PA, School District, "A", FSA, 5.25%, 2028 1,000,000 1,058,250 Perkiomen Valley, PA, School District, FSA, 5%, 2011 (c) 280,000 295,926 Perkiomen Valley, PA, School District, FSA, 5%, 2013 (c) 1,000,000 1,066,720 Perkiomen Valley, PA, School District, FSA, 5%, 2019 220,000 230,228 Perkiomen Valley, PA, School District, FSA, 5%, 2025 1,260,000 1,309,669 Philadelphia, PA, School District, AMBAC, 5.375%, 2007 (c) 500,000 508,790 Philadelphia, PA, School District, FSA, 5.75%, 2011 (c) 500,000 544,400 Philadelphia, PA, School District, MBIA, 6%, 2010 (c) 500,000 541,065 South Park, PA, School District, FGIC, 5%, 2019 750,000 778,673 Southeastern Area, PA, Special Schools Authority Rev., 0%, 2007 360,000 341,024 State Public School Building Authority, Pennsylvania School (Colonial Intermediate Unit 20), FGIC, 5%, 2030 500,000 521,150 State Public School Building Authority, Pennsylvania School (Lease Philadelphia School District), FSA, 5.25%, 2024 1,000,000 1,063,620 State Public School Building Authority, Pennsylvania School (Tuscarora School District), FSA, 5%, 2013 (c) 1,000,000 1,066,720 State Public School Building Authority, Pennsylvania School (Wattsburg School District), MBIA, 0%, 2027 2,150,000 788,233 ------------ $ 23,995,583 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 11.5% Allegheny County, PA, Hospital Development Authority Rev. (South Hills Health System), MBIA, 5.8%, 2016 $ 500,000 $ 510,695 Allegheny County, PA, Hospital Development Authority Rev. (South Hills Health Systems), "B", 6.75%, 2025 555,000 583,066 Allegheny County, PA, Hospital Development Authority Rev. (UPMC Health Systems), MBIA, 5%, 2018 500,000 516,855 Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), 9.25%, 2030 150,000 179,093 Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), "B", 9.25%, 2022 50,000 59,698 Blair County, PA, Hospital Authority Rev. (Altoona), AMBAC, 5.5%, 2008 470,000 488,194 Erie County, PA, Hospital Authority Rev. (Hamot Health Foundation), AMBAC, 5.25%, 2017 675,000 720,104 Lancaster County, PA, Hospital Authority Rev., 5.5%, 2026 500,000 527,435 Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan Hospital), 5%, 2018 200,000 202,516 Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan Hospital), 6%, 2035 350,000 373,629 Lehigh County, PA, General Purpose Authority (Good Shepherd Group), "A", 5.625%, 2034 350,000 368,074 Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital), 5.25%, 2032 600,000 616,308 Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital), MBIA, 7%, 2016 250,000 292,598 Lehigh County, PA, General Purpose Authority (St. Luke's Bethlehem Hospital), 5.375%, 2033 600,000 617,394 Lehigh County, PA, Hospital Rev. (Lehigh Valley Hospital), FSA, 5.25%, 2019 500,000 530,630 Lycoming County, PA, Authority Hospital Rev. (Williamsport Hospital Obligation Group), CONNIE LEE, 5.375%, 2010 750,000 766,560 Monroe County, PA, Hospital Authority Rev. (Pocono Medical Center), 6%, 2043 750,000 790,200 Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial Hospital), 5.625%, 2032 400,000 416,484 Pennsylvania Higher Educational Facilities Authority Rev. (UPMC Health), 6.25%, 2018 100,000 110,013 Pennsylvania Higher Educational Facilities Authority Rev. (UPMC Health), 6%, 2031 650,000 706,043 Philadelphia, PA, Health & Educational Facilities Rev. (Jeane Health), 6.6%, 2010 140,000 148,058 Philadelphia, PA, Health & Educational Facilities Rev. (Temple University), 6.625%, 2023 250,000 250,925 Sayre, PA, Health Care Facilities Authority Rev. (Guthrie Health), 5.875%, 2031 500,000 531,155 Sayre, PA, Health Care Facilities Authority Rev. (Latrobe Hospital), AMBAC, 5.25%, 2015 585,000 630,004 South Central, PA, General Authority Rev., 5.625%, 2011 (c) 490,000 535,923 South Central, PA, General Authority Rev.. Wellspan Health, ETM, 5.625%, 2026 (c) 110,000 119,051 St. Mary's Hospital Authority, PA, Health Systems Rev. (Catholic Health East), "B", 5.375%, 2034 750,000 788,183 West Shore, PA, Hospital Authority (Holy Spirit Hospital), 6.25%, 2032 350,000 372,278 ------------ $ 12,751,166 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 1.2% Bucks County, PA, Industrial Development Authority Rev. (Ann's Choice, Inc.), 6.125%, 2025 $ 250,000 $ 255,295 Clarion, PA, Industrial Development Authority Rev. (Beverly Enterprises, Inc.), 7.5%, 2012 150,000 152,130 Cumberland County, PA, Municipal Authority Rev. (Wesley), "A", 7.25%, 2013 (c) 110,000 131,768 Cumberland County, PA, Municipal Authority Rev. (Wesley), "A", 7.25%, 2035 40,000 42,718 Lancaster County, PA, Hospital Authority Rev. (Willow Valley Retirement Project), 5.875%, 2031 500,000 521,035 Montgomery County, PA, Industrial Development Authority Rev. (Whitemarsh Continuing Care), 6.25%, 2035 250,000 262,675 ------------ $ 1,365,621 --------------------------------------------------------------------------------------------------------------------------------- Human Services - 0.2% Montgomery County, PA, Industrial Development Authority (Wordsworth Academy), 8%, 2024 $ 150,000 $ 150,596 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - New Morgan, PA, Industrial Development Authority, Solid Waste 1.0% Disposal Rev. (New Morgan Landfill Co., Inc./Browning Ferris, Inc.), 6.5%, 2019 $ 530,000 $ 532,767 Westmoreland County, PA, Industrial Development Corp. (Waste Management), LOC, 5.1%, 2018 500,000 512,250 ------------ $ 1,045,017 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 1.7% Bucks County, PA, Industrial Development Authority Rev. (USX Corp.), 5.4%, 2017 $ 300,000 $ 318,051 Pennsylvania Economic Development Financing Authority Rev. (Amtrak), 6.125%, 2021 150,000 158,846 Pennsylvania Economic Development Financing Authority, Solid Waste Disposal Rev. (Procter & Gamble), 5.375%, 2031 1,000,000 1,098,410 Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 270,000 284,720 ------------ $ 1,860,027 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 0.6% Erie County, PA, Industrial Development Authority, Pollution Control (International Paper Co.), "A", 5.3%, 2012 $ 650,000 $ 674,960 --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.1% Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013 $ 150,000 $ 148,077 --------------------------------------------------------------------------------------------------------------------------------- Parking - 1.9% Philadelphia, PA, Public Parking Authority Rev., FSA, 5.625%, 2015 $ 1,000,000 $ 1,065,880 Pittsburgh, PA, Public Parking Authority Rev., "A", FGIC, 5%, 2025 500,000 517,790 Pittsburgh, PA, Public Parking Authority Rev., AMBAC, 6%, 2020 500,000 544,495 ------------ $ 2,128,165 --------------------------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 0.5% Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium Hotel Room), AMBAC, 5.25%, 2017 $ 500,000 $ 525,530 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Local - 0.5% Allegheny County, PA, Residential Financing Authority, Single Family Mortgage Rev., "RR", 4.75%, 2025 $ 375,000 $ 366,574 Pittsburgh, PA, Urban Development Authority Mortgage Rev., 5.5%, 2010 225,000 226,942 ------------ $ 593,516 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 4.1% Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5%, 2014 $ 500,000 $ 507,620 Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.1%, 2020 1,405,000 1,417,420 Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.25%, 2021 750,000 754,163 Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.25%, 2033 555,000 563,331 Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5%, 2034 835,000 851,141 Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., "A", 4.875%, 2026 500,000 498,985 ------------ $ 4,592,660 --------------------------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 0.3% Delaware County, PA, Industrial Development Authority, Resource Recovery Facilities Rev. (American Ref-Fuel Co.), "A", 6.2%, 2019 $ 300,000 $ 313,554 --------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 4.1% Delaware Valley, PA, Regional Finance Authority, RITES, AMBAC, 7.624%, 2018 (p) $ 500,000 $ 591,750 Northumberland County, PA (Country Careers & Arts Center), 6.65%, 2020 245,000 250,030 Pennsylvania Industrial Development Authority, Economic Development, AMBAC, 7%, 2007 300,000 307,437 Philadelphia, PA, Industrial Development Authority, FSA, 5.125%, 2026 1,000,000 1,045,700 Philadelphia, PA, Industrial Development Authority, FSA, 5.25%, 2030 750,000 780,060 Philadelphia, PA, Industrial Development Authority, MBIA, 5.35%, 2012 500,000 517,160 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 1,000,000 1,091,270 ------------ $ 4,583,407 --------------------------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 1.4% Pennsylvania Higher Education, Capital Acquistion Rev., MBIA, 5%, 2026 $ 1,500,000 $ 1,546,245 --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.6% Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium Hotel Room), AMBAC, 5.25%, 2013 $ 500,000 $ 526,975 Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 135,000 140,243 ------------ $ 667,218 --------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 0.3% Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh Mills), 5.6%, 2023 $ 350,000 $ 366,051 --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.4% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 320,000 $ 328,035 Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 150,000 151,137 ------------ $ 479,172 --------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 0.3% Pennsylvania Turnpike Commission, 5.5%, 2015 $ 250,000 $ 268,130 --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 7.2% Allegheny County, PA, Port Authority Special Rev., MBIA, 6.25%, 2009 (c) $ 500,000 $ 540,300 Commonwealth of Puerto Rico Highway & Transportation Authority, "Y", 5.5%, 2036 1,020,000 1,090,778 Commonwealth of Puerto Rico Highway & Transportation Authority, MBIA, 5.5%, 2020 (u) 3,000,000 3,411,120 Pennsylvania Turnpike Commission, MBIA, 5%, 2024 1,775,000 1,854,041 Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC, 5.25%, 2013 500,000 525,075 Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC, 5.375%, 2017 500,000 517,640 ------------ $ 7,938,954 --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 13.7% Allegheny County, PA, (Chatham College), 5.95%, 2032 $ 335,000 $ 354,239 Allegheny County, PA, Higher Education Building Authority Rev. (Duquesne University), "A", XLCA, 5%, 2024 1,000,000 1,051,000 Cumberland County, PA, Municipal Authority (Dickinson College), AMBAC, 5.55%, 2017 535,000 569,780 Lycoming County, PA, (College of Technology), AMBAC, 5.25%, 2032 750,000 781,598 Pennsylvania Higher Educational Facilities Authority Rev. (Clarion University Foundation), XLCA, 5%, 2023 1,000,000 1,044,350 Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University), 5.2%, 2032 500,000 523,470 Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University), MBIA, 5%, 2028 750,000 782,768 Pennsylvania Higher Educational Facilities Authority Rev. (Independent Colleges & Universities), FGIC, 5%, 2024 1,000,000 1,046,590 Pennsylvania Higher Educational Facilities Authority Rev. (Marywood University), MBIA, 5.5%, 2018 (c) 300,000 320,967 Pennsylvania Higher Educational Facilities Authority Rev. (Mercyhurst College), "B", 5%, 2023 500,000 503,900 Pennsylvania Higher Educational Facilities Authority Rev. (Widener University), 5.375%, 2029 300,000 313,653 Pennsylvania Higher Educational Facilities Authority Rev. (Widener University), 5%, 2031 300,000 303,084 Pennsylvania Public School Building Authority (Delaware County College), MBIA, 5.75%, 2016 500,000 539,675 Pennsylvania State Higher Educational Facilities (Allegheny College), 4.75%, 2031 500,000 492,060 Pennsylvania State Higher Educational Facilities (Philadelphia University), 5.5%, 2020 500,000 520,090 Pennsylvania State Higher Educational Facilities Authority, "C", 4.5%, 2030 1,000,000 972,570 Pennsylvania State Public School Building Authority, Montgomery County Community College, AMBAC, 5%, 2025 500,000 524,515 Pennsylvania State University, 5%, 2029 1,400,000 1,460,788 Pennsylvania State University, "A", 5%, 2029 1,000,000 1,039,600 State Public School Building Authority, PA, Jefferson County (Dubois Technical School), FGIC, 5%, 2026 1,000,000 1,043,500 Union County, PA, Higher Educational Facilities Financing Authority, University Rev. (Bucknell University), 5.25%, 2021 1,000,000 1,061,160 ------------ $ 15,249,357 --------------------------------------------------------------------------------------------------------------------------------- Universities - Dormitories - 0.6% Pennsylvania Economic Development Financing Authority (Germantown Friends School Project), 5.35%, 2031 $ 600,000 $ 629,550 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Cogeneration - 0.3% Carbon County, PA, Industrial Development Authority Rev. (Panther Creek Partners), 6.65%, 2010 $ 110,000 $ 116,091 Pennsylvania Economic Development Financing Authority Rev., Resources Recovery Rev. (Colver), "G", 5.125%, 2015 100,000 97,694 Pennsylvania Economic Development Financing Authority Rev., Resources Recovery Rev. (Northampton Generating), 6.4%, 2009 150,000 149,118 ------------ $ 362,903 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Owned - 1.1% Lehigh County, PA, Industrial Development Authority Pollution Control Rev. (PPL Electric Utilities Corp.), "A", FGIC, 4.7%, 2029 $ 500,000 $ 497,170 Lehigh County, PA, Industrial Development Authority Rev. (PPL Electric Utilities Corp.), FGIC, 4.75%, 2027 750,000 752,648 ------------ $ 1,249,818 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.5% Guam Power Authority Rev., AMBAC, 5.25%, 2014 (u) $ 4,340,000 $ 4,589,159 Philadelphia, PA, Gas Works Rev. (1998 General Ordinance), FSA, 5.25%, 2020 1,000,000 1,059,720 Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2009 (c) 1,000,000 1,064,870 Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2011 (c) 500,000 541,330 ------------ $ 7,255,079 --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 9.3% Allegheny County, PA, Sewer Rev., MBIA, 5.75%, 2010 (c) $ 750,000 $ 814,440 Bucks County, PA, (Suburban Water Co.), FGIC, 5.55%, 2032 1,000,000 1,054,940 Delaware County, PA, Water Quality Control Authority, Sewer Rev., FGIC, 5%, 2018 750,000 778,380 Fairview Township, PA, Sewer Rev., FGIC, 5.05%, 2018 750,000 782,115 Johnstown, PA, Redevelopment Authority, Sewer Rev., "A", FSA, 5%, 2034 1,500,000 1,554,870 Lancaster County, PA, Water & Sewer Authority Rev., MBIA, 5%, 2028 440,000 457,318 Unity Township, PA, Municipal Authority Sewer Rev., FSA, 5%, 2034 1,660,000 1,722,482 University Area Joint Authority, Sewer Rev., MBIA, 5%, 2023 1,500,000 1,552,995 Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 500,000 521,065 Westmoreland County, PA, Municipal Authority Services Rev., FSA, 5.25%, 2026 1,000,000 1,070,922 ------------ $ 10,309,527 --------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $110,373,968) $114,352,357 --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.8% --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "B", 3.22%, due 4/06/06 $ 400,000 $ 400,000 Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D", 3.22%, due 4/06/06 500,000 500,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 900,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $111,273,968) $115,252,357 --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (3.8)% (4,180,805) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $111,071,552 --------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $2,000,000 Fixed - 3 Year Floating - 7 Day $ 27,467 BMA Swap Index (2.795%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/06/16 USD 4,000,000 Fixed - 10 Year Floating - 7 Day 21,206 BMA Swap Index (3.938%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 8/30/16 USD 2,000,000 Fixed - 10 Year Floating - 7 Day 15,359 BMA Swap Index (3.926%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/15/18 USD 2,000,000 Fixed - 12 Year Floating - 7 Day 10,528 BMA Swap Index (4.019%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 2,000,000 Fixed - 12 Year Floating - 7 Day 38,062 BMA Swap Index (3.861%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 1,000,000 Fixed - 15 Year Floating - 7 Day 15,981 BMA Swap Index (4.011%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 1,100,000 Floating - 3 Month Fixed - 20 Year (17,046) LIBOR Swap Index LIBOR Swap Index (5.363%) ------------------------------------------------------------------------------------------------------------------------------- $111,557 ======== At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.5% --------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 3.1% Horry County, SC, "A", FSA, 5.7%, 2027 $ 2,250,000 $ 2,280,260 Richland Lexington, SC, Airport Rev. (Columbia Airport), "A", FSA, 5%, 2026 1,000,000 1,025,990 Richland Lexington, SC, Airport Rev. (Columbia Airport), FSA, 5.125%, 2025 1,500,000 1,549,485 ------------ $ 4,855,735 --------------------------------------------------------------------------------------------------------------------------------- Chemicals - 0.5% York County, SC, Industrial Rev., Exempt Facilities Hoechst Celanese, 5.7%, 2024 $ 850,000 $ 831,530 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 9.9% Commonwealth of Puerto Rico, ETM, 5.5%, 2018 (c)(u) $ 4,000,000 $ 4,310,400 Commonwealth of Puerto Rico, ETM, 5.5%, 2019 (c)(u) 3,500,000 3,768,590 Commonwealth of Puerto Rico, MBIA, 5.75%, 2010 (c)(u) 4,000,000 4,308,960 Hilton Head Island, SC, Rev., MBIA, 5.125%, 2022 1,000,000 1,059,720 Horry County, SC, Hospital Fee Special Obligation, 6%, 2015 915,000 994,953 Richard Lexington Riverbanks, SC, Parks District, FGIC, 5.8%, 2018 1,000,000 1,065,730 ------------ $ 15,508,353 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.8% Beaufort County, SC, FGIC, 5.25%, 2018 $ 1,000,000 $ 1,047,120 Commonwealth of Puerto Rico, FSA, 6%, 2009 (c)(u) 1,700,000 1,841,678 ------------ $ 2,888,798 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 10.1% Anderson County, SC, School District, "B", 5.5%, 2018 $ 1,465,000 $ 1,560,606 Berkeley County, SC, School District, 5%, 2008 (c) 2,000,000 2,091,720 Chesterfield County, SC, School District, FSA, 5%, 2023 3,000,000 3,127,440 Darlington County, SC, School District, FSA, 5%, 2027 2,770,000 2,905,813 Jasper County, SC, School District, MBIA, 5.25%, 2024 1,000,000 1,071,930 Orangeburg County, SC, Consolidated School District, FSA, 5.25%, 2020 1,065,000 1,133,213 Orangeburg County, SC, Consolidated School District, FSA, 5.375%, 2022 2,050,000 2,204,447 Richland County, SC, School District, 5.1%, 2021 1,750,000 1,844,868 ------------ $ 15,940,037 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 20.6% Charleston County, SC, Hospital Facilities Rev. (Medical Society Health), MBIA, ETM, 5%, 2022 (c) $ 2,450,000 $ 2,465,141 Florence County, SC, Hospital Rev. (McLeod Regional Medical Center), "A", FSA, 5%, 2031 2,000,000 2,071,840 Florence County, SC, Hospital Rev. (McLeod Regional Medical Center), "A", FSA, 5.25%, 2034 2,000,000 2,105,640 Greenville, SC, Hospital Systems, Hospital Facilities Rev., 6%, 2020 3,400,000 3,915,304 Greenwood County, SC, Hospital Facilities Rev. (Self Memorial Hospital), 5.5%, 2021 1,000,000 1,034,880 Lexington County, SC, Health Services District, Inc., 5.5%, 2032 250,000 263,640 Lexington County, SC, Health Services District, Inc., 5.5%, 2037 250,000 262,783 Lexington County, SC, Health Services District, Inc., Hospital Rev., Refunding & Improvement, 5.5%, 2032 1,000,000 1,051,740 Lexington County, SC, Health Services District, Inc., Hospital Rev., Refunding & Improvement, FSA, 5.125%, 2021 1,500,000 1,562,190 South Carolina Jobs & Economic Development Authority Rev. (Bon Secours Health Systems, Inc.), "A", 5.625%, 2030 1,250,000 1,306,325 South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Anderson Area Medical Center, Inc.), MBIA, 5.25%, 2015 1,750,000 1,788,045 South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Georgetown Memorial Hospital), AMBAC, 5%, 2023 1,000,000 1,022,060 South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Georgetown Memorial Hospital), ASST GTY, 5.25%, 2021 1,500,000 1,563,435 South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031 750,000 808,260 South Carolina Jobs & Economic Development Authority, Hospital Facilties Rev. (Georgetown Memorial Hospital), AMBAC, 6%, 2014 1,000,000 1,084,690 South Carolina Jobs & Economic Development Authority, Hospital Facilties Rev. (Tuomey), CIFG, 5%, 2030 1,000,000 1,033,550 South Carolina Medical University, Hospital Facilities Rev., "A", MBIA, 5%, 2031 3,100,000 3,189,435 Spartanburg County, SC, Health Service Rev., AMBAC, 5.3%, 2020 2,500,000 2,527,275 Spartanburg County, SC, Health Service Rev., AMBAC, 5.3%, 2025 1,000,000 1,010,910 Spartanburg County, SC, Health Service Rev., FSA, 5.25%, 2032 2,250,000 2,345,423 ------------ $ 32,412,566 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 1.2% Greenville County, SC, Hospital Rev. (Chestnut Hill), "A", 8%, 2015 $ 1,420,000 $ 1,421,775 South Carolina Jobs & Economic Development Authority, Residential Care Facilities (Episcopal Home), "A", 6.375%, 2032 400,000 408,440 ------------ $ 1,830,215 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 1.0% Calhoun County, SC, Solid Waste Disposal Facilities Rev. (Carolina Eastman Co.), ETM, 6.75%, 2017 (c) $ 1,000,000 $ 1,194,470 Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 385,000 405,990 ------------ $ 1,600,460 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 2.1% Darlington County, SC, Industrial Development Rev. (Sonoco Products Co.), 6.125%, 2025 $ 1,500,000 $ 1,521,555 Florence County, SC, Industrial Development Rev. (Stone Container Corp.), 7.375%, 2007 225,000 226,118 Georgetown County, SC, Environmental Improvement Rev., International Paper, "A", 5.3%, 2028 500,000 483,010 Richland County, SC, Environmental Improvement Rev., International Paper, "A", 6.1%, 2023 1,000,000 1,070,680 ------------ $ 3,301,363 --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 1.5% Myrtle Beach, SC, Hospitality Fee Rev., "A", FGIC, 5%, 2036 $ 510,000 $ 527,921 South Carolina Jobs & Economic Development Authority (Myrtle Beach Convention), "B", MBIA, 5.125%, 2018 570,000 593,245 South Carolina Jobs & Economic Development Authority (Myrtle Beach Convention), "B", MBIA, 5.125%, 2019 595,000 624,179 South Carolina Jobs & Economic Development Authority (Myrtle Beach Convention), "B", MBIA, 5.125%, 2020 630,000 660,026 ------------ $ 2,405,371 --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 1.4% North Charleston SC, Housing Authority Rev. (Horizon Village), "A", FHA, 5%, 2038 $ 1,000,000 $ 978,110 North Charleston SC, Housing Authority Rev. (Horizon Village), "A", FHA, 5.1%, 2041 1,210,000 1,182,787 ------------ $ 2,160,897 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 2.0% South Carolina Housing, Finance & Development Authority Mortgage Rev, "A-2", FSA, 5.2%, 2035 $ 1,000,000 $ 1,010,730 South Carolina Housing, Finance & Development Authority Rev., "A-2", FSA, 6%, 2020 395,000 401,423 South Carolina Housing, Finance & Development Authority Rev., "A-2", FSA, 5.35%, 2024 1,715,000 1,744,687 ------------ $ 3,156,840 --------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 1.1% Greenville County, SC (University Center), "A", AMBAC, 5.25%, 2019 $ 1,000,000 $ 1,054,470 South Carolina Water Resources Authority Rev. (Local Government Program), "A", 7.25%, 2020 605,000 606,198 ------------ $ 1,660,668 --------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 5.5% North Charleston, SC, Municipal Golf Course Mortgage Rev., 5.5%, 2009 (c) $ 1,000,000 $ 1,062,820 Puerto Rico Public Finance Corp., 5.75%, 2007 (c) 1,000,000 1,017,620 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 2,750,000 3,000,993 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2019 (u) 2,600,000 2,911,818 Spartanburg, SC, Public Facilities Corp. (Renaissance Park), AMBAC, 5.125%, 2025 685,000 716,763 ------------ $ 8,710,014 --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.1% Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 $ 180,000 $ 186,991 --------------------------------------------------------------------------------------------------------------------------------- Tax Assessment - 0.3% Lancaster County, SC, Assessment Rev. (Sun City Carolina Lakes), 5.45%, 2037 $ 500,000 $ 501,060 --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.7% South Carolina Tobacco Settlement Authority, 6.375%, 2028 $ 1,000,000 $ 1,075,290 --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 3.4% South Carolina Transportation Infrastructure Rev., "A", AMBAC, 5%, 2023 $ 500,000 $ 518,435 South Carolina Transportation Infrastructure Rev., "A", AMBAC, 5%, 2027 2,000,000 2,078,440 South Carolina Transportation Infrastructure Rev., "A", AMBAC, 5%, 2033 1,645,000 1,707,197 South Carolina Transportation Infrastructure Rev., "A", MBIA, 5.375%, 2009 (c) 1,000,000 1,064,840 ------------ $ 5,368,912 --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 11.6% Clemson University, University Rev., AMBAC, 6.25%, 2009 (c) $ 1,250,000 $ 1,355,550 College Charleston, SC, Higher Education Facility Rev., "A", FGIC, 5.25%, 2028 2,435,000 2,561,230 College of Charleston, SC, Academic & Administrative Facilities Rev., "B", XLCA, 5%, 2024 800,000 833,672 College of Charleston, SC, Academic & Administrative Facilities Rev., "B", XLCA, 5.125%, 2034 1,510,000 1,579,958 South Carolina Educational Facilities Authority (Furman University), 5%, 2038 1,000,000 1,027,120 South Carolina Educational Facilities Authority (Furman University), AMBAC, 5.375%, 2020 1,245,000 1,332,013 South Carolina Educational Facilities Authority (Furman University), AMBAC, 5.5%, 2030 2,000,000 2,114,380 South Carolina Jobs & Economic Development Authority, Student Housing Rev. (Francis Marion University), "A", MBIA, 5%, 2034 1,945,000 2,007,668 University of South Carolina, University Rev., "A", AMBAC, 5%, 2034 3,665,000 3,770,369 University of South Carolina, University Rev., "A", FGIC, 5.625%, 2010 (c) 1,555,000 1,671,096 ------------ $ 18,253,056 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 11.1% Camden, SC, Public Utilities Rev., MBIA, 5.5%, 2007 (c) $ 1,425,000 $ 1,477,098 Camden, SC, Public Utilities Rev., MBIA, 5.5%, 2017 75,000 77,797 Easley, SC, Utility Rev., FSA, 5%, 2027 1,000,000 1,038,330 Easley, SC, Utility Rev., Refunding & Improvement, FSA, 5%, 2034 3,500,000 3,643,990 Greenwood, SC, Combined Public Utility, Refunding & Improvement Systems, MBIA, 5%, 2021 175,000 183,141 Orangeburg County, SC, Solid Waste Disposal Facilities Rev., Electric & Gas, AMBAC, 5.7%, 2024 2,000,000 2,003,340 Piedmont, SC, Municipal Power Agency, FGIC, 6.25%, 2021 2,600,000 3,152,240 Puerto Rico Electric Power Authority, RITES, FSA, 6.559%, 2015 (v)(z) 1,000,000 1,069,460 South Carolina Public Service Authority, "A", AMBAC, 5%, 2034 2,000,000 2,064,600 South Carolina Public Service Authority, "A", MBIA, 5.5%, 2018 200,000 212,752 South Carolina Public Service Authority, "A", MBIA, 5%, 2030 1,000,000 1,044,630 South Carolina Public Service Authority, "B", FSA, 5.125%, 2037 1,500,000 1,550,685 ------------ $ 17,518,063 --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 14.5% Anderson County, SC, Joint Municipal Water, FSA, 5%, 2032 $ 1,000,000 $ 1,030,870 Anderson County, SC, Water & Sewer Systems Rev., FGIC, 5.125%, 2032 2,000,000 2,093,980 Charleston, SC, Waterworks & Sewer Rev., Capital Improvement, "B", 5%, 2028 1,000,000 1,031,650 Columbia, SC, Waterworks & Sewer Systems Rev., 6%, 2010 (c) 2,000,000 2,164,660 Greenville, SC, Stormwater Systems, FSA, 5%, 2022 595,000 622,537 Greenville, SC, Waterworks Rev., 5.5%, 2007 (c) 1,000,000 1,035,040 Greenville, SC, Waterworks Rev., 5.25%, 2020 860,000 919,340 Rock Hill, SC, Utility Systems Rev., Refunding & Improvement, "A", FSA, 5.375%, 2023 500,000 536,565 Spartanburg, SC, San Sewer District, Sewer Systems Rev., "B", MBIA, 5%, 2034 4,000,000 4,145,120 Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA, 5.25%, 2030 1,000,000 1,061,680 Spartanburg, SC, Waterworks Rev., FGIC, 6.05%, 2006 (c) 2,750,000 2,761,193 Western Carolina Regional Sewer Authority Rev., AMBAC, 0%, 2007 4,000,000 3,871,440 York County, SC, Water & Sewer Rev., Refunding & Capital Improvement, MBIA, 5%, 2027 1,490,000 1,551,209 ------------ $ 22,825,284 --------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $154,696,336) $162,991,503 --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.5% --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "B", 3.22%, due 4/06/06 $ 400,000 $ 400,000 Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D", 3.22%, due 4/06/06 100,000 100,000 Burke County, GA, Development Authority Pollution Control Rev. (Oglethorpe Power Corp.), "A", 3.22%, due 4/05/06 1,230,000 1,230,000 Georgia Municipal Electric Authority, 3.05%, due 4/05/06 100,000 100,000 Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A", 3.22%, due 4/06/06 400,000 400,000 Jefferson County, AL, Sewer Rev., Warrants, "B-4", 3.22%, due 4/06/06 100,000 100,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 2,330,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $157,026,336) $165,321,503 --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (5.0)% (7,940,167) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $157,381,336 --------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $3,000,000 Fixed - 3 Year Floating - 7 Day $ 41,200 BMA Swap Index (2.795%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 7/13/16 USD 2,000,000 Fixed - 10 Year Floating - 7 Day 42,048 BMA Swap Index (3.742%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 3,000,000 Fixed - 12 Year Floating - 7 Day 57,092 BMA Swap Index (3.861%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 2,000,000 Fixed - 15 Year Floating - 7 Day 31,963 BMA Swap Index (4.011%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 1,500,000 Floating - 3 Month Fixed - 20 Year (23,244) LIBOR Swap Index LIBOR Swap Index (5.363%) ------------------------------------------------------------------------------------------------------------------------------- $149,059 ======== At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) TENNESSEE MUNICIPAL BOND FUND (Not Restated) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 98.1% --------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) --------------------------------------------------------------------------------------------------------------------------------- Airport and Port Memphis-Shelby County, TN, Airport Authority Facilities Rev., FSA, Revenue - 1.3% 5.125%, 2021 $ 1,500,000 $ 1,536,810 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 8.3% Chattanooga, TN, Public Improvement, 5%, 2021 $ 2,570,000 $ 2,663,368 Commonwealth of Puerto Rico, Unrefunded, Public Improvement, FSA, 5%, 2024 770,000 801,955 Lincoln County, TN, School Improvement, FGIC, 5.8%, 2007 (c) 1,000,000 1,031,330 Lincoln County, TN, School Improvement, FGIC, 5.8%, 2007 (c) 1,000,000 1,031,330 Puerto Rico Commonwealth, 5.4%, 2006 (c) 3,000,000 3,058,140 Puerto Rico Public Building Authority, 5.5%, 2021 1,000,000 1,101,710 ------------ $ 9,687,833 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 2.2% Knoxville, TN, Recreational Facilities Improvement, 5.5%, 2008 (c) $ 645,000 $ 675,631 Williamson County, TN, Public Improvement, 5%, 2018 1,760,000 1,850,992 ------------ $ 2,526,623 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 12.8% Fayette County, TN, School District, AMBAC, 5.6%, 2008 (c) $ 1,215,000 $ 1,258,072 Gibson County, TN, School District, MBIA, 5.75%, 2009 (c) 455,000 482,086 Gibson County, TN, School District, MBIA, 5.75%, 2016 190,000 201,533 Giles County, TN, School Improvement, FGIC, 5.75%, 2010 (c) 1,980,000 2,125,510 Greene County, TN, Rural School, FGIC, 5%, 2011 (c) 1,240,000 1,313,780 Roane County, TN, Rural School, FGIC, 5.6%, 2008 (c) 915,000 947,684 Roane County, TN, Rural School, FGIC, 5.6%, 2008 (c) 975,000 1,009,827 Rutherford County, TN, School & Public Improvement, 5%, 2022 1,510,000 1,573,284 Rutherford County, TN, School District, 5.875%, 2010 (c) 1,100,000 1,189,243 Rutherford County, TN, School Improvement, 0%, 2007 (c) 1,500,000 914,955 Rutherford County, TN, School Improvement, 5.875%, 2010 (c) 2,000,000 2,162,260 Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,575,000 1,711,442 ------------ $ 14,889,676 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 13.9% Jackson, TN, Hospital Rev. (Jackson-Madison County General Hospital), AMBAC, 5%, 2018 $ 1,000,000 $ 1,034,680 Johnson City, TN, Health & Education Financing Authority Rev. (Johnson City Medical Center Hospital), MBIA, 5.25%, 2016 1,375,000 1,381,545 Johnson City, TN, Health & Education Financing Authority Rev. (Johnson City Medical Center Hospital), MBIA, ETM, 5%, 2018 (c) 1,500,000 1,554,285 Johnson City, TN, Health & Educational Facilities, Hospital Rev. (Mountain States Health), "A", 5.5%, 2036 600,000 625,230 Knox County, TN, Health Educational Housing Facilities Board, Hospital Facilities Rev. (Baptist Health Systems), 6.5%, 2031 300,000 316,839 Knox County, TN, Health, Education & Housing Facilities Board Rev. (Catholic Healthcare Partners), 5.25%, 2030 1,000,000 1,033,270 Knox County, TN, Health, Education & Housing Facilities Board Rev. (Covenent Health), FSA, 5%, 2022 1,000,000 