<PAGE>
[LOGO] M F S(SM) Annual Report
INVESTMENT MANAGEMENT August 31, 1997
MFS(R) MUNICIPAL BOND FUND
[Graphic Omitted]
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
A Discussion with the Portfolio Manager ................................... 2
Portfolio Manager's Profile ............................................... 5
Fund Facts ................................................................ 6
Performance Summary ....................................................... 6
Portfolio Concentration ................................................... 8
Tax Form Summary .......................................................... 8
Portfolio of Investments .................................................. 9
Financial Statements ...................................................... 19
Notes to Financial Statements ............................................. 25
Independent Auditors' Report .............................................. 31
The MFS Family of Funds(R) ................................................ 32
Trustees and Officers ..................................................... 33
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HIGHLIGHTS
o FOR THE 12 MONTHS ENDED AUGUST 31, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 7.75%, WHILE CLASS B SHARES
RETURNED 6.84%. (SEE PERFORMANCE SUMMARY FOR MORE INFORMATION.)
o THE PAST YEAR HAS PROVIDED HEALTHY RETURNS FOR MUNICIPAL BOND INVESTORS,
WITH YIELDS ON LONG-TERM, HIGH-GRADE MUNICIPALS DECLINING BY ABOUT 40
BASIS POINTS (0.40%) OVER THE PERIOD, WITH ABOUT HALF OF THIS DECLINE
COMING OVER THE PAST SIX MONTHS.
o THANKS TO SOUND BUDGETING PRACTICES AND A HEALTHY ECONOMY, MANY
MUNICIPALITIES ARE IN THEIR STRONGEST FINANCIAL POSITIONS IN SEVERAL
YEARS. THIS, ALONG WITH RELATIVELY LOW YIELDS AND THE GROWTH OF MUNICIPAL
BOND INSURANCE, HAS LED TO INCREASINGLY NARROW YIELD DIFFERENTIALS AMONG
BOND QUALITIES.
o THE FUND IS SEEKING TO AVOID LARGE PORTFOLIO RESTRUCTURINGS FOR PURPOSES
OF ANTICIPATING INTEREST-RATE CHANGES, WHILE PLACING INCREASED EMPHASIS
ON THE PORTFOLIO'S STRUCTURAL CHARACTERISTICS AND OVERALL QUALITY.
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
Dear Shareholders:
An unprecedented combination of generally positive factors has helped the U.S.
economy enjoy a sustained period of relative stability and moderate growth in
which thousands of new jobs have been created every month, inflation remains
under control, and the investment climate -- at least until now -- has been
favorable. For example, the increased use of technology and other productivity
enhancements, as well as corporate restructuring and global competition, is
improving companies' balance sheets and helping control inflation. Meanwhile,
borrowing by corporations and governments continues to decline, while consumer
confidence is increasing, although consumer debt levels are still
uncomfortably high. While some lenders are beginning to tighten standards to
address this problem, consumer debt and personal bankruptcies continue to
rise. The rapid pace of growth seen in the first quarter slowed slightly in
the second quarter, to an annual rate of 3.3%. While real (inflation-adjusted)
growth could moderate further in the third quarter, we believe economic
momentum will carry well into the first quarter of 1998. The money supply is
increasing at a rapid rate, the housing and automobile markets are
strengthening, and it now appears that Christmas sales could be quite good.
Because economic growth continues to be impressive, markets are likely to
begin focusing on the Federal Reserve Board's (the Fed's) willingness to raise
interest rates.
In the fixed-income markets, we have been encouraged by the Fed's decision at
its July meeting not to raise short-term interest rates. But we cannot rule
out the possibility of future monetary tightening in the second half of the
year if, as we now expect, the economy strengthens during the balance of 1997.
Therefore, our risk/reward outlook for the fixed-income markets is neutral,
and we believe that fixed-income investors should think in terms of earning
the coupon income from their investments rather than seeking possible gains
from price appreciation.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
--------------------------
A. Keith Brodkin
Chairman and President
September 15, 1997
<PAGE>
A DISCUSSION WITH THE PORTFOLIO MANAGER
[Photo of Robert A. Dennis]
Robert A. Dennis
Generally, the past 12 months have provided healthy returns for municipal bond
investors. Long-term, high-grade municipal yields declined by about 40 basis
points (0.40%) over the period, with about half of this decline occurring over
the past six months. However, these numbers fail to reflect the market's
substantial volatility during the period as investors' perceptions changed
frequently concerning the rate of economic growth, the outlook for inflation,
and the prospects for Federal Reserve Board action. The range between March's
high point in yields and July's low was about 70 basis points (0.70%).
For the 12 months ended August 31, 1997, Class A shares of the Fund provided a
total return of 7.75%, while Class B shares returned 6.84%. These returns,
which assume the reinvestment of distributions but exclude the effects of any
sales charges, compare to a 9.27% return for the Lehman Brothers Municipal
Bond Index, an unmanaged index of approximately 8,000 investment-grade, mostly
long-term bonds. The Fund's 12-month returns compared unfavorably with the
8.83% average return for the General Municipal Bond fund category tracked by
Lipper Analytical Services, Inc., an independent firm that reports mutual fund
performance.
Q. WHAT DO YOU SEE AS SOME OF THE REASONS FOR THIS PERFORMANCE?
A. Contrary to the Fund's very favorable performance results achieved nearly
every year since its inception (compared with the average return of its
Lipper category) the results for the past 12 months have been
disappointing. Most of the underperformance occurred during the last four
months of 1996 when the Fund suffered from two significant miscalculations
relative to the course of interest rates. The Fund is doing relatively
better so far in 1997 as it seeks to avoid making major restructurings in
anticipation of possible changes in interest rates and focuses on adding
value through credit and sector analysis.
Q. IN GENERAL, HOW WOULD YOU DESCRIBE THE CURRENT MUNICIPAL MARKET?
A. For municipal credits, these have been the best of times. Reflecting the
effects of sound budgeting practices and a uniformly healthy economy,
municipal credits are in their strongest financial positions in many years.
This, along with the relatively low absolute yield levels and the continued
proliferation of municipal bond insurance, which now absorbs about half of
the new-issue calendar, has led to a narrowing of yield spreads among
qualities to historically low differentials. Over the past 12 months, the
yield spread between 20-year bonds rated "AAA" by Standard & Poor's and those
rated "BBB" has narrowed from 75 basis points (0.75%) to 40 basis points
(0.40%).
This significant narrowing of credit spreads has made it difficult to add
value to the portfolios in the traditional manner; that is, through
allocations among states, regions, and sectors. During this time of economic
stability and strength, but unusual interest-rate volatility, high-grade
municipals have become increasingly homogeneous, and portfolio performance
has been largely determined by maturity differentials and structural bond
differences.
Q. HOW HAS THE MUNICIPAL MARKET'S PERFORMANCE COMPARED WITH THAT OF THE
TAXABLE MARKET?
A. This market performed well against the taxable market because demand from
institutions and the retail market was consistent, while new-issue supply
was only slightly higher than last year's level. Borrowing for new public-
sector projects continued to be restrained, and interest rates were not low
enough to spark a new wave of refinancings.
Q. WHAT CAN YOU TELL US ABOUT THE AVERAGE CREDIT QUALITY OF THE FUND?
A. With quality yield spreads historically narrow, we believe prime-quality
bonds clearly offer the best values in the market. Accordingly, about two-
thirds of the Fund's assets are invested in bonds rated "AAA" and "AA" by
Standard & Poor's. Also, almost half of the Fund's assets are enhanced by
bond insurance.
Q. WHAT ABOUT THE INCREASED USE OF BOND INSURANCE? HOW HAS IT AFFECTED THE
MUNICIPAL MARKET AND HOW YOU MANAGE THE FUND?
