[MFS LOGO]
Annual Report for
Year Ended
March 31, 1996
MFS(R) Municipal Series Trust
For the States of: Alabama, Arkansas, Georgia, Massachusetts,
New York and Pennsylvania
<PAGE>
MFS(R) MUNICIPAL SERIES TRUST
Trustees
A. Keith Brodkin*
Chairman and President
Richard B. Bailey*
Private Investor; Former Chairman and Director
(until 1991), Massachusetts Financial Services
Company; Director, Cambridge Bancorp; Director,
Cambridge Trust Company
Marshall N. Cohan
Private Investor
Lawrence H. Cohn, M.D.
Chief of Cardiac Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE
Chief Executive Officer, Edmund Gibbons Ltd.;
Chairman, Bank of N.T. Butterfield & Son Ltd.
Abby M. O'Neill
Private Investor;
Director, Rockefeller Financial Services, Inc.
(investment adviser)
Walter E. Robb, III
President and Treasurer, Benchmark Advisors, Inc.
(corporate financial consultants); Trustee, Landmark Funds
(mutual funds)
Arnold D. Scott*
Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames*
President and Director,
Massachusetts Financial Services Company
J. Dale Sherratt
President, Insight Resources, Inc.
(acquisition planning specialists)
Ward Smith
Former Chairman (until 1994),
NACCO Industries;
Director, Sundstrand Corporation
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 Managers
David R. King*
Geoffrey L. Schechter*
David B. Smith*
Treasurer
W. Thomas London*
*Affiliated with the Investment Adviser
Assistant Treasurer
James O. Yost*
Secretary
Stephen E. Cavan*
Assistant Secretary
James R. Bordewick, Jr.*
Custodian
State Street Bank and Trust Company
Auditors
Deloitte & Touche LLP
Investor Information
For MFS stock and bond market outlooks,
call toll free: 1-800-637-4458 anytime from
a touch-tone telephone.
For information on MFS mutual funds,
call your financial adviser or, for an
information kit, call toll free:
1-800-637-2929 any business
day from 9 a.m. to 5 p.m. Eastern time
(or leave a message anytime).
Investor Service
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free:
1-800-225-2606 any business day from
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call toll free: 1-800-637-6576 any business
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for the Deaf.)
For share prices, account balances and
exchanges, call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone
telephone.
[DALBAR #1 LOGO]
Top-Rated Service
For the second year in a row, MFS earned a #1 ranking in DALBAR, Inc.'s
Broker/Dealer Survey, Main Office Operations Service Quality category. The firm
achieved a 3.49 overall score--on a scale of 1 to 4--in the 1995 survey. A total
of 71 firms responded, offering input on the quality of service they received
from 36 mutual fund companies nationwide. The survey contained questions about
service quality in 17 categories, including "knowledge of phone service
contacts," "accuracy of transaction processing," and "overall ease of doing
business with the firm."
<PAGE>
Letter to Shareholders
Dear Shareholders:
Declining interest rates and a favorable inflation outlook helped create
opportunities in the municipal market during the past 12 months. During the
fiscal year ended March 31, 1996, all classes of shares of the individual
state Funds available within the Trust generated positive total returns. For
the most part, these returns underperformed the 8.38% return of the Lehman
Brothers Municipal Bond Index (the Lehman Index), an unmanaged index of
municipal bond investments rated Baa or higher. However, although this index
is considered the benchmark for performance of municipal bonds, it is
comprised of municipal bonds issued nationwide, while each of the Funds in
the Trust is limited to investing in the bonds of a particular state. Because
individual indices do not exist for all of the states, we have provided a
discussion of each Fund's performance relative to the Lehman Index on the
following pages.
Economic Environment
We believe the U.S. economy will continue to show moderate growth in 1996,
although this growth may be somewhat uneven as we move from quarter to
quarter. Thus, while one quarter may experience an annualized rate of growth
in Gross Domestic Product (GDP) of less than 1%, another quarter may see
annualized growth in excess of 3%--but, for the year, we believe growth could
stay within our expected range of 2% to 2-1/2%. While some increase in
consumer spending has taken place in the early months of this year,
consumers, who represent two-thirds of the economy, remain in a somewhat
weakened position, due in part to an increase in consumer installment debt in
excess of 30% over the past two years. Meanwhile, growth is also being
constrained by ongoing economic doldrums in Europe and Japan, important
markets for U.S. exports. Here again, we are seeing a few tentative signs,
particularly in Japan, of modest recoveries that could lead to improved
prospects for U.S. exporters. Also, the "lag effect" of increases in
short-term interest rates by the Federal Reserve Board in 1994 and into 1995
is helping to keep growth in check. This lag effect can last up to two years,
and although the Fed did reduce short-term rates late last year and earlier
this year, we expect it to continue its diligent anti-inflationary policies.
Finally, it appears that inflation is likely to remain under control this
year, due in part to a continued moderation in wage pressures and the subdued
level of economic growth. At the same time, we believe the current upward
pressure on energy prices bears close scrutiny, as energy is an important
component of the inflation outlook.
Municipal Bond Market
Interest rates on municipal bonds experienced dramatic swings during the
fiscal year ended March 31, 1996. Rates declined by approximately 70 basis
points (0.70%) during the first nine months of the fiscal year, as a
combination of slowing economic growth and reduced inflationary pressures
enabled the Federal Reserve to begin lowering interest rates. Positive news
out of Washington, D.C. regarding the possibility of a balanced budget
provided further impetus for the rally in fixed-income securities. In the
fourth quarter of the fiscal year, interest rates on municipal securities
increased by about 55 basis points (0.55%) as signs of a reemergence in
economic growth and rising commodity prices raised inflationary concerns.
Further driving interest rates higher was the apparent failure of the federal
government to reach agreement on a balanced budget.
The overall 15-basis point (0.15%) decline in tax-exempt yields during the
fiscal year ended March 31, 1996 was dwarfed by the approximately 70-basis
point (0.70%) decline in yields on long-term U.S. Treasury securities during
the same period, driving the yield ratio of 30-year AAA-rated municipals to
U.S. Treasuries from 79% to 86%. The dramatic underperformance by tax-exempt
securities can be attributed to investors' fears concerning major tax reform,
more specifically, the potential of the implementation of a flat tax and the
removal of municipal bonds' special tax status. While these fears have
subsided somewhat recently as it appears that major tax reform is improbable,
tax-exempt securities are still trading at levels reflective of some modest
prospect of tax reform.
Supply continues to provide a positive foundation for the municipal bond
market. In 1995, new issuance totalled approximately $156 billion, a decline
of 5% from the previous year and nearly one-half of 1993's record level. More
importantly, during 1995 the outstanding supply of municipal bonds declined
by approximately $45 billion. It is expected that new issuance will again be
in the range of $160 billion, barring any sharp decline in interest rates,
and that the outstanding supply will again decline, by approximately $30
billion. Given the favorable technical outlook for municipal bonds and their
current yield ratios compared to U.S. Treasuries, we believe that tax-exempt
securities represent good value (although principal value and interest on
Treasury securities are guaranteed by the U.S. government if held to
maturity).
Portfolio Strategy
Although the structure of each Fund is impacted by the unique market dynamics
of its state, we strive to manage all the Funds in a similar style. We are
generally constructive on the municipal market, although recent volatility
and the aforementioned signs of growth have raised some concerns. Therefore,
we have shortened the durations (measures of interest rate sensitivity) of
some of the longer-term Funds to lessen their interest rate sensitivity. We
have also sought to purchase bonds that came to market at relatively high
yields, which tend to be relatively more defensive and help us maintain
dividend levels.
The focus on credit issues in the municipal market has grown with the Orange
County, California bankruptcy filing, the deterioration of Washington, D.C.'s
financial condition, and many other local problems. At the same time, with
the volatility in interest rates, we feel it is appropriate to maintain very
high quality across the Funds' portfolios. Finally, the rapidly changing
credit landscape
1
<PAGE>
Letter to Shareholders-continued
may present many opportunities that, with our research team, we hope to
identify and take advantage of to enhance the value of the Funds.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
/s/ David R. King /s/ Geoffrey L. Schechter /s/ David B. Smith
David R. King, Geoffrey L. Schechter and David B. Smith
Portfolio Managers
April 12, 1996
Portfolio Manager Profiles
David King has been a member of the MFS investment staff since 1985. A
graduate of the University of New Hampshire and the Babson College Graduate
School of Business Administration, he began his career at MFS as a member of
the Fixed Income Department and was named Assistant Vice President -
Investments in 1987. In 1988 he was named Vice President - Investments. Mr.
King is a Chartered Financial Analyst (C.F.A.) and currently has portfolio
management responsibilities for the Alabama, Arkansas and Pennsylvania state
Funds.
Geoffrey Schechter joined MFS in 1993 as an investment officer in the Fixed
Income Department. A graduate of the University of Texas and the Boston
University Graduate School of Business Administration, he was named Assistant
Vice President - Investments in 1994, Vice President - Investments in 1995
and currently has portfolio management responsibilities for the New York
state Fund. Mr. Schechter is a Certified Public Accountant (C.P.A.) and a
C.F.A.
David Smith has been a member of the MFS investment staff since 1988. A
graduate of Union College and the Babson College Graduate School of Business
Administration, he began his career at MFS as a Senior Treasury Analyst in
the Corporate Treasury Department. He was named a Research Aanalyst in the
Fixed Income Department in 1989, Investment Officer in 1990, Assistant Vice
President - Investments in 1991 and Vice President - Investments in 1993. Mr.
Smith is a C.F.A. and currently has portfolio management responsibilities for
the Georgia and Massachusetts state Funds.
Objective and Policies
The investment objective for each state Fund is to provide current income
exempt from federal income taxes and from the personal income taxes, if any,
of that state.
Each state Fund seeks to achieve its investment objective by investing its
assets primarily in municipal debt instruments. Each Fund may purchase
instruments, the interest on which may be subject to an alternative minimum
tax. Generally, each state Fund will invest at least two-thirds of its assets
in tax-exempt securities in the three highest grades (A or above) of
recognized rating agencies or comparable unrated securities. Each state Fund
may also enter into options and futures transactions and purchase securities
on a "when-issued" basis. A small portion of income may be subject to state,
federal, and/or alternative minimum tax. Capital gains, if any, are subject
to capital gains tax.
The performance of the individual state Funds listed on the following page
includes the reinvestment of distributions but excludes the effects of any
sales charges. Each Fund's results have been compared to the Lehman Index.
The portfolio of each Fund will tend to be structured with respect to
maturity and coupon and sector distribution, reflecting our views on interest
rates, credit quality, and financing trends. However, each Fund's performance
will differ because of supply/demand and credit quality conditions, which
vary from state to state.
2
<PAGE>
Alabama
For the 12 months ended March 31, 1996, Class A shares of the Fund provided a
total return of 7.13%, while Class B shares returned 6.25%. Both returns
underperformed the 8.38% return of the Lehman Index. Class A shares
outperformed the 6.92% average return for Alabama tax-exempt municipal bond
funds, as reported by Lipper Analytical Services, while Class B shares
underperformed the average. The Fund's underperformance relative to the
Lehman Index was due to the Fund's defensive structure, which caused its
performance to lag during the first two quarters of the fiscal year. The Fund
tended to do better in flat and down markets, and also had a higher dividend
yield than it would have had if it had been more aggressively structured.
Arkansas
The Fund's total returns for the fiscal year ended March 31, 1996 of 6.19% on
Class A shares and 5.43% on Class B shares lagged the 8.38% return of the
Lehman Index. The Fund's portfolio includes many older, higher-coupon bonds,
which caused it to underperform when interest rates declined during the first
three quarters. At the same time, these bonds helped maintain the yield at
levels higher than what they would have been had the Fund been restructured
to allow a greater return potential.
Georgia
The Fund's total returns for the fiscal year ended March 31, 1996 of 6.48%
for Class A shares and 5.52% for Class B shares underperformed the 8.38%
return of the Lehman Index, as well as the 7.44% return for the average
Georgia tax-exempt municipal bond fund, as reported by Lipper Analytical
Services, over the same period.
The Fund benefited from its high component of non-callable bonds during the
period of falling interest rates; however, this same position detracted from
performance as interest rates rose precipitously during the first calendar
quarter of 1996.
Massachusetts
The Fund's total returns for the fiscal year ended March 31, 1996 of 6.95%
for Class A shares and 6.27% for Class B shares underperformed the 8.38%
return of the Lehman Index. The performance of the Fund's Class A shares
matched the 6.95% return of the average Massachusetts tax-exempt municipal
bond fund, as reported by Lipper Analytical Services, while the Fund's Class
B shares slightly underperformed this average over the same period.
The Fund benefited by increasing its interest rate exposure during the period
of falling interest rates, by reinvesting proceeds of called bonds, and by
repositioning prerefunded positions into long-term discount bonds. The Fund
also benefited by having some of its high-coupon holdings prerefunded during
the period, substantially increasing the market value of those positions. We
will continue to monitor developments in the health care and utility sectors
to identify opportunities and risks within our current holdings. The Fund has
endeavored to dampen volatility by hedging its positions in the rising
interest rate environment experienced since February 1996.
New York
During the fiscal year ended March 31, 1996, the total returns of 6.98% for
Class A shares and 6.10% for Class B shares underperformed the 8.38% return
of the Lehman Index. Class A shares outperformed the 6.90% average return for
New York state tax-exempt municipal bond funds, as reported by Lipper
Analytical Services, while Class B shares underperformed the average. The
Fund's underperformance relative to the Lehman Index is primarily
attributable to the defensive posture that the Fund maintained during the
first two months of the fiscal year, when interest rates were generally
declining, and the aggressive posture that the Fund maintained during the
fourth quarter of the fiscal year, a period marked by rising interest rates.
Pennsylvania
The Fund provided total returns of 6.85% on Class A shares and 6.23% on Class
B shares for the 12 months ended March 31, 1996, compared to an 8.38% return
for the Lehman Index. Both classes underperformed the 7.46% average return
for Pennsylvania tax-exempt municipal bond funds as reported by Lipper
Analytical Services. The differential was primarily due to the first quarter
results, when the Fund was defensively structured relative to the Lehman
Index. The interest rate sensitivity was increased during the second and
third quarters and performance improved. The Fund has recently become more
defensive in an effort to provide some downside protection should interest
rates continue to rise.
3
<PAGE>
Performance
The following information illustrates the growth of a hypothetical $10,000
investment for each Fund's Class A shares for the periods indicated in
comparison to various market indicators. Fund results reflect the deduction
of the 4.75% maximum sales charge; benchmark comparisons are unmanaged and do
not reflect any fees or expenses. You cannot invest in an index. All results
reflect the reinvestment of all dividends and capital gains.
Class B shares were offered effective September 7, 1993. Information on Class
B share performance appears on the following pages.
Please note that the performance of other classes will be greater than or
less than the line shown, based on the differences in loads and fees paid by
shareholders investing in the different classes.
MFS ALABAMA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from February 1,
1990 to March 31, 1996)
<TABLE>
<CAPTION>
MFS Alabama Lehman Brothers Consumer
Days Municipal Bond Fund-A Municipal Bond Index Price Index
<S> <C> <C> <C> <C>
2/1/90 0 9,525 10,000 10,000
3/31/90 58 9,530 10,092 10,102
3/31/91 423 10,289 11,023 10,597
3/31/92 789 11,335 12,125 10,934
3/31/93 1,154 12,848 13,643 11,272
3/31/94 1,519 13,218 13,959 11,554
3/31/95 1,884 14,079 14,996 11,884
3/31/96 2,250 15,083 16,253 12,221
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
Life of Class
1 3 5 through
Year Years Years 3/31/96
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Alabama Municipal Bond Fund (Class A) including 4.75%
sales charge +2.00% +3.78% +6.90% +6.91%*
-------------------------------------------------------------------------------------------------------------
MFS Alabama Municipal Bond Fund (Class A) at net asset value +7.13% +5.49% +7.95% +7.75%*
-------------------------------------------------------------------------------------------------------------
MFS Alabama Municipal Bond Fund (Class B) with CDSC+ +2.25% -- -- +2.03%++
-------------------------------------------------------------------------------------------------------------
MFS Alabama Municipal Bond Fund (Class B) without CDSC +6.25% -- -- +3.11%++
-------------------------------------------------------------------------------------------------------------
Average Alabama tax-exempt municipal bond fund +6.92% +5.20% +7.78% +7.76%**
-------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +8.38% +6.01% +8.08% +8.19%**
-------------------------------------------------------------------------------------------------------------
Consumer Price Index(S) +2.84% +2.73% +2.89% +3.31%**
-------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of offering of Class A shares,
February 1, 1990 to March 31, 1996.
+These returns reflect the current Class B contingent deferred sales charge
(CDSC) of 4% for the 1-year period and 3% for the period commencing
September 7, 1993.
++For the period from the commencement of offering of Class B shares,
September 7, 1993 to March 31, 1996.
**Benchmark comparisons begin on February 1, 1990. Source: Lipper Analytical
Services, Inc.
(S)The Consumer Price Index is a popular measure of change in prices.
4
<PAGE>
MFS ARKANSAS MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from February 3,
1992 to March 31, 1996)
<TABLE>
<CAPTION>
MFS Arkansas Lehman Brothers Consumer
Days Municipal Bond Fund-A Municipal Bond Index Price Index
<S> <C> <C> <C> <C>
2/3/92 0 9,525 10,000 10,000
3/31/92 57 9,512 10,007 10,087
3/31/93 422 10,791 11,260 10,398
3/31/94 787 10,963 11,521 10,659
3/31/95 1,152 11,611 12,377 10,963
3/31/96 1,518 12,329 13,415 11,274
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
Life of Class
1 3 5 through
Year Years Years 3/31/96
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Arkansas Municipal Bond Fund (Class A) including 4.75%
sales charge +1.16% +2.87% -- +5.16%*
-------------------------------------------------------------------------------------------------------------
MFS Arkansas Municipal Bond Fund (Class A) at net asset value +6.19% +4.54% -- +6.40%*
-------------------------------------------------------------------------------------------------------------
MFS Arkansas Municipal Bond Fund (Class B) with CDSC+ +1.43% -- -- +0.89%++
-------------------------------------------------------------------------------------------------------------
MFS Arkansas Municipal Bond Fund (Class B) without CDSC +5.43% -- -- +1.96%++
-------------------------------------------------------------------------------------------------------------
Average other state tax-exempt municipal bond fund +6.99% +5.40% -- +6.39%**
-------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +8.38% +6.01% -- +7.30%**
-------------------------------------------------------------------------------------------------------------
Consumer Price Index(S) +2.84% +2.73% -- +2.92%**
-------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of offering of Class A shares,
February 3, 1992 to March 31, 1996.
+These returns reflect the current Class B CDSC of 4% for the 1-year period
and 3% for the period commencing September 7, 1993.
++For the period from the commencement of offering of Class B shares,
September 7, 1993 to March 31, 1996.
**Benchmark comparisons begin on February 1, 1992. Source: Lipper Analytical
Services, Inc.
(S)The Consumer Price Index is a popular measure of change in prices.
MFS GEORGIA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from July 1, 1988
to March 31, 1996)
<TABLE>
<CAPTION>
MFS Georgia Lehman Brothers Consumer
Days Municipal Bond Fund-A Municipal Bond Index Price Index
<S> <C> <C> <C> <C>
7/1/88 0 9,525 10,000 10,000
3/31/89 273 9,943 10,517 10,364
3/31/90 638 10,849 11,626 10,907
3/31/91 1,003 11,722 12,699 11,441
3/31/92 1,369 12,900 13,968 11,805
3/31/93 1,734 14,504 15,716 12,169
3/31/94 2,099 14,761 16,081 12,475
3/31/95 2,464 15,595 17,276 12,831
3/31/96 2,830 16,606 18,724 13,195
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
Life of Class
1 3 5 through
Year Years Years 3/31/96
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Georgia Municipal Bond Fund (Class A) including 4.75% sales
charge +1.39% +2.92% +6.17% +6.69%*
-------------------------------------------------------------------------------------------------------------
MFS Georgia Municipal Bond Fund (Class A) at net asset value +6.48% +4.61% +7.21% +7.35%*
-------------------------------------------------------------------------------------------------------------
MFS Georgia Municipal Bond Fund (Class B) with CDSC+ +1.52% -- -- +0.70%++
-------------------------------------------------------------------------------------------------------------
MFS Georgia Municipal Bond Fund (Class B) without CDSC +5.52% -- -- +1.77%++
-------------------------------------------------------------------------------------------------------------
Average Georgia tax-exempt municipal bond fund +7.44% +5.37% +7.33% +7.97%**
-------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +8.38% +6.01% +8.08% +8.54%**
-------------------------------------------------------------------------------------------------------------
Consumer Price Index(S) +2.84% +2.73% +2.89% +3.66%**
-------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of offering of Class A shares, June 6,
1988 to March 31, 1996.
+These returns reflect the current Class B CDSC of 4% for the 1-year period
and 3% for the period commencing September 7, 1993.
++For the period from the commencement of offering of Class B shares,
September 7, 1993 to March 31, 1996.
**Benchmark comparisons begin on June 1, 1988. Source: Lipper Analytical
Services, Inc.
(S)The Consumer Price Index is a popular measure of change in prices.
5
<PAGE>
MFS MASSACHUSETTS MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the 10-Year Period Ended
March 31, 1996)
<TABLE>
<CAPTION>
MFS Massachusetts Lehman Brothers Consumer
Days Municipal Bond Fund-A Municipal Bond Index Price Index
<S> <C> <C> <C> <C>
4/1/86 0 9,525 10,000 10,000
3/31/87 365 10,609 11,097 10,304
3/31/88 731 10,570 11,376 10,705
3/31/89 1,095 11,411 12,196 11,238
3/31/90 1,460 12,302 13,482 11,826
3/31/91 1,825 13,351 14,726 12,405
3/31/92 2,191 14,695 16,197 12,800
3/31/93 2,556 16,516 18,225 13,195
3/31/94 2,921 16,783 18,648 13,526
3/31/95 3,286 17,771 20,034 13,912
3/31/96 3,652 19,006 21,713 14,307
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 3 5
Year Years Years 10 Years
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Massachusetts Municipal Bond Fund (Class A) including 4.75%
sales charge +1.88% +3.10% +6.28% +6.64%
--------------------------------------------------------------------------------------------------------
MFS Massachusetts Municipal Bond Fund (Class A) at net asset
value +6.95% +4.79% +7.32% +7.16%
--------------------------------------------------------------------------------------------------------
MFS Massachusetts Municipal Bond Fund (Class B) with CDSC+ +2.27% -- -- +1.62%*
--------------------------------------------------------------------------------------------------------
MFS Massachusetts Municipal Bond Fund (Class B) without CDSC +6.27% -- -- +2.67%*
--------------------------------------------------------------------------------------------------------
Average Massachusetts tax-exempt municipal bond fund** +6.95% +5.19% +7.80% +6.99%
--------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index** +8.38% +6.01% +8.08% +8.06%
--------------------------------------------------------------------------------------------------------
Consumer Price Index(S)** +2.84% +2.73% +2.89% +3.65%
--------------------------------------------------------------------------------------------------------
</TABLE>
+These returns reflect the current Class B CDSC of 4% for the 1-year period
and 3% for the period commencing September 7, 1993.