1,036,960 Knox County, TN, Health, Education & Housing Facilities Board Rev. (East Tennessee Children's Hospital), 5.75%, 2033 450,000 469,971 Knox County, TN, Health, Education & Housing Facilities Board Rev. (Fort Sanders), MBIA, 5.75%, 2014 3,250,000 3,613,675 Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Adventist Health System), 5.25%, 2020 1,000,000 1,025,150 Shelby County, TN, Health Educational & Housing Facilities Board Rev. (St. Judes Children's Research), 5.5%, 2020 1,750,000 1,833,230 Shelby County, TN, Health Educational & Housing Facilities Hospital Rev., (Methodist Healthcare), 6.5%, 2012 (c) 625,000 716,294 Shelby County, TN, Health Educational & Housing Facilities Hospital Rev., (Methodist Healthcare), 6.5%, 2012 (c) 375,000 429,776 Springfield, TN, Health & Higher Educational Facilities Hospital Rev. (Northcrest Medical Center), 5.25%, 2013 1,000,000 1,013,450 ------------ $ 16,084,355 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 0.5% Shelby County, TN, Health Educational Rev. (Germantown Village), 7.25%, 2034 $ 250,000 $ 264,998 Shelby County, TN, Nursing Home Rev. (Beverly Enterprises, Inc.), 7.4%, 2006 (c) 250,000 260,898 ------------ $ 525,896 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 1.2% Hardeman County, TN, Correctional Facilities Rev., 7.75%, 2017 $ 1,000,000 $ 1,033,190 Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 320,000 337,446 ------------ $ 1,370,636 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 0.9% McMinn County, TN, Industrial Development Board, Pollution Control Rev. (Bowater, Inc.), 7.625%, 2016 $ 1,000,000 $ 1,006,540 --------------------------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Entertainment & Tourism - 3.3% Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.125%, 2028 $ 2,000,000 $ 2,088,880 Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.35%, 2029 1,665,000 1,776,871 ------------ $ 3,865,751 --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 3.9% Chattanooga, TN, Health, Educational & Housing Facilities (Rainbow Creek), GNMA, 6.125%, 2019 $ 425,000 $ 447,461 Franklin, TN, Industrial Development Rev. (Landings Apartments), FSA, 6%, 2026 1,000,000 1,024,820 Knoxville, TN, Community Development Corp., 5%, 2024 1,000,000 1,045,240 Memphis, TN, Health & Educational Facilities Board Rev. (Hickory Point Apartments), MBIA, 5.85%, 2020 1,000,000 1,035,080 Metropolitan Government of Nashville & Davidson County, TN, Health & Educational & Housing Facilities Board Rev. (Berkshire Place), GNMA, 6%, 2023 500,000 521,815 Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Herman Street), FHA, 7.25%, 2032 485,000 486,896 ------------ $ 4,561,312 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 12.5% Tennessee Housing Development Agency (Homeownership Program), "1A", 5%, 2035 $ 1,000,000 $ 1,039,370 Tennessee Housing Development Agency Mortgage Finance, 5.2%, 2023 1,500,000 1,551,510 Tennessee Housing Development Agency Mortgage Finance, 5.35%, 2034 1,150,000 1,174,104 Tennessee Housing Development Agency Rev., Homeownership Program, 5.45%, 2014 2,535,000 2,591,480 Tennessee Housing Development Agency Rev., Homeownership Program, 4.45%, 2017 645,000 634,151 Tennessee Housing Development Agency Rev., Homeownership Program, 4.45%, 2017 660,000 648,503 Tennessee Housing Development Agency Rev., Homeownership Program, 4.55%, 2018 575,000 565,214 Tennessee Housing Development Agency Rev., Homeownership Program, 4.55%, 2018 690,000 677,884 Tennessee Housing Development Agency Rev., Homeownership Program, 6%, 2020 1,260,000 1,288,073 Tennessee Housing Development Agency Rev., Homeownership Program, 5.05%, 2027 885,000 888,690 Tennessee Housing Development Agency Rev., Homeownership Program, 5.125%, 2034 1,090,000 1,125,381 Tennessee Housing Development Agency Rev., Homeownership Program, 5.25%, 2034 1,400,000 1,443,484 Tennessee Housing Development Agency Rev., Homeownership Program, FSA, 5.4%, 2032 790,000 798,177 Tennessee Housing Development Agency Rev., Homeownership Program, MBIA, 6.125%, 2020 70,000 70,725 ------------ $ 14,496,746 --------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 5.4% Chattanooga,TN, Industrial Development Board, AMBAC, 5.75%, 2018 $ 1,000,000 $ 1,078,060 Puerto Rico Public Finance Corp., 5.75%, 2007 (c) 2,000,000 2,035,240 State of Tennessee, School Bond Authority (Higher Education Facilities), FSA, 5.25%, 2029 3,000,000 3,152,430 ------------ $ 6,265,730 --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.7% Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 $ 730,000 $ 768,734 --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 1.0% Guam Economic Development Authority Tobacco Settlement, "B", 5.5%, 2041 $ 350,000 $ 357,193 Tobacco Settlement Financing Corp., 5%, 2031 750,000 752,040 ------------ $ 1,109,233 --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 4.2% Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (McKendree Village, Inc.), 5.125%, 2020 $ 1,000,000 $ 1,020,680 Metropolitan Government of Nashville & Davidson County, TN, Health, Educational & Housing Facilities Board Rev. (Meharry Medical College), AMBAC, 5%, 2024 3,750,000 3,858,825 ------------ $ 4,879,505 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.9% Jackson, TN, Electrical Systems Rev., MBIA, 5%, 2018 $ 1,000,000 $ 1,015,930 Lawrenceburg, TN, Electrical Rev., MBIA, 5.5%, 2009 (c) 1,255,000 1,325,242 Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., 5.125%, 2021 1,500,000 1,568,775 Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., "A", AMBAC, 5%, 2029 1,500,000 1,558,695 Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., MBIA, 0%, 2012 3,305,000 2,563,622 ------------ $ 8,032,264 --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Hallsdale-Powell Utility District, TN, Water & Sewer Rev., "A", FGIC, Revenue - 19.1% 5%, 2024 $ 1,500,000 $ 1,561,875 Hallsdale-Powell Utility District, TN, Water & Sewer Rev., FGIC, 5%, 2027 3,000,000 3,109,110 Harpeth Valley, TN, Utilities Improvements Rev., MBIA, 5.05%, 2008 (c) 1,925,000 1,990,046 Madison, TN, Utility Waterworks Rev., MBIA, 5%, 2019 2,750,000 2,811,820 Memphis, TN, Sewage Systems Rev., 5.75%, 2016 625,000 655,594 Memphis, TN, Sewage Systems Rev., 5.75%, 2018 1,145,000 1,201,048 Memphis, TN, Sewage Systems Rev., 5.75%, 2020 750,000 789,480 Rutherford County, TN, Water Rev., MBIA, 5%, 2027 770,000 807,106 West Knox Utility District, TN, Water & Sewer Rev., MBIA, ETM, 0%, 2006 (c) 1,920,000 1,876,224 West Knox Utility District, TN, Water & Sewer Rev., MBIA, ETM, 0%, 2007 (c) 1,920,000 1,806,931 West Wilson Utility District, TN, Waterworks Rev., MBIA, 5.25%, 2030 2,000,000 2,118,140 White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FSA, 6%, 2010 (c) 1,000,000 1,080,650 White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FSA, 5%, 2021 800,000 827,536 White House Utility District, TN, Water & Sewer Rev. (Robertson & Sumner Counties Waterworks), FSA, 5%, 2032 1,500,000 1,540,515 ------------ $ 22,176,075 --------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $108,161,488) $113,783,719 --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.3% --------------------------------------------------------------------------------------------------------------------------------- Jefferson County, AL, Sewer Rev., Warrants, "B-4", 3.22%, due 4/06/06 $ 200,000 $ 200,000 Sevier County, TN, Public Building Authority, 3.19%, due 4/06/06 200,000 200,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 400,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $108,561,488) $114,183,719 --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - 1.6% 1,859,269 --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $116,042,988 --------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------- 9/07/26 USD $2,000,000 Floating - 3 Month Fixed - 20 Year $ (53,817) LIBOR Swap Index LIBOR Swap Index (5.268%) ------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 2,150,000 Floating - 3 Month Fixed - 20 Year (33,317) LIBOR Swap Index LIBOR Swap Index (5.363%) ------------------------------------------------------------------------------------------------------------------------------- 7/11/36 USD 2,000,000 Floating - 7 Day Fixed - 30 Year (64,550) BMA Swap Index BMA Swap Index (4.127%) ------------------------------------------------------------------------------------------------------------------------------- $(151,684) ========= At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) VIRGINIA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 102.5% --------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) --------------------------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 8.5% Metropolitan Washington, D C, Airports Authority Rev., "A", FSA, 5%, 2032 $ 1,455,000 $ 1,496,889 Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC, 5.125%, 2024 1,000,000 1,035,500 Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC, 5%, 2025 705,000 724,486 Metropolitan Washington, DC, Airport Authority Rev., "A", MBIA, 5%, 2035 3,000,000 3,075,180 Metropolitan Washington, DC, Airport Authority Rev., "B", 5.5%, 2016 2,465,000 2,552,039 Metropolitan Washington, DC, Airport Authority Rev., "B", 5.75%, 2020 11,000,000 11,427,900 Norfolk, VA, Airport Authority Rev., "A", FGIC, 5.375%, 2017 1,755,000 1,871,339 Norfolk, VA, Airport Authority Rev., "A", FGIC, 5%, 2022 3,000,000 3,100,230 Virginia Resources Authority, Airport Rev., "B", 5.125%, 2027 720,000 739,296 ------------ $ 26,022,859 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 2.1% Lebanon, VA, 6.375%, 2006 (c) $ 1,625,000 $ 1,687,335 Newport News, VA, Economic Development, "A", 5%, 2031 1,595,000 1,659,980 Stafford County, VA, Industrial Development Authority Rev., "B", MBIA, 5%, 2034 3,060,000 3,177,963 ------------ $ 6,525,278 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 13.4% Chesterfield County, VA, 6%, 2010 (c) $ 1,900,000 $ 2,054,717 Chesterfield County, VA, 5%, 2020 2,015,000 2,106,178 Hampton, VA, Public Improvement, 6%, 2010 (c) 3,280,000 3,607,114 Hampton, VA, Public Improvement, 6%, 2010 (c) 3,480,000 3,827,060 Lynchburg, VA, Public Improvement, 5.6%, 2010 (c) 1,765,000 1,910,260 Puerto Rico Municipal Finance Agency, FSA, 6%, 2009 (c)(u) 2,210,000 2,394,181 Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 1,230,000 1,313,419 Richmond, VA, 0%, 2008 2,000,000 1,875,120 Richmond, VA, "A", FSA, 5.125%, 2010 (c) 5,000,000 5,297,750 Richmond, VA, "B", 0%, 2007 5,280,000 5,135,856 Richmond, VA, "B", 0%, 2008 5,270,000 4,940,941 Richmond, VA, "B", 0%, 2009 5,175,000 4,620,758 Suffolk, VA, Public Improvement, 5.5%, 2010 (c) 1,880,000 2,022,842 ------------ $ 41,106,196 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 0.4% Harrisonburg, VA, Public Recreation Facilities, FSA, 5.75%, 2029 $ 1,000,000 $ 1,088,010 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 12.3% Albemarle County, VA, Industrial Development Authority, Hospital Rev. (Martha Jefferson Hospital), 5.25%, 2023 $ 3,000,000 $ 3,082,890 Arlington County, VA, Industrial Development Authority Rev. (Virginia Hospital Center Arlington Health Systems), 5.25%, 2011 (c) 2,600,000 2,802,618 Fredericksburg, VA, Industrial Development Rev. (Medicorp Health Systems), "B", 5.125%, 2033 750,000 760,065 Fredericksburg, VA, Industrial Development Rev. (Medicorp Health Systems), AMBAC, 5.25%, 2023 11,000,000 11,385,000 Henrico County, VA, Economic Development Authority Rev. (Bon Secours Health Systems, Inc.), "A", 5.6%, 2030 2,000,000 2,085,020 Henrico County, VA, Industrial Development Authority Rev. (Bon Secours Health Systems, Inc.), MBIA, 6.25%, 2020 1,500,000 1,768,005 Loudoun County, VA, Industrial Development Authority, Hospital Rev. (Loudoun Hospital Center), "A", 6.1%, 2012 (c) 1,000,000 1,126,600 Lynchburg, VA, Industrial Development Authority, Healthcare Facilities Rev. (Central Health), 5.2%, 2008 (c) 855,000 885,549 Lynchburg, VA, Industrial Development Authority, Healthcare Facilities Rev., Unrefunded Balance (Central Health), 5.2%, 2018 145,000 150,330 Medical College of Virginia, Hospital Authority Rev., MBIA, 5.125%, 2018 3,000,000 3,108,900 Peninsula Ports Authority, VA, Health System Rev. (Riverside Health System), 5%, 2018 3,580,000 3,678,522 Peninsula Ports Authority, VA, Hospital Facility Rev. (Whittaker Memorial), FHA, 8.7%, 2023 2,025,000 2,357,809 Prince William County, VA, Industrial Development Authority, Hospital Rev. (Potomac Hospital Corp.), 5.2%, 2026 1,000,000 1,035,590 Roanoke, VA, Industrial Development Authority, Hospital Rev. (Roanoke Memorial Hospital), "B", MBIA, 6.125%, 2017 3,000,000 3,490,620 ------------ $ 37,717,518 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 0.5% Henrico County, VA, Economic Development Authority, Residential Care Facilities (United Methodist Homes), "A", 6.7%, 2027 $ 750,000 $ 782,888 Norfolk, VA, Redevelopment & Housing Authority Rev. (Fort Norfolk Retirement Community), "A", 6.125%, 2035 750,000 761,385 ------------ $ 1,544,273 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - Charles City County, VA, Industrial Development Authority, Solid 1.1% Waste Disposal Facility Rev. (Waste Management, Inc.), 6.25%, 2027 $ 1,500,000 $ 1,643,880 Henrico County, VA, Industrial Development Authority Rev. (Browning Ferris, Inc.), 5.45%, 2014 1,750,000 1,689,713 ------------ $ 3,333,593 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 1.3% Loudoun County, VA, Industrial Development Authority Rev. (Dulles Airport Marriot Hotel), 7.125%, 2015 $ 2,000,000 $ 2,040,800 Peninsula Ports Authority, Virginia Coal (Dominion Terminal Associates), 6%, 2033 1,000,000 1,069,110 Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 750,000 790,890 ------------ $ 3,900,800 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 1.8% Bedford County, VA, Industrial Development Authority Rev. (Nekooska Packaging Corp.), 5.6%, 2025 $ 1,000,000 $ 969,570 Isle Wight County, VA, Industrial Development Authority, Solid Waste Disposal Facilities Rev. (Union Camp Corp.), 6.1%, 2027 2,750,000 2,819,300 West Point, VA, Industrial Development Authority, Solid Waste Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 1,750,000 1,751,435 ------------ $ 5,540,305 --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 4.3% Alexandria, VA, Redevelopment & Housing Finance Authority Rev. (Jefferson Village Apartments), "B", 9%, 2018 $ 3,610,000 $ 3,593,394 Arlington County, VA, Industrial Development Authority Rev. (Colonial Village), FNMA, 5.15%, 2031 3,000,000 3,073,560 Virginia Housing Development Authority Rev., "B", 5.95%, 2016 1,345,000 1,367,569 Virginia Housing Development Authority Rev., "G", 5.625%, 2020 2,000,000 2,060,220 Virginia Housing Development Authority Rev., "I", 5.15%, 2017 3,000,000 3,055,260 ------------ $ 13,150,003 --------------------------------------------------------------------------------------------------------------------------------- Parking - 0.5% Norfolk, VA, Parking Systems Rev., MBIA, 5%, 2020 $ 1,630,000 $ 1,688,468 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 3.0% Virginia Housing Development Authority Commonwealth, "C", 4.4%, 2022 $ 1,270,000 $ 1,217,740 Virginia Housing Development Authority Commonwealth, "C", 4.75%, 2032 1,795,000 1,757,897 Virginia Housing Development Authority, "A", 4.9%, 2027 2,850,000 2,838,401 Virginia Housing Development Authority, "A", 5%, 2031 2,000,000 2,026,740 Virginia Housing Development Authority, "C", 4.66%, 2027 1,285,000 1,252,220 ------------ $ 9,092,998 --------------------------------------------------------------------------------------------------------------------------------- State & Agency - Other - 1.6% Fairfax County, VA, COP, 6.1%, 2017 $ 3,090,000 $ 3,463,674 Virginia Biotechnology Research Park Lease Rev. (Consolidated Laboratories), 5%, 2021 1,500,000 1,565,550 ------------ $ 5,029,224 --------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 24.3% Blue Ridge, VA, Regional Jail Authority, MBIA, 5.2%, 2021 $ 1,830,000 $ 1,904,426 Caroline County, VA, Industrial Development Authority, Lease Rev., AMBAC, 5.125%, 2034 1,000,000 1,046,560 Chesapeake, VA, Industrial Development Authority (Chesapeake Court House), MBIA, 6.25%, 2011 3,985,000 4,181,141 Chesapeake, VA, Industrial Development Authority (Chesapeake Court House), MBIA, 5.25%, 2017 2,000,000 2,074,840 Chesterfield County, VA, Industrial Development Authority, Public Facilities Lease Rev., 7.5%, 2008 1,150,000 1,150,356 Culpepperva Industrial Development Authority, "N", MBIA, 4.5%, 2030 5,000,000 4,885,500 Dinwiddie County, VA, Industrial Development Authority Lease Rev., "B", MBIA, 5%, 2030 2,500,000 2,585,200 Fairfax County, VA, Economic Development Authority (Vienna II Metrorail), 6%, 2009 (c) 1,750,000 1,911,455 Fairfax County, VA, Economic Development Authority Rev. (U.S. Route 28), MBIA, 5%, 2029 1,000,000 1,042,780 Fairfax County, VA, Economic Development Authority, Parking Rev. (Vienna II Metrorail), 6%, 2009 (c) 1,650,000 1,802,229 Fairfax County, VA, Redevelopment & Housing Authority Rev. (Mott & Gum Springs Community Centers), 5.5%, 2017 2,225,000 2,267,787 Fairfax, VA, Economic Development Authority Fairfax Public Improvement Project, 5%, 2030 1,000,000 1,035,130 Front Royal & Warren County, VA, Industrial Development Authority Lease Rev., School & Capital Improvement, "B", FSA, 5%, 2035 2,875,000 2,976,401 King George County, VA, Industrial Development Authority Lease Rev., FSA, 5%, 2036 2,000,000 2,067,160 Middlesex County, VA, Industrial Development Authority Rev., AMBAC, 5.125%, 2027 1,000,000 1,056,240 Middlesex County, VA, Industrial Development Authority Rev., AMBAC, 5.25%, 2032 2,000,000 2,113,680 Montgomery County, VA, Industrial Development, "B", AMBAC, 6%, 2017 1,000,000 1,107,280 Montgomery County, VA, Industrial Development, "C", AMBAC, 6%, 2017 1,120,000 1,240,154 New River Valley, VA, Regional Jail Authority, MBIA, 5.125%, 2019 3,405,000 3,548,248 Orange County, VA, Industrial Development Authority (Orange County Project), AMBAC, 5%, 2034 1,000,000 1,036,140 Pamunkey, VA, Regional Jail Authority, MBIA, 5.75%, 2006 (c) 2,230,000 2,286,664 Pamunkey, VA, Regional Jail Authority, MBIA, 5.75%, 2006 (c) 270,000 276,861 Powhatan County, VA, Economic Development Authority Lease Rev. (Virginia Capital Projects), AMBAC, 5.25%, 2033 1,000,000 1,055,980 Prince William County, VA, Lease Partnerships, 5%, 2021 1,500,000 1,565,235 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 4,000,000 4,365,080 Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) 1,000,000 1,106,740 Richmond, VA, Public Facilities, COP (Megahertz Project), "A", AMBAC, 5%, 2022 1,600,000 1,659,616 Southwest Virginia Regional Jail Authority Rev., MBIA, 5%, 2035 1,720,000 1,777,964 Virginia College Building Authority (21st Century College Program), 6%, 2009 (c) 2,000,000 2,144,020 Virginia Public Building Authority Rev., "B", MBIA, 0%, 2007 3,750,000 3,573,000 Virginia Resources Authority Rev., "B", FSA, 5.5%, 2019 1,070,000 1,140,909 Virginia Resources Authority Rev., 5%, 2021 (u) 2,780,000 2,924,727 Virginia Resources Authority Rev., 5%, 2023 (u) 3,040,000 3,178,198 Virginia Resources Authority Rev., 5%, 2033 (u) 5,020,000 5,192,437 Virginia Resources Authority, Infrastructure Rev., "A", 5%, 2017 1,360,000 1,421,200 ------------ $ 74,701,338 --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 1.6% Greater Richmond Convention Center Authority, Hotel Tax Rev. (Convention Center Expansion), 6.125%, 2010 (c) $ 3,500,000 $ 3,855,320 Virgin Islands, Public Finance Authority Rev., "A", 5.625%, 2025 1,000,000 1,036,830 ------------ $ 4,892,150 --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 1.0% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 455,000 $ 466,425 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.5%, 2039 965,000 990,919 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "B", 0%, 2055 2,000,000 69,300 Tobacco Settlement Financing Corp., 5.625%, 2037 1,000,000 1,024,190 Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 570,000 574,321 ------------ $ 3,125,155 --------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 0.3% Pocahontas Parkway Assn., VA, Toll Road Rev., 0%, 2013 $ 1,500,000 $ 1,018,440 --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 2.2% Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., "J", MBIA, 5%, 2029 $ 1,210,000 $ 1,263,893 Virginia Transportation Board Rev. (U.S. Route 58), "B", 5.125%, 2006 (c) 4,000,000 4,047,400 Virginia Commonwealth Board Program (Oak Grove Connector), "A", 5.25%, 2022 1,500,000 1,525,440 ------------ $ 6,836,733 --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 2.7% Amherst, VA, Industrial Development Authority Rev. (Educational Facilities Sweet Briar), 5%, 2026 $ 1,770,000 $ 1,801,559 Danville, VA, Industrial Development Authority, Educational Facilities Rev. (Averett University), 6%, 2022 500,000 519,140 Loudoun County, VA, Industrial Development Authority, University Facilities Rev. (George Washington University), 6.25%, 2012 2,710,000 2,714,824 Virginia College Building Authority, Educational Facilities Rev. (Washington & Lee University), MBIA, 5.25%, 2031 1,000,000 1,115,740 Virginia College Building Authority, Educational Facilities Rev. (Hampton University), 6%, 2010 (c) 1,000,000 1,092,430 Virginia College Building Authority, Educational Facilities Rev. (Regent University), MBIA, 5.125%, 2031 1,000,000 1,037,480 ------------ $ 8,281,173 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Owned - 2.2% Chesapeake, VA, Industrial Development Authority Rev. (Virginia Electric & Power Co.), 5.25%, 2008 $ 750,000 $ 757,717 Halifax County, VA, Industrial Development Authority (Old Dominion Electric Cooperative), AMBAC, 5.625%, 2028 3,000,000 3,212,850 Mecklenburg County, VA, Industrial Development Authority Rev. (UAE Mecklenburg LP), 6.5%, 2017 700,000 766,003 Pittsylvania County, VA, Industrial Development Authority Rev., 7.5%, 2014 2,000,000 2,036,000 ------------ $ 6,772,570 --------------------------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 7.3% Bristol, VA, Utility Systems Rev., FSA, ETM, 5.75%, 2016 (c) $ 240,000 $ 273,358 Guam Power Authority Rev., AMBAC, 5.25%, 2015 (u) 2,020,000 2,137,322 Puerto Rico Electric Power Authority Rev., FSA, 5.75%, 2010 (c)(u) 5,000,000 5,449,450 Puerto Rico Electric Power Authority Rev., FSA, 5.625%, 2010 (c)(u) 2,540,000 2,755,951 Puerto Rico Electric Power Authority Rev., FSA, 5.3%, 2020 (u) 2,500,000 2,685,000 Richmond, VA, Public Utilities Rev., FSA, 5%, 2033 6,950,000 7,149,535 Richmond, VA, Public Utilities Rev., FSA, 5%, 2035 1,000,000 1,038,070 Richmond, VA, Public Utilities Rev., FSA, "N", 5%, 2027 1,000,000 1,043,230 ------------ $ 22,531,916 --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 10.1% Fairfax County, VA, Water Authority Rev., 5%, 2026 $ 1,000,000 $ 1,044,840 Fairfax County, VA, Water Authority Rev., 5%, 2027 3,155,000 3,292,148 Fairfax County, VA, Water Authority Rev., 5%, 2027 3,210,000 3,344,724 Fairfax County, VA, Water Authority Rev., 5%, 2032 2,000,000 2,068,960 Fairfax County, VA, Water Authority Rev., "A", 5%, 2030 2,000,000 2,094,340 Loudoun County, VA, Sanitation Authority Water & Sewer Rev., 5%, 2033 3,000,000 3,115,980 Prince William County, VA, Water & Sewer Rev., FGIC, 5.5%, 2009 (c) 2,000,000 2,129,740 Puerto Rico Aqueduct & Sewer Authority Rev., ETM, 10.25%, 2009 (c) 195,000 216,520 Spotsylvania County, VA, Water & Sewer Rev., FSA, 5%, 2022 1,450,000 1,504,549 Virginia Beach, VA, Storm Water Utilities Rev., 6%, 2020 1,000,000 1,097,760 Virginia Resources Authority Sewer Systems Rev. (Hopewell Regional Wastewater), 5.75%, 2021 1,335,000 1,447,594 Virginia Resources Authority, Clean Water Rev., 5.4%, 2010 (c) 1,135,000 1,213,644 Virginia Resources Authority, Clean Water Rev., 6%, 2017 2,750,000 3,004,623 Virginia Resources Authority, Infrastructure Rev., "A", MBIA, 5.5%, 2019 1,600,000 1,719,936 Virginia Resources Authority, Infrastructure Rev., "A", MBIA, 5.5%, 2020 1,690,000 1,815,077 Virginia State Resources Authority, Water & Sewer Systems Rev. (Tuckahoe Creek Project), 5%, 2035 2,015,000 2,090,240 ------------ $ 31,200,675 --------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $301,373,200) $315,099,675 --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.5% --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "A", 3.22%, due 4/06/06 $ 100,000 $ 100,000 Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "B", 3.22%, due 4/06/06 600,000 600,000 Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "C", 3.22%, due 4/06/06 500,000 500,000 Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D", 3.22%, due 4/06/06 600,000 600,000 Burke County, GA, Development Authority Pollution Control Rev. (Oglethorpe Power Corp.), "A", 3.22%, due 4/05/06 300,000 300,000 Georgia Municipal Electric Authority, 3.05%, due 4/05/06 800,000 800,000 Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A", 3.22%, due 4/06/06 1,000,000 1,000,000 Jefferson County, AL, Sewer Rev., Warrants, "B-4", 3.22%, due 4/06/06 300,000 300,000 Massachusetts Water Resources Authority, 3.17%, due 4/05/06 100,000 100,000 Missouri Health & Educational Facilities Authority Rev., Medical Research Facilities (Stowers Institute), 3.22%, due 4/06/06 200,000 200,000 Sevier County, TN, Public Building Authority, 3.19%, due 4/06/06 70,000 70,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 4,570,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $305,943,200) $319,669,675 --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (4.0)% (12,156,955) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $307,512,720 --------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $6,000,000 Fixed - 3 Year Floating - 7 Day $ 82,400 BMA Swap Index (2.795%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 8/02/21 USD 3,000,000 Fixed - 15 Year Floating - 7 Day 47,944 BMA Swap Index (4.011%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 3,000,000 Floating - 3 Month Fixed - 20 Year (46,489) LIBOR Swap Index LIBOR Swap Index (5.363%) ------------------------------------------------------------------------------------------------------------------------------- 7/11/36 USD 3,000,000 Floating - 7 Day Fixed - 30 Year (96,826) BMA Swap Index BMA Swap Index (4.127%) ------------------------------------------------------------------------------------------------------------------------------- $(12,971) ======== At March 31, 2006 the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS - 3/31/06 MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.3% --------------------------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) --------------------------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 23.9% Charleston, WV, Public Improvements, 7.2%, 2009 $ 1,140,000 $ 1,255,357 Commonwealth of Puerto Rico, Public Improvement, 5.25%, 2023 1,500,000 1,562,160 Commonwealth of Puerto Rico, Public Improvement, "A", CIFG, 5%, 2034 2,000,000 2,062,520 Commonwealth of Puerto Rico, Public Improvement, MBIA, 5.75%, 2010 (c)(u) 6,000,000 6,463,440 Puerto Rico Commonwealth Public Improvement, "A", CIFG, 5%, 2025 1,000,000 1,048,770 Puerto Rico Public Buildings Authority Rev. (State Office Building), "F", XLCA, 5.25%, 2025 2,000,000 2,224,520 Puerto Rico Public Buildings Authority Rev., "B", 5.25%, 2007 (c) 3,115,000 3,223,184 West Virginia State, Highway Improvements, FGIC, 5.625%, 2010 (c) 2,000,000 2,162,500 West Virginia State, Public Improvements, FGIC, 5%, 2021 4,000,000 4,107,880 West Virginia State, Sewer Improvements, FGIC, 5.5%, 2017 2,565,000 2,721,952 West Virginia State, Water Utility Improvements, FGIC, 5.25%, 2026 8,000,000 8,229,280 ------------ $ 35,061,563 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 2.3% Brooke County, WV, Board of Education, FGIC, 5%, 2016 $ 1,390,000 $ 1,446,726 Puerto Rico, Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 1,800,000 1,922,076 ------------ $ 3,368,802 --------------------------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 5.0% Jefferson County, WV, Board of Education, FGIC, ETM, 6.85%, 2009 (c) $ 1,680,000 $ 1,842,691 Monongalia County, WV, Board of Education, MBIA, 5%, 2027 2,350,000 2,447,313 Monongalia County, WV, Board of Education, MBIA, 5%, 2033 3,000,000 3,108,360 ------------ $ 7,398,364 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 5.3% Kanawha County, WV, Building Commission Rev. (St. Francis Hospital), ETM, 7.5%, 2007 (c) $ 60,000 $ 62,552 Monongalia County, WV, Building Community Hospital Rev. (Monongalia General Hospital), "A", 5.25%, 2035 1,000,000 1,012,330 Ohio County, WV, County Commission Health System Rev. (Ohio Valley Medical Center), 5.75%, 2013 750,000 713,415 Randolph County, WV, Community Health Systems Rev. (Davis Health Systems, Inc.), FSA, 5.2%, 2021 1,000,000 1,059,600 Weirton, WV, Municipal Hospital Building, Commission Rev. (Weirton Hospital Medical Center), 6.375%, 2031 600,000 602,898 West Virginia Hospital Finance Authority, Hospital Rev. (Charleston Area Medical Center), ETM, 6.5%, 2023 (c) 2,000,000 2,408,780 West Virginia Hospital Finance Authority, Hospital Rev. (Fairmont General Hospital), 6.625%, 2019 300,000 300,042 West Virginia Hospital Finance Authority, Hospital Rev. (General Division Medical Office Building), 7.25%, 2014 1,645,000 1,647,912 ------------ $ 7,807,529 --------------------------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 1.9% Harrison County, WV, Building Commission Rev. (Maplewood Retirement), AMBAC, 5.25%, 2008 (c) $ 2,625,000 $ 2,757,877 --------------------------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 0.2% Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery), 5.875%, 2022 $ 350,000 $ 369,082 --------------------------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 0.1% Webster County, WV, Housing Development Rev. (Circlebrook), FHA, 6.35%, 2008 $ 155,000 $ 155,338 --------------------------------------------------------------------------------------------------------------------------------- Parking - 0.9% West Virginia Economic Development Authority, Auto Lease Rev. (Capitol Parking Garage), AMBAC, 5.8%, 2020 $ 1,260,000 $ 1,356,579 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - Local - 0.9% Charlestown, WV, Residential Mortgage Rev., 6.2%, 2011 $ 75,000 $ 75,211 Kanawha County, WV, 0%, 2014 (c) 1,920,000 1,212,346 ------------ $ 1,287,557 --------------------------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 1.8% Puerto Rico Housing Finance Authority Home Mortgage Rev., Mortgage Backed Securities, "A", 4.75%, 2023 $ 690,000 $ 690,973 West Virginia State, Housing Development Fund Rev., 5.25%, 2018 1,000,000 1,008,700 West Virginia State, Housing Development Fund Rev., 5.3%, 2023 985,000 992,299 ------------ $ 2,691,972 --------------------------------------------------------------------------------------------------------------------------------- State & Local Agencies - 24.2% Huntington, WV, Municipal Development Authority, Rev., MBIA, 5.1%, 2018 $ 1,740,000 $ 1,802,431 West Virginia Building Commission, "A", AMBAC, 5.375%, 2018 (u) 9,040,000 9,983,866 West Virginia Building Commission, "B", AMBAC, 5.375%, 2018 (u) 2,500,000 2,761,025 West Virginia Building Commission, Lease Rev., MBIA, ETM, 0%, 2007 (c) 3,150,000 3,010,140 West Virginia Building Commission, Lease Rev., MBIA, ETM, 0%, 2008 (c) 3,050,000 2,808,410 West Virginia Building Commission, Lease Rev., MBIA, ETM, 0%, 2009 (c) 1,000,000 883,810 West Virginia Economic Development Authority (Correctional Juvenile & Public), 5%, 2020 1,000,000 1,036,970 West Virginia Economic Development Authority (Correctional Juvenile & Public), MBIA, 5.5%, 2013 1,000,000 1,091,770 West Virginia Economic Development Authority (Correctional Juvenile & Public), MBIA, 5%, 2026 2,100,000 2,173,899 West Virginia Economic Development Authority State Office Building, "B", MBIA, 5.25%, 2030 1,355,000 1,427,032 West Virginia Economic Development Authority, Auto Lease Rev., 5.2%, 2033 1,000,000 1,036,550 West Virginia Economic Development Authority, Department of Environmental Protection, 5.5%, 2022 2,000,000 2,153,160 West Virginia Economic Development Authority, Lease Rev. (State Office Building), "B", MBIA, 5.25%, 2025 645,000 683,190 West Virginia Hospital Finance Authority, Hospital Rev. (Veterans Nursing Home), 5.5%, 2034 1,000,000 1,010,230 West Virginia Hospital Finance Authority, Hospital Rev. (West Virginia University Hospital), AMBAC, 5%, 2018 1,000,000 1,020,100 West Virginia School Building Authority, Miscellaneous Tax Rev., FSA, 5.25%, 2021 2,550,000 2,646,976 ------------ $ 35,529,559 --------------------------------------------------------------------------------------------------------------------------------- Tax - Other - 0.4% Virgin Islands, Public Finance Authority Rev., "A", 5.625%, 2025 $ 500,000 $ 518,415 --------------------------------------------------------------------------------------------------------------------------------- Tobacco - 0.5% Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 675,000 $ 691,949 --------------------------------------------------------------------------------------------------------------------------------- Toll Roads - 3.4% West Virginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, ETM, 0%, 2006 (c) $ 2,500,000 $ 2,479,275 West Virginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, ETM, 0%, 2007 (c) 2,000,000 1,911,200 