MFS 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*
*Affiliated with the Investment Adviser
Treasurer
W. Thomas London*
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
8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time.
(To use this service, your phone must be
equipped with a Telecommunications Device
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.
[GRAPHIC]
(DALBAR 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
receive 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."
(Source: 1995 DALBAR Survey)
<PAGE>
Letter to Shareholders
Dear Shareholders:
During the six months ended September 30, 1995, prices of 30-year U.S.
Treasury bonds rose, producing a decline in yields of approximately 94 basis
points (0.94%) to a level of 6.50%. The price rally was primarily
attributable to a consensus view that a slow but sustainable economic growth
rate had been achieved and that inflation would remain subdued. Municipal
bonds lagged Treasuries, with yields for long-term high-grade bonds declining
only 15 basis points (0.15%). Principal value and interest on Treasury
securities are guaranteed by the U.S. government if held to maturity. The
municipal market was hampered by concerns about tax reform, which could
remove its unique tax-exempt status, and the strong stock market, which has
captivated the interest of investors at the expense of municipal securities.
The ratio of long-term AAA-rated municipal yields to comparable U.S. Treasury
yields rose from 80% to 89% during the period, while all classes of each Fund
covered by this report experienced positive total returns for the six-month
period. A complete list of returns may be found on pages two and three of
this report.
Moderate, but sustainable growth appears to be the hallmark of the economic
expansion's fifth year. After slowing earlier in the summer, homebuying was
making modest gains by September 30, although consumer spending was still
showing some areas of weakness. Businesses, meanwhile, continued to work off
excess inventories and reduce factory output. At the same time, overseas
economies, particularly those of Germany and Japan, have not recovered as
expected, limiting U.S. export growth. However, the Federal Reserve Board's
consistent and, so far, successful efforts to fight inflation seem to be
giving consumers and businesses enough confidence to help maintain 2-1/2% to
3% real (adjusted for inflation) growth in gross domestic product, at least
through 1995.
Although the Federal Reserve implemented a one-quarter percentage point
decrease in short-term interest rates in July, the effects of its seven rate
increases, which began in early 1994 and ended in February of this year, are
still being felt throughout the economy. While there have been some increases
in commodity prices, companies have not been able to pass along most of those
higher costs. This is partly due to the need to keep fighting for market
share, and also because wages and benefits of U.S. workers are still growing
at a pace that is near, or perhaps below, the inflation rate, limiting
consumer buying power. At the end of July, the nation's employment cost index
had risen at a rate of just 2.8% over the previous year, helping to contain
cost pressures. At the same time, the bond markets have apparently become
convinced that economic growth will be contained for the near future and have
allowed long-term interest rates to decline. Although previous monetary
easing by the Federal Reserve has been followed by additional rate
reductions, prospects for further decreases in the current environment are
uncertain. Still, with long-term government bonds yielding approximately
6.50%, in an environment of 2-1/2% to 3% inflation, real rates of return in
the fixed-income markets remain relatively attractive.
We believe municipals offer attractive value at current levels. The yield
ratio of municipals to Treasuries of 89% is the highest level for this ratio
since October 1989, indicating the market is already compensating for a more
moderate version of tax reform, which, in our opinion, is the reform that
appears to have the best chance of passage. The tax-reform debate has
overshadowed a powerful fundamental trend--the low supply of new issues.
Issuance declined 44% in 1994 and has continued to decline in 1995. Combined
with a record amount of redemptions, we expect the supply of outstanding
municipals to actually shrink for an unprecedented second year in a row.
Therefore, any pickup in demand could have an even greater positive impact on
prices. Finally, any weakness in stock prices seems likely to bring investors
back to the municipal market.
During the six-month reporting period, we extended portfolio durations (a
measure of interest rate sensitivity) to participate in the market rally,
primarily by covering hedge positions and buying discount bonds. Currently,
durations are generally long relative to the benchmark Lehman Brothers
Municipal Bond Index, an unmanaged index of national municipal bonds rated
Baa or higher. When possible, we have swapped out of bonds with short call
features and into bonds with greater call protection. We have continued to
emphasize quality in the Funds, as the spread between high-grade and
lower-grade bonds is historically narrow. Finally, we moved out of
shorter-term bonds and into bonds in the 15- to 20-year maturity range, which
offer more yield and, we believe, better value relative to taxable
investments.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
(signature of A. Keith Brodkin)
A. Keith Brodkin
Chairman and President
(signatures of David R. King, Geoffrey L. Schechter and David B. Smith)
David R. King, Geoffrey L. Schechter and David B. Smith
Portfolio Managers
October 12, 1995
1
<PAGE>
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 responsibility for the Maryland, South Carolina and Tennessee
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 North
Carolina 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 Analyst 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 Virginia and West Virginia 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.
Performance Summary
Because mutual funds like MFS Municipal Series Trust are designed for
investors with long-term goals, we have provided cumulative results as well
as the average annual total returns for Class A, Class B and Class C shares
for the applicable time periods.
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------- --------------------------------------------
MFS Maryland Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years 6 Months 1 Year 9/07/93* - 9/30/95
--------------------------------- -------- ------- -------- --------- --------- ------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +3.24% +7.92% +40.40% +115.94% +2.86% +7.15% +2.87%
- ------------------------------- ------ ----- ------ ------- ------- ----- -------------------
Average Annual Total Return+ -- +7.92% +7.02% +8.00% -- +7.15% +1.38%
- ------------------------------- ------ ----- ------ ------- ------- ----- -------------------
SEC Average Annual Total Return++ -- +2.77% +5.98% +7.48% -- +3.15% -0.40%
- ------------------------------- ------ ----- ------ ------- ------- ----- -------------------
</TABLE>
<TABLE>
<CAPTION>
Class A
--------------------------------------------
MFS North Carolina Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ---------------------------------------- ----- ----- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +3.77% +8.33% +41.33% +123.29%
- -------------------------------------- --- --- ------- ----- ------ -------
Average Annual Total Return+ -- +8.33% +7.16% +8.36%
- -------------------------------------- --- --- ------- ----- ------ -------
SEC Average Annual Total Return++ -- +3.19% +6.13% +7.84%
- -------------------------------------- --- --- ------- ----- ------ -------
</TABLE>
<TABLE>
<CAPTION>
Class B Class C(section)
---------------------------------------- ------------------------------------------
MFS North Carolina Municipal Bond Fund 6 Months 1 Year 9/07/93* - 9/30/95 6 Months 1 Year 1/03/94* - 9/30/95
- --------------------------------------- -------- ------- ------------------ --------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +3.39% +7.65% +3.54% +3.43% +7.63% +2.92%
- ------------------------------------- ------ ----- ---------------- ------- ----- ----------------
Average Annual Total Return+ -- +7.65% +1.71% -- +7.63% +1.67%
- ------------------------------------- ------ ----- ---------------- ------- ----- ----------------
SEC Average Annual Total Return++ -- +3.65% -0.09% -- +7.63% +1.67%
- ------------------------------------- ------ ----- ---------------- ------- ----- ----------------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------- ---------------------------------------
MFS South Carolina Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years 6 Months 1 Year 9/07/93* - 9/30/95
- -------------------------------------- -------- ------- -------- --------- --------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +3.66% +8.60% +45.63% +131.82% +3.20% +7.82% +4.47%
- ------------------------------------ ------ ----- ------ ------- ------- ----- ----------------
Average Annual Total Return+ -- +8.60% +7.81% +8.77% -- +7.82% +2.14%
- ------------------------------------ ------ ----- ------ ------- ------- ----- ----------------
SEC Average Annual Total Return++ -- +3.45% +6.76% +8.24% -- +3.82% +0.33%
- ------------------------------------ ------ ----- ------ ------- ------- ----- ----------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------
MFS Tennessee Municipal Bond Fund 6 Months 1 Year 5 Years 8/12/88* - 9/30/95
---------------------------------- --------- ------- --------- -------------------
<S> <C> <C> <C> <C>
Cumulative Total Return+ +4.01% +8.01% +45.22% +67.25%
- -------------------------------- ------- ----- ------- -----------------
Average Annual Total Return+ -- +8.01% +7.78% +7.49%
- -------------------------------- ------- ----- ------- -----------------
SEC Average Annual Total Return++ -- +2.85% +6.73% +6.76%
-------------------------------- ------- ----- ------- -----------------
</TABLE>
<TABLE>
<CAPTION>
Class B
--------------------------------------------
MFS Tennessee Municipal Bond Fund 6 Months 1 Year 9/07/93* - 9/30/95
---------------------------------- --------- -------- -------------------
<S> <C> <C> <C>
Cumulative Total Return+ +3.73% +7.23% +5.41%
- -------------------------------- ------- ------ -----------------
Average Annual Total Return+ -- +7.23% +2.57%
- -------------------------------- ------- ------ -----------------
SEC Average Annual Total Return++ -- +3.23% +0.75%
-------------------------------- ------- ------ -----------------
</TABLE>
<TABLE>
<CAPTION>
Class A
--------------------------------------------
MFS Virginia Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ----------------------------------- ------- ------- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +4.12% +8.79% +42.47% +121.50%
- --------------------------------- ----- ----- ------- ----- ------ -------
Average Annual Total Return+ -- +8.79% +7.33% +8.28%
- --------------------------------- ----- ----- ------- ----- ------ -------
SEC Average Annual Total Return++ -- +3.67% +6.30% +7.75%
- --------------------------------- ----- ----- ------- ----- ------ -------
</TABLE>
<TABLE>
<CAPTION>
Class B Class C(section)
----------------------------------------- -------------------------------------------
MFS Virginia Municipal Bond Fund 6 Months 1 Year 9/07/93* - 9/30/95 6 Months 1 Year 1/03/94* - 9/30/95
- ----------------------------------- -------- ------- ------------------ --------- ------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +3.84% +8.12% +3.40% +3.88% +8.15% +2.63%
- --------------------------------- ------ ----- ---------------- ------- ----- -----------------
Average Annual Total Return+ -- +8.12% +1.63% -- +8.15% +1.50%
- --------------------------------- ------ ----- ---------------- ------- ----- -----------------
SEC Average Annual Total Return++ -- +4.11% -0.15% -- +8.15% +1.50%
- --------------------------------- ------ ----- ---------------- ------- ----- -----------------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------------- ------------------------------------------
MFS West Virginia Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years 6 Months 1 Year 9/07/93* - 9/30/95
- ------------------------------------- -------- -------- -------- --------- --------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +4.20% +8.63% +46.29% +128.29% +3.83% +7.85% +4.52%
- ----------------------------------- ------ ------ ------ ------- ------- ----- ----------------
Average Annual Total Return+ -- +8.63% +7.91% +8.60% -- +7.85% +2.17%
- ----------------------------------- ------ ------ ------ ------- ------- ----- ----------------
SEC Average Annual Total Return++ -- +3.49% +6.86% +8.08% -- +3.85% +0.37%
- ----------------------------------- ------ ------ ------ ------- ------- ----- ----------------
</TABLE>
All results represent past performance and are not necessarily an indication
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
*Commencement of offering of this class of shares.
+These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++The average annual total rate of return, as required by the Securities and
Exchange Commission (SEC), reflects the maximum sales load of 4.75% for
Class A shares and the current maximum contingent deferred sales charge
(CDSC) of 4% for Class B shares.
[S]Class C shares have no initial sales charge or CDSC but, along with
Class B shares, have higher annual fees and expenses than Class A shares.
3
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1995
MFS MARYLAND MUNICIPAL BOND FUND
Municipal Bonds - 97.4%
<TABLE>
<CAPTION>
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
<S> <C> <C> <C>
General Obligation - 13.4%
AA+ Anne Arundel County, MD, 4.9s, 2011 $ 1,005 $ 926,770
AAA Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.3s, 2009 700 690,733
AAA Baltimore, MD, Consolidated Public
Improvement, MBIA, 7s, 2009 1,000 1,163,170
A Baltimore, MD, Consolidated Public
Improvement, 7.15s, 2009 2,000 2,323,260
AAA Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.3s, 2010 815 799,686
AAA Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.375s, 2011 900 880,209
AAA Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.375s, 2013 1,000 966,620
AAA Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.375s, 2013 770 748,548
AA- Carroll County, MD, 5.2s, 2011 1,000 951,340
AA+ Howard County, MD, Metropolitan
District, 0s, 2008 1,975 1,000,179
AAA Montgomery County, MD, Public
Improvement, 0s, 2009 4,000 1,882,680
AA- Prince George's County, MD, 0s, 2007 5,110 2,752,143
AAA Prince George's County, MD, Public
Improvement, AMBAC, 5.5s, 2013 2,000 1,961,900
AAA State of Maryland, 9s, 1999 350 410,365
AA Washington Suburban Sanitation District,
MD, 6.1s, 2015 1,070 1,097,071
AA Washington Suburban Sanitation District,
MD, 5s, 2010 1,000 956,290
AA Washington Suburban Sanitation District,
MD, 5s, 2011 1,315 1,255,155
-------------
$20,766,119
- ----- ---------------------------------------- ---------------- -------------
State and Local Appropriation - 15.0%
AAA Baltimore, MD, Certificates of
Participation, 5.25s, 2016 $ 2,000 $ 1,839,340
NR Calvert County, MD, Community Lease
Rev., 7.2s, 2010 750 821,295
AA+ Howard County, MD, Certificates of
Participation, 8.149s, 2021 450 587,107
AA+ Howard County, MD, Certificates of
Participation, "A", 8s, 2019 805 1,028,098
AA+ Howard County, MD, Certificates of
Participation, "B", 8s, 2019 385 491,698
AA+ Howard County, MD, Certificates of
Participation, "C", 8s, 2019 680 868,455
AAA Maryland Stadium Authority, Convention
Center Expansion, AMBAC, 5.875s, 2012 1,000 1,010,910
AA- Maryland Stadium Authority, Sports
Facilities Leasing Rev., 7.6s, 2019 2,580 2,852,860
AAA Prince George's County, MD, Certificates
of Participation, MBIA, 0s, 2005 2,495 1,500,218
AAA Prince George's County, MD, Certificates
of Participation, MBIA, 0s, 2006 2,490 1,413,723
AAA Prince George's County, MD, Certificates
of Participation, MBIA, 0s, 2011 3,675 1,498,885
AAA Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2004 980 626,112
AAA Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2006 1,800 1,021,968
AAA Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2009 1,500 699,525
AAA Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2010 2,730 1,187,222
AAA Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2011 2,810 1,137,348
State and Local Appropriation - continued
AAA Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2012 $ 2,480 $ 963,331
AAA Prince George's County, MD, Industrial
Development Authority, MBIA, 5.25s,
2019 1,000 917,330
A Puerto Rico Public Buildings Authority,
5.31s, 2017 (Municipal Swap)[S]. 3,000 2,784,360
-------------
$23,249,785
- ----- ---------------------------------------- ---------------- -------------
Refunded and Special Obligation - 13.1%
AAA Baltimore, MD, Water Utility Rev., MBIA,
6.5s, 2000 $ 540 $ 586,808
AAA Commonwealth of Puerto Rico, Public
Improvement, 6.8s, 2002 1,500 1,710,525
AAA Howard County, MD, Metropolitan
District, 7.15s, 2000 500 559,795
AAA Maryland Board of Trustees, College &
University Rev., 7.625s, 1995 1,730 1,775,102
AAA Maryland Health & Higher Education
Facilities Authority Rev. (Sinai
Hospital/ Baltimore), 7s, 2000 2,000 2,248,120
AAA Maryland Health & Higher Education
Facilities Authority Rev. (University
of Maryland Medical System), FGIC,
6.5s, 2001 1,000 1,097,470
AAA Maryland Health & Higher Education
Facilities Authority Rev. (University
of Maryland Medical System), FGIC, 7s,
2001 1,840 2,093,773
AAA Montgomery County, MD, Rev. Authority,
Lease Rev. (Regional Indoor Swim Center
Project), 7.6s, 1998 750 819,473
AAA Morgan State University, MD, Academic &
Auxiliary Facilities & Fees Rev., MBIA,
0s, 2006 1,135 642,296
AAA Morgan State University, MD, Academic &
Auxiliary Facilities & Fees Rev., MBIA,
0s, 2008 1,400 708,274
NR Prince George's County, MD, Hospital
Rev. (Dimensions Health Corp.), 7.25s,
2002 2,000 2,327,120
AAA Puerto Rico Aqueduct & Sewer Authority,
10.25s, 2009 500 690,475
AAA Puerto Rico Electric Power Authority
Rev., 8s, 1998 500 557,870
A- Puerto Rico Electric Power Authority
Rev., 7s, 2001 1,000 1,140,650
AAA St. Mary's County, MD, 7.75s, 1996 2,050 2,171,217
AA Washington Suburban Sanitation District,
MD, 6.9s, 2001 1,045 1,182,418
-------------
$20,311,386
- ----- ---------------------------------------- ---------------- -------------
Single Family Housing Revenue - 7.3%
NR Maryland Community Development
Administration, 7.75s, 2009 $ 1,500 $ 1,553,310
NR Maryland Community Development
Administration, 7.7s, 2015 685 724,894
NR Maryland Community Development
Administration, 8.25s, 2017 1,300 1,365,442
NR Maryland Community Development
Administration, 7.625s, 2020 2,500 2,614,450
NR Maryland Community Development
Administration, 8.25s, 2020 500 527,405
NR Maryland Community Development
Administration, 6.75s, 2026 2,250 2,303,865
NR Maryland Community Development
Administration, 7.625s, 2029 980 1,022,582
4
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Single Family Housing Revenue - continued
NR Maryland Community Development
Administration, 7.85s, 2029 $ 740 $ 784,393
NR Montgomery County, MD, Housing
Opportunities Commission, 7.5s, 2017 365 385,787
-------------
$11,282,128
- ----- ---------------------------------------- ---------------- -------------
Multi-Family Housing Revenue - 4.7%
BBB Baltimore, MD, City Housing Corp. Rev.,
7.75s, 2009 $ 1,025 $ 1,053,197
AAA Baltimore, MD, City Housing Corp. Rev.,
FNMA, 7.25s, 2023 1,240 1,288,062
NR Maryland Community Development
Administration, 7.375s, 2021 425 442,854
NR Maryland Community Development
Administration, 8.4s, 2029 1,320 1,375,096
NR Maryland Community Development
Administration, 7.5s, 2031 65 67,712
NR Maryland Community Development
Administration, 0s, 2032 11,605 672,625
NR Maryland Community Development
Administration, 7.8s, 2032 1,200 1,268,209
NR Montgomery County, MD, Housing
Opportunities Commission, 7.375s, 2032 1,045 1,083,685
-------------
$ 7,251,440
- ----- ---------------------------------------- ---------------- -------------
Insured Health Care Revenue - 6.6%
AAA Maryland Health & Higher Education
Facilities Authority Rev. (Francis
Scott Key Medical Center), FGIC, 5s,
2013 $ 1,000 $ 903,320
AAA Maryland Health & Higher Education
Facilities Authority Rev. (Frederick
Memorial Hospital), FGIC, 5.25s, 2013 2,250 2,122,448
AAA Maryland Health & Higher Education
Facilities Authority Rev. (Frederick
Memorial Hospital), FGIC, 5s, 2020 1,000 878,690
AAA Maryland Health & Higher Education
Facilities Authority Rev. (Mercy
Medical Center), AMBAC, 5.5s, 2022 1,000 941,360
AAA Maryland Health & Higher Education
Facilities Authority Rev. (Suburban
Hospital), FGIC, 5.125s, 2021 1,000 882,210
AAA Maryland Health & Higher Education
Facilities Authority Rev. (University
of Maryland), FGIC, 5s, 2020 2,000 1,748,000
AAA Maryland Industrial Development Finance
Authority, Economic Development Rev.
(Bon Secours), FSA, 7.62s, 2022++++ 1,500 1,471,245
AAA Maryland Industrial Development Finance
Authority, Economic Development Rev.
(Bon Secours), FSA, 5.5s, 2024 1,325 1,246,773
-------------
$10,194,046
- ----- ---------------------------------------- ---------------- -------------
Health Care Revenue - 12.5%
NR Berlin, MD, Hospital Rev. (Atlantic
General Hospital), 8.375s, 2022 $ 1,375 $ 1,450,528
BBB- Maryland Health & Higher Education
Facilities Authority Rev. (Doctors
Community Hospital), 5.5s, 2024 2,000 1,646,700
NR Maryland Health & Higher Education
Facilities Authority Rev. (Francis
Scott Key), 5.625s, 2025 1,500 1,406,655
Health Care Revenue - continued
AA- Maryland Health & Higher Education
Facilities Authority Rev. (Johns
Hopkins Hospital), 0s, 2010 $ 2,000 $ 867,120
AA- Maryland Health & Higher Education
Facilities Authority Rev. (Johns
Hopkins Hospital), 5s, 2023 2,500 2,169,775
AA Maryland Health & Higher Education
Facilities Authority Rev. (Kaiser
Permanente Hospital), 9.125s, 2015 500 515,480
NR Maryland Health & Higher Education
Facilities Authority Rev. (Medlantic
Hospital Care Corp.), 8.375s, 2014 3,720 3,918,090
A Maryland Health & Higher Education
Facilities Authority Rev. (Peninsula
Regional Medical), 5s, 2023 1,000 846,420
AA- Maryland Industrial Development Finance
Authority (Holy Cross Health System
Corp.), 5.5s, 2015 1,000 940,500
NR Prince George's County, MD, Hospital
Rev. (Dimensions Health Corp.), 5.3s,
2024 3,500 2,955,470
NR Prince George's County, MD, Hospital
Rev. (Southeast Healthcare System),
6.375s, 2023 2,900 2,624,355
-------------
$19,341,093
- ----- ---------------------------------------- ---------------- -------------
Water and Sewer Utility Revenue - 2.5%
AAA Baltimore, MD, Wastewater Revenue, MBIA,
6s, 2015 $ 1,000 $ 1,042,370
AAA Baltimore, MD, Wastewater Revenue, MBIA,
7.21s, 2020++++ 3,000 2,846,070
-------------
$ 3,888,440
- ----- ---------------------------------------- ---------------- -------------
Turnpike Revenue - 0.6%
A Commonwealth of Puerto Rico, Highway
Rev., 5.5s, 2019 $ 1,000 $ 931,010
- ----- ---------------------------------------- ---------------- -------------
Industrial Revenue (Corporate Guarantee) -5.0%
NR Baltimore, MD, Industrial Rev. Board
(Weyerhaeuser Co.), 9s, 2006 $ 3,150 $ 3,266,235
AA Baltimore, MD, Port Facilities Rev.
(E.I. du Pont de Nemours & Co.), 6.5s,
2011 1,500 1,607,145
AAA Northeast Maryland, Waste Disposal
Authority (Harford County Resource
Recovery), MBIA, 7.2s, 2005 1,000 1,150,460
NR Northeast Maryland, Waste Disposal
Authority (Montgomery County Resource
Recovery), 6s, 2006 1,000 1,035,440
A Upper Potomac River Commission, MD,
Pollution Control Rev. (Westvaco
Corp.), 10.5s, 2004 150 157,720
A Upper Potomac River Commission, MD,
Pollution Control Rev. (Westvaco
Corp.), 9.125s, 2015 500 522,415
-------------
$ 7,739,415
- ----- ---------------------------------------- ---------------- -------------
Universities - 1.9%
NR Maryland Health & Higher Education
Facilities Authority Rev. (Mt. St.
Mary's College), 6.5s, 2009 $ 775 $ 691,873
AAA Morgan State University, MD, Auxiliary
Facility Fees Rev., 6s, 2015 1,500 1,574,265
AA+ University of Maryland, Auxiliary
Facilities & Tuition Rev., 0s, 2004 1,000 640,740
-------------
$ 2,906,878
- ----- ---------------------------------------- ---------------- -------------
5
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Special Assessment District - 3.5%
NR Northeast Maryland, Waste Disposal
Authority (Montgomery County Resource
Recovery), 6.3s, 2016 $ 5,400 $ 5,396,598
- ----- ---------------------------------------- ---------------- -------------
Other - 11.3%
NR Baltimore County, MD, 5.375s, 2013 $ 1,600 $ 1,519,216
NR Maryland Energy Financing
Administration, Solid Waste Disposal
Rev. (Hagerstown), 9s, 2016 1,000 1,013,490
BBB Maryland Health & Higher Education
Facilities Authority Rev. (Kennedy
Institute), 6.75s, 2022 500 503,400
BBB Maryland Industrial Development Finance
Authority (America Center for Physics),
6.625s, 2017 1,500 1,530,870
NR Maryland Industrial Development Finance
Authority (YMCA/Baltimore), 8s, 2012 2,825 2,937,265
NR Maryland Industrial Development Finance
Authority (YMCA/Baltimore), 8.25s, 2012 925 960,816
AAA Prince George's County, MD, FSA, 5.25s,
2013 4,500 4,183,740
AAA Washington D.C., Metropolitan Area
Transit Authority, Gross Rev., FGIC,
5.125s, 2009 1,100 1,065,119
AAA Washington D.C., Metropolitan Area
Transit Authority, Gross Rev., FGIC,
5.25s, 2014 4,000 3,719,280
-------------
$ 17,433,196
- ----- ---------------------------------------- ---------------- -------------
Total Municipal Bonds (Identified Cost, $142,738,960) $150,691,534
- ----------------------------------------------------------------------- -------------
Floating Rate Demand Notes - 1.4%
Uinta County, WY, Pollution Control Rev.
(Chevron Corp.), due 2020 $ 1,200 $ 1,200,000
Uinta County, WY, Pollution Control Rev.
(Chevron Corp.), due 2022 1,000 1,000,000
- ----- ---------------------------------------- ---------------- -------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,200,000
- ----------------------------------------------------------------------- -------------
Total Investments (Identified Cost, $144,938,960) $152,891,534
Other Assets, Less Liabilities - 1.2% 1,860,273
- ----------------------------------------------------------------------- -------------
Net Assets - 100.0% $154,751,807
- ----------------------------------------------------------------------- -------------
[S]Indexed security.
++++Inverse floating rate security.
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
MFS NORTH CAROLINA MUNICIPAL BOND FUND
Municipal Bonds - 97.5%
- ----------------------------------------------------------------------- -------------
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- ----- ---------------------------------------- ---------------- -------------
General Obligation - 4.8%
AAA Charlotte, NC, Water & Sewer, 5.8s, 2013 $ 1,780 $ 1,828,505
AAA Charlotte, NC, Water & Sewer, 5.8s, 2014 5,050 5,163,372
AAA Charlotte, NC, Water & Sewer, 5.9s, 2019 2,000 2,038,260
AAA Durham, NC, 5.9s, 2013 2,400 2,497,392
AAA Durham, NC, 5.9s, 2014 2,400 2,488,440
AAA Greensboro, NC, 6.3s, 2011 4,165 4,400,323
BBB+ Hertford County, NC, 9.5s, 2000 100 104,019
BBB+ Hertford County, NC, 9.5s, 2001 100 103,959
BBB+ Hertford County, NC, 9.5s, 2002 100 103,870
AAA Mecklenberg County, NC, 5.5s, 2011 $ 1,630 $ 1,653,162
AAA Mecklenberg County, NC, 5.5s, 2012 1,750 1,747,480
-------------
$ 22,128,782
- ----- ---------------------------------------- ---------------- -------------
State and Local Appropriation - 13.7%
AAA Charlotte, NC, Certificates of
Participation (Convention Facilities
Project), AMBAC, 0s, 2004 $ 3,435 $ 2,111,838
AAA Charlotte, NC, Certificates of
Participation (Convention Facilities
Project), AMBAC, 0s, 2005 4,810 2,801,729
AAA Charlotte, NC, Certificates of
Participation (Convention Facilities
Project), AMBAC, 0s, 2006 1,075 591,196
AAA Charlotte, NC, Certificates of
Participation (Convention Facilities
Project), AMBAC, 0s, 2008 3,000 1,444,830
AAA Charlotte, NC, Certificates of
Participation (Convention Facilities
Project), AMBAC, 5.25s, 2013 3,750 3,531,375
AAA Charlotte, NC, Certificates of
Participation (Convention Facilities
Project), AMBAC, 5.25s, 2020 14,400 13,232,304
AAA Charlotte, NC, Certificates of
Participation (Convention Facilities
Project), AMBAC, 5s, 2021 2,350 2,078,105
AAA Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC,
6.375s, 2010 1,100 1,173,260
AAA Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC,
0s, 2011 425 168,453
AAA Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC,
0s, 2013 1,000 344,810
AAA Dare County, NC, MBIA, 6.6s, 2006 2,100 2,274,825
AA Durham County, NC, Certificates of
Participation (Hospital & Office
Facilities), 5.875s, 2009 1,460 1,506,194
AA Durham County, NC, Certificates of
Participation (Hospital & Office
Facilities), 6s, 2014 500 504,785
AA Durham, NC, Certificates of
Participation (New Durham Corp.),
6.875s, 2009 1,750 1,889,545
AAA Fayetteville, NC, Public Works
Community, AMBAC, 5.25s, 2016 250 233,348
AAA Franklin County, NC, Certificates of
Participation (Jail & School), FGIC,
6.625s, 2014 2,000 2,122,200
AA Greensboro, NC, Certificates of
Participation (Coliseum Arena Project),
6.25s, 2011 2,180 2,269,031
AAA Harnett County, NC, Certificates of
Participation, AMBAC, 6.2s, 2006 1,000 1,083,400
AAA Harnett County, NC, Certificates of
Participation, AMBAC, 6.2s, 2009 2,500 2,624,100
BBB Puerto Rico Housing, Bank & Finance
Agency, 7.5s, 2006 7,000 7,684,320
A Puerto Rico Public Buildings Authority,
5.5s, 2007 2,550 2,570,731
A Puerto Rico Public Buildings Authority,
5.31s, 2016 (Municipal Swap)[S]. 6,500 6,032,780
AAA Scotland County, NC, Certificates of
Participation (Jail/Courthouse
Project), CGIC, 6.75s, 2011 1,000 1,066,060
6
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
State and Local Appropriation - continued
AAA Union County, NC, Certificates of
Participation, FSA, 6.375s, 2012 $ 1,000 $ 1,046,950
AA+ Winston-Salem, NC, Certificates of
Participation, 5s, 2011 2,000 1,874,800
-------------
$ 62,260,969
- ----- ---------------------------------------- ---------------- -------------
Refunded and Special Obligation - 12.9%
NR Chapel Hill, NC, Parking Facilities Rev.
(Rosemary Street Project), 8.125s, 2000 $ 1,710 $ 2,016,945
NR Chapel Hill, NC, Parking Facilities Rev.
(Rosemary Street Project), 8.25s, 2000 3,305 3,917,052
AAA Charlotte, NC, Certificates of
Participation (Convention Facilities
Project), AMBAC, 6.75s, 2001 4,250 4,811,340
AAA Charlotte-Mecklenberg, NC, Hospital
Authority, Health Care Systems Rev.,
8.25s, 1996 2,995 3,177,246
AAA Charlotte-Mecklenberg, NC, Hospital
Authority, Health Care Systems Rev.,
7.8s, 1998 1,280 1,427,034
AAA Charlotte-Mecklenberg, NC, Hospital
Authority, Health Care Systems Rev.,
8s, 1998 500 559,765
AAA Craven, NC, Regional Medical Authority,
MBIA, 7.2s, 2000 1,500 1,706,895
AAA Dare County, NC, School Bonds, MBIA,
6.9s, 2000 800 890,808
AAA Dare County, NC, School Bonds, MBIA,
6.9s, 2000 800 890,808
AAA Dare County, NC, School Bonds, MBIA,
6.9s, 2000 500 556,755
AAA Fayetteville, NC, Public Works Rev.,
FGIC, 7s, 2000 2,000 2,234,940
AAA North Carolina Eastern Municipal Power
Agency, 13s, 1998 3,000 3,552,300
BBB+ North Carolina Eastern Municipal Power
Agency, 7.75s, 1999 2,900 3,245,274
A- North Carolina Eastern Municipal Power
Agency, 7.5s, 2010 2,595 3,093,603
A- North Carolina Eastern Municipal Power
Agency, 5s, 2017 8,165 7,502,329
NR North Carolina Medical Care Commission,
Hospital Rev. (Presbyterian Health),
7.3s, 2000 1,000 1,142,360
NR North Carolina Medical Care Commission,
Hospital Rev. (Presbyterian Health),
7.375s, 2000 12,315 14,109,172
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., AMBAC,
7.625s, 1998 820 894,349
NR Pender County, NC, Certificates of
Participation (Pender County Prison),
7.6s, 2001 1,900 2,210,346
NR Pender County, NC, Certificates of
Participation (Pender County Prison),
7.7s, 2001 1,000 1,168,270
-------------
$ 59,107,591
- ----- ---------------------------------------- ---------------- -------------
Single Family Housing Revenue - 4.5%
A+ North Carolina Housing Finance Agency,
10.375s, 2007 $ 70 $ 71,305
A+ North Carolina Housing Finance Agency,
6.7s, 2018 1,800 1,867,482
A+ North Carolina Housing Finance Agency,
8.125s, 2019 2,200 2,283,446
A+ North Carolina Housing Finance Agency,
7.7s, 2021 $ 2,695 $ 2,787,304
A+ North Carolina Housing Finance Agency,
7.8s, 2021 2,715 2,814,206
A+ North Carolina Housing Finance Agency,
7.85s, 2028 6,835 7,150,298
A+ North Carolina Housing Finance Agency,
7.6s, 2032 3,375 3,519,484
-------------
$ 20,493,525
- ----- ---------------------------------------- ---------------- -------------
Multi-Family Housing Revenue - 4.2%
A Asheville, NC, Housing Authority
(Asheville Terrace Apartments), 7.1s,
2011 $ 5,000 $ 5,199,800
NR Charlotte, NC, Housing Authority
(Merrywood Senior Adult Project),
9.75s, 2019 6,710 6,575,800
AA North Carolina Housing Finance Agency,
6.9s, 2024 4,890 5,118,901
NR Salisbury, NC, Housing Corp., Inc.