A. The rise in bond insurance continues to be one of the most dramatic trends
in the municipal market. This, plus the healthy condition of municipal
credits and relatively low interest rates, has contributed to the continued
narrowing of already very low yield spreads among qualities in this market.
This means investors are generally not being adequately paid for buying
lower-grade bonds, and that in today's environment of nearly uniform economic
and financial health, it is that much harder to find unusual value among
investment-grade municipal bonds.
Q. WHAT ABOUT CALL PROTECTION? WHAT PORTION OF THE FUND IS IN NONCALLABLE
BONDS, AND WHY IS THIS IMPORTANT FOR INVESTORS?
A. Call protection is important, not just to help ensure the continuation of
the income stream from bonds, but also to help provide favorable total
return performance, particularly during periods of stable or declining
interest-rate trends. The fact that the Fund has more than 40% of its
assets in noncallable bonds is one of its most important characteristics.
Q. COULD YOU TALK ABOUT SOME OF THE LARGEST SECTORS IN THE FUND AND WHY YOU'RE
FAVORING THEM?
A. The Fund's largest sector holdings are in general obligation and other tax-
backed bonds, refunded bonds (escrowed in U.S. Treasury securities), and
essential-service electric and gas revenue bonds. These are traditionally
among the most secure and liquid sectors of municipal finance. At the same
time, the Fund is geographically well diversified, with holdings in 26
states.
Q. IN YOUR LAST REPORT, YOU SAID YOU INTENDED TO MAKE THE FUND LESS VULNERABLE
TO UNEXPECTED INTEREST-RATE MOVES. WHAT STEPS HAVE YOU TAKEN TO DO THIS?
A. As I mentioned, we are trying to avoid making major restructurings in
anticipation of possible interest-rate changes, while placing increased
emphasis on the portfolio's overall quality with the help of our
experienced municipal research staff. We believe this expertise should
prove more valuable in coming months as municipalities face new challenges,
including coping with the effects of the new federal welfare reform law,
other possible cuts in federal aid, and the deregulation of electric
utilities.
Q. LOOKING AHEAD, WHAT POTENTIAL CHANGES DO YOU SEE IN THE GENERAL ECONOMIC OR
POLITICAL ENVIRONMENT, AND HOW MIGHT THEY AFFECT THE FUND?
A. The most likely outlook is for a continuation of healthy, but not
overheated, growth and relatively low inflation. However, the price for
keeping the economy on a relatively even keel will be further volatility in
interest rates. We are determined not to take what we believe to be
unreasonable risks in trying to anticipate the trends in interest rates,
but to add value for our shareholders through market analysis based on our
long experience in portfolio management and credit analysis from our large
and highly experienced research staff.
/s/ Robert A. Dennis
-------------------------------
Robert A. Dennis
Portfolio Manager
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PORTFOLIO MANAGER'S PROFILE
ROBERT A. DENNIS IS A SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(SM)
AND HAS BEEN PORTFOLIO MANAGER OF MFS(R) MUNICIPAL BOND FUND SINCE 1984. MR.
DENNIS JOINED MFS IN 1980 AND WAS NAMED ASSISTANT VICE PRESIDENT -
INVESTMENTS IN 1981, VICE PRESIDENT - INVESTMENTS IN 1983, AND SENIOR VICE
PRESIDENT IN 1986. HE IS A GRADUATE OF THE MASSACHUSETTS INSTITUTE OF
TECHNOLOGY AND ITS SLOAN SCHOOL OF MANAGEMENT.
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<PAGE>
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FUND FACTS
OBJECTIVE: THE FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE AS HIGH
A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL INCOME
TAXES AS IS CONSIDERED CONSISTENT WITH PRUDENT
INVESTING AND PROTECTION OF SHAREHOLDERS' CAPITAL.
COMMENCEMENT OF
INVESTMENT OPERATIONS: CLASS A: DECEMBER 16, 1976
CLASS B: SEPTEMBER 7, 1993
SIZE: $1.7 BILLION NET ASSETS AS OF AUGUST 31, 1997
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PERFORMANCE SUMMARY
The information below and on the following page illustrates the historical
performance of MFS Municipal Bond Fund - Class A shares in comparison to
various market indicators. Class A share performance results reflect the
deduction of the 4.75% maximum sales charge; benchmark comparisons are
unmanaged and do not reflect any fees or expenses. The performance of other
share classes will be greater than or less than the line shown, based on the
differences in charges and fees paid by shareholders investing in different
classes. It is not possible to invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 5-year period ended August 31, 1997)
MFS Lehman Consumer
Municipal Brothers Price
Bond Fund Municipal Index -
Class A Bond Index U.S.
---------- ---------- -------
8/92 $ 9,500 $10,000 $10,000
8/93 $10,800 $11,200 $10,300
8/94 $10,700 $11,200 $10,600
8/95 $11,500 $12,200 $10,900
8/96 $12,100 $12,900 $11,200
8/97 $12,984 $14,062 $11,405
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended August 31, 1997)
MFS Lehman Consumer
Municipal Brothers Price
Bond Fund Municipal Index -
Class A Bond Index U.S.
---------- ---------- -------
8/87 $ 9,500 $10,000 $10,000
8/89 $11,400 $11,900 $10,900
8/91 $13,400 $14,100 $11,900
8/93 $17,100 $17,600 $12,700
8/95 $18,100 $19,200 $13,400
8/97 $20,443 $22,060 $14,044
AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 31, 1997
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
MFS Municipal Bond Fund (Class A)
including 4.75% sales charge (SEC results) +2.59% +4.86% +5.36% +7.41%
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MFS Municipal Bond Fund (Class A)
at net asset value +7.75% +6.57% +6.40% +7.93%
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MFS Municipal Bond Fund (Class B)
with CDSC (SEC results) +2.84% +4.71% +5.25% +7.52%
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MFS Municipal Bond Fund (Class B)
at net asset value +6.84% +5.61% +5.57% +7.52%
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Lehman Brothers Municipal Bond Index* +9.27% +7.77% +7.06% +8.23%
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Average general municipal debt fund** +8.83% +6.99% +6.45% +7.81%
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Consumer Price Index+* +2.19% +2.55% +2.66% +3.45%
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</TABLE>
* Source: CDA/Wiesenberger.
** Source: Lipper Analytical Services, Inc.
+ The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
All results are historical and assume the reinvestment of dividends and
capital gains. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Past performance is no guarantee of future results.
Class A share SEC results include the maximum 4.75% sales charge. Class B
share SEC results reflect the applicable contingent deferred sales charge
(CDSC), which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%.
Class B share results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior to the
commencement of offering of Class B shares. Because operating expenses
attributable to Class B shares are higher than those of Class A shares, Class
B share performance generally would have been lower than Class A share
performance. The Class A share performance included within the Class B share
SEC performance has been adjusted to reflect the CDSC generally applicable to
Class B shares rather than the initial sales charge generally applicable to
Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time.
PORTFOLIO CONCENTRATION AS OF AUGUST 31, 1997
QUALITY RATINGS
"AAA" 58.7%
"AA" 9.0%
"A" 9.9%
"BBB" 15.4%
Cash and Equivalents 7.0%
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TAX FORM SUMMARY
IN JANUARY 1998, SHAREHOLDERS WILL BE MAILED A TAX FORM SUMMARY
REPORTING THE FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE
CALENDAR YEAR 1997.