*For the period from the commencement of offering of Class B shares,
September 7, 1993 to March 31, 1996.
**Source: Lipper Analytical Services, Inc.
(S)The Consumer Price Index is a popular measure of change in prices.
MFS NEW YORK MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from July 1, 1988
to March 31, 1996)
<TABLE>
<CAPTION>
MFS New York Lehman Brothers Consumer
Days Municipal Bond Fund-A Municipal Bond Index Price Index
<S> <C> <C> <C> <C>
7/1/88 0 9,525 10,000 10,000
3/31/89 273 9,923 10,517 10,364
3/31/90 638 10,835 11,626 10,907
3/31/91 1,003 11,863 12,699 11,441
3/31/92 1,369 13,148 13,968 11,805
3/31/93 1,734 15,099 15,716 12,169
3/31/94 2,099 15,432 16,081 12,475
3/31/95 2,464 16,362 17,276 12,831
3/31/96 2,830 17,504 18,724 13,195
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
Life of Class
1 3 5 through
Year Years Years 3/31/96
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS New York Municipal Bond Fund (Class A) including 4.75%
sales charge +1.92% +3.36% +7.04% +7.41%*
-------------------------------------------------------------------------------------------------------------
MFS New York Municipal Bond Fund (Class A) at net asset value +6.98% +5.05% +8.09% +8.08%*
-------------------------------------------------------------------------------------------------------------
MFS New York Municipal Bond Fund (Class B) with CDSC+ +2.10% -- -- +1.34%++
-------------------------------------------------------------------------------------------------------------
MFS New York Municipal Bond Fund (Class B) without CDSC +6.10% -- -- +2.40%++
-------------------------------------------------------------------------------------------------------------
Average New York tax-exempt municipal bond fund +6.90% +4.72% +7.79% +7.99%**
-------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +8.38% +6.01% +8.08% +8.54%**
-------------------------------------------------------------------------------------------------------------
Consumer Price Index(S) +2.84% +2.73% +2.89% +3.66%**
-------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of offering of Class A shares, June 6,
1988 to March 31, 1996.
+These returns reflect the current Class B CDSC of 4% for the 1-year period
and 3% for the period commencing September 7, 1993.
++For the period from the commencement of offering of Class B shares,
September 7, 1993 to March 31, 1996.
**Benchmark comparisons begin on June 1, 1988. Source: Lipper Analytical
Services, Inc.
(S)The Consumer Price Index is a popular measure of change in prices.
6
<PAGE>
MFS PENNSYLVANIA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from February 1,
1993 to March 31, 1996)
<TABLE>
<CAPTION>
MFS Pennsylvania Lehman Brothers Consumer
Days Municipal Bond Fund-A Municipal Bond Index Price Index
<S> <C> <C> <C> <C>
2/1/93 0 9,525 10,000 10,000
3/31/93 58 9,501 10,252 10,070
3/31/94 423 9,727 10,490 10,323
3/31/95 788 10,519 11,269 10,617
3/31/96 1,154 11,240 12,214 10,919
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
Life of Class
1 3 5 through
Year Years Years 3/31/96
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Pennsylvania Municipal Bond Fund (Class A) including 4.75%
sales charge +1.81% +4.06% -- +3.77%*
-------------------------------------------------------------------------------------------------------------
MFS Pennsylvania Municipal Bond Fund (Class A) at net asset
value +6.85% +5.76% -- +5.38%*
-------------------------------------------------------------------------------------------------------------
MFS Pennsylvania Municipal Bond Fund (Class B) with CDSC+ +2.23% -- -- +1.28%++
-------------------------------------------------------------------------------------------------------------
MFS Pennsylvania Municipal Bond Fund (Class B) without CDSC +6.23% -- -- +2.34%++
-------------------------------------------------------------------------------------------------------------
Average Pennsylvania tax-exempt municipal bond fund +7.46% +5.44% -- +6.03%**
-------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +8.38% +6.01% -- +6.52%**
-------------------------------------------------------------------------------------------------------------
Consumer Price Index(S) +2.84% +2.73% -- +2.81%**
-------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of offering of Class A shares,
February 1, 1993 to March 31, 1996.
+These returns reflect the current Class B CDSC of 4% for the 1-year period
and 3% for the period commencing September 7, 1993.
++For the period from the commencement of offering of Class B shares,
September 7, 1993 to March 31, 1996.
**Benchmark comparisons begin on February 1, 1993. Source: Lipper Analytical
Services, Inc.
(S)The Consumer Price Index is a popular measure of change in prices.
All results are historical and are not an indication of future results. The
investment return and principal value of an investment in a mutual fund will
vary with changes in market conditions, and shares, when redeemed, may be
worth more or less than their original cost. All results for the Pennsylvania
Fund and all Class A results for the Alabama, Georgia and New York Funds
reflect the applicable expense subsidy which is explained in the Notes to
Financial Statements. Had these subsidies not been in effect, the results
would have been less favorable. These subsidies may be rescinded at any time.
Tax Form Summary
In January 1996, shareholders were mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1995.
Exempt-Interest Dividends
For federal income tax purposes, approximately 99% of the total dividends
paid by each Fund from net investment income during the year ended March 31,
1996, is designated as an exempt-interest dividend.
7
<PAGE>
Portfolio of Investments - March 31, 1996
MFS ALABAMA MUNICIPAL BOND FUND
Municipal Bonds and Warrants - 98.0%
<TABLE>
<CAPTION>
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
- ------------------------------------------------ ----------------- --------------
<S> <C> <C> <C>
General Obligation - 14.2%
AA Birmingham, AL, 8s, 2015 $1,150 $ 1,226,464
AA Birmingham, AL, 5.125s, 2017, Warrants 1,000 904,240
AAA Commonwealth of Puerto Rico, MBIA,
5.375s, 2022 1,000 946,910
AAA Hoover, AL, AMBAC, 5s, 2020, Warrants 1,120 999,365
AA Huntsville, AL, 5.5s, 2020 3,000 2,832,390
NR Shelby County, AL, 7.4s, 2007, Warrants 1,000 1,081,600
NR Shelby County, AL, 7.7s, 2017, Warrants 800 883,208
AAA Shelby County, AL, MBIA, 0s, 2011,
Warrants 3,000 1,160,310
AA State of Alabama, 0s, 2004 2,500 1,624,175
AA State of Alabama, 0s, 2006 1,165 650,792
AA State of Alabama, 7.1s, 2010 250 274,105
-------------
$12,583,559
--- --------------------------------------- --------------- -------------
State and Local Appropriation - 4.2%
NR Alabama Building Renovation Finance
Authority Rev., 7.45s, 2011 $1,500 $ 1,669,830
A Montgomery County, AL, Rev. (Department
of Human Resources Project), 7s, 2007,
Warrants 1,000 1,068,870
A Puerto Rico Public Buildings Authority,
5.6s, 2008 500 504,625
A Puerto Rico Public Buildings Authority,
5.5s, 2021 500 471,360
-------------
$ 3,714,685
--- --------------------------------------- --------------- -------------
Refunded and Special Obligation - 12.4%
A Alabama Mental Health Finance
Authority, 7.375s, 1999 $ 250 $ 275,170
NR Alexander City, AL, 0s, 2001, Warrants 1,000 319,280
NR Alexander City, AL, 0s, 2001, Warrants 1,000 296,910
NR Alexander City, AL, 0s, 2001, Warrants 1,250 345,125
NR Birmingham, AL, 7.4s, 1999 1,000 1,100,860
AA Birmingham, AL, Historical Preservation
Authority (Kelly Ingram/Civil Rights),
7.2s, 2001 1,000 1,122,740
AA Birmingham, AL, Public Parks &
Recreation Board Rev. (Legion Park),
7.25s, 1999 400 441,820
NR Birmingham, AL, Waterworks & Sewer
Board Rev., 7.2s, 2000 500 552,630
BBB Gadsden East, AL, Medical Clinic Board
Rev. (Baptist Hospital), 7.8s, 2001 2,000 2,331,860
AAA Hoover, AL, Board of Education, AMBAC,
6.625s, 2001, Warrants 1,000 1,100,460
NR Morgan County-Decatur, AL, Hospital
Board Rev., 7.875s, 1999 750 834,743
AAA Puerto Rico Highway & Transportation
Authority, 6.5s, 2002 1,000 1,116,200
AAA University of Alabama, University
Housing Rev., MBIA, 7.1s, 2001 1,000 1,126,960
-------------
$10,964,758
--- --------------------------------------- --------------- -------------
Single Family Housing Revenue - 5.5%
NR Alabama Housing Finance Authority,
FNMA, GNMA, FHLMC, 6.55s, 2014 $2,465 $ 2,511,342
AAA Alabama Housing Finance Authority,
GNMA, 7.4s, 2022 705 734,822
AAA Alabama Housing Finance Authority,
GNMA, 7.5s, 2022 470 497,067
AAA Alabama Housing Finance Authority,
GNMA, 7.6s, 2022 150 156,800
AAA Alabama Housing Finance Authority,
GNMA, 7.75s, 2022 440 461,960
AAA Alabama Housing Finance Authority,
GNMA, 7.9s, 2022 525 552,757
-------------
$ 4,914,748
--- --------------------------------------- --------------- -------------
Multi-Family Housing Revenue - 2.1%
AAA Alabama Housing Finance Authority,
Residential Development Authority, FHA,
7.25s, 2023 $1,425 $ 1,488,826
AA Puerto Rico Housing Finance Corp., FHA,
7.5s, 2015 355 372,399
-------------
$ 1,861,225
--- --------------------------------------- --------------- -------------
Insured Health Care Revenue - 6.9%
AAA Birmingham, AL, Special Care Facilities
(Carraway), Connie Lee, 5.875s, 2025 $1,000 $ 962,810
AAA Birmingham, AL, Special Care Facilities
(Children's Hospital), FGIC, 5.625s,
2018 1,625 1,564,063
AA Birmingham, AL, Special Care Facilities
(Daughters of Charity), AMBAC, 5s, 2025 1,500 1,312,095
AAA Huntsville, AL, Health Care Facilities
Rev., MBIA, 6.375s, 2022 850 878,390
AAA University of Alabama, Hospital Rev.
(Birmingham), MBIA, 5s, 2014 1,500 1,377,435
-------------
$ 6,094,793
--- --------------------------------------- --------------- -------------
Health Care Revenue - 6.5%
BBB- Baldwin County, AL, Eastern Shore
Health Care Authority (Thomas), 8.5s,
2016 $1,000 $ 1,078,380
AA Birmingham, AL, Special Care Facilities
(Daughters of Charity), AMBAC, 5.25s,
2015 1,000 916,040
A Montgomery, AL, Medical Clinic Board
Rev. (Jackson Hospital & Clinic), 7s,
2015 2,725 2,828,904
NR South Medical Clinic Board Rev.
(Cullman Regional Medical Center),
6.5s, 2023 1,000 966,580
-------------
$ 5,789,904
--- --------------------------------------- --------------- -------------
Electric and Gas Utility Revenue - 2.1%
AAA DeKalb and Cherokee County, AL, Gas
Rev., AMBAC, 5.4s, 2016 $1,000 $ 947,290
AAA Puerto Rico Telephone Authority Rev.,
AMBAC, 5.59s, 2004(S) 1,000 941,000
-------------
$ 1,888,290
--- --------------------------------------- --------------- -------------
Water and Sewer Utility Revenue - 11.5%
BBB Alabama Water Pollution Control
Authority, 7.75s, 2012 $ 950 $ 1,011,266
AAA Arab, AL, Waterworks Board, Water Rev.,
MBIA, 7.05s, 2016 1,000 1,073,310
AA Birmingham, AL, Waterworks & Sewer
Board, 5.375s, 2020 2,000 1,876,140
AA Birmingham, AL, Waterworks and Sewer
Board Rev., 5.5s, 2020 1,000 954,020
BBB- Fairview, AL, Government Utility
Services, Corporate Water Rev., 8s,
2020 1,000 1,070,330
AAA Fort Payne, AL, Waterworks Board, Water
Rev., MBIA , 5.35s, 2016 1,000 934,150
AAA Limestone County, AL, Water Authority
Rev., FGIC, 7.7s, 2019 900 968,940
AAA Limestone County, AL, Water Authority
Rev., FGIC, 5.25s, 2020 2,500 2,305,150
-------------
$10,193,306
--- --------------------------------------- --------------- -------------
8
<PAGE>
- --- --------------------------------------- --------------- -------------
Airport and Port Revenue - 6.6%
AAA Alabama Docks Department, Docks
Facilities Rev., BIGI, 7.6s, 2012 $2,600 $ 2,805,192
AAA Birmingham, AL, Airport Rev., AMBAC,
5.25s, 2020 1,000 910,590
NR Mobile, AL, Airport Authority, 7.375s,
2012 1,000 1,015,250
NR Mobile, AL, Airport Authority, 8.875s,
2015 1,000 1,091,170
-------------
$ 5,822,202
--- --------------------------------------- --------------- -------------
Sales and Excise Tax Revenue - 2.5%
AAA Alabama Mental Health Finance
Authority, MBIA, 5.5s, 2015 $1,300 $ 1,252,199
A Puerto Rico Highway Transportation
Authority, 5.5s, 2017 1,000 936,760
-------------
$ 2,188,959
--- --------------------------------------- --------------- -------------
Industrial Revenue (Corporate Guarantee) - 11.0%
BBB- Butler, AL, Industrial Development
Rev., 8s, 2028 $1,000 $ 1,109,930
NR Camden, AL, Industrial Development
Board, Pollution Control Rev., 7.75s,
2009 500 537,580
BBB Courtland, AL, Industrial Development
Board, Solid Waste Disposal Rev., 5.9s,
2017 1,000 967,120
BBB Courtland, AL, Industrial Development
Board, Solid Waste Disposal Rev.,
7.75s, 2020 1,485 1,576,089
AA Mobile, AL, Industrial Development
Board (Mobil), 6s, 2014 1,500 1,514,490
BBB Mobile, AL, Industrial Development
Board, Dock & Wharf Rev. (Ideal Basic,
Inc.), 6.75s, 2004 270 270,907
BBB Mobile, AL, Industrial Development
Board, Dock & Wharf Rev. (Ideal Basic,
Inc.), 6.875s, 2009 1,075 1,079,031
BBB+ Piedmont, AL, Industrial Development
Board (Springs Industries, Inc.),
8.25s, 2010 1,000 1,090,350
AA- Tarrant City, AL, Industrial
Development Board Rev. (Vulcan
Materials Co.), 7.5s, 2011 1,500 1,640,400
-------------
$ 9,785,897
--- --------------------------------------- --------------- -------------
Universities - 9.3%
AAA Alabama Agriculture & Mech., MBIA,
5.75s, 2013 $ 500 $ 499,765
AAA Alabama Agriculture & Mech., MBIA,
5.5s, 2020 2,545 2,429,508
AAA Alabama Board of Education Rev.
(Shelton State Community College),
MBIA, 6s, 2014 1,000 1,025,370
NR Homewood, AL, Educational Building
Authority Rev. (Samford University),
6.5s, 2016 1,000 1,047,130
AA- UAB Educational Foundation, AL, Student
Housing Rev., 5.35s, 2019 1,630 1,570,635
AAA University of Southern Alabama, Tuition
Rev., AMBAC, 5s, 2015 1,775 1,625,101
-------------
$ 8,197,509
--- --------------------------------------- --------------- -------------
Other - 3.2%
NR Birmingham, AL, Downtown Redevelopment
Authority (Social Security
Administration), 0s, 2010 $2,985 $ 2,012,875
Other - continued
AAA Birmingham-Jefferson, AL, Civic Center,
Capital Outlay, MBIA, 0s, 2009 $1,660 $ 789,379
-------------
$ 2,802,254
--- --------------------------------------- --------------- -------------
Total Municipal Bonds and Warrants (Identified Cost, $82,756,189) $86,802,089
-------------------------------------------------------------------- -------------
Floating Rate Demand Note - 0.3%
-------------------------------------------------------------------- -------------
NR Uinta County, WY, Pollution Control
Rev. (Chevron), due 2020, at Identified
Cost $ 300 $ 300,000
--- --------------------------------------- --------------- -------------
Total Investments (Identified Cost, $83,056,189) $87,102,089
Other Assets, Less Liabilities - 1.7% 1,521,133
-------------------------------------------------------------------- -------------
Net Assets - 100.0% $88,623,222
-------------------------------------------------------------------- -------------
(S) Indexed security.
See notes to financial statements
Portfolio of Investments - March 31, 1996
</TABLE>
MFS ARKANSAS MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
Municipal Bonds - 97.8%
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
<S> <C> <C> <C>
Student Loan Revenue - 1.3%
NR Arkansas Student Loan Authority Rev.,
7.15s, 2002 $ 835 $ 887,412
NR Arkansas Student Loan Authority Rev.,
6.75s, 2006 1,500 1,539,720
------------
$2,427,132
--- --------------------------------------- --------------- ------------
General Obligation - 3.0%
AA Arkansas College Savings, 0s, 2009 $1,146 $ 543,410
AA Arkansas Waste Disposal & Pollution
Control Rev., 6.25s, 2020 1,000 1,039,260
AA Arkansas Water Resources Development
Authority, 5.65s, 2018 1,000 972,690
AA Arkansas Water Resources Development
Authority, 5.75s, 2025 1,000 976,610
A Commonwealth of Puerto Rico, Public
Improvements, 5.25s, 2018 1,000 914,080
AAA Mississippi County, AR, Community
College District, AMBAC, 6s, 2018 1,000 1,023,830
------------
$5,469,880
--- --------------------------------------- --------------- ------------
State and Local Appropriation - 4.7%
AAA Arkansas Development Finance Authority,
Correctional Facilities Rev., MBIA,
7.125s, 2010 $2,000 $2,176,500
A Arkansas Development Finance Authority,
Local Government Rev., 7.1s, 2008 2,440 2,672,556
NR Arkansas Development Finance Authority
Rev. (State Agencies Facilities),
5.875s, 2013 875 850,360
A Arkansas Development Finance Authority
Rev. (State Agencies Facilities),
5.875s, 2013 1,000 935,100
A Puerto Rico Public Buildings Authority,
Education & Health, 6.285s, 2016(S) 2,000 1,858,840
------------
$8,493,356
--- --------------------------------------- --------------- ------------
Refunded and Special Obligation - 13.5%
AAA Arkansas Development Finance Authority,
Water Rev., MBIA, 7s, 2001 $2,900 $3,239,213
9
<PAGE>
Refunded and Special Obligation - continued
AAA Arkansas Development Finance Authority,
Water Rev., MBIA, 6.4s, 2002 $ 2,000 $ 2,194,900
AAA Arkansas Housing Development Agency,
Single Family Mortgage Rev., ETM,
8.375s, 2010 800 971,320
AAA Arkansas Housing Development Agency,
Single Family Mortgage Rev., ETM,
8.375s, 2011 1,000 1,247,520
AAA Arkansas Waste Disposal & Pollution
Control Rev., 6.25s, 2002 4,000 4,331,800
AA Arkansas Water Resources Development
Authority, 6.375s, 2012 1,000 1,051,200
NR Beaver Water District, AR, Benton &
Washington Counties, Water Rev.,
6.625s, 1999 500 544,455
NR Beaver Water District, AR, Benton &
Washington Counties, Water Rev., 6.75s,
1999 1,750 1,912,820
AAA Harrison, AR, Residential Housing
Facilities Board, Single Family
Mortgage Rev., FGIC, ETM, 7.4s, 2011 4,000 4,618,680
AAA Puerto Rico Aqueduct & Sewer Authority,
7.875s, 1998 1,000 1,100,590
AAA Puerto Rico Public Buildings Authority,
7.125s, 1998 1,500 1,620,120
AAA Sherwood, AR, Residential Housing
Facilities Board, Single Family
Mortgage Rev., MBIA, 7.5s, 2010 1,250 1,488,987
------------
$24,321,605
- --- --------------------------------------- --------------- ------------
Single Family Housing Revenue - 14.6%
NR Arkansas Development Finance Authority,
Single Family Mortgage Rev., 0s, 2011 $ 5,000 $ 1,689,350
AAA Arkansas Development Finance Authority,
Single Family Mortgage Rev., GNMA,
7.4s, 2023 1,450 1,510,784
AAA Arkansas Development Finance Authority,
Single Family Mortgage Rev., GNMA,
7.45s, 2027 1,710 1,831,786
AAA Arkansas Development Finance Authority,
Single Family Mortgage Rev., GNMA,
FNMA, 6.7s, 2027 3,000 3,039,420
A+ Arkansas Housing Development Agency,
Residential Mortgage Rev., 0s, 2015 29,350 3,604,180
NR Jefferson County, AR, Health Care &
Residential Facilities Board, 7.25s,
2011 1,000 1,034,480
NR Lonoke County, AR, Residential Housing
Facilities Board, 7.375s, 2011 363 372,415
NR Lonoke County, AR, Residential Housing
Facilities Board, 7.9s, 2011 1,073 1,159,890
NR Mississippi County, AR, Public
Facilities Board, Mortgage Rev., 7.2s,
2010 1,295 1,429,731
NR North Little Rock, AR, Residential
Housing Facilities Board, 0s, 2010 21,925 8,543,734
NR Pulaski County, AR, Public Facilities
Board Rev., 0s, 2014 2,750 819,967
NR Saline County, AR, Residential Housing
Facilities Board, 7.875s, 2011 1,220 1,293,834
------------
$26,329,571
- --- --------------------------------------- --------------- ------------
Multi-Family Housing Revenue - 0.2%
AAA West Memphis, AR, Public Facilities
Board Rev., AMBAC, 0s, 2011 $ 1,090 $ 429,078
- --- --------------------------------------- --------------- ------------
Insured Health Care Revenue - 8.9%
AAA Arkansas Development Finance Authority
Rev. (Sisters of Mercy), MBIA, 5s, 2013 $ 6,340 $ 5,882,505
AAA Arkansas Development Finance Authority
Rev. (Sisters of Mercy), MBIA, 5s, 2019 6,000 5,384,580
AAA Independence, AR, Housing Education
Financing Authority (While River), FSA,
5.5s, 2009 1,850 1,844,098
AAA Pulaski County, AR, Health Facilities
Board Rev. (Sisters of
Charity/Nazareth), MBIA, 6s, 2012 1,000 1,038,060
AAA Saline County, AR, Hospital Rev.,
Connie Lee, 6s, 2019 2,000 1,987,400
------------
$16,136,643
- --- --------------------------------------- --------------- ------------
Health Care Revenue - 7.4%
NR Baxter County, AR, Hospital Rev., 7.5s,
2021 $ 3,145 $ 3,342,380
A+ Little Rock, AR, Health Facilities
Board, Hospital Rev., 6.9s, 2009 1,400 1,525,944
A Little Rock, AR, Health Facilities
Board, Hospital Rev., 7s, 2017 3,250 3,442,302
A- Pulaski County, AR, Hospital Rev.