(Yadkin Senior Citizens), 6.75s, 2022 2,160 2,183,998
-------------
$ 19,078,499
- ----- ---------------------------------------- ---------------- -------------
Insured Health Care Revenue - 6.9%
AAA Craven, NC, Regional Medical Authority,
MBIA, 5.5s, 2023 $ 650 $ 606,197
AAA Cumberland County, NC, Hospital
Facilities Rev. (Cumberland County
Hospital), MBIA, 0s, 2009 1,800 820,980
AAA Cumberland County, NC, Hospital
Facilities Rev. (Cumberland County
Hospital), MBIA, 6s, 2021 4,000 4,053,120
AAA North Carolina Medical Care Commission,
Hospital Rev. (Alamance Health
Services, Inc.), FSA, 5.5s, 2024 2,700 2,481,111
AAA North Carolina Medical Care Commission,
Hospital Rev. (Moore Regional), FGIC,
5.2s, 2013 6,750 6,229,035
AAA North Carolina Medical Care Commission,
Hospital Rev. (Moore Regional), MBIA,
5s, 2018 4,300 3,766,843
AAA North Carolina Medical Care Commission,
Hospital Rev. (St. Joseph's Hospital),
AMBAC, 5.1s, 2014 1,550 1,400,967
AAA North Carolina Medical Care Commission,
Hospital Rev. (Wesley Long Community
Hospital), AMBAC, 5.25s, 2013 5,000 4,641,600
AAA Pitt County, NC, Hospital Rev. (Pitt
Memorial Hospital), MBIA, 6.75s, 2014 2,800 3,007,928
AAA Wake County, NC, Hospital Rev., MBIA,
5.125s, 2013 5,000 4,521,350
-------------
$ 31,529,131
- ----- ---------------------------------------- ---------------- -------------
Health Care Revenue - 13.9%
AA North Carolina Medical Care Commission,
Hospital Rev. (Carolina Medicorp),
5.5s, 2015 $ 2,185 $ 2,054,577
AA North Carolina Medical Care Commission,
Hospital Rev. (Carolina Medicorp), 6s,
2021 19,000 18,731,150
A North Carolina Medical Care Commission,
Hospital Rev. (Gaston Health Care), 0s,
2007 500 239,850
A North Carolina Medical Care Commission,
Hospital Rev. (Gaston Health Care),
7.25s, 2019 1,400 1,475,838
7
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Health Care Revenue - continued
NR North Carolina Medical Care Commission,
Hospital Rev. (Halifax Memorial),
6.75s, 2014 $ 1,355 $ 1,375,840
NR North Carolina Medical Care Commission,
Hospital Rev. (Halifax Memorial),
6.75s, 2024 4,500 4,551,075
A North Carolina Medical Care Commission,
Hospital Rev. (Mercy Hospital), 6.5s,
2015 1,650 1,658,877
A North Carolina Medical Care Commission,
Hospital Rev. (Moore Memorial
Hospital), 9.1s, 1999 800 833,376
AA North Carolina Medical Care Commission,
Hospital Rev. (Presbyterian Health
Services), 5.5s, 2014 9,750 9,240,953
AA North Carolina Medical Care Commission,
Hospital Rev. (Presbyterian Health
Services), 5.5s, 2020 2,950 2,738,456
A+ North Carolina Medical Care Commission,
Hospital Rev. (Rex Hospital), 6.25s,
2017 2,500 2,570,200
NR North Carolina Medical Care Commission,
Hospital Rev. (Valdese General), 8.75s,
2016 5,575 5,858,043
BBB Northern Hospital District, Surry
County, NC, Health Care Facilities
Rev., 7.875s, 2021 4,530 4,688,097
AA- Pitt County, NC, Rev. (Memorial
Hospital), 5.25s, 2021 8,500 7,714,685
-------------
$ 63,731,017
- ----- ---------------------------------------- ---------------- -------------
Electric and Gas Utility Revenue - 16.6%
A New Hanover County, NC, Industrial
Facilities Rev. (Carolina Power & Light
Co.), 6.9s, 2009 $ 1,000 $ 1,064,510
AAA North Carolina Eastern Municipal Power
Agency, 5.5s, 2007 2,040 2,095,876
BBB+ North Carolina Eastern Municipal Power
Agency, 7s, 2007 5,000 5,384,950
BBB+ North Carolina Eastern Municipal Power
Agency, 7.25s, 2007 5,000 5,485,900
BBB+ North Carolina Eastern Municipal Power
Agency, 7.5s, 2010 3,005 3,312,652
AAA North Carolina Eastern Municipal Power
Agency, AMBAC, 6s, 2018 13,945 14,219,298
AAA North Carolina Eastern Municipal Power
Agency, FSA, 5.75s, 2019 2,500 2,406,675
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., MBIA, 0s,
2008 10,150 5,205,123
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., MBIA, 0s,
2009 10,000 4,714,100
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., MBIA, 6s,
2011 5,000 5,191,250
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., MBIA,
6.72s, 2012++++ 3,000 2,740,560
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., MBIA,
7.625s, 2014 $ 180 $ 192,429
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., MBIA,
5.75s, 2015 12,750 12,385,860
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., MBIA, 5s,
2018 2,000 1,766,900
AAA North Carolina Municipal Power Agency,
No. 1 Catawba Electric Rev., FSA, 6.2s,
2018 2,500 2,524,600
AAA Puerto Rico Electric Power Authority
Rev., FSA, 6s, 2016 5,000 5,052,400
A Wake County, NC, Industrial Facilities
Rev. (Carolina Power & Light), 6.9s,
2009 2,000 2,129,020
-------------
$ 75,872,103
- ----- ---------------------------------------- ---------------- -------------
Water and Sewer Utility Revenue - 2.7%
AAA Concord, NC, Utilities System Rev.,
MBIA, 5.5s, 2019 $ 3,000 $ 2,883,570
AAA Kanapolis, NC, Certificates of
Participation, 7.375s, 2010 5,000 5,430,800
AA+ Winston-Salem, NC, Water & Sewer Systems
Rev., 6.25s, 2012 4,000 4,180,040
-------------
$ 12,494,410
- ----- ---------------------------------------- ---------------- -------------
Airport and Port Revenue - 1.4%
AAA Piedmont Triad Airport Authority, NC,
Airport Authority Rev., MBIA, 5s, 2016 $ 3,645 $ 3,254,548
BB+ Raleigh-Durham, NC, Airport Authority
(American Airlines), 9.625s, 2015 3,000 3,068,490
-------------
$ 6,323,038
- ----- ---------------------------------------- ---------------- -------------
Industrial Revenue (Corporate Guarantee) - 9.6%
NR Alamance County, NC, Industrial
Facilities & Pollution Control Finance
Authority (A.O. Smith Corp.), 7.375s,
2009 $ 1,000 $ 1,001,220
NR Chatham County, NC, Industrial
Facilities & Pollution Control Finance
Authority (Weyerhaeuser Co.), 9s, 2006 1,260 1,306,494
A Craven County, NC, Industrial Facilities
& Pollution Control Finance Authority
(Weyerhaeuser Co.), 6.35s, 2010 5,000 5,206,950
NR Gaston County, NC, Industrial Facilities
& Pollution Control Finance Authority
(Combustion Engineering, Inc.), 8.85s,
2015 1,000 1,146,170
BBB Halifax County, NC, Industrial
Facilities & Pollution Control Finance
Authority (Champion International
Corp.), 8.149s, 2019 1,500 1,637,625
BBB Haywood County, NC, Industrial
Facilities & Pollution Control Finance
Authority (Champion International
Corp.), 8.1s, 2009 2,500 2,718,275
BBB Haywood County, NC, Industrial
Facilities & Pollution Control Finance
Authority (Champion International
Corp.), 5.5s, 2018 3,000 2,696,310
8
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Industrial Revenue (Corporate Guarantee) - continued
NR Henderson County, NC, Industrial
Facilities & Pollution Control Finance
Authority (Figgie International Real
Estate), 8s, 2009 $ 1,400 $ 1,429,596
A Martin County, NC, Industrial Facilities
& Pollution Control Finance Authority
(Weyerhaeuser Co.), 7.25s, 2014 7,000 7,637,070
A Martin County, NC, Industrial Facilities
& Pollution Control Finance Authority
(Weyerhaeuser Co.), 5.65s, 2023 6,145 5,651,003
A Martin County, NC, Industrial Facilities
& Pollution Control Finance Authority
(Weyerhaeuser Co.), 6.8s, 2024 7,500 7,772,925
AAA Mecklenberg County, NC, Industrial
Facilities & Pollution Control Finance
Authority (Precision Steel), 7.75s,
2014 2,600 2,842,398
NR Surry County, NC, Industrial Facilities
& Pollution Control Finance Authority
(Weyerhaeuser Co.), 9.25s, 2002 1,500 1,767,075
NR Wake County, NC, Industrial Facilities &
Pollution Control Finance Authority
(Mallinckrodt), 6.75s, 2012 1,100 1,155,990
-------------
$ 43,969,101
- ----- ---------------------------------------- ---------------- -------------
Universities - 5.4%
AAA Appalachian State University, NC, MBIA,
6.1s, 2014 $ 1,140 $ 1,171,681
AAA Appalachian State University, NC, MBIA,
6.125s, 2019 5,370 5,508,331
AA North Carolina Education Facilities
Finance Agency (Duke University),
6.75s, 2021 12,500 13,497,625
AA University of North Carolina (Chapel
Hill), 0s, 2012 9,105 3,274,704
AA University of North Carolina (Chapel
Hill), 0s, 2013 4,285 1,431,447
-------------
$ 24,883,788
- ----- ---------------------------------------- ---------------- -------------
Other - 0.9%
NR Iredell, NC, Solid Waste Systems Rev.,
6.25s, 2012 $ 1,250 $ 1,289,688
A Puerto Rico Highway & Transportation
Authority Rev., 6.625s, 2018 2,715 2,846,107
-------------
$ 4,135,795
- ----- ---------------------------------------- ---------------- -------------
Total Municipal Bonds (Identified Cost, $421,852,495) $446,007,749
- ----- ---------------------------------------- ---------------- -------------
Floating Rate Demand Notes - 1.3%
- ----------------------------------------------------------------------- -------------
Jackson County, MS, Pollution Control
Rev. (Chevron USA, Inc.), due 12/01/16 $ 200 $ 200,000
Lincoln County, WY, Pollution Control
Rev. (Exxon Corp.), due 11/01/14 200 200,000
Uinta County, WY, Pollution Control Rev.
(Chevron USA, Inc.), due 8/15/20 3,000 3,000,000
Wake County, NC, Industrial Facilities &
Pollution Control Rev. (Carolina Power
& Light Co.), due 3/01/17 2,700 2,700,000
- ----- ---------------------------------------- ---------------- -------------
Total Floating Rate Demand Notes, at Identified Cost $ 6,100,000
- ----- ---------------------------------------- ---------------- -------------
Total Investments (Identified Cost, $427,952,495) $452,107,749
Other Assets, Less Liabilities - 1.2% $ 5,597,920
- ----------------------------------------------------------------------- -------------
Net Assets - 100.0% $457,705,669
- ----------------------------------------------------------------------- -------------
[S]Indexed security.
++++Inverse floating rate security.
Portfolio of Investments (Unaudited) - September 30, 1995
MFS SOUTH CAROLINA MUNICIPAL BOND FUND
Municipal Bonds - 97.8%
- ----------------------------------------------------------------------- -------------
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- ----- ---------------------------------------- ---------------- -------------
General Obligation - 0.9%
AA Charleston County, SC, 5.5s, 2014 $ 1,250 $ 1,214,075
A Commonwealth of Puerto Rico, 5.25s, 2018 500 451,970
-------------
$ 1,666,045
- ----- ---------------------------------------- ---------------- -------------
State and Local Appropriation - 6.9%
AAA Berkeley County, SC, School District,
AMBAC, 6.3s, 2016 $ 1,800 $ 1,868,166
AAA Greenville County, SC, Certificate of
Participation, AMBAC, 5.9s, 2019 1,100 1,084,853
AAA Hilton Head Island, SC, Public Finance
Corp., Certificate of Participation,
AMBAC, 5.75s, 2014 2,000 1,966,160
AAA Lexington County, SC, School District
No. 1, Certificates of Participation
(Gilbert Middle School), MBIA, 6.65s,
2012 1,000 1,053,470
BBB+ Myrtle Beach, SC, Public Finance Corp.,
Certificates of Participation
(Convention Center), 6.875s, 2017 2,500 2,587,125
AAA North Charleston, SC, Certificates of
Participation (Coliseum), FGIC, 6s,
2016 1,355 1,371,368
A Puerto Rico Public Building Authority,
5.5s, 2021 1,000 922,440
NR Williamsburg County, SC, School District
Public Facilities Corp., Certificates
of Participation, 7.5s, 2006 175 173,290
NR Williamsburg County, SC, School District
Public Facilities Corp., Certificates
of Participation, 7.5s, 2007 190 188,062
NR Williamsburg County, SC, School District
Public Facilities Corp., Certificates
of Participation, 7.5s, 2008 205 202,827
NR Williamsburg County, SC, School District
Public Facilities Corp., Certificates
of Participation, 7.5s, 2009 220 217,587
NR Williamsburg County, SC, School District
Public Facilities Corp., Certificates
of Participation, 7.5s, 2012 270 258,212
NR Williamsburg County, SC, School District
Public Facilities Corp., Certificates
of Participation, 7.5s, 2014 315 300,541
NR Williamsburg County, SC, School District
Public Facilities Corp., Certificates
of Participation, 7.5s, 2018 635 603,593
-------------
$ 12,797,694
- ----- ---------------------------------------- ---------------- -------------
9
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Refunded and Special Obligation - 21.7%
NR Anderson County, SC, 7.75s, 1997 $ 500 $ 539,880
AA Charleston County, SC, Alumax Project,
6.5s, 2001 1,315 1,458,453
AAA Charleston County, SC, Certificates of
Participation (Charleston Public
Facilities Corp.), MBIA, 7.1s, 2001 2,000 2,282,740
AA Columbia, SC, Waterworks & Sewer Rev.,
0s, 2004 1,500 988,575
AA Columbia, SC, Waterworks & Sewer Rev.,
0s, 2006 2,045 1,182,358
AAA Commonwealth of Puerto Rico, Public
Improvement, 6.8s, 2002 425 484,649
AAA Greenville Hospital System, SC, Hospital
Facilities Rev., "A", FGIC, 7.8s, 1998 1,950 2,152,059
AAA Greenville Hospital System, SC, Hospital
Facilities Rev., "B", FGIC, 7.8s, 1998 1,500 1,655,430
AAA Greenwood County, SC, Hospital Rev.
(Self Memorial Hospital), BIG, 8.25s,
1997 500 547,710
AAA Greenwood County, SC, Hospital Rev.
(Self Memorial Hospital), BIG, 8.375s,
1997 1,000 1,097,780
AAA Laurens, SC, Utility Systems Rev., FGIC,
7.625s, 1998 1,100 1,209,758
AAA Lexington County, SC, School District
No. 1, Certificates of Participation
(White Knoll Middle School), CGIC,
7.65s, 1999 1,400 1,568,980
AAA Myrtle Beach, SC, Water & Sewer Rev.,
MBIA, 6s, 2000 1,780 1,889,239
AAA Myrtle Beach, SC, Water & Sewer Rev.,
MBIA, 6s, 2000 1,750 1,857,398
AAA North Charleston, SC, Sewer Rev., MBIA,
7.75s, 1998 1,250 1,387,387
AAA Puerto Rico Aqueduct & Sewer Authority,
9s, 1996 750 978,090
AAA Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.625s, 2002 300 339,087
AA Richland County, SC, 6.25s, 2000 1,260 1,367,919
AAA Richland County, SC, Certificates of
Participation, FGIC, 0s, 2005 1,160 714,003
AAA Richland County, SC, Certificates of
Participation, FGIC, 0s, 2006 1,160 671,072
AAA Richland County, SC, Certificates of
Participation, FGIC, 0s, 2007 1,160 632,977
NR South Carolina Jobs, Economic
Development Authority (Carolina
Hospital System Project), 7.55s, 2002 2,000 2,361,820
AAA South Carolina Public Service Authority,
Electric Rev., 7.75s, 1996 3,155 3,247,189
AAA South Carolina Public Service Authority,
Electric Rev., 7.875s, 1996 650 669,181
AAA South Carolina Public Service Authority,
"C", 7.1s, 2001 1,220 1,394,375
AAA South Carolina Public Service Authority
(Santee Cooper), 6.625s, 2002 4,000 4,511,000
A- Spartanburg County, SC, Hospital
Facilities Rev. (Mary Black Hospital),
8.25s, 1998 500 562,485
A Williamsburg County, SC, School
District, 7.8s, 1996 200 209,144
A Williamsburg County, SC, School
District, 7.9s, 1996 250 261,530
A Williamsburg County, SC, School
District, 7.9s, 1996 $ 275 $ 287,683
A Williamsburg County, SC, School
District, 7.9s, 1996 300 313,836
AAA York County, SC, School District No. 3,
MBIA, 7.5s, 1998 575 631,741
AAA York, SC, Water & Sewer Rev., AMBAC,
7.875s, 1996 620 653,083
-------------
$40,108,611
- ----- ---------------------------------------- ---------------- -------------
Single Family Housing Revenue - 6.3%
AA South Carolina Housing Authority, 8.6s,
2019 $1,000 $ 1,040,930
AA South Carolina Housing Finance &
Development Authority, 7.55s, 2011 1,750 1,828,890
AA South Carolina Housing Finance &
Development Authority, 7.75s, 2022 2,650 2,787,906
AA South Carolina Housing Finance &
Development Authority, 7.8s, 2022 1,000 1,047,250
AA South Carolina Housing Finance &
Development Authority, 7.9s, 2032 4,610 4,846,124
-------------
$11,551,100
- ----- ---------------------------------------- ---------------- -------------
Multi-Family Housing Revenue - 1.7%
AA South Carolina Housing Finance &
Development Authority (Fairway
Apartments), 7.625s, 2033 $1,980 $ 2,092,365
BBB+ South Carolina Housing Finance &
Development Authority (Hunting Ridge
Apartments), 6.75s, 2025 1,000 991,030
-------------
$ 3,083,395
- ----- ---------------------------------------- ---------------- -------------
Insured Health Care Revenue - 7.7%
AAA Anderson County, SC, Hospital Facilities
Rev. (Anderson Area Medical Center,
Inc.), MBIA, 5.25s, 2012 $1,000 $ 930,140
AAA Charleston County, SC, Hospital Rev.
(Bon Secours Health System Project),
FSA, 5.625s, 2025 1,500 1,422,270
AAA Charleston County, SC, Hospital Rev.
(Medical Society Health Project), MBIA,
5.5s, 2019 2,550 2,382,669
AAA Charleston County, SC, Hospital Rev.
(Medical Society Health Project), MBIA,
5s, 2022 2,450 2,109,695
AAA Greenwood County, SC, Hospital Rev.
(Self Memorial Hospital), MBIA, 5.875s,
2017 1,000 994,460
AAA Pickens & Richland Counties, SC,
Hospital Rev. (Baptist Hospital),
AMBAC, 5.75s, 2021 3,635 3,516,172
AAA Richland County, SC, Hospital Facilities
Rev. (Providence), CGIC, 5.25s, 2010 1,200 1,130,688
AAA South Carolina Jobs, Economic
Development Authority, Hospital
Facilities Rev. (Tuomey Regional
Medical Center), MBIA, 5.5s, 2020 1,900 1,779,806
-------------
$14,265,900
- ----- ---------------------------------------- ---------------- -------------
Health Care Revenue - 7.6%
NR Charleston County, SC, First Mortgage
Rev. (Driftwood Health Care), 12.5s,
2014 $2,115 $ 2,166,395
NR Greenville County, SC, First Mortgage
Rev. (Chestnut Hill), 10.125s, 2016 1,950 1,950,000
10
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Health Care Revenue - continued
AA- Greenville Hospital System, SC, Hospital
Facilities Rev., 6s, 2020 $ 5,400 $ 5,324,616
NR Horry County, SC, Hospital Facilities
Rev. (Conway Hospital), 6.75s, 2012 4,500 4,586,310
-------------
$ 14,027,321
- ----- ---------------------------------------- ---------------- -------------
Electric and Gas Utility Revenue - 11.4%
A Colleton & Dorchester Counties, SC,
Pollution Control Rev., 6.6s, 2014 $ 3,000 $ 3,159,690
A Fairfield County, SC, Pollution Control
Rev. (South Carolina Electric Co.),
6.5s, 2014 1,250 1,327,925
AAA Piedmont Municipal Power Agency, SC,
Electric Rev., FGIC, 6.25s, 2021 4,600 4,828,620
AAA Piedmont Municipal Power Agency, SC,
Electric Rev., FGIC, 5s, 2022 2,300 1,992,099
A- Puerto Rico Electric Power Authority,
6.125s, 2008 1,025 1,089,483
A- Puerto Rico Electric Power Authority,
5.5s, 2020 1,000 923,720
AAA South Carolina State, Public Service
Authority, MBIA, 6.904s, 2013++++ 3,000 2,778,420
AAA South Carolina Public Service Authority,
FGIC, 5.875s, 2023 5,000 4,903,250
-------------
$ 21,003,207
- ----- ---------------------------------------- ---------------- -------------
Water and Sewer Utility Revenue - 16.7%
AAA Cayce, SC, Waterworks & Sewer Rev.,
AMBAC, 5.25s, 2015 $ 1,500 $ 1,378,590
AA- Charleston County, SC, Waterworks &
Sewer Rev., 6s, 2012 2,000 2,028,540
AAA Charleston County, SC, Waterworks &
Sewer Rev., MBIA, 5s, 2022 3,150 2,754,549
AA Columbia, SC, Waterworks & Sewer Rev.,
0s, 2005 2,245 1,389,408
AA Columbia, SC, Waterworks & Sewer Rev.,
0s, 2006 9,330 5,430,247
AA Columbia, SC, Waterworks & Sewer Rev.,
5.375s, 2012 3,500 3,403,750
NR Laurens County, SC, Water & Sewer
Commission, Sewer System Rev., 5.5s,
2014 1,080 1,015,243
AAA Laurens, SC, Public Utility Systems
Refunding, FGIC, 5s, 2018 2,395 2,094,475
AAA Myrtle Beach, SC, Water & Sewer Rev.,
AMBAC, 5.5s, 2013 1,000 956,570
AAA Rock Hill, SC, Utility Systems Rev.,
AMBAC, 5s, 2020 1,285 1,129,117
A+ South Carolina Resources Authority
(Local Government Program), 7.25s, 2020 3,000 3,222,030
AAA St. Andrews, SC, Public Services
District, Sewer System Rev., FGIC,
7.75s, 2018 1,000 1,074,980
AAA Union, SC, Combined Public Utility
System Rev., FGIC, 5s, 2021 650 575,412
AAA Western Carolina Regional Sewer
Authority, AMBAC, 0s, 2007 4,400 2,384,976
NR York County, SC, Water & Sewer Rev.,
6.5s, 2025 2,000 1,940,720
-------------
$ 30,778,607
- ----- ---------------------------------------- ---------------- -------------
Turnpike Revenue - 1.3%
A Commonwealth of Puerto Rico, Highway &
Transportation Authority, 5.5s, 2013 $ 1,500 $ 1,437,300
A Commonwealth of Puerto Rico, Highway &
Transportation Authority, 5.5s, 2015 1,000 950,120
-------------
$ 2,387,420
- ----- ---------------------------------------- ---------------- -------------
Airport and Port Revenue - 1.0%
AAA Charleston County, SC, Airport Revenue,
MBIA, 5s, 2013 $ 2,000 $ 1,803,000
- ----- ---------------------------------------- ---------------- -------------
Industrial Revenue (Corporate Guarantee) - 13.0%
NR Aiken County, SC, Industrial Rev.
(Kimberly-Clark Project), 8.92s, 2005 $ 300 $ 312,141
A+ Calhoun, SC, Solid Waste Disposal Rev.
(Eastman Kodak), 6.75s, 2017 1,000 1,067,340
A Charleston County, SC, Resource Recovery
Rev. (Foster Wheeler), 9.25s, 2010 1,750 1,922,428
BBB+ Chester County, SC, Industrial Rev.
(Springs Industries, Inc.), 7.35s, 2014 1,000 1,072,560
BBB+ Chester County, SC, Industrial Rev.
(Springs Industries, Inc.), 7.8s, 2014 1,025 1,113,447
AA- Darlington County, SC, Industrial
Development Rev. (Nucor Corp.), 5.75s,
2023 2,000 1,881,220
A+ Darlington County, SC, Industrial
Development Rev. (Sunoco Products Co.),
6.125s, 2025 1,500 1,500,435
NR Fairfield County, SC, Industrial Rev.
(Rite Aid, Inc.), 7.9s, 2016 2,950 3,072,602
NR Greenville County, SC, Industrial Rev.
(Kroger Co.), 7.85s, 2015 500 536,390
NR Lexington County, SC, Industrial Rev.
(J.B. White & Co.), 8s, 2005 680 731,646
AA- Oconee County, SC, Pollution Control
Rev. (Duke Power Co.), 5.8s, 2014 1,975 1,961,175
AA- Oconee County, SC, Pollution Control
Rev. (Duke Power Co.), 7.5s, 2017 1,000 1,101,060
A- Richland County, SC, Pollution Control
Rev. (Union Camp Corp.), 6.55s, 2020 1,800 1,884,420
A- Richland County, SC, Solid Waste
Facilities Rev. (Union Camp Corp.),
6.75s, 2022 2,000 2,097,020
A+ York County, SC, Industrial Rev.
(Hoechst Celanese), 5.7s, 2024 4,000 3,754,840
-------------
$ 24,008,724
- ----- ---------------------------------------- ---------------- -------------
Universities - 0.6%
AAA Coastal Carolina University, 6.875s,
2026 $ 1,000 $ 1,076,610
- ----- ---------------------------------------- ---------------- -------------
Other - 1.0%
A Puerto Rico Public Building Authority,
5.7s, 2009 $ 1,000 $ 996,760
AAA Puerto Rico Telephone Authority Rev.,
AMBAC, 4.35s, 2005 (Interest Rate
Swap)[S]. 1,000 925,050
-------------
$ 1,921,810
- ----- ---------------------------------------- ---------------- -------------
Total Municipal Bonds (Identified Cost, $170,932,287) $180,479,444
- ----------------------------------------------------------------------- -------------
11
<PAGE>
Portfolio of Investments (Unaudited) - continued
Floating Rate Demand Note - 1.0%
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Charleston County, SC, Industrial Rev.
(Massey Coal), due 1/01/07, at
Identified Cost $1,900 $ 1,900,000
- ----- ---------------------------------------- ---------------- -------------
Total Investments (Identified Cost, $172,832,287) $182,379,444
Other Assets, Less Liabilities - 1.2% 2,162,813
- ----------------------------------------------------------------------- -------------
Net Assets - 100.0% $184,542,257
- ----------------------------------------------------------------------- -------------
++++Inverse floating rate security.
[S]Indexed security.
Portfolio of Investments (Unaudited) - September 30, 1995
MFS TENNESSEE MUNICIPAL BOND FUND
Municipal Bonds - 97.8%
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- ----- ------------------------------------------ ---------------- -------------
General Obligation - 8.0%
AA Metropolitan Government of Nashville &
Davidson County, TN, 6.125s, 2014 $ 1,000 $ 1,026,720
AA Metropolitan Government of Nashville &
Davidson County, TN, 6.125s, 2019 3,255 3,297,706
AA Metropolitan Government of Nashville &
Davidson County, TN, 6.15s, 2025 1,000 1,008,060
AAA Puerto Rico Commonwealth, MBIA, 5.375s,
2022 1,000 940,010
AA- Rutherford County, TN, 0s, 2015 1,500 468,750
AA+ Shelby County, TN, 5.1s, 2015 1,000 911,100
AA+ Shelby County, TN, 5.125s, 2015 1,000 913,980
AA+ Shelby County, TN, 5.125s, 2018 1,115 999,096
NR Territory of Virgin Islands, 7.75s, 2006 415 458,392
-------------
$ 10,023,814
- ----- ---------------------------------------- ---------------- -------------
State and Local Appropriation - 3.1%
AAA Gatlinburg, TN, Public Building
Authority (Gatlinburg Convention
Center), AMBAC, 6.9s, 2012 $ 1,000 $ 1,071,680
A Puerto Rico Public Building Authority,
GTD, Public Educational & Health, PSA
Fixed Rate, 5.31s, 2016[S]. 2,000 1,856,240
A Puerto Rico Public Building Authority,
5.5s, 2021 1,000 922,440
-------------
$ 3,850,360
- ----- ---------------------------------------- ---------------- -------------
Refunded and Special Obligation - 21.4%
AAA Bristol, TN, Health & Educational
Facilities Board Rev. (Bristol
Memorial), FGIC, 7s, 2001 $ 500 $ 565,955
AAA Gladeville, TN, Utility District,
Waterworks Rev., FGIC, 7.4s, 2000 500 565,370
AAA Knox County, TN, Health, Educational &
Housing Facilities Board (Fort
Sanders), MBIA, 8s, 1998 2,000 2,167,100
AAA Knox County, TN, Health, Educational &
Housing Facilities Board (Mercy
Health), AMBAC, 7.6s, 1999 3,500 3,910,025
NR Knox County, TN, Industrial Development
Board, 0s, 2016 8,325 2,056,109
NR Memphis, TN, Electric Systems Rev.,
6.75s, 2000 1,500 1,653,705
AAA Memphis-Shelby County, TN, Airport
Authority, MBIA, 8s, 1998 3,500 3,840,305
AAA Mt. Juliet, TN, Public Building
Authority (Madison), MBIA, 7.7s, 2004 $ 1,100 $ 1,399,805
AAA Mt. Juliet, TN, Public Building
Authority (Madison), MBIA, 7.8s, 2004 3,500 4,477,795
NR Mt. Juliet, TN, Public Building
Authority (Poplar Grove), 8.375s, 1999 1,430 1,627,211
NR New Tazewell, TN, Health, Educational &
Housing Facilities Board (Lincoln),
7.25s, 1997 2,000 2,126,380
AAA Puerto Rico Highway & Transportation
Authority Rev., 8.125s, 1998 670 749,690
AAA Shelby County, TN, 6.5s, 1999 1,120 1,214,797
NR Wilson County, TN, Water & Wastewater
Authority, Waterworks Rev., 8s, 1999 500 564,475
-------------
$ 26,918,722
- ----- ---------------------------------------- ---------------- -------------
Single Family Housing Revenue - 7.4%
A Shelby County, TN, Single Family
Mortgage Rev., FHA, 0s, 2015 $10,000 $ 1,448,600
A+ Tennessee Housing Development Agency,
7.4s, 2016 345 359,766
A+ Tennessee Housing Development Agency,
8.125s, 2021 4,365 4,498,438
A+ Tennessee Housing Development Agency,
7.65s, 2022 1,000 1,045,430
A+ Tennessee Housing Development Agency,
7.375s, 2023 1,000 1,045,610
A+ Tennessee Housing Development Agency,
7.125s, 2026 800 840,592
-------------
$ 9,238,436
- ----- ---------------------------------------- ---------------- -------------
Multi-Family Housing Revenue - 4.8%
AAA Franklin, TN, Industrial Development
Rev., FHA, 6.75s, 2027 $ 1,000 $ 1,023,350
NR Jackson, TN, Health, Education & Housing
Facilities Board, FHA, 7.1s, 2028 1,610 1,674,819
AAA Metropolitan Government of Nashville &
Davidson County, TN, Health,
Educational, FHA, 7.25s, 2032 495 513,543
NR Metropolitan Government of Nashville &
Davidson County, TN, Industrial, FHA,
6.95s, 2026 1,000 1,036,770
A Metropolitan Government of Nashville &
Davidson County, TN, Industrial, FHA,
7.5s, 2029 695 731,293
A+ Metropolitan Government of Nashville &
Davidson County, TN, Industrial, FHA,
7.7s, 2029 1,000 1,052,670
-------------
$ 6,032,445
- ----- ---------------------------------------- ---------------- -------------
Insured Health Care Revenue - 10.2%
AAA Bristol, TN, Health & Educational
Facilities Board Rev. (Bristol
Memorial), FGIC, 0s, 2021 $ 1,325 $ 1,350,997
AAA Bristol, TN, Health & Educational
Facilities Board Rev. (Bristol
Memorial), FGIC, 5.25s, 2021 1,000 900,710
AAA Chattanooga-Hamilton County, TN,
Hospital Authority (Erlanger Medical
Center), FSA, 5.5s, 2013 2,000 1,918,080
AAA Jackson, TN, Hospital Refunding (General
Hospital), AMBAC, 5.625s, 2015 1,000 963,770
12
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Insured Health Care Revenue - continued
AAA Johnson City, TN, Health Educational
Facilities Authority (Johnson Medical
Center), MBIA, 5.25s, 2016 $ 2,625 $ 2,395,417
AAA Knox County, TN, Health, Educational &
Housing Facilities Board (Fort
Sanders), MBIA, 5.75s, 2014 3,250 3,216,623
AAA Knox County, TN, Health, Educational &
Housing Facilities Board (Fort
Sanders), MBIA, 5.25s, 2023 2,375 2,125,459
-------------
$ 12,871,056
- ----- ---------------------------------------- ---------------- -------------
Health Care Revenue - 4.8%
NR Clarksville, TN, Hospital Rev.