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<PAGE>
PORTFOLIO OF INVESTMENTS - August 31, 1997
<TABLE>
<CAPTION>
Municipal Bonds - 94.1%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
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General Obligations - 13.1%
<S> <C> <C>
Chicago, IL, 5.25s, 2027 $ 6,000 $ 5,741,160
Chicago, IL, Board of Education, MBIA, 6.25s, 2012 2,500 2,795,875
Clark County, NV, Las Vegas Convention and Visitors
Authority, MBIA, 5.5s, 2021 3,570 3,537,120
Clark County, NV, School District, MBIA, 7s, 2010 4,000 4,733,440
Commonwealth of Massachusetts, 7s, 2007 1,285 1,425,489
Commonwealth of Massachusetts, 6.5s, 2008 6,400 7,283,840
Commonwealth of Massachusetts, FGIC, 7s, 2009 7,000 8,312,010
Commonwealth of Massachusetts, 5s, 2013 10,000 9,674,300
Commonwealth of Massachusetts, 5.125s, 2013 10,000 9,809,000
Commonwealth of Massachusetts, 5s, 2014 10,500 10,088,190
Commonwealth of Massachusetts, 5.125s, 2015 6,000 5,816,100
Detroit, MI, 6.25s, 2009 5,235 5,553,550
Detroit/Wayne County, MI, Stadium, 5.5s, 2017 6,000 6,032,580
District of Columbia, MBIA, 6.5s, 2010 6,000 6,723,900
Florida Board of Education, Capital Outlay, 9.125s, 2014 1,735 2,472,913
Florida Board of Education, Capital Outlay, 5.25s, 2022 7,905 7,670,538
Lewisville, TX, Independent School District, 5s, 2018 8,500 8,045,250
New York City, NY, 7.5s, 2002 12,500 13,852,000
New York City, NY, 7.5s, 2006 5,000 5,612,500
New York City, NY, 7.65s, 2006 295 330,126
New York City, NY, 7.5s, 2007 15,500 17,254,290
New York City, NY, 7.5s, 2008 10,000 11,131,800
New York City, NY, 7.7s, 2009 320 358,729
New York City, NY, 5.75s, 2013 8,500 8,644,755
New York City, NY, 5.75s, 2014 9,500 9,606,210
New York City, NY, 5.75s, 2015 11,085 11,208,930
State of California, 5.25s, 2011 5,250 5,292,262
State of California, 5.5s, 2013### 5,000 5,163,100
State of Florida, Broward County Expressway Authority, 10s, 2014 4,350 6,595,122
State of Washington, 6.75s, 2010 3,880 4,544,295
State of Washington, 6s, 2012 4,360 4,790,681
Virginia Public School Authority, School Financing,
5.125s, 2017 17,980 17,637,481
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$ 227,737,536
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State and Local Appropriation - 27.3%
California Public Works Board, Lease Rev.
(Department of Corrections), AMBAC, 5.25s, 2013 $ 6,795 $ 6,852,622
California Public Works Board, Lease Rev.
(University of California), 5.5s, 2014 4,500 4,558,005
Chicago, IL, Board of Education Lease Certificates,
MBIA, 6.25s, 2009 5,160 5,738,797
Chicago, IL, Board of Education Lease Certificates,
MBIA, 6.25s, 2015 27,295 30,305,912
Indiana Office Building Community Capital Complex
Rev., 6.9s, 2011 9,500 11,189,575
King County, IL, Washington Lease Rev. (King Street
Center), MBIA, 5.125s, 2017 6,975 6,644,943
King County, IL, Washington Lease Rev. (King Street
Center), MBIA, 5.25s, 2026 6,000 5,726,580
Los Angeles County, CA, Public Works Rev. (Multiple
Capital Facilities), AMBAC, 5.125s, 2017 8,500 8,182,695
Massachusetts Bay Transportation Authority, 6.1s, 2013 10,200 11,166,960
Massachusetts Bay Transportation Authority, 5.875s, 2015 4,500 4,792,320
Massachusetts Bay Transportation Authority, 7s, 2021 19,185 23,395,340
Massachusetts Bay Transportation Authority, 5s, 2023 17,970 16,677,058
Massachusetts Bay Transportation Authority, 5.25s, 2026 5,000 4,800,950
Massachusetts Bay Transportation Authority, 5s, 2027 29,045 26,821,315
Metropolitan Government of Nashville & Davidson
Counties, TN, 7s, 2011 5,280 5,768,611
Metropolitan Transportation Authority, NY, Commuter,
5.5s, 2011 3,430 3,515,476
Metropolitan Transportation Authority, NY, Commuter,
5.125s, 2024 4,000 3,823,360
Metropolitan Transportation Authority, NY, Service
Contract, 7.4s, 2001 4,075 4,437,390
Metropolitan Transportation Authority, NY, Service
Contract, 7.375s, 2008 5,000 5,884,800
Metropolitan Transportation Authority, NY, Service
Contract, 5.75s, 2013 5,600 5,811,400
New York Dormitory Authority Rev. (State
University), 5.25s, 2010 9,390 9,317,321
New York Dormitory Authority Rev. (City University),
7s, 2009 13,765 15,888,114
New York Dormitory Authority Rev. (City University),
7.5s, 2010 15,650 18,771,079
New York Dormitory Authority Rev. (City University),
5.75s, 2013 25,150 26,181,150
New York Dormitory Authority Rev. (City University),
5.75s, 2013 5,000 5,205,000
New York Dormitory Authority Rev. (City University),
AMBAC, 5.5s, 2016 4,000 4,010,840
New York Dormitory Authority Rev. (Mental Health
Services Facilities), 6s, 2007 1,500 1,602,915
New York Dormitory Authority Rev. (Mental Health
Services Facilities), 5.75s, 2010 2,000 2,042,880
New York Dormitory Authority Rev. (Mental Health
Services Facilities), 5.5s, 2017 3,250 3,191,728
New York Dormitory Authority Rev. (State
University), 7.375s, 2010 16,100 19,071,094
New York Dormitory Authority Rev. (State
University), 5.5s, 2013 7,875 7,980,446
New York Medical Care Facilities Finance Agency
(Mental Health Services), 8.875s, 2007 1,725 1,791,102
New York Medical Care Facilities Finance Agency
(Mental Health Services), 7.875s, 2020 1,485 1,626,684
New York Urban Development Corp., FSA, 5.5s, 2014 4,525 4,597,174
New York Urban Development Corp., 5.5s, 2015 16,200 16,017,750
New York Urban Development Corp., 5.5s, 2016 14,690 14,897,863
New York Urban Development Corp., MBIA, 5.5s, 2019 3,500 3,501,015
New York Urban Development Corp. (Correctional
Facilities), 5.5s, 2014 5,000 5,036,300
New York Urban Development Corp. (Correctional
Facilities), 5.375s, 2015 10,000 9,815,300
Orange County, FL, School Board Certificates, MBIA,
5.375s, 2017 22,000 21,772,300
Philadelphia, PA, Municipal Authority, MBIA, 5.4s, 2017 5,000 4,993,550
Rhode Island Convention Center Authority, MBIA, 5.25s, 2015 20,870 20,581,785
Rhode Island Convention Center Authority, MBIA, 5s, 2023 20,360 18,783,118
San Bernardino, CA, Joint Powers Financing Authority
Lease Rev. (California Dept. of Transportation), 5.5s, 2014 10,000 10,064,400
San Bernardino, CA, Joint Powers Financing Authority
Lease Rev. (California Dept. of Transportation), 5.5s, 2020 4,000 3,942,960
Triborough Bridge & Tunnel Authority, 7.25s, 2010 22,905 26,472,225
--------------
$ 473,250,202
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Refunded and Special Obligations - 18.1%
Alameda County, CA, Certificates of Participation,
BIGI, 7.25s, 2011+ $ 4,560 $ 5,064,017
Alameda County, CA, Certificates of Participation,
BIGI, 7.25s, 2012+ 4,770 5,297,228
Alameda County, CA, Certificates of Participation,
BIGI, 7.25s, 2013 4,990 5,541,544
Alameda County, CA, Certificates of Participation,
BIGI, 7.25s, 2000 3,775 4,192,251
Austin, TX, Utility Systems Rev., 10.75s, 2000 2,615 3,043,520
Chicago, IL, Public Building Commission Mortgage
Rev., ETM, MBIA, 7.125s, 2015 6,590 7,122,670
Clark County, NV, School District, MBIA, 7s, 2001 10,050 11,045,151
Commonwealth of Massachusetts, 6.875s, 2001 4,825 5,340,503
Commonwealth of Massachusetts, Consolidated Loan,
7s, 2007 $ 3,305 $ 3,666,336
Florida Board of Education, Capital Outlay, ETM,
9.125s, 2014 265 375,471
Indianapolis, IN, Local Public Improvement Rev.,
7.4s, 2020 3,710 4,078,329
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland Medical
System), FGIC, 7s, 2017 7,945 8,828,563
Massachusetts Port Authority Rev., ETM, 13s, 2013 3,500 5,968,690
Massachusetts Water Resources Authority, 7.625s, 2000 10,760 11,857,305
Massachusetts Water Resources Authority, 7.5s, 2000 15,850 17,418,516
Michigan Hospital Finance Authority Rev.