(Arkansas Children's Hospital), 6.15s,
2017 5,000 4,997,300
------------
$13,307,926
- --- --------------------------------------- --------------- ------------
Electric and Gas Utility Revenue - 15.2%
BBB Independence County, AR, Pollution
Control Rev. (Arkansas Power & Light
Co.), 6.25s, 2021 $ 3,000 $ 2,962,320
AA- Jefferson County, AR, Pollution Control
Rev. (Arkansas Electric Cooperative),
6.125s, 2008 2,000 2,006,720
BBB Jefferson County, AR, Pollution Control
Rev. (Arkansas Power & Light Co.),
6.3s, 2018 1,050 1,061,403
AAA Jonesboro, AR, City Water & Light
Plant, Public Utilities Systems Rev.,
AMBAC, 5.25s, 2013 1,210 1,163,899
AAA North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2010 1,000 1,047,330
AAA North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2010 2,000 2,162,100
AAA North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2015 6,000 6,615,420
BBB Pope County, AR, Solid Waste Disposal
Rev. (Arkansas Power & Light Co.), 8s,
2020 1,780 1,979,591
AAA Pope County, AR, Solid Waste Disposal
Rev. (Arkansas Power & Light Co.), FSA,
8s, 2021 3,000 3,357,060
AAA Puerto Rico Telephone Authority Rev.,
AMBAC, 5.59s, 2004(S) 4,000 3,764,000
AAA West Memphis, AR, Public Utility
Systems Rev., MBIA, 6.6s, 2009 1,250 1,334,825
------------
$27,454,668
- --- --------------------------------------- --------------- ------------
Water and Sewer Utility Revenue - 12.1%
AAA Arkansas Development Finance Authority,
Water & Sewer Rev., MBIA, 5s, 2012 $ 1,000 $ 944,580
AAA Arkansas Development Finance Authority,
Water & Sewer Rev., MBIA, 5s, 2015 3,000 2,786,130
10
<PAGE>
Water and Sewer Utility Revenue - continued
AAA Arkansas Development Finance Authority,
Water & Sewer Rev., MBIA, 5.4s, 2015 $ 1,750 $ 1,706,267
AA Arkansas Water Resources Development
Authority, 6.375s, 2021 1,000 1,048,490
AAA Beaver Water District, AR, Benton &
Washington Counties, Water & Sewer
Rev., MBIA, 5.85s, 2008 2,000 2,075,460
NR El Dorado, AR, Water & Sewer Rev., 6s,
2012 1,000 1,030,670
AAA Fort Smith, AR, Water & Sewer, MBIA,
5.7s, 2008 1,000 1,028,690
AAA Fort Smith, AR, Water & Sewer, MBIA,
6s, 2012 2,250 2,329,290
A Puerto Rico Aqueduct & Sewer Authority,
5s, 2015 1,000 898,060
AAA Russellville, AR, Water Systems Rev.,
AMBAC, 6.25s, 2012 2,365 2,474,168
NR South Sebastian County, AR, Water Users
Assn., 5.95s, 2016 2,425 2,480,872
NR South Sebastian County, AR, Water Users
Assn., 6.15s, 2023 1,000 1,032,940
AAA Texarkana, AR, Public Facilities Board,
Waterworks Facilities Rev., MBIA, 7s,
2007 2,000 2,096,060
------------
$ 21,931,677
- --- --------------------------------------- --------------- ------------
Sales and Excise Tax Revenue - 3.1%
NR Little Rock, AR, Hotel & Restaurant
Gross Receipts Tax, 7.375s, 2015 $ 4,790 $ 5,641,183
Industrial Revenue (Corporate Guarantee) - 10.9%
AA- Blytheville, AR, Solid Waste Recycling
& Sewerage Treatment Rev. (Nucor
Corp.), 6.9s, 2021 $ 5,000 $ 5,252,860
AA- Blytheville, AR, Solid Waste Recycling
& Sewerage Treatment Rev. (Nucor
Corp.), 6.375s, 2023 8,445 8,561,297
A- Camden, AR, Environmental
(International Paper), 7.625s, 2018 1,000 1,113,620
AA- Jonesboro, AR, Industrial Development
Rev. (Anheuser-Busch Co.), 6.5s, 2012 3,500 3,762,159
A- Pine Bluff, AR, Solid Waste Disposal
Rev. (International Paper Co.), 5.55s,
2017 1,050 984,690
------------
$ 19,674,626
- --- --------------------------------------- --------------- ------------
Universities - 1.8%
NR University of Arkansas, University
Rev., 7.2s, 2010 $ 2,500 $ 2,810,125
NR University of Arkansas, University
Rev., 6.625s, 2012 500 528,455
------------
$ 3,338,580
- --- --------------------------------------- --------------- ------------
Other - 1.1%
A- Little Rock, AR, Wastewater and Sewer
Rev., 5.8s, 2016 $ 2,000 $ 1,937,200
- --- --------------------------------------- --------------- ------------
Total Municipal Bonds (Identified Cost, $171,459,722) $176,893,125
Other Assets, Less Liabilities - 2.2% 3,963,086
- --- --------------------------------------- --------------- ------------
Net Assets - 100.0% $180,856,211
- --- --------------------------------------- --------------- ------------
(S) Indexed security.
See notes to financial statements
Portfolio of Investments - March 31, 1996
MFS GEORGIA MUNICIPAL BOND FUND
Municipal Bonds - 96.4%
- --- --------------------------------------- --------------- ------------
General Obligation - 10.6%
AA Fulton County, GA, School District,
6.375s, 2010 $ 2,000 $ 2,210,500
AA Fulton County, GA, School District,
6.375s, 2012 1,000 1,086,670
AA Fulton County, GA, School District,
6.375s, 2016 1,000 1,080,050
AA Fulton County, GA, School District,
5.625s, 2021 1,000 970,710
AAA Paulding County, GA, School District,
MBIA, 6s, 2013 1,000 1,048,450
AA+ State of Georgia, 5.25s, 2011 1,500 1,476,345
NR Territory of Virgin Islands, 7.75s,
2006 415 455,068
------------
$ 8,327,793
- --- --------------------------------------- --------------- ------------
State and Local Appropriation - 6.3%
AA Fulton County, GA, Building Authority
Rev. (Judicial Center Project), 0s,
2011 $ 3,000 $ 1,304,220
AA Fulton County, GA, Building Authority
Rev. (Judicial Center Project), 0s,
2012 6,015 2,444,977
AAA Puerto Rico Public Buildings Authority,
Government Facilities Guaranteed,
AMBAC, 6.25s, 2015 1,100 1,187,494
------------
$ 4,936,691
- --- --------------------------------------- --------------- ------------
Refunded and Special Obligation - 8.0%
AA+ DeKalb County, GA, 7.5s, 2000 $ 780 $ 872,937
AAA Fulton County, GA, School District,
7.625s, 1997 500 534,665
NR Hogansville, GA, Combined Public
Utility Systems Rev., 9s, 2000 2,200 2,624,864
AAA Marietta, GA, Development Authority
Rev. (Life College, Inc.), CAP GTY,
7.2s, 1999 1,000 1,112,500
AAA Marietta, GA, Development Authority
Rev. (Life College, Inc.), CAP GTY,
7.25s, 1999 1,000 1,114,170
------------
$ 6,259,136
- --- --------------------------------------- --------------- ------------
Single Family Housing Revenue - 2.7%
AAA DeKalb County, GA, Housing Authority,
Single Family Mortgage Rev., GNMA,
7.75s, 2022 $ 495 $ 509,518
AA+ Georgia Housing & Finance Authority,
0s, 2031 10,525 775,061
AA+ Georgia Residential Finance Authority
Rev., 8.375s, 2019 5 5,232
AA+ Georgia Residential Finance Authority
Rev., 8s, 2020 390 410,506
AA+ Georgia Residential Finance Authority
Rev., 7.25s, 2021 365 385,918
------------
$ 2,086,235
- --- --------------------------------------- --------------- ------------
Multi-Family Housing Revenue - 5.1%
A Cobb County, GA, Housing Authority Rev.
(Signature Place Project), 6.875s, 2017 $ 1,500 $ 1,530,555
NR Hinesville, GA, Leased Housing Corp.
Rev. (Baytree Apartments), FHA, 6.7s,
2017 900 927,117
AAA St. Mary's, GA (Cumberland Oaks
Apartments), FNMA, 7.375s, 2022 1,470 1,549,982
------------
$ 4,007,654
- --- --------------------------------------- --------------- ------------
11
<PAGE>
Insured Health Care Revenue - 7.6%
AAA Albany-Dougherty County, GA, Hospital
Authority Rev. (Phoebe Putney Memorial
Hospital, Inc.), AMBAC, 5.7s, 2013 $3,100 $ 3,053,965
AAA Crisp County, GA, Hospital Authority
Rev., Certificates of Participation
(Crisp Regional PJ), FSA, 5.4s, 2012 1,000 966,110
AAA Macon-Bibb County, GA, Hospital
Authority Rev. (Memorial Medical
Center), FGIC, 5.3s, 2013 2,000 1,920,620
------------
$ 5,940,695
- --- --------------------------------------- --------------- ------------
Health Care Revenue - 6.1%
NR Fulton County, GA, Residential Care
Facilities, Elderly Authority Rev.
(Lenbrook Square Foundation), 9.75s,
2017 $1,050 $ 1,069,436
NR Richmond County, GA, Development
Authority, Nursing Home Refunding
(Beverly Enterprises), 8.75s, 2011 1,190 1,284,891
NR Royston, GA, Hospital Authority Rev.
(Cobb Health), 7.375s, 2014 1,565 1,623,421
BBB+ Savannah, GA, Hospital Authority Rev.
(Chandler Hospital), 7s, 2011 800 799,944
------------
$ 4,777,692
- --- --------------------------------------- --------------- ------------
Electric and Gas Utility Revenue - 9.8%
AAA Appling County, GA, Development
Authority (Oglethorpe Power Corp.),
MBIA, 7.15s, 2021 $1,400 $ 1,521,814
A Burke County, GA, Development
Authority, Pollution Control Rev.
(Georgia Power Vogl), 8.375s, 2017### 1,000 1,059,910
AAA Georgia Municipal Electric Authority,
Power Rev., AMBAC, 0s, 2013 1,675 637,807
AAA Georgia Municipal Electric Authority,
Power Rev., BIGI, 0s, 2008 2,500 1,315,750
AAA Georgia Municipal Electric Authority,
Power Rev., BIGI, 0s, 2009 1,500 738,270
AAA Georgia Municipal Electric Authority,
Power Rev., MBIA, 6.5s, 2020 1,250 1,363,750
A+ Monroe County, GA, Development
Authority, Pollution Control Rev.
(Oglethorpe Power), 6.8s, 2012 1,000 1,081,330
------------
$ 7,718,631
- --- --------------------------------------- --------------- ------------
Water and Sewer Utility Revenue - 16.0%
NR Barnesville, GA, Water & Sewer Rev.,
6.9s, 2022 $1,715 $ 1,797,509
AAA Brunswick, GA, Water & Sewer Rev.,
MBIA, 6.1s, 2014 1,000 1,053,510
AAA Cartersville, GA, Water & Sewer Rev.,
AMBAC, 7.2s, 2012 2,225 2,401,754
AAA Columbia County, GA, Water & Sewer
Rev., AMBAC, 6.9s, 2011 1,000 1,084,400
AA DeKalb County, GA, Water & Sewer Rev.,
5.25s, 2023 1,000 910,860
AAA Douglasville-Douglas County, GA, Water
& Sewer Authority, AMBAC, 5.625s, 2015 1,800 1,788,192
AAA Fulton County, GA, Water & Sewer Rev.,
FGIC, 6.375s, 2014 3,250 3,530,378
------------
$12,566,603
- --- --------------------------------------- --------------- ------------
Airport and Port Revenue - 8.7%
A Atlanta, GA, Airport Facilities Rev.,
6.25s, 2021 $ 500 $ 503,685
AAA Atlanta, GA, Airport Facilities Rev.,
AMBAC, 0s, 2010 6,000 2,683,440
AAA Atlanta, GA, Airport Facilities Rev.,
MBIA, 0s, 2010 3,500 1,561,140
BB Clayton County, GA, Development
Authority, Special Facilities Rev.
(Delta Airlines), 7.625s, 2020 500 518,015
BB Fulton County, GA (Delta Airlines),
6.95s, 2012 1,500 1,551,945
------------
$ 6,818,225
- --- --------------------------------------- --------------- ------------
Industrial Revenue (Corporate Guarantee) - 11.9%
NR Adel County, GA, Industrial Development
Authority, Pollution Control Rev.
(Weyerhaeuser Co.), 9s, 2006 $1,000 $ 1,032,360
BB Atlanta, GA, Special Purpose Facilities
Rev. (Delta Airlines Project), 7.9s,
2018 1,000 1,063,000
AA- Cartersville, GA, Development Authority
Rev., Water & Wastewater Facilities
(Anheuser-Busch Cos., Inc.), 7.4s, 2010 500 590,345
B+ Effingham County, GA, Development
Authority, Pollution Control Rev. (Fort
Howard Corp.), 7.9s, 2005 1,750 1,847,475
NR Emanuel County, GA, Development
Authority (Figgie Properties Project),
7.95s, 2004 475 478,087
AA- Savannah, GA, Economic Development
Authority, Industrial Development Rev.
(Hershey Foods Corp.), 6.6s, 2012 1,150 1,219,966
NR Savannah, GA, Economic Development
Authority, Industrial Development Rev.
(Union Camp Corp.), 6.15s, 2017 1,000 1,023,600
BBB Savannah, GA, Port Authority, Pollution
Control Rev. (Union Carbide Corp.),
7.55s, 2004 1,000 1,012,080
BBB Wayne County, GA, Solid Waste Rev.
(ITT-Rayonier, Inc.), 8s, 2015 1,000 1,099,540
------------
$ 9,366,453
- --- --------------------------------------- --------------- ------------
Universities - 1.5%
AAA Marietta, GA, Development Authority
Rev. (Life College, Inc.), CAP GTY,
5.8s, 2019 $1,200 $ 1,183,296
- --- --------------------------------------- --------------- ------------
Other - 2.1%
AA- George L. Smith II/Georgia World
Congress Center Authority (Domed
Stadium Project), 7.875s, 2020 $1,475 $ 1,619,432
- --- --------------------------------------- --------------- ------------
Total Municipal Bonds (Identified Cost, $70,673,827) $75,608,536
- --- --------------------------------------- --------------- ------------
Floating Rate Demand Notes - 2.2%
NR Georgia Hospital Financing Authority
Rev. (Equipment), due 2001 $1,100 $ 1,100,000
NR Uinta County, WY, Pollution Control
Rev. (Chevron), due 2020 600 600,000
- --- --------------------------------------- --------------- ------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,700,000
- --- --------------------------------------- --------------- ------------
Total Investments (Identified Cost, $72,373,827) $77,308,536
Other Assets, Less Liabilities - 1.4% 1,079,908
- --- --------------------------------------- --------------- ------------
Net Assets - 100.0% $78,388,444
- --- --------------------------------------- --------------- ------------
###Security segregated as collateral for an open futures contract.
See notes to financial statements
12
<PAGE>
Portfolio of Investments - March 31, 1996
MFS MASSACHUSETTS MUNICIPAL BOND FUND
Municipal Bonds - 95.8%
Student Loan Revenue - 0.1%
AAA Massachusetts Education Loan Authority,
Letter of Credit, 9s, 2001 $ 130 $ 132,035
- --- --------------------------------------- --------------- ------------
General Obligation - 11.9%
NR Belmont, MA, ULT, 5s, 2015 $ 2,165 $ 2,009,639
A+ Commonwealth of Massachusetts, 0s, 2004 10,000 6,485,300
A+ Commonwealth of Massachusetts, 0s, 2005 2,000 1,222,360
A+ Commonwealth of Massachusetts, "A", 0s,
2005 2,000 1,243,260
AAA Commonwealth of Massachusetts, AMBAC,
6.75s, 2009 2,500 2,691,625
AAA Commonwealth of Massachusetts, FGIC,
0s, 2006 4,000 2,376,280
AAA Commonwealth of Massachusetts, FGIC,
7s, 2009 1,250 1,434,225
AAA Commonwealth of Massachusetts, MBIA,
7.5s, 2004 2,850 3,346,612
AAA Gloucester, MA, AMBAC, 7s, 2009 225 247,275
AAA Gloucester, MA, AMBAC, 7s, 2010 215 236,285
AAA Haverhill, MA, FGIC, 7s, 2012 1,250 1,359,900
NR Holyoke, MA, Electric Rev., 8s, 2001 690 740,046
AAA Holyoke, MA, MBIA, 8s, 2001 1,700 1,962,735
AAA Holyoke, MA, MBIA, 8.1s, 2005 500 595,360
AAA Lawrence, MA, AMBAC, 9.75s, 2002 600 744,636
NR Lowell, MA, 8.4s, 2009 1,000 1,149,760
NR Northbridge, MA, 7.6s, 2001 325 363,815
AAA Princeton, MA, AMBAC, 7.25s, 2009 490 537,471
NR Quabbin, MA, Regional School District,
MBIA, 5s, 2015 2,550 2,331,108
------------
$31,077,692
- --- --------------------------------------- --------------- ------------
State and Local Appropriation - 14.2%
A+ Massachusetts Bay Transportation
Authority, 5.5s, 2012 $ 5,000 $ 4,924,650
A+ Massachusetts Bay Transportation
Authority, 5.875s, 2015 1,965 1,994,888
A+ Massachusetts Bay Transportation
Authority, 6.2s, 2016 10,400 10,898,576
A+ Massachusetts Bay Transportation
Authority, 7s, 2021 5,000 5,700,300
A+ Massachusetts Bay Transportation
Authority, 5.75s, 2025 6,000 5,836,080
AAA Massachusetts Bay Transportation
Authority, AMBAC, 5.25s, 2017 8,370 7,709,272
------------
$37,063,766
- --- --------------------------------------- --------------- ------------
Refunded and Special Obligation - 14.2%
AAA Boston, MA, MBIA, 7.75s, 1998### $ 500 $ 547,265
A+ Commonwealth of Massachusetts, 6.875s,
2001 4,000 4,482,400
NR Holyoke, MA, 9.85s, 1997 380 421,401
NR Lowell, MA, 7.625s, 2001 4,875 5,628,285
AAA Massachusetts Bay Transportation
Authority, 8.5s, 1999 3,000 3,394,140
AAA Massachusetts Federally Assisted
Housing, ETM, 0s, 2023 4,285 785,226
AA Massachusetts Health & Education
Facilities Authority (Children's
Hospital), 7.75s, 1998 2,425 2,645,190
AAA Massachusetts Health & Education
Facilities Authority (Newton-Wellesley
Hospital), BIGI, 8s, 1998 1,710 1,880,709
NR Massachusetts Health & Education
Facilities Authority (Saint Elizabeth's
Hospital), FHA, 7.75s, 1997 1,250 1,337,025
Refunded and Special Obligation - continued
AAA Massachusetts Health & Education
Facilities Authority (South Shore
Hospital), MBIA, 8.125s, 1997 $ 1,070 $ 1,146,044
NR Massachusetts Health & Education
Facilities Authority (Suffolk
University), 8s, 2000 1,750 1,998,500
NR Massachusetts Industrial Finance Agency
(Cape Cod Health System), 8.5s, 2000 500 589,490
NR Massachusetts Industrial Finance
Agency, Tunnel Rev. (Mass. Turnpike),
9s, 2020 8,220 9,788,951
AAA Massachusetts Port Authority Rev., ETM,
12.75s, 2002 485 659,076
AAA Massachusetts Port Authority Rev., ETM,
13s, 2013 780 1,280,963
AAA Palmer, MA, AMBAC, 7.7s, 2000 500 572,635
------------
$37,157,300
- --- --------------------------------------- --------------- ------------
Single Family Housing Revenue - 2.4%
A+ Massachusetts Housing Finance Agency,
8.1s, 2020 $ 2,270 $ 2,379,005
A+ Massachusetts Housing Finance Agency,
8.1s, 2021 2,000 2,138,360
A+ Massachusetts Housing Finance Agency,
7.95s, 2023 965 1,008,174
A Massachusetts Housing Finance Agency,
7.5s, 2029 930 934,064
------------
$ 6,459,603
- --- --------------------------------------- --------------- ------------
Multi-Family Housing Revenue - 4.2%
BBB+ Massachusetts Housing Finance Agency,
8.4s, 2021 $ 2,190 $ 2,242,078
A+ Massachusetts Housing Finance Agency,
8.8s, 2021 1,995 2,066,122
BBB+ Massachusetts Housing Finance Agency,
8.2s, 2027 720 757,029
AAA Massachusetts Housing Finance Agency,
AMBAC, 6.65s, 2019 1,500 1,548,975
AAA Massachusetts Housing Finance Agency,
FNMA, 6.9s, 2025 1,700 1,803,615
AAA Massachusetts Housing Finance Agency,
FNMA, 7.65s, 2028 1,430 1,479,792
AAA Somerville, MA, Housing Authority Rev.