(Clarksville Memorial Hospital),
6.375s, 2018 $ 1,000 $ 979,140
A- Cookeville, TN, Industrial Development
Board, Hospital Rev. (Cookville
General), 5.75s, 2010 2,000 1,849,040
NR Knox County, TN, Health, Educational &
Housing Facilities Board (Baptist
East), 8.5s, 2004 1,410 1,500,846
NR Knox County, TN, Health, Educational &
Housing Facilities Board (Baptist
East), 8.6s, 2016 710 753,360
BBB+ Knox County, TN, Health, Educational &
Housing Facilities Board (East
Tennessee Children's), 6.5s, 2012 1,000 1,000,180
-------------
$ 6,082,566
- ----- ---------------------------------------- ---------------- -------------
Water and Sewer Utility Revenue - 17.5%
AAA Madison, TN, Utility Waterworks
Refunding, MBIA, 5s, 2019 $ 2,750 $ 2,425,390
AAA Metropolitan Government of Nashville &
Davidson County, TN, Water & Sewer
Rev., FGIC, 6.5s, 2010 1,000 1,106,970
AAA Metropolitan Government of Nashville &
Davidson County, TN, Water & Sewer
Rev., FGIC, 5.2s, 2013 2,000 1,875,900
AAA Metropolitan Government of Nashville &
Davidson County, TN, Water & Sewer
Rev., FGIC, 5.1s, 2016 3,500 3,155,495
AAA Metropolitan Government of Nashville &
Davidson County, TN, Water & Sewer
Rev., RIBS, AMBAC, 7.973s, 2022++++ 1,000 1,007,950
NR Mt. Juliet, TN, Public Building
Authority (Cumberland), 7.55s, 2024 2,065 2,224,315
AAA Mt. Juliet, TN, Public Building
Authority (Hermitage), MBIA, 7.5s, 2009 300 322,695
NR Mt. Juliet, TN, Public Building
Authority (Milcroft), 7.55s, 2024 1,225 1,319,509
NR Mt. Juliet, TN, Public Building
Authority (New Market), 8.375s, 2024 570 615,959
NR Mt. Juliet, TN, Public Building
Authority (Tipton), 7.5s, 2004 380 416,651
NR Poplar Grove, TN, Utility District,
Waterworks Rev., 6.375s, 2011 500 513,040
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2002 1,315 919,829
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2003 1,045 689,961
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2004 $ 1,920 $ 1,194,201
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2005 1,920 1,122,816
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2006 1,920 1,059,360
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2007 1,920 992,621
NR Wilson County, TN, Water & Wastewater
Authority, 6s, 2014 1,000 998,390
-------------
$ 21,961,052
- ----- ---------------------------------------- ---------------- -------------
Turnpike Revenue - 0.8%
A Puerto Rico Highway & Transportation
Authority, Highway Rev., 5.5s, 2015 $ 1,000 $ 950,120
- ----- ---------------------------------------- ---------------- -------------
Sales and Excise Tax Revenue - 0.8%
A- Tennessee Local Development Authority
Rev., Community Provider Loan, 7s, 2021 $ 1,000 $ 1,067,490
- ----- ---------------------------------------- ---------------- -------------
Industrial Revenue (Corporate Guarantee) - 14.7%
BBB Bristol, TN, Industrial Development
(K-Mart), 7.5s, 2008 $ 1,105 $ 1,190,846
AA- Humphreys County, TN, Certificates of
Participation (DuPont), 6.7s, 2024 1,750 1,850,258
NR Knox County, TN, Industrial Development
Board (Kroger Co.), 8.1s, 2003 2,000 2,226,480
NR Lawrenceburg, TN, Industrial Development
Board (Tridon, Inc.), 9.875s, 2006 1,000 1,028,570
BBB+ Maury County, TN, Industrial Development
Pollution Control Rev. (Saturn Corp.),
6.5s, 2024 1,500 1,521,915
BBB McMinn County, TN, Industrial
Development Board, Pollution Control
Rev. (Bowater), 7.625s, 2016 2,000 2,148,060
BBB Memphis-Shelby County, TN, Airport
Authority (Federal Express Corp.),
7.875s, 2009 2,755 3,033,778
BBB Memphis-Shelby County, TN, Airport
Authority (Federal Express Corp.),
6.2s, 2014 1,000 998,100
NR Metropolitan Government of Nashville &
Davidson County, TN, IDR (Wilson
Sporting), 7.75s, 2014 1,000 1,107,620
BB+ Metropolitan Nashville Airport Authority
(American Airlines, Inc.), 9.875s, 2005 2,500 2,604,475
A- Puerto Rico Industrial, Medical &
Environmental Pollution Control
Facilities, Finance Authority Rev.
(Baxter Travenol Laboratories), 8s,
2012 750 831,150
-------------
$ 18,541,252
- ----- ---------------------------------------- ---------------- -------------
Universities - 2.8%
AA Jackson, TN, Health, Educational &
Housing Facilities Board (Lambuth
University), 5.9s, 2015 $ 1,000 $ 1,005,490
AA Metropolitan Government of Nashville &
Davidson County, TN, Health,
Educational & Housing Facilities Board
(Vanderbilt University), 5.125s, 2013 490 457,018
13
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Universities - continued
AA Metropolitan Government of Nashville &
Davidson County, TN, Health,
Educational & Housing Facilities Board
(Vanderbilt University), 7.625s, 2016 $ 1,000 $ 1,083,020
AA Metropolitan Government of Nashville &
Davidson County, TN, Health,
Educational & Housing Facilities Board
(Vanderbilt University), 5.2s, 2018 1,000 920,950
-------------
$ 3,466,478
- ----- ---------------------------------------- ---------------- -------------
Other - 1.5%
AAA Puerto Rico Telephone Authority Rev.,
7-Year Swap, "M", AMBAC, 4.35s, 2004[S]. $ 2,000 $ 1,850,100
- ----- ---------------------------------------- ---------------- -------------
Total Municipal Bonds (Identified Cost, $116,220,646)
---------------------------------------------------------------------------------------
Floating Rate Demand Note - 0.7%
Sullivan County, TN, Industrial
Development Pollution Control Rev., due
2016, at Identified Cost $ 900 $ 900,000
- ----- ---------------------------------------- ---------------- -------------
Call Option Purchased - 0.1%
Principal Amount
of Contracts
Issuer/Expiration Date/Strike Price (000 Omitted)
- --------------------------------------------------- ---------------- -------------
State of New Jersey, GOB, "D"/February 2003/102
(Premium Paid, $255,000) $ 2,000 $ 152,300
- --------------------------------------------------- ---------------- -------------
Total Investments (Identified Cost, $117,375,646) $123,906,191
Other Assets, Less Liabilities - 1.4% 1,721,263
- ----------------------------------------------------------------------- -------------
Net Assets - 100.0% $125,627,454
- ----------------------------------------------------------------------- -------------
[S]Indexed security.
++++Inverse floating rate security.
Portfolio of Investments (Unaudited) - September 30, 1995
MFS VIRGINIA MUNICIPAL BOND FUND
Municipal Bonds - 97.0%
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
General Obligation - 5.9%
AAA Fairfax County, VA, 5.375s, 2009 $ 1,000 $ 1,010,470
AAA Fairfax County, VA, 5.5s, 2013 2,000 1,965,960
NR Lebanon, VA, 7.6s, 2005 375 383,288
NR Lebanon, VA, 7.75s, 2010 310 316,898
AA- Portsmouth, VA, 6.375s, 2012 1,555 1,620,839
AA Richmond, VA, 0s, 2006 1,000 569,500
AA Richmond, VA, 0s, 2006 2,500 1,423,750
AA Richmond, VA, 0s, 2007 5,280 2,831,347
AA Richmond, VA, 0s, 2008 2,000 1,008,860
AA Richmond, VA, 0s, 2008 5,270 2,645,645
AA Richmond, VA, 0s, 2009 5,175 2,431,008
AA Richmond, VA, 5.5s, 2022 2,000 1,863,360
AA Richmond, VA, 5.5s, 2023 2,410 2,241,758
AAA State of Virginia (Higher Educational
Institute), 0s, 1996 1,000 973,790
AAA State of Virginia (Higher Educational
Institute), 0s, 1998 1,295 1,159,672
AAA State of Virginia (Higher Educational
Institute), 0s, 1999 1,300 1,111,227
AA State of Virginia (Higher Educational
Institute), 6.5s, 2013 1,875 1,994,738
A Suffolk, VA, 6.5s, 2006 $ 1,250 $ 1,314,488
-------------
$ 26,866,598
- ----- ---------------------------------------- ---------------- -------------
State and Local Appropriation - 6.6%
NR Chesterfield County, VA, Industrial
Development Authority, Public
Facilities Lease Rev. (Correctional
Enterprises), 7.5s, 2008 $ 1,720 $ 1,762,501
AA Henrico County, VA, Industrial
Development Authority Rev., 6.5s, 2010 5,000 5,450,200
NR New Kent County, VA, Industrial
Development Authority, Public
Facilities Lease Rev. (New Kent County
Courthouse), 7.5s, 2011 700 750,771
A Puerto Rico Public Buildings Authority,
5.385s, 2016 (Municipal Swap)[S] 6,500 6,032,780
AAA Virginia Public Building Authority,
MBIA, 0s, 2007 13,305 7,093,428
AAA Virginia Public Building Authority,
MBIA, 0s, 2008 10,650 5,317,226
AA Virginia Transportation Board, Contract
Rev. (Route 28), 5.5s, 2018 3,750 3,554,587
-------------
$ 29,961,493
- ----- ---------------------------------------- ---------------- -------------
Refunded and Special Obligation - 16.2%
NR Arlington County, VA, Industrial
Development Authority (Arlington
Hospital), 7.125s, 2001 $ 4,450 $ 5,105,797
NR Carroll County, VA, Solid Waste
Authority Rev., 7.5s, 2001 2,265 2,635,939
NR Chesapeake, VA, Certificates of
Participation, 7.75s, 1996 1,250 1,309,488
NR Chesapeake, VA, Industrial Development
Authority (Sentara Life Care Corp.),
10s, 1997 1,105 1,238,418
AA Chesapeake, VA, Public Improvement,
6.75s, 1998 2,500 2,747,450
AAA Fairfax County, VA, Water Authority
Rev., 7.25s, 2000 3,090 3,472,048
AA- Hampton, VA, Public Improvement, 6.625s,
2000 1,500 1,646,535
AAA Henrico County, VA, Water & Sewer Rev.,
MBIA, 7.875s, 1996 3,500 3,648,680
NR Hopewell County, VA, Hospital Authority
(John Randolph Hospital), 8.85s, 1997 4,760 4,889,424
AAA Nelson County, VA, Service Authority,
Water & Sewer Rev., FGIC, 7.875s, 1996 1,000 1,039,150
NR Newport News, VA, 6.5s, 2000 875 969,640
NR Newport News, VA, 6.5s, 2000 2,205 2,443,493
NR Newport News, VA, 6.5s, 2000 2,325 2,576,472
AA Norfolk, VA, Industrial Development
Authority (Sentara Hospital), 7.875s,
1998 1,000 1,117,900
AA Norfolk, VA, Industrial Development
Authority (Sentara Hospital), 7.9s,
1998 2,000 2,237,220
NR Norfolk, VA, Industrial Development
Authority (Sentara Life Care Corp.),
10s, 1997 4,230 4,740,730
AA- Portsmouth, VA, 6.9s, 2000 1,500 1,678,650
AAA Puerto Rico, Public Improvement, 7.9s,
1996 1,660 1,758,853
AAA Puerto Rico Aqueduct & Sewer Authority,
9s, 1996 4,150 5,412,098
14
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Refunded and Special Obligation - continued
AAA Puerto Rico Aqueduct & Sewer Authority,
10.25s, 2009 $ 400 $ 552,380
AAA Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.5s, 2002 1,750 1,965,443
AAA Roanoke, VA, Industrial Development
Authority, Hospital Rev. (Memorial
Hospital), MBIA, 7.25s, 2000 1,750 1,985,620
A+ Roanoke, VA, Industrial Development
Authority, Hospital Rev. (Roanoke
Memorial), 7.5s, 2000 1,245 1,425,799
AAA Southeastern Public Service Authority,
VA, Solid Waste System Rev., 9.25s,
1996 2,750 2,911,123
AAA State of Virginia, Public School
Authority, 8.5s, 1997 500 536,265
AAA Virginia Beach, VA, Certificates of
Participation (Judicial Center
Project), FGIC, 7.25s, 2000 4,955 5,640,276
A+ Virginia Beach, VA, Water & Sewer Rev.,
6.625s, 2002 2,400 2,685,816
NR Virginia College Building Authority
(Hampton University), 7.75s, 1999 750 843,382
AA Virginia Resources Authority, Water
System Rev., 7.875s, 1998 800 892,368
NR Virginia Resources Authority, Water &
Sewer System Rev., 7.5s, 1999 1,180 1,319,924
AAA Virginia Transportation Board, Contract
Rev. (Route 28), 7.7s, 1998 2,175 2,386,866
-------------
$ 73,813,247
- ----- ---------------------------------------- ---------------- -------------
Single Family Housing Revenue - 2.6%
AAA Puerto Rico Housing Finance Corp., GNMA,
7.8s, 2021 $ 45 $ 47,025
AAA Virginia Housing Development Authority,
FHA, 0s, 2010 560 131,734
NR Virginia Housing Development Authority,
7.22s, 2019++++ 7,500 6,760,425
A+ Virginia Housing Development Authority,
7.1s, 2022 2,000 2,095,060
AA+ Virginia Housing Development Authority,
0s, 2029 3,615 236,023
AA+ Virginia Housing Development Authority,
7.8s, 2038 2,500 2,598,750
-------------
$ 11,869,017
- ----- ---------------------------------------- ---------------- -------------
Multi-Family Housing Revenue - 6.8%
NR Alexandria, VA, Redevelopment & Housing
Authority (Jefferson Village
Apartments), 9s, 2018 $ 4,000 $ 4,118,400
NR Fairfax County, VA, Redevelopment &
Housing Authority (Little River Glen),
8.95s, 2020 3,865 3,979,133
AAA Harrisonburg, VA, Redevelopment &
Housing Authority (Battery Heights),
GNMA, 7.375s, 2028 3,540 3,726,947
NR Norfolk, VA, Redevelopment & Housing
Authority (Dockside Apartments),
7.375s, 2028 2,000 2,112,940
NR Virginia Beach, VA, Development
Authority (Lake Point Associates
Project), 12.125s, 2015 6,300 6,451,263
AA Virginia Housing Development Authority,
6.5s, 2013 2,300 2,327,439
AA+ Virginia Housing Development Authority,
6.125s, 2022 8,500 8,373,095
-------------
$ 31,089,217
- ----- ---------------------------------------- ---------------- -------------
Insured Health Care Revenue - 10.1%
A Albemarle County, VA, Industrial
Development Authority, First Mortgage
Rev., FHA, 8.9s, 2026 $ 2,150 $ 2,439,175
AAA Augusta County, VA, Industrial
Development Authority (Augusta Hospital
Corp.), AMBAC, 5.5s, 2015 4,680 4,525,420
AAA Augusta County, VA, Industrial
Development Authority (Augusta Hospital
Corp.), AMBAC, 5.125s, 2021 3,000 2,718,870
A Front Royal-Warren County, VA,
Industrial Development Authority, FHA,
9.45s, 2024 1,000 1,098,440
AAA Hanover County, VA, Industrial
Development Authority (Bon Secours),
MBIA, 6s, 2008 1,460 1,556,725
AAA Hanover County, VA, Industrial
Development Authority (Bon Secours),
MBIA, 5.5s, 2025 5,950 5,515,531
AAA Hanover County, VA, Industrial
Development Authority (Memorial
Regional Hospital), MBIA, 5.5s, 2025 6,000 5,561,880
AAA Harrisonburg, VA, Industrial Development
Authority (Rockingham Memorial
Hospital), MBIA, 5.75s, 2013 3,000 2,949,510
AAA Henrico County, VA, Industrial
Development Authority Rev. (Bon
Secours), RIBS, FSA, 7.711s, 2027++++ 8,700 8,674,422
AAA Peninsula Ports Authority, VA, Hospital
Facilities Rev. (Wittaker Memorial
Hospital), FHA, 8.7s, 2023 2,100 2,260,167
AAA Roanoke, VA, Industrial Development
Authority, Hospital Rev. (Roanoke
Memorial Hospital), MBIA, 6.125s, 2017 6,000 6,185,820
AAA Roanoke, VA, Industrial Development
Authority, Hospital Rev. (Roanoke
Memorial Hospital), MBIA, 5s, 2024 3,000 2,583,720
-------------
$ 46,069,680
- ----- ---------------------------------------- ---------------- -------------
Health Care Revenue - 5.7%
NR Albemarle County, VA, Industrial
Development Authority (Martha Jefferson
Hospital), 5.5s, 2015 $ 2,000 $ 1,868,380
NR Albemarle County, VA, Industrial
Development Authority (Martha Jefferson
Hospital), 5.5s, 2020 1,000 915,060
AA- Chesapeake, VA, Industrial Development
Authority (Sentara Life Care Corp.),
7.875s, 2008 1,000 1,104,170
AA- Chesapeake, VA, Industrial Development
Authority (Sentara Life Care Corp.),
8s, 2018 4,000 4,394,560
NR Fairfax, Fauquier & Loudoun Counties,
VA, Health Center Commission, Nursing
Home Rev., 9s, 2020 1,910 2,003,743
A+ Henrico County, VA, Industrial
Development Authority (St. John's
Hospital), 8.875s, 2015 955 990,659
A+ Lynchburg, VA, Industrial Development
Authority (Central Health, Inc.),
8.125s, 2016 1,400 1,515,542
NR Martinsville, VA, Industrial Development
Authority (Beverly Enterprises), 6.75s,
2004 1,230 1,208,045
15
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Health Care Revenue - continued
AA- Norfolk, VA, Industrial Development
Authority (Sentara Life Corp.), "A",
7.875s, 2008 $ 1,000 $ 1,094,820
AA- Norfolk, VA, Industrial Development
Authority (Sentara Life Corp.), "A",
7.9s, 2018 2,000 2,146,640
BBB+ Peninsula Ports Authority, VA, Hospital
Facilities Rev. (Mary Immaculate
Hospital), 7.375s, 2017 3,000 3,096,420
A Suffolk, VA, Industrial Development
Authority (Louise Obici Memorial
Hospital), 7.875s, 2005 2,060 2,200,306
A+ Virginia Beach, VA, Hospital Facilities
Rev. (Virginia Beach General Hospital),
8.75s, 2017 2,875 3,192,601
-------------
$ 25,730,946
- ----- ---------------------------------------- ---------------- -------------
Electric and Gas Utility Revenue - 2.5%
A+ Halifax County, VA, Industrial Rev.
Authority (Old Dominion Electric
Cooperative Project), 6s, 2022 $ 5,000 $ 4,837,250
A- Southeastern Public Service Authority,
VA, Solid Waste System Rev., 6s, 2017 6,750 6,484,658
-------------
$ 11,321,908
- ----- ---------------------------------------- ---------------- -------------
Water and Sewer Utility Revenue - 9.5%
A+ Chesapeake, VA, Water & Sewer, 5.125s,
2021 $ 1,200 $ 1,063,380
AA Chesterfield County, VA, Water & Sewer
Rev., 0s, 2004 5,025 3,152,936
AA Chesterfield County, VA, Water & Sewer
Rev., 0s, 2005 4,815 2,842,150
AA Chesterfield County, VA, Water & Sewer
Rev., 0s, 2006 4,000 2,216,800
AA Chesterfield County, VA, Water & Sewer
Rev., 0s, 2007 6,000 3,134,400
AA Chesterfield County, VA, Water & Sewer
Rev., 0s, 2008 6,135 2,979,770
AA Chesterfield County, VA, Water & Sewer
Rev., 0s, 2009 6,135 2,781,302
AA Chesterfield County, VA, Water & Sewer
Rev., 0s, 2010 9,005 3,803,172
AA- Fairfax County, VA, Water Authority
Rev., 6s, 2022 16,000 16,003,840
AA- Fairfax County, VA, Water Authority
Rev., 5.75s, 2029 2,100 2,028,138
AAA Norfolk, VA, Water Rev., MBIA, 5.9s,
2025 3,215 3,166,261
-------------
$ 43,172,149
- ----- ---------------------------------------- ---------------- -------------
Turnpike Revenue - 3.2%
AAA Chesapeake Bay, VA, Bridge & Tunnel
Authority, FGIC, 0s, 2005 $ 4,535 $ 2,747,303
AAA Chesapeake Bay, VA, Bridge & Tunnel
Authority, MBIA, 5.75s, 2025 4,000 3,878,200
AAA Richmond, VA, Metropolitan Authority,
FGIC, 5.75s, 2022 4,250 4,125,560
AA State of Virginia, Transportation Board,
6.5s, 2018 3,500 3,631,915
-------------
$ 14,382,978
- ----- ---------------------------------------- ---------------- -------------
Airport and Port Revenue - 8.0%
AAA Metropolitan Washington, D.C., Airport
Rev., MBIA, 6.625s, 2012 $ 3,000 $ 3,127,170
AA- Metropolitan Washington, D.C., Airport
Rev., 7.6s, 2014 5,030 5,491,452
AAA Metropolitan Washington, D.C., Airport
Rev., BIGI, 8.2s, 2018 $ 3,500 $ 3,884,545
AAA Metropolitan Washington, D.C., Airport
Rev., MBIA, 5.75s, 2020 12,500 12,004,125
AAA Metropolitan Washington, D.C., Airport
Rev., MBIA, 5.5s, 2024 2,745 2,518,839
AA- Peninsula Airport Commission, VA, 7.3s,
2021 2,400 2,639,472
BB+ Puerto Rico Ports Authority Facilities
(American Airlines), 6.3s, 2023 2,000 1,992,180
A+ Virginia Port Authority, 8.2s, 2008 4,500 4,991,760
-------------
$ 36,649,543
- ----- ---------------------------------------- ---------------- -------------
Sales and Excise Tax Revenue - 0.7%
AA Virginia Transportation Board, Contract
Rev. (Route 28), 5.25s, 2012 $ 3,160 $ 2,984,967
- ----- ---------------------------------------- ---------------- -------------
Industrial Revenue (Corporate Guarantee) - 4.6%
A- Halifax, VA, Industrial Development
Authority (Tandy Corp.), 8.25s, 2008 $ 3,500 $ 3,821,895
A+ Henrico County, VA, Industrial
Development Authority (St. Mary's
Hospital), 7.5s, 2007 835 915,603
A- Isle Wight County, VA, Industrial
Development Authority (Union Camp
Corp.), 6.55s, 2024 8,000 8,125,600
NR Lynchburg, VA, Industrial Development
Authority (Kroger Co.), 7.9s, 2011 1,000 1,065,770
NR Virginia Beach, VA, Development
Authority (Beverly Enterprises), 10s,
2010 1,400 1,570,632
AA Virginia State Resources Authority,
Solid Waste Disposal, 5.5s, 2015 3,230 3,051,930
BBB West Point, VA, Industrial Development
Authority (Chesapeake Corp.), 6.375s,
2019 2,600 2,602,106
-------------
$ 21,153,536
- ----- ---------------------------------------- ---------------- -------------
Universities - 6.6%
A+ Albemarle County, VA, Industrial
Development Authority Health Services
Rev. (University of Virginia Health
Services Foundations), 6.5s, 2022 $ 1,000 $ 1,019,310
A- Hampton Roads, VA, Medical College
General Rev., 6.875s, 2016 2,000 2,108,560
A- Hampton Roads, VA, Medical College
General Rev., 6.875s, 2016 1,500 1,581,420
NR Loudoun County, VA, Industrial
Development Authority, University
Facilities Rev. (George Washington
University), 6.25s, 2012 2,710 2,781,056
NR Rockingham County, VA, Industrial
Development Authority Rev. (Bridgewater
College), 6s, 2023 6,610 6,259,340
AA+ University of Virginia, University Rev.,
5.375s, 2014 5,690 5,489,882
AA+ University of Virginia, University Rev.,
5.2s, 2015 2,000 1,886,540
AA+ University of Virginia, University Rev.,
5.375s, 2020 1,520 1,439,516
AA Virginia College Building Authority
(Washington & Lee University), 5.75s,
2019 5,000 5,002,300
BBB- Virginia College Building Authority,
Educational Facilities Rev. (Marymount
University), 7s, 2022 2,500 2,606,250
-------------
$ 30,174,174
- ----- ---------------------------------------- ---------------- -------------
16
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Other - 8.0%
NR Danville, VA, Industrial Development
Authority, Industrial Development Rev.
(Piedmont Mall), 8s, 2013 $ 3,180 $ 3,165,563
AA Fairfax County, VA, Economic Development
Authority Rev., 5.5s, 2014 10,000 9,688,600
AA Fairfax County, VA, Economic Development
Authority Rev., 5.25s, 2018 5,500 5,094,650
AA Fairfax County, VA, Economic Development
Authority Rev., 5.5s, 2018 9,240 8,854,230
NR Pittsylvania County, VA, Industrial
Development Authority Rev., 7.5s, 2014 8,000 8,362,640
AAA Virginia State Peninsula, Regional Jail
Authority Facilities, 5.5s, 2018 1,500 1,423,125
-------------
$ 36,588,808
- ----- ---------------------------------------- ---------------- -------------
Total Municipal Bonds (Identified Cost, $419,011,923) $441,828,261
- ----- ---------------------------------------- ---------------- -------------
Floating Rate Demand Note - 2.0%
- ----------------------------------------------------------------------- -------------
Peninsula Ports Authority, VA (Shell Oil
Co.), due 12/01/05 at Identified Cost $ 8,900 $ 8,900,000
- ----- ---------------------------------------- ---------------- -------------
Call Options Purchased - 0.2%
- ----------------------------------------------------------------------- -------------
Principal Amount
of Contracts
Issuer/Expiration Date/Strike Price (000 Omitted)
- ----- ---------------------------------------- ---------------- -------------
Georgia Municipal Electric Authority/2003/102 $ 20 $ 548,400
State of New Jersey, "D"/2003/102 5 380,750
- ----- ---------------------------------------- ---------------- -------------
Total Call Options Purchased (Premiums Paid, $576,800) $ 929,150
- ----- ---------------------------------------- ---------------- -------------
Total Investments (Identified Cost, $428,488,723) $451,657,411
Other Assets, Less Liabilities - 0.8% $ 3,768,034
- ----------------------------------------------------------------------- -------------
Net Assets - 100.0% $455,425,445
- ----- ---------------------------------------- ---------------- -------------
[S]Indexed security.
++++Inverse floating rate security.
Portfolio of Investments (Unaudited) - September 30, 1995
MFS WEST VIRGINIA MUNICIPAL BOND FUND
Municipal Bonds - 97.3%
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
General Obligation - 7.0%
AAA Cabell, WV, Board of Education, MBIA,
6s, 2006 $ 500 $ 534,735
NR Charleston, WV, Public Improvement,
7.2s, 2008 1,240 1,437,049
NR Charleston, WV, Public Improvement,
7.2s, 2009 1,140 1,317,281
AAA Jefferson County, WV, Board of
Education, FGIC, 6.85s, 2009 1,680 1,899,273
AAA Monongalia County, WV, Board of
Education, MBIA, 7s, 2005 500 569,120
AAA Ohio County, WV, Board of Education,
MBIA, 5.25s, 2018 1,180 1,111,335
AAA State of West Virginia, Water
Development Authority Rev., FSA, 6.2s,
2024 3,000 3,048,960
-------------
$ 9,917,753
- ----- ---------------------------------------- ---------------- -------------
State and Local Appropriation - 7.3%
A Puerto Rico Public Buildings Authority,
5.31s, 2016 (Municipal Swap)[S]. $ 2,000 $ 1,856,240
AAA West Virginia Building Commission, Lease
Rev. (West Virginia Regional Jail),
MBIA, 0s, 2007 3,150 1,654,285
AAA West Virginia Building Commission, Lease
Rev. (West Virginia Regional Jail),
MBIA, 0s, 2008 3,050 1,497,673
AAA West Virginia Building Commission, Lease
Rev. (West Virginia Regional Jail),
MBIA, 0s, 2009 2,500 1,131,825
AAA West Virginia Building Commission, Lease
Rev. (West Virginia Regional Jail),
MBIA, 7s, 2015 1,000 1,074,650
A- West Virginia School Building Authority,
6.75s, 2015 3,000 3,200,100
-------------
$ 10,414,773
- ----- ---------------------------------------- ---------------- -------------
Refunded and Special Obligation - 12.4%
BBB+ Charleston, WV, Parking Rev., 8.5s, 1996 $ 1,000 $ 1,048,820
AAA Kanawha County, WV, Building Commission
(St. Francis Hospital), 7.5s, 2007 275 320,520
AAA Puerto Rico Aqueduct & Sewer Authority,
9s, 1996 1,500 1,956,180
AAA Puerto Rico Electric Power Authority
Rev., 8s, 1998 1,000 1,115,740
AAA Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.625s, 2002 400 452,117
AAA South Charleston, WV, Hospital Rev.
(Herbert J. Thomas Memorial Hospital),
BIGI, 8s, 1998 500 559,015
AAA West Virginia Hospital Finance Authority
(Monongalia General Hospital), 8.6s,
1997 1,000 1,073,390
AAA West Virginia Parkways, Economic
Development & Tourism Authority, FGIC,
0s, 2005 2,250 1,348,853
AAA West Virginia Parkways, Economic
Development & Tourism Authority, FGIC,
0s, 2006 2,500 1,407,350
AAA West Virginia Parkways, Economic
Development & Tourism Authority, FGIC,
0s, 2007 2,000 1,055,160
AAA West Virginia Parkways, Economic
Development & Tourism Authority, FGIC,
0s, 2008 610 306,689
AAA West Virginia Resources Recovery
Authority, Solid Waste Disposal Rev.,
BIGI, 8.25s, 1996 700 733,285
AAA West Virginia Water Development
Authority, 8.125s, 1998 2,015 2,265,062
BBB+ West Virginia Water Development
Authority, 8.125s, 1998 1,750 1,964,480
BBB+ West Virginia Water Development
Authority, 8.625s, 1998 750 852,585
BBB+ West Virginia Water Development
Authority, 7.4s, 2001 750 869,370
AAA West Virginia Water Development
Authority, 7.1s, 2009 250 293,098
-------------
$ 17,621,714
- ----- ---------------------------------------- ---------------- -------------
Single Family Housing Revenue - 9.5%
AAA Berkeley, Brooke & Fayette Counties, WV,
FGIC, 9.1s, 2011 $ 85 $ 87,419
NR Berkeley County, WV, Residential
Mortgage Rev., 7.875s, 2012 315 323,855
17
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Single Family Housing Revenue - continued
NR Charles Town, WV, Residential Mortgage
Rev., 6.2s, 2011 $ 960 $ 960,240
NR Mason County, WV, Rev., 0s, 2014 1,700 415,497
A+ West Virginia Housing Development Fund,
7.85s, 2014 890 920,358
A+ West Virginia Housing Development Fund,
0s, 2015 3,285 418,476
AA+ West Virginia Housing Development Fund,
7.95s, 2017 2,980 3,123,398
A+ West Virginia Housing Development Fund,
7.2s, 2018 5,000 5,211,100
A+ West Virginia Housing Development Fund,
7.2s, 2020 2,000 2,084,440
-------------
$ 13,544,783
- ----- ---------------------------------------- ---------------- -------------
Multi-Family Housing Revenue - 1.0%
AAA Huntington, WV, Housing Corp., Multi-
Family Rev., FNMA, 7.5s, 2024 $ 800 $ 844,608
NR Webster County, WV, Housing Development
Rev. (Circlebrook), 6.35s, 2008 555 560,150
-------------
$ 1,404,758
- ----- ---------------------------------------- ---------------- -------------
Insured Health Care Revenue - 7.5%
AAA Monongalia County, WV, Building
Commission, Hospital Rev. (Monongalia
General Hospital), MBIA, 6.625s, 2011 $ 1,000 $ 1,064,190
AAA West Virginia Hospital Finance Authority
(Cabell Huntington Hospital), AMBAC,
6.25s, 2019 4,000 4,076,360
AAA West Virginia Hospital Finance Authority
(West Virginia University Hospital,
Inc.), MBIA, 5s, 2016 3,250 2,849,730
AAA West Virginia Hospital Finance Authority
(West Virginia University Medical
Corp.), MBIA, 7.875s, 2007 1,500 1,623,060
AAA West Virginia Hospital Finance Authority
(West Virginia University Medical
Corp.), MBIA, 7.875s, 2018 1,000 1,083,820
-------------
$ 10,697,160
- ----- ---------------------------------------- ---------------- -------------
Health Care Revenue - 11.6%
BBB+ Berkeley County, WV, Building
Commission, Hospital Rev. (City
Hospital Project), 6.5s, 2022 $ 2,500 $ 2,490,400
NR Hampshire County, WV, First Mortgage
Rev. (Romney Health Care) 9.5s, 2022 1,280 1,306,919
NR Monongalia County, WV, Health Facilities
Rev. (Beverly Enterprises, Inc.), 10s,
2007 910 1,011,939
NR Princeton, WV, Hospital Rev. (Princeton
Community Hospital), 6s, 2018 1,500 1,363,500
NR West Virginia Hospital Finance Authority
(Charleston Area Medical Center), 6.5s,
2023 2,000 2,052,060
BBB- West Virginia Hospital Finance Authority
(General Hospital Project), 7.25s, 2020 5,000 4,980,950
NR West Virginia Hospital Finance Authority
(Teays Valley Haven Project), 10s, 2005 205 205,280
NR West Virginia Hospital Finance Authority
(Teays Valley Haven Project), 10s, 2015 3,025 3,099,899
-------------
$ 16,510,947
- ----- ---------------------------------------- ---------------- -------------
Electric and Gas Utility Revenue - 5.1%
AAA Mason County, WV, Pollution Control Rev.