(Oakwood Hospital), FGIC, 7.2s, 2015 10,000 10,975,500
Michigan Municipal Bond Authority Rev. (Wayne
County), FGIC, 7s, 2000 10,000 10,909,200
Missouri Regional Convention & Sports Complex
Authority, 6.8s, 2003 8,950 10,062,932
Missouri Regional Convention & Sports Complex
Authority, 6.9s, 2003 21,520 24,307,701
New York Medical Care Facilities Finance Agency
(Mental Health Services), 7.875s, 2000 8,125 9,076,031
New York Urban Development Corp. (Correctional
Facilities), 7.625s, 2001 7,570 8,472,798
New York Urban Development Corp. (Correctional
Facilities), 7.375s, 2002 4,000 4,529,920
New York City, NY, 7.65s, 2006 4,705 5,369,675
New York City, NY, 7.7s, 2009 3,680 4,207,160
New York City, NY, 8s, 2001 2,475 2,835,484
Pennsylvania Convention Center Authority Rev., FGIC,
6.7s, 2016 51,195 60,121,872
Philadelphia, PA, Municipal Authority Rev. (Justice
Lease), FGIC, 7.1s, 2001 6,000 6,726,420
Philadelphia, PA, Municipal Authority Rev. (Justice
Lease), FGIC, MBIA, 7.125s, 2001 4,500 5,049,090
Philadelphia, PA, School District, MBIA, MBIA, 7s, 2005 9,440 10,392,024
Santa Clara County, CA, Certificates of
Participation (American Baptist Homes West), 8s, 1998 5,200 5,411,328
State of Florida, Jacksonville Transportation
Authority, ETM, 9.2s, 2015 2,000 2,795,480
Washington Public Power Supply System Rev.,
(Nuclear Proj. #2), 7.375s, 2000 20,000 21,972,400
Washington Public Power Supply System Rev.,
(Nuclear Proj. #2), 7.625s, 2001 10,815 12,086,952
--------------
$ 314,142,061
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Airport and Port Revenue - 1.9%
Connecticut Airport Rev. (Bradley International
Airport), FGIC, 7.65s, 2012 $ 5,000 $ 5,830,000
Denver, CO, City and County Airport Rev., MBIA,
5.6s, 2020 15,780 15,819,608
Massachusetts Port Authority Rev., 5.125s, 2020 3,290 3,155,209
Port of Seattle, WA, FGIC, 5.5s, 2022 8,250 8,194,807
--------------
$ 32,999,624
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Electric and Gas Utility Revenue - 15.4%
Austin, TX, Utility Systems Rev., AMBAC, 6.75s, 2012 (++) $ 2,500 $ 2,785,475
Georgia Municipal Electric Authority Rev., FGIC,
5.5s, 2020 5,045 5,090,153
Georgia Municipal Electric Authority Rev., MBIA,
5.5s, 2020 22,190 22,388,600
Georgia Municipal Electric Authority, Proj.
One Subordinated, AMBAC, 5.125s, 2020(++) 11,500 10,863,475
Georgia Municipal Electric Authority, Special
Obligation, AMBAC, 6.5s, 2017 8,510 9,701,740
Intermountain Power Agency, UT, Power Supply Rev.,
6.15s, 2014## 44,600 47,142,200
Intermountain Power Agency, UT, Power Supply Rev.,
MBIA, 6s, 2016 10,000 10,465,200
Intermountain Power Agency, UT, Power Supply Rev.,
AMBAC, 6s, 2021 9,000 9,359,460
Intermountain Power Agency, UT, Power Supply Rev.,
MBIA, 5.7s, 2017 12,000 12,158,160
Massachusetts Municipal Wholesale Electric Co.,
MBIA, 6.75s, 2017 6,030 6,607,975
Mercer County, ND, Pollution Control Rev. (Antelope
Valley Station), AMBAC, 7.2s, 2013 4,000 4,840,440
Michigan Strategic Fund, Limited Obligation Rev.
(Detroit Edison), MBIA, 7s, 2008 3,000 3,544,080
North Carolina Eastern Municipal Power, MBIA, 5.7s, 2013 7,000 7,250,950
North Carolina Eastern Municipal Power, MBIA, 5.625s, 2014 7,735 7,929,999
North Carolina Eastern Municipal Power, MBIA, 6.5s, 2018 9,250 10,533,438
North Carolina Municipal Power, MBIA, 5.125s, 2017(++) 5,000 4,766,150
Northern California Transmission Agency, MBIA, 7s, 2013 4,000 4,773,800
Piedmont, SC, Municipal Power Agency, Electric Rev.,
FGIC, 6.25s, 2021 4,150 4,603,263
Piedmont, SC, Municipal Power Agency, Electric Rev.,
MBIA, 5.375s, 2025 10,000 9,866,700
Southern California Public Power Authority Rev. (San
Juan Unit Power), MBIA, 5.25s, 2014 14,940 14,806,885
Washington Public Power Supply System Rev., MBIA,
5.75s, 2011 7,500 7,765,275
Washington Public Power Supply System Rev.
(Nuclear Proj. #1), MBIA, 5.75s, 2010 13,100 13,618,105
Washington Public Power Supply System Rev.
(Nuclear Proj. #2), MBIA, 5.625s, 2010 10,000 10,285,000
Washington Public Power Supply System Rev.
(Nuclear Proj. #2), MBIA, 5.7s, 2012 15,000 15,332,850
Washington Public Power Supply System Rev.
(Nuclear Proj. #3), 7.125s, 2016 5,145 6,117,457
Washington Public Power Supply System Rev.
(Nuclear Proj. #3), FGIC, 0s, 2005 6,895 4,697,839
--------------
$ 267,294,669
- ---------------------------------------------------------------------------------------------------------
Health Care Revenue - 3.3%
Cuyahoga County, OH, Hospital Rev. (Cleveland
Clinic), 8s, 2015 $ 8,550 $ 8,751,182
Michigan Hospital Finance Authority Rev. (Henry
Ford), 5.25s, 2020 18,450 17,848,345
Michigan Hospital Finance Authority Rev. (Hospital
Henry Ford Health), 5.25s, 2025 21,465 20,612,410
Michigan Hospital Finance Authority Rev. (Mercy
Health Services), 5.625s, 2016 8,375 8,440,409
Pennsylvania Higher Education Facilities, Health
Services Rev. (University of Pennsylvania), 5.75s, 2022 2,015 2,049,980
-------------
$ 57,702,326
- ---------------------------------------------------------------------------------------------------------
Insured Health Care Revenue - 4.9%
Davenport, IA, Hospital Rev. (St. Luke's Hospital),
AMBAC, 7.4s, 2020 $ 2,715 $ 2,951,911
District of Columbia Hospital Rev. (Medlantic
Healthcare), MBIA, 5.25s, 2019 6,750 6,436,733
Illinois Educational Facilities Authority Rev.,
MBIA, 5.7s, 2011 4,500 4,656,060
Illinois Educational Facilities Authority Rev.