(Clarendon Hill), GNMA, 7.85s, 2010 1,000 1,067,330
------------
$10,964,941
- --- --------------------------------------- --------------- ------------
Insured Health Care Revenue - 3.9%
AAA Massachusetts Health & Education
Facilities Authority (Beth Israel
Hospital), AMBAC, 8.168s, 2025++++ $ 4,000 $ 3,994,000
AAA Massachusetts Health & Education
Facilities Authority (Brigham & Women's
Hospital), MBIA, 6.75s, 2024 2,000 2,157,400
AAA Massachusetts Health & Education
Facilities Authority (Newton-Wellesley
Hospital), MBIA, 6s, 2025 2,000 2,015,961
NR Massachusetts Health & Education
Facilities Authority (Youville), FHA,
6s, 2034 2,000 1,931,020
------------
$10,098,381
- --- --------------------------------------- --------------- ------------
Health Care Revenue - 18.1%
NR Boston, MA, Industrial Development
Finance Authority Rev. (Stonehedge
Convalescent), 10.75s, 2011 $ 755 $ 817,748
13
<PAGE>
Health Care Revenue - continued
A Massachusetts Health & Education
Facilities Authority (Beth Israel
Hospital), 7s, 2014 $3,000 $ 3,174,660
A Massachusetts Health & Education
Facilities Authority (Charlton Memorial
Hospital), 7.25s, 2013 1,700 1,797,410
AA Massachusetts Health & Education
Facilities Authority (Children's
Hospital), 6.125s, 2012 2,285 2,337,760
A Massachusetts Health & Education
Facilities Authority (Dana-Farber),
5.5s, 2027 2,500 2,233,101
BBB+ Massachusetts Health & Education
Facilities Authority (Emerson
Hospital), 8s, 2018 1,775 2,034,363
NR Massachusetts Health & Education
Facilities Authority (Fairview Extended
Care Facilities), 10.25s, 2021 2,000 2,274,620
A- Massachusetts Health & Education
Facilities Authority (Jordan Hospital),
6.875s, 2022 2,150 2,190,979
BB Massachusetts Health & Education
Facilities Authority (Massachusetts Eye
& Ear Infirmary), 7.375s, 2011 3,000 2,939,581
A Massachusetts Health & Education
Facilities Authority (New England
Deaconess), 6.875s, 2022 5,600 5,768,056
BBB Massachusetts Health & Education
Facilities Authority (Sisters of
Providence), 6.5s, 2008 1,900 1,885,389
NR Massachusetts Industrial Finance Agency
(Beverly Enterprises), 8.375s, 2009 4,040 4,322,396
NR Massachusetts Industrial Finance Agency
(Continental Healthcare), 11.875s, 2015 5,465 5,660,428
NR Massachusetts Industrial Finance Agency
(Evanswood), 7.625s, 2014 1,200 1,244,125
NR Massachusetts Industrial Finance Agency
(Martha's Vineyard Long-Term Care),
9.25s, 2022++ 3,000 2,352,000
NR Massachusetts Industrial Finance Agency
(Massachusetts Biomedical Research),
0s, 2004 5,000 3,155,450
NR Massachusetts Industrial Finance Agency
(Massachusetts Biomedical Research),
0s, 2010 5,300 2,203,104
NR Massachusetts Industrial Finance Agency
(Needham/Hamilton House), 11s, 2010 700 715,344
------------
$47,106,514
- --- --------------------------------------- --------------- ------------
Water and Sewer Utility Revenue - 7.9%
A Massachusetts Water Resources
Authority, 6.5s, 2019 $8,000 $ 8,668,000
A Massachusetts Water Resources
Authority, 5.5s, 2022 5,150 4,753,398
AAA Massachusetts Water Resources
Authority, MBIA, 5s, 2022 1,640 1,449,005
AAA Massachusetts Water Resources
Authority, MBIA, 5s, 2025 5,000 4,379,250
AA Massachusetts Water Resources Authority
(Pollution Abatement LN PJ), 5.2s, 2011 1,520 1,464,673
------------
$20,714,326
- --- --------------------------------------- --------------- ------------
Airport and Port Revenue - 4.8%
AA- Massachusetts Port Authority Rev., 5s,
2015 $5,600 $ 5,095,272
AAA Massachusetts Port Authority Rev.,
FGIC, 7.5s, 2020 4,500 4,988,476
BB+ Puerto Rico Port Authority Rev.
(American Airlines), 6.3s, 2023 2,370 2,385,120
------------
$12,468,868
- --- --------------------------------------- --------------- ------------
Industrial Revenue (Corporate Guarantee) - 1.2%
NR Massachusetts Industrial Finance Agency
(Automatic Data Processing, Inc.),
8.25s, 2019 $ 900 $ 923,517
BBB Massachusetts Industrial Finance Agency
(Boston Edison), 5.75s, 2014 1,900 1,803,576
NR Springfield, MA, Industrial Development
Finance Agency (Terminal Building),
10s, 2001 338 341,164
------------
$ 3,068,257
- --- --------------------------------------- --------------- ------------
Universities - 7.4%
A+ Massachusetts Health & Education
Facilities Authority (Boston College),
5.25s, 2023 $1,500 $ 1,368,705
AAA Massachusetts Health & Education
Facilities Authority (Boston
University), MBIA, 6s, 2022 1,175 1,180,205
AAA Massachusetts Health & Education
Facilities Authority (Boston
University), MBIA, 9.147s, 2031++++ 5,000 5,600,000
AAA Massachusetts Health & Education
Facilities Authority (Harvard
University), 5.375s, 2032 3,190 2,963,318
AAA Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2004 1,000 656,670
AAA Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2005 1,000 618,680
AAA Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2009 1,000 478,980
AAA Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2010 1,000 447,830
AAA Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2011 500 208,675
NR Massachusetts Industrial Finance Agency
(Curry College), 8s, 2010 635 629,159
NR Massachusetts Industrial Finance Agency
(Curry College), 8s, 2014 2,000 2,016,620
NR Massachusetts Industrial Finance Agency
(Emerson College), 8.9s, 2018 1,000 1,107,871
AAA Massachusetts Industrial Finance Agency
(Lesley College), Connie Lee, 6.3s,
2025 2,000 2,036,760
------------
$19,313,473
- --- --------------------------------------- --------------- ------------
Other - 5.5%
NR Martha's Vineyard, MA, Land Bank (Land
Acquisition), 8.125s, 2011 $4,000 $ 4,101,200
NR Massachusetts Health & Education
Facilities Authority (Learning Center
for Deaf Children), 9.25s, 2014 2,250 2,402,797
NR Massachusetts Health & Education
Facilities Authority (Learning Center
for Deaf Children), 8s, 2020 1,500 1,492,770
BBB Massachusetts Industrial Finance Agency
(Dexter School), 7.5s, 2011 1,720 1,830,733
BBB Massachusetts Industrial Finance Agency
(Dexter School), 7.5s, 2021 2,900 3,101,087
14
<PAGE>
Other - continued
NR Nantucket Island, MA, Land Bank (Land
Acquisition), 7.75s, 2020 $1,200 $ 1,341,132
------------
$ 14,269,719
- --- --------------------------------------- --------------- ------------
Total Municipal Bonds (Identified Cost, $235,478,824) $249,894,875
- --- --------------------------------------- --------------- ------------
Call Option Purchased - 0.1%
- --- --------------------------------------- --------------- ------------
Principal Amount
of Contracts
Description/Expiration Date/Strike Price (000 Omitted)
- --- --------------------------------------- --------------- ------------
NR Georgia Municipal Electric Authority
Power Co. / 2003 / 103
(Premium Paid, $131,400) $ 10 $ 297,000
- --- --------------------------------------- --------------- ------------
Floating Rate Demand Notes - 2.4%
- --- --------------------------------------- --------------- ------------
Principal Amount
Issuer (000 Omitted)
A+ Lincoln County, WY, Pollution Control
Rev. (Exxon), due 2014 $ 200 $ 200,000
NR Uinta County, WY, Pollution Control
Rev. (Chevron), due 2020 6,100 6,100,000
- --- --------------------------------------- --------------- ------------
Total Floating Rate Demand Notes, at Identified Cost $ 6,300,000
- --- --------------------------------------- --------------- ------------
Total Investments (Identified Cost, $241,910,224) $256,491,875
Other Assets, Less Liabilities - 1.7% 4,321,235
- --- --------------------------------------- --------------- ------------
Net Assets - 100.0% $260,813,110
- --- --------------------------------------- --------------- ------------
++Security valued by or at the direction of the Trustees.
++++Inverse floating rate security.
###Security segregated as collateral for an open futures contract.
See notes to financial statements
Portfolio of Investments - March 31, 1996
MFS NEW YORK MUNICIPAL BOND FUND
Municipal Bonds - 98.4%
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
- --- --------------------------------------- --------------- ------------
General Obligation - 9.7%
AAA Brookhaven, NY, FGIC, 5.5s, 2013 $1,000 $ 986,430
BBB+ New York, NY, 7.2s, 2008 1,000 1,071,190
BBB+ New York, NY, 7.3s, 2010 880 954,333
BBB+ New York, NY, 7.3s, 2011 5,000 5,415,500
BBB+ New York, NY, 7.375s, 2013 1,600 1,735,264
BBB+ New York, NY, 8s, 2015 10 11,383
BBB+ New York, NY, 8.25s, 2016 160 185,004
BBB+ New York, NY, 8s, 2018 60 68,382
NR Oswego County, NY, 6.7s, 2009 1,000 1,115,960
AAA Port Byron, NY, Central School
District, AMBAC, 7.4s, 2012 500 599,695
AAA Port Byron, NY, Central School
District, AMBAC, 7.4s, 2013 500 603,485
AAA Port Byron, NY, Central School
District, AMBAC, 7.4s, 2014 500 607,070
AAA Port Byron, NY, Central School
District, AMBAC, 7.4s, 2015 500 607,095
NR Territory of Virgin Islands, 7.75s,
2006 415 455,068
AAA Washingtonville, NY, Central School
District, FGIC, 7.35s, 2008 550 648,917
AAA Washingtonville, NY, Central School
District, FGIC, 7.35s, 2009 550 648,873
------------
$ 15,713,649
- --- --------------------------------------- --------------- ------------
State and Local Appropriation - 23.7%
BBB Metropolitan Transportation Authority,
NY, Service Contract, 5.75s, 2007 $ 250 $ 249,347
State and Local Appropriation - continued
BBB Metropolitan Transportation Authority,
NY, Service Contract, 7.375s, 2008 $2,000 $ 2,234,520
BBB Metropolitan Transportation Authority,
NY, Service Contract, 0s, 2009 4,920 2,233,827
BBB Metropolitan Transportation Authority,
NY, Service Contract, 0s, 2012 4,700 1,742,760
BBB Metropolitan Transportation Authority,
NY, Service Contract, 0s, 2012 7,000 2,595,600
BBB New York Dormitory Authority Rev. (City
University), 8.125s, 2008 1,500 1,653,720
BBB New York Dormitory Authority Rev. (City
University), 5.75s, 2013 1,250 1,208,225
BBB New York Dormitory Authority Rev. (City
University), 5.625s, 2016 4,200 3,991,680
AAA New York Dormitory Authority Rev. (City
University), AMBAC, 5.75s, 2018 1,000 1,001,140
AAA New York Dormitory Authority Rev. (City
University), AMBAC, 5.75s, 2018 800 800,912
AAA New York Dormitory Authority Rev. (City
University), AMBAC, 6.3s, 2024 2,040 2,108,788
AAA New York Dormitory Authority Rev. (City
University), MBIA, 6.25s, 2019 1,300 1,331,005
AAA New York Dormitory Authority Rev.
(Mental Health Hospital), MBIA, 5.125s,
2021 2,500 2,264,725
A New York Local Government Assistance
Corp., 0s, 2014 3,750 1,303,237
BBB+ New York Medical Care Facilities
Finance Agency, Mental Health Services,
7.875s, 2008 245 273,995
BBB+ New York Medical Care Facilities
Finance Agency, Mental Health Services,
6.375s, 2014 1,000 1,020,620
BBB+ New York Medical Care Facilities
Finance Agency, Mental Health Services,
7.3s, 2021 250 275,230
BBB New York Medical Care Facilities
Finance Agency, Mental Health Services
(Huntington Mortgage), 6.5s, 2014 1,250 1,257,237
AAA New York Medical Care Facilities
Finance Agency, Mental Health Services,
MBIA, 6.15s, 2015 600 611,172
AAA New York, NY, Transportation
(Livingston Plaza), FSA, 5.25s, 2020 385 353,187
BBB New York Urban Development Corp., 5.7s,
2020 1,500 1,421,145
BBB New York Urban Development Corp.
(Correctional Facilities), 0s, 2009 7,145 3,362,865
AAA New York Urban Development Corp.
(Empire State Development Corp.), MBIA,
5.5s, 2019 2,000 1,924,280
AAA New York Urban Development Corp., MBIA,
5.75s, 2015 1,000 996,450
A Puerto Rico Public Buildings Authority,
Education & Health, 6.285s, 2016(S) 2,000 1,858,840
NR Troy, NY, Certificates of
Participation, Recreational Facilities
Rev., 9.75s, 2010**++ 905 90,500
NR United Nations Development Corp., 6s,
2026 350 345,233
------------
$ 38,510,240
- --- --------------------------------------- --------------- ------------
Refunded and Special Obligation - 12.3%
AAA New York Local Government Assistance
Corp., 7.25s, 2001 $2,500 $ 2,844,475
15
<PAGE>
Refunded and Special Obligation - continued
AAA New York Medical Care Facilities
Finance Agency (Buffalo General
Hospital), FHA, 7.7s, 1998 $ 500 $ 550,445
AAA New York Medical Care Facilities
Finance Agency (Catholic), FHA, 8.3s,
1998 515 563,976
AAA New York Medical Care Facilities
Finance Agency (Long Island Hospital),
8.1s, 1998 1,500 1,637,310
AAA New York Medical Care Facilities
Finance Agency (Presbyterian Hospital),
FHA, 7.7s, 2000 750 859,695
AAA New York Medical Care Facilities
Finance Agency (St. Luke's Hospital),
FHA, 7.45s, 2000 2,600 2,922,894
AAA New York Medical Care Facilities
Finance Agency, Mental Health Services,
7.875s, 2000 560 645,764
AAA New York Medical Care Facilities
Finance Agency, Mental Health Services,
7.875s, 2000 225 259,458
AAA New York Medical Care Facilities
Finance Agency, Mental Health Services,
7.3s, 2001 750 860,895
BBB+ New York, NY, 8s, 2001 490 574,917
BBB+ New York, NY, 8.25s, 2001 1,840 2,195,377
A- New York, NY, Municipal Water & Sewer
Finance Authority, 7s, 2001 530 593,674
A- New York, NY, Municipal Water & Sewer
Finance Authority, 7s, 2001 225 252,031
A- New York, NY, Municipal Water & Sewer
Finance Authority, 7.375s, 2001 2,000 2,287,560
AA- New York Power Authority Rev. (General
Purpose), 8s, 1998 380 412,083
BBB New York Urban Development Corp., State
Facilities Rev., 7.5s, 2001 1,000 1,148,870
AAA Puerto Rico Aqueduct & Sewer Authority,
9s, 2005 250 324,037
AAA Triborough Bridge & Tunnel Authority,
NY, 7.375s, 2000 1,000 1,114,320
------------
$20,047,781
- --- --------------------------------------- --------------- ------------
Single Family Housing Revenue - 4.4%
NR New York Mortgage Agency Rev., 7.375s,
2011 $1,295 $ 1,366,781
NR New York Mortgage Agency Rev., 8.05s,
2011 735 798,327
NR New York Mortgage Agency Rev., 6.45s,
2017 2,355 2,437,495
NR New York Mortgage Agency Rev., 8.05s,
2021 325 350,535
NR New York Mortgage Agency Rev., 8.05s,
2022 555 592,984
NR New York Mortgage Agency Rev., 7.75s,
2023 995 1,056,660
NR New York, NY, Housing Development Corp.
(South Bronx Cooperatives), 8.1s, 2023 580 604,313
------------
$ 7,207,095
- --- --------------------------------------- --------------- ------------
Insured Health Care Revenue - 7.2%
AAA New York Dormitory Authority Rev.
(Devereux Foundation), MBIA, 5s, 2015 $1,000 $ 914,210
AAA New York Dormitory Authority Rev. (St.
Vincent's Hospital), FHA, 7.375s, 2011 2,500 2,720,600
Insured Health Care Revenue - continued
AA New York Medical Care Facilities
Finance Agency (Montefiore Medical),
7.25s, 2009 $3,185 $ 3,416,804
AA New York Medical Care Facilities
Finance Agency (Montefiore Medical),
7.25s, 2024 1,750 1,869,140
AAA New York Medical Care Facilities
Finance Agency (Montefiore Medical),
AMBAC, FHA, 6.5s, 2029 2,550 2,705,907
------------
$11,626,661
- --- --------------------------------------- --------------- ------------
Health Care Revenue - 1.8%
NR Albany, NY, Industrial Development
Authority, Civic Facilities Rev.,
8.25s, 2004### $2,135 $ 2,248,283
NR Tompkins County, NY, Industrial
Development Authority, 7.875s, 2024 700 708,834
------------
$ 2,957,117
- --- --------------------------------------- --------------- ------------
Electric and Gas Utility Revenue - 5.5%
AAA New York Energy Research & Development
(Brooklyn Gas), MBIA, 5.5s, 2021 $1,500 $ 1,435,440
BB+ New York Energy Research & Development
(Lilco), 6.9s, 2022 2,000 2,005,120
AAA New York Power Authority, FGIC, 6.5s,
2008 2,500 2,797,525
A- Puerto Rico Electric Power, 0s, 2017 500 134,070
NR Virgin Islands Water & Power Authority,
Electric Systems Rev., 7.4s, 2011 2,450 2,560,862
------------
$ 8,933,017
- --- --------------------------------------- --------------- ------------
Water and Sewer Utility Revenue - 10.3%
AAA Buffalo, NY, Municipal Water Authority,
FGIC, 5s, 2025 $1,000 $ 894,370
A- New York Environmental Facilities
Corp., Pollution Control Rev., 5.75s,
2010 3,235 3,324,933
A New York Environmental Facilities
Corp., Pollution Control Rev., 6.875s,
2010 2,000 2,205,280
NR New York Environmental Facilities
Corp., Water Facilities Rev., 8.85s,
2015 2,500 2,770,725
A- New York, NY, Municipal Water & Sewer
Finance Authority, 6s, 2010 620 643,690
A- New York, NY, Municipal Water & Sewer
Finance Authority, 7.1s, 2012 2,000 2,183,200
A- New York, NY, Municipal Water & Sewer
Finance Authority, 7s, 2015 745 806,343
A- New York, NY, Municipal Water & Sewer
Finance Authority, 6s, 2017 200 198,056
A- New York, NY, Municipal Water & Sewer
Finance Authority, 7.6s, 2020 470 517,117
A- New York, NY, Municipal Water & Sewer
Finance Authority, 5.5s, 2023 1,500 1,360,740
AAA Suffolk County, NY, Water Authority,
MBIA, 5.1s, 2012 1,895 1,815,921
------------
$16,720,375
- --- --------------------------------------- --------------- ------------
Turnpike Revenue - 9.8%
AAA Buffalo & Fort Erie, NY, MBIA, 5.75s,
2025 $3,255 $ 3,187,784
A New York Thruway Authority, 5.75s, 2019 500 481,515
BBB Triborough Bridge & Tunnel Authority,
NY, 0s, 2012 360 138,686
A+ Triborough Bridge & Tunnel Authority,
NY, 6.625s, 2012 250 276,792
16
<PAGE>
Turnpike Revenue - continued
A+ Triborough Bridge & Tunnel Authority,
NY, 5.5s, 2017 $ 8,000 $ 7,748,660
AAA Triborough Bridge & Tunnel Authority,
NY, MBIA, 0s, 2017 10,825 3,246,309
BBB Virgin Islands Public Finance
Authority, Highway Rev., 7.7s, 2004 800 874,376
------------
$ 15,954,122
- --- --------------------------------------- --------------- ------------
Airport and Port Revenue - 1.8%
A New York, NY, Industrial Development
Authority, 6s, 2019 $ 2,000 $ 1,925,260
AAA Port Authority, NY & NJ, FGIC, 6.5s,
2019 1,000 1,050,220
-------------
$ 2,975,480
- --- --------------------------------------- --------------- ------------
Sales and Excise Tax Revenue - 1.0%
A Puerto Rico Highway Rev., 5s, 2036 $ 2,000 $ 1,671,300
- --- --------------------------------------- --------------- ------------
Industrial Revenue (Corporate Guarantee) - 2.7%
A+ Allegany County, NY, Industrial
Development Authority, Solid Waste Rev.
(Atlantic Richfield), 6.625s, 2016 $ 1,000 $ 1,039,580
NR Fulton County, NY, Industrial
Development Agency (Crossroads
Incubator), 8.75s, 2009 1,120 1,198,870
NR Monroe County, NY, Industrial
Development Agency (Weyerhaeuser Co.),
9s, 2006### 1,000 1,032,360
BB+ New York, NY, Industrial Development
Agency, Special Facilities Rev.
(American Airlines), 6.9s, 2024 1,000 1,038,570
------------
$ 4,309,380
- --- --------------------------------------- --------------- ------------
Universities - 4.8%
AAA New York Dormitory Authority Rev.
(Canisius College), CAPMAC, 0s, 2014 $ 1,550 $ 526,116
AAA New York Dormitory Authority Rev.
(Canisius College), CAPMAC, 0s, 2015 1,050 335,895
AAA New York Dormitory Authority Rev.
(Colgate University), MBIA, 6s, 2021 850 878,118
AA New York Dormitory Authority Rev.
(Cornell University), 7.375s, 2020 1,500 1,662,450
AAA New York Dormitory Authority Rev.
(Fordham University), FGIC, 5.5s, 2023 1,000 952,560
AA New York Dormitory Authority Rev.
(Menorah Campus), 7.4s, 2031 1,095 1,209,931
AA New York Dormitory Authority Rev.