(Appalachian Power Co.), MBIA, 6.6s,
2022 $ 7,000 $ 7,279,790
- ----- ---------------------------------------- ---------------- -------------
Water and Sewer Utility Revenue - 4.4%
A Beckley, WV, Industrial Development Rev.
(Beckley Water Co.), 7s, 2017 $ 2,000 $ 2,123,840
AAA Charleston,WV, Sewer Rev., MBIA, 6.5s,
2017 2,260 2,378,764
AAA West Virginia Water Development
Authority, CGIC, 7.5s, 2009 1,100 1,190,486
BBB+ West Virginia Water Development
Authority, 7.625s, 2009 500 539,395
-------------
$ 6,232,485
- ----- ---------------------------------------- ---------------- -------------
Turnpike Revenue - 2.0%
AAA West Virginia Parkways, Economic
Development & Tourism Authority, FGIC,
0s, 2006 $ 1,885 $ 1,058,502
AAA West Virginia Parkways, Economic
Development & Tourism Authority, RIBS,
FGIC, 7.408s, 2019++++ 1,800 1,717,993
-------------
$ 2,776,495
- ----- ---------------------------------------- ---------------- -------------
Industrial Revenue (Corporate Guarantee) - 21.5%
A Braxton County, WV, Solid Waste Disposal
(Weyerhaeuser), 6.5s, 2025 $ 2,000 $ 2,040,480
BBB+ Harrison County, WV, Commercial
Development Rev. (K-Mart Corp.), 7.75s,
2009 1,125 1,223,944
NR Jackson County, WV, Pollution Control
Rev. (Kaiser Aluminium & Chemical
Corp.), 6.5s, 2008 1,365 1,325,073
NR Kanawha County, WV, Commercial
Development Rev. (Kroger Co.), 8s, 2011 1,000 1,072,720
A Kanawha County, WV, Commercial
Development Rev. (May Dept. Stores
Co.), 6.5s, 2003 3,000 3,243,900
BBB Kanawha County, WV, Pollution Control
Rev. (Union Carbide Corp.), 8s, 2020 2,000 2,184,080
BBB+ Marshall County, WV, Pollution Control
Rev. (Ohio Power Co.), 6.85s, 2022 2,000 2,108,700
AAA Marshall County, WV, Pollution Control
Rev. (Ohio Power Co.), MBIA, 6.85s,
2022 3,150 3,350,718
NR McDowell County, WV, Industrial
Development Rev. (War Telephone Co.),
13.5s, 2001 500 504,665
NR Monongalia County, WV, Commercial
Development Rev. (Kroger Co.), 7.7s,
2012 2,000 2,114,540
NR Ohio County, WV, Industrial Development
Rev. (Kroger Co.), 8.125s, 2011 2,000 2,153,640
NR Putnam County, WV, Industrial
Development Rev. (Rite Aid Corp.),
10.375s, 2002 590 604,419
AAA Putnam County, WV, Pollution Control
Rev. (Appalachian Power Co.), AMBAC,
5.45s, 2019 2,000 1,861,640
AAA Putnam County, WV, Pollution Control
Rev. (Appalachian Power Co.), MBIA,
6.6s, 2019 3,200 3,340,224
A Raleigh County, WV, Commercial
Development Rev. (K-Mart Corp.), 6s,
2006 670 640,855
BBB South Charleston, WV, Pollution Control
Rev. (Union Carbide Corp.), 7.625s,
2005 2,500 2,839,550
-------------
$ 30,609,148
- ----- ---------------------------------------- ---------------- -------------
18
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
S&P Bond Principal Amount
Rating Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Universities - 4.3%
AAA West Virginia University Rev. (West
Virginia University Dormitory Project),
AMBAC, 6s, 2012 $5,000 $ 5,073,200
AAA West Virginia University Rev. (West
Virginia University Dormitory Project),
MBIA, 6.75s, 2017 1,000 1,057,840
-------------
$ 6,131,040
- ----- ---------------------------------------- ---------------- -------------
Other - 3.7%
BBB+ Charleston, WV, Parking Rev., 6s, 2013 $1,480 $ 1,453,833
A Puerto Rico Highway & Transportation
Authority Rev., 6.625s, 2018 1,600 1,677,264
NR West Virginia Hospital Finance Authority
(General Division Medical Building),
7.25s, 2014 2,000 2,182,960
-------------
$ 5,314,057
- ----- ---------------------------------------- ---------------- -------------
Total Municipal Bonds (Identified Cost, $130,699,378) $138,454,903
---------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.5%
- ----------------------------------------------------------------------- -------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------- ---------------- -------------
Georgia Hospital Financing Authority
Rev., due 2001 $ 100 $ 100,000
Harris County, TX, Industrial
Development Corp., due 2024 200 200,000
New York City, Municipal Water Finance
Authority, due 2023 100 100,000
Peninsula Ports Authority, VA (Shell Oil
Co.), due 2005 100 100,000
Perry County, MS, Pollution Control
Rev., due 2002 100 100,000
Uinta County, WY, Pollution Control Rev.
(Chevron), due 2020 100 100,000
- ----- ---------------------------------------- ---------------- -------------
Total Floating Rate Demand Notes, at Identified Cost $ 700,000
- ----------------------------------------------------------------------- -------------
Total Investments (Identified Cost, $131,399,378) $139,154,903
Other Assets, Less Liabilities - 2.2% 3,062,497
- ----------------------------------------------------------------------- -------------
Net Assets - 100.0% $142,217,400
- ----------------------------------------------------------------------- -------------
</TABLE>
[S]Indexed security.
++++Inverse floating rate security.
See notes to financial statements
19
<PAGE>
Financial Statements
Statements of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
North South West
Maryland Carolina Carolina Tennessee Virginia Virginia
September 30, 1995 Fund Fund Fund Fund Fund Fund
------------------------------------------- --------- ---------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $144,938,960 $427,952,495 $172,832,287 $117,375,646 $428,488,723 $131,399,378
Unrealized appreciation 7,952,574 24,155,254 9,547,157 6,530,545 23,168,688 7,755,525
------- -------- -------- ------- ------- ---------
Total, at value $152,891,534 $452,107,749 $182,379,444 $123,906,191 $451,657,411 $139,154,903
Cash 97,116 85,214 88,912 85,473 83,454 61,800
Receivable for Fund shares sold 5,932 361,135 54,310 37,315 94,546 123,248
Receivable for investments sold 274,600 8,000,746 1,473,135 1,259,507 5,625,000 471,650
Interest receivable 2,494,399 8,803,008 2,973,289 1,952,705 8,276,494 2,963,131
Other assets 2,091 6,074 2,363 1,657 2,396 1,778
------- -------- -------- ------- ------- ---------
Total assets $155,765,672 $469,363,926 $186,971,453 $127,242,848 $465,739,301 $142,776,510
------- -------- -------- ------- ------- ---------
Liabilities:
Distributions payable $ 302,133 $ 797,803 $ 351,151 $ 282,311 $ 990,172 $ 283,235
Payable for Fund shares reacquired 384,050 338,822 37,060 203,144 428,871 128,204
Payable for investments purchased -- 10,119,110 1,805,369 979,833 8,489,080 --
Payable for daily variation margin on
open futures contracts 165,000 -- 41,250 -- -- --
Payable to affiliates -
Management fee 4,650 13,721 5,531 3,775 13,653 4,269
Shareholder servicing agent fee 1,316 3,855 1,565 1,072 3,818 1,208
Distribution fee 92,389 272,462 110,144 73,955 276,665 84,122
Accrued expenses and other liabilities 64,327 112,484 77,126 71,304 111,597 58,072
------- -------- -------- ------- ------- ---------
Total liabilities $ 1,013,865 $ 11,658,257 $ 2,429,196 $ 1,615,394 $ 10,313,856 $ 559,110
------- -------- -------- ------- ------- ---------
Net assets $154,751,807 $457,705,669 $184,542,257 $125,627,454 $455,425,445 $142,217,400
======= ======== ======== ======= ======= =========
Net assets consist of:
Paid-in capital $152,394,706 $449,556,809 $178,668,195 $121,069,216 $446,222,985 $137,876,140
Unrealized appreciation on investments 7,895,530 24,155,254 9,532,896 6,530,545 23,168,688 7,755,525
Accumulated distributions in excess of
net realized gain on investments (4,875,834) (14,737,532) (3,217,002) (1,703,655) (12,323,692) (2,988,910)
Accumulated distributions in excess of
net investment income (662,595) (1,268,862) (441,832) (268,652) (1,642,536) (425,355)
------- -------- -------- ------- ------- ---------
Total $154,751,807 $457,705,669 $184,542,257 $125,627,454 $455,425,445 $142,217,400
======= ======== ======== ======= ======= =========
Shares of beneficial interest outstanding:
Class A 12,929,908 36,328,015 14,172,572 10,979,971 38,084,784 11,486,728
Class B 1,142,061 2,569,984 1,236,450 1,096,347 2,191,138 1,021,861
Class C -- 728,996 -- -- 225,727 --
------- -------- -------- ------- ------- ---------
Total shares of beneficial interest
outstanding 14,071,969 39,626,995 15,409,022 12,076,318 40,501,649 12,508,589
======= ======== ======== ======= ======= =========
Net assets:
Class A $142,199,005 $419,616,704 $169,736,117 $114,227,162 $428,260,125 $130,602,729
Class B 12,552,802 29,673,743 14,806,140 11,400,292 24,630,704 11,614,671
Class C -- 8,415,222 -- -- 2,534,616 --
------- -------- -------- ------- ------- ---------
Total net assets $154,751,807 $457,705,669 $184,542,257 $125,627,454 $455,425,445 $142,217,400
======= ======== ======== ======= ======= =========
Class A shares:
Net asset value and redemption price per
share (net assets / shares of
beneficial interest outstanding) $11.00 $11.55 $11.98 $10.40 $11.24 $11.37
======= ======== ======== ======= ======= =========
Offering price per share (100/95.25 of
net asset value per share) $11.55 $12.13 $12.58 $10.92 $11.80 $11.94
======= ======== ======== ======= ======= =========
Class B shares:
Net asset value and offering price per
share (net assets / shares of
beneficial interest outstanding) $10.99 $11.55 $11.97 $10.40 $11.24 $11.37
======= ======== ======== ======= ======= =========
Class C shares:
Net asset value, offering price, and
redemption price per share (net assets
/ shares of beneficial interest
outstanding) $-- $11.54 $-- $-- $11.23 $--
======= ======== ======== ======= ======= =========
</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 (Unaudited)
<TABLE>
<CAPTION>
North South
Maryland Carolina Carolina Tennessee Virginia West Virginia
Six Months Ended September 30, 1995 Fund Fund Fund Fund Fund Fund
- -------------------------------------- ----------- ------------ ------------ --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Interest income $ 4,977,463 $14,532,055 $ 5,875,240 $4,092,132 $14,854,154 $4,633,995
--------- ---------- ---------- ------- -------- -----------
Expenses -
Management fee $ 429,969 $ 1,275,855 $ 510,220 $ 349,541 $ 1,261,291 $ 388,358
Trustees' compensation 8,047 8,047 8,047 8,479 8,047 8,047
Shareholder servicing agent fees
(Class A) 108,178 320,297 128,632 87,199 324,411 97,640
Shareholder servicing agent fees
(Class B) 13,327 31,346 15,428 11,924 25,988 12,138
Shareholder servicing agent fees
(Class C) -- 6,291 -- -- 1,859 --
Distribution and service fees
(Class A) 252,414 747,361 300,141 203,465 756,958 227,827
Distribution and service fees
(Class B) 60,577 142,480 70,128 54,200 118,128 55,172
Distribution and service fees
(Class C) -- 41,939 -- -- 12,391 --
Custodian fee 22,337 105,366 43,078 20,935 112,043 29,346
Printing 14,069 36,499 15,334 12,128 35,013 12,773
Postage 6,402 16,067 6,391 4,591 22,388 7,906
Auditing fees 1,600 2,450 1,600 1,700 1,600 1,600
Legal fees 3,734 4,418 3,095 636 4,934 5,456
Miscellaneous 17,885 90,507 46,159 35,608 81,911 43,778
--------- ---------- ---------- ------- -------- -----------
Total expenses $ 938,539 $ 2,828,923 $ 1,148,253 $ 790,406 $ 2,766,962 $ 890,041
Fees paid indirectly (9,896) (19,410) (4,266) (3,020) (21,841) (6,803)
--------- ---------- ---------- ------- -------- -----------
Net expenses $ 928,643 $ 2,809,513 $ 1,143,987 $ 787,386 $ 2,745,121 $ 883,238
--------- ---------- ---------- ------- -------- -----------
Net investment income $ 4,048,820 $11,722,542 $ 4,731,253 $3,304,746 $12,109,033 $3,750,757
--------- ---------- ---------- ------- -------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified
cost) -
Investment transactions $ 179,875 $ 2,065,468 $ 575,710 $ 698,302 $ 1,721,060 $ 75,638
Futures contracts (2,367,398) (1,973,633) (1,258,242) (596,378) -- --
--------- ---------- ---------- ------- -------- -----------
Net realized gain (loss) on
investments $(2,187,523) $ 91,835 $ (682,532) $ 101,924 $ 1,721,060 $ 75,638
--------- ---------- ---------- ------- -------- -----------
Change in unrealized appreciation
(depreciation) -
Investments $ 3,247,138 $ 4,758,841 $ 2,559,838 $1,672,352 $ 4,843,002 $1,905,996
Futures contracts (185,576) 413,824 (87,710) (34,625) -- --
--------- ---------- ---------- ------- -------- -----------
Net unrealized gain on
investments $ 3,061,562 $ 5,172,665 $ 2,472,128 $1,637,727 $ 4,843,002 $1,905,996
--------- ---------- ---------- ------- -------- -----------
Net realized and unrealized
gain on investments $ 874,039 $ 5,264,500 $ 1,789,596 $1,739,651 $ 6,564,062 $1,981,634
--------- ---------- ---------- ------- -------- -----------
Increase in net assets from
operations $ 4,922,859 $16,987,042 $ 6,520,849 $5,044,397 $18,673,095 $5,732,391
========= ========== ========== ======= ======== ===========
</TABLE>
See notes to financial statements
21
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
North South West
Maryland Carolina Carolina Tennessee Virginia Virginia
Six Months Ended September 30, 1995 Fund Fund Fund Fund Fund Fund
- ---------------------------------------------- --------- ---------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,048,820 $ 11,722,542 $ 4,731,253 $ 3,304,746 $ 12,109,033 $ 3,750,757
Net realized gain (loss) on investments (2,187,523) 91,835 (682,532) 101,924 1,721,060 75,638
Net unrealized gain on investments 3,061,562 5,172,665 2,472,128 1,637,727 4,843,002 1,905,996
------- -------- -------- ------- -------- ---------
Increase in net assets from operations $ 4,922,859 $ 16,987,042 $ 6,520,849 $ 5,044,397 $ 18,673,095 $ 5,732,391
------- -------- -------- ------- -------- ---------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,775,668) $(10,912,242) $ (4,421,022) $ (3,058,851) $(11,508,080) $ (3,494,970)
From net investment income (Class B) (273,152) (623,352) (310,231) (245,895) (543,165) (255,787)
From net investment income (Class C) -- (186,948) -- -- (57,788) --
In excess of net investment income (Class A) (11,502) (6,562) (3,965) (37,348) (115,387) (3,688)
In excess of net investment income (Class B) (832) (375) (278) (3,002) (5,446) (270)
In excess of net investment income (Class C) -- (112) -- -- (579) --
------- -------- -------- ------- -------- ---------
Total distributions declared to
shareholders $ (4,061,154) $(11,729,591) $ (4,735,496) $ (3,345,096) $(12,230,445) $ (3,754,715)
------- -------- -------- ------- -------- ---------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 5,805,796 $ 17,170,238 $ 9,095,899 $ 5,017,884 $ 18,707,025 $ 6,310,512
Net asset value of shares issued to
shareholders in reinvestment of
distributions 2,226,645 6,841,527 2,613,387 1,604,024 6,157,572 2,052,125
Cost of shares reacquired (10,671,166) (35,104,309) (12,961,023) (10,272,330) (30,876,167) (5,785,000)
------- -------- -------- ------- -------- ---------
Increase (decrease) in net assets from
Fund share transactions $ (2,638,725) $(11,092,544) $ (1,251,737) $ (3,650,422) $ (6,011,570) $ 2,577,637
------- -------- -------- ------- -------- ---------
Total increase (decrease) in net assets $ (1,777,020) $ (5,835,093) $ 533,616 $ (1,951,121) $ 431,080 $ 4,555,313
Net assets:
At beginning of period 156,528,827 463,540,762 184,008,641 127,578,575 454,994,365 137,662,087
------- -------- -------- ------- -------- ---------
At end of period $154,751,807 $457,705,669 $184,542,257 $125,627,454 $455,425,445 $142,217,400
======= ======== ======== ======= ======== =========
Distributions in excess of net investment
income included in net assets at end of
period $ (662,595) $ (1,268,862) $ (441,832) $ (268,652) $ (1,642,536) $ (425,355)
======= ======== ======== ======= ======== =========
</TABLE>
See notes to financial statements
22
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
North South West
Maryland Carolina Carolina Tennessee Virginia Virginia
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 $ 8,772,044 $ 25,142,344 $ 9,684,650 $ 6,896,351 $ 25,267,942 $ 7,516,720
Net realized loss on investments (1,923,431) (13,223,193) (2,073,916) (1,682,291) (13,703,623) (2,860,553)
Net unrealized gain on investments 2,635,697 13,773,515 4,304,353 1,666,615 12,561,701 3,004,520
-------- -------- -------- ------- -------- ---------
Increase in net assets from
operations $ 9,484,310 $ 25,692,666 $ 11,915,087 $ 6,880,675 $ 24,126,020 $ 7,660,687
-------- -------- -------- ------- -------- ---------
Distributions declared to shareholders -
From net investment income (Class A) $ (8,333,922) $(23,735,358) $ (9,149,011) $ (6,505,625) $(24,093,973) $ (7,131,736)
From net investment income (Class B) (438,122) (973,317) (535,639) (369,736) (877,432) (360,160)
From net investment income (Class C) -- (383,161) -- -- (296,537) --
From net realized gain on investments
(Class A) -- (2,495,977) (887,817) (16,392) (1,715,754) --
From net realized gain on investments
(Class B) -- (103,677) (54,897) (887) (62,515) --
From net realized gain on investments
(Class C) -- (43,596) -- -- (5,815) --
In excess of net investment income
(Class A) (34,518) -- (4,241) -- (70,576) --
In excess of net investment income
(Class B) (1,815) -- (248) -- (2,570) --
In excess of net investment income
(Class C) -- -- -- -- (869) --
In excess of net realized gain on
investments (Class A) (551,221) (1,516,684) (433,734) (116,960) (328,083) (170,490)
In excess of net realized gain on
investments (Class B) (35,494) (62,999) (26,820) (6,328) (11,934) (8,251)
In excess of net realized gain on
investments (Class C) -- (26,491) -- -- (1,112) --
-------- -------- -------- ------- -------- ---------
Total distributions declared to
shareholders $ (9,395,092) $(29,341,260) $(11,092,407) $ (7,015,928) $(27,467,170) $ (7,670,637)
-------- -------- -------- ------- -------- ---------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 14,962,711 $ 54,114,282 $ 21,068,556 $ 18,228,934 $ 52,465,877 $ 14,859,231
Net asset value of shares issued to
shareholders in reinvestment of
distributions 5,220,027 17,432,937 6,185,730 3,344,948 13,994,379 4,136,605
Cost of shares reacquired (31,511,548) (87,206,798) (27,469,733) (16,270,748) (66,801,938) (17,506,211)
-------- -------- -------- ------- -------- ---------
Increase (decrease) in net assets
from Fund share transactions $(11,328,810) $(15,659,579) $ (215,447) $ 5,303,134 $ (341,682) $ 1,489,625
-------- -------- -------- ------- -------- ---------
Total increase (decrease) in net
assets $(11,239,592) $(19,308,173) $ 607,233 $ 5,167,881 $ (3,682,832) $ 1,479,675
Net assets:
At beginning of period 167,768,419 482,848,935 183,401,408 122,410,694 458,677,197 136,182,412
-------- -------- -------- ------- -------- ---------
At end of period $156,528,827 $463,540,762 $184,008,641 $127,578,575 $454,994,365 $137,662,087
======== ======== ======== ======= ======== =========
Distributions in excess of net
investment income included in net
assets at end of period $ (650,261) $ (1,261,813) $ (437,589) $ (228,302) $ (1,521,124) $ (421,397)
======== ======== ======== ======= ======== =========
</TABLE>
See notes to financial statements
23
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
Maryland Fund
- ---------------------------------------- ------------------------ ----------
Six Months Year
Ended Ended Two Months
September March Ended
30, 31, March 31,
- ---------------------------------------- ------------ -------- ----------
1995 1995 1994
- ---------------------------------------- ------------ -------- ----------
(Unaudited)
- ---------------------------------------- ------------ -------- ----------
Class A
- ---------------------------------------- ------------ -------- ----------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.94 $ 10.89 $ 11.81
Income from investment operations# -
Net investment income $ 0.29 $ 0.59 $ 0.10
Net realized and unrealized gain
(loss) on investments 0.06 0.09 (0.92)
---------- ------ --------
Total from investment operations $ 0.35 $ 0.68 $ (0.82)
---------- ------ --------
Less distributions declared to shareholders -
From net investment income### $ (0.29) $ (0.59) $ (0.06)
From net realized gain on
investments -- -- --
In excess of net investment income -- -- (0.04)
In excess of net realized gain on
investments -- (0.04) --
---------- ------ --------
Total distributions declared to
shareholders $ (0.29) $ (0.63) $ (0.10)
---------- ------ --------
Net asset value - end of period $ 11.00 $ 10.94 $ 10.89
========== ====== ========
Total return++ 3.24%+++ 6.51% (6.96)%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.15%+ 1.21% 1.23%+
Net investment income 5.25%+ 5.46% 4.97%+
Portfolio turnover 8% 31% 1%
Net assets at end of period (000
omitted) $142,199 $145,361 $161,290
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------- ---------- ------- ------- ------- ------ --------
Year Ended
January
31,
- ---------------------------------------- ---------- ------- ------- ------- ------ --------
1994 1993 1992 1991 1990 1989
- ---------------------------------------- ---------- ------- ------- ------- ------ --------
- ---------------------------------------- ---------- ------- ------- ------- ------ --------
- ---------------------------------------- ---------- ------- ------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.40 $ 11.20 $ 10.97 $ 10.79 $ 10.76 $ 10.62
Income from investment operations# -
Net investment income $ 0.62 $ 0.67 $ 0.70 $ 0.70 $ 0.69 $ 0.69
Net realized and unrealized gain
(loss) on investments 0.53 0.24 0.31 0.19 0.04 0.14
-------- ----- ----- ----- ---- ------
Total from investment operations $ 1.15 $ 0.91 $ 1.01 $ 0.89 $ 0.73 $ 0.83
-------- ----- ----- ----- ---- ------
Less distributions declared to shareholders -
From net investment income### $ (0.61) $ (0.69) $ (0.76) $ (0.70) $ (0.69) $ (0.69)
From net realized gain on
investments (0.07) (0.02) (0.02) (0.01) (0.01) --
In excess of net investment income (0.04) -- -- -- -- --
In excess of net realized gain on
investments (0.02) -- -- -- -- --
-------- ----- ----- ----- ---- ------
Total distributions declared to
shareholders $ (0.74) $ (0.71) $ (0.78) $ (0.71) $ (0.70) $ (0.69)
-------- ----- ----- ----- ---- ------
Net asset value - end of period $ 11.81 $ 11.40 $ 11.20 $ 10.97 $ 10.79 $ 10.76
======== ===== ===== ===== ==== ======
Total return++ 10.27% 8.34% 9.55% 8.51% 6.90% 8.15%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.25% 1.14% 1.16% 1.17% 1.18% 1.14%
Net investment income 5.42% 6.13% 6.32% 6.45% 6.33% 6.52%
Portfolio turnover 25% 5% 9% 41% 58% 34%
Net assets at end of period (000
omitted) $173,419 $145,794 $119,120 $101,742 $93,175 $84,380
</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.
### For the six months ended September 30, 1995 and the year ended March 31,
1995, the per share distribution in excess of net investment income was
$0.001 and $0.003, respectively.
++ 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
24
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
Maryland Fund
- --------------------------------------------------- -------------------- --------
Year Ended
January
31,
- --------------------------------------------------- ---------- ------ --------
1988 1987 1986
- --------------------------------------------------- ---------- ------ --------
- --------------------------------------------------- ---------- ------ --------
Class A
- --------------------------------------------------- ---------- ------ --------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.20 $ 10.44 $ 9.89
Income from investment operations# -
Net investment income $ 0.68 $ 0.71 $ 0.81
Net realized and unrealized gain (loss) on
investments (0.57) 0.78 0.62
-------- ---- ------
Total from investment operations $ 0.11 $ 1.49 $ 1.43
-------- ---- ------
Less distributions declared to shareholders -
From net investment income### $ (0.67) $ (0.73) $ (0.82)
From net realized gain on investments (0.01) -- (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 $ (0.69) $ (0.73) $ (0.88)
-------- ---- ------
Net asset value - end of period $ 10.62 $ 11.20 $ 10.44
======== ==== ======
Total return++ 1.25% 14.86% 15.47%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.10% 1.10% 0.98%
Net investment income 6.47% 6.60% 8.22%
Portfolio turnover
13% 11% 26%
Net assets at end of period (000 omitted) $79,906 $81,712 $33,818
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------- ------------ -------- -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- --------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994**
- --------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- --------------------------------------------------- ------------ -------- -------- ------------
Class B
- --------------------------------------------------- ------------ -------- -------- ------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.93 $ 10.88 $11.80 $11.88
Income from investment operations# -
Net investment income $ 0.25 $ 0.51 $ 0.08 $ 0.22
Net realized and unrealized gain (loss) on
investments 0.06 0.09 (0.91) (0.01)
---------- ------ ------ ----------
Total from investment operations $ 0.31 $ 0.60 $(0.83) $ 0.21
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income### $ (0.25) $ (0.51) $(0.08) $(0.21)
From net realized gain on investments -- -- -- (0.05)
In excess of net investment income -- -- (0.01) (0.01)
In excess of net realized gain on investments -- (0.04) -- (0.02)
From paid-in capital#### -- -- -- --
---------- ------ ------ ----------
Total distributions declared to shareholders $ (0.25) $ (0.55) $(0.09) $(0.29)
---------- ------ ------ ----------
Net asset value - end of period $ 10.99 $ 10.93 $10.88 $11.80
========== ====== ====== ==========
Total return++ 2.86%+++ 5.75% (7.08)%+++ 4.45%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.87%+ 1.93% 1.95%+ 1.81%+
Net investment income 4.52%+ 4.73% 4.19%+ 4.23%+
Portfolio turnover 8% 31% 1% 25%
Net assets at end of period (000 omitted) $12,553 $11,168 $6,478 $5,345
</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.
### For the six months ended September 30, 1995 and the year ended March 31,
1995, the per share distribution in excess of net investment income was
$0.001 and $0.003, respectively.
#### For the year ended January 31, 1986, the per share distribution from
paid-in capital was $0.0005.
++ 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 period from the commencement of offering of Class B shares,
September 7, 1993 to January 31, 1994.
See notes to financial statements
25
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
North Carolina Fund
- --------------------------------------------------- ------------------------ ----------
Six Months Year
Ended Ended Two Months
September March Ended
30, 31, March 31,
- --------------------------------------------------- ------------ -------- ----------
1995 1995 1994
- --------------------------------------------------- ------------ -------- ----------
(Unaudited)
- --------------------------------------------------- ------------ -------- ----------
Class A
- --------------------------------------------------- ------------ -------- ----------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.42 $ 11.48 $ 12.37
---------- ------ --------
Income from investment operations# -
Net investment income $ 0.30 $ 0.61 $ 0.10
Net realized and unrealized gain (loss) on
investments 0.13 0.03 (0.89)
---------- ------ --------
Total from investment operations $ 0.43 $ 0.64 $ (0.79)
---------- ------ --------
Less distributions declared to shareholders -
From net investment income#### $ (0.30) $ (0.60) $ (0.07)
From net realized gain on investments -- (0.06) --
In excess of net investment income -- -- (0.03)
In excess of net realized gain on investments -- (0.04) --
From paid-in capital### -- -- --
---------- ------ --------
Total distributions declared to shareholders $ (0.30) $ (0.70) $ (0.10)
---------- ------ --------
Net asset value - end of period $ 11.55 $ 11.42 $ 11.48
========== ====== ========
Total return++ 3.77%+++ 5.86% (6.39)%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.17%+ 1.16% 1.16%+
Net investment income 5.12%+ 5.38% 4.96%+
Portfolio turnover 12% 58% 2%
Net assets at end of period (000 omitted) $419,617 $429,131 $460,321
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------- ---------- ------- ------- ------- ------- --------
Year Ended
January
31,
- --------------------------------------------------- ---------- ------- ------- ------- ------- --------
1994 1993 1992 1991 1990 1989
- --------------------------------------------------- ---------- ------- ------- ------- ------- --------
- --------------------------------------------------- ---------- ------- ------- ------- ------- --------
- --------------------------------------------------- ---------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.80 $ 11.45 $ 11.30 $ 11.18 $ 11.15 $ 11.13
-------- ----- ----- ----- ----- ------
Income from investment operations# -
Net investment income $ 0.64 $ 0.65 $ 0.70 $ 0.72 $ 0.73 $ 0.74
Net realized and unrealized gain (loss) on
investments 0.58 0.37 0.26 0.17 0.03 0.02
-------- ----- ----- ----- ----- ------
Total from investment operations $ 1.22 $ 1.02 $ 0.96 $ 0.89 $ 0.76 $ 0.76
-------- ----- ----- ----- ----- ------
Less distributions declared to shareholders -
From net investment income#### $ (0.61) $ (0.67) $ (0.76) $ (0.72) $ (0.73) $ (0.74)
From net realized gain on investments (0.01) -- (0.01) (0.05) -- --
In excess of net investment income (0.03) -- -- -- -- --
In excess of net realized gain on investments -- -- -- -- -- --
From paid-in capital### -- -- (0.04) -- -- --
-------- ----- ----- ----- ----- ------
Total distributions declared to shareholders $ (0.65) $ (0.67) $ (0.81) $ (0.77) $ (0.73) $ (0.74)
-------- ----- ----- ----- ----- ------
Net asset value - end of period $ 12.37 $ 11.80 $ 11.45 $ 11.30 $ 11.18 $ 11.15
======== ===== ===== ===== ===== ======
Total return++ 10.59% 9.23% 8.82% 8.34% 6.97% 7.12%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.19% 1.07% 1.09% 1.09% 1.12% 1.11%
Net investment income 5.21% 5.80% 6.17% 6.47% 6.48% 6.70%
Portfolio turnover 12% 2% 39% 44% 61% 25%
Net assets at end of period (000 omitted) $495,158 $398,352 $312,466 $226,806 $175,101 $129,287
</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.