(Loyola University Health Systems), MBIA, 5s, 2024 6,675 6,174,442
Lorain County, OH, Hospital Rev. (Catholic
Healthcare Partners), MBIA, 5.625s, 2013 4,775 4,846,052
Massachusetts Health & Education Facilities
Authority (University Hospital), MBIA, 7.25s, 2019 4,500 4,900,050
Michigan Hospital Finance Authority Rev. (Sisters of
Mercy Hospital), MBIA, 5.375s, 2014 9,000 9,073,350
New York Dormitory Authority Rev. (Montefiore Medical
Center), AMBAC, 5.25s, 2015 13,000 12,836,980
Peninsula Ports Authority, VA, Hospital Facilities
Rev. (Wittaker Memorial), FHA, 8.7s, 2023 1,595 1,650,809
Rhode Island Health & Education Building, Hospital
Financing, (Lifespan), MBIA, 5.25s, 2026 2,155 2,071,795
Sayre, PA, Health Care Facilities Authority Rev.
(Guthrie Healthcare Systems), AMBAC, 7s, 2011 6,000 6,553,800
Tarrant County, TX, Health Facilities Development
Corp. (Fort Worth Osteopathic), MBIA, 6s, 2021 6,000 6,469,980
Utah County, UT, Hospital Rev., IHC Health Services,
Inc., 5.25s, 2026 6,930 6,547,048
Washington County, PA, Hospital Authority Rev.
(Washington Hospital), AMBAC, 7.15s, 2017 9,000 9,736,470
-------------
$ 84,905,480
- ---------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.2%
Colorado Housing Finance Authority, FHA, 8.3s, 2023 $ 4,000 $ 4,281,120
- ---------------------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.0%
Illinois Dedicated Tax Rev. (Civic Center), AMBAC,
6.25s, 2011 $ 3,640 $ 4,056,015
Illinois Sales Tax Rev., 6.5s, 2022 5,000 5,694,900
Illinois Sales Tax Rev. (Public Improvement), 0s, 2009 8,965 4,829,625
Metropolitan Atlanta, GA, Rapid Transit Authority, 6.25s, 2018 4,580 5,063,190
Rhode Island Depositors Economic Protection Corp.,
FSA, 5.75s, 2014 14,800 15,518,244
-------------
$ 35,161,974
- ---------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.7%
Northeast Maryland Waste Disposal Authority,
(Southwest County Resource Recovery), MBIA, 7.2s, 2005 $ 3,000 $ 3,445,170
Tacoma, WA, Solid Waste Utility Rev., AMBAC, 5.5s, 2017 5,000 5,006,500
York County, PA, Industrial Development Rev., 8.2s, 2014 4,250 4,414,348
-------------
$ 12,866,018
- ---------------------------------------------------------------------------------------------------------
Special Assesment District - 0.4%
Chico, CA, Public Finance Authority Rev. (Southeast
Chico Redevelopment), FGIC, 6.625s, 2021 $ 6,435 $ 6,850,830
- ---------------------------------------------------------------------------------------------------------
Turnpike Revenue - 2.0%
New Jersey Transportation Trust Fund Authority,
Transportation Systems, 5.25s, 2015 $ 5,000 $ 4,959,050
New Jersey Transportation Trust Fund Authority,
Transportation Systems, 5.25s, 2016 10,000 9,915,800
New York Thruway Authority General Rev., 5.5s, 2015 10,340 10,483,002
New York Thruway Authority General Rev., 5.25s, 2021 9,000 8,786,790
-------------
$ 34,144,642
- ---------------------------------------------------------------------------------------------------------
Universities - 2.3%
Massachusetts Health & Education Facilities (Harvard
University), 6.25s, 2020 $ 32,200 $ 36,295,196
Texas A & M University (Permanent University Fund),
0s, 2007 6,695 4,152,507
-------------
$ 40,447,703
- ---------------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 1.8%
Detroit, MI, Sewage Disposal Rev., MBIA, 5s, 2022 $12,750 $ 11,940,885
East Bay, CA, Municipal Utility District, Water
Systems Rev., MBIA, 5s, 2014 7,900 7,654,152
Houston Texas Water & Sewer Systems Rev., FGIC,
5.375s, 2027 11,000 10,783,630
-------------
$ 30,378,667
- ---------------------------------------------------------------------------------------------------------
Other - 0.7%
Los Angeles County, CA, Public Works Rev., MBIA,
5.25s, 2014 $ 6,660 $ 6,599,865
Orange County, CA, California Recovery Certificates,
MBIA, 6s, 2026 5,000 5,249,351
-------------
$ 11,849,216
- ---------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $1,508,308,799) $1,634,012,068
- ---------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 7.8%
- ---------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority
Rev. Presbyterian, due 09/04/97 $ 4,500 $ 4,500,000
Allegheny County, PA, Hospital Development Authority
Rev. Presbyterian, due 09/04/97 1,000 1,000,000
Burke County, GA, Development Authority, Pollution
Control Rev. (Georgia Power), due 09/02/97 3,100 3,100,000
California Pollution Control Financing Authority,
Control Rev. Shell Oil, due 09/02/97 $ 2,500 $2,500,000
California Statewide Community Development (Sutter
Health), due 09/02/97 2,300 2,300,000
Charleston County, SC, Industrial Rev. Massey Coal,
due 09/02/97 100 100,000
Commonwealth of Massachusetts, due 09/02/97 910 910,000
Dade County, FL, Health Facility Hospital Rev.
(Miami Childrens Hospital), due 09/03/97 4,500 4,500,000
Dade County, FL, Industrial Development Authority,
Pollution Control Rev., due 09/02/97 3,000 3,000,000
Delaware County, PA, Industrial Development
Authority (United Parcel Service), due 09/02/97 1,800 1,800,000
East Baton Rouge, LA, Parish, Pollution Control Rev.
Exxon, due 09/02/97 500 500,000
Georgia Hospital Financing Authority Rev. (Hospital
Loan Program), due 09/02/97 100 100,000
Harris County, TX, Health Facilities Hospital
(Memorial Hospital), due 09/03/97 1,300 1,300,000
Harris County, TX, Health Facilities Hospital
(Methodist Hospital), due 09/02/97 900 900,000
Harris County, TX, Health Facilities Hospital (St.
Lukes Episcopal), due 09/02/97 7,000 7,000,000
Harris County, TX, Health Facility Development,
Development Corp. Special Facilities Rev., due 09/02/97 3,100 3,100,000
Harris County, TX, Hospital Rev. (Methodist
Hospital), due 09/02/97 8,500 8,500,000
Harris County, TX, Industrial Development Corp.,
Pollution Control Rev., Control Rev., due 09/02/97 3,000 3,000,000
Jackson County, MS, Pollution Control Rev. (Chevron
USA, Inc.), due 09/02/97 1,700 1,700,000
Jacksonville, FL, Pollution Control Rev. Power &
Light, due 09/02/97 500 500,000
Kansas City, MO, Industrial Development Hospital,
due 09/02/97 1,500 1,500,000
Kansas City, MO, Industrial Development Hospital,
due 09/02/97 100 100,000
Kansas City, MO, Industrial Development Hospital,
Variable Insured Research Health Services Systems,
due 09/02/97 5,150 5,150,000
Lincoln County, WY, Pollution Control Rev. Exxon,
due 09/02/97 1,300 1,300,000
Lincoln County, WY, Pollution Control Rev., Exxon,
due 09/02/97 1,400 1,400,000
Lubbock, TX, Health Facilities Development Corp.