(Vassar College), 5s, 2015 1,400 1,284,262
AA New York, NY, Industrial Development
Agency (Nightingale-Bamford School),
5.85s, 2020 1,000 943,470
------------
$ 7,792,802
- --- --------------------------------------- --------------- ------------
Other - 3.0%
AA Battery Park City Authority, 5.7s, 2020 $ 4,000 $ 3,743,880
NR Dutchess, NY, Industrial Development
Agency, Civic Facilities Rev., 8.625s,
2016 1,125 1,195,942
------------
$ 4,939,822
- --- --------------------------------------- --------------- ------------
Special Assessment District - 0.4%
A Grand Central, NY, Business Improvement
Dist. Capital, 5.25s, 2022 $ 810 $ 730,710
- --- --------------------------------------- --------------- ------------
Total Municipal Bonds (Identified Cost, $153,074,634) $160,089,551
- --- --------------------------------------- --------------- ------------
</TABLE>
<TABLE>
<CAPTION>
S&P Bond Principal Amount
Rating of Contracts
(Unaudited) Description/Expiration Date/Strike Price (000 Omitted) Value
- ---------- ------------------------------------------------------------- ----------------- -------------
<S> <C> <C> <C>
Call Option Purchased - 0.4%
A Georgia Municipal Electric Authority / 2003 / 102 $ 1 $ 20,790
A North Carolina Eastern Municipal Power Agency / 2003 / 102 5 192,250
A State of New Jersey, "D" / 2003 / 102 2 382,000
- ---------- ------------------------------------------------------------ --------------- -----------
Total Call Options Purchased (Premiums Paid, $555,000) $ 595,040
----------------------------------------------------------------------------------------------- -----------
Floating Rate Demand Notes -- 1.6%
----------------------------------------------------------------------------------------------- -----------
Principal Amount
Issuer (000 Omitted)
- ---------- ------------------------------------------------------------ --------------- -----------
NR New York, NY, City Municipal Water Finance Authority, due
2023 $ 300 $ 300,000
AAA New York, NY, City Municipal Water Finance Authority, due
2024 100 100,000
NR New York, NY, Job Development Authority, due 2007 2,125 2,125,000
- ---------- ------------------------------------------------------------ --------------- -----------
Total Floating Rate Demand Notes, at Identified Cost $ 2,525,000
----------------------------------------------------------------------------------------------- -----------
Total Investments (Identified Cost, $156,154,634) $163,209,591
Other Assets, Less Liabilities - (0.4)% (693,119)
Net Assets - 100.0% $162,516,472
----------------------------------------------------------------------------------------------- -----------
(S)Indexed security.
++Security valued by or at the direction of the Trustees.
**Non-income producing security - in default.
###Security segregated as collateral for an open futures contract.
See notes to financial statements
</TABLE>
Portfolio of Investments - March 31, 1996
MFS PENNSYLVANIA MUNICIPAL BOND FUND
Municipal Bonds - 96.9%
<TABLE>
<CAPTION>
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
- ------------------------------------------------ ----------------- --------------
<S> <C> <C> <C>
General Obligation - 15.7%
AAA Bangor, PA, Area School District
(Northampton), AMBAC, 5.4s, 2017 $ 750 $ 704,220
AAA Bedford, PA, Area School District,
MBIA, 5.5s, 2017 500 478,885
AAA Berks County, PA, FGIC, 0s, 2018 2,200 585,992
AAA Dauphin County, PA, General Authority
Hospital Rev., MBIA, 0s, 2020 940 218,700
A Dauphin County, PA, General Authority
Hospital Rev., Variable Rate Demand
Bond, 5.8s, 2026 400 389,624
BBB- Greene County, PA, 6s, 2010 100 99,645
AAA Lancaster, PA, School District, FGIC,
5.4s, 2013 1,300 1,259,986
AAA Montour Pittsburgh, PA, MBIA, 0s, 2019 1,190 312,113
AAA Northeastern York County, PA, School
District, FGIC, 0s, 2012 415 166,573
AAA Oley Valley, PA, School District,
AMBAC, 0s, 2011 810 346,348
AAA Philadelphia, PA, School District,
AMBAC, 5.5s, 2025 750 706,425
AAA Pittsburgh, PA, Public Improvement,
FGIC, 5.25s, 2011 750 727,687
A Southeastern Area, PA, Special Schools
Authority Rev., 0s, 2007 360 182,426
AAA Southern Fulton, PA, School District,
CAP GTY, 0s, 2016 460 136,735
AA- State of Pennsylvania, 6.25s, 2010 300 326,838
-------------
$6,642,197
- ------------------------------------------------ ----------------- --------------
17
<PAGE>
- --- --------------------------------------- --------------- -------------
State and Local Appropriation - 1.5%
AAA Philadelphia, PA, Municipal Authority
Rev., FGIC, 5.625s, 2014 $ 200 $ 194,892
NR Philadelphia, PA, Municipal Authority
Rev. (Justice Lease), 8.625s, 2016 400 435,312
-------------
$ 630,204
--- --------------------------------------- --------------- -------------
Refunded and Special Obligation - 10.3%
AAA Allegheny County, PA, Sanitation
Authority, FGIC, 7.45s, 1999 $ 200 $ 218,110
AAA Bethlehem, PA, Authority, Water Rev.,
MBIA, 6.1s, 2002 500 537,910
AAA Philadelphia, PA, Gas Works Rev., ETM,
6s, 2013 1,645 1,732,810
NR Philadelphia, PA, Hospitals & Higher
Educational Facilities Authority,
Hospital Rev., 7.25s, 2001 500 566,335
AAA Puerto Rico Highway and Special
Obligation & Transport Authority,
Highway Rev., 6.5s, 2002 250 279,050
AAA Schuylkill County, PA, Redevelopment
Authority Rev., FGIC, 7s, 2007 300 330,522
AAA Westmoreland County, PA, FGIC, ETM, 0s,
2018 1,000 271,130
AAA Westmoreland County, PA, MBIA, ETM,
5.25s, 2009 400 399,468
-------------
$4,335,335
--- --------------------------------------- --------------- -------------
Guaranteed Housing Revenue - 2.3%
A Harrisburg, PA, Authority Rev., 5.875s,
2021 $1,000 $ 979,960
--- --------------------------------------- --------------- -------------
Single Family Housing Revenue - 4.7%
AA+ Pennsylvania Housing Finance Authority,
6.75s, 2014 $ 500 $ 516,610
AA Pennsylvania Housing Finance Authority,
6.4s, 2016 500 506,855
AA+ Pennsylvania Housing Finance Authority,
6.65s, 2021 250 256,637
AA+ Pennsylvania Housing Finance Authority,
6.125s, 2024 500 498,930
A+ Philadelphia, PA, Redevelopment
Authority, 6.1s, 2010 200 196,438
-------------
$1,975,470
--- --------------------------------------- --------------- -------------
Multi-Family Housing Revenue - 4.0%
NR Montgomery, PA, Redevelopment Authority
(KBF Associates), 6.5s, 2025 $ 250 $ 241,100
AAA Pennsylvania Housing Finance Agency,
FNMA, 5.75s, 2014 275 270,617
AAA Pennsylvania Housing Finance Agency,
FNMA, 5.8s, 2022 800 779,992
A Pittsburgh, PA, Urban Development
Corp., 5.5s, 2010 400 379,812
-------------
$1,671,521
--- --------------------------------------- --------------- -------------
Insured Health Care Revenue - 11.8%
AAA Allegheny County, PA, Hospital
Authority (Magee Women's), FGIC, 0s,
2015 $1,000 $ 314,600
AAA Allegheny County, PA, Hospital
Authority (University of Pitts-MD),
MBIA, 5.35s, 2015 400 375,836
AAA Blair County, PA, Hospital Authority
(Altoona), AMBAC, 5.5s, 2008### 470 476,063
Insured Health Care Revenue - continued
AAA Butler County, PA, Hospital Authority,
Hospital Rev. (Butler Memorial
Hospital), FSA, 5.25s, 2016 $ 400 $ 367,200
AAA Dauphin County, PA, General Authority
Hospital Rev. (Hapsco Project), MBIA,
5.8s, 2002 355 373,680
AAA Dauphin County, PA, General Authority
Hospital Rev. (Hapsco Project), MBIA,
5.5s, 2013 1,000 956,770
AAA Delaware County, PA, Hospital Rev.
(Crozer Chester), MBIA, 5.3s, 2020 500 462,405
AAA Lancaster County, PA, Hospital Rev.
(Masonic), AMBAC, 5s, 2020 400 351,156
AAA Lehigh County, PA, Hospital Rev.
(Lehigh Valley), MBIA, 7s, 2016 250 284,475
AAA Sayre, PA, Health Care Facilities (VHA
PA), AMBAC, 6.375s, 2022 160 165,637
AAA Sewickley Valley, PA, Hospital
Authority (Sewickley Valley Hospital),
MBIA, 5.75s, 2016 850 836,834
-------------
$4,964,656
--- --------------------------------------- --------------- -------------
Health Care Revenue - 7.4%
A- Butler County, PA, Industrial
Development Authority (Sherwood Oaks),
5.75s, 2011 $ 400 $ 371,032
AA- Chester County, PA, Health & Education
(Main Line), 5.5s, 2015 335 311,275
BBB- Cumberland County, PA, Municipal
Refunding (Carlisle Hospital), 6.8s,
2023 500 483,580
NR Montgomery County, PA (AHF-Amber),
8.5s, 2023 210 205,493
AA Philadelphia, PA, Health & Educational
Facilities Authority (Children's
Hospital), 5.375s, 2014 500 465,255
BBB+ Philadelphia, PA, Health & Educational
Facilities Authority (Graduate Health),
6.25s, 2018 300 276,876
BBB Philadelphia, PA, Health & Educational
Facilities Authority (Jeanes Health),
6.6s, 2010 500 481,265
A- Philadelphia, PA, Health & Educational
Facilities Authority (Temple
University), 6.625s, 2023 250 255,870
A- Union County, PA, Hospital Authority
Rev. (Evangelical), 5.875s, 2023 300 271,176
-------------
$3,121,822
--- --------------------------------------- --------------- -------------
Electric and Gas Utility Revenue - 5.4%
BBB- Luzerne County, PA, Industrial
Development Authority, 6.05s, 2019 $ 300 $ 283,632
AAA Luzerne County, PA, Industrial
Development Authority, AMBAC, 7.2s,
2017 500 552,295
NR Pennsylvania Economic Development
Authority (Northampton Generating),
6.5s, 2013 250 240,943
BBB Philadelphia, PA, Gas Works Rev.,
6.375s, 2014 750 755,475
BBB Philadelphia, PA, Gas Works Rev.,
5.25s, 2015 250 220,560
NR Schuylkill County, PA, Industrial
Development Authority (Schuylkill
Energy Res.), 6.5s, 2010 235 235,220
-------------
$2,288,125
18
<PAGE>
- --- --------------------------------------- --------------- -------------
Water and Sewer Utility Revenue - 7.9%
AAA Bethlehem, PA, Water Rev., MBIA, 5.2s,
2021 $ 250 $ 227,310
AAA Center Township, PA, Sewer Refunding,
MBIA, 5.5s, 2016 300 289,380
AAA Lancaster, PA, Sewer Authority, FGIC,
6.85s, 2011 250 258,925
AAA Meadville, PA, Area Water Authority,
FSA, 5.125s, 2014 250 230,820
AAA Moon Township, PA, Water & Sewer, MBIA,
5.4s, 2013 500 477,940
BBB Philadelphia, PA, Water Rev., 5.75s,
2013 275 266,970
AAA Philadelphia, PA, Water Rev., FSA,
5.75s, 2013 300 298,299
AAA Philadelphia, PA, Water Rev., MBIA,
5.5s, 2014 500 478,725
AAA Philadelphia, PA, Water Rev., MBIA,
5.25s, 2023 500 453,065
NR Smithfield, PA, Sewer Authority, 6.2s,
2018 350 349,811
-------------
$ 3,331,245
--- --------------------------------------- --------------- -------------
Turnpike Revenue - 3.0%
AAA Delaware River Junction, PA, Port
Authority Rev., FGIC, 5.4s, 2014 $ 250 $ 241,088
AAA Delaware River Junction, PA, Toll
Bridge (Pennsylvania Bridge), FGIC,
6.25s, 2012 1,000 1,043,730
-------------
$ 1,284,818
--- --------------------------------------- --------------- -------------
Airport and Port Revenue - 3.0%
AAA Allegheny County, PA, Airport Rev.
(Greater Pitts), FGIC, 7.75s,
2019### $ 750 $ 782,040
AAA Dauphin County, PA, Airport Rev.
(Harris International), 5.5s, 2014 500 475,085
-------------
$ 1,257,125
--- --------------------------------------- --------------- -------------
Sales and Excise Tax Revenue - 5.1%
A Commonwealth of Puerto Rico, 5.5s, 2013 $ 500 $ 487,365
A Commonwealth of Puerto Rico, 5.5s, 2019 750 700,515
AAA Pennsylvania Inter-governmental
Cooperative Authority Special Tax,
MBIA, 5.6s, 2015 1,000 965,560
-------------
$ 2,153,440
--- --------------------------------------- --------------- -------------
Industrial Revenue (Corporate Guarantee) - 6.9%
BBB- Beaver County, PA, Industrial
Development Rev. (J. Ray McDermott
Project), 6.8s, 2009 $ 835 $ 840,895
A- Erie County, PA, Industrial Development
Authority, Environmental Improvement
(International Paper), 7.625s, 2018 250 278,405
NR Hampden, PA, Industrial Development
Authority (K-Mart), 5.75s, 2008 $ 250 $ 179,798
A New Morgan, PA, Industrial Development
Authority (Browning Ferris), 6.5s, 2019 500 512,795
NR Northampton County, PA, Industrial
Development Authority (Bethlehem
Steel), 7.55s, 2017 800 820,136
BBB- Pennsylvania Economic Development
Authority (MacMillan Bloedel), 7.6s,
2020 250 273,433
-------------
$ 2,905,462
--- --------------------------------------- --------------- -------------
Universities - 3.2%
AAA Cumberland County, PA, Municipal
(Messiah College), AMBAC, 5.125s, 2015 $ 300 $ 276,492
A+ Pennsylvania Higher Education
Facilities Authority Rev. (Thomas
Jefferson University), 6s, 2019 625 631,769
AA- Pennsylvania Higher Education
Facilities Authority Rev. (University
of Pennsylvania), 7s, 2008 400 451,672
-------------
$ 1,359,933
--- --------------------------------------- --------------- -------------
Other - 4.7%
BBB- Pennsylvania Convention Center Rev.,
6.75s, 2019 $ 250 $ 260,960
A Pennsylvania Finance Authority Rev.,
6.6s, 2009 900 963,027
AAA Pennsylvania Industrial Development
Authority Rev., AMBAC, 7s, 2007 300 341,490
AAA Pennsylvania Industrial Development
Authority Rev., AMBAC, 5.8s, 2009 400 410,720
-------------
$ 1,976,197
--- --------------------------------------- --------------- -------------
Total Municipal Bonds (Identified Cost, $40,666,042) $40,877,510
-------------------------------------------------------------------- -------------
Floating Rate Demand Notes - 1.6%
-------------------------------------------------------------------- -------------
AAA Allegheny County, PA, Hospital
(Presbyterian), MBIA, due 2020 $ 300 $ 300,000
AAA Allegheny County, PA, Hospital
(Presbyterian), MBIA, due 2020 300 300,000
A+ Delaware County, PA, Industrial
Development Authority, Airport
Facilities (UPS), due 2015 100 100,000
--- --------------------------------------- --------------- -------------
Total Floating Rate Demand Notes, at Identified Cost $ 700,000
-------------------------------------------------------------------- -------------
Total Investments (Identified Cost, $41,366,042) $41,577,510
Other Assets, Less Liabilities - 1.5% 622,426
-------------------------------------------------------------------- -------------
Net Assets - 100.0% $42,199,936
-------------------------------------------------------------------- -------------
###Security segregated as collateral for an open futures contract.
See notes to financial statements
</TABLE>
19
<PAGE>
Financial Statements
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
March 31, 1996 Fund Fund Fund Fund Fund Fund
- ----------------------- ---------- ----------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $83,056,189 $171,459,722 $72,373,827 $241,910,224 $156,154,634 $41,366,042
Unrealized
appreciation 4,045,900 5,433,403 4,934,709 14,581,651 7,054,957 211,468
-------- --------- -------- --------- --------- ----------
Total, at value $87,102,089 $176,893,125 $77,308,536 $256,491,875 $163,209,591 $41,577,510
Cash 92,694 66,935 113,954 74,295 185,566 16,108
Receivable for Fund
shares sold 66,189 337,543 22,199 1,146,165 40,903 15,139
Receivable for
investments sold 255,000 1,754,317 100,000 200,000 35,048 --
Interest receivable 1,471,146 2,652,332 1,225,093 4,139,616 2,387,788 685,899
Deferred organization
expenses -- 2,082 -- -- -- 3,237
Other assets 1,143 2,133 1,074 353 2,124 301
-------- --------- -------- --------- --------- ----------
Total assets $88,988,261 $181,708,467 $78,770,856 $262,052,304 $165,861,020 $42,298,194
-------- --------- -------- --------- --------- ----------
Liabilities:
Distributions payable $ 224,036 $ 417,772 $ 149,453 $ 610,427 $ 269,839 $ 71,333
Payable for Fund
shares reacquired 1,390 280,673 47,736 298,918 109,819 13,976
Payable for
investments purchased -- -- -- -- 2,620,992 --
Payable for daily
variation margin on
open futures
contracts -- -- 37,500 75,000 135,000 6,000
Payable to affiliates
-
Management fee 3,989 8,143 3,531 11,714 7,344 345
Shareholder servicing
agent fee 1,123 2,266 1,022 3,260 2,164 --
Distribution fee 55,188 49,721 46,973 168,871 92,443 3,621
Accrued expenses and
other liabilities 79,313 93,681 96,197 71,004 106,947 2,983
-------- --------- -------- --------- --------- ----------
Total liabilities $ 365,039 $ 852,256 $ 382,412 $ 1,239,194 $ 3,344,548 $ 99,140
-------- --------- -------- --------- --------- ----------
Net assets $88,623,222 $180,856,211 $78,388,444 $260,813,110 $162,516,472 $42,198,258
-------- --------- -------- --------- --------- ----------
Net assets consist of:
Paid-in capital $83,816,639 $183,304,572 $77,405,579 $252,056,620 $158,695,757 $43,331,602
Unrealized
appreciation on
investments 4,045,900 5,433,403 4,910,830 14,588,583 6,999,932 243,491
Accumulated
undistributed net
realized gain (loss)
on investments 677,369 (7,620,056) (3,786,105) (4,799,511) (2,748,611) (1,403,179)
Accumulated
undistributed
(distributions in
excess of) net
investment income 83,314 (261,708) (141,860) (1,032,582) (430,606) 28,022
-------- --------- -------- --------- --------- ----------
Total $88,623,222 $180,856,211 $78,388,444 $260,813,110 $162,516,472 $42,199,936
-------- --------- -------- --------- --------- ----------
Shares of beneficial
interest outstanding:
Class A 7,840,413 17,733,791 6,514,802 22,724,465 12,607,934 1,924,960
Class B 583,567 815,478 974,670 1,030,087 2,631,884 2,575,213
-------- --------- -------- --------- --------- ----------
Total shares of
beneficial interest
outstanding 8,423,980 18,549,269 7,489,472 23,754,552 15,239,818 4,500,173
-------- --------- -------- --------- --------- ----------
Net assets:
Class A $82,483,893 $172,906,525 $68,183,476 $249,497,114 $134,448,592 $18,029,769
Class B 6,139,329 7,949,686 10,204,968 11,315,996 28,067,880 24,170,167
-------- --------- -------- --------- --------- ----------
Total net assets $88,623,222 $180,856,211 $78,388,444 $260,813,110 $162,516,472 $42,199,936
-------- --------- -------- --------- --------- ----------
Class A shares:
Net asset value and
redemption price per
share
(net assets / shares
of beneficial
interest
outstanding) $10.52 $9.75 $10.47 $10.98 $10.66 $9.37
-------- --------- -------- --------- --------- ----------
Offering price per
share (100/95.25 of
net asset value per
share) $11.04 $10.24 $10.99 $11.53 $11.19 $9.84
-------- --------- -------- --------- --------- ----------
Class B shares:
Net asset value and
offering price per
share
(net assets / shares
of beneficial
interest
outstanding) $10.52 $9.75 $10.47 $10.99 $10.66 $9.39
-------- --------- -------- --------- --------- ----------
</TABLE>
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
20
<PAGE>
Financial Statements - continued
Statements of Operations
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Year Ended March 31, 1996 Fund Fund Fund Fund Fund Fund
- -------------------------- --------- ----------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Interest income $5,708,575 $11,542,571 $5,204,374 $17,715,932 $10,461,924 $2,317,456
------- --------- ------- --------- -------- ----------
Expenses -
Management fee $ 500,417 $ 1,060,604 $ 458,694 $ 1,484,656 $ 934,490 $ 217,590
Trustees' compensation 15,465 14,012 17,650 15,688 15,399 14,606
Shareholder servicing
agent fee (Class A) 128,617 277,676 110,691 389,663 215,099 25,699
Shareholder servicing
agent fee (Class B) 11,529 16,982 21,131 22,357 58,317 49,233
Distribution and service
fee (Class A) 299,638 153,664 257,877 909,212 501,117 --
Distribution and service
fee (Class B) 52,407 64,683 96,049 101,622 265,077 174,424
Custodian fee 48,390 90,351 36,076 119,408 82,286 19,185
Printing 13,263 29,641 12,842 21,896 19,622 12,547
Postage 4,026 13,517 11,487 16,836 15,641 4,717
Auditing fees 32,455 34,455 31,580 18,880 18,755 27,955
Legal fees 960 2,451 2,678 11,957 5,684 10,522
Amortization of
organization expenses -- 2,235 -- -- -- 1,763
Miscellaneous 48,189 77,125 62,022 95,244 92,055 30,310
------- --------- ------- --------- -------- ----------
Total expenses $1,155,356 $ 1,837,396 $1,118,777 $ 3,207,419 $ 2,223,542 $ 588,551
Fees paid indirectly (7,254) (14,914) (5,461) (18,167) (5,732) (3,970)
Reduction of expenses by
investment adviser and
distributor (85,277) -- (73,392) -- (142,619) (370,367)
------- --------- ------- --------- -------- ----------
Net expenses $1,062,825 $ 1,822,482 $1,039,924 $ 3,189,252 $ 2,075,191 $ 214,214
------- --------- ------- --------- -------- ----------
Net investment income $4,645,750 $ 9,720,089 $4,164,450 $14,526,680 $ 8,386,733 $2,103,242
------- --------- ------- --------- -------- ----------
Realized and unrealized
gain (loss) on
investments:
Realized gain (loss)
(identified cost basis) -
Investment transactions $1,880,185 $ 645,820 $ 559,115 $ 3,133,465 $ 4,202,151 $ 340,107
Futures contracts (102,941) (2,322,083) (819,702) 23,017 (155,746) (731,486)
------- --------- ------- --------- -------- ----------
Net realized gain
(loss) on
investments $1,777,244 $(1,676,263) $ (260,587) $ 3,156,482 $ 4,046,405 $ (391,379)
------- --------- ------- --------- -------- ----------
Change in unrealized
appreciation
(depreciation) -
Investments $ (188,403) $ 3,800,153 $1,110,681 $ 526,159 $ (852,933) $ 774,678
Futures contracts -- (153,416) 100,268 6,932 (55,025) 12,088
------- --------- ------- --------- -------- ----------