### For the year ended January 31, 1991, the per share distribution from
paid-in capital was $0.0005.
#### For the six months ended September 30, 1995, the per share distribution
in excess of net investment income was $0.002.
++ 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
26
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
North Carolina Fund
- --------------------------------------------------- --------------------- --------
Year Ended
January
31,
- --------------------------------------------------- ---------- ------- --------
1988 1987 1986
- --------------------------------------------------- ---------- ------- --------
- --------------------------------------------------- ---------- ------- --------
Class A
- --------------------------------------------------- ---------- ------- --------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.82 $ 11.09 $ 10.01
-------- ----- ------
Income from investment operations# -
Net investment income $ 0.73 $ 0.75 $ 0.82
Net realized and unrealized gain (loss) on
investments (0.69) 0.90 1.12
-------- ----- ------
Total from investment operations $ 0.04 $ 1.65 $ 1.94
-------- ----- ------
Less distributions declared to shareholders -
From net investment income### $ (0.73) $ (0.76) $ (0.82)
From net realized gain on investments -- (0.16) (0.04)
In excess of net investment income -- -- --
In excess of net realized gain on investments -- -- --
-------- ----- ------
Total distributions declared to shareholders $ (0.73) $ (0.92) $ (0.86)
-------- ----- ------
Net asset value - end of period $ 11.13 $ 11.82 $ 11.09
======== ===== ======
Total return++ 0.65% 15.76% 20.63%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.08% 1.07% 0.90%
Net investment income 6.71% 6.63% 8.02%
Portfolio turnover 10% 10% 78%
Net assets at end of period (000 omitted) $110,462 $105,668 $53,561
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------- ------------ -------- -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- --------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994**
- --------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- --------------------------------------------------- ------------ -------- -------- ------------
Class B
- --------------------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.42 $ 11.47 $ 12.36 $ 12.36
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.25 $ 0.52 $ 0.08 $ 0.22
Net realized and unrealized gain (loss) on
investments 0.13 0.05 (0.89) 0.01
---------- ------ ------ ----------
Total from investment operations $ 0.38 $ 0.57 $ (0.81) $ 0.23
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income### $ (0.25) $ (0.52) $ (0.08) $ (0.21)
From net realized gain on investments -- (0.06) -- (0.01)
In excess of net investment income -- -- -- (0.01)
In excess of net realized gain on investments -- (0.04) -- --
---------- ------ ------ ----------
Total distributions declared to shareholders $ (0.25) $ (0.62) $ (0.08) $ (0.23)
---------- ------ ------ ----------
Net asset value - end of period $ 11.55 $ 11.42 $ 11.47 $ 12.36
========== ====== ====== ==========
Total return++ 3.39%+++ 5.20% (6.51)%+++ 4.58%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.89%+ 1.88% 1.88%+ 1.84%+
Net investment income 4.39%+ 4.64% 4.18%+ 4.03%+
Portfolio turnover 12% 58% 2% 12%
Net assets at end of period (000 omitted) $29,674 $26,260 $15,866 $13,379
</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 six months ended September 30, 1995 and the two months ended
March 31, 1994, the per share distribution in excess of net investment
income was $0.0002 and $0.004, respectively.
++ 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
27
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
North Carolina Fund
- ----------------------------------------------------- ------------------------ -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- ----------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994***
- ----------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- ----------------------------------------------------- ------------ -------- -------- ------------
Class C
- ----------------------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $11.41 $11.47 $12.36 $12.24
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.26 $ 0.53 $ 0.10 $ 0.02
Net realized and unrealized gain (loss) on
investments 0.13 0.04 (0.90) 0.12
---------- ------ ------ ----------
Total from investment operations $ 0.39 $ 0.57 $(0.80) $ 0.14
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income### $(0.26) $(0.53) $(0.09) $(0.02)
From net realized gain on investments -- (0.06) -- --
In excess of net realized gain on investments -- (0.04) -- --
---------- ------ ------ ----------
Total distributions declared to shareholders $ (0.26) $(0.63) $(0.09) $(0.02)
---------- ------ ------ ----------
Net asset value - end of period $11.54 $11.41 $11.47 $12.36
========== ====== ====== ==========
Total return 3.43%+++ 5.18% (6.50)%+++ 16.50%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.82%+ 1.81% 1.82%+ 1.44%+
Net investment income 4.47%+ 4.71% 4.25%+ 2.33%+
Portfolio turnover 12% 58% 2% 12%
Net assets at end of period (000 omitted) $8,415 $8,149 $6,661 $4,584
</TABLE>
*** For the period from the commencement of offering of Class C shares,
January 3, 1994 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 six months ended September 30, 1995, the two months ended March
31, 1994 and the year ended January 31, 1994, the per share distribution
in excess of net investment income was $0.0002, $0.002 and $0.003,
respectively.
See notes to financial statements
28
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
South Carolina Fund
- --------------------------------------------------- ------------------------ -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- --------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994
- --------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- --------------------------------------------------- ------------ -------- -------- ------------
Class A
- --------------------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.86 $ 11.79 $ 12.74 $ 12.02
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.31 $ 0.63 $ 0.08 $ 0.63
Net realized and unrealized gain (loss) on
investments 0.12 0.15 (0.92) 0.74
---------- ------ ------ ----------
Total from investment operations $ 0.43 $ 0.78 $ (0.84) $ 1.37
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income### $ (0.31) $ (0.62) $ (0.08) $ (0.61)
From net realized gain on investments -- (0.06) -- (0.01)
In excess of net investment income -- -- (0.03) (0.03)
In excess of net realized gain on investments -- (0.03) -- --
---------- ------ ------ ----------
Total distributions declared to shareholders $ (0.31) $ (0.71) $ (0.11) $ (0.65)
---------- ------ ------ ----------
Net asset value - end of period $ 11.98 $ 11.86 $ 11.79 $ 12.74
========== ====== ====== ==========
Total return++ 3.66%+++ 6.93% (6.65)%+++ 11.69%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.19%+ 1.19% 1.23%+ 1.22%
Net investment income 5.17%+ 5.37% 5.09%+ 5.06%
Portfolio turnover 10% 30% 4% 10%
Net assets at end of period (000 omitted) $169,736 $171,045 $173,316 $187,307
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------- ------- ------- ------ ------ --------
Year Ended January 31,
- --------------------------------------------------- ------- ------- ------ ------ --------
1993 1992 1991 1990 1989
- --------------------------------------------------- ------- ------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.74 $ 11.45 $ 11.30 $ 11.24 $ 11.14
------- ------- ------ ------ --------
Income from investment operations# -
Net investment income $ 0.67 $ 0.70 $ 0.71 $ 0.72 $ 0.76
Net realized and unrealized gain (loss) on
investments 0.34 0.40 0.21 0.06 0.11
----- ----- ---- ---- ------
Total from investment operations $ 1.01 $ 1.10 $ 0.92 $ 0.78 $ 0.87
----- ----- ---- ---- ------
Less distributions declared to shareholders -
From net investment income### $ (0.69) $ (0.76) $ (0.71) $ (0.72) $ (0.77)
From net realized gain on investments (0.04) (0.05) (0.06) -- --
In excess of net investment income -- -- -- -- --
In excess of net realized gain on investments -- -- -- -- --
----- ----- ---- ---- ------
Total distributions declared to shareholders $ (0.73) $ (0.81) $ (0.77) $ (0.72) $ (0.77)
----- ----- ---- ---- ------
Net asset value - end of period $ 12.02 $ 11.74 $ 11.45 $ 11.30 $ 11.24
----- ----- ---- ---- ------
Total return++ 8.89% 9.95% 8.46% 7.13% 8.18%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.12% 1.15% 1.18% 1.21% 0.97%
Net investment income 5.74% 6.07% 6.30% 6.35% 6.90%
Portfolio turnover 11% 22% 47% 54% 27%
Net assets at end of period (000 omitted) $144,539 $101,434 $75,922 $57,675 $45,391
</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.
### For the six months ended September 30, 1995, the per share distribution
in excess of net investment income was $0.0003.
++ 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
29
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
South Carolina Fund
- --------------------------------------------------- -------------------- --------
Year Ended
January
31,
- --------------------------------------------------- ---------- ------ --------
1988 1987 1986
- --------------------------------------------------- ---------- ------ --------
- --------------------------------------------------- ---------- ------ --------
Class A
- --------------------------------------------------- ---------- ------ --------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.54 $ 10.89 $ 9.95
-------- ---- ------
Income from investment operations# -
Net investment income $ 0.77 $ 0.77 $ 0.84
Net realized and unrealized gain (loss) on
investments (0.36) 0.69 0.95
-------- ---- ------
Total from investment operations $ 0.41 $ 1.46 $ 1.79
-------- ---- ------
Less distributions declared to shareholders -
From net investment income### $ (0.77) $ (0.78) $ (0.84)
From net realized gain on investments -- (0.03) (0.01)
In excess of net investment income -- -- --
In excess of net realized gain on investments -- -- --
From paid-in capital#### (0.04) -- --
-------- ---- ------
Total distributions declared to shareholders $ (0.81) $ (0.81) $ (0.85)
-------- ---- ------
Net asset value - end of period $ 11.14 $ 11.54 $ 10.89
======== ==== ======
Total return++ 3.92% 14.05% 19.13%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.81% 0.99% 1.01%
Net investment income 7.07% 7.00% 8.26%
Portfolio turnover 12% 13% 28%
Net assets at end of period (000 omitted) $34,025 $27,978 $10,936
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------- ------------ -------- -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- --------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994**
- --------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- --------------------------------------------------- ------------ -------- -------- ------------
Class B
- --------------------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.86 $ 11.78 $ 12.73 $12.67
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.27 $ 0.54 $ 0.08 $ 0.21
Net realized and unrealized gain (loss) on
investments 0.11 0.17 (0.94) 0.06
---------- ------ ------ ----------
Total from investment operations $ 0.38 $ 0.71 $ (0.86) $ 0.27
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income### $ (0.27) $ (0.54) $ (0.08) $(0.20)
From net realized gain on investments -- (0.06) -- --
In excess of net investment income -- -- (0.01) (0.01)
In excess of net realized gain on investments -- (0.03) -- --
From paid-in capital#### -- -- -- --
---------- ------ ------ ----------
Total distributions declared to shareholders $ (0.27) $ (0.63) $ (0.09) $(0.21)
---------- ------ ------ ----------
Net asset value - end of period $ 11.97 $ 11.86 $ 11.78 $12.73
========== ====== ====== ==========
Total return++ 3.20%+++ 6.26% (6.77)%+++ 5.47%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.91%+ 1.90% 1.96%+ 1.90%+
Net investment income 4.44%+ 4.63% 4.29%+ 3.86%+
Portfolio turnover 10% 30% 4% 10%
Net assets at end of period (000 omitted) $14,806 $12,964 $10,085 $8,217
</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 six months ended September 30, 1995 and the year ended March 31,
1995, the per share distribution in excess of net investment income was
$0.0002 and $0.00436, respectively.
#### For the year ended January 31, 1986, the per share distribution from
paid-in capital was $0.00042.
++ 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
30
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
Tennessee Fund
- ---------------------------------------- -------------------------------- -------------- ----------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
- ---------------------------------------- -------------- -------------- -------------- ----------------
1995 1995 1994 1994
- ---------------------------------------- -------------- -------------- -------------- ----------------
(Unaudited)
- ---------------------------------------- -------------- -------------- -------------- ----------------
Class A
- ---------------------------------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.27 $ 10.26 $ 10.94 $ 10.37
------------ ------------ ------------ --------------
Income from investment operations# -
Net investment income [S] $ 0.27 $ 0.56 $ 0.09 $ 0.57
Net realized and unrealized gain
(loss) on investments 0.13 0.02 (0.68) 0.57
------------ ------------ ------------ --------------
Total from investment operations $ 0.40 $ 0.58 $ (0.59) $ 1.14
------------ ------------ ------------ --------------
Less distributions declared to shareholders -
From net investment income##### $ (0.27) $ (0.56) $ (0.07) $ (0.54)
From net realized gain on
investments### -- -- -- --
In excess of net investment income -- -- (0.02) (0.03)
In excess of net realized gain on
investments -- (0.01) -- --
From paid-in capital#### -- -- -- --
------------ ------------ ------------ --------------
Total distributions declared to
shareholders $ (0.27) $ (0.57) $ (0.09) $ (0.57)
------------ ------------ ------------ --------------
Net asset value - end of period $ 10.40 $ 10.27 $ 10.26 $ 10.94
============ ============ ============ ==============
Total return++ 4.01%+++ 5.86% (5.39)%+++ 11.20%
Ratios (to average net assets)/Supplemental data (section):
Expenses## 1.19%+ 1.22% 1.21%+ 1.29%
Net investment income 5.28%+ 5.52% 5.31%+ 5.25%
Portfolio turnover 12% 27% 4% 12%
Net assets at end of period (000
omitted) $114,227 $117,572 $117,117 $123,050
</TABLE>
<TABLE>
<CAPTION>
Year Ended January 31,
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
1993 1992 1991 1990 1989*
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.10 $ 9.90 $ 9.80 $ 9.68 $ 9.53
---------- ---------- ---------- ---------- ----------
Income from investment operations# -
Net investment income (section) $ 0.57 $ 0.61 $ 0.62 $ 0.67 $ 0.22
Net realized and unrealized gain
(loss) on investments 0.31 0.30 0.13 0.11 0.10
---------- ---------- ---------- ---------- ----------
Total from investment operations $ 0.88 $ 0.91 $ 0.75 $ 0.78 $ 0.32
---------- ---------- ---------- ---------- ----------
Less distributions declared to shareholders -
From net investment income##### $ (0.57) $ (0.66) $ (0.63) $ (0.66) $ (0.17)
From net realized gain on
investments### (0.01) (0.05) (0.02) -- --
In excess of net investment income (0.03) -- -- -- --
In excess of net realized gain on
investments -- -- -- -- --
From paid-in capital#### -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions declared to
shareholders $ (0.61) $ (0.71) $ (0.65) $ (0.66) $ (0.17)
---------- ---------- ---------- ---------- ----------
Net asset value - end of period $ 10.37 $ 10.10 $ 9.90 $ 9.80 $ 9.68
========== ========== ========== ========== ==========
Total return++ 9.03% 9.50% 7.96% 8.30% 3.43%+++
Ratios (to average net assets)/Supplemental data (section):
Expenses## 1.14% 1.15% 1.03% 0.53% 0.40%+
Net investment income 5.89% 6.11% 6.37% 6.70% 5.98%+
Portfolio turnover 9% 42% 58% 78% 5%
Net assets at end of period (000
omitted) $99,443 $87,898 $72,108 $56,048 $15,832
* For the period from the commencement of investment operations, August 12, 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.
### For the year ended March 31, 1995, the per share distribution from net realized gain on investments was $0.0014.
#### For the year ended January 31, 1991, the per share distribution from paid-in capital was $0.0013.
##### For the six months ended September 30, 1995, the per share distribution in excess of net investment income was $0.003.
++ 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.
[S] The investment adviser did not impose all or a portion of its advisory, distribution or expense reimbursement fees 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>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income -- -- -- -- -- -- $0.61 $0.60 $0.20
Ratios (to average net assets):
Expenses -- -- -- -- -- -- 1.17% 1.24% 0.95%+
Net investment income -- -- -- -- -- -- 6.23% 5.99% 5.43%+
</TABLE>
See notes to financial statements
31
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
Tennessee Fund
- ----------------------------------------------------- ------------------------ -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- ----------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994**
- ----------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- ----------------------------------------------------- ------------ -------- -------- ------------
Class B
- ----------------------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.26 $ 10.26 $10.95 $10.87
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.24 $ 0.48 $ 0.08 $ 0.19
Net realized and unrealized gain (loss) on
investments 0.14 0.01 (0.69) 0.08
---------- ------ ------ ----------
Total from investment operations $ 0.38 $ 0.49 $(0.61) $ 0.27
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income#### $ (0.24) $ (0.48) $(0.08) $(0.19)
From net realized gain on investments### -- -- -- --
In excess of net realized gain on investments -- (0.01) -- --
---------- ------ ------ ----------
Total distributions declared to shareholders $ (0.24) $ (0.49) $(0.08) $(0.19)
---------- ------ ------ ----------
Net asset value - end of period $ 10.40 $ 10.26 $10.26 $10.95
========== ====== ====== ==========
Total return 3.73%+++ 5.00% (5.59)%+++ 2.48%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.90%+ 1.94% 1.93%+ 1.93%+
Net investment income 4.53%+ 4.80% 4.49%+ 4.20%+
Portfolio turnover 12% 27% 4% 12%
Net assets at end of period (000 omitted) $11,400 $10,006 $5,294 $3,818
</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, 1995, the per share distribution from net
realized gain on investments was $0.0014.
#### For the six months ended September 30, 1995, the per share distribution
in excess of net investment income was $0.003.
See notes to financial statements
32
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
Virginia Fund
- ---------------------------------------- ------------------------ ----------
Six Months Year
Ended Ended Two Months
September March Ended
30, 31, March 31,
- ---------------------------------------- ------------ -------- ----------
1995 1995 1994
- ---------------------------------------- ------------ -------- ----------
(Unaudited)
- ---------------------------------------- ------------ -------- ----------
Class A
- ---------------------------------------- ------------ -------- ----------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $11.09 $11.15 $12.07
---------- ------ --------
Income from investment operations# -
Net investment income $ 0.30 $ 0.56 $ 0.10
Net realized and unrealized gain
(loss) on investments 0.15 0.04 (0.92)
---------- ------ --------
Total from investment operations $ 0.45 $ 0.60 $(0.82)
---------- ------ --------
Less distributions declared to shareholders -
From net investment income### $ (0.30) $(0.61) $(0.06)
From net realized gain on
investments#### -- (0.04) --
In excess of net investment income -- -- (0.04)
In excess of net realized gain on
investments -- (0.01) --
---------- ------ --------
Total distributions declared to
shareholders $ (0.30) $(0.66) $(0.10)
---------- ------ --------
Net asset value - end of period $ 11.24 $11.09 $11.15
========== ====== ========
Total return++ 4.12%+++ 5.67% (6.80)%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.17%+ 1.16% 1.17%+
Net investment income 5.34%+ 4.91% 5.33%+
Portfolio turnover 17% 27% 5%
Net assets at end of period (000
omitted) $428,260 $430,688 $443,580
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------- ---------- ------- ------- ------- ------- --------
Year Ended January 31,
- ---------------------------------------- ---------- ------- ------- ------- ------- --------
1994 1993 1992 1991 1990 1989
- ---------------------------------------- ---------- ------- ------- ------- ------- --------
- ---------------------------------------- ---------- ------- ------- ------- ------- --------
- ---------------------------------------- ---------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $ 11.72 $ 11.44 $ 11.16 $ 10.97 $ 10.91 $ 10.75
-------- ----- ----- ----- ----- ------
Income from investment operations# -
Net investment income $ 0.65 $ 0.68 $ 0.71 $ 0.73 $ 0.73 $ 0.74
Net realized and unrealized gain
(loss) on investments 0.56 0.30 0.34 0.19 0.06 0.16
-------- ----- ----- ----- ----- ------
Total from investment operations $ 1.21 $ 0.98 $ 1.05 $ 0.92 $ 0.79 $ 0.90
-------- ----- ----- ----- ----- ------
Less distributions declared to shareholders -
From net investment income### $ (0.62) $ (0.70) $ (0.77) $ (0.73) $ (0.73) $ (0.74)
From net realized gain on
investments#### (0.20) -- -- -- -- --
In excess of net investment income (0.04) -- -- -- -- --
In excess of net realized gain on
investments -- -- -- -- -- --
-------- ----- ----- ----- ----- ------
Total distributions declared to
shareholders $ (0.86) $ (0.70) $ (0.77) $ (0.73) $ (0.73) $ (0.74)
-------- ----- ----- ----- ----- ------
Net asset value - end of period $ 12.07 $ 11.72 $ 11.44 $ 11.16 $ 10.97 $ 10.91
======== ===== ===== ===== ===== ======
Total return++ 10.67% 8.88% 9.76% 8.74% 7.46% 8.76%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.18% 1.08% 1.08% 1.11% 1.12% 1.09%
Net investment income 5.37% 6.02% 6.32% 6.64% 6.67% 6.91%
Portfolio turnover 22% 20% 13% 38% 41% 38%
Net assets at end of period (000
omitted) $479,333 $399,696 $328,664 $275,202 $240,553 $207,680
</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.
### For the six months ended September 30, 1995 and the year ended March 31,
1995, the per share distribution in excess of net investment income was
$0.003.
#### For the year ended January 31, 1993, the per share distribution from net
realized gain on investments was $0.00348.
++ 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
33
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
Virginia Fund
- ---------------------------------------- --------------------- --------
Year Ended
January
31,
- ---------------------------------------- ---------- ------- --------
1988 1987 1986
- ---------------------------------------- ---------- ------- --------
- ---------------------------------------- ---------- ------- --------
Class A
- ---------------------------------------- ---------- ------- --------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.38 $ 10.78 $ 10.01
-------- ----- ------
Income from investment operations# -
Net investment income $ 0.72 $ 0.74 $ 0.81
Net realized and unrealized gain
(loss) on investments (0.57) 0.61 0.77
-------- ----- ------
Total from investment operations $ 0.15 $ 1.35 $ 1.58
-------- ----- ------
Less distributions declared to shareholders -
From net investment income### $ (0.71) $ (0.75) $ (0.80)
From net realized gain on
investments (0.05) -- (0.01)
In excess of net investment income -- -- --
In excess of net realized gain on
investments -- -- --
From paid-in capital#### (0.02) -- --
-------- ----- ------
Total distributions declared to
shareholders $ (0.78) $ (0.75) $ (0.81)
-------- ----- ------
Net asset value - end of period $ 10.75 $ 11.38 $ 10.78
======== ===== ======
Total return++ 1.61% 13.12% 16.82%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.04% 1.02% 0.83%
Net investment income 6.75% 6.73% 8.89%
Portfolio turnover 11% 20% 23%
Net assets at end of period (000
omitted) $192,104 $181,937 $85,706
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------- ------------ -------- -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- ---------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994**
- ---------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- ---------------------------------------- ------------ -------- -------- ------------
Class B
- ---------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.08 $ 11.14 $ 12.06 $ 12.14
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.26 $ 0.53 $ 0.09 $ 0.22
Net realized and unrealized gain
(loss) on investments 0.16 (0.01) (0.92) 0.01
---------- ------ ------ ----------
Total from investment operations $ 0.42 $ 0.52 $ (0.83) $ 0.23
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income### $ (0.26) $ (0.53) $ (0.09) $ (0.21)
From net realized gain on
investments -- (0.04) -- (0.09)
In excess of net investment income -- -- -- (0.01)
In excess of net realized gain on
investments -- (0.01) -- --
From paid-in capital#### -- -- -- --
---------- ------ ------ ----------
Total distributions declared to
shareholders $ (0.26) $ (0.58) $ (0.09) $ (0.31)
---------- ------ ------ ----------
Net asset value - end of period $ 11.24 $ 11.08 $ 11.14 $ 12.06
========== ====== ====== ==========
Total return++ 3.84%+++ 4.91% (6.92)%+++ 4.93%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.89%+ 1.88% 1.88%+ 1.82%+
Net investment income 4.60%+ 4.84% 4.52%+ 4.25%+
Portfolio turnover 17% 27% 5% 22%
Net assets at end of period (000
omitted) $24,631 $22,007 $13,337 $10,877
</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, 1995 and the two months ended March 31,
1994, the per share distribution in excess of net investment income was
$0.002. For the six months ended September 30, 1995 the per share
distribution in excess of net investment income was $0.003.
#### For the years ended January 31, 1987 and 1986, the per share
distributions from paid-in capital were $0.0005 and $0.0015,
respectively.
++ 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
34
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
Virginia Fund
- ----------------------------------------------------- ------------------------ -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- ----------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994**
- ----------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- ----------------------------------------------------- ------------ -------- -------- ------------
Class C
- ----------------------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $11.07 $11.14 $12.06 $11.94
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.26 $ 0.56 $ 0.08 $ 0.02
Net realized and unrealized gain (loss) on
investments 0.17 (0.04) (0.91) 0.12
---------- ------ ------ ----------
Total from investment operations $ 0.43 $ 0.52 $(0.83) $ 0.14
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income### $ (0.27) $(0.54) $(0.09) $(0.02)
From net realized gain on investments -- (0.04) -- --
In excess of net realized gain on investments -- (0.01) -- --
---------- ------ ------ ----------
Total distributions declared to shareholders $ (0.27) $(0.59) $(0.09) $(0.02)
---------- ------ ------ ----------
Net asset value - end of period $11.23 $11.07 $11.14 $12.06
========== ====== ====== ==========
Total return 3.88%+++ 4.85% (6.91)%+++ 17.05%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.82%+ 1.80% 1.82%+ 1.18%+
Net investment income 4.66%+ 4.90% 4.48%+ 1.79%+
Portfolio turnover 17% 27% 5% 22%
Net assets at end of period (000 omitted) $2,535 $2,300 $1,760 $ 833
</TABLE>
** For the period from the commencement of offering of Class C shares,
January 3, 1994 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 years ended March 31, 1995 and January 31, 1994, the per share
distribution in excess of net investment income was $0.002. For the six
months ended September 30, 1995, the per share distribution in excess of
net investment income was $0.003.
See notes to financial statements
35
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
West Virginia Fund
- ---------------------------------------- ------------------------ ----------
Six Months Year
Ended Ended Two Months
September March Ended
30, 31, March 31,
- ---------------------------------------- ------------ -------- ----------
1995 1995 1994
- ---------------------------------------- ------------ -------- ----------
(Unaudited)
- ---------------------------------------- ------------ -------- ----------
Class A
- ---------------------------------------- ------------ -------- ----------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.21 $ 11.19 $ 12.06
---------- ------ --------
Income from investment operations# -
Net investment income $ 0.31 $ 0.62 $ 0.01
Net realized and unrealized gain
(loss) on investments 0.16 0.03 (0.78)
---------- ------ --------
Total from investment operations $ 0.47 $ 0.65 $ (0.77)
---------- ------ --------
Less distributions declared to shareholders -
From net investment income### $ (0.31) $ (0.62) $ (0.06)
From net realized gain on
investments -- -- --
In excess of net investment income -- -- (0.04)
In excess of net realized gain on
investments -- (0.01) --
---------- ------ --------
Total distributions declared to
shareholders $ (0.31) $ (0.63) $ (0.10)
---------- ------ --------
Net asset value - end of period $ 11.37 $ 11.21 $ 11.19
========== ====== ========
Total return++ 4.20%+++ 6.07% (6.37)%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.21%+ 1.19% 1.30%+
Net investment income 5.38%+ 5.62% 5.36%+
Portfolio turnover 5% 23% 2%
Net assets at end of period (000
omitted) $130,603 $127,616 $130,726
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------- ---------- ------- ------ ------ ------ --------
Year Ended
January
31,
- ---------------------------------------- ---------- ------- ------ ------ ------ --------
1994 1993 1992 1991 1990 1989
- ---------------------------------------- ---------- ------- ------ ------ ------ --------
- ---------------------------------------- ---------- ------- ------ ------ ------ --------
- ---------------------------------------- ---------- ------- ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $ 11.50 $ 11.20 $ 10.93 $ 10.72 $ 10.68 $ 10.51
-------- ----- ---- ---- ---- ------
Income from investment operations# -
Net investment income $ 0.64 $ 0.66 $ 0.70 $ 0.71 $ 0.71 $ 0.77
Net realized and unrealized gain
(loss) on investments 0.69 0.34 0.34 0.21 0.04 0.18
-------- ----- ---- ---- ---- ------
Total from investment operations $ 1.33 $ 1.00 $ 1.04 $ 0.92 $ 0.75 $ 0.95
-------- ----- ---- ---- ---- ------
Less distributions declared to shareholders -
From net investment income### $ (0.61) $ (0.69) $ (0.76) $ (0.71) $ (0.71) $ (0.78)
From net realized gain on
investments (0.12) (0.01) (0.01) -- -- --
In excess of net investment income (0.04) -- -- -- -- --
In excess of net realized gain on
investments -- -- -- -- -- --
-------- ----- ---- ---- ---- ------
Total distributions declared to
shareholders $ (0.77) $ (0.70) $ (0.77) $ (0.71) $ (0.71) $ (0.78)
-------- ----- ---- ---- ---- ------
Net asset value - end of period $ 12.06 $ 11.50 $ 11.20 $ 10.93 $ 10.72 $ 10.68
======== ===== ==== ==== ==== ======
Total return++ 11.80% 9.12% 9.84% 8.91% 7.26% 9.43%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.24% 1.15% 1.17% 1.21% 1.22% 0.86%
Net investment income 5.30% 5.97% 6.33% 6.59% 6.63% 7.01%
Portfolio turnover 26% 19% 14% 37% 34% 9%
Net assets at end of period (000
omitted) $141,190 $115,289 $80,440 $61,984 $52,398 $43,026
</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.
### For the six months ended September 30, 1995, the per share distribution
in excess of net investment income was $0.0003.
++ 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
36
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
West Virginia Fund
- ------------------------------------------------- ------------------------ --------
Year Ended
January 31,
- ------------------------------------------------- -------------- ------ --------
1988 1987 1986
- ------------------------------------------------- -------------- ------ --------
- ------------------------------------------------- -------------- ------ --------
Class A
- ------------------------------------------------- -------------- ------ --------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.30 $ 10.77 $ 9.83
------------ ---- ------
Income from investment operations# -
Net investment income $ 0.77 $ 0.81 $ 0.84
Net realized and unrealized gain (loss) on
investments (0.72) 0.56 0.96
------------ ---- ------
Total from investment operations $ 0.05 $ 1.37 $ 1.80
------------ ---- ------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.81) $ (0.85)
From net realized gain on investments (0.02) (0.03) (0.01)
In excess of net investment income### -- -- --
In excess of net realized gain on investments -- -- --
From paid-in capital#### (0.06) -- --
------------ ---- ------
Total distributions declared to
shareholders $ (0.84) $ (0.84) $ (0.86)
------------ ---- ------
Net asset value - end of period $ 10.51 $ 11.30 $ 10.77
============ ==== ======
Total return++ 0.76% 13.42% 19.42%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.79% 0.87% 1.00%
Net investment income 7.32% 7.42% 8.40%
Portfolio turnover 11% 9% 24%
Net assets at end of period (000 omitted) $36,276 $34,436 $17,733
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------- ---------------- ---------------- ---------------- ------------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
- ----------------------------------------------- ---------------- ---------------- ---------------- ------------------
1995 1995 1994 1994**
- ----------------------------------------------- ---------------- ---------------- ---------------- ------------------
(Unaudited)
- ----------------------------------------------- ---------------- ---------------- ---------------- ------------------
Class B
- ----------------------------------------------- ---------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.21 $ 11.19 $12.06 $12.13
-------------- -------------- -------------- ----------------
Income from investment operations# -
Net investment income $ 0.26 $ 0.53 $ 0.01 $ 0.22
Net realized and unrealized gain (loss) on
investments 0.16 0.04 (0.87) 0.05
-------------- -------------- -------------- ----------------
Total from investment operations $ 0.42 $ 0.57 $(0.86) $ 0.27
-------------- -------------- -------------- ----------------
Less distributions declared to shareholders -
From net investment income $ (0.26) $ (0.54) $(0.01) $(0.21)
From net realized gain on investments -- -- -- (0.12)
In excess of net investment income### -- -- -- (0.01)
In excess of net realized gain on investments -- (0.01) -- --
From paid-in capital#### -- -- -- --
-------------- -------------- -------------- ----------------
Total distributions declared to
shareholders $ (0.26) $ (0.55) $(0.01) $(0.34)
-------------- -------------- -------------- ----------------
Net asset value - end of period $ 11.37 $ 11.21 $11.19 $12.06
============== ============== ============== ================
Total return++ 3.83%+++ 5.30% (6.48)%+++ 5.59%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.93%+ 1.91% 2.02%+ 1.89%+
Net investment income 4.65%+ 4.87% 4.56%+ 4.14%+
Portfolio turnover 5% 23% 2% 26%
Net assets at end of period (000 omitted) $11,615 $10,046 $5,456 $4,530
</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 six months ended September 30, 1995 and the year ended March 31,
1995, the distribution in excess of net investment income was $0.0003
and $0.0051, respectively.
#### For the years ended January 31, 1987 and 1986, the per share
distributions from paid-in capital were $0.0018 and $0.0005,
respectively.