West Virginia Parkways, Economic Development & Tourism Authority, Rev., FGIC, ETM, 0%, 2008 (c) 610,000 561,682 ------------ $ 4,952,157 --------------------------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 1.3% Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., "J", MBIA, 5%, 2029 $ 1,820,000 $ 1,901,063 --------------------------------------------------------------------------------------------------------------------------------- Universities - Colleges - 23.2% Commonwealth of Puerto Rico, Industrial Tourist Education (University Plaza), MBIA, 5%, 2021 $ 1,270,000 $ 1,318,984 Fairmont State College, West Virginia, College Rev., "A", FGIC, 5%, 2032 3,210,000 3,307,070 Fairmont State College, West Virginia, College Rev., FGIC, 5.25%, 2022 5,130,000 5,443,392 Fairmont State College, West Virginia, College Rev., FGIC, 5.375%, 2027 1,500,000 1,603,725 Fairmont State College, West Virginia, College Rev., FGIC, 5%, 2032 2,250,000 2,318,040 Shepherd University Board of Governors, West Virginia Rev. (Residence Facilities Projects), MBIA, 5%, 2035 1,675,000 1,734,630 State of West Virginia, Department of Higher Education (Marshall University), FGIC, 5.25%, 2019 1,680,000 1,768,402 State of West Virginia, Department of Higher Education (Student Union James C. Wilson College), 5.125%, 2022 1,500,000 1,576,935 State of West Virginia, Department of Higher Education, "B", FGIC, 5%, 2029 1,000,000 1,035,950 State of West Virginia, Department of Higher Education, MBIA, 5%, 2010 1,345,000 1,409,291 West Virginia University, Dormitory Rev., AMBAC, 5%, 2007 (c) 2,000,000 2,062,840 West Virginia University, University Systems Rev. (Marshall University), FGIC, 6%, 2020 2,705,000 2,947,666 West Virginia University, University Systems Rev. (West Virginia University), MBIA, 5.5%, 2020 1,700,000 1,914,693 West Virginia, Higher Education Facilities Rev., "B", FGIC, 5%, 2034 4,395,000 4,535,113 West Virginia, West Virginia University Improvement Rev., "C", FGIC, 5%, 2028 1,000,000 1,034,240 ------------ $ 34,010,971 --------------------------------------------------------------------------------------------------------------------------------- Universities - Dormitories - 0.4% West Liberty State College, Capital Improvement, 6%, 2028 $ 500,000 $ 529,420 -------------------------------------------------------------------------------------------------------------------------------- Utilities - Investor Owned - 0.5% Mason County, WV, Pollution Control Rev. (Appalachian Power Co.), 5.5%, 2022 $ 750,000 $ 766,357 --------------------------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 8.1% Fairmont, WV, Waterworks Rev., AMBAC, 5.25%, 2022 $ 200,000 $ 222,278 Parkersburg, WV, Waterworks & Sewer Series A, "N", FGIC, 4.5%, 2022 1,000,000 1,003,720 West Virginia Water Development Authority Loan Program, "B", AMBAC, 4.75%, 2035 500,000 501,890 West Virginia Water Development Authority Rev., AMBAC, 6.25%, 2020 1,000,000 1,090,410 West Virginia Water Development Authority Rev., AMBAC, 5.25%, 2023 1,000,000 1,065,270 West Virginia Water Development Authority Rev., AMBAC, 5%, 2026 2,850,000 2,966,793 West Virginia Water Development Authority Rev., ETM, 7.1%, 2009 (c) 105,000 111,794 West Virginia Water Development Authority, "A", FGIC, 5%, 2033 1,500,000 1,556,580 West Virginia Water Development Authority, Infrastructure Rev., "A", AMBAC, 5%, 2033 1,950,000 2,016,768 West Virginia Water Development Authority, Infrastructure Rev., FSA, 5.5%, 2018 390,000 413,162 West Virginia Water Development Authority, Infrastructure Rev., FSA, 5.5%, 2019 895,000 945,899 ------------ $ 11,894,564 --------------------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $146,260,711) $153,049,118 --------------------------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 0.7% --------------------------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "C", 3.22%, due 4/06/06 $ 100,000 $ 100,000 Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D", 3.22%, due 4/06/06 400,000 400,000 New York City, NY, Municipal Water & Sewer Finance Authority Rev., 3.09%, due 4/03/06 600,000 600,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 1,100,000 --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $147,360,711) $154,149,118 --------------------------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (5.0)% (7,345,357) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $146,803,761 --------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SWAPS NOTIONAL PRINCIPAL UNREALIZED AMOUNT OF CASH FLOWS PAID CASH FLOWS APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND RECEIVED BY THE FUND (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------- 12/01/07 USD $3,000,000 Fixed - 3 Year Floating - 7 Day $ 41,200 BMA Swap Index (2.795%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/16/16 USD 3,000,000 Fixed - 10 Year Floating - 7 Day 7,728 BMA Swap Index (3.977%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/15/18 USD 3,000,000 Fixed - 12 Year Floating - 7 Day 15,791 BMA Swap Index (4.019%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 6/22/18 USD 3,000,000 Fixed - 12 Year Floating - 7 Day 57,092 BMA Swap Index (3.861%) BMA Swap Index ------------------------------------------------------------------------------------------------------------------------------- 9/13/26 USD 1,500,000 Floating - 3 Month Fixed - 20 Year (23,244) LIBOR Swap Index LIBOR Swap Index (5.363%) ------------------------------------------------------------------------------------------------------------------------------- $ 98,567 ======== At March 31, 2006 the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. The following abbreviations are used in the Portfolio of Investments and are defined: BMA Bond Market Assn. COP Certificate of Participation ETM Escrowed to Maturity LIBOR London Interbank Offered Rate LOC Letter of Credit Insurers Inverse Floaters ---------------------------------------------------------------------------------------------------------------------------- AMBAC AMBAC Indemnity Corp. RITES Residual Interest Tax-Exempt Security ASST GTY Asset Guaranty Insurance Co. CIFG CDS IXIS Financial Guaranty CONNIE LEE Connie Lee Insurance Co. FGIC Financial Guaranty Insurance Co. FHA Federal Housing Administration FNMA Federal National Mortgage Assn. FSA Financial Security Assurance, Inc. GNMA Government National Mortgage Assn. MBIA MBIA Insurance Corp. XLCA XL Capital Insurance Co. Portfolio Footnotes: (c) Refunded bond. (p) Primary inverse floater. (u) As restated - (See Note 8). Underlying security deposited into special purpose trust ("the trust") by investment banker upon creation of self-deposited inverse floaters (See Note 7). (v) Externally deposited inverse floater. (z) Restricted securities (excluding 144A issues) are not registered under the Securities Act of 1933 and are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The South Carolina Fund holds the following restricted security: TOTAL % ACQUISITION ACQUISITION CURRENT OF NET FUND SECURITY DATE COST MARKET VALUE ASSETS --------------------------------------------------------------------------------------------------------------------------------- South Carolina Puerto Rico Electric Power Authority, RITES, FSA, 6.559%, 2015 9/16/99 $976,500 $1,069,460 0.7% Fund SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (As Restated - See Note 8) 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 For year ended 3/31/06 FUND FUND FUND FUND ASSETS -------------------------------------------------------------------------------------------------------------------------------- Investments - Identified cost $86,709,966 $163,106,114 $331,733,980 $111,273,968 Unrealized appreciation (depreciation) 3,259,147 10,178,367 18,301,676 3,978,389 -------------------------------------------------------------------------------------------------------------------------------- Total investments, at value $89,969,113 $173,284,481 $350,035,656 $115,252,357 Cash 53,828 57,731 93,330 5,497 Receivable for investments sold 431,255 353,308 1,631,327 40,000 Receivable for fund shares sold 76,679 76,006 49,621 288,684 Interest receivable 1,297,576 2,637,392 5,522,129 1,739,598 Receivable from investment adviser -- -- -- 328,082 Unrealized appreciation on interest rate swaps 82,707 149,241 276,446 133,261 -------------------------------------------------------------------------------------------------------------------------------- Total assets $91,911,158 $176,558,159 $357,608,509 $117,787,479 -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES -------------------------------------------------------------------------------------------------------------------------------- Distributions payable $139,233 $222,243 $399,413 $135,535 Payable for fund shares reacquired 175,578 148,117 451,404 222,027 Payable to the holder of the floating rate certificate from trust assets 5,360,000 10,350,000 21,425,000 6,170,000 Unrealized depreciation on interest rate swaps 44,738 32,556 67,442 21,704 Payable to affiliates - Management fee 708 1,359 2,750 910 Shareholder servicing costs 7,105 13,134 21,244 7,366 Distribution and service fees 487 2,068 4,362 12,009 Administrative services fee 47 64 129 61 Payable for independent trustees' compensation 10,213 13,428 16,565 9,952 Payable for interest expense and fees 50,384 116,805 177,933 68,308 Accrued expenses and other liabilities 61,145 73,094 85,568 68,055 -------------------------------------------------------------------------------------------------------------------------------- Total liabilities $5,849,638 $10,972,868 $22,651,810 $6,715,927 -------------------------------------------------------------------------------------------------------------------------------- Net assets $86,061,520 $165,585,291 $334,956,699 $111,071,552 -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF -------------------------------------------------------------------------------------------------------------------------------- Paid-in capital $83,246,841 $155,568,821 $316,806,089 $107,409,795 Unrealized appreciation (depreciation) on investments 3,297,116 10,295,052 18,510,680 4,089,946 Accumulated net realized gain (loss) on investments (359,905) 227,805 225,319 (217,800) Accumulated distributions in excess of net investment income (122,532) (506,387) (585,389) (210,389) -------------------------------------------------------------------------------------------------------------------------------- Net assets $86,061,520 $165,585,291 $334,956,699 $111,071,552 --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (As Restated -- See Note 8) - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA FUND FUND FUND FUND Net Assets Class A $75,596,857 $118,475,660 $270,123,603 $72,429,191 Class B 10,464,663 30,045,829 32,609,959 38,642,361 Class C -- 17,063,802 32,223,137 -- -------------------------------------------------------------------------------------------------------------------------------- Total net assets $86,061,520 $165,585,291 $334,956,699 $111,071,552 -------------------------------------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding Class A 7,772,637 10,644,398 22,796,832 7,134,583 Class B 1,074,534 2,708,136 2,755,978 3,796,778 Class C -- 1,535,312 2,721,190 -- -------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 8,847,171 14,887,846 28,274,000 10,931,361 -------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $9.73 $11.13 $11.85 $10.15 -------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25Xnet asset value per share) $10.22 $11.69 $12.44 $10.66 ------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $9.74 $11.09 $11.83 $10.18 -------------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $11.11 $11.84 $-- -------------------------------------------------------------------------------------------------------------------------------- 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 (As Restated - See Note 8) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA For year ended 3/31/06 FUND FUND FUND FUND (Not Restated) ASSETS ---------------------------------------------------------------------------------------------------------------------------------- Investments - Identified cost $157,026,336 $108,561,488 $305,943,200 $147,360,711 Unrealized appreciation (depreciation) 8,295,167 5,622,231 13,726,475 6,788,407 ---------------------------------------------------------------------------------------------------------------------------------- Total investments, at value $165,321,503 $114,183,719 $319,669,675 $154,149,118 Cash 37,408 24,466 99,860 25,983 Receivable for investments sold -- 875,742 3,138,230 30,000 Receivable for fund shares sold 143,634 23,100 114,129 98,795 Interest receivable 2,553,774 1,660,432 4,913,054 2,495,078 Unrealized appreciation on interest rate swaps 179,291 -- 144,319 128,799 ---------------------------------------------------------------------------------------------------------------------------------- Total assets $168,235,610 $116,767,459 $328,079,267 $156,927,773 ---------------------------------------------------------------------------------------------------------------------------------- LIABILITIES ---------------------------------------------------------------------------------------------------------------------------------- Distributions payable $161,341 $198,454 $445,466 $158,591 Payable for investments purchased 1,028,680 -- 3,811,842 -- Payable to the holder of the floating rate certificate from trust assets 9,275,000 -- 15,670,000 9,670,000 Payable for fund shares reacquired 154,949 289,318 184,651 97,683 Unrealized depreciation on interest rate swaps 30,232 151,684 157,290 30,232 Payable to affiliates - Management fee 1,292 953 2,522 1,204 Shareholder servicing costs 10,691 7,388 20,447 8,881 Distribution and service fees 1,972 1,419 3,473 1,627 Administrative services fee 63 53 120 61 Payable for independent trustees' compensation 16,078 13,107 16,669 15,736 Payable for interest expense and fees 109,601 -- 165,960 77,371 Accrued expenses and other liabilities 64,375 62,095 88,107 62,626 ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities $10,854,274 $724,471 $20,566,547 $10,124,012 ---------------------------------------------------------------------------------------------------------------------------------- Net assets $157,381,336 $116,042,988 $307,512,720 $146,803,761 ---------------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF ---------------------------------------------------------------------------------------------------------------------------------- Paid-in capital $149,405,014 $110,694,520 $294,437,588 $140,245,969 Unrealized appreciation (depreciation) on investments 8,444,226 5,470,547 13,713,504 6,886,974 Accumulated net realized gain (loss) on investments (374,713) 133,909 186,200 (45,174) Accumulated distributions in excess of net investment income (93,191) (255,988) (824,572) (284,008) ---------------------------------------------------------------------------------------------------------------------------------- Net assets $157,381,336 $116,042,988 $307,512,720 $146,803,761 ----------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (As Restated - See Note 8) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA For year ended 3/31/06 FUND FUND FUND FUND (Not Restated) Net Assets Class A $131,167,200 $98,825,497 $277,632,554 $134,415,461 Class B 26,214,136 17,217,491 16,884,892 12,388,300 Class C -- -- 12,995,274 -- ---------------------------------------------------------------------------------------------------------------------------------- Total net assets $157,381,336 $116,042,988 $307,512,720 $146,803,761 ---------------------------------------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding Class A 10,706,507 9,356,295 24,329,340 11,718,696 Class B 2,141,062 1,631,198 1,480,756 1,080,558 Class C -- -- 1,139,059 -- ---------------------------------------------------------------------------------------------------------------------------------- Total shares of beneficial interest outstanding 12,847,569 10,987,493 26,949,155 12,799,254 ---------------------------------------------------------------------------------------------------------------------------------- Class A shares Net asset value per share (net assets/shares of beneficial interest outstanding) $12.25 $10.56 $11.41 $11.47 ---------------------------------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25Xnet asset value per share) $12.86 $11.09 $11.98 $12.04 ---------------------------------------------------------------------------------------------------------------------------------- Class B shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $12.24 $10.56 $11.40 $11.46 ---------------------------------------------------------------------------------------------------------------------------------- Class C shares Net asset value and offering price per share (net assets/shares of beneficial interest outstanding) $-- $-- $11.41 $-- ---------------------------------------------------------------------------------------------------------------------------------- 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 (As Restated - See Note 8) This statement describes how much your fund received in investment income and paid in expenses. It also describes any gains or losses generated by fund operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA For year ended 3/31/06 FUND FUND FUND FUND NET INVESTMENT INCOME --------------------------------------------------------------------------------------------------------------------------------- Interest $4,635,223 $9,360,784 $18,408,111 $5,573,167 --------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $482,629 $956,565 $1,905,888 $612,949 Distribution and service fees 84,973 818,796 1,664,065 418,425 Shareholder servicing costs 124,489 247,140 478,496 154,667 Administrative services fee 17,427 27,235 46,766 20,034 Independent trustees' compensation 5,418 8,205 15,340 7,302 Custodian fee 40,431 62,240 121,182 42,987 Shareholder communications 8,219 23,483 42,755 18,819 Auditing fees 44,324 44,344 44,382 43,528 Legal fees 8,970 33,890 11,129 14,383 Interest expense and fees 160,390 313,602 644,766 185,565 Miscellaneous 50,516 75,746 72,746 39,418 --------------------------------------------------------------------------------------------------------------------------------- Total expenses $1,027,786 $2,611,246 $5,047,515 $1,558,077 --------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (10,791) (12,591) (30,136) (8,166) Reduction of expenses by investment adviser (220,301) (435,899) (868,267) (399,762) --------------------------------------------------------------------------------------------------------------------------------- Net expenses $796,694 $2,162,756 $4,149,112 $1,150,149 --------------------------------------------------------------------------------------------------------------------------------- Net investment income $3,838,529 $7,198,028 $14,258,999 $4,423,018 --------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: --------------------------------------------------------------------------------------------------------------------------------- Realized gain (loss) (identified cost basis) - Investment transactions $139,165 $719,463 $736,465 $301,189 Swap transactions 147,467 89,998 282,977 42,702 --------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $286,632 $809,461 $1,019,442 $343,891 --------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $(1,058,665) $(2,621,573) $(3,866,717) $(580,781) Swap transactions (44,559) 334 119,123 (19,004) --------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(1,103,224) $(2,621,239) $(3,747,594) $(599,785) --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(816,592) $(1,811,778) $(2,728,152) $(255,894) --------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $3,021,937 $5,386,250 $11,530,847 $4,167,124 ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS Statement of Operations (As Restated - See Note 8) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA For year ended 3/31/06 FUND FUND FUND FUND (Not Restated) NET INVESTMENT INCOME -------------------------------------------------------------------------------------------------------------------------------- Interest $8,669,839 $6,229,512 $16,969,114 $7,779,193 -------------------------------------------------------------------------------------------------------------------------------- Expenses - Management fee $878,565 $672,349 $1,723,944 $816,555 Distribution and service fees 746,133 551,957 1,299,754 607,115 Shareholder servicing costs 216,254 163,542 421,988 195,257 Administrative services fee 25,541 21,330 42,966 24,259 Independent trustees' compensation 9,710 7,628 14,603 9,345 Custodian fee 62,188 41,947 106,473 51,385 Shareholder communications 18,139 10,881 45,839 14,942 Auditing fees 44,340 44,332 44,374 44,337 Legal fees 5,840 6,328 12,132 5,570 Interest expense and fees 276,562 -- 469,207 256,213 Miscellaneous 39,887 49,714 83,830 50,665 -------------------------------------------------------------------------------------------------------------------------------- Total expenses $2,323,159 $1,570,008 $4,265,110 $2,075,643 -------------------------------------------------------------------------------------------------------------------------------- Fees paid indirectly (11,861) (8,344) (26,212) (12,467) Reduction of expenses by investment adviser (400,334) (306,371) (785,506) (372,074) -------------------------------------------------------------------------------------------------------------------------------- Net expenses $1,910,964 $1,255,293 $3,453,392 $1,691,102 -------------------------------------------------------------------------------------------------------------------------------- Net investment income $6,758,875 $4,974,219 $13,515,722 $6,088,091 -------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: -------------------------------------------------------------------------------------------------------------------------------- Realized gain (loss) (identified cost basis) - Investment transactions $439,645 $361,731 $830,201 $150,465 Swap transactions 250,896 119,455 364,938 250,952 -------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $690,541 $481,186 $1,195,139 $401,417 -------------------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) - Investments $(2,259,791) $(1,581,219) $(4,268,211) $(1,918,969) Swap transactions 94,849 (139,688) 102,093 (9,694) -------------------------------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $(2,164,942) $(1,720,907) $(4,166,118) $(1,928,663) -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $(1,474,401) $(1,239,721) $(2,970,979) $(1,527,246) -------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $5,284,474 $3,734,498 $10,544,743 $4,560,845 --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS (Not Restated) 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 For year ended 3/31/06 FUND FUND FUND FUND CHANGE IN NET ASSETS OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income $3,838,529 $7,198,028 $14,258,999 $4,423,018 Net realized gain (loss) on investments 286,632 809,461 1,019,442 343,891 Net unrealized gain (loss) on investments (1,103,224) (2,621,239) (3,747,594) (599,785) --------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $3,021,937 $5,386,250 $11,530,847 $4,167,124 --------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income Class A $(3,413,002) $(5,263,309) $(11,694,658) $(2,989,205) Class B (412,712) (1,168,804) (1,306,917) (1,394,784) Class C -- (642,938) (1,170,926) -- --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- (564,709) (1,065,305) -- Class B -- (152,917) (135,859) -- Class C -- (82,521) (127,766) -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(3,825,714) $(7,875,198) $(15,501,431) $(4,383,989) --------------------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(4,252,560) $(12,844,892) $(14,095,028) $1,890,721 --------------------------------------------------------------------------------------------------------------------------------- Total change in net assets $(5,056,337) $(15,333,840) $(18,065,612) $1,673,856 --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS --------------------------------------------------------------------------------------------------------------------------------- At beginning of period 91,117,857 180,919,131 353,022,311 109,397,696 At end of period $86,061,520 $165,585,291 $334,956,699 $111,071,552 --------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(122,532) $(506,387) $(585,389) $(210,389) --------------------------------------------------------------------------------------------------------------------------------- SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND For year ended 3/31/06 CHANGE IN NET ASSETS OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income $6,758,875 $4,974,219 $13,515,722 $6,088,091 Net realized gain (loss) on investments 690,541 481,186 1,195,139 401,417 Net unrealized gain (loss) on investments (2,164,942) (1,720,907) (4,166,118) (1,928,663) --------------------------------------------------------------------------------------------------------------------------------- Change in net assets from operations $5,284,474 $3,734,498 $10,544,743 $4,560,845 --------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income Class A $(5,659,836) $(4,261,947) $(12,295,006) $(5,562,081) Class B (1,056,777) (664,458) (688,908) (467,115) Class C -- -- (466,544) -- --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- (373,368) -- -- Class B -- (67,191) -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(6,716,613) $(5,366,964) $(13,450,458) $(6,029,196) --------------------------------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(2,560,303) $(7,850,463) $(6,612,020) $(521,038) --------------------------------------------------------------------------------------------------------------------------------- Total change in net assets $(3,992,442) $(9,482,929) $(9,517,735) $(1,989,389) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS --------------------------------------------------------------------------------------------------------------------------------- At beginning of period 161,373,778 125,525,917 317,030,455 148,793,150 At end of period $157,381,336 $116,042,988 $307,512,720 $146,803,761 --------------------------------------------------------------------------------------------------------------------------------- Accumulated distributions in excess of net investment income included in net assets at end of period $(93,191) $(255,988) $(824,572) $(284,008) ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS Statement of Changes in Net Assets (Not Restated) - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA For year ended 3/31/05 FUND FUND FUND FUND 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) --------------------------------------------------------------------------------------------------------------------------------- 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) --------------------------------------------------------------------------------------------------------------------------------- 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) --------------------------------------------------------------------------------------------------------------------------------- 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 FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MISSISSIPPI MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ----------------------------------------------------------- CLASS A 2006 2005 2004 2003 2002 Net asset value, beginning of period $9.82 $10.02 $10.02 $9.61 $9.78 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.44 $0.46 $0.46 $0.46 $0.49 Net realized and unrealized gain (loss) on investments (0.09) (0.19) 0.01 0.44 (0.16) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.35 $0.27 $0.47 $0.90 $0.33 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.44) $(0.47) $(0.47) $(0.49) $(0.50) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.73 $9.82 $10.02 $10.02 $9.61 --------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 3.59 2.76 4.77 9.48 3.45 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.07 0.93 0.82 0.84 0.85 Expenses after expense reductions (f) 0.82 0.68 0.62 0.64 0.65 Expenses after expense reductions and excluding interest and fees (f)(l) 0.64 0.58 0.62 0.64 0.65 Net investment income 4.48 4.70 4.61 4.70 5.05 Portfolio turnover 9 19 12 22 6 Net assets at end of period (000 Omitted) $75,597 $79,574 $82,507 $87,724 $76,004 ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MISSISSIPPI MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 ----------------------------------------------------------- CLASS B 2006 2005 2004 2003 2002 Net asset value, beginning of period $9.84 $10.03 $10.04 $9.62 $9.79 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.37 $0.39 $0.38 $0.38 $0.42 Net realized and unrealized gain (loss) on investments (0.10) (0.19) (0.01)(g) 0.44 (0.17) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.27 $0.20 $0.37 $0.82 $0.25 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.37) $(0.39) $(0.38) $(0.40) $(0.42) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.74 $9.84 $10.03 $10.04 $9.62 --------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 2.71 2.08 3.80 8.67 2.62 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.83 1.70 1.64 1.67 1.65 Expenses after expense reductions (f) 1.58 1.45 1.44 1.47 1.45 Expenses after expense reductions and excluding interest and fees (f)(l) 1.40 1.35 1.44 1.47 1.45 Net investment income 3.72 3.93 3.79 3.86 4.23 Portfolio turnover 9 19 12 22 6 Net assets at end of period (000 Omitted) $10,465 $11,544 $13,177 $12,900 $10,177 --------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (g) The per share amount is not in accordance with the net realized and unrealized gain/loss for the period because of the timing of sales of fund shares and the amount of per share realized and unrealized gains and losses at such time. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------- CLASS A 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.30 $11.53 $11.49 $10.94 $11.14 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.49 $0.51 $0.51 $0.52 $0.53 Net realized and unrealized gain (loss) on investments (0.12) (0.24) 0.04 0.56 (0.18) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.37 $0.27 $0.55 $1.08 $0.35 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.49) $(0.50) $(0.51) $(0.53) $(0.55) From net realized gain on investments (0.05) -- -- -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.54) $(0.50) $(0.51) $(0.53) $(0.55) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.13 $11.30 $11.53 $11.49 $10.94 --------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 3.30 2.45 4.90 10.05 3.16 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.28 1.14 1.13 1.17 1.21 Expenses after expense reductions (f) 1.03 0.89 0.93 0.97 1.01 Expenses after expense reductions and excluding interest and fees (f)(l) 0.85 0.79 0.86 0.87 0.88 Net investment income 4.36 4.47 4.39 4.56 4.80 Portfolio turnover 12 20 13 17 18 Net assets at end of period (000 Omitted) $118,476 $125,861 $131,642 $132,843 $121,717 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 --------------------------------------------------------------- CLASS B 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.27 $11.49 $11.45 $10.93 $11.13 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.41 $0.42 $0.42 $0.43 $0.45 Net realized and unrealized gain (loss) on investments (0.14) (0.22) 0.04 0.54 (0.19) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.27 $0.20 $0.46 $0.97 $0.26 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.40) $(0.42) $(0.42) $(0.45) $(0.46) From net realized gain on investments (0.05) -- -- -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.45) $(0.42) $(0.42) $(0.45) $(0.46) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.09 $11.27 $11.49 $11.45 $10.93 --------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 2.43 1.77 4.12 8.96 2.39 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.03 1.89 1.87 1.92 1.96 Expenses after expense reductions (f) 1.78 1.64 1.67 1.72 1.76 Expenses after expense reductions and excluding interest and fees (f)(l) 1.60 1.54 1.60 1.62 1.63 Net investment income 3.61 3.70 3.62 3.80 4.05 Portfolio turnover 12 20 13 17 18 Net assets at end of period (000 Omitted) $30,046 $35,328 $41,509 $40,867 $29,903 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8) YEARS ENDED 3/31 -----------------------------------------------------------