Net unrealized gain
(loss) on investments $ (188,403) $ 3,646,737 $1,210,949 $ 533,091 $ (907,958) $ 786,766
------- --------- ------- --------- -------- ----------
Net realized and
unrealized gain
on investments $1,588,841 $ 1,970,474 $ 950,362 $ 3,689,573 $ 3,138,447 $ 395,387
------- --------- ------- --------- -------- ----------
Increase in net
assets from
operations $6,234,591 $11,690,563 $5,114,812 $18,216,253 $11,525,180 $2,498,629
======= ========= ======= ========= ======== ==========
</TABLE>
See notes to financial statements
21
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Year Ended March 31, 1996 Fund Fund Fund Fund Fund Fund
- -------------------------- --------- ---------- --------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets:
From operations -
Net investment income $ 4,645,750 $ 9,720,089 $ 4,164,450 $ 14,526,680 $ 8,386,733 $ 2,103,242
Net realized gain (loss)
on investments 1,777,244 (1,676,263) (260,587) 3,156,482 4,046,405 (391,379)
Net unrealized gain
(loss) on investments (188,403) 3,646,737 1,210,949 533,091 (907,958) 786,766
------- -------- ------- -------- ------- ---------
Increase in net assets
from operations $ 6,234,591 $ 11,690,563 $ 5,114,812 $ 18,216,253 $ 11,525,180 $ 2,498,629
------- -------- ------- -------- ------- ---------
Distributions declared to
shareholders -
From net investment
income (Class A) $(4,413,702) $ (9,375,278) $ (3,749,712) $(14,053,457) $ (7,263,571) $ (990,676)
From net investment
income (Class B) (225,971) (326,899) (414,738) (473,223) (1,123,162) (1,117,148)
In excess of net
investment income
(Class A) -- -- (19,210) (35,743) (76,432) --
In excess of net
investment income
(Class B) -- -- (2,125) (1,204) (11,819) --
------- -------- ------- -------- ------- ---------
Total distributions
declared to shareholders $(4,639,673) $ (9,702,177) $ (4,185,785) $(14,563,627) $ (8,474,984) $(2,107,824)
------- -------- ------- -------- ------- ---------
Fund share (principal)
transactions -
Net proceeds from sale of
shares $ 6,801,657 $ 10,722,904 $ 9,527,957 $ 41,490,140 $ 34,552,591 $ 6,446,099
Issued in connection with
the acquisition of
the Advantage Fund -- -- -- -- 14,684,566 14,818,825
Net asset value of shares
issued to shareholders
in reinvestment of
distributions 1,862,845 4,417,313 2,180,065 6,631,937 5,133,804 1,301,093
Cost of shares reacquired (9,836,700) (30,608,486) (17,375,838) (62,188,200) (53,386,143) (4,865,944)
------- -------- ------- -------- ------- ---------
Increase (decrease) in
net assets from Fund
share transactions $(1,172,198) $(15,468,269 $ (5,667,816) $(14,066,123) $ 984,818 $17,700,073
------- -------- ------- -------- ------- ---------
Total increase
(decrease) in net
assets $ 422,720 $(13,479,883) $ (4,738,789) $(10,413,497) $ 4,035,014 $18,090,878
Net assets:
At beginning of period 88,200,502 194,336,094 83,127,233 271,226,607 158,481,458 24,109,058
------- -------- ------- -------- ------- ---------
At end of period $88,623,222 $180,856,211 $ 78,388,444 $260,813,110 $162,516,472 $42,199,936
======= ======== ======= ======== ======= =========
Accumulated undistributed
(distributions in excess
of) net investment
income included in net
assets at end of period $ 83,314 $ (261,708) $ (141,860) $ (1,032,582) $ (430,606) $ 28,022
======= ======== ======= ======== ======= =========
</TABLE>
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Year Ended March 31, 1995 Fund Fund Fund Fund Fund Fund
- -------------------------- --------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets:
From operations -
Net investment income $ 4,679,690 $ 10,867,210 $ 4,725,659 $ 16,312,275 $ 8,740,078 $ 1,233,943
Net realized loss on
investments (720,688) (4,813,993) (3,196,176) (7,575,364) (4,956,654) (926,036)
Net unrealized gain on
investments 1,407,648 4,563,068 2,709,105 6,284,378 5,683,239 1,312,816
------- -------- ------- -------- -------- ---------
Increase in net assets
from operations $ 5,366,650 $ 10,616,285 $ 4,238,588 $ 15,021,289 $ 9,466,663 $ 1,620,723
------- -------- ------- -------- -------- ---------
Distributions declared to
shareholders -
From net investment
income (Class A) $(4,455,164) $(10,558,798) $ (4,347,433) $(15,941,100) $ (8,299,546) $ (918,914)
From net investment
income (Class B) (169,047) (299,458) (355,084) (341,011) (440,532) (308,983)
From net realized gain on
investments (Class A) -- -- (44,822) (438,055) (13,401)
From net realized gain on
investments (Class B) -- -- (3,726) (8,649) (4,722)
In excess of net
investment income
(Class A) -- -- -- -- (106,916) --
In excess of net
investment income
(Class B) -- -- -- -- (5,096) --
In excess of net realized
gain on investments
(Class A) (208,081) (1,025,561) (231,782) (334,517) (772,589) (45,614)
In excess of net realized
gain on investments
(Class B) (8,165) (37,275) (19,268) (6,605) (35,924) (16,075)
------- -------- ------- -------- -------- ---------
Total distributions
declared to shareholders $(4,840,457) $(11,921,092) $ (5,002,115) $(17,069,937) $ (9,660,603) $(1,307,709)
------- -------- ------- -------- -------- ---------
Fund share (principal)
transactions -
Net proceeds from sale of
shares $ 12,406,978 $ 19,194,317 $ 14,621,961 $ 25,180,128 $ 78,439,130 $ 7,920,007
Net asset value of shares
issued to shareholders
in reinvestment of
distributions 1,737,757 5,605,569 2,363,696 7,555,508 5,701,844 832,536
Cost of shares reacquired (10,820,302) (30,096,110) (25,603,342) (42,201,495) (94,352,331) (3,221,987)
------- -------- ------- -------- -------- ---------
Increase (decrease) in
net assets from Fund
share transactions $ 3,324,433 $ (5,296,224) $ (8,617,685) $ (9,465,859) $(10,211,357) $ 5,530,556
------- -------- ------- -------- -------- ---------
Total increase
(decrease) in net
assets $ 3,850,626 $ (6,601,031) $ (9,381,212) $(11,514,507) $(10,405,297) $ 5,843,570
Net assets:
At beginning of period 84,349,876 200,937,125 92,508,445 282,741,114 168,886,755 18,265,488
------- -------- ------- -------- -------- ---------
At end of period $ 88,200,502 $194,336,094 $ 83,127,233 $271,226,607 $158,481,458 $24,109,058
------- -------- ------- -------- -------- ---------
Accumulated undistributed
(distributions in excess
of) net investment
income included in net
assets at end of period $ (18,567) $ (321,022) $ (197,344) $ (1,034,592) $ (582,451) $ 8,529
======= ======== ======= ======== ======== =========
</TABLE>
See notes to financial statements
22
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Alabama Fund
- ----------------------- ------------------ -------- ---------- ------ ------ --------
Two
Year Months
Ended Ended Year Ended
March March January
31, 31, 31,
- ----------------------- -------- ------ -------- ---------- ------ ------ --------
1996 1995 1994 1994 1993 1992 1991
- ----------------------- -------- ------ -------- ---------- ------ ------ --------
Class A
- ----------------------- -------- ------ -------- ---------- ------ ------ --------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
beginning of period $ 10.34 $ 10.27 $ 10.98 $ 10.33 $ 9.95 $ 9.65 $ 9.53
------ ------ ------ ------ ------ ------ ------
Income from investment
operations# -
Net investment
income(S) $ 0.55 $ 0.56 $ 0.09 $ 0.55 $ 0.56 $ 0.60 $ 0.59
Net realized and
unrealized gain
(loss) on
investments 0.18 0.09 (0.71) 0.69 0.41 0.41 0.08
------ ------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.73 $ 0.65 $ (0.62) $ 1.24 $ 0.97 $ 1.01 $ 0.67
------ ------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment
income $ (0.55) $ (0.55) $ (0.08) $ (0.54) $ (0.58) $ (0.65) $ (0.55)
From net realized gain
on investments -- -- -- (0.04) (0.01) (0.06) --
In excess of net
investment income++++ -- -- (0.01) (0.01) -- -- --
In excess of net
realized gain on
investments -- (0.03) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Total distributions
declared to
shareholders $ (0.55) $ (0.58) $ (0.09) $ (0.59) $ 0.59) $ (0.71) $ (0.55)
------ ------ ------ ------ ------ ------ ------
Net asset value - end
of period $ 10.52 $ 10.34 $ 10.27 $ 10.98 $ 10.33 $ 9.95 $ 9.65
====== ====== ====== ====== ====== ====== ======
Total return++ 7.13% 6.51% (5.66)%+++ 12.26% 10.08% 10.92% 7.31%
Ratios (to average net
assets)/Supplemental data(S):
Expenses## 1.14% 1.15% 1.18%++ 1.21% 1.08% 0.95% 0.57%+
Net investment income 5.18% 5.47% 5.17%+ 5.13% 5.79% 6.19% 6.63%+
Portfolio turnover 37% 30% 4% 12% 17% 23% 64%
Net assets at end of
period (000 omitted) $82,484 $83,805 $81,501 $87,344 $67,678 $48,476 $22,076
+ Annualized.
+ ++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
## For the fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
++ Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
++++ For the year ended January 31, 1992, the per share distribution in excess of net investment income was $0.004.
(S) The investment adviser and/or the distributor voluntarily waived a portion of their management and distribution fee,
respectively, for the periods indicated. If these fees had been incurred by the Fund, the net investment income per share and
the ratios would have been:
Net investment
income $ 0.54 $ 0.55 $ 0.09 $ 0.54 $ 0.55 $ 0.59 $ 0.52
Ratios (to average
net assets):
Expenses 1.24% 1.25% 1.28%+ 1.31% 1.18% 1.08% 1.33%+
Net investment
income 5.08% 5.37% 5.07%+ 5.03% 5.69% 6.06% 5.87%+
</TABLE>
See notes to financial statements
23
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
Alabama Fund
- ----------------------------------------------------- ------------------ -------- ------------
Two
Year Months
Ended Ended
March March Year Ended
31, 31, January 31,
- ----------------------------------------------------- -------- ------ -------- ------------
1996 1995 1994 1994**
- ----------------------------------------------------- -------- ------ -------- ------------
Class B
- ----------------------------------------------------- -------- ------ -------- ------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 10.34 $ 10.27 $ 10.98 $ 10.93
------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.46 $ 0.47 $ 0.08 0.18
Net realized and unrealized gain (loss) on
investments 0.18 0.09 (0.71) 0.07
------ ------ ------ ------
Total from investment operations $ 0.64 $ 0.56 $ (0.63) $ 0.25
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ (0.46) $ (0.46) $ (0.08) $ (0.18)
From net realized gain on investments -- -- -- (0.02)
In excess of net realized gain on investments -- (0.03) -- --
------ ------ ------ ------
Total distributions declared to shareholders $ (0.46) $ (0.49) $ (0.08) $ (0.20)
------ ------ ------ ------
Net asset value - end of period $ 10.52 $ 10.34 $ 10.27 $ 10.98
====== ====== ====== ======
Total return 6.25% 5.64% (5.79)%+++ 2.29%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.96% 1.97% 2.01%+ 1.98%+
Net investment income 4.34% 4.63% 4.30%+ 3.98%+
Portfolio turnover 37% 30% 4% 12%
Net assets at end of period (000 omitted) $6,139 $ 4,396 $ 2,849 $ 2,269
</TABLE>
** For the period from the commencement of offering of Class B shares,
September 7, 1993 to January 31, 1994.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on
average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
See notes to financial statements
24
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
Arkansas Fund
--------------------- ---------------------- ---------- ------------- --------- --------- --------- ----------- ------------
Year Two Months Year Two Months
Ended Ended Year Ended Ended Ended Year Ended
March 31, March 31, January 31, March 31, March 31, January 31,
--------------------- --------- ---------- ---------- ------------- --------- --------- --------- ----------- ------------
1996 1995 1994 1994 1993* 1996 1995 1994 1994**
--------------------- --------- ---------- ---------- ------------- --------- --------- --------- ----------- ------------
Class A Class B
--------------------- --------- ---------- ---------- ------------- --------- --------- --------- ----------- ------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
beginning of period $ 9.66 $ 9.69 $ 10.47 $ 9.88 $ 9.53 $ 9.65 $ 9.69 $10.47 $10.42
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Income from
investment
operations# -
Net investment
income(S) $ 0.50 $ 0.53 $ 0.09 $ 0.56 $ 0.58 $ 0.42 $ 0.42 $ 0.07 $ 0.23
Net realized and
unrealized gain
(loss) on
investments 0.09 0.02 (0.77) 0.60 0.35 0.10 0.01 (0.78) (0.04)
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Total from
investment
operations $ 0.59 $ 0.55 $ (0.68) $ 1.16 $ 0.93 $ 0.52 $ 0.43 $(0.71) $ 0.19
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Less distributions declared to
shareholders -
From net
investment income $ (0.50) $ (0.53) $ (0.08) $ (0.55) $ (0.58) $(0.42) $(0.42) $(0.07) $(0.14)
From net realized
gain on
investments++++ -- -- -- 0.00 -- -- -- -- 0.00
In excess of net
investment
income++++++ -- -- (0.02) (0.02) -- -- -- 0.00 0.00
In excess of net
realized gain on
investments -- (0.05) -- -- -- -- (0.05) -- --
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Total
distributions
declared to
shareholders $ (0.50) $ (0.58) $ (0.10) $ (0.57) $ (0.58) $(0.42) $(0.47) $(0.07) $(0.14)
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Net asset value -
end of period $ 9.75 $ 9.66 $ 9.69 $ 10.47 $ 9.88 $ 9.75 $ 9.65 $ 9.69 $10.47
======== ========= ========= =========== ======= ======== ======== ========= ==========
Total return++ 6.19% 5.90% (6.61)%+++ 11.95% 10.11%+++ 5.43% 4.67% (6.81)%+++ 2.18%+++
Ratios (to average net
assets)/Supplemental data(S):
Expenses### 0.93% 0.75% 0.75%+ 0.63% 0.16%+ 1.76% 1.84% 1.82%+ 1.75%+
Net investment
income 5.10% 5.51% 5.21%+ 5.30% 6.04%+ 4.27% 4.40% 4.11%+ 3.87%+
Portfolio turnover 6% 24% 1% 3% 10% 6% 24% 1% 3%
Net assets at end
of period (000
omitted) $172,907 $187,105 $195,042 $203,542 $124,644 $7,950 $7,231 $5,895 $5,179
* For the period from the commencement of investment operations, February 3, 1992 to January 31, 1993.
** For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
### For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
++ Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
++++ For the year ended January 31, 1994, the per share distributions from net realized gain on investments and in excess of
net ealized gain on investments were $0.0015 and $0.0003, respectively, for both Class A and Class B shares.
++++++ For the year ended March 31, 1994 and the year ended January 31, 1994, the per share distributions in excess of net
investment income were $0.002 and $0.004, respectively, for Class B shares.
(S) The investment adviser and/or the distributor voluntarily waived a portion of their management and distribution fee,
respectively, for the periods indicated. If these fees had been incurred by the Fund, the net investment income per share and
the ratios would have been:
Net investment
income -- $ 0.52 $ 0.09 $ 0.53 $ 0.52 -- $ 0.41 $ 0.07 $ 0.12
Ratios (to average net assets):
Expenses -- 0.82% 0.96%+ 0.91% 0.75%+ -- 1.91% 2.02%+ 3.44%+
Net investment
income -- 5.43% 5.01%+ 5.01% 5.45%+ -- 4.33% 3.91%+ 2.18%+
</TABLE>
See notes to financial statements
25
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
Georgia Fund
--------------------- ---------------------- ---------- ------------- --------- --------- --------- ----------- ------------
Year Two Months
Ended Ended Year Ended
March 31, March 31, January 31,
--------------------- --------- ---------- ---------- ------------- --------- --------- --------- ----------- ------------
1996 1995 1994 1994 1993 1992 1991 1990 1989*
--------------------- --------- ---------- ---------- ------------- --------- --------- --------- ----------- ------------
Class A
--------------------- --------- ---------- ---------- ------------- --------- --------- --------- ----------- ------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
beginning of period $ 10.35 $ 10.38 $ 11.30 $ 10.57 $ 10.22 $ 9.83 $ 9.73 $ 9.73 $ 9.53
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Income from
investment
operations# -
Net investment
income(S) $ 0.54 $ 0.57 $ 0.09 $ 0.57 $ 0.58 $ 0.61 $ 0.63 $ 0.66 $ 0.32
Net realized and
unrealized gain
(loss) on
investments 0.12 -- (0.92) 0.75 0.38 0.46 0.12 0.02 0.14
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Total from
investment
operations $ 0.66 $ 0.57 $ (0.83) $ 1.32 $ 0.96 $ 1.07 $ 0.75 $ 0.68 $ 0.46
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Less distributions declared to
shareholders -
From net
investment income $ (0.54) $ (0.56) $ (0.06) $ (0.55) $ (0.60) $ (0.66) $ (0.63) $ (0.66) $(0.26)
From net realized
gain on investments -- (0.01) -- (0.01) (0.01) (0.02) (0.02) (0.02) --
In excess of net
investment
income++++ 0.00 -- (0.03) (0.03) -- -- -- -- --
In excess of net
realized gain on
investments -- (0.03) -- -- -- -- -- -- --
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Total
distributions
declared to
shareholders $ (0.54) $ (0.60) $ (0.09) $ (0.59) $ (0.61) $ (0.68) $ (0.65) $ (0.68) $(0.26)
-------- --------- --------- ----------- ------- -------- -------- --------- ----------
Net asset value -
end of period $ 10.47 $ 10.35 $ 10.38 $ 11.30 $ 10.57 $ 10.22 $ 9.83 $ 9.73 $ 9.73
======== ========= ========= =========== ======= ======== ======== ========= ==========
Total return++ 6.48% 5.65% (7.34)%+++ 12.71% 9.56% 11.29% 8.06% 7.19% 7.57%+
Ratios (to average net
assets)/Supplemental data(S):
Expenses### 1.17% 1.14% 1.18%+ 1.21% 1.08% 0.99% 0.74% 0.42% 0.40%+
Net investment
income 5.11% 5.50% 5.05%+ 5.10% 5.75% 6.08% 6.46% 6.72% 6.18%+
Portfolio turnover 65% 56% 5% 14% 27% 36% 71% 99% --
Net assets at end
of period (000
omitted) $68,183 $74,432 $85,878 $94,407 $64,649 $47,869 $29,214 $12,628 $4,383
* For the period from the commencement of investment operations, June 6, 1988 to January 31, 1989.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
++ Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
++++ For the year ended March 31, 1996, the per share distribution in excess of net investment income for Class A shares was
$0.003.
(S) The investment adviser and/or the distributor voluntarily waived a portion of their management and distribution fee,
respectively, for the periods indicated. If these fees had been incurred by the Fund, the net investment income per share
and the ratios would have been:
Net investment
income $ 0.53 $ 0.56 $ 0.09 $ 0.56 $ 0.57 $ 0.60 $ 0.59 $ 0.57 $ 0.29
Ratios (to
average net
assets):
Expenses 1.27% 1.24% 1.28%+ 1.31% 1.18% 1.09% 1.11% 1.31% 1.07%+
Net investment
income 5.01% 5.40% 4.95%+ 5.00% 5.65% 5.98% 6.09% 5.83% 5.51%+
</TABLE>
See notes to financial statements
26
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
Georgia Fund
- ----------------------------------------------------- ------------------ -------- ------------
Two
Year Months
Ended Ended
March March Year Ended
31, 31, January 31,
- ----------------------------------------------------- -------- ------ -------- ------------
1996 1995 1994 1994**
- ----------------------------------------------------- -------- ------ -------- ------------
Class B
- ----------------------------------------------------- -------- ------ -------- ------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 10.36 $ 10.38 $ 11.30 $ 11.26
------ ---- ------ ----------
Income from investment operations# -
Net investment income $ 0.45 $ 0.47 $ 0.07 $ 0.19
Net realized and unrealized gain (loss) on
investments 0.12 0.02 (0.91) 0.05
------ ---- ------ ----------
Total from investment operations $ 0.57 $ 0.49 $ (0.84) $ 0.24
------ ---- ------ ----------
Less distributions declared to shareholders -
From net investment income $ (0.46) $ (0.47) $ (0.07) $ (0.18)
From net realized gain on investments -- (0.01) -- (0.01)
In excess of net investment income++++ 0.00 -- (0.01) (0.01)
In excess of net realized gain on investments -- (0.03) -- --
------ ---- ------ ----------
Total distributions declared to shareholders $ (0.46) (0.51) $ (0.08) $ (0.20)
------ ---- ------ ----------
Net asset value - end of period $ 10.47 $ 10.36 $ 10.38 $ 11.30
====== ==== ====== ==========
Total return 5.52% 4.88% (7.47)%+++ 5.34%+
Ratios (to average net assets)/Supplemental data:
Expenses## 2.00% 1.96% 1.99%+ 1.97%+
Net investment income 4.27% 4.66% 4.17%+ 3.83%+
Portfolio turnover 65% 56% 5% 14%
Net assets at end of period (000 omitted) $10,205 $ 8,695 $ 6,631 $ 5,766
** For the period from the commencement of offering of Class B shares, September 7, 1993 to January
31, 1994.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on average shares
outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without
reduction for fees paid indirectly.
++++ For the year ended March 31, 1996, the per share distribution in excess of net investment income
for Class B shares was $0.002.