++ 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
37
<PAGE>
Notes to Financial Statements (Unaudited)
(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, MFS Arkansas Municipal Bond Fund, MFS California
Municipal Bond Fund, MFS Florida Municipal Bond Fund, MFS Georgia Municipal
Bond Fund, MFS Louisiana Municipal Bond Fund, MFS Maryland Municipal Bond
Fund* (Maryland Fund), MFS Massachusetts Municipal Bond Fund, MFS Mississippi
Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North Carolina
Municipal Bond Fund* (North Carolina Fund), MFS Pennsylvania Municipal Bond
Fund, MFS South Carolina Municipal Bond Fund* (South Carolina Fund), MFS
Tennessee Municipal Bond Fund* (Tennessee Fund), MFS Texas Municipal Bond
Fund, MFS Virginia Municipal Bond Fund* (Virginia Fund), MFS Washington
Municipal Bond Fund, and MFS West Virginia Municipal Bond Fund* (West
Virginia 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
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, options and options on futures contracts listed on
commodities exchanges are valued at closing settlement prices.
Over-the-counter options are valued by brokers through the use of a pricing
model which takes into account closing bond valuations, implied volatility
and short-term repurchase rates. 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.
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. Investments in index contracts, or
contracts on related options, for purposes other than hedging may be made
when a Fund has cash on hand and wishes to participate in anticipated market
appreciation while the cash is being invested. 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.
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 - Each Fund's custodian bank calculates its fee based on
the 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 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.
At March 31, 1995, 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 its utilization
or expiration.
38
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
West
Tennessee Virginia Virginia
Expiration Date Fund Fund Fund
================ ========== ========== ========== ========== ========== ============
<S> <C> <C> <C> <C> <C> <C>
March 31, 2003 $381,262 $6,639,082 $295,369
</TABLE>
Multiple Classes of Shares of Beneficial Interest - Each Fund offers both
Class A and Class B shares. The North Carolina and Virginia Funds also offer
Class C shares. The three 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 effective annual rate
of 0.55% of each Fund's average daily net assets.
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 period ended September 30,
1995 is a net periodic pension expense for each Fund, as follows:
<TABLE>
<CAPTION>
North South West
Maryland Carolina Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund Fund Fund
================ ========== ========== ========== ========== ========== ============
<S> <C> <C> <C> <C> <C> <C>
March 31, 2003 $2,106 $2,106 $2,106 $1,688 $2,106 $2,106
</TABLE>
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$18,385, $48,602, $28,817, $16,742, $40,994 and $27,908 as its portion of the
sales charge on sales of Class A shares of the Maryland, North Carolina,
South Carolina, Tennessee, Virginia and West Virginia Funds, respectively for
the period ended September 30, 1995.
The Trustees have adopted separate distribution plans for Class A, Class B
and Class C 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 at or above a certain
dollar level, and other such distribution-related expenses that are approved
by the Fund. MFD retains the service fee for accounts not attributable to a
securities dealer. For the period ended September 30, 1995 such fees amounted
to $9,666, $13,641, $5,675, $4,302, $13,187 and $5,052 for the Maryland,
North Carolina, South Carolina, Tennessee, Virginia and West Virginia Funds.
Fees incurred under the distribution plan during the period ended September
30, 1995 were 0.35% of each Fund's average daily net assets attributable to
Class A shares on an annualized basis.
The Class B and Class C distribution plans provide that the Funds will pay
MFD a distribution fee of 0.75% per annum, and a service fee of up to 0.25%
per annum, of the Fund's average daily net assets attributable to Class B and
Class C shares. MFD will pay to securities dealers that enter into a sales
agreement with MFD all or a portion of the service fee attributable to Class
B and Class C shares, and will pay to such securities dealers all of the
distribution fee attributable to Class C shares. The service fee is intended
to be additional consideration for services rendered by the dealer with
respect to Class B and Class C shares. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $187,
$136, $1,146, $261, $553 and $68 for the Maryland, North Carolina, South
Carolina, Tennessee, Virginia and West Virginia Funds, respectively, for
Class B shares. MFD retains the service fee for accounts not attributable to
a securities dealer, which amounted to $414, and $1,048 for the North
Carolina and Virginia Funds, respectively for Class C shares. Fees incurred
under the distribution plans during the period ended September 30, 1995 were
1.00% of each of the Fund's average daily net assets attributable to Class B
and Class C shares on an annualized basis.
A contingent deferred sales charge is imposed on shareholder redemption of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within 12 months following the share 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 period ended September 30, 1995 on
Class A and Class B shares were as follows:
39
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
North South West
Maryland Carolina Carolina Tennessee Virginia Virginia
CDSC imposed Fund Fund Fund Fund Fund Fund
================ ========== ========== ========== ========== ========== ============
<S> <C> <C> <C> <C> <C> <C>
Class A $ -- $ 2,118 $ 302 $ 4 $ -- $ 4
-------- -------- -------- -------- -------- ----------
Class B $22,798 $44,577 $23,329 $19,180 $26,385 $15,790
======== ======== ======== ======== ======== ==========
</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
effective annual rate of up to 0.15%, up to 0.22% and up to 0.15%
attributable to Class A, Class B and Class C 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>
North South West
Maryland Carolina Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund Fund Fund
========== ====== ====== ====== ======= ====== ========
<S> <C> <C> <C> <C> <C> <C>
Purchases $12,447 $55,288 $18,536 $15,060 $76,456 $10,320
Sales 19,345 70,825 19,480 18,366 81,288 6,786
</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>
North South West
Maryland Carolina Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund Fund Fund
===================================== ======= ======= ======= ======= ======= =========
<S> <C> <C> <C> <C> <C> <C>
Aggregate cost $144,939 $427,952 $172,832 $117,376 $428,489 $131,399
===== ===== ===== ===== ===== =======
Gross unrealized appreciation $ 9,153 $ 25,920 $ 10,161 $ 7,186 $ 25,243 $ 8,329
Gross unrealized depreciation (1,200) (1,765) (614) (655) (2,074) (573)
----- ----- ----- ----- ----- -------
Net unrealized appreciation $ 7,953 $ 24,155 $ 9,547 $ 6,531 $ 23,169 $ 7,756
===== ===== ===== ===== ===== =======
</TABLE>
(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 Maryland Fund North Carolina Fund South Carolina Fund Tennessee Fund
------------------ ------------------- ------------------- -------------------
Period Ended September 30, 1995
(000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
======================================= ====== ======== ====== ========= ====== ========= ====== =========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 286 $ 3,129 972 $ 11,231 536 $ 6,384 295 $ 3,053
Shares issued to shareholders in
reinvestment of distributions 190 2,078 551 6,345 204 2,435 142 1,469
Shares reacquired (836) (9,156) (2,770) (31,950) (988) (11,781) (910) (9,422)
------ -------- ------ --------- ------ --------- ------ ---------
Net decrease (360) $ (3,949) (1,247) $(14,374) (248) $ (2,962) (473) $ (4,900)
====== ======== ====== ========= ====== ========= ====== =========
Year Ended March 31, 1995 (000 Omitted)
=================================================================================================================================
Shares sold 793 $ 8,524 3,008 $ 33,720 1,422 $ 16,607 1,284 $ 13,091
Shares issued to shareholders in
reinvestment of distributions 461 4,949 1,457 16,419 502 5,842 311 3,153
Shares reacquired (2,777) (29,402) (7,002) (77,840) (2,209) (25,465) (1,555) (15,606)
------ -------- ------ --------- ------ --------- ------ ---------
Net increase (decrease) (1,523) $(15,929) (2,537) $(27,701) (285) $ (3,016) 40 $ 638
====== ======== ====== ========= ====== ========= ====== =========
Virginia Fund West Virginia Fund
------------------ ------------------- ------------------------------------------
Period Ended September 30, 1995 (000
Omitted) Shares Amount Shares Amount
======================================= ====== ======== ====== =========
Shares sold 1,301 $ 14,639 403 $ 4,565
Shares issued to shareholders in
reinvestment of distributions 524 5,872 167 1,888
Shares reacquired (2,584) (29,019) (467) (5,297)
====== ======== ====== =========
Net increase (decrease) (759) $ (8,508) 103 $ 1,156
====== ======== ====== =========
40
<PAGE>
Notes to Financial Statements (Unaudited) - continued
Class A Shares - continued Virginia Fund West Virginia Fund
------------------ -------------------
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount
- --------------------------------------- ------ -------- ------ ---------
Shares sold 2,822 $ 30,863 908 $ 10,025
Shares issued to shareholders in
reinvestment of distributions 1,219 13,336 355 3,917
Shares reacquired (4,988) (54,182) (1,557) (16,951)
------ -------- ------ ---------
Net decrease (947) $ (9,983) (294) $ (3,009)
====== ======== ====== =========
Class B Shares Maryland Fund North Carolina Fund South Carolina Fund Tennessee Fund
------------------ ------------------- ------------------- -------------------
Period Ended September 30, 1995 (000
Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
- --------------------------------------- ------ -------- ------ --------- ------ --------- ------ ---------
Shares sold 246 $2,677 413 $4,758 227 $2,712 190 $1,965
Shares issued to shareholders in
reinvestment of distributions 14 148 34 397 15 178 13 135
Shares reacquired (139) (1,515) (178) (2,050) (99) (1,180) (82) (850)
------ -------- ------ --------- ------ --------- ------ ---------
Net increase 121 $1,310 269 $3,105 143 $1,710 121 $1,250
====== ======== ====== ========= ====== ========= ====== =========
Year Ended March 31, 1995 (000 Omitted)
---------------------------------------------------------------------------------------------------------------------------------
Shares sold 598 $6,438 1,174 $ 13,233 383 $4,461 505 $5,138
Shares issued to shareholders in
reinvestment of distributions 25 271 71 795 30 344 19 192
Shares reacquired (197) (2,109) (328) (3,609) (175) (2,005) (65) (664)
------ -------- ------ --------- ------ --------- ------ ---------
Net increase 426 $4,600 917 $ 10,419 238 $2,800 459 $4,666
====== ======== ====== ========= ====== ========= ====== =========
Virginia Fund West Virginia Fund
------------------ -------------------
Period Ended September 30, 1995 (000
Omitted) Shares Amount Shares Amount
- --------------------------------------- ------ -------- ------ ---------
Shares sold 275 $ 3,077 154 $ 1,746
Shares issued to shareholders in
reinvestment of distributions 21 240 14 164
Shares reacquired (90) (1,017) (43) (488)
------ -------- ------ ---------
Net increase 206 $ 2,300 125 $ 1,422
====== ======== ====== =========
Year Ended March 31, 1995 (000 Omitted)
- --------------------------------------- ------ -------- ------ ---------
Shares sold 918 $ 10,079 440 $ 4,834
Shares issued to shareholders in
reinvestment of distributions 37 408 20 220
Shares reacquired (166) (1,815) (51) (555)
------ -------- ------ ---------
Net increase 789 $ 8,672 409 $ 4,499
====== ======== ====== =========
Class C Shares North Carolina
Fund Virginia Fund
------------------ -------------------
Period Ended September 30, 1995 (000
Omitted) Shares Amount Shares Amount
- --------------------------------------- ------ -------- ------ ---------
Shares sold 102 $ 1,181 89 $ 991
Shares issued to shareholders in
reinvestment of distributions 9 99 4 45
Shares reacquired (96) (1,104) (75) (840)
------ -------- ------ ---------
Net increase 15 $ 176 18 $ 196
------ -------- ------ ---------
Year Ended March 31, 1995 (000 Omitted)
- --------------------------------------- ------ -------- ------ ---------
Shares sold 637 $ 7,160 1,049 $ 11,525
Shares issued to shareholders in
reinvestment of distributions 19 219 23 250
Shares reacquired (523) (5,757) (1,022) (10,805)
------ -------- ------ ---------
Net increase 133 $ 1,622 50 $ 970
====== ======== ====== =========
</TABLE>
41
<PAGE>
(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 period ended September 30, 1995 ranged from $6
to $1,288.
(7) Financial Instruments
The Funds trade financial instruments with off-balance sheet risk in the
normal course of their 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>
Fund Unrealized
Description Expiration Contracts Position Appreciation
====================== ============== ============== ========== ========= ===============
<S> <C> <C> <C> <C> <C>
Maryland Fund U.S. Treasury December 1995 120 Short $57,044
South Carolina Fund U.S. Treasury December 1995 30 Short 14,261
</TABLE>
At September 30, 1995, 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
September 30, 1995:
<TABLE>
<CAPTION>
Unrealized
Principal Appreciation
Fund Description Index (000 Omitted) Value (Depreciation)
- ------------------ --------------------------------------------- ------------------ ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Maryland Fund Puerto Rico Public Building Authority, 5.31s, PSA Municipal
2017 Swap $3,000 $2,784,360 $(215,640)
North Carolina Puerto Rico Public Building Authority, 5.31s, PSA Municipal
Fund 2016 Swap $6,500 $6,032,780 $(467,220)
South Carolina Puerto Rico Telephone Authority Revenue, Corp. Swap Rate
Fund 4.355s, 2005 Curve $1,000 $ 925,050 $ (74,950)
Tennessee Fund Puerto Rico Public Building Authority, 5.31s, PSA Municipal
2016 Swap $2,000 $1,856,240 $(143,760)
Puerto Rico Telephone Authority Revenue, Corp. Swap Rate
4.35s, 2004 Curve $2,000 $1,850,100 $(149,900)
Virginia Fund Puerto Rico Public Building Authority, 5.35s, PSA Municipal
2016 Swap $6,500 $6,032,780 $(467,220)
West Virginia Fund Puerto Rico Public Building Authority, 5.31s, PSA Municipal
2016 Swap $2,000 $1,856,240 $(143,760)
</TABLE>
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.
42
<PAGE>
It's Easy to Contact Us
MFS Automated Information
Account Information:
Call 1-800-MFS-TALK (1-800-637-8255)
anytime.
Market Outlook:
Call 1-800-637-4458 anytime for the MFS outlook
on the bond and stock markets.
? MFS Personal Service
Account Service:
Call 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
Product Information:
Call 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time.
IRA Service:
Call 1-800-637-1255 any business day
from 8 a.m. to 6 p.m. Eastern time.
Service for the Hearing-Impaired:
Call 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time (TDD required).
[letter logo] MFS Mailing Addresses
For Personal Accounts:
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For IRA Accounts:
MFS Service Center, Inc.
J.W. McCormack Station
P.O. Box 4501
Boston, MA 02101-9817
<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 literature(3) 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 any time).
(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.
<PAGE>
MFS(R) Municipal
Series Trust
[DALBAR logo]
500 Boylston Street
Boston, MA 02116
MFS(R) Maryland Municipal Bond Fund
MFS(R) North Carolina Municipal Bond Fund
MFS(R) South Carolina Municipal Bond Fund
MFS(R) Tennessee Municipal Bond Fund
MFS(R) Virginia Municipal Bond Fund
MFS(R) West Virginia Municipal Bond Fund
Bulk Rate
U.S. Postage
P A I D
Permit #55638
Boston, MA
[MFS logo]
40/240
41/241/341
42/242
43/243/343
44/244
MST-3A 11/95 54M 63/263
<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
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
8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time.
(To use this service, your phone must be
equipped with a Telecommunications Device
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.
TOP-RATED SERVICE
[Dalbar logo] 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 respond-
ed, offering input on the quality of service
they receive from 36 mutual fund companies
nationwide. The survey contained questions
about service quality in 17 categories, includ-
ing "knowledge of phone service contacts,"
"accuracy of transaction processing," and
"overall ease of doing business with the firm."
(Source: 1995 DALBAR Survey)
<PAGE>
Letter to Shareholders
Dear Shareholder:
During the past six months ended September 30, 1995, prices of 30-year U.S.
Treasury bonds rose, producing a decline in yields of approximately 94 basis
points (0.94%) to a level of 6.50%. The price rally was primarily attributable
to a consensus view that a slow but sustainable economic growth rate had been
achieved and that inflation would remain subdued. Municipal bonds lagged
Treasuries, with yields for long-term high-grade bonds declining only 15 basis
points (0.15%). Principal value and interest on Treasury securities are
guaranteed by the U.S. government if held to maturity. The municipal market was
hampered by concerns about tax reform, which could remove its unique tax-exempt
status, and the strong stock market, which has captivated the interest of
investors at the expense of municipal securities. The ratio of long-term
AAA-rated municipal yields to comparable U.S. Treasury yields rose from 80% to
89% during the period, while all classes of each Fund covered by this report
experienced positive total returns for the six-month period. A complete list of
returns may be found on pages two and three of this report.
Moderate, but sustainable growth appears to be the hallmark of the economic
expansion's fifth year. After slowing earlier in the summer, homebuying was
making modest gains by September 30, although consumer spending was still
showing some areas of weakness. Businesses, meanwhile, continued to work off
excess inventories and reduce factory output. At the same time, overseas
economies, particularly those of Germany and Japan, have not recovered as
expected, limiting U.S. export growth. However, the Federal Reserve Board's
consistent and, so far, successful efforts to fight inflation seem to be giving
consumers and businesses enough confidence to help maintain 2-1/2% to 3% real
(adjusted for inflation) growth in gross domestic product, at least through
1995.
Although the Federal Reserve implemented a one-quarter percentage point
decrease in short-term interest rates in July, the effects of its seven rate
increases, which began in early 1994 and ended in February of this year, are
still being felt throughout the economy. While there have been some increases
in commodity prices, companies have not been able to pass along most of those
higher costs. This is partly due to the need to keep fighting for market share,
and also because wages and benefits of U.S. workers are still growing at a pace
that is near, or perhaps below, the inflation rate, limiting consumer buying
power. At the end of July, the nation's employment cost index had risen at a
rate of just 2.8% over the previous year, helping to contain cost pressures. At
the same time, the bond markets have apparently become convinced that economic
growth will be contained for the near future and have allowed long-term
interest rates to decline. Although previous monetary easing by the Federal
Reserve has been followed by additional rate reductions, prospects for further
decreases in the current environment are uncertain. Still, with long-term
government bonds yielding approximately 6.50%, in an environment of 2-1/2% to
3% inflation, real rates of return in the fixed-income markets remain
relatively attractive.
We believe municipals offer attractive value at current levels. The yield
ratio of municipals to Treasuries of 89% is the highest level since October
1989, indicating the market is already compensating for a more moderate version
of tax reform, which, in our opinion, is the reform that appears to have the
best chance of passage. The tax-reform debate has overshadowed a powerful
fundamental trend--the low supply of new issues. Issuance declined 44% in 1994
and has continued to decline in 1995. Combined with a record amount of
redemptions, we expect the supply of outstanding municipals to actually shrink
for an unprecedented second year in a row. Therefore, any pickup in demand
could have an even greater positive impact on prices. Finally, any weakness in
stock prices seems likely to bring investors back to the municipal market.
During the six-month reporting period, we extended portfolio durations (a
measure of interest rate sensitivity) to participate in the market rally,
primarily by covering hedge positions and buying discount bonds. Currently,
durations are generally long relative to the benchmark Lehman Brothers
Municipal Bond Index, an unmanaged index of national municipal bonds rated Baa
or higher. When possible, we have swapped out of bonds with short call features
and into bonds with greater call protection. We have continued to emphasize
quality in the Funds, as the spread between high-grade and lower-grade bonds is
historically narrow. Finally, we moved out of shorter-term bonds and into bonds
in the 15- to 20-year maturity range, which offer more yield and, we believe,
better value relative to taxable investments.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin /s/ David R. King, Geoffrey L. Schechter and David B.
Smith
A. Keith Brodkin David R. King, Geoffrey L. Schechter and David B. Smith
Chairman and President Portfolio Managers
October 12, 1995
1
<PAGE>
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
responsibility 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 Georgia and New
York state Funds. 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 Analyst 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
Massachusetts state Fund.
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.
Performance Summary
Because mutual funds like MFS Municipal Series Trust are designed for investors
with long-term goals, we have provided cumulative results as well as the
average annual total returns for Class A and Class B shares for the applicable
time periods.
<TABLE>
<CAPTION>
Class A Class B
----------------------------------------------------- -----------------------------------------
MFS Alabama Municipal Bond
Fund 6 Months 1 Year 5 Years 2/01/90* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- -------------------------- -------- -------- -------- ------------------ -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +4.54% +9.14% +52.27% +54.53% +4.11% +8.24% +6.00%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
Average Annual Total
Return+ -- +9.14% +8.77% +8.00% -- +8.24% +2.86%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
SEC Average Annual Total
Return++ -- +3.93% +7.72% +7.08% -- +4.24% +1.03%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
----------------------------------------- -----------------------------------------
MFS Arkansas Municipal Bond Fund 6 Months 1 Year 2/03/92* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
-------------------------------- -------- -------- ------------------ -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +3.59% +7.00% +26.27% +3.30% +6.14% +2.97%
-------------------------------- ------ ------ ----------------- ------ ------ -----------------
Average Annual Total Return+ -- +7.00% +6.59% -- +6.14% +1.43%
-------------------------------- ------ ------ ----------------- ------ ------ -----------------
SEC Average Annual Total
Return++ -- +1.94% +5.18% -- +2.14% -0.37%
-------------------------------- ------ ------ ----------------- ------ ------ -----------------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
----------------------------------------------------- -----------------------------------------
MFS Georgia Municipal Bond
Fund 6 Months 1 Year 5 Years 6/06/88* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- -------------------------- -------- -------- -------- ------------------ -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +4.24% +8.33% +46.42% +70.50% +3.80% +7.53% +2.89%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
Average Annual Total
Return+ -- +8.33% +7.93% +7.56% -- +7.53% +1.39%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
SEC Average Annual Total
Return++ -- +3.18% +6.88% +6.85% -- +3.53% -0.41%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
</TABLE>
*Commencement of offering of this class of shares.
+These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++The average annual total rate of return, as required by the Securities and
Exchange Commission (SEC), reflects the maximum sales charge of 4.75% for
Class A shares and the current maximum contingent deferred sales charge
(CDSC) of 4% for Class B shares.
2
<PAGE>
Performance Summary - continued
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ -----------------------------------------
MFS Massachusetts Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years 6 Months 1 Year 9/07/93* - 9/30/95
- ------------------------------------- -------- -------- -------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +4.40% +9.13% +48.13% +128.49% +4.02% +8.35% +4.71%
- ------------------------------------- ------ ------ ------ ------ ------ ------ -----------------
Average Annual Total Return+ -- +9.13% +8.17% +8.61% -- +8.35% +2.26%
- ------------------------------------- ------ ------ ------ ------ ------ ------ -----------------
SEC Average Annual Total Return++ -- +3.98% +7.13% +8.09% -- +4.35% +0.49%
- ------------------------------------- ------ ------ ------ ------ ------ ------ -----------------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
----------------------------------------------------- -----------------------------------------
MFS New York Municipal
Bond Fund 6 Months 1 Year 5 Years 6/06/88* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- -------------------------- -------- -------- -------- ------------------ -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +4.14% +8.93% +53.59% +78.71% +3.71% +8.04% +3.86%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
Average Annual Total
Return+ -- +8.93% +8.96% +8.26% -- +8.04% +1.85%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
SEC Average Annual Total
Return++ -- +3.80% +7.91% +7.54% -- +4.04% +0.07%
- -------------------------- ------ ------ ------ ----------------- ------ ------ -----------------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
----------------------------------------- -----------------------------------------
MFS Pennsylvania Municipal Bond Fund 6 Months 1 Year 2/01/93* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- ------------------------------------- -------- -------- ------------------ -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +3.85% +8.80% +14.70% +3.66% +7.94% +3.54%
- ------------------------------------- ------ ------ ----------------- ------ ------ -----------------
Average Annual Total Return+ -- +8.80% +5.29% -- +7.94% +1.70%
- ------------------------------------- ------ ------ ----------------- ------ ------ -----------------
SEC Average Annual Total Return++ -- +3.59% +3.38% -- +3.94% -0.09%
- ------------------------------------- ------ ------ ----------------- ------ ------ -----------------
</TABLE>
*Commencement of offering of this class of shares.
+These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++The average annual total rate of return, as required by the SEC, reflects the
maximum sales charge of 4.75% for Class A shares and the current maximum CDSC
of 4% for Class B shares.
All results represent past performance and are not necessarily an indication of
future results. Investment return and principal value will fluctuate, 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 Georgia,
Alabama 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 by MFS at any time without notice.
3
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1995
MFS ALABAMA MUNICIPAL BOND FUND
Municipal Bonds and Warrants - 96.3%
<TABLE>
<CAPTION>
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
<S> <C> <C> <C>
General Obligation - 16.4%
AA Birmingham, AL, 5s, 2013 $1,000 $ 906,400
AA Birmingham, AL, 8s, 2015 1,150 1,242,310
AA Birmingham, AL, 5.125s, 2017 1,000 905,420
AAA Commonwealth of Puerto Rico, MBIA, 5.375s, 2022 1,000 940,010
AAA Covington County, AL, AMBAC, 5.5s, 2014, Warrants 1,000 968,840
AAA Hoover, AL, AMBAC, 5s, 2020, Warrants 1,120 995,568
AA Huntsville, AL, General Obligations, 5.5s, 2020 3,000 2,838,270
AAA Phoenix City, AL, Capital Improvements, MBIA, 6s, 2011 500 513,075
NR Shelby County, AL, 7.4s, 2007, Warrants 1,000 1,083,370
AAA Shelby County, AL, MBIA, 0s, 2011, Warrants 3,000 1,128,720
NR Shelby County, AL, 7.7s, 2017, Warrants 800 869,016
AA State of Alabama, 0s, 2004 2,500 1,583,375
AA State of Alabama, 0s, 2006 1,165 633,923
AA State of Alabama, 7.1s, 2010 250 276,802
------
$14,885,099
- ----------------------------------------------------------------------------------------------------- --------- ------
State and Local Appropriation - 4.1%
NR Alabama Building Renovation Finance Authority Rev., 7.45s, 2011 $1,500 $ 1,668,405
A Montgomery County, AL, Rev. (Department of Human Resources Project), 7s, 2007, Warrants 1,000 1,069,850
A Puerto Rico Public Buildings Authority, 5.6s, 2008 500 505,690
A Puerto Rico Public Buildings Authority, 5.5s, 2021 500 461,220
------
$ 3,705,165
- ----------------------------------------------------------------------------------------------------- --------- ------
Refunded and Special Obligation - 12.2%
NR Alexander City, AL, 0s, 2001, Warrants $1,000 $ 312,540
NR Alexander City, AL, 0s, 2001, Warrants 1,000 290,640
NR Alexander City, AL, 0s, 2001, Warrants 1,250 337,825
NR Birmingham, AL, 7.4s, 1999 1,000 1,111,570
AA Birmingham, AL, Historical Preservation Authority (Kelly Ingram/Civil Rights), 7.2s, 2001 1,000 1,134,780
AA Birmingham, AL, Public Parks & Recreation Board Rev. (Legion Park), 7.25s, 1999 400 445,720
NR Birmingham, AL, Waterworks & Sewer Board Rev., 7.2s, 2000 500 558,800
AAA Commonwealth of Puerto Rico, Highway & Transportation Authority, 6.5s, 2002 1,000 1,123,110
BBB Gadsden East, AL, Medical Clinic Board Rev. (Baptist Hospital), 7.8s, 2001 2,000 2,360,240
AAA Hoover, AL, Board of Education, AMBAC, 6.625s, 2001 1,000 1,110,290
NR Morgan County-Decatur, AL, Hospital Board Rev., 7.875s, 1999 750 843,270
A State of Alabama, Mental Health Finance Authority, 7.375s, 1999 250 277,742
AAA University of Alabama, University Housing Rev., MBIA, 7.1s, 2001 1,000 1,138,680
------
$11,045,207
- ----------------------------------------------------------------------------------------------------- --------- ------
Single Family Housing Revenue - 5.7%
AAA State of Alabama, Housing Finance Authority, FNMA, GNMA, FHLMC, 6.55s, 2014 $2,480 $ 2,526,574
AAA State of Alabama, Housing Finance Authority, GNMA, 7.4s, 2022 705 740,419
AAA State of Alabama, Housing Finance Authority, GNMA, 7.5s, 2022 $ 470 $ 496,935
AAA State of Alabama, Housing Finance Authority, GNMA, 7.6s, 2022 150 158,017
AAA State of Alabama, Housing Finance Authority, GNMA, 7.75s, 2022 460 486,822
AAA State of Alabama, Housing Finance Authority, GNMA, 7.9s, 2022 745 790,228
------
$ 5,198,995
- ----------------------------------------------------------------------------------------------------- --------- ------
Multi-Family Housing Revenue - 2.1%
AA Commonwealth of Puerto Rico, Housing Finance Corp., FHA, 7.5s, 2015 $ 355 $ 375,224
AAA State of Alabama, Housing Finance Authority, Residential Development Authority, FHA, 7.25s,
2023 1,430 1,490,674
------
$ 1,865,898
- ----------------------------------------------------------------------------------------------------- --------- ------
Insured Health Care Revenue - 6.2%
AAA Birmingham, AL, Special Care Facilities (Baptist Medical Center), MBIA, 5.5s, 2013 $1,500 $ 1,430,700
AAA Birmingham, AL, Special Care Facilities (Children's Hospital), FGIC, 5.625s, 2019 2,401 2,300,401
AAA East, AL, Health Care Authority Facilities Rev., MBIA, 5.75s, 2013 1,000 987,680
AAA Huntsville, AL, Health Care Facilities Rev., MBIA, 6.375s, 2022 850 873,451
------
$ 5,592,232
- ----------------------------------------------------------------------------------------------------- --------- ------
Health Care Revenue - 5.4%
BBB- Baldwin County, AL, Eastern Shore Health Care Authority (Thomas), 8.5s, 2016 $1,000 $ 1,083,380
A Montgomery, AL, Medical Clinic Board Rev. (Jackson Hospital & Clinic), 7s, 2015 2,725 2,843,537
NR South Medical Clinic Board Rev. (Cullman Regional Medical Center), 6.5s, 2023 1,000 952,010
------
$ 4,878,927
- ----------------------------------------------------------------------------------------------------- --------- ------
Electric and Gas Utility Revenue - 1.0%
AAA Marshall County, AL, Gas District, MBIA, 5s, 2013 $1,000 $ 901,250
- ----------------------------------------------------------------------------------------------------- --------- ------
Water and Sewer Utility Revenue - 11.2%
AAA Arab, AL, Waterworks Board, Water Rev., MBIA, 7s, 2016 $1,000 $ 1,071,960
AA Birmingham, AL, Waterworks & Sewer Board Rev., 5.3s, 2014 1,000 940,500
AA Birmingham, AL, Waterworks & Sewer Board Rev., 5.5s, 2020 1,000 944,930
BBB- Fairview, AL, Government Utility Services, Corporate Water Rev., 8s, 2020 1,000 1,071,740
AAA Limestone County, AL, Water Authority Rev., FGIC, 7.7s, 2019 900 977,364
AAA Limestone County, AL, Water Authority Rev., FGIC, 5.25s, 2020 1,450 1,325,300
AAA Madison County, AL, Water Refunding, AMBAC, 5.25s, 2014 1,000 926,600
BBB State of Alabama, Water Pollution Control Authority, 7.75s, 2012 950 1,009,660
AAA State of Alabama, Water Pollution Control Authority, AMBAC, 5.5s, 2016 2,000 1,905,520
------
$10,173,574
- ----------------------------------------------------------------------------------------------------- --------- ------
Turnpike Revenue - 1.0%
A Puerto Rico Commonwealth, 5.5s, 2017 $1,000 $ 933,760
- ----------------------------------------------------------------------------------------------------- --------- ------
4
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds and Warrants - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Airport and Port Revenue - 5.4%
NR Mobile, AL, Airport Authority, 7.375s, 2012 $1,000 $ 1,020,630
NR Mobile, AL, Airport Authority, 8.875s, 2015 1,000 1,095,220
AAA State of Alabama, Docks Department, Docks Facilities Rev., BIGI, 7.6s, 2012 2,600 2,823,704
------
$ 4,939,554
- ----------------------------------------------------------------------------------------------------- --------- ------
Sales and Excise Tax Revenue - 1.4%
AAA State of Alabama, Mental Health Finance Authority, MBIA, 5.5s, 2015 $1,300 $ 1,239,849
- ----------------------------------------------------------------------------------------------------- --------- ------
Industrial Revenue (Corporate Guarantee) - 11.9%
BBB- Butler, AL, Industrial Development Rev., 8s, 2028 $1,000 $ 1,111,840
NR Camden, AL, Industrial Development Board, Pollution Control Rev., 7.75s, 2009 500 537,775
BBB Courtland, AL, Industrial Development Board, Solid Waste Disposal Rev., 5.9s, 2017 1,000 942,980
BBB Courtland, AL, Industrial Development Board, Solid Waste Disposal Rev., 7.75s, 2020 1,485 1,586,395
AA Mobile, AL, Industrial Development Board (Mobil), 6s, 2014 2,500 2,482,225
BBB Mobile, AL, Industrial Development Board, Dock & Wharf Rev. (Ideal Basic, Inc.), 6.75s,
2004 270 270,896
BBB Mobile, AL, Industrial Development Board, Dock & Wharf Rev. (Ideal Basic, Inc.), 6.875s,
2009 1,075 1,078,999
BBB+ Piedmont, AL, Industrial Development Board (Springs Industries, Inc.), 8.25s, 2010 1,000 1,094,730
AA- Tarrant City, AL, Industrial Development Board Rev. (Vulcan Materials Co.), 7.5s, 2011 1,500 1,646,430
------
$10,752,270
- ----------------------------------------------------------------------------------------------------- --------- ------
Universities - 9.2%
AAA Auburn University, AL, University Rev., MBIA, 5.25s, 2012 $1,000 $ 931,320
AAA Auburn University, AL, University Rev., MBIA, 5.25s, 2013 1,000 928,990
NR Homewood, AL, Educational Building Authority Rev. (Samford University), 6.5s,2016 1,000 1,047,690
AAA State of Alabama, Agriculture & Mech., MBIA, 5.75s, 2013 500 495,465
AAA State of Alabama, Agriculture & Mech., MBIA, 5.5s, 2020 2,545 2,412,481
AAA Alabama State Board of Education Rev. (Shelton State Community College), MBIA, 6s, 2014 1,000 1,019,720
AA- UAB Educational Foundation, AL, Student Housing Rev., 5.35s, 2019 1,630 1,539,192
------
$ 8,374,858
- ----------------------------------------------------------------------------------------------------- --------- ------
Other - 3.1%
NR Birmingham, AL, Downtown Redevelopment Authority (Social Security Administration), 0s, 2010 $2,985 $ 1,914,489
AAA Puerto Rico Telephone Authority Rev., 7-Year Swap, "M", AMBAC, 4.35s, 2004S. 1,000 925,050
------
$ 2,839,539
- ----------------------------------------------------------------------------------------------------- --------- ------
Total Municipal Bonds and Warrants (Identified Cost, $82,339,381) $87,326,177
- ------------------------------------------------------------------------------------------------------------------- --------
Floating Rate Demand Notes - 2.3%
------------------------------------------------------------------------------------------------------------------- --------
AAA Peninsula Ports Authority, VA, (Shell Oil Co.), due 2005 $1,200 $ 1,200,000
A+ Phoenix City, AL, Industrial Development Board (Mead Coated), due 2025 700 700,000
A- Phoenix City, AL, Industrial Development Board, due 2028 200 200,000
- ----------------------------------------------------------------------------------------------------- --------- ------
Total Floating Rate Demand Notes, at Identified Cost $ 2,100,000
------------------------------------------------------------------------------------------------------------------- --------
Total Investments (Identified Cost, $84,439,381) $89,426,177
Other Assets, Less Liabilities - 1.4% 1,304,665
- ------------------------------------------------------------------------------------------------------------------- --------
Net Assets - 100.0% $90,730,842
- ------------------------------------------------------------------------------------------------------------------- --------
[S] Indexed security.