CLASS C 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.29 $11.51 $11.47 $10.93 $11.13 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.41 $0.42 $0.42 $0.43 $0.45 Net realized and unrealized gain (loss) on investments (0.14) (0.22) 0.04 0.56 (0.18) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.27 $0.20 $0.46 $0.99 $0.27 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.40) $(0.42) $(0.42) $(0.45) $(0.47) From net realized gain on investments (0.05) -- -- -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.45) $(0.42) $(0.42) $(0.45) $(0.47) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.11 $11.29 $11.51 $11.47 $10.93 --------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 2.43 1.78 4.12 9.14 2.39 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.03 1.89 1.87 1.92 1.96 Expenses after expense reductions (f) 1.78 1.64 1.67 1.72 1.76 Expenses after expense reductions and excluding interest and fees (f)(l) 1.60 1.54 1.60 1.62 1.63 Net investment income 3.61 3.72 3.63 3.81 4.05 Portfolio turnover 12 20 13 17 18 Net assets at end of period (000 Omitted) $17,064 $19,730 $21,907 $14,005 $10,178 --------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------- CLASS A 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.99 $12.30 $12.24 $11.68 $11.89 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.51 $0.53 $0.53 $0.54 $0.57 Net realized and unrealized gain (loss) on investments (0.09) (0.27) 0.07 0.58 (0.21) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.42 $0.26 $0.60 $1.12 $0.36 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.51) $(0.53) $(0.53) $(0.56) $(0.57) From net realized gain on investments (0.05) (0.04) (0.01) -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.56) $(0.57) $(0.54) $(0.56) $(0.57) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.85 $11.99 $12.30 $12.24 $11.68 --------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 3.49 2.15 5.01 9.71 3.08 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.33 1.10 1.12 1.11 1.12 Expenses after expense reductions (f) 1.08 0.85 0.92 0.91 0.92 Expenses after expense reductions and excluding interest and fees (f)(l) 0.89 0.85 0.92 0.91 0.92 Net investment income 4.24 4.38 4.30 4.50 4.78 Portfolio turnover 8 9 9 20 13 Net assets at end of period (000 Omitted) $270,124 $279,875 $305,185 $316,687 $303,250 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 --------------------------------------------------------------- CLASS B 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.98 $12.29 $12.23 $11.67 $11.89 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.43 $0.45 $0.45 $0.47 $0.48 Net realized and unrealized gain (loss) on investments (0.10) (0.27) 0.07 0.57 (0.20) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.33 $0.18 $0.52 $1.04 $0.28 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.43) $(0.45) $(0.45) $(0.48) $(0.50) From net realized gain on investments (0.05) (0.04) (0.01) -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.48) $(0.49) $(0.46) $(0.48) $(0.50) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.83 $11.98 $12.29 $12.23 $11.67 --------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 2.73 1.49 4.33 9.01 2.33 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.98 1.75 1.76 1.76 1.77 Expenses after expense reductions (f) 1.73 1.50 1.56 1.56 1.57 Expenses after expense reductions and excluding interest and fees (f)(l) 1.54 1.50 1.56 1.56 1.57 Net investment income 3.59 3.72 3.64 3.85 4.07 Portfolio turnover 8 9 9 20 13 Net assets at end of period (000 Omitted) $32,610 $40,251 $50,363 $59,116 $57,534 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 ----------------------------------------------------------- CLASS C 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.98 $12.29 $12.23 $11.67 $11.89 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.43 $0.45 $0.45 $0.46 $0.48 Net realized and unrealized gain (loss) on investments (0.09) (0.27) 0.07 0.58 (0.20) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.34 $0.18 $0.52 $1.04 $0.28 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.43) $(0.45) $(0.45) $(0.48) $(0.50) From net realized gain on investments (0.05) (0.04) (0.01) -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.48) $(0.49) $(0.46) $(0.48) $(0.50) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.84 $11.98 $12.29 $12.23 $11.67 --------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 2.82 1.49 4.33 9.01 2.33 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.98 1.76 1.77 1.76 1.77 Expenses after expense reductions (f) 1.73 1.51 1.57 1.56 1.57 Expenses after expense reductions and excluding interest and fees (f)(l) 1.54 1.51 1.57 1.56 1.57 Net investment income 3.61 3.76 3.67 3.84 4.07 Portfolio turnover 8 9 9 20 13 Net assets at end of period (000 Omitted) $32,223 $32,897 $35,256 $31,836 $23,741 --------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ----------------------------------------------------------- CLASS A 2006 2005 2004 2003 2002 Net asset value, beginning of period $10.17 $10.31 $10.21 $9.73 $9.85 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.43 $0.44 $0.42 $0.45 $0.48 Net realized and unrealized gain (loss) on investments (0.02) (0.14) 0.10 0.51 (0.11) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.41 $0.30 $0.52 $0.96 $0.37 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.43) $(0.44) $(0.42) $(0.48) $(0.49) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.15 $10.17 $10.31 $10.21 $9.73 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 4.08 2.97 5.12 10.12 3.85 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.13 1.03 1.05 1.03 0.99 Expenses after expense reductions (f) 0.77 0.69 0.75 0.55 0.46 Expenses after expense reductions and excluding interest and fees (f)(l) 0.60 0.60 0.64 0.48 0.36 Net investment income 4.24 4.33 4.12 4.47 4.90 Portfolio turnover 9 20 24 19 19 Net assets at end of period (000 Omitted) $72,429 $67,942 $75,083 $68,705 $47,661 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 --------------------------------------------------------------- CLASS B 2006 2005 2004 2003 2002 Net asset value, beginning of period $10.20 $10.34 $10.24 $9.75 $9.88 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.36 $0.36 $0.34 $0.36 $0.40 Net realized and unrealized gain (loss) on investments (0.03) (0.14) 0.10 0.53 (0.12) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.33 $0.22 $0.44 $0.89 $0.28 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.35) $(0.36) $(0.34) $(0.40) $(0.41) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.18 $10.20 $10.34 $10.24 $9.75 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 3.30 2.19 4.38 9.21 2.86 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.89 1.80 1.85 1.85 1.83 Expenses after expense reductions (f) 1.53 1.46 1.55 1.37 1.30 Expenses after expense reductions and excluding interest and fees (f)(l) 1.36 1.37 1.44 1.30 1.20 Net investment income 3.49 3.56 3.32 3.62 4.06 Portfolio turnover 9 20 24 19 19 Net assets at end of period (000 Omitted) $38,642 $41,455 $48,480 $46,941 $28,286 --------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------- CLASS A 2006 2005 2004 2003 2002 Net asset value, beginning of period $12.36 $12.61 $12.53 $12.00 $12.15 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.54 $0.56 $0.55 $0.58 $0.60 Net realized and unrealized gain (loss) on investments (0.11) (0.25) 0.10 0.54 (0.16) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.43 $0.31 $0.65 $1.12 $0.44 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.54) $(0.56) $(0.57) $(0.59) $(0.59) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.25 $12.36 $12.61 $12.53 $12.00 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 3.48 2.52 5.30 9.51 3.68 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.34 1.23 1.21 1.23 1.27 Expenses after expense reductions (f) 1.09 0.98 1.01 1.03 1.07 Expenses after expense reductions and excluding interest and fees (f)(l) 0.92 0.89 0.94 0.95 0.94 Net investment income 4.35 4.50 4.39 4.68 4.91 Portfolio turnover 13 15 16 21 10 Net assets at end of period (000 Omitted) $131,167 $130,342 $137,911 $129,844 $121,438 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 ---------------------------------------------------------------- CLASS B 2006 2005 2004 2003 2002 Net asset value, beginning of period $12.36 $12.60 $12.52 $11.99 $12.14 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.46 $0.48 $0.47 $0.50 $0.52 Net realized and unrealized gain (loss) on investments (0.12) (0.24) 0.10 0.54 (0.16) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.34 $0.24 $0.57 $1.04 $0.36 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.46) $(0.48) $(0.49) $(0.51) $(0.51) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.24 $12.36 $12.60 $12.52 $11.99 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 2.73 1.94 4.62 8.81 3.01 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.99 1.88 1.86 1.88 1.92 Expenses after expense reductions (f) 1.74 1.63 1.66 1.68 1.72 Expenses after expense reductions and excluding interest and fees (f)(l) 1.57 1.54 1.59 1.60 1.59 Net investment income 3.70 3.85 3.74 4.03 4.25 Portfolio turnover 13 15 16 21 10 Net assets at end of period (000 Omitted) $26,214 $31,032 $36,817 $37,603 $34,139 --------------------------------------------------------------------------------------------------------------------------------- (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) TENNESSEE MUNICIPAL BOND FUND (Not Restated) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 --------------------------------------------------------------- CLASS A 2006 2005 2004 2003 2002 Net asset value, beginning of period $10.71 $10.96 $10.90 $10.43 $10.58 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.45 $0.45 $0.45 $0.47 $0.49 Net realized and unrealized gain (loss) on investments (0.12) (0.18) 0.06 0.49 (0.14) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.33 $0.27 $0.51 $0.96 $0.35 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.44) $(0.44) $(0.45) $(0.49) $(0.50) From net realized gain on investments (0.04) (0.08) -- -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.48) $(0.52) $(0.45) $(0.49) $(0.50) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.56 $10.71 $10.96 $10.90 $10.43 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 3.13 2.53 4.80 9.34 3.36 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.19 1.16 1.14 1.17 1.14 Expenses after expense reductions (f) 0.94 0.91 0.94 0.97 0.94 Net investment income 4.17 4.16 4.08 4.35 4.66 Portfolio turnover 5 11 19 16 12 Net assets at end of period (000 Omitted) $98,825 $104,837 $118,990 $115,819 $101,294 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) TENNESSEE MUNICIPAL BOND FUND - CONTINUED (Not Restated)
YEARS ENDED 3/31 --------------------------------------------------------------- CLASS B 2006 2005 2004 2003 2002 Net asset value, beginning of period $10.70 $10.95 $10.89 $10.42 $10.57 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.38 $0.38 $0.38 $0.40 $0.42 Net realized and unrealized gain (loss) on investments (0.11) (0.18) 0.06 0.49 (0.14) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.27 $0.20 $0.44 $0.89 $0.28 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.37) $(0.37) $(0.38) $(0.42) $(0.43) From net realized gain on investments (0.04) (0.08) -- -- -- --------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.41) $(0.45) $(0.38) $(0.42) $(0.43) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.56 $10.70 $10.95 $10.89 $10.42 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 2.56 1.87 4.12 8.64 2.69 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.84 1.81 1.79 1.82 1.79 Expenses after expense reductions (f) 1.59 1.56 1.59 1.62 1.59 Net investment income 3.52 3.51 3.43 3.70 4.00 Portfolio turnover 5 11 19 16 12 Net assets at end of period (000 Omitted) $17,217 $20,689 $24,306 $27,546 $26,183 --------------------------------------------------------------------------------------------------------------------------------- (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------- CLASS A 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.52 $11.73 $11.61 $11.14 $11.36 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.51 $0.53 $0.53 $0.53 $0.54 Net realized and unrealized gain (loss) on investments (0.12) (0.21) 0.12 0.47 (0.22) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.39 $0.32 $0.65 $1.00 $0.32 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.50) $(0.53) $(0.53) $(0.53) $(0.54) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.41 $11.52 $11.73 $11.61 $11.14 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 3.45 2.83 5.70 9.10 2.87 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.30 1.10 1.13 1.13 1.12 Expenses after expense reductions (f) 1.05 0.85 0.93 0.93 0.92 Expenses after expense reductions and excluding interest and fees (f)(l) 0.90 0.85 0.93 0.93 0.92 Net investment income 4.38 4.63 4.53 4.62 4.77 Portfolio turnover 13 11 11 13 14 Net assets at end of period (000 Omitted) $277,633 $285,185 $301,218 $308,164 $299,088 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 --------------------------------------------------------------- CLASS B 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.51 $11.72 $11.60 $11.13 $11.35 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.43 $0.46 $0.45 $0.46 $0.47 Net realized and unrealized gain (loss) on investments (0.11) (0.21) 0.12 0.46 (0.22) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.32 $0.25 $0.57 $0.92 $0.25 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.43) $(0.46) $(0.45) $(0.45) $(0.47) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.40 $11.51 $11.72 $11.60 $11.13 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 2.78 2.16 5.02 8.40 2.20 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.95 1.75 1.77 1.78 1.78 Expenses after expense reductions (f) 1.70 1.50 1.57 1.58 1.58 Expenses after expense reductions and excluding interest and fees (f)(l) 1.55 1.50 1.57 1.58 1.58 Net investment income 3.73 3.98 3.88 3.97 4.12 Portfolio turnover 13 11 11 13 14 Net assets at end of period (000 Omitted) $16,885 $19,637 $23,564 $25,470 $26,970 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 ----------------------------------------------------------- CLASS C 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.52 $11.72 $11.61 $11.13 $11.36 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.43 $0.46 $0.45 $0.45 $0.47 Net realized and unrealized gain (loss) on investments (0.11) (0.20) 0.11 0.48 (0.23) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.32 $0.26 $0.56 $0.93 $0.24 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.43) $(0.46) $(0.45) $(0.45) $(0.47) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.41 $11.52 $11.72 $11.61 $11.13 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 2.78 2.25 4.93 8.49 2.10 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.95 1.75 1.77 1.78 1.77 Expenses after expense reductions (f) 1.70 1.50 1.57 1.58 1.57 Expenses after expense reductions and excluding interest and fees (f)(l) 1.55 1.50 1.57 1.58 1.57 Net investment income 3.72 3.98 3.88 3.97 4.10 Portfolio turnover 13 11 11 13 14 Net assets at end of period (000 Omitted) $12,995 $12,208 $13,338 $12,758 $10,619 --------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
YEARS ENDED 3/31 ---------------------------------------------------------------- CLASS A 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.58 $11.82 $11.77 $11.32 $11.45 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.48 $0.51 $0.51 $0.55 $0.57 Net realized and unrealized gain (loss) on investments (0.11) (0.25) 0.05 0.46 (0.14) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.37 $0.26 $0.56 $1.01 $0.43 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.48) $(0.50) $(0.51) $(0.56) $(0.56) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.47 $11.58 $11.82 $11.77 $11.32 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 3.21 2.28 4.84 9.04 3.79 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.34 1.25 1.21 1.26 1.30 Expenses after expense reductions (f) 1.09 1.00 1.01 1.06 1.10 Expenses after expense reductions and excluding interest and fees (f)(l) 0.92 0.89 0.93 0.96 0.93 Net investment income 4.16 4.35 4.33 4.71 4.97 Portfolio turnover 7 14 17 13 2 Net assets at end of period (000 Omitted) $134,416 $134,459 $140,599 $139,564 $121,860 --------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - CONTINUED (As Restated - See Note 8)
YEARS ENDED 3/31 --------------------------------------------------------------- CLASS B 2006 2005 2004 2003 2002 Net asset value, beginning of period $11.58 $11.82 $11.76 $11.31 $11.44 --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.41 $0.43 $0.43 $0.47 $0.50 Net realized and unrealized gain (loss) on investments (0.13) (0.24) 0.06 0.46 (0.15) --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $0.28 $0.19 $0.49 $0.93 $0.35 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.40) $(0.43) $(0.43) $(0.48) $(0.48) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.46 $11.58 $11.82 $11.76 $11.31 --------------------------------------------------------------------------------------------------------------------------------- Total return (%)(r)(s)(t) 2.45 1.62 4.25 8.34 3.12 --------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.99 1.90 1.86 1.91 1.96 Expenses after expense reductions (f) 1.74 1.65 1.66 1.71 1.76 Expenses after expense reductions and excluding interest and fees (f)(l) 1.57 1.54 1.58 1.61 1.59 Net investment income 3.51 3.71 3.68 4.06 4.31 Portfolio turnover 7 14 17 13 2 Net assets at end of period (000 Omitted) $12,388 $14,334 $17,744 $19,443 $16,248 --------------------------------------------------------------------------------------------------------------------------------- Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS (1) BUSINESS AND ORGANIZATION MFS Mississippi Municipal Bond Fund (Mississippi Fund), MFS New York Municipal Bond Fund (New York Fund), MFS North Carolina Municipal Bond Fund (North Carolina Fund), MFS Pennsylvania Municipal Bond Fund (Pennsylvania Fund), MFS South Carolina Municipal Bond Fund (South Carolina Fund), MFS Tennessee Municipal Bond Fund (Tennessee Fund), MFS Virginia Municipal Bond Fund (Virginia Fund), and MFS West Virginia Municipal Bond Fund (West Virginia Fund) are each a series of MFS Municipal Series Trust which is organized as a Massachusetts business Trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. (2) SIGNIFICANT ACCOUNTING POLICIES General - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Because each fund invests primarily in the securities of a single state and its political subdivisions, each fund is vulnerable to the effects of changes in the legal and economic environment of the particular state. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the projects or assets or the inability to collect revenues for the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, the security could decline in value, interest from the security could become taxable and the funds may be required to issue Forms 1099-DIV. Investment Valuations - Debt instruments (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated bid price as reported by an independent pricing service. Values of debt instruments obtained from pricing services can utilize both dealer-supplied valuations and electronic data processing techniques which take into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Short-term instruments with a maturity at issuance of 365 days or less are generally valued at amortized cost, which approximates market value. Swaps are generally valued on the basis of quotations from brokers and dealers. Securities and other assets generally valued on the basis of information from an independent pricing service may also be valued on the basis of information from brokers and dealers. 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. Derivative Risk - Each fund may invest in derivatives for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the funds use derivatives as an investment to gain market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative's original cost. Derivative instruments include swap agreements. Swap Agreements - Each fund may enter into swap agreements. A swap is an exchange of cash payments between the fund and another party. Net cash payments are exchanged at specified intervals and are recorded as a realized gain or loss in the Statement of Operations. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation in the Statement of Operations. 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. Interest Rate Swap Agreements - Interest rate swap agreements are agreements to exchange cash flows periodically based on a notional principal amount, such as 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 recorded as an unrealized gain or loss, and any payments received or made are recorded as realized gains or losses, in the Statement of Operations. The primary risk associated with interest rate swap agreements is that unfavorable changes in the fluctuation of interest rates could adversely impact the funds. 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 each 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 or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. Each fund may receive proceeds from litigation settlements 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. Interest Expense and Fees - Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets in connection with self-deposited inverse floater transactions. Interest expense and fees are recorded as incurred. Fees Paid Indirectly - Each fund's custody fee is reduced according to an arrangement that measures the value of cash deposited with the custodian by each fund. This amount, for the year ended March 31, 2006, is shown as a reduction of total expenses on the Statement of Operations. Tax Matters and Distributions - Each fund intends to continue to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable and tax-exempt income, including realized capital gains. Accordingly, no provision for federal income tax is required in the financial statements. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Book/tax differences primarily relate to amortization and accretion of debt securities, secured borrowings, wash sale loss deferrals, and treating a portion of the proceeds from redemptions as a distribution for tax purposes. The tax character of distributions declared to shareholders is as follows:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA YEAR ENDED MARCH 31, 2006 FUND FUND FUND FUND FUND FUND FUND FUND Ordinary income (including any short-term capital gains) $-- $-- $ 398,095 $-- $-- $ 178,774 $-- $-- Tax-exempt income 3,825,714 7,075,051 14,172,501 4,383,989 6,716,613 4,915,444 13,450,458 6,029,196 Long-term capital gain -- 800,147 930,835 -- -- 272,746 -- -- ----------------------------------------------------------------------------------------------------------------------------------- Total distributions $3,825,714 $7,875,198 $15,501,431 $4,383,989 $6,716,613 $5,366,964 $13,450,458 $6,029,196 YEAR ENDED MARCH 31, 2005 Ordinary income (including any short-term capital gains) $-- $-- $ 338,971 $-- $ 36,036 $ 194,393 $-- $ 35,541 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 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
The federal tax cost and the tax basis components of distributable earnings were as follows:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA AS OF MARCH 31, 2006 FUND FUND FUND FUND FUND FUND FUND FUND Cost of investments $81,370,159 $153,098,806 $310,081,560 $105,130,780 $147,510,016 $108,427,579 $290,015,566 $137,513,232 ----------------------------------------------------------------------------------------------------------------------------------- Gross appreciation $3,355,431 $9,986,521 $18,739,736 $4,083,736 $8,658,413 $5,835,077 $14,375,942 $7,069,833 Gross depreciation (116,477) (150,846) (210,640) (132,159) (121,926) (78,937) (391,833) (103,947) ----------------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) $3,238,954 $9,835,675 $18,529,096 $3,951,577 $8,536,487 $5,756,140 $13,984,109 $6,965,886 Undistributed ordinary income $-- $42,588 $-- $-- $-- $-- $-- $-- Undistributed tax- exempt income 198,486 76,149 586,480 162,694 445,131 154,994 276,734 228,967 Undistributed long-term capital gain -- 528,821 -- -- -- -- -- -- Capital loss carryforwards (317,125) -- -- (190,380) (615,121) -- -- (221,741) Post-October capital loss deferral (21,979) -- -- -- -- -- (69,610) -- Other temporary differences (283,657) (466,763) (964,966) (262,134) (390,175) (562,666) (1,116,101) (415,320)
As of March 31, 2006, certain funds had available capital loss carryforwards to offset future realized gains. Such losses expire as follows: MISSISSIPPI PENNSYLVANIA SOUTH CAROLINA WEST VIRGINIA EXPIRATION DATE FUND FUND FUND FUND March 31, 2009 $-- $-- $(615,121) $(75,960) March 31, 2010 -- -- -- (83,347) March 31, 2012 -- (190,380) -- -- March 31, 2013 (287,448) -- -- (62,434) March 31, 2014 (29,677) -- -- -- ------------------------------------------------------------------------------- Total $(317,125) $(190,380) $(615,121) $(221,741) 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 - Each fund has an investment advisory agreement with 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, MFS has agreed to reduce the management fee to 0.30% of each fund's average daily net assets for the period March 1, 2004 through February 28, 2009. For the year ended March 31, 2006, this waiver amounted to the following for each fund and is reflected as a reduction of total expenses in the Statement of Operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND $219,717 $434,859 $866,378 $278,607 $399,362 $305,648 $783,646 $371,168
The management fee incurred for the year ended March 31, 2006 was equivalent to an annual effective rate of 0.30% of each fund's average daily net assets. For the Pennsylvania Fund, the investment adviser has contractually agreed to pay a portion of the fund's operating expenses exclusive of management, distribution and service, and certain other fees and expenses, such that operating expenses do not exceed 0.20% annually of the fund's average daily net assets. This contractual fee arrangement will continue until August 1, 2006. For the year ended March 31, 2006 this reduction amounted to $120,502 and is reflected as a reduction of total expenses in the Statement of Operations. Distributor - MFS Fund Distributors, Inc. (MFD), a wholly owned subsidiary of MFS, as distributor, received the following amounts for the year ended March 31, 2006, as its portion of the initial sales charge on sales of Class A shares of the funds.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND $36,917 $32,543 $48,878 $54,052 $53,030 $15,995 $54,548 $59,371
The Board of Trustees has adopted a distribution plan for certain class shares pursuant to Rule 12b-1 of the Investment Company Act of 1940. Each fund's distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. Distribution Fee Plan Table:
CLASS A ----------------------------------------------------------------- TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE Mississippi Fund 0.10% 0.25% 0.35% -- $-- New York Fund 0.10% 0.25% 0.35% 0.25% 306,731 North Carolina Fund 0.10% 0.25% 0.35% 0.35% 969,752 Pennsylvania Fund 0.10% 0.25% 0.35% 0.10% 71,057 South Carolina Fund 0.10% 0.25% 0.35% 0.35% 458,345 Tennessee Fund 0.10% 0.25% 0.35% 0.35% 360,973 Virginia Fund 0.10% 0.25% 0.35% 0.35% 987,845 West Virginia Fund 0.10% 0.25% 0.35% 0.35% 472,504 CLASS B ----------------------------------------------------------------- TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE Mississippi Fund 0.75% 0.25% 1.00% 0.76% $84,973 New York Fund 0.75% 0.25% 1.00% 1.00% 330,385 North Carolina Fund 0.75% 0.25% 1.00% 1.00% 366,281 Pennsylvania Fund 0.75% 0.25% 1.00% 0.86% 347,368 South Carolina Fund 0.75% 0.25% 1.00% 1.00% 287,788 Tennessee Fund 0.75% 0.25% 1.00% 1.00% 190,984 Virginia Fund 0.75% 0.25% 1.00% 1.00% 185,897 West Virginia Fund 0.75% 0.25% 1.00% 1.00% 134,611 CLASS C ----------------------------------------------------------------- TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE New York Fund 0.75% 0.25% 1.00% 1.00% $181,680 North Carolina Fund 0.75% 0.25% 1.00% 1.00% 328,032 Virginia Fund 0.75% 0.25% 1.00% 1.00% 126,012
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND Total Distribution and Service Fees $84,973 $818,796 $1,664,065 $418,425 $746,133 $551,957 $1,299,754 $607,115
(1) In accordance with the distribution plan for certain classes, each fund pays distribution and/or service fees up to these annual percentage rates of each class' average daily net assets. (2) The annual effective rates represent actual fees incurred under the distribution plan for the year ended March 31, 2006 based on each class' average daily net assets. Payment of the Mississippi Fund's 0.25% annual Class A service fee and 0.10% annual Class A distribution fee are not yet implemented and will commence on such date as the Board of Trustees may determine. Except in the case of the 0.25% annual Class B service fee paid by the Mississippi Fund upon the sale of Class B shares in the first year, payment of the Class B service fee will not be implemented until such date as the Board of Trustees may determine. Payment of the New York Fund's 0.10% annual Class A distribution fee is not yet implemented and will commence on such date as the Board of Trustees may determine. Payment of the Pennsylvania Fund's 0.10% annual Class A distribution fee is not yet implemented and will commence on such date as the Board of Trustees may determine. 0.10% of the Class A service fee is currently being paid by the Pennsylvania Fund. Payment of the remaining 0.15% of the Pennsylvania Fund's Class A service fee is not yet implemented and will commence on such date as the Board of Trustees may determine. Except in the case of the 0.25% annual Class B service fee paid by the Pennsylvania Fund upon the sale of Class B shares in the first year, the Class B service fee has been set at 0.10% annually and may be increased to a maximum of 0.25% annually on such date as the Board of Trustees may determine. Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within 12 months of purchase. Class B shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the year ended March 31, 2006, 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 $-- $-- $-- $901 $137 $-- $3,586 $3,924 Class B 12,550 63,111 78,328 79,310 41,905 32,750 28,120 28,095 Class C N/A 1,491 3,994 N/A N/A N/A 1,619 N/A
Shareholder Servicing Agent - Each fund pays a portion of shareholder servicing costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS. MFSC receives a fee from the funds', for its services as shareholder servicing agent, set periodically under the supervision of the funds' Board of Trustees. For the year ended March 31, 2006, each fund paid MFSC the following fee, which equated to the following annual percentage of each fund's average daily net assets for shareholder services.
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND Expenses paid $92,562 $183,682 $365,689 $117,352 $168,397 $128,989 $330,601 $156,514 Percentage of average daily net assets 0.1056% 0.1056% 0.1055% 0.1053% 0.1054% 0.1055% 0.1055% 0.1054%
MFSC also receives payment from each fund for out-of-pocket and sub-accounting expenses paid by MFSC on behalf of the funds. For the year ended March 31, 2006, these costs amounted to the following:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND $31,625 $51,023 $111,575 $27,359 $40,228 $28,805 $72,709 $31,652
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, the funds may partially reimburse MFS the costs incurred to provide these services, subject to review and approval by the Board of Trustees. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. Effective July 1, 2005, each fund's annual fixed amount is $10,000. The administrative services fee incurred for the year ended March 31, 2006 was equivalent to the following annual effective rates of each fund's average daily net assets:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND Percentage of average daily net assets 0.0199% 0.0157 % 0.0135% 0.0180% 0.0160% 0.0175% 0.0137% 0.0163%
Trustees' and Officers' Compensation - Each fund pays compensation to Independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The funds do not pay compensation directly to Trustees who are officers of the investment adviser, or to officers of each fund, all of whom receive remuneration for their services to the funds from MFS. Certain officers and Trustees of the funds are officers or directors of MFS, MFD, and MFSC. Each fund has an unfunded, defined benefit plan for retired Independent Trustees which resulted in the following pension expense for the funds. These amounts are included in Independent trustees' compensation for the year ended March 31, 2006.
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND $1,161 $1,612 $3,141 $1,197 $3,096 $1,425 $3,127 $3,091
The deferred liability for retirement benefits payable to retired Trustees amounted to the following for each fund at March 31, 2006, and is included in payable for independent trustees' compensation.
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND $9,834 $12,845 $15,474 $9,716 $15,432 $12,801 $15,500 $15,429
Other - These funds and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the year ended March 31, 2006, the fees paid to Tarantino LLC amounted to the following:
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND $587 $1,172 $2,319 $747 $1,071 $820 $3,027 $995
MFS has agreed to reimburse the funds for a portion of the payments made by each fund to Tarantino LLC in the following amounts, which are shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO.