</TABLE>
See notes to financial statements
27
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
Massachusetts Fund
- --------------------------------------------------------------------------------------------------------------
Two Months
Year Ended Ended Year Ended
March 31, March 31, January 31,
- --------------------------------------- ----------- ----------- ----------- ----------- -----------
1996 1995 1994 1994 1993
- --------------------------------------- ----------- ----------- ----------- ----------- -----------
Class A
- --------------------------------------- ----------- ----------- ----------- ----------- -----------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 10.84 $ 10.90 $ 11.75 $ 11.41 $ 11.05
--------- --------- --------- --------- ---------
Income from investment operations# -
Net investment income $ 0.60 $ 0.64 $ 0.11 $ 0.64 $ 0.68
Net realized and unrealized gain
(loss) on investments 0.14 (0.03) (0.85) 0.58 0.39
--------- --------- --------- --------- ---------
Total from investment operations $ 0.74 $ 0.61 $ (0.74) $ 1.22 $ 1.07
--------- --------- --------- --------- --------
Less distributions declared to shareholders -
From net investment income $ (0.60) $ (0.64) $ (0.07) $ (0.64) $ (0.71)
From net realized gain on investments -- (0.02) -- (0.20) --
In excess of net investment income++++ 0.00 -- (0.04) (0.04) --
In excess of net realized gain on
investments -- (0.01) -- -- --
From paid-in capital -- -- -- -- --
--------- --------- --------- --------- --------
Total distributions declared to
shareholders $ (0.60) $ (0.67) $ (0.11) $ (0.88) $ (0.71)
--------- --------- --------- --------- --------
Net asset value - end of period $ 10.98 $ 10.84 $ 10.90 $ 11.75 $ 11.41
========= ========= ========= ========= =========
Total return++ 6.95% 5.89% (6.34)%+++ 11.02% 10.03%
Ratios (to average net assets)/Supplemental data:
Expenses### 1.17% 1.17% 1.19%+ 1.19% 1.08%
Net investment income 5.44% 6.01% 5.64%+ 5.71% 6.33%
Portfolio turnover 31% 31% 4% 30% 32%
Net assets at end of period (000
omitted) $249,497 $262,551 $277,748 $300,894 $270,778
</TABLE>
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
1992 1991 1990 1989
---------------------------------------- ----------- ----------- ----------- ----------
---------------------------------------- ----------- ----------- ----------- ----------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Ne t asset value - beginning of period $ 10.68 $ 10.58 $ 10.65 $ 10.60
--------- --------- --------- ---------
Income from investment operations# -
Net investment income $ 0.73 $ 0.71 $ 0.72 $ 0.72
Net realized and unrealized gain (loss)
on investments 0.43 0.11 (0.07) 0.05
--------- --------- --------- ---------
Total from investment operations $ 1.16 $ 0.82 $ 0.65 $ 0.77
--------- --------- --------- ---------
Less distributions declared to
shareholders -
From net investment income $ (0.78) $ (0.72) $ (0.72) $ (0.72)
From net realized gain on investments -- -- -- --
In excess of net investment income++++ -- -- -- --
In excess of net realized gain on
investments -- -- -- --
From paid-in capital (0.01) -- -- --
--------- --------- --------- ---------
Total distributions declared to
shareholders $ (0.79) $ (0.72) $ (0.72) $ (0.72)
--------- --------- --------- ---------
Net asset value - end of period $ 11.05 $ 10.68 $ 10.58 $ 10.65
========= ========= ========= =========
Total return++ 11.23% 8.12% 6.28% 7.65%
Ratios (to average net
assets)/Supplemental data:
Expenses### 1.06% 1.07% 1.10% 1.07%
Net investment income 6.65% 6.74% 6.75% 6.90%
Portfolio turnover 51% 43% 52% 26%
Net assets at end of period (000
omitted) $239,311 $213,679 $215,381 $212,763
</TABLE>
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based
on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++ Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been
lower.
++++ For the year ended March 31, 1996, the per share distribution in excess
of net investment income for Class A shares was $0.002.
See notes to financial statements
28
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
Massachusetts Fund
- ---------------------------------------------------------------------------------------------------
Two Months
Year Ended Year Ended Ended Year Ended
January 31, March 31, March 31, January 31,
- -------------------------- ---------- --------- ---------- ------- ---------- ------------
1988 1987 1996 1995 1994 1994**
- -------------------------- ---------- --------- ---------- ------- ---------- ------------
Class A Class B
- -------------------------- ---------- --------- ---------- ------- ---------- ------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
beginning of period $ 11.25 $ 10.59 $ 10.84 $10.90 $11.75 $11.91
-------- ------- ------ ------ ------ -----
Income from investment
operations# -
Net investment income $ 0.71 $ 0.74 $ 0.52 $ 0.55 $ 0.09 $ 0.23
Net realized and
unrealized gain (loss)
on investments (0.65) 0.68 0.15 (0.02) (0.85) 0.04
-------- ------- ------ ------ ------ ------
Total from investment
operations $ 0.06 $ 1.42 $ 0.67 $ 0.53 $(0.76) $ 0.27
-------- ------- ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment
income $ (0.71) $ (0.75) $ (0.52) $(0.56) $(0.09) $(0.22)
From net realized gain on
investments -- (0.01) -- (0.02) -- (0.20)
In excess of net
investment income++++ -- -- 0.00 -- -- (0.01)
In excess of net realized
gain on investments -- -- -- (0.01) -- --
-------- ------- ------ ------ ------ --------
Total distributions
declared to
shareholders $ (0.71) $ (0.76) $ (0.52) $(0.59) $(0.09) $(0.43)
-------- ------- ------ ------ ------ -------
Net asset value - end of
period $ 10.60 $ 11.25 $ 10.99 $10.84 $10.90 $11.75
======== ======= ====== ====== ====== ======
Total return++ 0.80% 14.10% 6.27% 5.13% (6.46)%+++ 5.89%+
Ratios (to average net
assets)/Supplemental data:
Expenses### 1.04% 0.87% 1.90% 1.89% 1.91%+ 1.81%+
Net investment income 6.79% 6.83% 4.71% 5.27% 4.89%+ 4.62%+
Portfolio turnover 27% 7% 31% 31% 4% 30%
Net assets at end of
period (000 omitted) $224,219 $242,119 $11,316 $8,676 $4,993 $4,191
</TABLE>
** For the period from the commencement of offering of Class B shares,
September 7, 1993 to January 31, 1994.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on
average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++ Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
++++ For the year ended March 31, 1996, the per share distribution in excess
of net investment income for Class B shares was $0.0013.
See notes to financial statements
29
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
New York Fund
- -------------------------------------------------------------------------------------------------------------
Two Months
Year Ended Ended Year Ended
March 31, March 31, January 31,
- --------------------------------------- ----------- ----------- ----------- ----------- ---------
1996 1995 1994 1994 1993
- --------------------------------------- ----------- ----------- ----------- ----------- ---------
Class A
- --------------------------------------- ----------- ----------- ----------- ----------- ---------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 10.49 $ 10.50 $ 11.34 $ 10.78 $ 10.25
------ ------- --------- -------- --------
Income from investment operations# -
Net investment income(S) $ 0.55 $ 0.56 $ 0.09 $ 0.59 $ 0.63
Net realized and unrealized gain
(loss) on investments 0.17 0.05 (0.84) 0.74 0.58
------ ------- -------- -------- --------
Total from investment operations $ 0.72 $ 0.61 $ (0.75) $ 1.33 $ 1.21
------ ------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.56) $ (0.06) $ (0.57) $ (0.65)
From net realized gain on investments -- -- -- (0.17) (0.03)
In excess of net investment income++++ 0.00 (0.01) (0.03) (0.03) --
In excess of net realized gain on
investments -- (0.05) -- -- --
From paid-in capital -- -- -- -- --
------ ------- -------- -------- -------
Total distributions declared to
shareholders $ (0.55) $ (0.62) $ (0.09) $ (0.77) $ (0.68)
------ ------- -------- -------- -------
Net asset value - end of period $ 10.66 $ 10.49 $ 10.50 $ 11.34 $ 10.78
====== ======= ======== ======== ========
Total return++ 6.98% 6.03% (6.58)%+++ 12.69% 12.23%
Ratios (to average net assets)/Supplemental
data(S):
Expenses### 1.10% 1.07% 1.03%+ 0.93% 0.53%
Net investment income 5.09% 5.43% 5.09%+ 5.21% 6.16%
Portfolio turnover 102% 147% 15% 51% 61%
Net assets at end of period (000
omitted) $134,449 $146,597 $162,621 $184,523 $135,749
</TABLE>
* For the period from the commencement of investment operations, June 6,
1988 to January 31, 1989.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on
average shares outstanding.
### For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++ Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
++++ For the year ended March 31, 1996, the per share distribution in excess of
net investment income for Class A shares was $0.0058.
(S) The investment adviser and/or the distributor voluntarily waived a portion
of their management and distribution fee, respectively, for the periods
indicated. If these fees had been incurred by the Fund, the net investment
income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $0.54 $0.55 $0.07 $0.56 $0.57
Ratios (to average net assets):
Expenses 1.20% 1.18% 1.23%+ 1.23% 1.13%
Net investment income 4.99% 5.31% 4.88%+ 4.90% 5.56%
</TABLE>
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
1992 1991 1990 1989*
---------------------------------------- ----------- ---------- ----------- ----------
---------------------------------------- ----------- ---------- ----------- ----------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 9.90 $ 9.74 $ 9.79 $ 9.53
------ ----- ------- ------
Income from investment operations# -
Net investment income(S) $ 0.65 $ 0.65 $ 0.68 $ 0.29
Net realized and unrealized gain
(loss) on investments 0.44 0.16 0.01 0.21
------ ----- ------- ------
Total from investment operations $ 1.09 $ 0.81 $ 0.69 $ 0.50
------ ----- ------- ------
Less distributions declared to
shareholders -
From net investment income $ (0.69) $ (0.65) $ (0.67) $(0.24)
From net realized gain on investments (0.05) -- (0.06) --
In excess of net investment income++++ -- -- -- --
In excess of net realized gain on
investments -- -- -- --
From paid-in capital -- -- (0.01) --
------ ----- ------- ------
Total distributions declared to
shareholders $ (0.74) $ (0.65) $ (0.74) $(0.24)
------ ----- ------- ------
Net asset value - end of period $ 10.25 $ 9.90 $ 9.74 $ 9.79
====== ===== ======= ======
Total return++ 11.42% 8.74% 7.33% 8.16%+
Ratios (to average net
assets)/Supplemental data(S):
Expenses### 0.65% 0.54% 0.40% 0.40%+
Net investment income 6.44% 6.73% 6.88% 5.93%+
Portfolio turnover 80% 188% 236% 32%
Net assets at end of period (000
omitted) $79,524 $37,385 $20,156 $6,412
* For the period from the commencement of investment operations, June 6,
1988 to January 31, 1989.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on
average shares outstanding.
### For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++ Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
++++ For the year ended March 31, 1996, the per share distribution in excess of
net investment income for Class A shares was $0.0058.
(S) The investment adviser and/or the distributor voluntarily waived a portion of their
management and distribution fee, respectively, for the periods indicated. If these
fees had been incurred by the Fund, the net investment income per share and the
ratios would have been:
<S> <C> <C> <C> <C>
Net investment income $0.60 $0.61 $0.59 $0.26
Ratios (to average net assets):
Expenses 1.16% 0.95% 1.32% 1.09%+
Net investment income
5.93% 6.33% 5.96% 5.24%+
</TABLE>
See notes to financial statements
30
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
New York Fund
- ---------------------------------------------------------------------------------------------------------
Two Months
Year Ended Ended Year Ended
March 31, March 31, January 31,
- ------------------------------------------------- ----------- ----------- ----------- -----------
1996 1995 1994 1994**
- ------------------------------------------------- ----------- ----------- ----------- -----------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 10.49 $10.50 $11.34 $11.46
------ ---- ------ ------
Income from investment operations# -
Net investment income(S) $ 0.47 $ 0.47 $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on
investments 0.17 0.05 (0.83) 0.04
------ ---- ------ -----
Total from investment operations $ 0.64 $ 0.52 $(0.76) $ 0.22
------ ---- ------ -----
Less distributions declared to shareholders -
From net investment income $ (0.47) $(0.47) $(0.07) $(0.18)
From net realized gain on investments -- -- -- (0.15)
In excess of net investment income++++ 0.00 (0.01) (0.01) (0.01)
In excess of net realized gain on investments -- (0.05) -- --
------ ---- ------ ------
Total distributions declared to shareholders $ (0.47) $(0.53) $(0.08) $(0.34)
------ ---- ------ ------
Net asset value - end of period $ 10.66 $ 10.49 $10.50 $11.34
====== ==== ====== ======
Total return 6.10% 5.17% (6.71)%+++ 5.20%+
Ratios (to average net assets)/
Supplemental data(S):
Expenses### 1.92% 1.89% 1.87%+ 1.79%+
Net investment income 4.27% 4.58% 4.21%+ 3.90%+
Portfolio turnover 102% 147% 15% 51%
Net assets at end of period (000 omitted) $28,068 $11,885 $6,265 $4,828
</TABLE>
** For the period from the commencement of offering of Class B shares,
September 7, 1993 to January 31, 1994.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based
on average shares outstanding.
### For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++++ For the year ended March 31, 1996, the per share distribution in excess
of net investment income for Class B shares was $0.0048.
(S) The investment adviser and/or the distributor voluntarily waived a portion
of their management and distribution fee, respectively, for the periods
indicated. If these fees had been incurred by the Fund, the net investment
income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C>
Net investment income -- $0.47 $0.07 $0.17
Ratios (to average net assets):
Expenses -- 1.91% 1.97%+ 2.00%+
Net investment income -- 4.57% 4.11%+ 3.69%+
</TABLE>
See notes to financial statements
31
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
Pennsylvania Fund
- -------------------------------------------------------------------------------------------------------------------------
Two Months
Year Ended Ended Year Ended Year Ended
March 31, March 31, January 31, March 31,
- ------------------------------------------------- ----------- ----------- ----------- ----------- -----------
1996 1995 1994 1994* 1996
- ------------------------------------------------- ----------- ----------- ----------- ----------- -----------
Class A Class B
- --------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 9.29 $ 9.15 $ 10.14 $ 9.53 $ 9.29
------ ---- ------ -------- --------
Income from investment operations# -
Net investment income(S) $ 0.54 $ 0.54 $ 0.09 $ 0.50 $ 0.50
Net realized and unrealized gain (loss)
on investments 0.09 0.18 (0.99) 0.62 0.07
------ ---- ------ ----- --------
Total from investment operations $ 0.63 $ 0.72 $ (0.90) $ 1.12 $ 0.57
------ ---- ------ ----- ------
Less distributions declared to shareholders -
From net investment income++++ $ (0.55) $ (0.54) $ (0.09) (0.50) $ (0.47)
From net realized gain on
investments -- (0.01) -- (0.01) --
In excess of net realized gain on
investments -- (0.03) -- -- --
------ ---- ------ ------ ------
Total distributions declared to
shareholders $ (0.55) $ (0.58) $ (0.09) $ (0.51) $ (0.47)
------ ---- ------ ------ ------
Net asset value - end of period $ 9.37 $ 9.29 $ 9.15 $ 10.14 $ 9.39
====== ==== ====== ====== =======
Total return++ 6.85% 8.14% (8.91)%+++ 12.12% 6.23%
Ratios (to average net assets)/Supplemental
data(S):
Expenses## 0.10% 0.01% 0.00%+ 0.00%+ 0.88%
Net investment income 5.76% 5.97% 5.43%+ 5.30%+ 4.98%
Portfolio turnover 40% 49% 1% 10% 40%
Net assets at end of period (000 omitted) $18,030 $16,411 $13,961 $13,987 $24,170
</TABLE>
* For the period from the commencement of investment operations, February 1,
1993 to January 31, 1994.
** For the period from the commencement of offering of Class B shares,
September 7, 1993 to January 31, 1994.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on
average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++ Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
++++ For the two months ended March 31, 1994, Class B net investment income
includes distributions in excess of net investment income of less than
$0.001 per share.
(S) The Adviser voluntarily agreed to maintain expenses of the Fund at not
more than 1.30% and 1.95% of average daily net assets for Class A and
Class B shares, respectively. To the extent actual expenses were over/
under these limitations, the net investment income per share and the
ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $0.45 $0.43 $0.06 $0.32 $0.41
Ratios (to average net assets):
Expenses 1.00% 1.18% 1.84%+ 1.94%+ 1.85%
Net investment income 4.86% 4.80% 3.60%+ 3.36%+ 4.01%
</TABLE>
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------ -------- ------ ----------
Two Months
Ended Year Ended
March 31, January 31,
- ------------------------------------------------ -------- ---------- ----------
1995 1994 1994**
- ------------------------------------------------ -------- ---------- ----------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C>
Net asset value - beginning of period $ 9.15 $10.15 $10.06
----- ------ -----
Income from investment operations# -
Net investment income(S) $ 0.45 $ 0.06 $ 0.17
Net realized and unrealized gain (loss)
on investments 0.18 (0.99) 0.10
----- ------ -----
Total from investment operations $ 0.63 $ (0.93) $ 0.27
----- ------ -----
Less distributions declared to shareholders -
From net investment income++++ $(0.45) $(0.07) $(0.17)
From net realized gain on
investments (0.01) -- (0.01)
In excess of net realized gain on
investments (0.03) -- --
------ ------ -----
Total distributions declared to
shareholders $(0.49) $(0.07) $(0.18)
------ ------ -----
Net asset value - end of period $ 9.29 $ 9.15 $10.15
====== ====== =====
Total return++ 7.07% (9.16)%+++ 6.76%+
Ratios (to average net assets)/Supplemental
data(S):
Expenses### 1.01% 1.00%+ 1.00%+
Net investment income 4.96% 4.37%+ 4.22%+
Portfolio turnover 49% 1% 10%
Net assets at end of period (000 omitted) $7,699 $4,304 $3,401
</TABLE>
* For the period from the commencement of investment operations, February 1,
1993 to January 31, 1994.
** For the period from the commencement of offering of Class B shares,
September 7, 1993 to January 31, 1994.
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based
on average shares outstanding.
### For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++ Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
++++ For the two months ended March 31, 1994, Class B net investment income
includes distributions in excess of net investment income of less than
$0.001 per share.
(S) The Adviser voluntarily agreed to maintain expenses of the Fund at not more
than 1.30% and 1.95% of average daily net assets for Class A and Class B
shares, respectively. To the extent actual expenses were over/under these
limitations, the net investment income per share and the ratios would have
been:
<TABLE>
<S> <C> <C> <C>
Net investment income $0.34 $ 0.04 $0.05
Ratios (to average net assets):
Expenses 2.26% 2.91%+ 2.50%+
Net investment income 3.72% 2.47%+ 1.29%+
</TABLE>
See notes to financial statements
32
<PAGE>
Notes to Financial Statements
(1) Business and Organization
MFS Municipal Series Trust (the Trust) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Trust presently
consists of nineteen Funds, as follows: MFS Municipal Income Fund, MFS
Alabama Municipal Bond Fund* (Alabama Fund), MFS Arkansas Municipal Bond
Fund* (Arkansas Fund), MFS California Municipal Bond Fund, MFS Florida
Municipal Bond Fund, MFS Georgia Municipal Bond Fund* (Georgia Fund), MFS
Louisiana Municipal Bond Fund, MFS Maryland Municipal Bond Fund, MFS
Massachusetts Municipal Bond Fund* (Massachusetts Fund), MFS Mississippi
Municipal Bond Fund, MFS New York Municipal Bond Fund* (New York Fund), MFS
North Carolina Municipal Bond Fund, MFS Pennsylvania Municipal Bond Fund*
(Pennsylvania Fund), MFS South Carolina Municipal Bond Fund, MFS Tennessee
Municipal Bond Fund, MFS Texas Municipal Bond Fund, MFS Virginia Municipal
Bond Fund, MFS Washington Municipal Bond Fund, and MFS West Virginia
Municipal Bond Fund. Each Fund, except MFS Municipal Income Fund, is
non-diversified.
The Funds denoted with an asterisk above are included within these financial
statements.
(2) Significant Accounting Policies
The preparation of financial statements in conformity with 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.
Investment Valuations - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, are valued on the
basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon
exchange or over-the-counter prices. Short-term obligations, which mature in
60 days or less, are valued at amortized cost, which approximates market
value. Futures contracts and options listed on commodities exchanges are
valued at closing settlement prices. Securities for which there are no such
quotations or valuations are valued at fair value as determined in good faith
by or at the direction of the Trustees.
Deferred Organization Expenses - Costs incurred by a Fund in connection with
its organization have been deferred and are being amortized on a
straight-line basis over a five-year period beginning on the date of
commencement of operations of the Fund.
Futures Contracts - Each Fund may enter into futures contracts for the
delayed delivery of securities or contracts based on financial indices at a
fixed price on a future date. In entering such contracts, each Fund is
required to deposit either in cash or securities an amount equal to a certain
percentage of the contract amount. Subsequent payments are made or received
by the Fund each day, depending on the daily fluctuations in the value of the
underlying security, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. Each Fund's investment in futures
contracts is designed to hedge against anticipated future changes in interest
rates or securities prices. Investments in interest rate futures for purposes
other than hedging may be made to modify the duration of the portfolio
without incurring the additional transaction costs involved in buying and
selling the underlying securities. Should interest rates move unexpectedly,
the Fund may not achieve the anticipated benefits of the futures contracts
and may realize a loss.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and original issue discount are amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Fees Paid Indirectly - The Trust's custodian bank calculates its fee based on
each Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by each
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Trust's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided. Each Fund files a tax return
annually using tax accounting methods required under provisions of the Code
which may differ from generally accepted accounting principles, the basis on
which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial
statements may differ from that reported on each Fund's tax return and,
consequently, the character of distributions to shareholders reported in the
financial highlights may differ from that reported to shareholders on Form
1099-DIV.
Distributions paid by each Fund from net interest received on tax-exempt
municipal bonds are not includable by shareholders as gross income for
federal income tax purposes because each Fund intends to meet certain
requirements of the Code applicable to regulated investment companies, which
will enable each Fund to pay exempt-interest dividends. The portion of such
interest, if any, earned on private activity bonds issued after August 7,
1986 may be considered a tax-preference item to shareholders. Distributions
to shareholders are recorded on the ex-dividend date.
Each Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a return of
capital. Differences in the recognition or classification of income between
the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or accumulated net
realized gains.