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
MFS ARKANSAS MUNICIPAL BOND FUND
Municipal Bonds - 97.8%
- ------------------------------------------------------------------------------------------------------------------- --------
Student Loan Revenue - 1.4%
NR Arkansas Student Loan Authority Rev., 7.15s, 2002 $1,000 $ 1,064,830
NR Arkansas Student Loan Authority Rev., 6.75s, 2006 1,500 1,538,415
--------
$ 2,603,245
- --------------------------------------------------------------------------------------------------- ---------- --------
General Obligation - 4.5%
A Commonwealth of Puerto Rico, 5.25s, 2018 $2,000 $ 1,807,880
AAA Mississippi County, AR, Community College District, AMBAC, 6s, 2018 1,650 1,694,913
NR Northwest Arkansas Community College District, 5.8s, 2012 650 656,630
AAA Pulaski County, AR, Special School District, FSA, 5.25s, 2013 3,495 3,295,854
AA State of Arkansas, Waste Disposal & Pollution Control Rev., 6.25s, 2020 1,000 1,032,340
--------
$ 8,487,617
- --------------------------------------------------------------------------------------------------- ---------- --------
State and Local Appropriation - 4.5%
AAA Arkansas Development Finance Authority Correctional Facilities Rev., MBIA, 7.125s, 2010 $2,000 $ 2,159,640
A Arkansas Development Finance Authority Local Government Rev., 7.1s, 2008 2,440 2,680,779
NR Arkansas Development Finance Authority Rev. (State Agencies Facilities), 5.875s, 2013 875 862,785
A Arkansas Development Finance Authority Rev. (State Agencies Facilities), 5.875s, 2013 1,000 938,140
A Puerto Rico Public Buildings Authority, GTD, Education & Health, 5.31s, 2016S. 2,000 1,856,240
--------
$8,497,584
- --------------------------------------------------------------------------------------------------- ---------- --------
Refunded and Special Obligation - 12.3%
A- Beaver Water District, AR, Benton & Washington Counties, Water Rev., 6.625s, 1999 $ 500 $ 549,775
A- Beaver Water District, AR, Benton & Washington Counties, Water Rev., 6.75s, 1999 1,750 1,932,367
AAA Harrison, AR, Residential Housing Facilities Board, Single Family Mortgage Rev., FGIC, ETM,
7.4s, 2011 4,000 4,585,880
5
<PAGE>
Portfolio of Invesments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Refunded and Special Obligation - continued
AAA Puerto Rico Public Buildings Authority, 7.125s, 1998 $ 1,500 $ 1,634,490
AAA Sherwood, AR, Residential Housing Facilities Board, Single Family Mortgage Rev., MBIA,
7.5s, 2010 1,250 1,480,187
AAA State of Arkansas, Development Finance Authority, Water Rev., MBIA, 7s, 2001 2,900 3,273,172
AAA State of Arkansas, Development Finance Authority, Water Rev., MBIA, 6.4s, 2002 2,000 2,213,020
AAA State of Arkansas, Housing Development Agency, Single Family Mortgage Rev., ETM, 8.375s,
2010 800 998,232
AAA State of Arkansas, Housing Development Agency, Single Family Mortgage Rev., ETM, 8.375s,
2011 1,000 1,240,690
AAA State of Arkansas, Waste Disposal & Pollution Control Rev., 6.25s, 2002 4,000 4,366,400
AA State of Arkansas, Water Resources Development Authority, 6.375s, 2012 1,000 1,047,850
--------
$23,322,063
- --------------------------------------------------------------------------------------------------- ---------- --------
Single Family Housing Revenue - 13.8%
NR Jefferson County, AR, Health Care & Residential Facilities Board, 7.25s, 2011 $ 1,000 $ 1,032,330
NR Lonoke County, AR, Residential Housing Facilities Board, 7.375s, 2011 389 400,846
NR Lonoke County, AR, Residential Housing Facilities Board, 7.9s, 2011 1,116 1,216,786
NR Mississippi County, AR, Public Facilities Board, Mortgage Rev., 7.2s, 2010 1,295 1,427,167
NR North Little Rock, AR, Residential Housing Facilities Board, 0s, 2010 21,925 7,853,754
NR Pulaski County, AR, Public Facilities Board Rev., 0s, 2014 2,750 806,465
NR Saline County, AR, Residential Housing Facilities Board, 7.875s, 2011 1,320 1,411,449
NR State of Arkansas, Development Finance Authority, Single Family Mortgage Rev., 0s, 2011 5,000 1,632,100
AAA State of Arkansas, Development Finance Authority, Single Family Mortgage Rev., GNMA, 7.4s,
2023 1,560 1,637,766
AAA State of Arkansas, Development Finance Authority, Single Family Mortgage Rev., GNMA, FNMA,
6.7s, 2027 3,000 3,038,370
AAA State of Arkansas, Development Finance Authority, Single Family Mortgage Rev., GNMA, 7.45s,
2027 1,710 1,848,321
A+ State of Arkansas, Housing Development Agency, Single Family Mortgage Rev., 0s, 2015 33,000 3,947,790
--------
$26,253,144
- --------------------------------------------------------------------------------------------------- ---------- --------
Multi-Family Housing Revenue - 0.2%
AAA West Memphis, AR, Public Facilities Board Rev., AMBAC, 0s, 2011 $ 1,090 $ 417,818
- --------------------------------------------------------------------------------------------------- ---------- --------
Insured Health Care Revenue - 8.5%
AAA Independence, AR, Health & Education Financing Authority (While River), FSA, 5.5s, 2009 $ 1,850 $ 1,854,403
AAA Pulaski County, AR, Health Facilities Board Rev. (Sisters of Charity/Nazareth), MBIA, 6s,
2012 1,000 1,031,880
AAA Saline County, AR, Hospital Rev., Connie Lee, 6s, 2019 $ 2,000 $ 1,999,040
AAA State of Arkansas, Development Finance Authority Rev. (Sisters of Mercy), MBIA, 5s, 2013 6,340 5,834,955
AAA State of Arkansas, Development Finance Authority Rev. (Sisters of Mercy), MBIA, 5s, 2019 6,000 5,335,980
--------
$16,056,258
- --------------------------------------------------------------------------------------------------- ---------- --------
Health Care Revenue - 8.7%
NR Baxter County, AR, Hospital Rev., 7.5s, 2021 $ 3,145 $ 3,360,180
A+ Little Rock, AR, Health Facilities Board, Hospital Rev., 6.9s, 2009 1,400 1,538,908
A Little Rock, AR, Health Facilities Board, Hospital Rev., 7s, 2017 3,250 3,458,747
A+ Little Rock, AR, Health Facilities Board, Hospital Rev. (Baptist Medical), 5.5s, 2015 1,400 1,334,480
A- Pulaski County, AR, Hospital Rev. (Arkansas Children's Hospital), 6.15s, 2017 6,750 6,766,132
--------
$16,458,447
- ---------------------------------------------------------------------------------------------------- ---------- --------
Electric and Gas Utility Revenue - 13.8%
BBB Independence County, AR, Pollution Control Rev. (Arkansas Power & Light), 6.25s, 2021 $ 3,000 $ 3,016,050
AA- Jefferson County, AR, Pollution Control Rev. (Arkansas Electric Cooperative), 6.125s, 2008 2,000 2,006,180
BBB Jefferson County, AR, Pollution Control Rev. (Arkansas Power & Light), 6.3s, 2018 1,050 1,077,636
AAA Jonesboro, AR, City Water & Light Plant, Public Utilities Systems Rev., AMBAC, 5.25s, 2013 3,210 3,064,587
AAA North Little Rock, AR, Electric Rev., MBIA, 6.5s, 2010 1,000 1,054,520
AAA North Little Rock, AR, Electric Rev., MBIA, 6.5s, 2010 2,000 2,180,520
AAA North Little Rock, AR, Electric Rev., MBIA, 6.5s, 2015 6,000 6,578,820
BBB Pope County, AR, Solid Waste Disposal Rev. (Arkansas Power & Light Co.), 8s, 2020 1,780 1,991,303
AAA Pope County, AR, Solid Waste Disposal Rev. (Arkansas Power & Light Co.), FSA, 8s, 2021 3,000 3,368,280
A- Puerto Rico Electric Power Authority Rev., 5s, 2012 500 450,885
AAA West Memphis, AR, Public Utility Systems Rev., MBIA, 6.6s, 2009 1,250 1,342,050
--------
$26,130,831
- --------------------------------------------------------------------------------------------------- ---------- --------
Water and Sewer Utility Revenue - 12.0%
AAA Beaver Water District, AR, Benton & Washington Counties, Water & Sewer Rev., MBIA, 5.85s,
2008 $ 2,000 $ 2,087,820
NR El Dorado, AR, Water & Sewer Rev., 6s, 2012 1,000 1,024,700
AAA Fort Smith, AR, Water & Sewer, MBIA, 5.7s, 2008 1,000 1,034,690
AAA Fort Smith, AR, Water & Sewer, MBIA, 6s, 2012 2,250 2,321,460
6
<PAGE>
Portfolio of Invesments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Water and Sewer Utility Revenue - continued
A Puerto Rico Aqueduct & Sewer Authority, 7.875s, 2017 $ 1,000 $ 1,108,120
AAA Russellville, AR, Water Systems Rev., AMBAC, 6.25s, 2012 2,365 2,465,323
NR South Sebastian County, AR, Water Users Assn., 5.95s, 2016 2,425 2,460,114
NR South Sebastian County, AR, Water Users Assn., 6.15s, 2023 1,000 1,024,890
AAA State of Arkansas, Development Finance Authority, Water & Sewer Rev., MBIA, 5s, 2012 1,000 937,260
AAA State of Arkansas, Development Finance Authority, Water & Sewer Rev., MBIA, 5s, 2015 3,000 2,762,970
AAA State of Arkansas, Development Finance Authority, Water & Sewer Rev., MBIA, 5.4s, 2015 2,500 2,419,100
AA State of Arkansas, Water Resources Development Authority, 6.375s, 2021 1,000 1,039,270
AAA Texarkana, AR, Public Facilities Board, Waterworks Facilities Rev., MBIA, 7s, 2007 2,000 2,115,360
--------
$ 22,801,077
- --------------------------------------------------------------------------------------------------- ---------- --------
Turnpike Revenue - 1.0%
A Commonwealth of Puerto Rico, 5.5s, 2019 $ 2,000 $ 1,862,020
- --------------------------------------------------------------------------------------------------- ---------- --------
Sales and Excise Tax Revenue - 3.0%
NR Little Rock, AR, Hotel & Restaurant Gross Receipts Tax, 7.375s, 2015 $ 4,790 $ 5,625,040
- --------------------------------------------------------------------------------------------------- ---------- --------
Industrial Revenue (Corporate Guarantee) - 10.7%
AA- Blytheville, AR, Solid Waste Recycling & Sewerage Treatment Rev. (Nucor Corp.), 6.9s, 2021 $ 5,000 $ 5,309,500
AA- Blytheville, AR, Solid Waste Recycling & Sewerage Treatment Rev. (Nucor Corp.), 6.375s,
2023 8,945 9,188,840
A- Camden, AR, Environmental (International Paper), 7.625s, 2018 1,000 1,123,820
AA- Jonesboro, AR, Industrial Development Rev. (Anheuser-Busch Co.), 6.5s, 2012 3,500 3,761,660
A- Pine Bluff, AR, Solid Waste Disposal Rev. (International Paper Co.), 5.55s, 2017 1,050 991,294
--------
$ 20,375,114
- --------------------------------------------------------------------------------------------------- ---------- --------
Universities - 1.7%
NR University of Arkansas, University Rev., 7.2s, 2010 $ 2,500 $ 2,760,361
NR University of Arkansas, University Rev., 6.625s, 2012 500 523,140
--------
$ 3,283,501
- --------------------------------------------------------------------------------------------------- ---------- --------
Other - 1.9%
AAA Puerto Rico Telephone Authority Rev., 7-Year Swap, "M", AMBAC, 4.35s, 2004S. $ 4,000 $ 3,700,200
- --------------------------------------------------------------------------------------------------- ---------- --------
Total Municipal Bonds (Identified Cost, $180,403,031) $185,873,959
- --------------------------------------------------------------------------------------------------- ---------- --------
Other Assets, Less Liabilities - 2.2% 4,130,035
- --------------------------------------------------------------------------------------------------- ---------- --------
Net Assets - 100.0% $190,003,994
- --------------------------------------------------------------------------------------------------- ---------- --------
[S]Indexed security.
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
MFS GEORGIA MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
--------------------------------------------------------------------------------------------------- ---------- --------
General Obligation - 11.9%
AA+ DeKalb County, GA, Health Facilities, ULT, 5.5s, 2020 $ 1,500 $ 1,453,110
AA Fulton County, GA, School District, 6.375s, 2010 2,000 2,181,420
AA Fulton County, GA, School District, 6.375s, 2012 1,000 1,082,690
AA Fulton County, GA, School District, 6.375s, 2016 1,000 1,081,150
AAA Paulding County, GA, School District, MBIA, 6s, 2013 1,000 1,052,800
AA+ State of Georgia, 5.25s, 2011 1,500 1,477,470
AA+ State of Georgia, 5s, 2010 1,000 967,880
NR Territory of Virgin Islands, 7.75s, 2006 415 458,392
--------
$ 9,754,912
- --------------------------------------------------------------------------------------------------- ---------- --------
State and Local Appropriation - 8.7%
AA Fulton County, GA, Building Authority Rev. (Judicial Center Project), 0s, 2011 $ 3,000 $ 1,268,130
AA Fulton County, GA, Building Authority Rev. (Judicial Center Project), 0s, 2012 6,015 2,384,045
AA Middle Georgia Coliseum Rev., 5.375s, 2014 2,450 2,306,479
AAA Puerto Rico, Public Building Authority, Government Facilities Guaranteed, AMBAC, 6.25s,
2015 1,100 1,180,520
--------
$ 7,139,174
- --------------------------------------------------------------------------------------------------- ---------- --------
Refunded and Special Obligation - 8.1%
AA+ DeKalb County, GA, Jail, 7.5s, 2000 $ 780 $ 883,903
AAA Fulton County, GA, School District, 7.625s, 1997 500 540,665
NR Hogansville, GA, Combined Public Utility Systems Rev., 9s, 2000 2,200 2,670,118
AAA Marietta, GA, Development Authority Rev. (Life College, Inc.), CAP GTY, 7.2s, 1999 1,250 1,412,650
AAA Marietta, GA, Development Authority Rev. (Life College, Inc.), CAP GTY, 7.25s, 1999 1,000 1,132,010
--------
$ 6,639,346
- --------------------------------------------------------------------------------------------------- ---------- --------
Single Family Housing Revenue - 3.1%
AAA DeKalb County, GA, Housing Authority Single Family Mortgage Rev., GNMA, 7.75s, 2022 $ 495 $ 513,003
AA+ State of Georgia, Housing & Finance Authority Rev., Cap. Apprec. Home Owners Mort., 0s,
2031 10,905 833,251
AA+ State of Georgia, Residential Finance Authority Rev., Single Family Mortgage Rev., 8.375s,
2019 400 421,344
AA+ State of Georgia, Residential Finance Authority Rev., Home Ownership Mortgage, 8s, 2020 395 419,126
AA+ State of Georgia, Residential Finance Authority Rev., Home Ownership Mortgage, 7.25s, 2021 365 385,294
--------
$ 2,572,018
- --------------------------------------------------------------------------------------------------- ---------- --------
Multi-Family Housing Revenue - 4.9%
A Cobb County, GA, Housing Authority Rev. (Signature Place Project), 6.875s, 2017 $1,500 $1,531,005
NR Hinesville, GA, Leased Housing Corp. Rev. (Baytree Apartments), FHA, 6.7s, 2017 900 927,603
AAA St. Mary's, GA, Multi-Family Mortgage Rev. (Cumberland Oaks Apartments), FNMA, 7.375s, 2022 1,470 1,551,276
--------
$4,009,884
- --------------------------------------------------------------------------------------------------- ---------- --------
7
<PAGE>
Portfolio of investments - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Insured Health Care Revenue - 7.7%
AAA Albany-Dougherty County, GA, Hospital Authority Rev. (Phoebe Putney Memorial Hospital,
Inc.), AMBAC, 5.7s, 2013 $3,100 $ 3,060,041
AAA Albany-Dougherty County, GA, Hospital Authority Rev. (Phoebe Putney Memorial Hospital,
Inc.), AMBAC, 5s, 2020 500 432,805
AAA Gainesville & Hall County, GA, Hospital Authority Rev. (NE Health), MBIA, 5.75s, 2017 1,000 974,380
AAA Macon-Bibb County, GA, Hospital Authority Rev. (Memorial Medical Center), FGIC, 5.3s, 2013 2,000 1,906,360
--------
$ 6,373,586
- --------------------------------------------------------------------------------------------------- ---------- --------
Health Care Revenue - 6.2%
NR Fulton County, GA, Residential Care Facilities (Lenbrook Square Foundation), 9.75s, 2017 $1,065 $ 1,096,928
NR Richmond County, GA, Development Authority, Nursing Home Rfdg. (Beverly Enterprises),
8.75s, 2011 1,190 1,296,707
NR Royston, GA, Hospital Authority Rev. (Cobb Health), 7.375s, 2014 1,565 1,578,709
BBB+ Savannah, GA, Hospital Authority Rev. (Candler Hospital), 7s, 2011 1,100 1,115,763
--------
$ 5,088,107
- --------------------------------------------------------------------------------------------------- ---------- --------
Electric and Gas Utility Revenue - 6.7%
AAA Appling County, GA, Development Authority (Oglethorpe Power Corp.), MBIA, 7.15s, 2021 $1,400 $ 1,516,802
AAA Georgia Municipal Electric Authority, Power Rev., BIGI, 0s, 2008 2,500 1,286,650
AAA Georgia Municipal Electric Authority, Power Rev., BIGI, 0s, 2009 1,500 715,380
AAA Georgia Municipal Electric Authority, Power Rev., AMBAC, 0s, 2013 1,675 613,569
AAA Georgia Municipal Electric Authority, Special Obligation, MBIA, 6.5s, 2020 1,250 1,354,562
--------
$ 5,486,963
- --------------------------------------------------------------------------------------------------- ---------- --------
Water and Sewer Utility Revenue - 14.1%
NR Barnesville, GA, Water & Sewer Rev., 6.9s, 2022 $1,715 $ 1,782,279
AAA Brunswick, GA, Water & Sewer Rev., MBIA, 6.1s, 2014 1,000 1,047,160
AAA Cartersville, GA, Water & Sewer Rev., AMBAC, 7.2s, 2012 2,225 2,402,377
AAA Columbia County, GA, Water & Sewer Rev., AMBAC, 6.9s, 2011 1,000 1,079,120
AAA Douglasville-Douglas County, GA, Water & Sewer Authority, AMBAC, 5.625s, 2015 1,800 1,775,466
AAA Fulton County, GA, Water & Sewer Rev., FGIC, 6.375s, 2014 3,250 3,511,657
--------
$11,598,059
- --------------------------------------------------------------------------------------------------- ---------- --------
Airport and Port Revenue - 6.3%
AAA Atlanta, GA, Airport Facilities Rev., AMBAC, 0s, 2010 $6,000 $ 2,613,720
AAA Atlanta, GA, Airport Facilities Rev., MBIA, 0s, 2010 3,500 1,524,670
A Atlanta, GA, Airport Facilities Rev., 6.25s, 2021 500 501,620
BB Clayton County, GA, Development Authority, Special Facilities Rev. (Delta Air), 7.625s,
2020 500 518,085
--------
$ 5,158,095
- --------------------------------------------------------------------------------------------------- ---------- --------
Industrial Revenue (Corporate Guarantee) - 15.0%
NR Adel County, GA, Industrial Development Authority, Pollution Control Rev. (Weyerhaeuser
Co.), 9s, 2006 $1,000 $ 1,000,000
BB Atlanta, GA, Special Purpose Facilities Rev. (Delta Airlines Project), 7.9s, 2018 1,000 1,060,360
A Burke County, GA, Development Authority, Pollution Control Rev. (Georgia Power Co./Vogtle
Project), 8.375s, 2017 1,000 1,074,370
AA- Cartersville, GA, Development Authority Rev., Water & Wastewater Facilities (Anheuser-Busch
Cos., Inc.), 7.4s, 2010 500 588,970
B+ Effingham County, GA, Development Authority, Pollution Control Rev. (Fort Howard Corp.),
7.9s, 2005 1,750 1,855,472
NR Emanuel County, GA, Development Authority (Figgie Properties Project), 7.95s, 2004 475 478,472
BBB Gainesville & Hall County, GA, Industrial Development Authority (K-Mart), 6.375s, 2008 600 590,685
A+ Monroe County, GA, Development Authority, Pollution Control Rev. (Oglethorpe Power Corp.),
6.8s, 2012 1,000 1,082,920
AA- Savannah, GA, Economic Development Authority, Industrial Development Rev. (Hershey Foods
Corp.), 6.6s, 2012 1,450 1,545,675
NR Savannah, GA, Economic Development Authority (Union Camp Corp.), 6.15s, 2017 1,000 1,017,800
BBB Savannah, GA, Port Authority, Pollution Control Rev. (Union Carbide Corp.), 7.55s, 2004 1,000 1,021,920
BBB Wayne County, GA, Solid Waste Rev. (ITT-Rayonier, Inc.), 8s, 2015 1,000 1,105,750
--------
$12,422,394
- --------------------------------------------------------------------------------------------------- ---------- --------
Universities - 1.4%
AAA Marietta, GA, Development Authority Rev. (Life College, Inc.), CAP GTY, 5.8s, 2019 $1,200 $ 1,168,152
- --------------------------------------------------------------------------------------------------- ---------- --------
Other - 3.8%
AAA Cobb-Marietta, GA, Coliseum. & Exhibition Rfdg., MBIA, 5.5s, 2012 $1,550 $ 1,508,010
AA- George L. Smith II/Georgia World Congress Center Authority (Domed Stadium Project), 7.875s,
2020 1,475 1,618,252
--------
$ 3,126,262
- --------------------------------------------------------------------------------------------------- ---------- --------
Total Municipal Bonds (Identified Cost, $75,124,029) $80,536,952
--------------------------------------------------------------------------------------------------- ---------- --------
Floating Rate Demand Notes - 0.4%
NR State of Georgia, Hospital Equipment Financing Authority, due 2001, at Amortized Cost and
Value $ 300 $ 300,000
--------------------------------------------------------------------------------------------------- ---------- --------
Total Investments (Identified Cost, $75,424,029) $80,836,952
- --------------------------------------------------------------------------------------------------- ---------- --------
Other Assets, Less Liabilities - 1.7% 1,440,317
Net Assets - 100.0% $82,277,269
- --------------------------------------------------------------------------------------------------- ---------- --------
See notes to financial statements
8
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1995
MFS MASSACHUSETTS MUNICIPAL BOND FUND
Municipal Bonds - 97.1%
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Student Loan Revenue - 0.1%
AAA Massachusetts Education Loan Authority, 9s, 2001 $ 135 $ 138,087
--------------------------------------------------------------------------------------------------- ------------ ----------
General Obligation - 10.8%
AAA Boston, MA, AMBAC, 6.5s, 2012 $ 2,000 $ 2,132,100
A+ Commonwealth of Massachusetts, 0s, 2004 10,000 6,332,100
AAA Commonwealth of Massachusetts, MBIA, 7.5s, 2004 2,850 3,375,853
A+ Commonwealth of Massachusetts, 0s, 2005 2,000 1,213,380
A+ Commonwealth of Massachusetts, 0s, 2005 2,000 1,193,020
AAA Commonwealth of Massachusetts, FGIC,
0s, 2006 4,000 2,321,400
AAA Commonwealth of Massachusetts, AMBIC, 6.75s, 2009 2,500 2,702,150
AAA Commonwealth of Massachusetts, FGIC, 7s, 2009 1,250 1,437,687
AAA Gloucester, MA, AMBAC, 7s, 2009 225 248,719
AAA Gloucester, MA, AMBAC, 7s, 2010 215 237,665
AAA Haverhill, MA, FGIC, 7s, 2012 1,250 1,360,612
AAA Holyoke, MA, MBIA, 8s, 2001 1,700 1,981,435
AAA Holyoke, MA, MBIA, 8.1s, 2005 500 599,630
NR Holyoke, MA, Electric Rev., 8s, 2001 690 742,798
AAA Lawrence, MA, AMBAC, 9.75s, 2002 600 764,940
NR Lowell, MA, 8.4s, 2009 1,000 1,159,240
NR Northbridge, MA, 7.6s, 2001 325 366,281
AAA Princeton, MA, AMBAC, 7.25s, 2009 490 540,744
--------
$28,709,754
- --------------------------------------------------------------------------------------------------- ---------- --------
State and Local Appropriation - 13.0%
A+ Massachusetts Bay Transportation Authority, 5.5s, 2012 $ 5,000 $ 4,928,700
A+ Massachusetts Bay Transportation Authority, 5.875s, 2015 1,965 1,997,697
A+ Massachusetts Bay Transportation Authority, 6.2s, 2016 15,725 16,606,229
AAA Massachusetts Bay Transportation Authority, AMBAC, 5.25s, 2017S.S. 8,370 7,730,280
A+ Massachusetts Bay Transportation Authority, 5.875s, 2019 3,600 3,574,872
--------
$34,837,778
- --------------------------------------------------------------------------------------------------- ---------- --------
Refunded and Special Obligation - 15.0%
AAA Boston, MA, MBIA, 7.75s, 1998 $ 500 $ 553,010
A+ Commonwealth of Massachusetts, 6.875s, 2001 11,000 12,418,582
NR Holyoke, MA, 9.85s, 1997 400 451,516
NR Lowell, MA, 7.625s, 2001 4,875 5,683,128
AAA Massachusetts Bay Transportation Authority, 8.5s, 1999 3,000 3,433,800
AAA Massachusetts Bay Transportation Authority, 7.875s, 2001 1,500 1,756,215
AAA Massachusetts Federally Assisted Housing, ETM, 0s, 2023 4,285 750,774
AA Massachusetts Health & Education Facilities Authority (Children's Hospital), 7.75s, 1998 2,425 2,672,907
AAA Massachusetts Health & Education Facilities Authority (Newton-Wellesley Hospital), BIGI,
8s, 1998 3,290 3,670,784
NR Massachusetts Health & Education Facilities Authority (Saint Elizabeth's Hospital), FHA,
7.75s, 1997 1,250 1,350,237
AAA Massachusetts Health & Education Facilities Authority (South Shore Hospital), MBIA, 8.125s,
1997 1,070 1,159,997
NR Massachusetts Health & Education Facilities Authority (Suffolk University), 8s, 2000 $ 1,750 $ 2,023,472
NR Massachusetts Health & Education Facilities Authority (Youville Hospital), 9s, 1996 540 559,429
NR Massachusetts Health & Education Facilities Authority (Youville Hospital), 9.1s, 1996 455 471,516
NR Massachusetts Industrial Finance Agency (Cape Cod Health System), 8.5s, 2000 500 597,620
AAA Massachusetts Port Authority Rev., ETM, 12.75s, 2002 485 668,853
AAA Massachusetts Port Authority Rev., ETM, 13s, 2013 780 1,282,803
AAA Palmer, MA, AMBAC, 7.7s, 2000 500 578,825
--------
$40,083,468
- --------------------------------------------------------------------------------------------------- ---------- --------
Single Family Housing Revenue - 3.1%
A+ Massachusetts Housing Finance Agency, 9.5s, 2016 $ 1,590 $ 1,640,466
A+ Massachusetts Housing Finance Agency, 8.1s, 2020 2,350 2,455,726
A+ Massachusetts Housing Finance Agency, 8.1s, 2021 2,000 2,098,480
A+ Massachusetts Housing Finance Agency, 7.95s, 2023 990 1,042,291
A Massachusetts Housing Finance Agency, 7.5s, 2029 930 937,830
--------
$ 8,174,793
- --------------------------------------------------------------------------------------------------- ---------- --------
Multi-Family Housing Revenue - 4.3%
AAA Massachusetts Housing Finance Agency, AMBAC, 6.65s, 2019 $ 1500 $ 1,540,125
AAA Massachusetts Housing Finance Agency, GNMA, 9.125s, 2020 490 502,612
BBB+ Massachusetts Housing Finance Agency, 8.4s, 2021 2,190 2,256,532
A+ Massachusetts Housing Finance Agency, 8.88s, 2021 1,995 2,071,109
AAA Massachusetts Housing Finance Agency, FNMA, 6.9s, 2025 1,700 1,774,919
BBB+ Massachusetts Housing Finance Agency, 8.2s, 2027 720 758,520
AAA Massachusetts Housing Finance Agency, FNMA, 7.65s, 2028 1,430 1,490,546
AAA Somerville, MA, Housing Authority Revenue (Clarendon Hill), GNMA, 7.85s, 2010 1,000 1,076,700
--------
$11,471,063
- --------------------------------------------------------------------------------------------------- ---------- --------
Insured Health Care Revenue - 4.3%
AAA Massachusetts Health & Education Facilities Authority (Beth Israel), INFLOS, AMBAC, 8.168s,
2025++++ $ 4,000 $ 3,981,760
AAA Massachusetts Health & Education Facilities Authority (Brigham & Women's Hospital), MBIA,
6.75s, 2024 2,000 2,126,020
AAA Massachusetts Health & Education Facilities Authority (Newton-Wellesley Hospital), MBIA,
6s, 2025 2,000 1,999,780
NR Massachusetts Health & Education Facilities Authority (Youville), FHA,
6s, 2034 2,000 1,942,200
NR Massachusetts Industrial Finance Agency (Meadow Green Nursing Home), FHA, 9.6s, 2027 1,470 1,569,004
--------
$11,618,764
- --------------------------------------------------------------------------------------------------- ---------- --------
9
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Health Care Revenue - 18.1%
NR Boston, MA, Industrial Development Finance Authority Rev. (Stonehedge Convalescent),
10.75s, 2011 $ 805 $ 876,371
AA Massachusetts Health & Education Facilities Authority (Children's Hospital), 6.125s, 2012 2,285 2,322,725
A Massachusetts Health & Education Facilities Authority (New England Deaconess), 6.875s, 2022 6,750 6,887,430
A Massachusetts Health & Education Facilities Authority (Dana-Farber), 5.5s, 2027 2,500 2,185,250
A Massachusetts Health & Education Facilities Authority (Beth Israel Hospital), 7s, 2014 3,000 3,177,990
NR Massachusetts Health & Education Facilities Authority (Central New England Health), 6.125s,
2013 2,200 1,981,276
A- Massachusetts Health & Education Facilities Authority (Charlton Memorial Hospital), 7.25s,
2013 1,700 1,779,475
BBB Massachusetts Health & Education Facilities Authority (Emerson Hospital), 8s, 2018 1,775 1,878,251
NR Massachusetts Health & Education Facilities Authority (Fairview Extended Care), 10.25s,
2021 2,000 2,262,640
A- Massachusetts Health & Education Facilities Authority (Jordan Hospital), 6.875s, 2022 2,150 2,198,848
BB Massachusetts Health & Education Facilities Authority (Massachusetts Eye & Ear Infirmary),
7.375s, 2011 3,000 2,968,590
BBB Massachusetts Health & Education Facilities Authority (Sisters of Providence), 6.5s, 2008 1,900 1,950,293
NR Massachusetts Industrial Finance Agency (Beverly Enterprises), 8.375s, 2009 2,000 2,138,240
NR Massachusetts Industrial Finance Agency (Continental Healthcare), 11.875s, 2015 5,465 5,713,821
NR Massachusetts Industrial Finance Agency (Evanswood), 7.625s, 2014 1,200 1,236,912
NR Massachusetts Industrial Finance Agency (Martha's Vineyard Long-Term Care), 9.25s, 2022 3,000 2,850,000
NR Massachusetts Industrial Finance Agency (Massachusetts Biomedical Research), 0s, 2004 5,000 3,054,300
NR Massachusetts Industrial Finance Agency (Massachusetts Biomedical Research), 0s, 2010 5,300 2,091,274
NR Massachusetts Industrial Finance Agency (Needham/Hamilton House), 11s, 2010 700 715,967
--------
$ 48,269,653
- --------------------------------------------------------------------------------------------------- ---------- --------
Water and Sewer Utility Revenue - 6.7%
A Massachusetts Water Resources Authority, 5.5s, 2015 $4,600 $ 4,332,142
A Massachusetts Water Resources Authority, 6.5s, 2019 8,000 8,696,640
A Massachusetts Water Resources Authority, 5.5s, 2022 5,150 4,776,161
--------
$ 17,804,943
- --------------------------------------------------------------------------------------------------- ---------- --------
Turnpike Revenue - 3.4%
NR Massachusetts Industrial Finance Agency, Tunnel Rev. (Mass Turnpike), 9s, 2020 $8,220 $ 8,973,116
- --------------------------------------------------------------------------------------------------- ---------- --------
Airport and Port Revenue - 4.6%
AA- Massachusetts Port Authority Rev., 5s, 2015 $5,600 $ 4,997,272
AAA Massachusetts Port Authority Rev., FGIC, 7.5s, 2020 4,500 4,972,725
BB+ Puerto Rico Ports Authority (American Airline), 6.3s, 2023 2,370 2,360,733
--------
$ 12,330,730
- --------------------------------------------------------------------------------------------------- ---------- --------
Industrial Revenue (Corporate Guarantee) - 0.5%
NR Massachusetts Industrial Finance Agency (Automatic Data Processing, Inc.), 8.25s, 2019 $ 900 $ 923,598
NR Springfield, MA, Industrial Development Finance Agency (Terminal Building), 10s, 2001 393 398,410
--------
$ 1,322,008
- --------------------------------------------------------------------------------------------------- ---------- --------
Universities - 7.8%
AAA Massachusetts Health & Education Facilities Authority (Boston University), MBIA, RIBS,
9.147s, 2031++++ $5,000 $ 5,455,800
AAA Massachusetts Health & Education Facilities Authority (Harvard University), 5.625s, 2028 4,000 3,939,480
AA+ Massachusetts Health & Education Facilities Authority (Wellesley College), 5.375s, 2019 3,440 3,222,798
AAA Massachusetts Industrial Finance Agency (Brandeis University), MBIA, 0s, 2004 1,000 642,990
AAA Massachusetts Industrial Finance Agency (Brandeis University), MBIA, 0s, 2005 1,000 609,270
AAA Massachusetts Industrial Finance Agency (Brandeis University), MBIA, 0s, 2009 1,000 460,480
AAA Massachusetts Industrial Finance Agency (Brandeis University), MBIA, 0s, 2010 1,000 432,500
AAA Massachusetts Industrial Finance Agency (Brandeis University), MBIA, 0s, 2011 500 202,905
NR Massachusetts Industrial Finance Agency (Curry College), 8s, 2010 635 632,288
NR Massachusetts Industrial Finance Agency (Curry College), 8s, 2014 2,000 2,027,800
NR Massachusetts Industrial Finance Agency (Emerson College), 8.9s, 2017 1,000 1,114,440
AAA Massachusetts Industrial Finance Agency (Lesley College), Connie Lee, 6.3s, 2025 2,000 2,034,660
--------
$ 20,775,411
- --------------------------------------------------------------------------------------------------- ---------- --------
Other - 5.4%
NR Martha's Vineyard, MA, Land Bank, 8.125s, 2011 $4,200 $ 4,329,318
NR Massachusetts Health & Education Facilities Authority (Learning Center for the Deaf), 8s,
2020 1,500 1,501,890
NR Massachusetts Health & Education Facilities Authority (Learning Center for Deaf), 9.25s,
2014 2,250 2,419,537
BBB Massachusetts Industrial Finance Agency (Dexter School), 7.5s, 2011 1,720 1,829,822
BBB Massachusetts Industrial Finance Agency (Dexter School), 7.5s, 2021 2,900 3,085,165
NR Nantucket Island, MA, Land Bank, 7.75s, 2020 1,200 1,339,512
--------
$ 14,505,244
- --------------------------------------------------------------------------------------------------- ---------- --------
Total Municipal Bonds (Identified Cost, $242,026,298) $259,014,790
- --------------------------------------------------------------------------------------------------- ---------- --------
10
<PAGE>
Portfolio of Investments (Unaudited) - continued
Call Option Purchased - 0.1%
Principal
Amount
S&P of Contracts
Bond (000
Rating Issuer/Expiration Date/Strike Price Omitted) Value
- ------- -------------------------------------------------------------------- ------------ -------------
NR Georgia Municipal Electric Authority Power Co./2003/103
(Premium Paid, $131,400) $ 10 $ 274,200
- ------- ------------------------------------------------------------------ ---------- -----------
Total Investments (Identified Cost, $242,157,698) $259,289,012
Other Assets, Less Liabilities - 2.8% $ 7,581,723
- ------------------------------------------------------------------------------- ---------- -----------
Net Assets - 100.0% $266,870,735
- ----------------------------------------------------------------------------------------------- -----------
++++Inverse floating rate security.