Rev. St. Joseph Health System, due 09/02/97 800 800,000
Lynchburg, VA, Industrial Development Authority,
due 09/03/97 7,700 7,700,000
Maricopa County, AZ, Industrial Development
Authority Samaritan Health Services Hospital, due 09/02/97 100 100,000
Municipal Assistance Corp., NY, due 07/01/08 17,300 17,300,000
New York, NY, Municipal Water Finance Authority,
due 09/02/97 1,500 1,500,000
Peninsula Ports Authority, VA, Shell Oil, due 09/02/97 1,700 1,700,000
Perry County, MS, Pollution Control Rev. Leaf River
Forest, due 09/02/97 3,400 3,400,000
Phenix City, AL, Environmental Improvement Rev.,
due 09/02/97 1,000 1,000,000
Pinellas County, FL, Health Facility Authority, due
09/02/97 6,100 6,100,000
St. Lucie County, FL, Pollution Control Rev. Power &
Light, due 09/02/97 400 400,000
State of Oregon, due 09/03/97 9,800 9,800,000
Triborough Bridge & Tunnel Authority, NY, Variable,
due 09/03/97 3,100 3,100,000
Uinta County, WY, Pollution Control Rev. (Chevron),
due 09/02/97 2,900 2,900,000
Uinta County, WY, Pollution Control Rev. (Chevron),
Pollution Control Rev. Chevron, due 09/02/97 1,150 1,150,000
Vermont Educational & Health Buildings Agency,
Capital Asset Financing Program, due 06/01/22 3,090 3,090,000
Vermont Educational & Health Buildings Agency,
Capital Asset Financing Program, due 06/01/27 15,645 15,645,000
- ---------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 135,445,000
- ---------------------------------------------------------------------------------------------------------
Non-Floating Rate Demand Notes
- ---------------------------------------------------------------------------------------------------------
New York City, NY, Municipal Water Finance
Authority, due 09/02/97, at Identified Cost $ 175 $ 175,000
- ---------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,643,928,799) $ 1,769,632,068
Other Assets, Less Liabilities - (1.9)% (33,398,707)
- ---------------------------------------------------------------------------------------------------------
Net assets - 100.0% $ 1,736,233,361
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(++)When-issued security. At August 31, 1997, the Fund had sufficient cash
and/or securities at least equal to the value of the when-issued security.
+Restricted security.
##SEC Rule 144A restriction.
###Security segregated as collateral for an open futures contract.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
AUGUST 31, 1997
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,643,928,799) $1,769,632,068
Cash 17,757
Receivable for daily variation margin on open futures
contracts 244,733
Receivable for Fund shares sold 544,710
Receivable for investments sold 36,059,024
Interest receivable 22,136,850
Other assets 16,219
--------------
Total assets $1,828,651,361
--------------
Liabilities:
Distributions payable $ 3,145,788
Payable for Fund shares reacquired 47,490,001
Payable for investments purchased 22,770,543
Payable for when-issued investments purchased 18,575,621
Payable to affiliates -
Management fee 57,527
Shareholder servicing agent fee 18,429
Distribution and service fee 14,551
Administrative fee 1,977
Accrued expenses and other liabilities 343,563
---------------
Total liabilities $ 92,418,000
--------------
Net assets $1,736,233,361
==============
Net assets consist of:
Paid-in capital $1,582,282,968
Unrealized appreciation on investments 125,758,180
Accumulated undistributed net realized gain on
investments 24,880,947
Accumulated net investment income 3,311,266
--------------
Total $1,736,233,361
==============
Shares of beneficial interest outstanding 157,932,054
===========
Class A shares:
Net asset value per share
(net assets of $1,660,375,045 / 151,027,931 shares of
beneficial interest outstanding) $10.99
======
Offering price per share (100 / 95.25) $11.54
======
Class B shares:
Net asset value and offering price per share
(net assets of $75,858,316 / 6,904,123 shares of
beneficial interest outstanding) $10.99
======
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
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- -------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 1997
- -------------------------------------------------------------------------------
Net investment income:
Interest income $ 107,440,862
-------------
Expenses -
Management fee $ 7,363,899
Trustees' compensation 82,080
Shareholder servicing agent fee 1,549,277
Shareholder servicing agent fee (Class A) 706,578
Shareholder servicing agent fee (Class B) 53,868
Distribution and service fee (Class B) 605,681
Administrative fee 124,924
Custodian fee 448,715
Postage 90,589
Printing 76,602
Auditing fees 54,155
Legal fees 13,116
Miscellaneous 522,422
-------------
Total expenses $ 11,691,906
Fees paid indirectly (357,434)
-------------
Net expenses $ 11,334,472
-------------
Net investment income $ 96,106,390
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 52,199,616
Futures contracts (21,341,499)
-------------
Net realized gain on investments $ 30,858,117
-------------
Change in unrealized appreciation (depreciation) -
Investments $ 14,841,970
Futures contracts (1,733,527)
-------------
Net unrealized gain on investments $ 13,108,443
-------------
Net realized and unrealized gain on investments $ 43,966,560
-------------
Increase in net assets from operations $ 140,072,950
=============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 1997 1996
- ------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
<S> <C> <C>
From net investment income $ 96,106,390 $ 105,338,973
Net realized gain on investments 30,858,117 24,385,079
Net unrealized gain (loss) on investments 13,108,443 (33,508,051)
--------------- ---------------
Increase in net assets from operations $ 140,072,950 $ 96,216,001
--------------- ---------------
Distributions declared to shareholders -
From net investment income (Class A) $ (92,663,173) $ (101,464,492)
From net investment income (Class B) (3,251,831) (2,800,303)
--------------- ---------------
Total distributions declared to shareholders $ (95,915,004) $ (104,264,795)
--------------- ---------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 2,033,525,620 $ 1,980,944,467
Net asset value of shares issued to shareholders in
reinvestment of distributions 59,510,183 60,332,570
Cost of shares reacquired (2,269,551,169) (2,169,208,109)
--------------- ---------------
Decrease in net assets from Fund share transactions $ (176,515,366) $ (127,931,072)
--------------- ---------------
Total decrease in net assets $ (132,357,420) $ (135,979,866)
Net assets:
At beginning of period 1,868,590,781 2,004,570,647
--------------- ---------------
At end of period (including accumulated distributions
in excess of net investment income of $3,311,266
and ($1,216,893), respectively) $ 1,736,233,361 $ 1,868,590,781
=============== ===============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TEN MONTHS YEAR ENDED
YEAR ENDED AUGUST 31, ENDED OCTOBER 31,
--------------------------------------- AUGUST 31, -----------------------
1997 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of
period $ 10.75 $ 10.83 $ 10.68 $ 11.64 $ 10.73 $ 10.80
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations# -
Net investment income $ 0.57 $ 0.59 $ 0.60 $ 0.51 $ 0.61 $ 0.66
Net realized and unrealized gain
(loss) on investments 0.24 (0.09) 0.15 (0.77) 1.14 0.09
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations $ 0.81 $ 0.50 $ 0.75 $ (0.26) $ 1.75 $ 0.75
---------- ---------- ---------- ---------- ---------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.57) $ (0.58) $ (0.60) $ (0.47) $ (0.66) $ (0.66)
From net realized gain on
investments -- -- -- (0.16) (0.15) (0.16)
In excess of net investment
income -- -- -- (0.04) (0.03) --
In excess of net realized gain on
investments -- -- -- (0.03) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions declared
to shareholders $ (0.57) $ (0.58) $ (0.60) $ (0.70) $ (0.84) $ (0.82)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value - end of period $ 10.99 $ 10.75 $ 10.83 $ 10.68 $ 11.64 $ 10.73
========== ========== ========== ========== ========== ==========
Total return(+) 7.75% 4.67% 7.31% (2.33)%++ 16.97% 7.35%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.60% 0.60% 0.61% 0.59%+ 0.59% 0.57%
Net investment incme 5.29% 5.37% 5.70% 5.49%+ 5.63% 6.12%