NORTH SOUTH WEST MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA FUND FUND FUND FUND FUND FUND FUND FUND $584 $1,040 $1,889 $653 $972 $723 $1,860 $906
(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 $7,370,638 $20,298,941 $27,904,787 $12,854,080 $20,123,471 $5,427,424 $40,721,663 $12,124,714 ----------------------------------------------------------------------------------------------------------------------------------- Sales $9,479,866 $31,159,252 $37,060,077 $9,900,191 $22,517,387 $13,377,719 $48,080,889 $10,290,796 -----------------------------------------------------------------------------------------------------------------------------------
(5) SHARES OF BENEFICIAL INTEREST Each fund's Declaration permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in each funds' shares were as follows:
MISSISSIPPI FUND NEW YORK FUND --------------------------------------------------------- --------------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2006 MARCH 31, 2005 MARCH 31, 2006 MARCH 31, 2005 --------------------------- --------------------------- --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold Class A 866,381 $8,546,452 848,592 $8,374,011 653,127 $7,390,698 815,176 $9,246,436 Class B 24,252 239,436 67,946 671,256 138,910 1,569,384 189,036 2,134,993 Class C -- -- -- -- 134,687 1,526,215 254,356 2,882,371 ----------------------------------------------------------------------------------------------------------------------------------- 890,633 $8,785,888 916,538 $9,045,267 926,724 $10,486,297 1,258,568 $14,263,800 Shares issued to shareholders in reinvestment of distributions Class A 185,126 $1,824,861 202,129 $1,995,326 324,484 $3,670,111 341,492 $3,876,961 Class B 21,153 208,716 26,931 266,210 74,060 834,700 82,381 932,304 Class C -- -- -- -- 39,815 449,550 40,923 464,049 ----------------------------------------------------------------------------------------------------------------------------------- 206,279 $2,033,577 229,060 $2,261,536 438,359 $4,954,361 464,796 $5,273,314 Shares reacquired Class A (1,380,138) $(13,645,231) (1,181,606) $(11,628,233) (1,469,796) $(16,663,402) (1,439,174) $(16,299,898) Class B (144,591) (1,426,794) (234,324) (2,311,215) (640,793) (7,238,245) (746,624) (8,419,453) Class C -- -- -- -- (387,465) (4,383,903) (450,082) (5,098,504) ----------------------------------------------------------------------------------------------------------------------------------- (1,524,729) $(15,072,025) (1,415,930) $(13,939,448) (2,498,054) $(28,285,550) (2,635,880) $(29,817,855) Net change Class A (328,631) $(3,273,918) (130,885) $(1,258,896) (492,185) $(5,602,593) (282,506) $(3,176,501) Class B (99,186) (978,642) (139,447) (1,373,749) (427,823) (4,834,161) (475,207) (5,352,156) Class C -- -- -- -- (212,963) (2,408,138) (154,803) (1,752,084) ----------------------------------------------------------------------------------------------------------------------------------- (427,817) $(4,252,560) (270,332) $(2,632,645) (1,132,971) $(12,844,892) (912,516) $(10,280,741) NORTH CAROLINA FUND PENNSYLVANIA FUND --------------------------------------------------------- --------------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2006 MARCH 31, 2005 MARCH 31, 2006 MARCH 31, 2005 --------------------------- --------------------------- --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold Class A 1,314,537 $15,818,825 1,143,651 $13,851,656 1,258,762 $12,897,989 939,866 $9,572,613 Class B 132,671 1,590,635 226,499 2,727,665 275,025 2,820,655 219,277 2,233,233 Class C 271,600 3,270,481 350,544 4,238,404 -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- 1,718,808 $20,679,941 1,720,694 $20,817,725 1,533,787 $15,718,644 1,159,143 $11,805,846 Shares issued to shareholders in reinvestment of distributions Class A 698,501 $8,393,304 801,691 $9,697,346 185,707 $1,901,237 199,352 $2,028,705 Class B 69,832 838,029 89,784 1,084,499 87,173 894,888 103,442 1,054,750 Class C 79,561 954,980 86,256 1,042,409 -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- 847,894 $10,186,313 977,731 $11,824,254 272,880 $2,796,125 302,794 $3,083,455 Shares reacquired Class A (2,554,557) $(30,727,514) (3,418,210) $(41,256,336) (990,703) $(10,143,698) (1,740,181) $(17,572,031) Class B (807,609) (9,719,958) (1,054,515) (12,698,157) (631,297) (6,480,350) (946,568) (9,606,585) Class C (375,266) (4,513,810) (560,837) (6,768,295) -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- (3,737,432) $(44,961,282) (5,033,562) $(60,722,788) (1,622,000) $(16,624,048) (2,686,749) $(27,178,616) Net change Class A (541,519) $(6,515,385) (1,472,868) $(17,707,334) 453,766 $4,655,528 (600,963) $(5,970,713) Class B (605,106) (7,291,294) (738,232) (8,885,993) (269,099) (2,764,807) (623,849) (6,318,602) Class C (24,105) (288,349) (124,037) (1,487,482) -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- (1,170,730) $(14,095,028) (2,335,137) $(28,080,809) 184,667 $1,890,721 (1,224,812) $(12,289,315) SOUTH CAROLINA FUND TENNESSEE FUND --------------------------------------------------------- --------------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2006 MARCH 31, 2005 MARCH 31, 2006 MARCH 31, 2005 --------------------------- --------------------------- --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold Class A 1,132,204 $14,046,582 950,794 $11,757,607 493,536 $5,305,262 807,064 $8,690,294 Class B 85,307 1,056,145 141,911 1,753,969 79,543 857,100 100,093 1,078,899 ----------------------------------------------------------------------------------------------------------------------------------- 1,217,511 $15,102,727 1,092,705 $13,511,576 573,079 $6,162,362 907,157 $9,769,193 Shares issued to shareholders in reinvestment of distributions Class A 307,593 $3,815,307 331,066 $4,103,455 210,399 $2,255,583 305,347 $3,294,671 Class B 54,579 676,705 71,169 881,385 40,963 439,012 55,569 599,037 ----------------------------------------------------------------------------------------------------------------------------------- 362,172 $4,492,012 402,235 $4,984,840 251,362 $2,694,595 360,916 $3,893,708 Shares reacquired Class A (1,274,850) $(15,823,297) (1,676,720) $(20,679,951) (1,135,271) $(12,170,537) (2,185,685) $(23,511,524) Class B (510,226) (6,331,745) (623,153) (7,698,788) (422,094) (4,536,883) (442,829) (4,764,261) ----------------------------------------------------------------------------------------------------------------------------------- (1,785,076) $(22,155,042) (2,299,873) $(28,378,739) (1,557,365) $(16,707,420) (2,628,514) $(28,275,785) Net change Class A 164,947 $2,038,592 (394,860) $(4,818,889) (431,336) $(4,609,692) (1,073,274) $(11,526,559) Class B (370,340) (4,598,895) (410,073) (5,063,434) (301,588) (3,240,771) (287,167) (3,086,325) ----------------------------------------------------------------------------------------------------------------------------------- (205,393) $(2,560,303) (804,933) $(9,882,323) (732,924) $(7,850,463) (1,360,441) $(14,612,884) VIRGINIA FUND WEST VIRGINIA FUND --------------------------------------------------------- --------------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2006 MARCH 31, 2005 MARCH 31, 2006 MARCH 31, 2005 --------------------------- --------------------------- --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT Shares sold Class A 1,481,053 $17,100,137 1,462,579 $16,951,475 767,854 $8,913,846 649,571 $7,566,744 Class B 138,191 1,599,934 170,166 1,965,225 78,236 910,206 79,286 924,193 Class C 152,773 1,767,443 153,081 1,777,770 -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- 1,772,017 $20,467,514 1,785,826 $20,694,470 846,090 $9,824,052 728,857 $8,490,937 Shares issued to shareholders in reinvestment of distributions Class A 610,984 $7,063,585 708,987 $8,198,785 325,732 $3,779,345 363,462 $4,229,391 Class B 33,680 389,119 43,470 502,212 23,338 270,745 32,505 377,803 Class C 26,043 300,916 29,691 343,223 -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- 670,707 $7,753,620 782,148 $9,044,220 349,070 $4,050,090 395,967 $4,607,194 Shares reacquired Class A (2,517,056) $(29,092,777) (3,103,223) $(35,811,466) (981,278) $(11,390,785) (1,296,913) $(15,044,930) Class B (396,940) (4,587,647) (518,696) (5,990,259) (258,946) (3,004,395) (375,140) (4,362,666) Class C (99,697) (1,152,730) (260,460) (2,995,655) -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- (3,013,693) $(34,833,154) (3,882,379) $(44,797,380) (1,240,224) $(14,395,180) (1,672,053) $(19,407,596) Net change Class A (425,019) $(4,929,055) (931,657) $(10,661,206) 112,308 $1,302,406 (283,880) $(3,248,795) Class B (225,069) (2,598,594) (305,060) (3,522,822) (157,372) (1,823,444) (263,349) (3,060,670) Class C 79,119 915,629 (77,688) (874,662) -- -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- (570,969) $(6,612,020) (1,314,405) $(15,058,690) (45,064) $(521,038) (547,229) $(6,309,465)
(6) LINE OF CREDIT Each fund and other affiliated funds participate in a $1 billion unsecured line of credit provided by a syndication of banks under a 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 0.35%. 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, 2006 ranged from $563 to $2,216, and is included in miscellaneous expense on the Statement of Operations. None of the funds had significant borrowings on the line of credit during the year ended March 31, 2006. (7) INVERSE FLOATERS The funds invest in municipal inverse floating rate securities which are structured by the issuer (known as primary market inverse floating rate securities) or by an investment banker utilizing municipal bonds which have already been issued (known as secondary market inverse floating rate securities) to have variable rates of interest which typically move in the opposite direction of short term interest rates. A secondary market inverse floating rate security is created when an investment banker transfers a fixed rate municipal bond to a special purpose trust, and causes the trust to (a) issue floating rate certificates to third parties, in an amount equal to a fraction of the par amount of the deposited bonds (these certificates usually pay tax-exempt interest at short-term interest rates that typically reset weekly; and the certificate holders typically, on seven days notice, have the option to tender their certificates to the investment banker or another party for redemption at par plus accrued interest), and (b) issue inverse floating rate certificates (sometimes referred to as "inverse floaters"). If the holder of the inverse floater transfers the municipal bonds to an investment banker for the purpose of depositing the municipal bonds into the special purpose trust, the inverse floating rate certificates that are issued by the trust are referred to as "self-deposited inverse floaters." If the bonds held by the trust are purchased by the investment banker for deposit into the trust from someone other than the purchasers of the inverse floaters, the inverse floating rate certificates that are issued by the trust are referred to as "externally deposited inverse floaters." Such self-deposited inverse floaters held by the funds are accounted for as secured borrowings, with the municipal bonds reflected in the investments of the funds and amounts owed to the holder of the floating rate certificate under the provisions of the trust, which amounts are paid solely from the assets of the trust, reflected as liabilities of the funds in the Statements of Assets and Liabilities under the caption, "Payable to the holder of the floating rate certificate from trust assets". At March 31, 2006, the funds' Statements of Assets and Liabilities impacts were as follows:
PAYABLE TO THE HOLDER WEIGHTED AVERAGE OF THE FLOATING RATE INTEREST RATE ON VALUE OF BONDS CERTIFICATE FROM FLOATING RATE CERTIFICATES TRANSFERRED TO FUND TRUST ASSETS ISSUED BY THE TRUST THE TRUST Mississippi Fund $5,360,000 3.29% $11,763,958 New York Fund $10,350,000 3.30% $22,662,735 North Carolina Fund $21,425,000 3.41% $48,240,831 Pennsylvania Fund $6,170,000 3.32% $13,543,429 South Carolina Fund $9,275,000 3.67% $20,142,439 Tennessee Fund $0 -- $0 Virginia Fund $15,670,000 3.45% $33,502,505 West Virginia Fund $9,670,000 3.28% $21,130,407
Primary and externally deposited inverse floaters held by the funds are not accounted for as secured borrowings. (8) RESTATEMENT INFORMATION After the funds issued their March 31, 2006 financial statements, certain of the funds determined that the criteria for sale accounting in FASB Statement No. 140 had not been met for certain transfers of municipal bonds during the fiscal year ended March 31, 2006 and that its transfers of municipal bonds in connection with self-deposited inverse floaters should have been accounted for as secured borrowings rather than as sales. Accordingly, certain of the funds have restated the Statements of Assets and Liabilities, including the Portfolios of Investments, as of March 31, 2006, the related Statements of Operations for the year then ended, and certain Financial Highlights for each of the applicable periods in the five years then ended, to give effect to this change, including recording interest on the bonds as interest income and interest paid to the holder of the floating rate certificate from trust assets as interest expense in the Statements of Operations. The Statements of Changes in Net Assets were not restated. The Tennessee Fund did not invest in self-deposited inverse floaters and therefore no financial statement restatement is required. The restatement did not affect the funds' reported net investment income, annual total return or net asset value.
MISSISSIPPI FUND NEW YORK FUND --------------------------- --------------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2006 Investments, identified cost $81,380,738 $86,709,966 $153,219,624 $163,106,114 Unrealized appreciation 3,228,375 3,259,147 9,714,857 10,178,367 Investments, at value $84,609,113 $89,969,113 $162,934,481 $173,284,481 Interest receivable 1,247,192 1,297,576 2,520,587 2,637,392 Total assets $86,500,774 $91,911,158 $166,091,354 $176,558,159 Payable to the holder of the floating rate certificate from trust assets -- 5,360,000 -- 10,350,000 Payable for interest expense and fees -- 50,384 -- 116,805 Total liabilities $439,254 $5,849,638 $506,063 $10,972,868 Unrealized appreciation (depreciation) on investments 3,266,344 3,297,116 9,831,542 10,295,052 Accumulated net realized gain (loss) on investments (329,133) (359,905) 691,315 227,805 STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2006 Interest income $4,474,833 $4,635,223 $9,047,182 $9,360,784 Interest expense and fees $-- $160,390 $-- $313,602 Total expenses $867,396 $1,027,786 $2,297,644 $2,611,246 Net expenses $636,304 $796,694 $1,849,154 $2,162,756 NORTH CAROLINA FUND PENNSYLVANIA FUND --------------------------- --------------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2006 Investments, identified cost $310,188,695 $331,733,980 $105,146,535 $111,273,968 Unrealized appreciation 18,421,961 18,301,676 3,935,822 3,978,389 Investments, at value $328,610,656 $350,035,656 $109,082,357 $115,252,357 Interest receivable 5,344,196 5,522,129 1,671,290 1,739,598 Total assets $336,005,576 $357,608,509 $111,549,171 $117,787,479 Payable to the holder of the floating rate certificate from trust assets -- 21,425,000 -- 6,170,000 Payable for interest expense and fees -- 177,933 -- 68,308 Total liabilities $1,048,877 $22,651,810 $477,619 $6,715,927 Unrealized appreciation (depreciation) on investments 18,630,965 18,510,680 4,047,379 4,089,946 Accumulated net realized gain (loss) on investments 105,034 225,319 (175,233) (217,800) STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2006 Interest income $17,763,345 $18,408,111 $5,387,602 $5,573,167 Interest expense and fees $-- $644,766 $-- $185,565 Total expenses $4,402,749 $5,047,515 $1,372,512 $1,558,077 Net expenses $3,504,346 $4,149,112 $964,584 $1,150,149 SOUTH CAROLINA FUND VIRGINIA FUND WEST VIRGINIA FUND --------------------------- --------------------------- --------------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2006 Investments, identified cost $147,711,815 $157,026,336 $290,165,692 $305,943,200 $137,566,802 $147,360,711 Unrealized appreciation 8,334,688 8,295,167 13,833,983 13,726,475 6,912,316 6,788,407 Investments, at value $156,046,503 $165,321,503 $303,999,675 $319,669,675 $144,479,118 $154,149,118 Interest receivable 2,444,173 2,553,774 4,747,094 4,913,054 2,417,707 2,495,078 Total assets $158,851,009 $168,235,610 $312,243,307 $328,079,267 $147,180,402 $156,927,773 Payable to the holder of the floating rate certificate from trust assets -- 9,275,000 -- 15,670,000 -- 9,670,000 Payable for interest expense and fees -- 109,601 -- 165,960 -- 77,371 Total Liabilities $1,469,673 $10,854,274 $4,730,587 $20,566,547 $376,641 $10,124,012 Unrealized appreciation (depreciation) on investments 8,483,747 8,444,226 13,821,012 13,713,504 7,010,883 6,886,974 Accumulated net realized gain (loss) on investments (414,234) (374,713) 78,692 186,200 (169,083) (45,174) STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2006 Interest income $8,393,277 $8,669,839 $16,499,907 $16,969,114 $7,522,980 $7,779,193 Interest expense and fees $-- $276,562 $-- $469,207 $-- $256,213 Total expenses $2,046,597 $2,323,159 $3,795,903 $4,265,110 $1,819,430 $2,075,643 Net expenses $1,634,402 $1,910,964 $2,984,185 $3,453,392 $1,434,889 $1,691,102
FINANCIAL HIGHLIGHTS
YEARS ENDED 3/31 -------------------------------------------- MISSISSIPPI FUND 2006 2005 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.89 1.07 0.83 0.93 Expenses after expense reductions 0.64 0.82 0.58 0.68 CLASS B Expenses before expense reductions 1.65 1.83 1.60 1.70 Expenses after expense reductions 1.40 1.58 1.35 1.45 YEARS ENDED 3/31 -------------------------------------------------------------------- NEW YORK FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.10 1.28 1.04 1.14 1.06 1.13 Expenses after expense reductions 0.85 1.03 0.79 0.89 0.86 0.93 CLASS B Expenses before expense reductions 1.85 2.03 1.79 1.89 1.80 1.87 Expenses after expense reductions 1.60 1.78 1.54 1.64 1.60 1.67 CLASS C Expenses before expense reductions 1.85 2.03 1.79 1.89 1.80 1.87 Expenses after expense reductions 1.60 1.78 1.54 1.64 1.60 1.67 YEARS ENDED 3/31 -------------------------------------------- NEW YORK FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.07 1.17 1.08 1.21 Expenses after expense reductions 0.87 0.97 0.88 1.01 CLASS B Expenses before expense reductions 1.82 1.92 1.83 1.96 Expenses after expense reductions 1.62 1.72 1.63 1.76 CLASS C Expenses before expense reductions 1.82 1.92 1.83 1.96 Expenses after expense reductions 1.62 1.72 1.63 1.76 YEAR ENDED 3/31 -------------------- NORTH CAROLINA FUND 2006 -------------------- PREVIOUSLY REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.14 1.33 Expenses after expense reductions 0.89 1.08 CLASS B Expenses before expense reductions 1.79 1.98 Expenses after expense reductions 1.54 1.73 CLASS C Expenses before expense reductions 1.79 1.98 Expenses after expense reductions 1.54 1.73 YEARS ENDED 3/31 -------------------------------------------------------------------- PENNSYLVANIA FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.96 1.13 0.94 1.03 0.94 1.05 Expenses after expense reductions 0.60 0.77 0.60 0.69 0.64 0.75 CLASS B Expenses before expense reductions 1.72 1.89 1.71 1.80 1.74 1.85 Expenses after expense reductions 1.36 1.53 1.37 1.46 1.44 1.55 YEARS ENDED 3/31 -------------------------------------------- PENNSYLVANIA FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 0.96 1.03 0.89 0.99 Expenses after expense reductions 0.48 0.55 0.36 0.46 CLASS B Expenses before expense reductions 1.78 1.85 1.73 1.83 Expenses after expense reductions 1.30 1.37 1.20 1.30 YEARS ENDED 3/31 -------------------------------------------------------------------- SOUTH CAROLINA FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.17 1.34 1.14 1.23 1.14 1.21 Expenses after expense reductions 0.92 1.09 0.89 0.98 0.94 1.01 CLASS B Expenses before expense reductions 1.82 1.99 1.79 1.88 1.79 1.86 Expenses after expense reductions 1.57 1.74 1.54 1.63 1.59 1.66 YEARS ENDED 3/31 -------------------------------------------- SOUTH CAROLINA FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.15 1.23 1.14 1.27 Expenses after expense reductions 0.95 1.03 0.94 1.07 CLASS B Expenses before expense reductions 1.80 1.88 1.79 1.92 Expenses after expense reductions 1.60 1.68 1.59 1.72 YEAR ENDED 3/31 -------------------- VIRGINIA FUND 2006 -------------------- PREVIOUSLY REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.15 1.30 Expenses after expense reductions 0.90 1.05 CLASS B Expenses before expense reductions 1.80 1.95 Expenses after expense reductions 1.55 1.70 CLASS C Expenses before expense reductions 1.80 1.95 Expenses after expense reductions 1.55 1.70 YEARS ENDED 3/31 -------------------------------------------------------------------- WEST VIRGINIA FUND 2006 2005 2004 -------------------- -------------------- -------------------- PREVIOUSLY PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.17 1.34 1.14 1.25 1.13 1.21 Expenses after expense reductions 0.92 1.09 0.89 1.00 0.93 1.01 CLASS B Expenses before expense reductions 1.82 1.99 1.79 1.90 1.78 1.86 Expenses after expense reductions 1.57 1.74 1.54 1.65 1.58 1.66 YEARS ENDED 3/31 -------------------------------------------- WEST VIRGINIA FUND 2003 2002 -------------------- -------------------- PREVIOUSLY PREVIOUSLY REPORTED RESTATED REPORTED RESTATED RATIOS (%) TO AVERAGE NET ASSETS: CLASS A Expenses before expense reductions 1.16 1.26 1.13 1.30 Expenses after expense reductions 0.96 1.06 0.93 1.10 CLASS B Expenses before expense reductions 1.81 1.91 1.79 1.96 Expenses after expense reductions 1.61 1.71 1.59 1.76
While the "Statements of Assets and Liabilities" as of March 31, 2005, 2004, 2003 and 2002 (not presented herein) have not been reissued to give effect to the restatement, the principal effects of the restatement would be to increase investments and payable to the holder of the floating rate certificate from trust assets by corresponding amounts each year end, with no effect on previously reported net assets. The "Statements of Operations" for the years ended March 31, 2005, 2004, 2003 and 2002 (not presented herein) have not been reissued to give effect to the restatement, but the principal effects of the restatement would be to increase interest income and interest expense and fees by corresponding amounts each year, with no effect on previously reported net investment income. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNT FIRM To the Trustees and Shareholders of MFS Municipal Series Trust: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of MFS Mississippi Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS Tennessee Municipal Bond Fund, MFS Virginia Municipal Bond Fund and MFS West Virginia Municipal Bond Fund, certain of the portfolios of MFS Municipal Series Trust (the "Trust"), as of March 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2006, 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, such financial statements and financial highlights present fairly, in all material respects, the financial positions of MFS Mississippi Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS Tennessee Municipal Bond Fund, MFS Virginia Municipal Bond Fund and MFS West Virginia Municipal Bond Fund as of March 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 8, for each of the funds except the MFS Tennessee Municipal Bond Fund, the statements of assets and liabilities, including the portfolios of investments, as of March 31, 2006, and the related statements of operations for the year then ended have been restated; additionally, certain financial highlights for these funds for certain of the years in the five year period ended March 31, 2006 have also been restated. DELOITTE & TOUCHE LLP Boston, Massachusetts May 23, 2006 (February 2, 2007 as to the effects of the restatement discussed in Note 8) TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND (Not Restated) The Trustees and officers of the Trust, as of May 1, 2006, 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 YEARS & NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j) --------------------- -------------------- --------------- ---------------------------------------------------------- INTERESTED TRUSTEES Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services Company, Chief Executive (born 10/20/63) Officer, President, Chief Investment Officer and Director Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services Company, Chairman (since (born 08/08/46) February 2004); Secretary of Economic Affairs, The Commonwealth of Massachusetts (January 2002 to December 2002); Fidelity Investments, Vice Chairman (June 2000 to December 2001); Fidelity Management & Research Company (investment adviser), President (March 1997 to July 2001); Bell Canada Enterprises (telecommunications), Director; Medtronic, Inc. (medical technology), Director; Telesat (satellite communications), Director INDEPENDENT TRUSTEES J. Atwood Ives Trustee and Chair of February 1992 Private investor; Eastern Enterprises (diversified (born 05/01/36) Trustees services company), Chairman, Trustee and Chief Executive Officer (until November 2000) Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and compliance matters (since (born 11/29/41) July 2002); PricewaterhouseCoopers LLP (professional services firm), Partner (November 2000 until June 2002) Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Senior Cardiac Surgeon, (born 03/11/37) Chief of Cardiac Surgery (until 2005); Harvard Medical School, Professor of Surgery; Brigham and Women's Hospital Physicians' Organization, Chair (2000 to 2004) 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 William R. Gutow Trustee December 1993 Private investor and real estate consultant; Capitol (born 09/27/41) 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) 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 Robert W. Uek Trustee January 2006 Retired (since 1999); PricewaterhouseCoopers LLP (born 05/18/41) (professional services firm), Partner (until 1999); Consultant to investment company industry (since 2000); TT International Funds (mutual fund complex), Trustee (2000 until 2005); Hillview Investment Trust II Funds (mutual fund complex), Trustee (2000 until 2005) OFFICERS Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services Company, Executive Vice (born 12/01/58) President and Chief Regulatory Officer (since March 2004); Fidelity Management & Research Company, Vice President (prior to March 2004); Fidelity Group of Funds, President and Treasurer (prior to March 2004) Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services Company, Senior Vice (born 12/30/64) President (since September 2004); PricewaterhouseCoopers LLP, Partner (prior to September 2004) Christopher R. Bohane(k) Assistant Secretary July 2005 Massachusetts Financial Services Company, Vice President (born 1/18/74) and Assistant Clerk and Senior Counsel (since April 2003); Kirkpatrick & Lockhart LLP (law firm), Associate (prior to April 2003); Nvest Services Company, Assistant Vice President and Associate Counsel (prior to January 2001) Ethan D. Corey(k) Assistant Secretary July 2005 Massachusetts Financial Services Company, Special Counsel (born 11/21/63) and Assistant Clerk (since December 2004); Dechert LLP (law firm), Counsel (prior to December 2004) David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services Company, Vice President (born 8/10/68) (since June 2005); JP Morgan Investor Services, Vice President (January 2001 to June 2005); State Street Bank, Vice President and Corporate Audit Manager (prior to January 2001) Timothy M. Fagan(k) Assistant Secretary September 2005 Massachusetts Financial Services Company, Vice President (born 7/10/68) and Assistant Clerk and Senior Counsel (since September 2005); John Hancock Advisers, LLC, Vice President and Chief Compliance Officer (September 2004 to August 2005), Senior Attorney (prior to September 2004); John Hancock Group of Funds, Vice President and Chief Compliance Officer (September 2004 to December 2004) Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services Company, Vice President (born 10/27/70) (since May 2005); JP Morgan Investment Management Company, Vice President (prior to May 2005) Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services Company, Senior Vice (born 11/13/57) President Susan S. Newton(k) Assistant Secretary May 2005 Massachusetts Financial Services Company, Senior Vice (born 03/07/50) and Assistant Clerk President and Associate General Counsel (since April 2005); John Hancock Advisers, LLC, Senior Vice President, Secretary and Chief Legal Officer (prior to April 2005); John Hancock Group of Funds, Senior Vice President, Secretary and Chief Legal Officer (prior to April 2005) Susan A. Pereira(k) Assistant Secretary July 2005 Massachusetts Financial Services Company, Vice President (born 11/05/70) and Assistant Clerk and Senior Counsel (since June 2004); Bingham McCutchen LLP (law firm), Associate (January 2001 to June 2004); Preti, Flaherty, Beliveau, Pachios & Haley, LLC, Associate (prior to January 2001) Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services Company, Executive Vice (born 05/01/52) President, General Counsel and Secretary (since January 2006); Wilmer Cutler Pickering Hale and Dorr LLP (law firm), Partner (prior to January 2006) Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance services), (born 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(k) Assistant Treasurer September 1990 Massachusetts Financial Services Company, Senior Vice (born 06/12/60) President
---------- (h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously since appointment unless indicated otherwise. (j) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public companies"). (k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. (n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant retained by MFS pursuant to its settlement with the SEC concerning market timing and related matters. The terms of that settlement required that compensation and expenses related to the independent compliance consultant be borne exclusively by MFS and, therefore, MFS paid Mr. Butler for the services he rendered to the independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total of $351,119.29. Each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Messrs. Butler, Sherratt and Uek and Ms. Thomsen are members of the Trust's Audit Committee. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. As of December 31, 2005, each Trustee served as a board member of 98 funds within the MFS Family of Funds. The Trust held a shareholders' meeting in 2005, and will hold a shareholders' 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 Massachusetts Financial Services Company 500 Boylston Street, Boston, MA 02116-3741 DISTRIBUTOR MFS Fund Distributors, Inc. 500 Boylston Street, Boston, MA 02116-3741 PORTFOLIO MANAGER Michael Dawson CUSTODIAN State Street Bank and Trust Company 225 Franklin Street, Boston, MA 02110 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP 200 Berkeley Street, Boston, MA 02116 BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT A discussion regarding the Board's most recent review and renewal of the Fund's investment advisory agreement is available by clicking on the fund's name under "Select a fund" on the MFS Web site (mfs.com). PROXY VOTING POLICIES AND INFORMATION A general description of the MFS funds' proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission 100 F Street, NE, Room 1580 Washington, D.C. 20549 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-551-5850. The fund's Form N-Q is available on the EDGAR database on the Commission's Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. FEDERAL TAX INFORMATION (unaudited) (Not Restated) The funds will notify shareholders of amounts for use in preparing 2006 income tax forms in January 2007. The following information is provided pursuant to provisions of the Internal Revenue Code. The funds below designated the following amounts as capital gain dividends paid during the fiscal year. CAPITAL GAINS New York Fund 882,849 North Carolina Fund 930,835 Tennessee Fund 315,108 Virginia Fund 56,016 Of the dividends paid from net investment income during the fiscal year, the following percentages were designated as exempt interest dividends for federal income tax purposes. If each fund had earned income on private activity bonds, a portion of the dividends paid may be considered a tax preference item for purposes of computing a shareholder's alternative minimum tax. DIVIDENDS Mississippi Fund 100.00% New York Fund 100.00% North Carolina Fund 100.00% Pennsylvania Fund 100.00% South Carolina Fund 100.00% Tennessee Fund 99.78% Virginia Fund 100.00% West Virginia Fund 100.00% 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 -------------------------------------------------------------------------------------------------------------------- Share prices, account balances, exchanges 1-800-MFS-TALK (1-800-637-8255) or stock and bond outlooks touch-tone required 24 hours a day, 365 days a year --------------------------------------------------------------------------------------------------------------------