33
<PAGE>
During the year ended March 31, 1996, the following amounts were reclassified
from accumulated net realized gain on investments to accumulated
undistributed net investment income due to differences between book and tax
accounting for accrued market discount on disposal of securities:
Alabama Arkansas Pennsylvania
Fund Fund Fund
====== ====== ============
$95,804 $41,402 $24,075
With respect to the Georgia, Massachusetts and New York Funds, the following
amounts were reclassified to accumulated undistributed net investment income
and paid-in capital, from accumulated net realized gain on investments due to
differences between book and tax accounting for accrued market discount on
disposal of securities:
Georgia Massachusetts New York
Fund Fund Fund
===================================== ====== ============ =========
Accumulated undistributed
net investment income $76,819 $38,957 $240,096
Paid-in capital $ 1,473 $ 550 $ 65,936
These changes had no effect on the net asset value per share.
At March 31, 1996, the following Funds, for federal income tax purposes, had
capital loss carryforwards which may be applied against any net taxable
realized gains of each succeeding year until the earlier of their utilization
or expiration.
<TABLE>
<CAPTION>
Expiration Arkansas Georgia Massachusetts New York Pennsylvania
Date Fund Fund Fund Fund Fund
============== ========= ========= ============= =========== ============
<S> <C> <C> <C> <C> <C>
March 31, 2003 $ -- $2,399,843 $3,052,342 $2,754,263 $ 111,447
March 31, 2004 7,618,347 1,339,129 1,732,935 -- 1,259,709
---------- ---------- ---------- ---------- -----------
$7,618,347 $3,738,972 $4,785,277 $2,754,263 $1,371,156
========== ========== ========== ========== ===========
</TABLE>
Multiple Classes of Shares of Beneficial Interest - Each Fund offers both
Class A and Class B shares. The two classes of shares differ in their
respective shareholder servicing agent, distribution and service fees. All
shareholders bear the common expenses of the Fund pro rata based on settled
shares outstanding, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend
rights; differences in per share dividend rates are generally due to
differences in separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.55%
of each Fund's average daily net assets. The investment adviser voluntarily
waived a portion of its fee with respect to the Pennsylvania Fund, which is
reflected as a reduction of expenses in the Statement of Operations.
Under a temporary expense reimbursement agreement with MFS, MFS has
voluntarily agreed to pay all of the Pennsylvania Fund's operating expenses,
exclusive of management and distribution fees. The Pennsylvania Fund in turn
will pay MFS an expense reimbursement fee not greater than 0.40% of its
average daily net assets. To the extent that the expense reimbursement fee
exceeds the Fund's actual expenses, the excess will be applied to amounts
paid by MFS in prior years. At March 31, 1996, the aggregate unreimbursed
expenses owed to MFS by the Pennsylvania Fund amounted to $216,880, including
$34,522 incurred in the current year. During the year ended March 31, 1996,
MFS voluntarily waived the reimbursement fee of $158,044.
The Trust pays no compensation directly to its Trustees who are officers of
the investment adviser, or to officers of the Trust, all of whom receive
remuneration for their services to the Trust from MFS. Certain of the
officers and Trustees of the Trust are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Trust has
an unfunded defined benefit plan for all its independent Trustees and Mr.
Bailey. Included in Trustees' compensation for the year ended March 31, 1996
is a net periodic pension expense for each Fund, as follows:
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Fund Fund Fund Fund Fund Fund
===== ====== ===== =========== ====== ============
$2,995 $2,542 $3,930 $4,218 $3,929 $2,293
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$2,545, $9,023, $3,327, $8,855, $5,042 and $2,811 as its portion of the sales
charge on sales of Class A shares of the Alabama, Arkansas, Georgia,
Massachusetts, New York and Pennsylvania Funds, respectively, for the year
ended March 31, 1996.
The Trustees have adopted separate distribution plans for Class A and Class B
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Class A distribution plan provides that each Fund will pay MFD up to
0.35% per annum of its average daily net assets attributable to Class A
shares in order that MFD may pay expenses on behalf of the Fund related to
the distribution and servicing of its shares. These expenses include a
service fee to each securities dealer that enters into a sales agreement with
MFD of up to 0.25% per annum of the Fund's average daily net assets
attributable to Class A shares which are attributable to that securities
dealer, a distribution fee to MFD of up to 0.10% per annum of the Fund's
average daily net assets attributable to Class A shares, commissions to
dealers and payments to MFD wholesalers for sales
34
<PAGE>
at or above a certain dollar level, and other such distribution-related
expenses that are approved by the Fund. Except in the case of the 0.25% per
annum first year service fee, service fees payable under the Arkansas Fund's
Class A distribution plan have been established by the Trustees of the Trust
at up to 0.10%, subject to increase on such date or dates as the Trustees of
the Trust may determine. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $4,676, $4,157,
$4,860, $77,307 and $21,318 for the Alabama, Arkansas, Georgia, Massachusetts
and New York Funds for the year ended March 31, 1996. Fees incurred under the
distribution plan during the year ended March 31, 1996 were 0.35% of average
daily net assets attributable to Class A shares on an annualized basis for
the Massachusetts Fund. MFD is currently waiving the 0.10% distribution fee
for the Alabama, Georgia, and New York Funds, which is reflected as a
reduction of expenses in the Statement of Operations. Distribution fee
payments under the distribution plan by the Arkansas Fund will commence on
such date to be determined by the Trustees. In the case of the Pennsylvania
Fund, payments of up to 0.25% per annum of the service fee will commence
under the distribution plan when the value of the net assets of the Fund
attributable to Class A shares first equals or exceeds $50 million.
The Class B distribution plan provides that each Fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the Fund's average daily net assets attributable to Class B shares.
The service fee is not charged to the Pennsylvania Fund Class B shares held
over one year. Except in the case of the 0.25% per annum first year service
fee, service fees payable under the Arkansas Fund's Class B distribution plan
have been established by the Trustees of the Trust at up to 0.10%, subject to
increase on such date or dates as the Trustees of the Trust may determine.
MFD will pay to securities dealers that enter into a sales agreement with MFD
all or a portion of the service fee attributable to Class B shares. The
service fee is intended to be additional consideration for services rendered
by the dealer with respect to Class B shares. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $249,
$717, $895, $826 and $4,533 for the Alabama, Arkansas, Georgia,
Massachusetts, New York and Pennsylvania Funds, respectively, for Class B
shares. Fees incurred under the distribution plan during the year ended March
31, 1996 were 1.00% of each of the Fund's average daily net assets
attributable to Class B shares on an annualized basis, except in the cases of
the Arkansas and Pennsylvania Funds, which were 0.84% and 0.77%,
respectively.
Purchases over $1 million into Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the
event of a shareholder redemption within 12 months following such purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of
Class B shares in the event of a shareholder redemption within six years of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the year ended March 31, 1996 on Class
A and Class B shares were as follows:
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
CDSC imposed Fund Fund Fund Fund Fund Fund
============= ===== ====== ====== =========== ====== ============
<S> <C> <C> <C> <C> <C> <C>
Class A $ 8 $ -- $ 1 $ -- $ 186 $ 3
------ ------ ------ ------- ------- --------
Class B $2,531 $4,215 $10,865 $14,743 $29,930 $18,579
====== ====== ======= ======= ======= ========
</TABLE>
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as
a percentage of the average daily net assets of each class of shares at an
annual rate of up to 0.15% and up to 0.22% attributable to Class A and Class
B shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, were as follows
(000 omitted):
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Fund Fund Fund Fund Fund Fund
============= ===== ====== ====== =========== ======== ============
<S> <C> <C> <C> <C> <C> <C>
Purchases $32,661 $12,100 $52,388 $81,654 $170,244 $31,918
Sales 32,678 29,757 59,586 99,955 167,629 14,860
</TABLE>
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Funds, as computed on a federal income tax basis,
are as follows (000 omitted):
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Fund Fund Fund Fund Fund Fund
============== ====== ======= ====== =========== ======== ============
<S> <C> <C> <C> <C> <C> <C>
Aggregate cost $83,056 $171,460 $72,374 $241,910 $156,155 $41,366
====== ======= ====== ======== ======= =======
Gross unrealized
appreciation $ 4,546 $ 6,916 $ 5,088 $ 16,648 $ 9,039 $ 808
Gross unrealized
depreciation (500) (1,483) (153) (2,066) (1,984) (597)
------ ------- ------ --------- ------ ------
Net unrealized
appreciation $ 4,046 $ 5,433 $ 4,935 $ 14,582 $ 7,055 $ 211
====== ======= ====== ======== ======= =======
</TABLE>
35
<PAGE>
(5) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares Alabama Fund Arkansas Fund Georgia Fund
------------------ ------------------ --------------------
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
====================================== ====== ======== ====== ======== ====== ==========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 461 $ 4,854 952 $ 9,317 599 $ 6,335
Shares issued to shareholders in
reinvestment of distributions 167 1,774 433 4,248 186 1,962
Shares reacquired (893) (9,492) (3,027) (29,685) (1,458) (15,415)
----- ------ ------ ------ ---- --------
Net decrease (265) $(2,864) (1,642) $(16,120) (673) $ (7,118)
===== ======= ===== ======= ==== ========
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount
======================================= ====== ======== ====== ======== ====== ==========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,021 $ 10,353 1,828 $ 17,573 1,076 $ 10,979
Shares issued to
shareholders in reinvestment of
distributions 164 1,663 569 5,424 210 2,148
Shares reacquired (1,017) (10,194) (3,147) (29,660) (2,370) (23,804)
---- ------ ---- ------ ---- --------
Net increase
(decrease) 168 $ 1,822 (750) $ (6,663) (1,084) $(10,677)
====== ======== ====== ======== ====== ==========
</TABLE>
<TABLE>
<CAPTION>
Massachusetts Fund New York Fund Pennsylvania Fund
---------------- ---------------- ------------------
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
======================================== ====== ====== ==== ====== ==== ========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,359 $ 37,357 2,667 $ 28,693 302 $ 2,857
Shares issued to shareholders in
reinvestment of distributions 576 6,381 415 4,457 70 659
Shares reacquired (5,434) (60,354) (4,446) (47,873) (213) 2,014)
------ ------ ---- ------ ---- --------
Net increase
(decrease) (1,499) $(16,616) (1,364) $(14,723) 159 $ 1,502
====== ====== ===== ====== ==== ========
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, 1996 (000 Omitted) Shares Amounts Shares Amount Shares Amount
======================================== ====== ======= ====== ======= ======== =========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,947 $ 20,608 6,955 $ 71,200 438 $ 3,991
Shares issued to shareholders in
reinvestment of distributions 689 7,371 527 5,440 72 652
Shares reacquired (3,891) (41,117) (9,004) (92,427) (269) (2,402)
---- ------ ---- ------ ---- --------
Net increase
(decrease) (1,255) $(13,138) (1,522) $(15,787) 241 $ 2,241
==== ====== ==== ====== ==== ========
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Alabama Fund Arkansas Fund Georgia Fund
----------------- ----------------- -------------------
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
====================================== ===== ====== ===== ====== ===== ========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 183 $1,948 143 $1,406 301 $ 3,193
Shares issued to shareholders in
reinvestment of distributions 8 88 17 169 21 218
Shares reacquired (33) (345) (94) (923) (186) (1,961)
---- ------ --- ------ ----- -------
Net increase 158 $1,691 66 $ 652 136 $ 1,450
==== ====== === ===== ===== =======
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
====================================== ===== ====== ===== ====== ===== ========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 203 $2,054 167 $1,621 358 $ 3,643
Shares issued to shareholders in
reinvestment of distributions 7 74 19 181 21 216
Shares reacquired (62) (626) (46) (436) (178) (1,799)
--- ------ --- ------ ----- -------
Net increase 148 $1,502 140 $1,366 201 $ 2,060
=== ====== === ====== ===== =======
</TABLE>
<TABLE>
<CAPTION>
Massachusetts Fund New York Fund Pennsylvania Fund
----------------- ----------------- -------------------
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
====================================== ===== ====== ===== ====== ===== ========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 374 $ 4,133 544 $ 5,859 376 $ 3,589
Issued in connection with
the acquisition of the
Advantage Fund 1,405 14,685 1,604 14,819
Shares issued to
shareholders in
reinvestment of
distributions 23 251 63 676 68 642
Shares
reacquired (166) (1,834) (513) (5,513) (300) (2,852)
----- ------ ----- ------ ----- --------
Net increase 231 $ 2,550 1,499 $15,707 1,748 $16,198
===== ====== ===== ====== ===== ========
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Class B Shares - continued Massachusetts Fund New York Fund Pennsylvania Fund
----------------- ----------------- -------------------
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
====================================== ===== ====== ===== ====== ===== ========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 428 $ 4,572 700 $7,239 428 $3,928
Shares issued to shareholders in
reinvestment of distributions 17 184 25 262 20 181
Shares
reacquired (103) (1,084) (190) (1,925) (90) (820)
----- ------ ----- ------ ---- ------
Net increase 342 $ 3,672 535 $5,576 358 $3,289
===== ====== ===== ====== ==== ======
</TABLE>
(6) Line of Credit
The Trust entered into an agreement which enables each of the Funds to
participate with other funds managed by MFS in an unsecured line of credit
with a bank which permits borrowings up to $350 million, collectively.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. 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 quarter. The commitment fee allocated
to each of the Funds for the year ended March 31, 1996 ranged from $507 to
$10,834.
(7) Financial Instruments
The Trust trades financial instruments with off-balance sheet risk in the
normal course of its investing activities in order to manage exposure to
market risks such as interest rates. These financial instruments include
futures contracts. The notional or contractual amounts of these instruments
represent the investment a Fund has in particular classes of financial
instruments and does not necessarily represent the amounts potentially
subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions
are considered.
Futures Contracts
<TABLE>
<CAPTION>
Unrealized
Appreciation
Fund Description Expiration Contracts Positions (Depreciation)
================= ============================ =========== ======== ======== =============
<S> <C> <C> <C> <C> <C>
Georgia Fund U.S. Treasury Bonds June 1996 50 Short $(23,879)
Massachusetts Fund U.S. Treasury Bonds June 1996 100 Short $ 6,932
New York Fund U.S. Treasury Bonds June 1996 180 Short $(55,025)
Pennsylvania Fund U.S. Treasury Bonds June 1996 8 Short $ 32,023
</TABLE>
At March 31, 1996, each Fund had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
The Trust also invests in indexed securities whose value may be linked to
interest rates, commodities, indices or other financial indicators. Indexed
securities are fixed-income securities whose proceeds at maturity
(principal-indexed securities) or interest rates (coupon-indexed securities)
rise and fall according to the change in one or more specified underlying
instruments.
Indexed securities may be more volatile than the underlying instrument
itself. The following is a summary of such securities held at March 31, 1996:
<TABLE>
<CAPTION>
Principal
Amount
(000 Unrealized
Fund Description Index Omitted) Value Depreciation
============== =============================== =============== ========== ========= =============
<S> <C> <C> <C> <C> <C>
Alabama Fund Puerto Rico Telephone J. J. Kenny $1,000 $ 941,000 $ 59,000
Authority Rev., 5.59s, 2004
Arkansas Fund Puerto Rico Telephone J. J. Kenny $4,000 $3,674,000 $236,000
Authority Rev., 5.59s, 2004
Puerto Rico Public Buildings PSA Municipal $2,000 $1,858,840 $141,160
Authority, 6.285s, 2016 Swap
New York Fund Puerto Rico Public Buildings PSA Municipal $2,000 $1,858,840 $141,160
</TABLE>
Authority, 6.285s, 2016 Swap
(8) Acquisitions
At close of business on April 28, 1995, the New York Fund acquired all of the
assets and liabilities of The New York Portfolio, a series of The Advantage
Municipal Bond Fund (the Advantage Fund). The acquisition was accomplished by
a tax free exchange of 1,405,222 Class B shares of the Fund (valued at
$14,684,566) for 1,595,965 shares of the Advantage Fund's net assets on that
date ($14,684,566), including $719,185 of unrealized depreciation, which were
combined with those of the Fund. The aggregate net assets for Class B shares
after the acquisition were $26,723,476.
At close of business on April 28, 1995, the Pennsylvania Fund acquired all of
the assets and liabilities of The Pennsylvania Portfolio, a series of The
Advantage Municipal Bond Fund (the Advantage Fund). The acquisition was
accomplished by a tax free exchange of 1,603,769 Class B shares of the Fund
(valued at $14,818,825) for 1,580,698 shares of the Advantage Fund's net
assets on that date ($14,818,825) including $730,231 of unrealized
depreciation, which were combined with those of the Fund. The aggregate net
assets for Class B shares after the acquisition were $22,807,582.
37
<PAGE>
(9) Litigation
MFS has been named as a defendant in a lawsuit brought by the City of Troy,
NY (the City) alleging, among other things, that certain municipal securities
issued by Troy and purchased by MFS Municipal Series Trust-New York (the
Fund) were invalid at the time of issuance. The Fund is actual owner of the
securities. The lawsuit seeks to void the issuance of the securities and
seeks the return of all principal and interest payments previously made by
the City together with interest on such amounts. If the matter cannot be
resolved through settlement with the City and other parties, MFS and the
Fund, if named as defendant, intend vigorously to contest the case. This
lawsuit is in a preliminary state and involves significant complexities that
prevent the Fund from being able to predict whether any liability might
result. Management does not believe that any potential liability would be
material to the financial position of the Fund. Accordingly, no amount has
been accrued in the financial statements with respect to this matter. The
Fund has filed a separate lawsuit against the City, and certain other
parties, in which the Fund is seeking a determination that the securities are
valid and that the Fund is entitled to payment and/or damages. If such
securities are deemed invalid, then interest payments received from the City
are taxable. Given this uncertainty, the Fund is currently treating such
interest payments as taxable.
38
<PAGE>
Independent Auditors' Report
To the Trustees of MFS Municipal Series Trust and Shareholders
of the Portfolios 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 Georgia Municipal Bond Fund, MFS
Massachusetts Municipal Bond Fund, MFS New York Municipal Bond Fund, and MFS
Pennsylvania Municipal Bond Fund (portfolios of MFS Municipal Series Trust)
as of March 31, 1996, the related statements of operations for the year then
ended, the statements of changes in net assets for the years ended March 31,
1996 and 1995, and the financial highlights for each of the years in the
two-year period ended March 31, 1996, the two months ended March 31, 1994,
and each of the years in the eight-year period ended January 31, 1994. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of the
securities owned at March 31, 1996 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
aforementioned portfolios of MFS Municipal Series Trust at March 31, 1996,
the results of their operations, the changes in their net assets, and their
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 29, 1996
-------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
39
<PAGE>
MFS Investment Opportunities
Mutual Funds
The MFS Family of Funds(R), shown on the facing page, falls into the eight
general categories below. All offer full-time professional management, a
diversified portfolio, and a wide array of shareholder services.
Stock funds seek growth of capital rather than income through investments in
stocks.
Stock and bond funds seek current income and growth of capital through
investments in both stocks and bonds.
Bond funds seek current income through investments in debt securities.
World funds seek stock, balanced, and bond fund objectives through
investments in U.S. and foreign stocks and bonds.
Limited-maturity funds seek current income and preservation of capital
through investments in debt securities with remaining maturities of five
years or less.
National tax-free bond funds seek current income exempt from federal income
tax through investments in debt securities issued by states and
municipalities.(1)
State tax-free bond funds seek current income exempt from federal and state
income taxes through investments in debt securities issued by a single state
and its municipalities.(1)
Money market funds seek preservation of capital and current income through
investments in short-term debt securities.(2)
To determine which MFS fund may be appropriate for you, please contact your
financial adviser, who can help you relate these investment opportunities to
your financial goals. If you prefer, you may call MFS Investor Information
for literature3 on MFS products and services: 1-800-637-2929, from 9 a.m. to
5 p.m. Eastern time any business day (leave a message anytime).
1 A small portion of the income may be subject to federal, state and/or
alternative minimum tax.
2 Investments in money market funds are not issued or guaranteed by the U.S.
government and there is no assurance that the fund will be able to maintain
a stable net asset value.
3 Including a prospectus containing more complete information including
charges and expenses. Read the prospectus carefully before investing.
40
<PAGE>
The MFS Family of Funds(R)
America's Oldest Mutual Fund Group
The members of the MFS Family of Funds are grouped below according to the
types of securities in their portfolios. For free prospectuses containing
more complete information, including the exchange privilege and all charges
and expenses, please contact your financial adviser or call MFS at
1-800-637-2929 any business day from 9 a.m. to 5 p.m. Eastern time (or leave
a message anytime). This material should be read carefully before investing
or sending money.
Stock
Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
MFS Capital Growth Fund
MFS Emerging Growth Fund
MFS Gold & Natural Resources Fund
MFS Growth Opportunities Fund
MFS Managed Sectors Fund
MFS OTC Fund
MFS Research Fund
MFS Value Fund
Stock and Bond
MFS Total Return Fund
MFS Utilities Fund
Bond
MFS Bond Fund
MFS Government Mortgage Fund
MFS Government Securities Fund
MFS High Income Fund
MFS Intermediate Income Fund
MFS Strategic Income Fund
Limited Maturity Bond
MFS Government Limited Maturity Fund
MFS Limited Maturity Fund
MFS Municipal Limited Maturity Fund
World
MFS/Foreign & Colonial Emerging
Markets Equity Fund
MFS/Foreign & Colonial International
Growth Fund
MFS/Foreign & Colonial International
Growth and Income Fund MFS World Asset Allocation Fund(SM)
MFS World Equity Fund
MFS World Governments Fund
MFS World Growth Fund
MFS World Total Return Fund
National Tax-Free Bond
MFS Municipal Bond Fund
MFS Municipal High Income Fund
(closed to new investors)
MFS Municipal Income Fund
State Tax-Free Bond
Alabama, Arkansas, California, Florida, Georgia, Louisiana, Maryland,
Massachusetts, Mississippi, New York, North Carolina, Pennsylvania, South
Carolina, Tennessee, Texas, Virginia, Washington, West Virginia
Money Market
MFS Cash Reserve Fund
MFS Government Money Market Fund
MFS Money Market Fund
<PAGE>
MFS(R) Municipal
Series Trust
[DALBAR LOGO]
500 Boylston Street
Boston, MA 02116
MFS(R) Alabama Municipal Bond Fund
MFS(R) Arkansas Municipal Bond Fund
MFS(R) Georgia Municipal Bond Fund
MFS(R) Massachusetts Municipal Bond Fund
MFS(R) New York Municipal Bond Fund
MFS(R) Pennsylvania Municipal Bond Fund
Bulk Rate
U.S. Postage
P A I D
Permit #55638
Boston, MA
[MFS LOGO]
54/254
55/255
46/246
45/245
52/252
MST-2B-4/96-32.5M 30/230