Portfolio turnover 91% 84% 90% 74% 56% 87%
Net assets at end of period
(000,000 omitted) $ 1,660 $ 1,798 $ 1,949 $ 2,031 $ 2,195 $ 1,878
</TABLE>
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to October 31, 1993, are 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.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 10.11 $ 10.53 $ 10.57 $ 9.71 $ 11.00
---------- ---------- ---------- ---------- ----------
Income from investment operations -
Net investment income $ 0.68 $ 0.68 $ 0.72 $ 0.73 $ 0.72
Net realized and unrealized gain (loss) on
investments 0.69 (0.13) 0.04 0.86 (0.90)
---------- ---------- ---------- ---------- ----------
Total from investment operations $ 1.37 $ 0.55 $ 0.76 $ 1.59 $ (0.18)
---------- ---------- ---------- ---------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.68) $ (0.69) $ (0.72) $ (0.73) $ (0.72)
From net realized gain on investments -- (0.27) -- -- --
In excess of net investment income -- -- (0.08) -- (0.39)
From paid in capital -- (0.01) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions declared to
shareholders $ (0.68) $ (0.97) $ (0.80) $ (0.73) $ (1.11)
---------- ---------- ---------- ---------- ----------
Net asset value - end of period $ 10.80 $ 10.11 $ 10.53 $ 10.57 $ 9.71
========== ========== ========== ========== ==========
Total return(+) 13.85% 5.42% 7.54% 16.95% (1.98)%
Ratios (to average net assets)/Supplemental data:
Expenses 0.59% 0.60% 0.64% 0.65% 0.61%
Net investment income 6.47% 6.69% 6.87% 7.16% 6.96%
Portfolio turnover 98% 160% 199% 190% 218%
Net assets at end of period (000,000 omitted) $ 1,715 $ 1,409 $ 1,259 $ 1,003 $ 903
</TABLE>
(+)Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, TEN MONTHS
ENDED YEAR ENDED
--------------------------------------- AUGUST 31, OCTOBER 31,
1997 1996 1995 1994 1993*
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 10.74 $ 11.10 $ 10.67 $ 11.63 $ 11.68
---------- ---------- ---------- ---------- ----------
Income from investment operations# -
Net investment income $ 0.48 $ 0.49 $ 0.49 $ 0.40 $ 0.07
Net realized and unrealized gain (loss) on
investments 0.25 (0.37) 0.16 (0.77) (0.05)
---------- ---------- ---------- ---------- ----------
Total from investment operations $ 0.73 $ 0.12 $ 0.65 $ (0.37) $ 0.02
---------- ---------- ---------- ---------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.48) $ (0.48) $ (0.49) $ (0.40) $ (0.07)(++)
From net realized gain on investments -- -- -- (0.16) --
In excess of net realized gain on investments -- -- -- (0.03) --
---------- ---------- ---------- ---------- ----------
Total distributions declared to
shareholders $ (0.48) $ (0.48) $ (0.49) $ (0.59) $ (0.07)
---------- ---------- ---------- ---------- ----------
Net asset value - end of period $ 10.99 $ 10.74 $ 10.83 $ 10.67 $ 11.63
========== ========== ========== ========== ==========
Total return 6.84% 3.69% 6.35% (3.25)%++ 1.49%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.46% 1.55% 1.60% 1.72%+ 1.70%+
Net investment income 4.42% 4.42% 4.68% 4.41%+ 3.85%+
Portfolio turnover 91% 84% 90% 74% 56%
Net assets at end of period (000,000 omitted) $ 76 $ 71 $ 56 $ 45 $ 10
</TABLE>
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to October 31, 1993, are based on
average shares outstanding.
##For fiscal years ending September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*For the period from the commencement of the Fund's offering of Class B
shares, September 7, 1993, through October 31, 1993.
(++)Amount includes a per share distribution in excess of net investment
income of $0.002.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Municipal Bond Fund (the Fund) is a diversified series of MFS Series Trust
IV (the Trust). The Trust is organized as a Massachusetts business trust and
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with 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 year. Actual results could differ from those estimates.
Investment Valuations - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, forward contracts
and interest rate swaps, 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, options,
and options on futures contracts listed on commodities exchanges are reported
at market value using settlement prices. Over-the-counter options on
securities are valued by brokers. Over-the counter currency options are valued
through the use of a pricing model which takes into account forward rates,
implied volatility, and short term repurchase rates.
Futures Contracts - The 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, the 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. The 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 or securities prices move
unexpectedly, the Fund may not achieve the anticipated benefits of the futures
contracts and may realize a loss.
Indexed Securities - The Fund may invest in indexed securities whose value
may be linked to foreign currencies, 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.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premiums
and original issue discounts are amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Interest payments received in additional securities are recorded on the ex-
interest date in an amount equal to the value of the security on such date.
Some securities may be purchased on a "when-issued" or "forward delivery"
basis, which means that the securities will be delivered to the Fund at a
future date, usually beyond customary settlement time.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's average daily net assets. The fee is reduced according to an
arrangement which measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided. The 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 the 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 the Fund from net interest received on tax-exempt
municipal bonds are not includible by shareholders as gross income for federal
income tax purposes because the Fund intends to meet certain requirements of
the Code applicable to regulated investment companies, which will enable the
Fund to pay exempt-interest dividends. The portion of such interest, if any,
earned on private activity bonds issued after August 7, 1986, may be
considered a tax-preference item to shareholders. Distributions to
shareholders are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax 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. During the year ended August 31, 1997 $4,336,773 was
reclassified from accumulated undistributed net realized gain on investments
to accumulated net investment income due to differences between book and tax
accounting for market discount on tax-exempt obligations. This change had no
effect on the net assets or net asset value per share.
Multiple Classes of Shares of Beneficial Interest - The Fund offers both Class
A and Class B shares. The two classes of shares differ in their respective
distribution and service fees. All shareholders bear the common expenses of
the Fund pro rata based on the settled shares outstanding of each class,
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 Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate
of 0.19% of average daily net assets and 3.59% of investment income.
Administrator - Effective March 1, 1997, the Fund has an administrative
services agreement with MFS to provide the Fund with certain financial, legal,
compliance, shareholder communications, and other administrative services. As
a partial reimbursement for the cost of providing these services, the Fund
pays MFS an administrative fee up to 0.015% per annum of the Fund's average
daily net assets, provided that the administrative fee is not assessed on Fund
assets that exceed $3 billion.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Fund has an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of
$24,042 for the year ended August 31, 1997.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$129,418 for the year ended August 31, 1997, as its portion of the sales
charge on sales of Class A shares of the Fund. The Trustees have adopted a
distribution plan relating solely to Class B shares pursuant to Rule 12b-1 of
the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD 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.