M F S(SM) INVESTMENT MANAGEMENT(R) MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. MST-B-ANN-05/06 30M MFS(R) MUNICIPAL INCOME FUND 3/31/06 ANNUAL REPORT (AS RESTATED) -------------------------------------------------------------------------------- LETTER FROM THE CEO 1 ------------------------------------------ PORTFOLIO COMPOSITION 2 ------------------------------------------ MANAGEMENT REVIEW 3 ------------------------------------------ PERFORMANCE SUMMARY 4 ------------------------------------------ EXPENSE TABLE 6 ------------------------------------------ PORTFOLIO OF INVESTMENTS 8 ------------------------------------------ FINANCIAL STATEMENTS 27 ------------------------------------------ NOTES TO FINANCIAL STATEMENTS 34 ------------------------------------------ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 43 ------------------------------------------ TRUSTEES AND OFFICERS 44 ------------------------------------------ BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 49 ------------------------------------------ PROXY VOTING POLICIES AND INFORMATION 49 ------------------------------------------ QUARTERLY PORTFOLIO DISCLOSURE 49 ------------------------------------------ FEDERAL TAX INFORMATION 49 ------------------------------------------ CONTACT INFORMATION BACK COVER ------------------------------------------ THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. M F S(SM) INVESTMENT MANAGEMENT(R) LETTER FROM THE CEO (Not Restated) [Photo of Robert J. Manning] Dear Shareholders, It has been said that change is the only constant in life. As investors have seen, that theme is still accurate today as we recently have experienced shifting economic cycles because of natural disasters and political instability around the globe. Markets worldwide have fluctuated in the past year as devastating hurricanes had a dramatic effect on the international economy, particularly on oil prices. We witnessed political unrest in the Middle East, highlighted by instability in Iraq, and in Africa, the usually stable Nigeria also experienced violence. As a result, energy prices have bounced up and down, with crude oil prices at one point topping a record $70 per barrel. Such cycles are not uncommon and in fact have almost become the norm in our everyday lives. What does all of this mean to you as an investor? In times like these, it helps to know that you're working with a seasoned investment professional who has experience to guide you through difficult times. At MFS(R), we believe our investment management team has the knowledge and confidence to navigate through difficult cycles and at the same time see through adversity to find investment opportunities for our clients and shareholders. Our investment management process, honed over 80 years, combines a unique concept of teamwork with our unwavering focus on the long term. We firmly believe that the best way to realize long-term financial goals - be it a college education, a comfortable retirement, or a secure family legacy - is to follow a three-pronged approach that focuses on longer time horizons. Allocate holdings across the major asset classes - including stocks, bonds, and cash. Diversify within each class to take advantage of different market segments and investing styles. Rebalance assets regularly to maintain a desired asset allocation. Of course, these strategies cannot guarantee a profit or protect against a loss. This long-term approach requires diligence and patience, two traits that in our experience are essential to capitalizing on the many opportunities the financial markets can offer - through both up and down economic cycles. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer and Chief Investment Officer MFS Investment Management(R) May 15, 2006 The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. PORTFOLIO COMPOSITION (As Restated) PORTFOLIO STRUCTURE (I) Bonds 103.7% Cash & Other Net Assets (3.7)% TOP 5 BOND INDUSTRIES (I) Health/Hospitals 19.6% -------------------------------------------------------------------------------- General Obligations/Schools 10.1% -------------------------------------------------------------------------------- General Obligations/General Purpose 8.7% -------------------------------------------------------------------------------- Municipal-Owned Utilities 6.8% -------------------------------------------------------------------------------- State & Local Agencies 6.1% -------------------------------------------------------------------------------- CREDIT QUALITY OF BONDS (R) AAA 36.4% -------------------------------------------------------------------------------- AA 11.7% -------------------------------------------------------------------------------- A 16.0% -------------------------------------------------------------------------------- BBB 20.6% -------------------------------------------------------------------------------- BB 4.1% -------------------------------------------------------------------------------- B 1.9% -------------------------------------------------------------------------------- CCC 0.4% -------------------------------------------------------------------------------- Not Rated 8.9% -------------------------------------------------------------------------------- PORTFOLIO FACTS Average Duration (d) 5.9 -------------------------------------------------------------------------------- Average Life (m) 14.4 yrs. -------------------------------------------------------------------------------- Average Maturity (m) 16.8 yrs. -------------------------------------------------------------------------------- Average Credit Quality of Rated Securities (a) A+ -------------------------------------------------------------------------------- Average Short Term Credit Quality A-1 -------------------------------------------------------------------------------- (a) The Average Credit Quality of Rated Securities is based upon a market weighted average of portfolio holdings that are rated by public rating agencies. (d) Duration is a measure of how much a bond price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a fund with a 5-year duration is likely to lose about 5.00% of its value. (i) For purposes of this graphical presentation, the bond component includes both accrued interest amounts and the equivalent exposure from any derivative holdings, if applicable. (m) The average maturity shown is calculated using the final stated maturity on the portfolio's holdings without taking into account any holdings which have been pre-refunded to an earlier date or which have a mandatory put date prior to the stated maturity. The average life shown takes into account these earlier dates. (r) Each security is assigned a rating from Moody's Investors Service. If not rated by Moody's, the rating will be that assigned by Standard & Poor's. Likewise, if not assigned a rating by Standard & Poor's, it will be based on the rating assigned by Fitch, Inc. For those portfolios that hold a security which is not rated by any of the three agencies, the security is considered Not Rated. Holdings in U.S. Treasuries and government agency mortgage-backed securities, if any, are included in a "AAA"-rating category. Percentages are based on the total market value of investments as of 3/31/06. Percentages are based on net assets as of 3/31/06, unless otherwise noted. The portfolio is actively managed, and current holdings may be different. MANAGEMENT REVIEW (Not Restated) SUMMARY OF RESULTS For the twelve months ended March 31, 2006, Class A shares of the MFS Municipal Income Fund provided a total return of 4.18%, at net asset value. In comparison, the fund's benchmark, the Lehman Brothers Municipal Bond Index (the Lehman Index), returned 3.81%. CONTRIBUTORS TO PERFORMANCE The fund benefited from holding lower-quality "BBB"-rated(s) securities and below-investment-grade debt. During the period, spreads in these credit sectors narrowed due to strong demands for higher-yielding securities, causing prices on these securities to appreciate. (The Lehman Index is composed primarily of higher-grade securities with no bonds rated lower than "BBB"). Strong security selection in the utilities sector also bolstered relative returns. A combination of security selection and overweighted positions in the health care sector also helped relative performance. DETRACTORS FROM PERFORMANCE Yield curve(y) positioning had a small negative effect on relative results. Overweighting the short-to-intermediate portion of the curve (represented by bonds with durations(d) of 0- to 8- years) detracted as this area underperformed the index. Additionally, underweighting the longer end of the curve (represented by bonds with durations of 11- to 14- years) hindered relative results as rates in that area decreased over the reporting period. Respectively, Geoffrey L. Schechter Portfolio Manager (d) Duration is a measure of how much a bond's price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value. (s) Bonds rated by S&P as "BBB" or higher are considered investment grade; bonds rated "BB" or lower are considered non-investment grade. (y) A yield curve graphically depicts the yields of different maturity bonds of the same credit quality and type. A normal yield curve is upward sloping, with short-term rates lower than long-term rates. The views expressed in this report are those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market and other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio's current or future investments. PERFORMANCE SUMMARY THROUGH 3/31/06 (Not Restated) THE FOLLOWING CHART ILLUSTRATES THE HISTORICAL PERFORMANCE OF THE FUND'S ORIGINAL SHARE CLASS IN COMPARISON TO ITS BENCHMARK. PERFORMANCE RESULTS INCLUDE ANY APPLICABLE CONTINGENT DEFERRED SALES CHARGE AND REFLECT THE PERCENTAGE CHANGE IN NET ASSET VALUE, INCLUDING REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. THE PERFORMANCE OF OTHER SHARE CLASSES WILL BE GREATER THAN OR LESS THAN THAT OF THE CLASS DEPICTED BELOW. BENCHMARK COMPARISONS ARE UNMANAGED; DO NOT REFLECT SALES CHARGES, COMMISSIONS OR EXPENSES; AND CANNOT BE INVESTED IN DIRECTLY. (SEE NOTES TO PERFORMANCE SUMMARY.) PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. FOR MOST RECENT MONTH-END PERFORMANCE, PLEASE VISIT MFS.COM. THE PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT MFS Municipal Income Lehman Brothers Fund -- Class A Municipal Bond Index 3/96 $ 9,525 $10,000 3/97 9,933 10,547 3/98 11,086 11,677 3/99 11,658 12,400 3/00 11,524 12,390 3/01 12,568 13,744 3/02 12,917 14,261 3/03 13,950 15,671 3/04 14,919 16,590 3/05 15,439 17,032 3/06 16,085 17,682 TOTAL RETURNS THROUGH 3/31/06 AVERAGE ANNUAL WITHOUT SALES CHARGE Share class Class inception date 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A 9/07/93 4.18% 5.06% 5.38% -------------------------------------------------------------------------------- B 12/29/86 3.40% 4.27% 4.58% -------------------------------------------------------------------------------- C 1/03/94 3.41% 4.29% 4.61% -------------------------------------------------------------------------------- AVERAGE ANNUAL Comparative benchmarks -------------------------------------------------------------------------------- Average general municipal debt fund (l) 3.48% 4.44% 4.97% -------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index (f) 3.81% 5.17% 5.86% -------------------------------------------------------------------------------- AVERAGE ANNUAL WITH SALES CHARGE Share class 1-yr 5-yr 10-yr -------------------------------------------------------------------------------- A -0.77% 4.04% 4.87% With Initial Sales Charge (4.75%) -------------------------------------------------------------------------------- B -0.57% 3.93% 4.58% With CDSC (Declining over six years from 4% to 0%) -------------------------------------------------------------------------------- C 2.41% 4.29% 4.61% With CDSC (1% for 12 months) (x) -------------------------------------------------------------------------------- CDSC - Contingent Deferred Sales Charge. (f) Source: FactSet Research Systems, Inc. (l) Source: Lipper Inc., an independent firm that reports mutual fund performance. (x) Assuming redemption within one year from the end of the prior month of purchase. INDEX DEFINITION Lehman Brothers Municipal Bond Index - a market-value-weighted index representative of the tax-exempt bond market. It is not possible to invest directly in an index. NOTES TO PERFORMANCE SUMMARY Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details. A portion of income may be subject to state, federal, and/or alternative minimum tax. Capital gains, if any, are subject to a capital gains tax. From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. EXPENSE TABLE (As Restated) FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, OCTOBER 1, 2005 THROUGH MARCH 31, 2006. 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 trust 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, 2005 through March 31, 2006. ACTUAL EXPENSES The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
----------------------------------------------------------------------------------------- Expenses Annualized Beginning Ending Paid During Share Expense Account Value Account Value Period (p) Class Ratio 10/01/05 3/31/06 10/01/05-3/31/06 ----------------------------------------------------------------------------------------- A Actual 0.92% $1,000.00 $1,011.80 $4.61 --------------------------------------------------------------------------------- Hypothetical (h) 0.92% $1,000.00 $1,020.34 $4.63 ----------------------------------------------------------------------------------------- B Actual 1.68% $1,000.00 $1,008.10 $8.41 --------------------------------------------------------------------------------- Hypothetical (h) 1.68% $1,000.00 $1,016.55 $8.45 ----------------------------------------------------------------------------------------- C Actual 1.68% $1,000.00 $1,009.20 $8.42 --------------------------------------------------------------------------------- Hypothetical (h) 1.68% $1,000.00 $1,016.55 $8.45 -----------------------------------------------------------------------------------------
(h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. PORTFOLIO OF INVESTMENTS - 3/31/06 (As Restated - See Note 8) The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 101.9% ----------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------- Airport & Port Revenue - 3.2% ----------------------------------------------------------------------------------------------------------------- Chicago, IL, O'Hare International Airport Rev. (2nd Lien Passenger Facility D), AMBAC, 5.5%, 2019 $ 350,000 $ 373,618 Chicago, IL, O'Hare International Airport Rev., FSA, 5.75%, 2022 (u) 3,000,000 3,260,940 Chicago, IL, O'Hare International Airport Rev., Third Lien, "A", FGIC, 5%, 2033 235,000 242,668 Chicago, IL, O'Hare International Airport Rev., Third Lien, "A", MBIA, 5%, 2029 950,000 984,020 Indianapolis, IN, Local Public Improvement (Airport Authority Project), "I", MBIA, 5%, 2034 200,000 201,818 Louisville & Jefferson County, KY, Regional Airport Authority, "A", MBIA, 6.5%, 2017 3,000,000 3,146,280 Miami-Dade County, FL, Aviation Revenue, "A", CIFG, 5%, 2038 500,000 509,455 New York City, NY, City Industrial Development Agency, Special Facilities Rev. (Terminal One Group), 5.5%, 2024 195,000 204,885 Oklahoma City, OK, Airport Trust, "B", FSA, 5.75%, 2017 1,080,000 1,141,733 ------------ $ 10,065,417 ----------------------------------------------------------------------------------------------------------------- Chemicals - 0.3% ----------------------------------------------------------------------------------------------------------------- Red River Authority, TX, Pollution Control Rev. (Celanese Project), 6.7%, 2030 $ 1,000,000 $ 1,058,970 ----------------------------------------------------------------------------------------------------------------- General Obligations - General Purpose - 8.6% ----------------------------------------------------------------------------------------------------------------- Chicago, IL (Lakefront Millennium Parking Facilities), MBIA, 5%, 2018 $ 4,000,000 $ 4,180,600 Chicago, IL (Lakefront Millennium Parking Facilities), MBIA, 0% to 2006, 5.7% to 2025 645,000 699,174 Commonwealth of Massachusetts, 5.875%, 2009 (c) 3,205,000 3,448,965 Commonwealth of Puerto Rico, FGIC, 5.5%, 2015 (u) 6,000,000 6,674,340 Cranston, RI, FGIC, 6.375%, 2009 (c) 200,000 220,028 Houston County, AL, AMBAC, 6.25%, 2009 (c) 850,000 937,482 Huntsville, AL, Capital Improvement Warrants, "C", MBIA, 5%, 2024 195,000 203,227 Interlocken Metropolitan District, CO, Improvement, "C", XLCA, 0%, 2027 510,000 148,828 Kane Kendall County, IL, Capital Appreciation, "E", FGIC, 0%, 2023 1,360,000 567,759 Kane Kendall County, IL, Capital Appreciation, "E", FGIC, 0%, 2025 1,335,000 497,381 Massachusetts State Consolidated Loan, "C", 5%, 2025 1,390,000 1,452,522 Mobile County, AL, 6%, 2009 (c) 800,000 856,976 New York City, NY, "J", 5%, 2030 320,000 329,254 New York City, NY, "J", MBIA, 5%, 2017 2,000,000 2,077,340 San Antonio, TX, 5%, 2020 700,000 719,047 Southlake, TX, AMBAC, 0%, 2009 (c) 3,185,000 1,219,218 Southlake, TX, AMBAC, 0%, 2009 (c) 3,150,000 1,127,826 State of Illinois, MBIA, 5.5%, 2025 110,000 115,243 State of Wisconsin, "C", 6%, 2010 (c) 1,200,000 1,302,468 ------------ $ 26,777,678 ----------------------------------------------------------------------------------------------------------------- General Obligations - Improvement - 1.6% ----------------------------------------------------------------------------------------------------------------- Birmingham, AL, "A", 5.75%, 2017 $ 1,000,000 $ 1,079,260 Worcester, MA, FSA, 6%, 2010 (c) 3,475,000 3,802,936 ------------ $ 4,882,196 ----------------------------------------------------------------------------------------------------------------- General Obligations - Schools - 10.1% ----------------------------------------------------------------------------------------------------------------- Adams 12 Five Star Schools, CO, "B", FGIC, 0%, 2025 $ 490,000 $ 183,495 De Soto, TX, Independent School District, School Building, PSF, 0%, 2031 380,000 103,109 De Soto, TX, Independent School District, School Building, PSF, 0%, 2034 285,000 65,365 De Soto, TX, Independent School District, School Building, PSF, 0%, 2036 380,000 78,557 Detroit, MI, City School District, "B", FGIC, 5%, 2009 (c) 2,000,000 2,093,860 Dudley-Charlton, MA, Regional School District, FGIC, 5.25%, 2017 (u) 2,990,000 3,287,565 Ennis, TX, Independent School District, Capital Appreciation, "N", PSF, 0%, 2028 200,000 63,736 Ennis, TX, Independent School District, Capital Appreciation, "N", PSF, 0%, 2029 385,000 120,574 Ennis, TX, Independent School District, Capital Appreciation, "N", PSF, 0%, 2031 380,000 103,109 Ferris, TX, Independent School District, PSF, 5.5%, 2034 640,000 687,462 Florida State Board of Education Capital Outlay, Public Education, "A", 5%, 2019 1,000,000 1,033,150 Fresno, CA, Unified School District, MBIA, 6.55%, 2020 1,225,000 1,429,881 Goose Creek, TX, Consolidated School District, PSF, 5%, 2009 (c) 2,500,000 2,588,925 Houston, TX, Independent School District, 5.25%, 2009 (c)(u) 3,650,000 3,809,140 Houston, TX, Independent School District, RITES, 6.519%, 2009 (c)(v)(z) 500,000 543,600 Keller, TX, Independent School District, PSF, 6%, 2017 225,000 244,521 Knox County, KY, Independent School District, XLCA, 5.5%, 2029 640,000 697,875 Lancaster, TX, Independent School District, Capital Appreciation, FSA, 0%, 2025 275,000 106,959 Lancaster, TX, Independent School District, Capital Appreciation, FSA, 0%, 2014 (c) 485,000 168,266 Lancaster, TX, Independent School District, Capital Appreciation, FSA, 0%, 2026 275,000 101,340 Lancaster, TX, Independent School District, Capital Appreciation, FSA, 0%, 2014 (c) 430,000 140,279 Leander, TX, Independent School District, Capital Appreciation, Refunding, School Building, FGIC, 0%, 2026 900,000 316,404 Leander, TX, Independent School District, Capital Appreciation, Refunding, School Building, FGIC, 0%, 2031 910,000 237,055 Leander, TX, Independent School District, PSF, 0%, 2018 2,500,000 1,252,550 Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2027 215,000 247,332 Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2028 215,000 247,577 Manistee, MI, Area Public Schools, FGIC, 5.75%, 2009 (c) 700,000 742,756 Marshall, MI, Public School District, 5.5%, 2011 (c) 500,000 540,780 Phenix City, AL, AMBAC, 5.65%, 2021 1,500,000 1,625,025 Philadelphia, PA, School District, MBIA, 6%, 2010 (c) 750,000 811,598 Roma, TX, Independent School District, PSF, 5.875%, 2010 (c) 1,705,000 1,852,295 San Jose Evergreen, CA, Community College District, Election 2004, "A", MBIA, 0%, 2028 740,000 233,418 Wattsburg, PA, Public School Building Authority Rev., Capital Appreciation, MBIA, 0%, 2029 2,150,000 710,317 Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,665,000 1,809,239 Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,765,000 1,917,902 Wylie, TX, Independent School District, PSF, 5.25%, 2029 1,080,000 1,138,352 ------------ $ 31,333,368 ----------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Hospitals - 19.3% ----------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), 9.25%, 2030 $ 650,000 $ 776,068 Allegheny County, PA, Hospital Development Authority Rev. (West Penn Allegheny Health), "B", 9.25%, 2022 350,000 417,883 Baldwin County, AL, Eastern Shore Health Care Authority Rev (Thomas Hospital), 5.75%, 2008 (c) 600,000 634,890 Baxter County, AR, Hospital Rev., 5.375%, 2014 1,000,000 1,030,160 Chemung County, NY, Civic Facilities Rev. (St. Joseph's Hospital- Elmira), "A", 6%, 2013 600,000 598,698 Colorado Health Facilities Authority Rev. (Portercare Adventist Health Systems), 6.625%, 2011 (c) 500,000 574,250 Cuyahoga County, OH, Hospital Facilities Rev. (Canton, Inc.), 7.5%, 2030 900,000 994,365 Denver, CO, Health & Hospital Authority Rev., 5.375%, 2018 300,000 305,199 Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 500,000 529,625 District of Columbia, Health & Hospital Authority Rev. (Medstar University Hospital), "D", 6.875%, 2007 (c) 700,000 719,586 Fulton County, NY, Industrial Development Agency, Civic Facilities Rev. (Nathan Littauer Hospital), "A", 5.75%, 2009 205,000 204,461 Gainesville & Hall County, GA, Hospital Authority Rev. (Northeast Georgia Health System, Inc.), 5.5%, 2031 445,000 459,151 Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), 5.75%, 2031 500,000 511,965 Henrico County, VA, Industrial Development Authority Rev. (Bon Secours) RIBS, FSA, 8.431%, 2027 (p) 5,000,000 6,441,900 Highlands County, FL, Health Facilities Authority Rev. (Adventist/ Sunbelt Hospital), 6%, 2011 (c) 350,000 376,863 Illinois Health Facilities Authority Rev. (Condell Medical Center), 6.35%, 2015 1,000,000 1,064,600 Illinois Health Facilities Authority Rev. (Decatur Memorial Hospital), 5.75%, 2024 350,000 364,336 Illinois Health Facilities Authority Rev. (Passavant Memorial Area Hospital Associates), 6%, 2024 335,000 360,363 Illinois Health Facilities Authority Rev. (Riverside Health Systems), 5.75%, 2022 650,000 670,111 Illinois Health Facilities Authority Rev. (Sinai Health), FHA, 5.15%, 2037 640,000 658,509 Indiana Health Facilities Financing Authority, Hospital Rev (Deaconess Hospital), "A", AMBAC, 5.375%, 2034 565,000 598,714 Indiana Health Facilities Financing Authority, Hospital Rev. (Clarian Health), "A", 5%, 2039 760,000 753,890 Indiana Health Facilities Financing Authority, Hospital Rev (Munster Medical Research Foundation, Inc.), 6.375%, 2031 500,000 524,985 Indiana Health Facilities Financing Authority, Hospital Rev (Munster Medical Research Foundation, Inc.), 6.375%, 2021 1,700,000 1,786,156 Indiana Health Facilities Financing Authority, Hospital Rev (Riverview Hospital), 5.25%, 2014 400,000 407,772 Indiana Health Facilities Financing Authority, Hospital Rev (Riverview Hospital), 6.125%, 2031 250,000 261,128 Kentucky Economic Development Finance Authority, Health Systems Rev. (Norton Healthcare, Inc.), 6.5%, 2020 1,250,000 1,357,113 Kentucky Economic Development Finance Authority, Health Systems Rev. (Norton Healthcare, Inc.), 6.625%, 2028 250,000 271,195 Kentucky Economic Development Finance Authority, Refunding & Improvement, "A", MBIA, 5%, 2018 2,400,000 2,488,656 Knox County, TN, Health Educational Hospital Facility (Baptist Health Systems, East Tennessee), 6.375%, 2022 1,000,000 1,052,080 Lauderdale County & Florence, AL (Coffee Health Group), "A", MBIA, 5.25%, 2019 1,100,000 1,145,199 Macomb County, MI, Hospital Finance Authority Rev. (Mount Clemens General Hospital), 5.75%, 2025 1,000,000 1,024,690 Marion County, FL, Hospital District Rev. (Monroe Hospital), 5.625%, 2019 750,000 781,410 Marshall County, AL, Health Care Rev., "A", 6.25%, 2022 500,000 532,250 Martin County, FL, Health Facilities Rev. (Martin Memorial Medical Center), "B", 5.75%, 2022 850,000 900,932 Maryland Health & Higher Educational Facilities Authority Rev (Medstar Health), 5.5%, 2033 305,000 316,142 Maryland Health & Higher Educational Facilities Authority Rev (University of Maryland Medical System), 6.75%, 2010 (c) 1,000,000 1,122,520 Massachusetts Health & Educational Facilities Authority Rev (Caritas Christi), 6.5%, 2012 400,000 433,388 Massachusetts Health & Educational Facilities Authority Rev (Caritas Christi), 5.7%, 2015 1,000,000 1,039,900 Massachusetts Health & Educational Facilities Authority Rev (Partners Healthcare Systems), 5.75%, 2021 400,000 436,212 Mecosta County, MI, General Hospital Rev., 6%, 2018 300,000 305,700 Miami Beach, FL, Health Facilities Rev. (Mount Sinai Medical Center), "A", 6.7%, 2019 750,000 823,583 Michigan Hospital Finance Authority Rev. (Memorial Healthcare Center), 5.75%, 2015 800,000 835,944 Montgomery, AL, Special Care Facilities, Financing Authority Rev (Baptist Health), "A-2", MBIA, 0% to 2007, 5% to 2014 (c) 1,270,000 1,239,279 Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial Hospital), 5.625%, 2032 375,000 390,454 Nassau County, NY, Industrial Development Agency, Civic Facilities Rev. (North Shore Health System), 5.875%, 2011 330,000 346,843 New Hampshire Health & Educational Facilities Authority Rev (Covenant Health), 6.5%, 2017 870,000 969,876 New Hampshire Health & Educational Facilities Authority Rev (Exeter Hospital), 6%, 2024 500,000 546,405 New Jersey Health Care Facilities (Palisades Medical Center), 6.5%, 2021 500,000 543,550 North Texas Health Facilities Development Corp. Rev. (United Regional Health Care System, Inc.), 6%, 2023 1,000,000 1,072,070 Ohio County, WV, County Commission Health System Rev. (Ohio Valley Medical Center), 5.75%, 2013 900,000 856,098 Oklahoma Development Finance Authority Rev. (Comanche County Hospital), 6%, 2014 600,000 657,750 Oklahoma Development Finance Authority Rev. (Comanche County Hospital), 6.6%, 2031 255,000 276,624 Rhode Island Health & Education Building Rev., Hospital Financing (Lifespan Obligated Group), "A", FSA, 5%, 2032 1,120,000 1,151,282 Rhode Island Health & Education Building Rev., Hospital Financing (Lifespan Obligated Group), 6.5%, 2012 (c) 1,500,000 1,717,740 Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare Systems, Inc.), 6.5%, 2027 290,000 271,501 Shelby County, TN, Educational & Housing Facilities Board Hospital Rev. (Methodist Healthcare), 6%, 2012 (c) 300,000 335,394 Shelby County, TN, Educational & Housing Facilities Board Hospital Rev. (Methodist Healthcare), 6%, 2012 (c) 500,000 558,990 South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031 500,000 538,840 Steubenville, OH, Hospital Rev. (Trinity Hospital), 6.375%, 2020 300,000 328,236 Stillwater, OK, Medical Center Authority (Stillwater Medical Center), 6.5%, 2007 (c) 1,000,000 1,049,920 Suffolk County, NY, Industrial Development Agency, Civic Facilities Rev. (Huntington Hospital), "C", 5.875%, 2032 1,000,000 1,046,180 Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Healthcare), 6.25%, 2020 1,000,000 1,057,220 Tom Green County, TX, Health Facilities Rev. (Shannon Health System), 6.75%, 2021 400,000 428,616 Upper Illinois River Valley Development, Health Facilities Rev (Morris Hospital), 6.625%, 2031 500,000 542,565 Valley, AL, Special Care Facilities Financing (Lanier Memorial Hospital), 5.5%, 2007 500,000 500,500 Wapello County, IA, Hospital Authority Rev. (Ottumwa Regional Health Center), 6.375%, 2031 750,000 788,325 Weirton, WV, Municipal Hospital Building, Commission Rev (Weirton Hospital Medical Center), 6.375%, 2031 500,000 502,415 West Plains, MO, Industrial Development Authority Rev. (Ozarks Medical Center), 6.75%, 2024 195,000 199,838 West Shore, PA, Hospital Authority (Holy Spirit Hospital), 6.25%, 2032 1,000,000 1,063,650 Wichita, KS, Hospital Authority Rev. (Via Christi Health System), 6.25%, 2019 1,500,000 1,659,345 Wisconsin Health & Educational Facilities Authority Rev. (Agnesian Healthcare, Inc.), 6%, 2017 325,000 345,010 Wisconsin Health & Educational Facilities Authority Rev. (Aurora Health Care, Inc.), 6.875%, 2030 750,000 854,835 Wisconsin Health & Educational Facilities Authority Rev. (Wheaton Franciscan Services), 6.25%, 2022 1,000,000 1,087,220 Yonkers, NY, Industrial Development Agency, Civic Facilities Rev (St. John's Riverside Hospital), 6.8%, 2016 410,000 427,954 ------------ $ 60,247,067 ----------------------------------------------------------------------------------------------------------------- Healthcare Revenue - Long Term Care - 1.8% ----------------------------------------------------------------------------------------------------------------- Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 7.75%, 2006 $ 30,000 $ 29,933 Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 8.125%, 2016 505,000 481,861 Bell County, TX, Health Facilities Development Rev. (Advanced Living Technology), 8.5%, 2026 1,130,000 1,060,042 Colorado Health Facilities Authority Rev. (Evangelical Lutheran), 6.9%, 2025 500,000 563,390 Cumberland County, PA, Municipal Authority Rev. (Wesley), "A", 7.25%, 2013 (c) 270,000 323,430 Cumberland County, PA, Municipal Authority Rev. (Wesley), "A", 7.25%, 2035 105,000 112,135 Eden Prairie, MN, Multi-Family Housing Rev. (Coll-Rolling Hills), "A", GNMA, 6%, 2021 200,000 214,894 Indiana Health Facilities Financing Authority Rev. (Hoosier Care), 7.125%, 2034 805,000 763,180 Iowa Finance Authority, Health Care Facilities Rev. (Care Initiatives Project), 9.25%, 2025 485,000 575,278 Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae), "A", 7.375%, 2027 940,000 979,800 Shelby County, TN, Health Educational Rev. (Germantown Village), 7.25%, 2034 385,000 408,096 ------------ $ 5,512,039 ----------------------------------------------------------------------------------------------------------------- Human Services - 0.4% ----------------------------------------------------------------------------------------------------------------- Nassau County, NY, Industrial Development Civic (Special Needs Facilities), 6.1%, 2012 $ 295,000 $ 302,691 Orange County, FL, Health Facilities Authority Rev. (GF/Orlando Healthcare Facilities), 9%, 2031 1,000,000 1,103,990 ------------ $ 1,406,681 ----------------------------------------------------------------------------------------------------------------- Industrial Revenue - Airlines - 0.8% ----------------------------------------------------------------------------------------------------------------- Los Angeles, CA, Regional Airport Lease Rev. (AMR Corp.), 7%, 2012 $ 300,000 $ 309,189 New York City, NY, Industrial Development Agency Rev. (American Airlines, Inc.), 7.625%, 2025 970,000 1,065,914 Tulsa, OK, Municipal Airport Trust Rev. (American Airlines, Inc.), "B", 5.65%, 2035 1,000,000 990,230 ------------ $ 2,365,333 ----------------------------------------------------------------------------------------------------------------- Industrial Revenue - Chemicals - 0.3% ----------------------------------------------------------------------------------------------------------------- Brazos River, TX, Harbor Navigation District (Dow Chemical Co.), 5.7%, 2033 $ 1,000,000 $ 1,063,440 ----------------------------------------------------------------------------------------------------------------- Industrial Revenue - Environmental Services - 1.5% ----------------------------------------------------------------------------------------------------------------- California Pollution Control Financing Authority, Solid Waste Disposal Rev. (Waste Management, Inc.), "A-2", 5.4%, 2025 $ 215,000 $ 223,755 Carbon County, UT, Solid Waste Disposal Rev. (Laidlaw Environmental), 7.45%, 2017 2,500,000 2,627,500 Charles City County, VA, Industrial Development Authority, Solid Waste Disposal Facility Rev. (Waste Management, Inc.), 6.25%, 2027 500,000 547,960 Colorado Housing & Finance Authority, Solid Waste Rev. (Waste Management, Inc.), 5.7%, 2018 230,000 246,986 Gloucester County, NJ, Solid Waste Resource Recovery Rev. (Waste Management, Inc.), 6.85%, 2029 150,000 163,808 Massachusetts Development Finance Agency Rev., Resource Recovery Rev. (Waste Management, Inc.), 6.9%, 2029 300,000 326,739 Nevada Department of Business Rev. (Republic Services, Inc.), 5.625%, 2026 450,000 484,205 ------------ $ 4,620,953 ----------------------------------------------------------------------------------------------------------------- Industrial Revenue - Metals - 0.0% ----------------------------------------------------------------------------------------------------------------- Burns Harbor, IN, Solid Waste Disposal Facilities Rev. (Bethlehem Steel), 8%, 2024 (d) $ 3,000,000 $ 300 ----------------------------------------------------------------------------------------------------------------- Industrial Revenue - Other - 2.6% ----------------------------------------------------------------------------------------------------------------- Bucks County, PA, Industrial Development Authority Rev. (USX Corp.), 5.4%, 2017 $ 500,000 $ 530,085 Gulf Coast, TX, Industrial Development Authority (Valero Energy Corp.), 5.6%, 2031 500,000 513,625 Hardeman County, TN, Correctional Facilities Corp. (Corrections Corp. of America), 7.375%, 2017 500,000 512,070 Massachusetts Development Finance Agency, Resource Recovery Rev. (Flour Corp.), 5.625%, 2019 2,895,000 3,020,180 Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.), 5.6%, 2017 1,300,000 1,349,179 Park Creek Metropolitan District, CO, Rev., Custodial Receipts, CR-2, 7.875%, 2032 (a) 400,000 442,068 Pennsylvania Economic Development Financing Authority Rev (Amtrak), 6.125%, 2021 550,000 582,434 Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific Corp.), 5.7%, 2026 980,000 1,026,530 ------------ $ 7,976,171 ----------------------------------------------------------------------------------------------------------------- Industrial Revenue - Paper - 2.3% ----------------------------------------------------------------------------------------------------------------- Butler, AL, Industrial Development Board, Solid Waste Disposal Rev. (Georgia Pacific Corp.), 5.75%, 2028 $ 260,000 $ 255,154 Delta County, MI, Economic Development Corp., Environmental Improvements Rev. (MeadWestvaco Escanaba), "A", 6.25%, 2012 (c) 900,000 1,017,261 Mobile, AL, Industrial Development Board Improvement Rev., (International Paper Co.), "B", 6.45%, 2019 2,000,000 2,120,160 Navajo County, AZ, Industrial Development Authority Rev. (Stone Container Corp.), 7.2%, 2027 500,000 518,160 Navajo County, AZ, Industrial Development Authority Rev. (Stone Container Corp.), 7.4%, 2026 1,500,000 1,542,900 Onondaga County, NY, Industrial Development Authority Rev., Solid Waste Disposal Rev. (Solvay Paperboard LLC), 6.8%, 2014 1,000,000 1,046,650 West Point, VA, Industrial Development Authority, Solid Waste Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 550,000 550,451 ------------ $ 7,050,736 ----------------------------------------------------------------------------------------------------------------- Miscellaneous Revenue - Other - 0.8% ----------------------------------------------------------------------------------------------------------------- Austin, TX, Convention Center (Convention Enterprises, Inc.), "A", 6.6%, 2021 $ 300,000 $ 318,186 Austin, TX, Convention Center (Convention Enterprises, Inc.), "A", 6.7%, 2028 400,000 424,700 Baltimore, MD, Convention Center Hotel Revenue, "A", XLCA, 5.25%, 2039 555,000 591,636 Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013 (z) 640,000 631,795 San Antonio, TX, Convention Center, Hotel Financial Corp., Contract Rev. (Empowerment Zone), "A", AMBAC, 5%, 2034 490,000 498,335 Toledo Lucas County, OH, Port Authority Development Rev (Northwest Ohio Bond Fund), "C", 5.125%, 2025 65,000 65,070 ------------ $ 2,529,722 ----------------------------------------------------------------------------------------------------------------- Multi-Family Housing Revenue - 3.0% ----------------------------------------------------------------------------------------------------------------- Bay County, FL, Housing Finance Authority, Multi-Family Rev (Andrews Place II Apartments), FSA, 5%, 2035 $ 150,000 $ 150,743 Bay County, FL, Housing Finance Authority, Multi-Family Rev (Andrews Place II Apartments), FSA, 5.1%, 2046 275,000 276,356 California Statewide Communities Development Authority Rev (Irvine Apartments), 5.25%, 2025 1,000,000 1,030,510 Charter Mac Equity Issuer Trust, 6.625%, 2009 2,000,000 2,128,960 Eaglebend, CO, Affordable Housing Corp., 6.2%, 2012 1,000,000 992,790 GMAC Municipal Mortgage Trust, "B-1", 5.6%, 2039 (a) 1,000,000 1,028,730 GMAC Municipal Mortgage Trust, "C-1", 5.7%, 2040 (a) 500,000 498,250 Indianapolis, IN, Multi-Family Rev. (Cambridge Station Apartments II), FNMA, 5.25%, 2039 320,000 324,112 Munimae TE Bond Subsidiary LLC, "A-2", 4.9%, 2049 (a) 2,000,000 1,984,920 Newark, NJ, Housing Authority Port Authority (Newark Marine Terminal), MBIA, 5.5%, 2028 215,000 233,290 North Charleston, SC, Housing Authority Rev. (Horizon Village), "A", FGIC, 5.15%, 2048 305,000 297,814 Seattle, WA, Housing Authority Rev., Capped Fund Program (High Rise Rehab), "I", FSA, 5%, 2025 455,000 453,858 ------------ $ 9,400,333 ----------------------------------------------------------------------------------------------------------------- Parking - 0.1% ----------------------------------------------------------------------------------------------------------------- Rail Connections, Inc., MA Rev., 0%, 2009 (c) $ 100,000 $ 57,884 Rail Connections, Inc., MA Rev., 0%, 2009 (c) 210,000 113,663 Rail Connections, Inc., MA Rev., 0%, 2009 (c) 300,000 152,076 ------------ $ 323,623 ----------------------------------------------------------------------------------------------------------------- Sales & Excise Tax Revenue - 0.4% ----------------------------------------------------------------------------------------------------------------- Austin, TX, Town Community Events Center Venue, FGIC, 6%, 2009 (c) $ 1,015,000 $ 1,094,972 Metropolitan Pier & Expo, IL, McCormick Place Expansion, MBIA, 5.25%, 2042 220,000 231,411 ------------ $ 1,326,383 ----------------------------------------------------------------------------------------------------------------- Single Family Housing - Local - 3.2% ----------------------------------------------------------------------------------------------------------------- Adams County, CO, Single Family Mortgage Rev., ETM, 8.875%, 2011 (c) $ 2,510,000 $ 3,088,430 Brevard County, FL, Housing Finance Authority, "B", GNMA, 6.5%, 2022 161,000 162,254 Calcasieu Parish, LA, Public Trust Authority, Single Family Mortgage Rev. "A", GNMA, 6.05%, 2032 465,000 491,775 California Rural Home Mortgage Finance Authority Rev., GNMA, 6.55%, 2030 110,000 111,610 Chicago, IL, Single Family Mortgage Rev., "C", GNMA, 7.05%, 2030 10,000 9,991 Cook County, IL, Single Family Mortgage Rev., "A", 0%, 2015 415,000 94,454 Jefferson Parish, LA, Single Family Mortgage Rev., GNMA, 6.625%, 2023 340,000 350,057 Jefferson Parish, LA, Single Family Mortgage Rev., GNMA, 6.75%, 2030 435,000 451,778 Lee County, FL, Housing Finance Authority Rev., "A", GNMA, 7%, 2031 20,000 20,215 Maricopa County, AZ, Single Family Mortgage Rev., "B", GNMA, 6.2%, 2034 100,000 102,014 Pima County, AZ, Industrial Development Authority Rev., "B-1", GNMA, 7.05%, 2030 225,000 229,293 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A", GNMA, 6.45%, 2029 560,000 575,372 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A", GNMA, 5.8%, 2036 615,000 666,488 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-1", GNMA, 6.875%, 2026 90,000 90,436 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-1", GNMA, 5.75%, 2037 190,000 202,392 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-3", GNMA, 6%, 2035 395,000 426,580 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-4", GNMA, 5.85%, 2037 365,000 392,284 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-5", GNMA, 5.8%, 2027 315,000 334,231 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-5", GNMA, 5.7%, 2036 645,000 691,982 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-5", GNMA, 5.9%, 2037 145,000 157,221 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "A-6", GNMA, 5.65%, 2036 465,000 494,993 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "B", GNMA, 5.45%, 2027 345,000 363,551 Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., "B-2", GNMA, 6.45%, 2033 325,000 336,638 ------------ $ 9,844,039 ----------------------------------------------------------------------------------------------------------------- Single Family Housing - State - 2.6% ----------------------------------------------------------------------------------------------------------------- California Housing Finance Agency Rev., Home Mortgage, MBIA, 0%, 2028 $ 1,735,000 $ 552,684 Colorado Housing & Finance Authority Rev., 7.45%, 2016 35,000 35,554 Colorado Housing & Finance Authority Rev., 6.875%, 2028 60,000 60,509 Colorado Housing & Finance Authority Rev., 6.8%, 2030 80,000 82,166 Colorado Housing & Finance Authority Rev., "A-1", 7.4%, 2027 15,000 15,058 Colorado Housing & Finance Authority Rev., "A-2", 7.15%, 2014 7,000 7,012 Colorado Housing & Finance Authority Rev., "A-2", AMBAC, 6.6%, 2028 300,000 309,618 Colorado Housing & Finance Authority Rev., "B-2", 6.1%, 2023 115,000 119,103 Colorado Housing & Finance Authority Rev., "B-3", 6.55%, 2033 105,000 107,626 Colorado Housing & Finance Authority Rev., "C", FHA, 6.75%, 2021 40,000 40,482 Colorado Housing & Finance Authority Rev., "C-2", FHA, 5.9%, 2023 170,000 177,176 Colorado Housing & Finance Authority Rev., "C-2", FHA, 6.6%, 2032 165,000 170,488 Colorado Housing & Finance Authority Rev., "C-3", FHA, 6.375%, 2033 90,000 92,280 Louisiana Housing Finance Agency, Single Family Mortgage Rev., "B-2", GNMA, 7.55%, 2031 125,000 130,013 Louisiana Housing Finance Agency, Single Family Mortgage Rev., GNMA, 6.4%, 2032 130,000 132,123 Minnesota Housing Finance Agency Rev., Residential Housing Finance, "B", 4.8%, 2023 195,000 196,166 Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), "B", GNMA, 6.7%, 2030 190,000 196,737 Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.35%, 2032 195,000 200,485 Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.85%, 2032 175,000 181,249 Missouri State Housing Development Commission, Single Family Mortgage Rev. (Home Loan Program), GNMA, 6.75%, 2034 105,000 106,579 New Hampshire Housing Finance Authority Rev., "B", 5.875%, 2030 105,000 105,920 New Hampshire Housing Finance Authority Rev., "B", 6.3%, 2031 90,000 91,110 New Hampshire Housing Finance Authority Rev., "B", 6.5%, 2035 705,000 766,081 New Mexico Mortgage Finance Authority Rev., "B-2", GNMA, 6.35%, 2033 175,000 182,499 New Mexico Mortgage Finance Authority Rev., GNMA, 7.1%, 2030 70,000 70,986 New Mexico Mortgage Finance Authority Rev., GNMA, 6.25%, 2032 380,000 395,173 New Mexico Mortgage Finance Authority Rev., "N", GNMA, 5.95%, 2037 440,000 476,340 North Dakota Housing Finance Agency Rev., Housing Finance, "A", 5%, 2033 385,000 386,690 Ohio Housing Finance Agency Mortgage Rev., Residential Mortgage Backed, "C", GNMA, 5.9%, 2035 425,000 444,682 Oklahoma Housing Finance Agency Rev., 6.65%, 2029 515,000 545,071 Texas Affordable Housing Corp., Single Family Mortgage Rev., "B", 5.25%, 2039 520,000 537,592 Texas Housing & Community Affairs, Residential Mortgage Rev., GNMA, 7.1%, 2021 755,000 792,629 Vermont Housing Finance Agency Rev., FSA, 4.95%, 2032 275,000 278,240 ------------ $ 7,986,121 ----------------------------------------------------------------------------------------------------------------- Solid Waste Revenue - 1.0% ----------------------------------------------------------------------------------------------------------------- Delaware County, PA, Industrial Development Authority, Resource Recovery Facilities Rev. (American Ref-Fuel Co.), "A", 6.2%, 2019 $ 500,000 $ 522,590 Hudson County, NJ, Solid Waste System Rev., 5.9%, 2015 830,000 828,788 Massachusetts Development Finance Agency Rev. (Ogden Haverhill Associates), 6.7%, 2014 700,000 764,715 Massachusetts Industrial Finance Agency, Resource Recovery Rev (Ogden Haverhill Associates), 5.6%, 2019 1,000,000 1,033,830 ------------ $ 3,149,923 ----------------------------------------------------------------------------------------------------------------- State & Agency - Other - 0.8% ----------------------------------------------------------------------------------------------------------------- Massachusetts State Development Finance Agency (Visual & Performing Arts), 6%, 2021 $ 1,000,000 $ 1,176,900 State of Michigan, COP, AMBAC, 5.5%, 2010 (c) 1,250,000 1,334,875 ------------ $ 2,511,775 ----------------------------------------------------------------------------------------------------------------- State & Local Agencies - 6.0% ----------------------------------------------------------------------------------------------------------------- Alabama Building Renovation Authority, AMBAC, 6%, 2018 $ 760,000 $ 826,538 Alabama State Public School & College, Capital Improvement, "D", 6%, 2015 2,850,000 3,086,151 Chicago, IL, Public Building Commission Rev., FGIC, 5.25%, 2016 (u) 3,000,000 3,284,400 Chicago, IL, Public Building Commission Rev., FGIC, 5.25%, 2017 (u) 2,500,000 2,747,100 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "A", 5%, 2045 325,000 330,067 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "B", 5.375%, 2010 (c) 1,500,000 1,597,665 Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, "B", 5.5%, 2013 (c) 1,075,000 1,177,921 Indianapolis, IN, Public Improvement Bond Bank, "C", AMBAC, 6%, 2017 500,000 542,315 New Jersey Economic Development Authority Rev., School Facilities Construction, "O", 5.25%, 2025 445,000 469,248 New Mexico Finance Authority Rev., Court Facilities Fee Rev., MBIA, 5.5%, 2011 (c) 475,000 514,577 New York State Urban Development Corp., Correctional Facilities Service Contract C, AMBAC, 5.875%, 2009 (c) 1,000,000 1,068,380 Stafford, TX, Economic Development Corp., FGIC, 6%, 2015 525,000 599,975 Virginia College Building Authority, VA, Public Higher Education Financing, "A", 5.75%, 2009 (c) 2,295,000 2,447,939 ------------ $ 18,692,276 ----------------------------------------------------------------------------------------------------------------- Student Loan Revenue - 0.9% ----------------------------------------------------------------------------------------------------------------- Access to Loans for Learning, California Student Loan Rev., 7.95%, 2030 $ 650,000 $ 683,690 Arizona Student Loan Acquisition Authority Rev., 5.8%, 2016 675,000 714,690 Arizona Student Loan Acquisition Authority Rev., 5.85%, 2017 700,000 741,349 Massachusetts Educational Financing Authority, Refunding Issue G, "A", MBIA, 6.1%, 2018 590,000 602,077 ------------ $ 2,741,806 ----------------------------------------------------------------------------------------------------------------- Tax - Other - 1.1% ----------------------------------------------------------------------------------------------------------------- New Jersey Economic Development Authority Rev., Cigarette Tax, 5.5%, 2024 $ 250,000 $ 260,855 New Jersey Economic Development Authority Rev., Cigarette Tax, 5.75%, 2029 450,000 476,208 New Jersey Economic Development Authority Rev., Cigarette Tax, 5.5%, 2031 200,000 207,616 New Jersey Economic Development Authority Rev., Cigarette Tax, 5.75%, 2034 300,000 315,399 New York City, NY, Transitional Finance Authority Rev., Future Tax Secured, "A", 6%, 2009 (c) 2,000,000 2,168,320 ------------ $ 3,428,398 ----------------------------------------------------------------------------------------------------------------- Tax Assessment - 2.1% ----------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh Mills), 5.1%, 2014 $ 75,000 $ 76,992 Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh Mills), 5.6%, 2023 50,000 52,293 Broadview, IL, Tax Increment Rev., 5.25%, 2012 1,000,000 1,026,850 Capital Region Community Development District, FL, Capital Improvement Rev., "B", 5.95%, 2006 40,000 40,060 Fishhawk Community Development District, FL, 5.125%, 2009 380,000 378,982 Greyhawk Landing Community Development, FL, Special Assessment Rev., "B", 6.25%, 2009 140,000 141,508 Katy, TX, Development Authority Rev., 5.8%, 2011 865,000 891,521 Katy, TX, Development Authority Rev., "B", 6%, 2018 1,200,000 1,238,064 Killarney, FL, Community Development District, "B", 5.125%, 2009 205,000 204,422 Lakes by the Bay South Community Development District, FL, Special Assessment, "B", 5.3%, 2009 255,000 254,561 Lancaster County, SC, Assessment Rev. (Sun City Carolina Lakes), 5.45%, 2037 50,000 50,106 Panther Trace, FL, Community Development District Rev., "B", 6.5%, 2009 5,000 5,023 Panther Trace, FL, Community Development District Rev., "B", 5%, 2010 655,000 651,273 Parkway Center, FL, Community Development District Rev., "B", 5.625%, 2014 935,000 945,566 Preserve at Wilderness Lake, FL, Community Development District, Capital Improvement, "B", 5%, 2009 150,000 148,358 Renaissance Community Development, FL, "B", 6.25%, 2008 120,000 120,824 Tuscany Reserve Community Development District, FL, "B", 5.25%, 2016 185,000 185,335 ------------ $ 6,411,738 ----------------------------------------------------------------------------------------------------------------- Tobacco - 1.6% ----------------------------------------------------------------------------------------------------------------- Badger, WI, Tobacco Asset Securitization Corp., 6.125%, 2027 $ 1,055,000 $ 1,115,251 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "A", 0%, 2050 4,000,000 261,600 Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "B", 0%, 2055 2,000,000 69,300 District of Columbia, Tobacco Settlement, 6.25%, 2024 405,000 430,013 Guam Economic Development Authority, 5%, 2022 115,000 116,133 Iowa Tobacco Settlement Authority, Tobacco Settlement Rev., Asset Backed, "B", 5.3%, 2011 (c) 750,000 799,140 Iowa Tobacco Settlement Authority, Tobacco Settlement Rev., Asset Backed, "B", 0% to 2007, 5.6% to 2034 615,000 571,353 Louisiana Tobacco Settlement Authority, 5.5%, 2030 415,000 431,471 New Jersey Tobacco Settlement Authority, 5.75%, 2032 675,000 701,008 South Carolina Tobacco Settlement Authority, 6.375%, 2028 500,000 537,645 Washington Tobacco Settlement Authority, 6.5%, 2026 70,000 76,334 ------------ $ 5,109,248 ----------------------------------------------------------------------------------------------------------------- Toll Roads - 0.5% ----------------------------------------------------------------------------------------------------------------- New Jersey State Turnpike Authority Rev., Unrefunded, "C", MBIA, 6.5%, 2016 $ 235,000 $ 271,141 New Jersey State Turnpike Authority Rev. "C", MBIA, ETM, 6.5%, 2016 (c) 80,000 92,598 Northwest Parkway Public Highway Authority Co. Rev., Capital Appreciation, "B", AMBAC, 0%, 2018 750,000 405,150 San Joaquin Hills, CA, Transportation Corridor Agency, Toll Road Rev., ETM, 0%, 2009 (c) 1,000,000 900,340 ------------ $ 1,669,229 ----------------------------------------------------------------------------------------------------------------- Transportation - Special Tax - 1.1% ----------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Port Authority Special Rev., MBIA, 6.25%, 2009 (c) $ 1,000,000 $ 1,080,600 New Jersey Economic Development Authority Rev., Transportation Project Sublease, "A", FSA, 6%, 2009 (c) 325,000 346,704 Pennsylvania State Turnpike Commission Oil, "A", AMBAC, 5.25%, 2018 850,000 891,140 Pennsylvania State Turnpike Commission Oil, "A", AMBAC, ETM, 5.25%, 2018 (c) 1,150,000 1,193,804 ------------ $ 3,512,248 ----------------------------------------------------------------------------------------------------------------- Universities - Colleges - 4.1% ----------------------------------------------------------------------------------------------------------------- Alabama Private Colleges & Universities, Facilities Authority Rev (Tuskegee University), ASSD GTY, 4.75%, 2026 $ 1,000,000 $ 1,004,670 Amherst, NY, Industrial Development Agency Rev. (Daemen College), "A", 6%, 2021 1,000,000 1,065,030 California Educational Facilities Authority Rev. (L.A. College of Chiropractic), 5.6%, 2017 250,000 241,610 Houston, TX, Community College Systems, MBIA, 7.875%, 2025 1,650,000 1,989,554 Illinois Finance Authority Rev. (University of Chicago), "A", 5%, 2034 215,000 221,869 Massachusetts Development Finance Agency Rev. (Boston University), XLCA, 6%, 2059 1,250,000 1,484,850 Massachusetts Development Finance Agency Rev. (Massachusetts College of Pharmacy), 6.625%, 2010 (c) 100,000 111,102 Massachusetts Development Finance Agency Rev., (Olin College), "B", XLCA, 5.25%, 2033 2,000,000 2,105,540 Northern Illinois University Rev., Auxiliary Facilities Systems, AMBAC, 5.875%, 2018 1,370,000 1,452,378 Savannah, GA, Economic Development Authority Rev. (College of Art & Design, Inc.), 6.5%, 2009 (c) 500,000 548,175 St. Joseph County, IN, Educational Facilities Rev. (University of Notre Dame), 6.5%, 2026 1,000,000 1,279,650 State of Oregon, Facilities Authority Rev. (Linfield College), "A", 5%, 2030 165,000 167,114 Upland, IN, Economic Development Rev. (Taylor University), 6%, 2018 435,000 478,509 Upland, IN, Economic Development Rev. (Taylor University), 6.25%, 2023 520,000 571,834 ------------ $ 12,721,885 ----------------------------------------------------------------------------------------------------------------- Universities - Secondary Schools - 1.8% ----------------------------------------------------------------------------------------------------------------- California Statewide Communities, Development Authority Rev (Escondido Charter High School), 7.5%, 2036 $ 500,000 $ 529,840 Clark County, NV, Economic Development Rev. (Alexander Dawson School), 5.5%, 2020 1,500,000 1,564,965 Maine Finance Authority, Educational Rev. (Waynflete School), 6.4%, 2019 1,000,000 1,064,340 Maine Finance Authority, Educational Rev. (Waynflete School), 6.5%, 2029 1,000,000 1,068,670 Michigan Municipal Bond Authority Rev. (YMCA Service Learning Academy), 7.625%, 2021 400,000 425,396 New Hampshire Health & Education (Derryfield School), 6.5%, 2010 290,000 294,808 Pima County, AZ, Industrial Development Authority Education Rev (Arizona Charter Schools), "C", 6.75%, 2031 500,000 520,345 ------------ $ 5,468,364 ----------------------------------------------------------------------------------------------------------------- Utilities - Cogeneration - 0.6% ----------------------------------------------------------------------------------------------------------------- Carbon County, PA, Industrial Development Authority Rev. (Panther Creek Partners), 6.65%, 2010 $ 550,000 $ 580,454 Klamath Falls, OR, Electric Rev. (Klamath Cogeneration), 6%, 2025 1,475,000 1,183,496 ------------ $ 1,763,950 ----------------------------------------------------------------------------------------------------------------- Utilities - Investor Owned - 5.0% ----------------------------------------------------------------------------------------------------------------- Apache County, AZ, Industrial Development Authority, Pollution Control Rev. (Tucson Electric Power Co.), 5.875%, 2033 $ 1,000,000 $ 1,002,410 Brazos River Authority, TX, Pollution Control Rev. (Texas Utility Co.), "B", 6.3%, 2032 120,000 131,207 California Pollution Control Financing Authority, Pollution Control Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 1,600,000 1,704,304 Clark County, NV, Industrial Development Rev. (Southwest Gas Corp.), "A", AMBAC, 4.85%, 2035 730,000 724,335 Connecticut Development Authority, Pollution Control Rev (Connecticut Light & Power Co.), 5.85%, 2028 1,000,000 1,058,350 Farmington, NM, Pollution Control Rev. (New Mexico Public Service), 5.8%, 2022 500,000 507,580 Farmington, NM, Pollution Control Rev. (New Mexico Public Service), 6.375%, 2022 1,000,000 1,049,240 Farmington, NM, Pollution Control Rev. (New Mexico Public Service), "A", 6.3%, 2016 565,000 587,199 Lehigh County, PA, Industrial Development Authority Pollution Control Rev. (PPL Electric Utility Corp.), "A", FGIC, 4.7%, 2029 320,000 318,189 Matagorda County, TX, Pollution Control Rev. (Reliant Energy), 5.95%, 2030 750,000 767,055 Mecklenburg County, VA, Industrial Development Authority Rev (UAE Mecklenburg LP), 6.5%, 2017 700,000 766,003 New Hampshire Industrial Development Authority, Pollution Control Rev. (Connecticut Light & Power), 5.9%, 2016 500,000 510,590 Pima County, AZ, Industrial Development Authority Rev. (Tucson Electric Power Co.), "A", 6.1%, 2025 2,000,000 2,005,700 Pittsylvania County, VA, Industrial Development Authority Rev., 7.5%, 2014 2,000,000 2,036,000 Port Morrow, OR, Pollution Control Rev. (Portland General Electric), 5.2%, 2033 350,000 361,508 Sabine River Authority, TX, Pollution Control Rev. (TXU Electric Co.), "A", 5.5%, 2022 500,000 529,965 West Feliciana Parish, LA, Pollution Control Rev. (Entergy Gulf States), 6.6%, 2028 1,665,000 1,680,218 ------------ $ 15,739,853 ----------------------------------------------------------------------------------------------------------------- Utilities - Municipal Owned - 6.7% ----------------------------------------------------------------------------------------------------------------- Austin, TX, Utility Systems Rev., AMBAC, 6.75%, 2011 $ 1,500,000 $ 1,715,130 California State, Department of Water Resources Power Supply Rev., "A", 5.125%, 2012 (c) 750,000 813,203 Georgia Municipal Electric Power Authority Rev., MBIA, 6.375%, 2016 2,000,000 2,337,640 Georgia Municipal Electric Power Authority Rev., MBIA, 6.5%, 2020 7,350,000 8,799,347 North Carolina Municipal Power Agency, Catawba Electric Rev., 6.375%, 2013 750,000 815,520 North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 7%, 2007 3,250,000 3,331,055 North Carolina Municipal Power Agency, MBIA, 5.25%, 2019 (u) 3,000,000 3,195,690 ------------ $ 21,007,585 ----------------------------------------------------------------------------------------------------------------- Water & Sewer Utility Revenue - 5.7% ----------------------------------------------------------------------------------------------------------------- Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 7.019%, 2016 (z)(v) $ 1,000,000 $ 1,186,100 Augusta, GA, Water & Sewer Rev., FSA, 5.25%, 2039 1,090,000 1,155,825 Forsyth County, GA, Water & Sewage Authority, 6.25%, 2010 (c) 1,170,000 1,288,895 Massachusetts Water Resources Authority, 6.5%, 2019 5,965,000 7,062,321 Mississippi Development Bank Special Obligations, Grenada, MS, Water & Sewer Systems Project, "N", FSA, 5%, 2030 490,000 508,218 Narragansett, RI, Bay Commission Wastewater Systems Rev., "A", MBIA, 5%, 2028 860,000 895,716 Pittsburgh, PA, Water & Sewer Authority Rev., "C", FSA, 5.25%, 2022 2,000,000 2,054,240 Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA, 5.25%, 2030 255,000 270,728 State of New York, Environmental Facilities, 5%, 2016 430,000 445,347 State of New York, Environmental Facilities, ETM, 5%, 2016 (c) 570,000 587,904 Upland, CA, Public Financing Authority Rev., Water Systems Improvement, AMBAC, 5%, 2033 590,000 605,558 West Virginia Water Development Authority Loan Program, "B", AMBAC, 4.75%, 2035 110,000 110,416 West Wilson Utility District, TN, Waterworks Rev., MBIA, 5.25%, 2030 480,000 508,354 Westmoreland County, PA, Municipal Authority Services Rev., FSA, 5.25%, 2025 400,000 429,328 Westmoreland County, PA, Municipal Authority Services Rev., FSA, 5.25%, 2026 520,000 556,863 ------------ $ 17,665,813 ----------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $299,609,812) $317,364,661 ----------------------------------------------------------------------------------------------------------------- Floating Rate Demand Notes - 1.0% ----------------------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) ----------------------------------------------------------------------------------------------------------------- Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian University Hospital), "D ", 3.22%, due 4/06/06 $ 600,000 $ 600,000 Burke County, GA, Development Authority Pollution Control Rev. (Oglethorpe Power Corp.), "A ", 3.22%, due 4/05/06 200,000 200,000 Georgia Municipal Electric Authority, 3.05%, due 4/05/06 100,000 100,000 Jefferson County, AL, Sewer Rev., 3.22%, due 4/06/06 300,000 300,000 Lincoln County, WY, Pollution Control Rev. (Exxon Mobile Corp.), 3.19%, due 4/03/06 1,000,000 1,000,000 New York City, NY, Municipal Water & Sewer Finance Authority Rev., 3.13%, due 4/03/06 200,000 200,000 Orange County, CA, 3.1%, due 4/03/06 100,000 100,000 Pinellas County, FL, Health Facilities Authority Rev. (Pooled Hospital Loan Program), 3.18%, due 4/03/06 500,000 500,000 Washington State Health Care Facilities, "A ", 3.18%, due 4/03/06 100,000 100,000 ----------------------------------------------------------------------------------------------------------------- TOTAL FLOATING RATE DEMAND NOTES (IDENTIFIED COST, $3,100,000) $ 3,100,000 ----------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $302,709,812) $320,464,661 ----------------------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (2.9)% (8,882,446) ----------------------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $311,582,215 -----------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
NOTIONAL PRINCIPAL CASH FLOWS UNREALIZED AMOUNT OF CASH FLOWS PAID RECEIVED APPRECIATION EXPIRATION CURRENCY CONTRACT BY THE FUND BY THE FUND (DEPRECIATION) 12/01/2007 USD $6,000,000 Fixed - 3 Year Floating - 7 day $82,399 BMA Swap Index BMA Swap Index (2.795%) 8/30/2016 USD 15,000,000 Fixed - 10 Year Floating - 7 Day 115,193 BMA Swap Index BMA Swap Index (3.926%) 8/02/2021 USD 2,000,000 Fixed - 15 Year Floating - 7 Day 31,963 BMA Swap Index BMA Swap Index (4.011%) ------------------------------------------------------------------------------------------------------------- $229,555
At March 31, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. (a) SEC Rule 144A restriction. (d) Non-income producing security - in default. (c) Refunded bond. (p) Primary inverse floater. (u) As restated (See Note 8). Underlying security deposited into special purpose trust ("the trust") by investment banker upon creation of self-deposited inverse floaters (See Note 7). (v) Externally deposited inverse floater. (z) Restricted securities (excluding 144A issues) are not registered under the Securities Act of 1933 and are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:
ACQUISITION ACQUISITION CURRENT TOTAL % OF SECURITY DATE COST MARKET VALUE NET ASSETS Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 7.019%, 2016 4/20/1999 $1,167,100 $1,186,100 Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013 12/17/2003 640,558 631,795 Houston, TX, Independent School District, RITES, 6.519%, 2009 2/26/1999 524,910 543,600 -------------------------------------------------------------------------------------------------- Total Restricted Securities $2,361,495 0.8%
The following abbreviations are used in the Portfolio of Investments and are defined: BMA Bond Market Assn. COP Certificate of Participation ETM Escrowed to Maturity Insurers AMBAC AMBAC Indemnity Corp. ASSD GTY Assured Guarantee Insurance Co. CIFG CDC IXIS Financial Guaranty FGIC Financial Guaranty Insurance Co. FHA Federal Housing Administration FNMA Federal National Mortgage Assn. FSA Financial Security Assurance, Inc. GNMA Government National Mortgage Assn. MBIA MBIA Insurance Corp. PSF Permanent School Fund XLCA XL Capital Insurance Co. Inverse Floaters RIBS Residual Interest Bonds RITES Residual Interest Tax-Exempt Security SEE NOTES TO FINANCIAL STATEMENTS FINANCIAL STATEMENTS | Statement of Assets and Liabilities (As Restated - See Note 8) This statement represents your fund's balance sheet, which details the assets and liabilities composing the total value of the fund.
AT 3/31/06 ASSETS --------------------------------------------------------------------------------------------------- Investments, at value (identified cost, $302,709,812) $320,464,661 Cash 77,197 Receivable for investments sold 559,006 Receivable for fund shares sold 172,314 Interest receivable 4,600,013 Unrealized appreciation on interest rate swap agreements 243,530 --------------------------------------------------------------------------------------------------- Total assets $326,116,721 --------------------------------------------------------------------------------------------------- LIABILITIES --------------------------------------------------------------------------------------------------- Distributions payable $ 513,639 Payable for investments purchased 1,280,005 Payable to the holder of the floating rate certificate from trust assets 12,070,000 Payable for fund shares reacquired 404,795 Unrealized depreciation on interest rate swap agreements 13,975 Payable to affiliates Management fee 2,510 Shareholder servicing costs 21,285 Distribution and service fees 3,600 Administrative services fee 97 Payable for independent trustees' compensation 32,280 Payable for interest expense and fees 82,839 Accrued expenses and other liabilities 109,481 --------------------------------------------------------------------------------------------------- Total liabilities $ 14,534,506 --------------------------------------------------------------------------------------------------- Net assets $311,582,215 --------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: --------------------------------------------------------------------------------------------------- Paid-in capital $297,426,695 Unrealized appreciation (depreciation) on investments 17,984,404 Accumulated net realized gain (loss) on investments (3,702,858) Accumulated distributions in excess of net investment income (126,026) --------------------------------------------------------------------------------------------------- Net assets $311,582,215 --------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding 36,523,035 --------------------------------------------------------------------------------------------------- Class A shares --------------------------------------------------------------------------------------------------- Net assets $240,212,089 Shares outstanding 28,174,876 --------------------------------------------------------------------------------------------------- Net asset value per share $ 8.53 --------------------------------------------------------------------------------------------------- Offering price per share (100/95.25Xnet asset value per share) $ 8.96 --------------------------------------------------------------------------------------------------- Class B shares --------------------------------------------------------------------------------------------------- Net assets $ 36,751,814 Shares outstanding 4,304,321 --------------------------------------------------------------------------------------------------- Net asset value and offering price per share $ 8.54 --------------------------------------------------------------------------------------------------- Class C shares --------------------------------------------------------------------------------------------------- Net assets $ 34,618,312 Shares outstanding 4,043,838 --------------------------------------------------------------------------------------------------- Net asset value and offering price per share $ 8.56 ---------------------------------------------------------------------------------------------------
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 (As Restated - See Note 8) This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.