Except in the case of the 0.25% per annum Class B service fee paid by the Fund
upon sale of Class B shares in the first year, payment of the Class B service
fee will be suspended until such date as the Trustees of the Trust may
determine. 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. No
amounts were retained during the year ended August 31, 1997. Fees incurred
under the distribution plan during the year ended August 31, 1997, were 0.82%
of average daily net assets attributable to Class B shares on an annualized
basis.
Purchases over $1 million of Class A shares 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
August 31, 1997, were $9,427 and $10,251 for Class A and Class B shares,
respectively.
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 Fund's average daily net assets at an effective annual
rate of 0.13%. Prior to January 1, 1997, the fee was calculated as a
percentage of the average daily net assets of each class of shares at an
effective 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, aggregated
$1,574,345,972 and $1,850,242,082, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $1,643,928,799
==============
Gross unrealized appreciation $ 127,927,592
Gross unrealized depreciation (2,224,323)
--------------
Net unrealized appreciation $ 125,703,269
==============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
Class A Shares
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1997 YEAR ENDED AUGUST 31, 1996
------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 184,758,268 $ 2,004,238,212 178,715,545 $ 1,948,177,673
Shares issued to
shareholders in
reinvestment of
distributions 5,291,900 57,558,122 5,345,853 58,555,788
Shares reacquired (206,226,168) (2,241,605,376) (196,714,962) (2,150,166,037)
------------ --------------- ------------ ---------------
Net decrease (16,176,000) $ (179,809,042) (12,653,564) $ (143,432,576)
============ =============== ============ ===============
Class B Shares
YEAR ENDED AUGUST 31, 1997 YEAR ENDED AUGUST 31, 1996
------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
Shares sold 2,698,839 $ 29,287,408 2,997,177 $ 32,766,794
Shares issued to
shareholders in
reinvestment of
distributions 179,440 1,952,061 162,309 1,776,782
Shares reacquired (2,574,149) (27,945,793) (1,734,057) (19,042,072)
---------- ------------ ---------- -------------
Net increase 304,130 $ 3,293,676 1,425,429 $ 15,501,504
========== ============ ========== =============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $400 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. 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 the Fund for the year ended August 31, 1997, was $17,759.
(7) Financial Instruments
The Fund trades financial instruments with off-balance-sheet risk in the
normal course of its investing activities in order to manage exposure to
market risks such as interest rates. These financial instruments include
indexed securities and futures contracts. The notional or contractual amounts
of these instruments represent the investment the Fund has in particular
classes of financial instruments and does not necessarily represent the
amounts potentially subject to risk. The measurement of the risks associated
with these instruments is meaningful only when all related and offsetting
transactions are considered.
Futures Contracts
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
DESCRIPTION EXPIRATION CONTRACTS POSITION (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds September 1997 300 Short $60,529
Municipal Bonds September 1997 56 Short (5,618)
-------
$54,911
=======
</TABLE>
At August 31, 1997, the Fund had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
(8) Restricted Securities
The Fund may invest not more than 15% of its total net assets in securities
which are subject to legal or contractual restrictions on resale. At August
31, 1997, the Fund owned the following restricted securities (constituting
0.6% of net assets) which may not be publicly sold without registration under
the Securities Act of 1933. The Fund does not have the right to demand that
such securities be registered. The value of these securities is determined by
valuations supplied by a pricing service or brokers or, if not available, in
good faith by or at the direction of the Trustees.
<PAGE>
<TABLE>
<CAPTION>
DATE OF PAR
DESCRIPTION ACQUISITION AMOUNT COST VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alameda County, CA, Certificates of
Participation, BIGI, 7.25s, 2011 9/21/90 $4,560,000 $4,448,690 $ 5,064,017
Alameda County, CA, Certificates of
Participation, BIGI, 7.25s, 2012 9/19/90 4,770,000 4,667,397 5,297,228
-----------
$10,361,245
===========
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Series Trust IV and Shareholders of MFS Municipal Bond
Fund:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of MFS Municipal Bond Fund (one of the
series constituting MFS Series Trust IV) as of August 31, 1997, the related
statement of operations for the year then ended, the statement of changes in
net assets for the years ended August 31, 1997 and 1996, and the financial
highlights for each of the years in the three-year period ended August 31,
1997, the ten months ended August 31, 1994, and each of the years in the
seven-year period ended October 31, 1993. These financial statements and
financial highlights are the responsibility of the Fund'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 August 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Municipal Bond
Fund at August 31, 1997, the results of its operations, the changes in its net
assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 3, 1997
--------------------------------------------
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.
<PAGE>
MFS(R) MUNICIPAL BOND FUND
<TABLE>
<S> <C>
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor; AUDITORS
Former Chairman and Director (until 1991), Deloitte & Touche LLP
Massachusetts Financial Services Company;
Director, Cambridge Bancorp; Director, Cambridge INVESTOR INFORMATION
Trust Company For MFS stock and bond market outlooks, call toll
free: 1-800-637-4458 anytime from a touch-tone
Peter G. Harwood - Private Investor telephone.
J. Atwood Ives - Chairman and Chief Executive For information on MFS mutual funds, call your
Officer, Eastern Enterprises financial adviser or, for an information kit, call
toll free: 1-800-637-2929 any business day from 9
Lawrence T. Perera - Partner, Hemenway a.m. to 5 p.m. Eastern time (or leave a message
& Barnes anytime).
William J. Poorvu - Adjunct Professor, Harvard INVESTOR SERVICE
University Graduate School of Business MFS Service Center, Inc.
Administration P.O. Box 2281
Boston, MA 02107-9906
Charles W. Schmidt - Private Investor
For general information, call toll free:
Arnold D. Scott* - Senior Executive Vice 1-800-225-2606 any business day from 8 a.m. to 8
President, Director and Secretary, Massachusetts p.m. Eastern time.
Financial Services Company
For service to speech- or hearing-impaired, call
Jeffrey L. Shames* - President and Director, toll free: 1-800-637-6576 any business day from 9
Massachusetts Financial Services Company a.m. to 5 p.m. Eastern time. (To use this service,
your phone must be equipped with a
Elaine R. Smith - Independent Consultant Telecommunications Device for the Deaf.)
David B. Stone - Chairman, North American For share prices, account balances, and exchanges,
Management Corp. (investment advisers) call toll free: 1-800-MFS-TALK (1-800-637-8255)
anytime from a touch-tone telephone.
INVESTMENT ADVISER
Massachusetts Financial Services Company WORLD WIDE WEB
500 Boylston Street www.mfs.com
Boston, MA 02116-3741
[DALBAR For the fourth year in a row,
DISTRIBUTOR LOGO] MFS earned a #1 ranking in the
MFS Fund Distributors, Inc. DALBAR, Inc. Broker/Dealer Survey,
500 Boylston Street Main Office Operations Service Quality
Boston, MA 02116-3741 Category. The firm achieved a 3.42
overall score on a scale of 1 to 4 in
PORTFOLIO MANAGER the 1997 survey. A total of 111 firms
Robert A. Dennis* responded, offering input on the
quality of service they received from
TREASURER 29 mutual fund companies nationwide.
W. Thomas London* The survey contained questions about
service quality in 11 categories,
ASSISTANT TREASURERS including "knowledge of operations
Mark E. Bradley* contact," "keeping you informed,"
Ellen Moynihan* "ease of doing business" with the firm.
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
-------------
MFS(R) MUNICIPAL BULK RATE
BOND FUND U.S. POSTAGE
PAID
MFS
-------------
500 Boylston Street
Boston, MA 02116-3741
[LOGO] M F S(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
[DALBAR
LOGO]
TOP-RATED SERVICE
(c)1997 MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116-3741
MMB-2 10/97 62M 11/211