YEAR ENDED 3/31/06 NET INVESTMENT INCOME --------------------------------------------------------------------------------------------------- Interest income $ 17,907,050 --------------------------------------------------------------------------------------------------- Expenses Management fee $ 1,748,513 Distribution and service fees 1,354,018 Shareholder servicing costs 438,989 Administrative services fee 43,442 Independent trustees' compensation 18,054 Custodian fee 117,265 Shareholder communications 30,259 Auditing fees 47,537 Legal fees 8,691 Interest expense and fees 348,977 Miscellaneous 110,393 --------------------------------------------------------------------------------------------------- Total expenses $ 4,266,138 --------------------------------------------------------------------------------------------------- Fees paid indirectly (22,580) Reduction of expenses by investment adviser (796,680) --------------------------------------------------------------------------------------------------- Net expenses $ 3,446,878 --------------------------------------------------------------------------------------------------- Net investment income $ 14,460,172 --------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS --------------------------------------------------------------------------------------------------- Realized gain (loss) (identified cost basis) Investment transactions $ 174,408 Swap transactions 454,917 --------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments $ 629,325 --------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) Investments $ (2,475,902) Swap transactions (267,889) --------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments $ (2,743,791) --------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments $ (2,114,466) --------------------------------------------------------------------------------------------------- Change in net assets from operations $ 12,345,706 ---------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS FINANCIAL STATEMENTS | Statements of Changes in Net Assets (Not Restated) These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
YEARS ENDED 3/31 2006 2005 CHANGE IN NET ASSETS --------------------------------------------------------------------------------------------------- FROM OPERATIONS --------------------------------------------------------------------------------------------------- Net investment income $ 14,460,172 $ 15,635,213 Net realized gain (loss) on investments 629,325 1,875,472 Net unrealized gain (loss) on investments (2,743,791) (7,230,682) --------------------------------------------------------------------------------------------------- Change in net assets from operations $ 12,345,706 $ 10,280,003 --------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------- From net investment income Class A $(11,422,176) $(12,056,821) Class B (1,578,544) (1,913,952) Class C (1,359,481) (1,411,847) --------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(14,360,201) $(15,382,620) --------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $ (6,094,125) $(30,106,846) --------------------------------------------------------------------------------------------------- Redemption fees $-- $ 691 --------------------------------------------------------------------------------------------------- Total change in net assets $ (8,108,620) $(35,208,772) --------------------------------------------------------------------------------------------------- NET ASSETS --------------------------------------------------------------------------------------------------- At beginning of period 319,690,835 354,899,607 At end of period (including accumulated distributions in excess of net investment income of $126,026 and $216,146, respectively) $311,582,215 $319,690,835 ---------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS FINANCIAL STATEMENTS | Financial Highlights (As Restated - See Note 8) The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
CLASS A YEARS ENDED 3/31 ---------------------------------------------------------------------- 2006 2005 2004 2003 2002 Net asset value, beginning of period $ 8.58 $ 8.70 $ 8.54 $ 8.32 $ 8.54 ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------------------- Net investment income (d) $ 0.41 $ 0.42 $ 0.41 $ 0.41 $ 0.44 Net realized and unrealized gain (loss) on investments (0.06) (0.13) 0.17 0.25 (0.20) ----------------------------------------------------------------------------------------------------------------------- Total from investment operations $ 0.35 $ 0.29 $ 0.58 $ 0.66 $ 0.24 ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS ----------------------------------------------------------------------------------------------------------------------- From net investment income $ (0.40) $ (0.41) $ (0.42) $ (0.44) $ (0.46) ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 8.53 $ 8.58 $ 8.70 $ 8.54 $ 8.32 ----------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 4.18 3.49 6.94 8.00 2.78 ----------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.17 1.04 1.04 1.05 1.15 Expenses after expense reductions (f) 0.92 0.79 0.88 0.90 0.91 Expenses after expense reductions and excluding interest and fees (f)(l) 0.81 0.79 0.88 0.90 0.91 Net investment income 4.71 4.90 4.80 4.85 5.12 Portfolio turnover 9 8 9 13 15 Net assets at end of period (000 Omitted) $ 240,212 $ 241,850 $ 264,797 $ 274,442 $ 276,719 ----------------------------------------------------------------------------------------------------------------------- CLASS B YEARS ENDED 3/31 ---------------------------------------------------------------------- 2006 2005 2004 2003 2002 Net asset value, beginning of period $ 8.59 $ 8.72 $ 8.55 $ 8.33 $ 8.55 ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------------------- Net investment income (d) $ 0.34 $ 0.36 $ 0.35 $ 0.35 $ 0.37 Net realized and unrealized gain (loss) on investments (0.05) (0.14) 0.18 0.24 (0.20) ----------------------------------------------------------------------------------------------------------------------- Total from investment operations $ 0.29 $ 0.22 $ 0.53 $ 0.59 $ 0.17 ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS ----------------------------------------------------------------------------------------------------------------------- From net investment income $ (0.34) $ (0.35) $ (0.36) $ (0.37) $ (0.39) ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 8.54 $ 8.59 $ 8.72 $ 8.55 $ 8.33 ----------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.40 2.60 6.27 7.19 2.00 ----------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.92 1.79 1.79 1.80 1.90 Expenses after expense reductions (f) 1.67 1.54 1.63 1.65 1.66 Expenses after expense reductions and excluding interest and fees (f)(l) 1.56 1.54 1.63 1.65 1.66 Net investment income 3.96 4.15 4.05 4.10 4.37 Portfolio turnover 9 8 9 13 15 Net assets at end of period (000 Omitted) $ 36,752 $ 43,930 $ 52,594 $ 59,591 $ 61,627 ----------------------------------------------------------------------------------------------------------------------- CLASS C YEARS ENDED 3/31 ---------------------------------------------------------------------- 2006 2005 2004 2003 2002 Net asset value, beginning of period $ 8.61 $ 8.73 $ 8.56 $ 8.34 $ 8.56 ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------------------- Net investment income (d) $ 0.35 $ 0.36 $ 0.35 $ 0.35 $ 0.37 Net realized and unrealized gain (loss) on investments (0.06) (0.13) 0.18 0.24 (0.20) ----------------------------------------------------------------------------------------------------------------------- Total from investment operations $ 0.29 $ 0.23 $ 0.53 $ 0.59 $ 0.17 ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS ----------------------------------------------------------------------------------------------------------------------- From net investment income $ (0.34) $ (0.35) $ (0.36) $ (0.37) $ (0.39) ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 8.56 $ 8.61 $ 8.73 $ 8.56 $ 8.34 ----------------------------------------------------------------------------------------------------------------------- Total return (%) (t)(s)(r) 3.41 2.72 6.27 7.18 2.00 ----------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.92 1.79 1.79 1.80 1.90 Expenses after expense reductions (f) 1.67 1.54 1.63 1.65 1.66 Expenses after expense reductions and excluding interest and fees (f)(l) 1.56 1.54 1.63 1.65 1.66 Net investment income 4.09 4.15 4.05 4.10 4.37 Portfolio turnover 9 8 9 13 15 Net assets at end of period (000 Omitted) $ 34,618 $ 33,911 $ 37,508 $ 39,420 $ 36,146 -----------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2004 and 2005 fiscal years resulted in a per share impact of less than $0.01. (d) Per share data are based on average shares outstanding. (f) Ratios do not reflect reductions from fees paid indirectly. (l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets. (r) Certain expenses have been reduced without which performance would have been lower. (s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. (t) Total returns do not include any applicable sales charges. SEE NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS (1) BUSINESS AND ORGANIZATION MFS Municipal Income Fund (the fund) is a series of MFS Municipal Series Trust which is organized as a Massachusetts business Trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. (2) SIGNIFICANT ACCOUNTING POLICIES GENERAL - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the projects or assets or the inability to collect revenues for the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal security has not complied with applicable tax requirements, the security could decline in value, interest from the security could become taxable and the fund may be required to issue Forms 1099-DIV. INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated bid price as reported by an independent pricing service. Values of debt instruments obtained from pricing services can utilize both dealer-supplied valuations and electronic data processing techniques which take into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Short-term instruments with a maturity at issuance of 365 days or less are generally valued at amortized cost, which approximates market value. Swaps are generally valued on the basis of quotations from brokers and dealers. Securities and other assets generally valued on the basis of information from an independent pricing service may also be valued on the basis of information from brokers and dealers. 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. DERIVATIVE RISK - The fund may invest in derivatives for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to gain market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative's original cost. Derivative instruments include swap agreements. SWAP AGREEMENTS - The fund may enter into swap agreements. A swap is an exchange of cash payments between the fund and another party. Net cash payments are exchanged at specified intervals and are recorded as a realized gain or loss in the Statement of Operations. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation in the Statement of Operations. 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. Interest rate swap agreements are agreements to exchange cash flows periodically based on a notional principal amount, such as 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 recorded as an unrealized gain or loss, and any payments received or made are recorded as realized gains or losses, in the Statement of Operations. The primary risk associated with interest rate swap agreements is that unfavorable changes in the fluctuation of interest rates could adversely impact the fund. SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April 1, 2005, the fund charged a 2% redemption fee (which was 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 no longer charges 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 or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. All premium and original issue discount is amortized or accreted for tax reporting purposes as required by federal income tax regulations. The fund may receive proceeds from litigation settlements 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. INTEREST EXPENSE AND FEES - Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets in connection to self-deposited inverse floater transactions. Interest expense and fees are recorded as incurred. 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, 2006, is shown as a reduction of total expenses on the Statement of Operations. TAX MATTERS AND DISTRIBUTIONS - The fund intends to continue to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable and tax-exempt income, including realized capital gains. Accordingly, no provision for federal income tax is required in the financial statements. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Book/tax differences primarily relate to amortization and accretion of debt securities and secured borrowings. The tax character of distributions declared to shareholders is as follows: MARCH 31, 2006 MARCH 31, 2005 Ordinary income (including any short-term capital gains) $-- $27,254 Tax-exempt income 14,360,201 15,355,366 ------------------------------------------------------------------- Total distributions $14,360,201 $15,382,620 The federal tax cost and the tax basis components of distributable earnings were as follows: AS OF MARCH 31, 2006 Cost of investments $290,150,614 ---------------------------------------------------------- Gross appreciation $22,050,402 Gross depreciation (3,806,355) ---------------------------------------------------------- Net unrealized appreciation (depreciation) $18,244,047 Undistributed tax-exempt income $1,078,782 Capital loss carryforwards (4,190,232) Other temporary differences (977,077) As of March 31, 2006, the fund had available capital loss carryforwards to offset future realized gains. Such losses expire as follows: March 31, 2011 $(104,559) March 31, 2012 (4,085,673) ---------------------------------------------------------- $(4,190,232) 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, MFS has agreed to reduce the management fee to 0.30% of the fund's average daily net assets for the period March 1, 2004 through February 28, 2009. For the year ended March 31, 2006, this waiver amounted to $794,807 and is reflected as a reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended March 31, 2006 was equivalent to an annual effective rate of 0.30% of the fund's average daily net assets. DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly owned subsidiary of MFS, as distributor, received $57,357 for the year ended March 31, 2006, as its portion of the initial sales charge on sales of Class A shares of the fund. The Board of Trustees has adopted a distribution plan for certain class shares pursuant to Rule 12b-1 of the Investment Company Act of 1940. The fund's distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. Distribution Fee Plan Table:
TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE Class A 0.10% 0.25% 0.35% 0.25% $608,334 Class B 0.75% 0.25% 1.00% 1.00% 400,650 Class C 0.75% 0.25% 1.00% 1.00% 345,034 ----------------------------------------------------------------------------------------------------------------- Total Distribution and Service Fees $1,354,018
(1) In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees up to these annual percentage rates of each class' average daily net assets. (2) The annual effective rates represent actual fees incurred under the distribution plan for the year ended March 31, 2006 based on each class' average daily net assets. Payment of the 0.10% annual Class A distribution fee is not yet implemented and will commence on such date as the fund's Board of Trustees may determine. Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within 12 months of purchase. Class B shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the year ended March 31, 2006, were as follows: AMOUNT Class A $8,903 Class B $59,246 Class C $4,632 SHAREHOLDER SERVICING AGENT - The fund pays a portion of shareholder servicing costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS. MFSC receives a fee from the fund, for its services as shareholder servicing agent, set periodically under the supervision of the fund's Board of Trustees. For the year ended March 31, 2006, the fee was $335,209, which equated to 0.1054% annually of the fund's average daily net assets. MFSC also receives payment from the fund for out-of-pocket and sub-accounting expenses paid by MFSC on behalf of the fund. For the year ended March 31, 2006, these costs amounted to $79,495. 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, the funds may partially reimburse MFS the costs incurred to provide these services, subject to review and approval by the Board of Trustees. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. Effective July 1, 2005, the fund's annual fixed amount is $10,000. The administrative services fee incurred for the year ended March 31, 2006 was equivalent to an annual effective rate of 0.0137% of the fund's average daily net assets. TRUSTEES' AND OFFICERS' COMPENSATION - The fund pays compensation to Independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees 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, MFD, and MFSC. The fund has an unfunded, defined benefit plan for retired Independent Trustees which resulted in a pension expense of $5,751. This amount is included in Independent trustees' compensation for the year ended March 31, 2006. The deferred liability for retirement benefits payable to retired Trustees amounted to $31,194 at March 31, 2006, and is included in payable for independent trustees' compensation. OTHER - This fund and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the year ended March 31, 2006, the fee paid to Tarantino LLC was $2,125. MFS has agreed to reimburse the fund for a portion of the payments made by the funds to Tarantino LLC in the amount of $1,873, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO. (4) PORTFOLIO SECURITIES Purchases and sales of investments, other than U.S. government securities, purchased option transactions, and short-term obligations, aggregated $27,704,803 and $31,794,529, respectively. (5) SHARES OF BENEFICIAL INTEREST The fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
YEAR ENDED 3/31/06 YEAR ENDED 3/31/05 SHARES AMOUNT SHARES AMOUNT Shares sold Class A 3,325,237 $28,649,761 1,567,579 $13,461,021 Class B 537,071 4,625,461 454,146 3,903,573 Class C 633,255 5,472,817 544,452 4,690,961 --------------------------------------------------------------------------------------------------- 4,495,563 $38,748,039 2,566,177 $22,055,555 YEAR ENDED 3/31/06 YEAR ENDED 3/31/05 SHARES AMOUNT SHARES AMOUNT Shares issued to shareholders in reinvestment of distributions Class A 734,629 $6,332,181 849,343 $7,292,898 Class B 90,476 781,204 118,406 1,017,998 Class C 104,388 902,609 119,904 1,032,616 --------------------------------------------------------------------------------------------------- 929,493 $8,015,994 1,087,653 $9,343,512 Shares reacquired Class A (4,066,222) $(34,988,521) (4,659,350) $(39,924,894) Class B (1,435,040) (12,389,239) (1,495,083) (12,809,285) Class C (634,387) (5,480,398) (1,021,491) (8,771,734) --------------------------------------------------------------------------------------------------- (6,135,649) $(52,858,158) (7,175,924) $(61,505,913) Net change Class A (6,356) $(6,579) (2,242,428) $(19,170,975) Class B (807,493) (6,982,574) (922,531) (7,887,714) Class C 103,256 895,028 (357,135) (3,048,157) --------------------------------------------------------------------------------------------------- (710,593) $(6,094,125) (3,522,094) $(30,106,846)
(6) LINE OF CREDIT The fund and other affiliated funds participate in a $1 billion unsecured line of credit provided by a syndication of banks under a 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 0.35%. 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, 2006 was $2,047, and is included in miscellaneous expense on the Statement of Operations. The fund had no significant borrowings on the line of credit during the year ended March 31, 2006. (7) INVERSE FLOATERS The fund invests in municipal inverse floating rate securities which are structured by the issuer (known as primary market inverse floating rate securities) or by an investment banker utilizing municipal bonds which have already been issued (known as secondary market inverse floating rate securities) to have variable rates of interest which typically move in the opposite direction of short term interest rates. A secondary market inverse floating rate security is created when an investment banker transfers a fixed rate municipal bond to a special purpose trust, and causes the trust to (a) issue floating rate certificates to third parties, in an amount equal to a fraction of the par amount of the deposited bonds (these certificates usually pay tax-exempt interest at short-term interest rates that typically reset weekly; and the certificate holders typically, on seven days notice, have the option to tender their certificates to the investment banker or another party for redemption at par plus accrued interest), and (b) issue inverse floating rate certificates (sometimes referred to as "inverse floaters"). If the holder of the inverse floater transfers the municipal bonds to an investment banker for the purpose of depositing the municipal bonds into the special purpose trust, the inverse floating rate certificates that are issued by the trust are referred to as "self-deposited inverse floaters." If the bonds held by the trust are purchased by the investment banker for deposit into the trust from someone other than the purchasers of the inverse floaters, the inverse floating rate certificates that are issued by the trust are referred to as "externally deposited inverse floaters." Such self-deposited inverse floaters held by the fund are accounted for as secured borrowings, with the municipal bonds reflected in the investments of the fund and amounts owed to the holder of the floating rate certificate under the provisions of the trust, which amounts are paid solely from the assets of the trust, reflected as liabilities of the fund in the Statement of Assets and Liabilities under the caption, "Payable to the holder of the floating rate certificate from trust assets". At March 31, 2006, the fund's Statement of Assets and Liabilities impact was as follows: PAYABLE TO THE HOLDER OF THE WEIGHTED AVERAGE INTEREST FLOATING RATE RATE ON FLOATING RATE VALUE OF BONDS CERTIFICATE FROM CERTIFICATES ISSUED TRANSFERRED TO TRUST ASSETS BY THE TRUST THE TRUST $12,070,000 2.86% $26,259,175 Primary and externally deposited inverse floaters held by the fund are not accounted for as secured borrowings. (8) RESTATEMENT INFORMATION After the fund issued its March 31, 2006 financial statements, the fund determined that the criteria for sale accounting in FASB Statement No. 140 had not been met for certain transfers of municipal bonds during the fiscal year ended March 31, 2006 and that its transfers of municipal bonds in connection with self-deposited inverse floaters should have been accounted for as secured borrowings rather than as sales. Accordingly, the fund has restated the Statement of Assets and Liabilities, including the Portfolio of Investments, as of March 31, 2006, the related Statement of Operations and the Financial Highlights for the year then ended, to give effect to this change, including recording interest on the bonds as interest income and interest paid to the holder of the floating rate certificate from trust assets as interest expense in the Statement of Operations. The fund's Statement of Changes in Net Assets was not restated. The restatement did not affect the fund's reported net investment income, annual total return or net asset value.
PREVIOUSLY REPORTED RESTATED STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2006 Investments, identified cost $290,623,337 $302,709,812 Investments, at value $308,394,661 $320,464,661 Interest receivable $4,517,174 $4,600,013 Total assets $313,963,882 $326,116,721 Payable to the holder of the floating rate certificate from trust assets $-- $12,070,000 Payable for interest expense and fees $-- $82,839 Total liabilities $2,381,667 $14,534,506 Unrealized appreciation (depreciation) on investments $18,000,879 $17,984,404 Accumulated net realized gain (loss) on investments $(3,719,333) $(3,702,858) STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2006 Interest income $17,558,073 $17,907,050 Interest expense and fees $-- $348,977 Total expenses $3,917,161 $4,266,138 Net expenses $3,097,901 $3,446,878
FINANCIAL HIGHLIGHTS
YEAR ENDED MARCH 31, 2006 PREVIOUSLY RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED CLASS A Expenses before expense reductions 1.06 1.17 Expenses after expense reductions 0.81 0.92 CLASS B Expenses before expense reductions 1.81 1.92 Expenses after expense reductions 1.56 1.67 CLASS C Expenses before expense reductions 1.81 1.92 Expenses after expense reductions 1.56 1.67
While the "Statement of Assets and Liabilities" as of March 31, 2005, 2004, 2003 and 2002 (not presented herein) has not been reissued to give effect to the restatement, the principal effects of the restatement would be to increase investments and payable to the holder of the floating rate certificate from trust assets by corresponding amounts each year end, with no effect on previously reported net assets. The "Statement of Operations" for the years ended March 31, 2005, 2004, 2003 and 2002 (not presented herein) has not been reissued to give effect to the restatement, but the principal effects of the restatement would be to increase interest income and interest expense and fees by corresponding amounts each year, with no effect on previously reported net investment income. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To The Trustees of MFS Municipal Series Trust and the Shareholders of MFS Municipal Income Fund: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of MFS Municipal Income Fund (one of the series comprising MFS Municipal Series Trust) (the "Trust") as of March 31, 2006, 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 audit. 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, 2006, 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, such financial statements and financial highlights present fairly, in all material respects, the financial position of MFS Muncipal Income Fund as of March 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 8, the statement of assets and liabilities, including the portfolio of investments, of the MFS Municipal Income Fund as of March 31, 2006, and the related statement of operations and the financial highlights for the year then ended have been restated. DELOITTE & TOUCHE LLP Boston, Massachusetts May 23, 2006 (February 2, 2007 as to the effects of the restatement discussed in Note 8) TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND (Not Restated) The Trustees and officers of the Trust, as of May 1, 2006, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING POSITION(S) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS & NAME, DATE OF BIRTH WITH FUND SINCE(H) OTHER DIRECTORSHIPS(J) ------------------- ---------------- --------------- ---------------------------------- INTERESTED TRUSTEES Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services (born 10/20/63) Company, Chief Executive Officer, President, Chief Investment Officer and Director Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services (born 08/08/46) Company, Chairman (since February 2004); 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 February 1992 Private investor; Eastern (born 05/01/36) Chair of Enterprises (diversified services Trustees company), Chairman, Trustee and Chief Executive Officer (until November 2000) Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and (born 11/29/41) compliance matters (since July 2002); PricewaterhouseCoopers LLP (professional services firm), Partner (November 2000 until June 2002) Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, (born 03/11/37) Senior Cardiac Surgeon, Chief of Cardiac Surgery (until 2005); Harvard Medical School, Professor of Surgery; Brigham and Women's Hospital Physicians' Organization, Chair (2000 to 2004) 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 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) 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 Robert W. Uek Trustee January 2006 Retired (since 1999); (born 05/18/41) PricewaterhouseCoopers LLP (professional services firm), Partner (until 1999); Consultant to investment company industry (since 2000); TT International Funds (mutual fund complex), Trustee (2000 until 2005); Hillview Investment Trust II Funds (mutual fund complex), Trustee (2000 until 2005) OFFICERS Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services (born 12/01/58) Company, Executive Vice President and Chief Regulatory Officer (since March 2004); Fidelity Management & Research Company, Vice President (prior to March 2004); Fidelity Group of Funds, President and Treasurer (prior to March 2004) Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services (born 12/30/64) Company, Senior Vice President (since September 2004); PricewaterhouseCoopers LLP, Partner (prior to September 2004) Christopher R. Bohane(k) Assistant July 2005 Massachusetts Financial Services (born 1/18/74) Secretary and Company, Vice President and Assistant Senior Counsel (since April Clerk 2003); Kirkpatrick & Lockhart LLP (law firm), Associate (prior to April 2003); Nvest Services Company, Assistant Vice President and Associate Counsel (prior to January 2001) Ethan D. Corey(k) Assistant July 2005 Massachusetts Financial Services (born 11/21/63) Secretary and Company, Special Counsel (since Assistant December 2004); Dechert LLP Clerk (law firm), Counsel (prior to December 2004) David L. DiLorenzo(k) Assistant July 2005 Massachusetts Financial Services (born 8/10/68) Treasurer Company, Vice President (since June 2005); JP Morgan Investor Services, Vice President (January 2001 to June 2005); State Street Bank, Vice President and Corporate Audit Manager (prior to January 2001) Timothy M. Fagan(k) Assistant September 2005 Massachusetts Financial Services (born 7/10/68) Secretary and Company, Vice President and Assistant Senior Counsel (since September Clerk 2005); John Hancock Advisers, LLC, Vice President and Chief Compliance Officer (September 2004 to August 2005), Senior Attorney (prior to September 2004); John Hancock Group of Funds, Vice President and Chief Compliance Officer (September 2004 to December 2004) Mark D. Fischer(k) Assistant July 2005 Massachusetts Financial Services (born 10/27/70) Treasurer Company, Vice President (since May 2005); JP Morgan Investment Management Company, Vice President (prior to May 2005) Ellen Moynihan(k) Assistant April 1997 Massachusetts Financial Services (born 11/13/57) Treasurer Company, Senior Vice President Susan S. Newton(k) Assistant May 2005 Massachusetts Financial Services (born 03/07/50) Secretary and Company, Senior Vice President Assistant and Associate General Counsel Clerk (since April 2005); John Hancock Advisers, LLC, Senior Vice President, Secretary and Chief Legal Officer (prior to April 2005); John Hancock Group of Funds, Senior Vice President, Secretary and Chief Legal Officer (prior to April 2005) Susan A. Pereira(k) Assistant July 2005 Massachusetts Financial Services (born 11/05/70) Secretary and Company, Vice President and Assistant Senior Counsel (since June 2004); Clerk Bingham McCutchen LLP (law firm), Associate (January 2001 to June 2004); Preti, Flaherty, Beliveau, Pachios & Haley, LLC, Associate (prior to January 2001) Mark N. Polebaum(k) Secretary and January 2006 Massachusetts Financial Services (born 05/01/52) Clerk Company, Executive Vice President, General Counsel and Secretary (since January 2006); Wilmer Cutler Pickering Hale and Dorr LLP (law firm), Partner (prior to January 2006) Frank L. Tarantino Independent June 2004 Tarantino LLC (provider of (born 03/07/44) Chief compliance services), Principal Compliance (since June 2004); CRA Business Officer 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(k) Assistant September 1990 Massachusetts Financial Services (born 06/12/60) Treasurer Company, Senior Vice President
---------- (h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously since appointment unless indicated otherwise. (j) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public companies"). (k)"Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116. (n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant retained by MFS pursuant to its settlement with the SEC concerning market timing and related matters. The terms of that settlement required that compensation and expenses related to the independent compliance consultant be borne exclusively by MFS and, therefore, MFS paid Mr. Butler for the services he rendered to the independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total of $351,119.29. Each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Messrs. Butler, Sherratt and Uek and Ms. Thomsen are members of the Trust's Audit Committee. Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. As of December 31, 2005, each Trustee served as a board member of 98 funds within the MFS Family of Funds. The Trust held a shareholders' meeting in 2005, and will hold a shareholders' 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 Massachusetts Financial Services Company 500 Boylston Street, Boston, MA 02116-3741 DISTRIBUTOR MFS Fund Distributors, Inc. 500 Boylston Street, Boston, MA 02116-3741 PORTFOLIO MANAGER Geoffrey L. Schechter CUSTODIAN State Street Bank and Trust Company 225 Franklin Street, Boston, MA 02110 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP 200 Berkeley Street, Boston, MA 02116 BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT A discussion regarding the Board's most recent review and renewal of the Fund's investment advisory agreement is available by clicking on the fund's name under "Select a fund" on the MFS Web site (mfs.com). PROXY VOTING POLICIES AND INFORMATION A general description of the MFS funds' proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission 100 F Street, NE Room 1580 Washington, D.C. 20549 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-551-5850. The fund's Form N-Q is available on the EDGAR database on the Commission's Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. FEDERAL TAX INFORMATION (unaudited) (Not Restated) The fund will notify shareholders of amounts for use in preparing 2006 income tax forms in January 2007. The following information is provided pursuant to provisions of the Internal Revenue Code. Of the dividends paid from net investment income during the fiscal year, 100% is designated as exempt interest dividends for federal income tax purposes. If the fund has earned income on private activity bonds, a portion of the dividends paid may be considered a tax preference item for purposes of computing a shareholder's alternative minimum tax. 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 -------------------------------------------------------------------------------------------------------------------- Share prices, account balances 1-800-MFS-TALK exchanges or stock and (1-800-637-8255) bond outlooks touch-tone required 24 hours a day, 365 days a year --------------------------------------------------------------------------------------------------------------------
M F S(SM) INVESTMENT MANAGEMENT(R) MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. LMB-ANN-05/06 10M ITEM 2. CODE OF ETHICS. The Registrant has adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the Registrant's principal executive officer and principal financial and accounting officer. The Registrant has not amended any provision in its Code of Ethics (the "Code") that relates to an element of the Code's definitions enumerated in paragraph (b) of Item 2 of this Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Messrs. Robert E. Butler and Robert W. Uek and Ms. Laurie J. Thomsen, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of "audit committee financial expert" as such term is defined in Form N-CSR. In addition, Messrs. Butler and Uek and Ms. Thomsen are "independent" members of the Audit Committee (as such term has been defined by the Securities and Exchange Commission in regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The Securities and Exchange Commission has stated that the designation of a person as an audit committee financial expert pursuant to this Item 3 on the Form N-CSR does not impose on such a person any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Audit Committee and the Board of Trustees in the absence of such designation or identification. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. ITEMS 4(a) THROUGH 4(d) AND 4(g): The Board of Trustees has appointed Deloitte & Touche LLP ("Deloitte") to serve as independent accountants to each series of the Registrant (collectively, the "Funds"). The tables below set forth the audit fees billed to the Funds as well as fees for non-audit services provided to the Funds and/or to the Funds' investment adviser, Massachusetts Financial Services Company ("MFS") and to various entities either controlling, controlled by, or under common control with MFS that provide ongoing services to the Funds ("MFS Related Entities"). For the fiscal years ended March 31, 2006 and 2005, audit fees billed to the Funds by Deloitte were as follows: Audit Fees FEES BILLED BY DELOITTE: 2006 2005 ---- ---- MFS Alabama Municipal Bond Fund $32,954 $33,754 MFS Arkansas Municipal Bond Fund 32,954 33,754 MFS California Municipal Bond Fund 32,954 33,754 MFS Florida Municipal Bond Fund 32,954 33,754 MFS Georgia Municipal Bond Fund 32,954 33,754 MFS Maryland Municipal Bond Fund 32,954 33,754 MFS Massachusetts Municipal Bond Fund 32,954 33,754 MFS Mississippi Municipal Bond Fund 32,954 33,754 MFS Municipal Income Fund 36,117 36,917 MFS New York Municipal Bond Fund 32,954 33,754 MFS North Carolina Municipal Bond Fund 32,954 33,754 MFS Pennsylvania Municipal Bond Fund 32,954 33,754 MFS South Carolina Municipal Bond Fund 32,954 33,754 MFS Tennessee Municipal Bond Fund 32,954 33,754 MFS Virginia Municipal Bond Fund 32,954 33,754 MFS West Virginia Municipal Bond Fund 32,954 33,754 -------- -------- TOTAL $530,427 $543,227 For the fiscal years ended March 31, 2006 and 2005, 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: 2006 2005 2006 2005 2006 2005 ---- ---- ---- ---- ---- ---- To MFS Alabama Municipal Bond Fund $0 $0 $9,550 $9,550 $514 $0 To MFS Arkansas Municipal Bond Fund 0 0 9,550 9,550 519 0 To MFS California Municipal Bond Fund 0 0 9,550 9,550 548 0 To MFS Florida Municipal Bond Fund 0 0 9,550 9,550 514 0 To MFS Georgia Municipal Bond Fund 0 0 9,550 9,550 511 0 To MFS Maryland Municipal Bond Fund 0 0 9,550 9,550 520 0 To MFS Massachusetts Municipal Bond Fund 0 0 9,550 9,550 532 0 To MFS Mississippi Municipal Bond Fund 0 0 9,550 9,550 514 0 To MFS Municipal Income Fund 0 0 9,550 9,550 539 0 To MFS New York Municipal Bond Fund 0 0 9,550 9,550 524 0 To MFS North Carolina Municipal Bond Fund 0 0 9,550 9,550 543 0 To MFS Pennsylvania Municipal Bond Fund 0 0 9,550 9,550 516 0 To MFS South Carolina Municipal Bond Fund 0 0 9,550 9,550 522 0 To MFS Tennessee Municipal Bond Fund 0 0 9,550 9,550 518 0 To MFS Virginia Municipal Bond Fund 0 0 9,550 9,550 539 0 To MFS West Virginia Municipal Bond Fund 0 0 9,550 9,550 520 0 TOTAL FEES BILLED BY DELOITTE TO ABOVE FUNDS: $0 $0 $152,800 $152,800 $8,393 $0 To MFS and MFS Related Entities of MFS Alabama Municipal Bond Fund* $931,475 $1,242,066 $0 $62,000 $444,131 $595,000 To MFS and MFS Related Entities of MFS Arkansas Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS California Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Florida Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Georgia Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Maryland Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Massachusetts Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Mississippi Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Municipal Income Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS New York Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS North Carolina Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Pennsylvania Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS South Carolina Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Tennessee Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS Virginia Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 To MFS and MFS Related Entities of MFS West Virginia Municipal Bond Fund* 931,475 1,242,066 0 62,000 444,131 595,000 AGGREGATE FEES FOR NON-AUDIT SERVICES: 2006 2005 ---- ---- To MFS Alabama Municipal Bond Fund, MFS and MFS Related Entities# $1,493,265 $1,946,217 To MFS Arkansas Municipal Bond Fund, MFS and MFS Related Entities# 1,493,270 1,946,217 To MFS California Municipal Bond Fund, MFS and MFS Related Entities# 1,493,299 1,946,217 To MFS Florida Municipal Bond Fund, MFS and MFS Related Entities# 1,493,265 1,946,217 To MFS Georgia Municipal Bond Fund, MFS and MFS Related Entities# 1,493,262 1,946,217 To MFS Maryland Municipal Bond Fund, MFS and MFS Related Entities# 1,493,271 1,946,217 To MFS Massachusetts Municipal Bond Fund, MFS and MFS Related Entities# 1,493,283 1,946,217 To MFS Mississippi Municipal Bond Fund, MFS and MFS Related Entities# 1,493,265 1,946,217 To MFS Municipal Income Fund, MFS and MFS Related Entities# 1,493,290 1,946,217 To MFS New York Municipal Bond Fund, MFS and MFS Related Entities# 1,493,275 1,946,217 To MFS North Carolina Municipal Bond Fund, MFS and MFS Related Entities# 1,493,294 1,946,217 To MFS Pennsylvania Municipal Bond Fund, MFS and MFS Related Entities# 1,493,267 1,946,217 To MFS South Carolina Municipal Bond Fund, MFS and MFS Related Entities# 1,493,273 1,946,217 To MFS Tennessee Municipal Bond Fund, MFS and MFS Related Entities# 1,493,269 1,946,217 To MFS Virginia Municipal Bond Fund, MFS and MFS Related Entities# 1,493,290 1,946,217 To MFS West Virginia Municipal Bond Fund, MFS and MFS Related Entities# 1,493,271 1,946,217 * 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 Fund (portions of which services also related to the operations and financial reporting of other funds within the MFS Funds complex). # This amount reflects the aggregate fees billed by Deloitte for non-audit services rendered to the Funds and for non-audit services rendered to MFS and the MFS Related Entities. (1) The fees included under "Audit-Related Fees" are fees related to assurance and related services that are reasonably related to the performance of the audit or review of financial statements, but not reported under "Audit Fees," including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters and internal control reviews. (2) The fees included under "Tax Fees" are fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews and tax distribution and analysis. (3) The fees included under "All Other Fees" are fees for products and services provided by Deloitte other than those reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees," including fees for services related to sales tax refunds, consultation on internal cost allocations, consultation on allocation of monies pursuant to an administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, analysis of certain portfolio holdings versus investment styles, review of internal controls and review of Rule 38a-1 compliance program.
ITEM 4(e)(1): Set forth below are the policies and procedures established by the Audit Committee of the Board of Trustees relating to the pre-approval of audit and non-audit related services: To the extent required by applicable law, pre-approval by the Audit Committee of the Board is needed for all audit and permissible non-audit services rendered to the Funds and all permissible non-audit services rendered to MFS or MFS Related Entities if the services relate directly to the operations and financial reporting of the Registrant. Pre-approval is currently on an engagement-by-engagement basis. In the event pre-approval of such services is necessary between regular meetings of the Audit Committee and it is not practical to wait to seek pre-approval at the next regular meeting of the Audit Committee, pre-approval of such services may be referred to the Chair of the Audit Committee for approval; provided that the Chair may not pre-approve any individual engagement for such services exceeding $50,000 or multiple engagements for such services in the aggregate exceeding $100,000 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 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 effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, the "Act") as conducted within 90 days of the filing of this amended report on Form N-CSR, the registrant's principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by the report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. However, as discussed below, subsequent to March 31, 2006, the registrant has applied the provisions of Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("FAS 140") to certain inverse floating rate obligations, as described below. Subsequent to the registrant's filing of the report on Form N-CSR for its fiscal year ended March 31, 2006 on June 6, 2006, the registrant's principal executive officer and principal financial officer became aware that other investment companies (not affiliated with the registrant) that had transferred municipal bonds to special purpose trusts for the purpose of investing in municipal securities commonly referred to as "inverse floaters" and that had accounted for such transfers as "sales" in accordance with what the registrant understands was common practice in the mutual fund industry, had received a comment from their independent public accountants questioning the sale treatment that had been previously applied by such investment companies to such transfers. In response to these comments, certain of these investment companies restated their financial statements to apply the provisions of FAS 140 to the transfers of such municipal bonds in connection with their investments in inverse floaters. The registrant had likewise accounted for such transfers as "sales". Registrant's chief executive officer and chief financial officer note that other investment companies that invested in similar securities over the same time periods had been accounting for such transfers in a similar manner as the registrant. After a review of this matter with the registrant's independent public accountants, registrant applied FAS 140 to such transfers and restated its financial statements for those series of the registrant that invest in inverse floaters for the fiscal year ended March 31, 2006. Subsequent to the filing of the registrant's Form N-CSR for the fiscal year ended March 31, 2006, and prior to the date hereof, the registrant's internal controls over financial reporting were modified to document the revised accounting treatment of these transactions, and such documentation included an analysis in accordance with FAS 140 of the relevant terms and conditions for transfers of securities in connection with inverse floating rate obligations. The registrant's independent public accountants have advised the registrant that its controls related to the review and analysis of the relevant terms and conditions of certain transfers of securities related to inverse floaters failed to operate effectively to determine whether the transfers qualified for sale accounting and that such failure constitutes a control deficiency that represents a material weakness in internal control over financial reporting as of March 31, 2006. It is the view of the registrant's chief executive officer and chief financial officer that at the time sale accounting treatment was applied to such transfers that treatment was appropriate and in accordance with accounting practices followed in the mutual fund industry with respect to such transfers. Registrant's chief executive officer and chief financial officers also note that the revised accounting treatment and restatement to the registrant's financial statements did not impact the net asset values of the shares of the series of the registrant investing in these securities, reported net income, past performance or the total returns for such series for any period. ITEM 12. EXHIBITS. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Code of Ethics attached hereto. (2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2): Attached hereto. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: Attached hereto. NOTICE A copy of the Amended and Restated Declaration of Trust of the Registrant is on file with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) MFS MUNICIPAL SERIES TRUST ------------------------------------------------------------------ By (Signature and Title)* MARIA F. DWYER ----------------------------------------------------- Maria F. Dwyer, President Date: February 20, 2007 ----------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* MARIA F. DWYER ----------------------------------------------------- Maria F. Dwyer, President (Principal Executive Officer) Date: February 20, 2007 ----------------- By (Signature and Title)* TRACY ATKINSON ----------------------------------------------------- Tracy Atkinson, Treasurer (Principal Financial Officer and Accounting Officer) Date: February 20, 2007 ----------------- * Print name and title of each signing officer under his or her signature.