[SS]When-issued security. At September 30, 1995, the Fund had sufficient cash and/or securities at least equal
to the value of the when-issued security.
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
MFS NEW YORK MUNICIPAL BOND FUND
Municipal Bonds - 95.0%
- ------------------------------------------------------------------------------- ---------- -----------
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------- ---------- -----------
General Obligation -9.4%
AAA Brookhaven, NY, FGIC, 5.5s, 2013S.S. $1,000 $ 967,510
AAA Erie County, NY, FGIC, 5.5s, 2025 150 142,864
BBB+ New York, NY, 7.2s, 2008 1,000 1,071,870
BBB+ New York, NY, 7.3s, 2010 880 942,955
BBB+ New York, NY, 7.3s, 2011 5,000 5,357,700
BBB+ New York, NY, 7.375s, 2013 1,600 1,710,144
BBB+ New York, NY, 8s, 2015 10 11,242
BBB+ New York, NY, 8.25s, 2016 160 182,388
BBB+ New York, NY, 8s, 2018 60 67,490
NR Oswego County, NY, 6.7s, 2009 1,000 1,110,780
AAA Port Byron, NY, Central School District, AMBAC, 7.4s, 2012 500 603,455
AAA Port Byron, NY, Central School District, AMBAC, 7.4s, 2013 500 607,220
AAA Port Byron, NY, Central School District, AMBAC, 7.4s, 2014 500 610,785
AAA Port Byron, NY, Central School District, AMBAC, 7.4s, 2015 500 610,715
NR Territory of Virgin Islands, 7.75s, 2006 415 458,392
AAA Washingtonville, NY, Central School District, FGIC, 7.35s, 2008 550 653,493
AAA Washingtonville, NY, Central School District, FGIC, 7.35s, 2009 550 650,259
---------
$ 15,759,262
- ------- ------------------------------------------------------------------ --------- ---------
State and Local Appropriation - 22.2%
BBB Metropolitan Transportation Authority, NY, 5.75s, 2007 $ 250 $ 249,137
BBB Metropolitan Transportation Authority, NY, 0s, 2008 4,750 2,236,015
BBB Metropolitan Transportation Authority, NY, 0s, 2012 4,700 1,668,735
BBB Metropolitan Transportation Authority, NY, Services Contract,
7.375s, 2008 2,000 2,250,620
BBB Metropolitan Transportation Authority, NY, Services Contract, 0s,
2009 4,920 2,159,929
BBB New York Dormitory Authority Rev. (City University), 8.125s, 2008 1,500 1,674,255
BBB New York Dormitory Authority Rev. (City University), 5.75s, 2012 3,000 2,879,940
BBB New York Dormitory Authority Rev. (City University), 5.75s, 2013 1,250 1,191,887
BBB New York Dormitory Authority Rev. (City University), 5.75s, 2018 800 755,256
BBB+ New York Dormitory Authority Rev. (Correct Courts), 5.5s, 2010 1,865 1,761,604
BBB New York Dormitory Authority Rev. (Department of Health), 5.5s,
2014 $ 325 $ 299,481
BBB New York Dormitory Authority Rev. (Department of Health), 5.5s,
2020 2,500 2,256,000
AAA New York Dormitory Authority Rev. (Mental Health Svcs.), FGIC,
5.375s, 2014 2,000 1,886,980
BBB+ New York Dormitory Authority Rev. (State University), 5.875s, 2017 610 590,638
A New York Local Government Assistance Corp., 5.375s, 2016 2,600 2,432,404
BBB+ New York Medical Care Facilities Finance Agency, Mental Health
Svcs., 7.875s, 2008 245 275,801
AAA New York Medical Care Facilities Finance Agency, Mental Health
Svcs., FSA, 5.375s, 2014 1,000 938,140
BBB+ New York Medical Care Facilities Finance Agency, Mental Health
Svcs., 6.375s, 2014 1,000 1,013,460
BBB New York Medical Care Facilities Finance Agency, Mental Health
Svcs. (Huntington Mortgage), 6.5s, 2014 1,250 1,261,537
AAA New York Medical Care Facilities Finance Agency, Mental Health
Svcs., MBIA, 6.15s, 2015 600 608,694
AAA New York Medical Care Facilities Finance Agency, Mental Health
Svcs., FSA, 5.25s, 2019 1,500 1,362,870
AAA New York Medical Care Facilities Finance Agency, Mental Health
Svcs., FGIC, 5.25s, 2019 2,000 1,824,200
BBB+ New York Medical Care Facilities Finance Agency, Mental Health
Svcs., 7.3s, 2021 250 275,815
AAA New York Urban Development Corp., State Facilities Rev., MBIA,
5.75s, 2015 1,000 983,770
BBB New York Urban Development Corp., State Facilities Rev., 7.5s,
2020 1,000 1,098,030
BBB New York Urban Development Corp., State Facilities Rev., 5.375s,
2023 700 610,267
AAA New York, NY, Transportation (Livingston Pl.), FSA, 5.25s, 2020 385 350,119
A Puerto Rico Public Buildings Authority, GTD, Education & Health,
5.31s, 2016S. 2,000 1,856,240
NR Troy, NY, Certificate of Participation, Recreational Facilities
Rev., 9.75s, 2010 930 93,000
NR United Nations Dev. C., 6s, 2026 350 351,834
---------
$37,196,658
- ------- ------------------------------------------------------------------ --------- ---------
Refunded and Special Obligation - 11.4%
BBB+ New York, NY, 8s, 2001 $ 490 $ 580,429
BBB+ New York, NY, 8.25s, 2001 1,840 2,222,812
A- New York, NY, Municipal Water & Sewer Finance Authority, 7s, 2001 530 598,576
A- New York, NY, Municipal Water & Sewer Finance Authority, 7s, 2001 225 254,112
A- New York, NY, Municipal Water & Sewer Finance Authority, 7.375s,
2001 2,000 2,309,220
AAA New York Local Government Assistance Corp., 7.25s, 2001 2,500 2,870,375
AAA New York Medical Care Facilities Finance Agency (Buffalo General
Hospital), FHA, 7.7s, 1998 500 557,760
AAA New York Medical Care Facilities Finance Agency (Catholic), FHA,
8.3s, 1998 515 571,583
11
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Refunded and Special Obligation - continued
AAA New York Medical Care Facilities Finance Agency (Long Island Hospital), 8.1s, 1998 $1,500 $ 1,658,130
AAA New York Medical Care Facilities Finance Agency, Mental Health Svcs., 7.875s, 2000 225 262,523
AAA New York Medical Care Facilities Finance Agency, Mental Health Svcs., 7.875s, 2000 560 653,391
AAA New York Medical Care Facilities Finance Agency, Mental Health Svcs., 7.3s, 2001 750 868,672
AAA New York Medical Care Facilities Finance Agency (Presbyterian Hospital), FHA, 7.7s, 2000 750 869,392
AAA New York Medical Care Facilities Finance Agency (St. Luke's Hospital), FHA, 7.45s, 2000 2,600 2,954,536
AA- New York Power Authority, General Purpose, 8s, 1998 380 417,209
AAA Puerto Rico Aqueduct & Sewer Authority, 9s, 2005 250 326,030
AAA Triborough Bridge & Tunnel Authority, NY, 7.375s, 2000 1,000 1,126,340
------
$19,101,090
- ----------------------------------------------------------------------------------------------------- --------- ------
Single Family Housing Revenue - 4.3%
NR New York, NY, Housing Development Authority (South Bronx Cooperatives), 8.1s, 2023 $ 580 $ 608,843
NR New York Mortgage Agency Rev., 7.375s, 2011 1,295 1,378,061
NR New York Mortgage Agency Rev., 8s, 2011 780 855,714
NR New York Mortgage Agency Rev., 6.45s, 2017 2,355 2,425,273
NR New York Mortgage Agency Rev., 8s, 2021 325 353,834
NR New York Mortgage Agency Rev., 8s, 2022 555 598,045
NR New York Mortgage Agency Rev., 7.75s, 2023 995 1,064,899
------
$ 7,284,669
- ----------------------------------------------------------------------------------------------------- --------- ------
Multi-Family Housing Revenue - 0.6%
BBB+ New York Dormitory Authority Rev., 5.7s, 2022 $ 650 $ 595,166
BBB New York Dormitory Authority Rev., 5.6s, 2023 425 385,118
------
$ 980,284
- ----------------------------------------------------------------------------------------------------- --------- ------
Insured Health Care Revenue - 13.6%
AAA New York Dormitory Authority Rev. (St. Vincent's Hospital), FHA, 7.375s, 2011 $2,500 $ 2,743,750
AAA New York Medical Care Facilities Finance Agency (St. Lukes), 5.6s, 2013 930 913,167
AAA New York Medical Care Facilities Finance Agency (Mount Sinai), MBIA, FHA, 5.75s, 2019 6,000 5,840,040
AAA New York Medical Care Facilities Finance Agency (Presbyterian), 5.5s, 2024 875 811,930
AAA New York Medical Care Facilities Finance Agency (Presbyterian), MBIA, 5.375s, 2025 4,945 4,578,179
AAA New York Medical Care Facilities Finance Agency (NY Hospital), AMBAC, FHA, 6.5s, 2029 2,550 2,659,073
AA New York Medical Care Facilities Finance Agency (Montefiore Medical), FHA, 7.25s, 2009 3,190 3,456,205
AA New York Medical Care Facilities Finance Agency (Montefiore Medical), FHA, 7.25s, 2024 $1,750 $ 1,888,127
------
$22,890,471
- ----------------------------------------------------------------------------------------------------- --------- ------
Health Care Revenue - 1.8%
NR Albany, NY, Industrial Development Authority, Civic Facilities Rev., 8.25s, 2004 $2,135 $ 2,266,238
NR Tompkins County, NY, Industrial Development Authority, 7.875s, 2024 700 705,901
------
$ 2,972,139
- ----------------------------------------------------------------------------------------------------- --------- ------
Electric and Gas Utility Revenue - 3.7%
AAA New York Power Authority, FGIC, 6.5s, 2008 $2,500 $ 2,802,000
AA- New York Power Authority, 5.25s, 2018 525 479,288
A- Puerto Rico Electric Power, 0s, 2017 500 130,825
A+ Puerto Rico Telephone Authority, 5.5s, 2013 250 241,027
NR Virgin Islands Water & Power Authority, Electric Systems Rev., 7.4s, 2011 2,450 2,569,952
------
$ 6,223,092
- ----------------------------------------------------------------------------------------------------- --------- ------
Water and Sewer Utility Revenue - 9.9%
AAA Buffalo, NY, Municipal Water Authority, FGIC, 5s, 2025 $1,000 $ 873,170
A- New York, NY, Municipal Water & Sewer Finance Authority, 6s, 2010 620 639,232
A- New York, NY, Municipal Water & Sewer Finance Authority, 7.1s, 2012 2,000 2,199,160
A- New York, NY, Municipal Water & Sewer Finance Authority, 7s, 2015 745 813,242
A- New York, NY, Municipal Water & Sewer Finance Authority, 6s, 2017 200 196,380
A- New York, NY, Municipal Water & Sewer Finance Authority, 7.6s, 2020 470 522,668
A- New York, NY, Municipal Water & Sewer Finance Authority, 5.5s, 2023 1,500 1,382,125
A- New York Environmental Facilities Corp., Pollution Control Rev., 5.75s, 2010 3,235 3,313,966
A New York Environmental Facilities Corp., Pollution Control Rev., 6.875s, 2010 2,000 2,186,960
NR New York Environmental Facilities Corp., Water Facilities Rev., 8.85s, 2015 2,500 2,791,650
AAA Suffolk County, NY, Water Authority, 5.1s, 2012 1,895 1,761,573
------
$16,680,126
- ----------------------------------------------------------------------------------------------------- --------- ------
Turnpike Revenue - 7.0%
AAA Buffalo & Fort Erie, NY, MBIA, 5.75s, 2025 $3,255 $ 3,160,865
A New York Throughway Authority, 5.75s, 2019 500 486,200
BBB Triborough Bridge & Tunnel Authority, NY, 0s, 2012 360 132,879
A+ Triborough Bridge & Tunnel Authority, NY, 6.625s, 2012 250 274,782
A+ Triborough Bridge & Tunnel Authority, NY, 5.5s, 2017 8,000 7,623,120
------
$11,677,846
- ----------------------------------------------------------------------------------------------------- --------- ------
Airport and Port Revenue - 1.1%
A New York, NY, Industrial, 6s, 2019 $2,000 $ 1,915,140
- ----------------------------------------------------------------------------------------------------- --------- ------
12
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Industrial Revenue (Corporate Guarantee) - 3.8%
A+ Allegany County, NY, Industrial Development Authority, Solid Waste Rev. (Atlantic
Richfield), 6.625s, 2016 $1,000 $ 1,037,970
NR Fulton County, NY, Industrial Development
Agency (Crossroads Incubator), 8.75s, 2009 1,160 1,249,076
NR Monroe County, NY, Industrial Development
Agency (Weyerhaeuser Co.), 9s, 2006 1,000 1,036,900
BB+ New York Energy Rev. (Long Island Lighting Company), 6.9s, 2022 2,000 2,004,180
BB+ New York, NY, Industrial Development Agency, Special Facilities Rev. (American Airlines),
6.9s, 2024 1,000 1,035,200
------
$ 6,363,326
- ----------------------------------------------------------------------------------------------------- --------- ------
Universities - 2.3%
AAA New York Dormitory Authority Rev. (Fordham University), FGIC, 5.5s, 2023 $1,000 $ 939,170
AA New York Dormitory Authority Rev. (Cornell University), 7.375s, 2020 1,500 1,688,940
AA New York Dormitory Authority Rev. (Menorah Campus), FHA, 7.4s, 2031 1,095 1,216,983
------
$ 3,845,093
- ----------------------------------------------------------------------------------------------------- --------- ------
Other - 3.5%
AA Battery Park City Authority, 5.7s, 2020 $4,000 $ 3,838,200
NR Dutchess, NY, Industrial Development Agency, Civic Facilities Rev., 8.625s, 2016 1,145 1,224,955
BBB Virgin Islands Public Finance Authority, Highway Rev., 7.7s, 2004 800 883,064
------
$ 5,946,219
- ----------------------------------------------------------------------------------------------------- --------- ------
Special Assessment District - 0.4%
A Grand Central, NY, Business Improvement Dist. Capital, 5.25s, 2022 $ 810 $ 729,720
- ----------------------------------------------------------------------------------------------------- --------- ------
Total Municipal Bonds (Identified Cost, $150,241,326) $159,565,135
- ------------------------------------------------------------------------------------------------------------------- --------
Call Options Purchased - 0.2%
--------------------------------------------------------------------------------------------------- ---------- --------
Principal
Amount
of
Contracts
(000
Issuer/Expiration Date/Strike Price Omitted)
--------------------------------------------------------------------------------------------------- ---------- --------
NR Georgia Municipal Electric Authority/ 2003/102 $ 1 $ 19,194
NR North Carolina Eastern Municipal Power Agency/2003/102 5 81,150
NR State of New Jersey, "D"/2003/102 2 152,300
- ----------------------------------------------------------------------------------------------------- --------- ------
Total Call Options Purchased (Premiums Paid, $555,000) $ 252,644
- ------------------------------------------------------------------------------------------------------------------- --------
Short-Term Obligations - 0.9%
--------------------------------------------------------------------------------------------------- ---------- --------
Principal
Amount
(000
Issuer Omitted)
--------------------------------------------------------------------------------------------------- ---------- --------
NR New York City, NY, Municipal Water Finance Authority, due 2022, at Amortized Cost and Value $1,500 $ 1,500,000
- ----------------------------------------------------------------------------------------------------- --------- ------
Floating Rate Demand Notes - 0.5%
- ----------------------------------------------------------------------------------------------------- --------- ------
NR New York, NY, Municipal, 0s, due 2023 $ 600 $ 600,000
AAA New York, NY, Municipal Water & Sewage Authority, due 2024 200 200,000
- ----------------------------------------------------------------------------------------------------- --------- ------
Total Floating Rate Demand Notes, at Identified Cost $ 800,000
- ------------------------------------------------------------------------------------------------------------------- --------
Total Investments (Identified Cost, $153,096,326) $162,117,779
Other Assets, Less Liabilities - 3.4% $ 5,657,120
- --------------------------------------------------------------------------------------------------- ---------- --------
Net Assets - 100.0% $167,774,899
- ------------------------------------------------------------------------------------------------------------------- --------
[S]Indexed security.
[SS]When-issued security. At September 30, 1995, the Fund had sufficient cash and/or securities at least equal to the value of
the when-issued security.
See notes to financial statements
Municipal Bonds - 96.9%
- --------------------------------------------------------------------------------------------------- ----------------------
General Obligation - 12.0%
AAA Bangor, PA, Area School District (Northampton), AMBAC, 5.4s, 2017 $ 750 $706,297
AAA Bedford, PA, Area School, MBIA, 5.5s, 2017 500 480,425
AAA Berks County, PA, FGIC, 0s, 2018 2,200 561,308
AAA Dauphin County, PA, General Authority Hospital Revenue, MBIA, 0s, 2020 940 209,225
A Dauphin County, PA, General Authority Hospital Revenue, Variable Rate Demand, 5.8s, 2026 400 394,548
BBB- Greene County, PA, 6s, 2010 100 98,971
AAA Lehigh County, PA, FGIC, 5.125s, 2011 500 468,670
AAA Montour Pittsburgh, PA, MBIA, 0s, 2019 1,190 305,175
AAA Northeastern York County, PA, School District, FGIC, 0s, 2012 415 162,667
AAA Oley Valley, PA, School District, AMBAC, 0s, 2011 810 334,764
AA- State of Pennsylvania, 6.25s, 2010 300 321,426
AA- State of Pennsylvania, 5.375s, 2012 500 481,445
A Southeastern Area Special Schools Authority Rev., 0s, 2007 360 174,884
AAA Southern Fulton, PA, School District, CAP GTY, 0s, 2016 460 133,574
------
$4,833,379
- ----------------------------------------------------------------------------------------------------- --------- ------
State and Local Appropriation - 3.6%
AAA Philadelphia, PA, Municipal Authority Rev., FGIC, 5.625s, 2014 $600 $ 581,778
NR Philadelphia, PA, Municipal Authority Rev. (Justice Lse), 8.625s, 2016 400 438,812
AAA State of Pennsylvania, Certificates of Participation, AMBAC, 5.25s, 2010 250 234,980
AAA State of Pennsylvania, Certificates of Participation, AMBAC, 5s, 2015 250 221,230
------
$1,476,800
- ----------------------------------------------------------------------------------------------------- --------- ------
Refunded and Special Obligation - 6.0%
AAA Allegheny County, PA, Sanitation Authority, FGIC, 7.45s, 1999 $200 $ 220,744
AAA Bethlehem, PA, Authority, Water Rev., MBIA, 6.1s, 2002 500 543,455
AAA Philadelphia, PA, Gas Works Rev., ETM, 6s, 2013 645 644,967
AAA Puerto Rico Highway and Special Obligation & Transport Authority, Highway Rev., 6.5s, 2002 250 280,777
AAA Schuylkill County, PA, Redevelopment Authority Rev., FGIC, 7s, 2007 300 332,916
AAA Westmoreland County, PA, MBIA, ETM, 5.25s, 2009 400 395,592
------
$2,418,451
- ----------------------------------------------------------------------------------------------------- --------- ------
Single Family Housing Revenue - 4.4%
AA Pennsylvania Housing Finance Agency, 6.75s, 2014 $500 $ 516,800
AA Pennsylvania Housing Finance Agency, 6.4s, 2016 500 506,760
AA Pennsylvania Housing Finance Agency, 6.65s, 2021 250 256,657
AA Pennsylvania Housing Finance Agency, 6.125s, 2024 500 495,055
------
$1,775,273
- ----------------------------------------------------------------------------------------------------- --------- ------
13
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Multi-Family Housing Revenue - 3.2%
NR Montgomery, PA, Redevelopment Authority (KBF Associates), 6.5s, 2025 $ 250 $ 234,975
AAA Pennsylvania Housing Finance Agency, Rental Housing, FNMA, 5.75s, 2014 275 268,727
AAA Pennsylvania Housing Finance Agency, Rental Housing, FNMA, 5.8s, 2022 800 773,624
------
$1,277,326
- ----------------------------------------------------------------------------------------------------- --------- ------
Insured Health Care Revenue - 11.0%
AAA Allegheny County, PA, Hospital Authority (Magee Women's), FGIC, 0s, 2015 $1,000 $ 304,860
AAA Blair County, PA, Hospital Authority (Altoona), AMBAC, 5.5s, 2008 470 469,793
AAA Butler County, PA, Hospital Authority, Hospital Rev. (Butler Memorial Hospital), FSA,
5.25s, 2016 400 364,128
AAA Dauphin County, PA, General Authority Hospital Revenue (Hapsco Project), MBIA, 5.8s, 2002 355 375,604
AAA Dauphin County, PA, General Authority Hospital Revenue (Western PA Hospital), MBIA, 5.5s,
2023 700 648,480
AAA Delaware County, PA, Hospital (Crozer Chester), MBIA, 5.3s, 2020 500 454,745
AAA Lehigh County, PA, Hospital Rev. (LeHigh Valley), MBIA, 7s, 2016 250 282,960
NR Philadelphia, PA, Health & Education Facilities Authority (St. Agnes Hospital), FHA, 7.25s,
2031 500 537,825
AAA Sayre, PA, Health Care Facilities (VHA PA), AMBAC, 6.375s, 2022 160 164,692
AAA Sewickley Valley, PA, Hospital Authority (Sewickley Valley Hospital), MBIA, 5.75s, 2016 850 830,662
------
$4,433,749
- ----------------------------------------------------------------------------------------------------- --------- ------
Health Care Revenue - 7.7%
A- Butler County, PA, Industrial Development Authority (Sherwood Oaks), 5.75s, 2011 $ 400 $ 377,260
AA- Chester County, PA, Health & Education (Main Line), 5.5s, 2015 335 315,714
BBB- Cumberland County, PA, Municipal Rfdg. (Carlisle Hospital), 6.8s, 2023 500 475,875
NR Montgomery County, PA (AHF-Amber), 8.5s, 2023 210 203,330
AA Philadelphia, PA, Health & Educational Facilities Authority (Childrens), 5.375s, 2014 500 459,515
BBB+ Philadelphia, PA, Health & Educational Facilities Authority (Graduate Health), 6.25s, 2018 300 281,898
BBB Philadelphia, PA, Health & Educational Facilities Authority (Jeanes Health), 6.6s, 2010 500 480,465
A- Philadelphia, PA, Health & Educational Facilities Authority (Temple University), 6.625s,
2023 250 247,302
A- Union County, PA, Hospital Authority Rev. (Evangelical), 5.875s, 2023 300 272,403
------
$3,113,762
- ----------------------------------------------------------------------------------------------------- --------- ------
Electric and Gas Utility Revenue - 8.1%
A Harrisburg, PA, Authority Rev., 5.875s, 2021 $1,000 $ 974,130
AAA Luzerne County, PA, Industrial Development Authority, AMBAC, 7.2s, 2017 500 551,620
BBB- Luzerne County, PA, Industrial Development Authority, 6s, 2019 300 281,772
NR Pennsylvania Economic Development (Northampton Generating), 6.5s, 2013 250 242,285
BBB Philadelphia, PA, Gas Works Rev., 6.375s, 2014 750 753,555
BBB Philadelphia, PA, Gas Works Rev., 5.25s, 2015 250 216,362
NR Schuylkill County, PA, Industrial Development Authority (Schuykill Energy Res.), 6.5s, 2010 240 238,927
------
$3,258,651
- ----------------------------------------------------------------------------------------------------- --------- ------
Water and Sewer Utility Revenue - 9.3%
AAA Bethlehem, PA, , Water Rev., MBIA, 5.2s, 2021 $ 250 $ 224,972
AAA Center Township, PA, Sewer Refunding, MBIA, 5.5s, 2016 300 287,163
AAA Highland, PA, Sewer & Water Rev., FSA, 5.35s, 2013 500 469,715
AAA Lancaster, PA, Sewer Authority, FGIC, 6.85s, 2011 250 261,167
AAA Meadville, PA, Area Water Authority, FSA, 5.125s, 2014 250 228,927
BBB Philadelphia, PA, Water Rev., 5.75s, 2013 275 262,234
AAA Philadelphia, PA, Water Rev., FSA, 5.75s, 2013 300 297,294
AAA Philadelphia, PA, Water Rev., MBIA, 5.5s, 2014 500 478,415
AAA Philadelphia, PA, Water Rev., MBIA, 5.25s, 2023 500 453,985
NR Smithfield, PA, Sewer Authority, 6.2s, 2018 350 344,015
AAA Wilkinsburg, PA, Water Authority Rev., FGIC, 5s, 2012 500 456,560
------
$3,764,447
- ----------------------------------------------------------------------------------------------------- --------- ------
Turnpike Revenue - 6.7%
A Commonwealth of Puerto Rico, Highway & Transportation Authority, 5.5s, 2013 $ 500 $ 479,100
A Commonwealth of Puerto Rico, Highway & Transportation Authority, 5.5s, 2015 500 475,060
A Commonwealth of Puerto Rico, Highway & Transportation Authority, 5.5s, 2018 750 698,257
AAA Delaware River Junction Toll Bridge (Pennsylvania Bridge), FGIC, 6.25s, 2012 1,000 1,041,574
------
$2,693,991
- ----------------------------------------------------------------------------------------------------- --------- ------
Airport and Port Revenue - 1.9%
AAA Allegheny County, PA, Airport Rev. (Gtr Pitts), FGIC, 7.75s, 2019 $ 750 $ 789,885
- ----------------------------------------------------------------------------------------------------- --------- ------
Sales and Excise Tax Revenue - 2.4%
AAA Pennsylvania Inter Govt. Cooperative Authority Spl Tax, MBIA, 5.6s, 2015 $1,000 $ 965,100
- ----------------------------------------------------------------------------------------------------- --------- ------
14
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
--------------------------------------------------------------------------------------------------- ------------ ----------
Industrial Revenue (Corporate Guarantee) - 7.3%
BBB- Beaver County, PA, Industrial Development Rev. (J Ray McDermott Project), 6.8s, 2009 $835 $ 837,095
A- Erie County, PA, Industrial Development Authority, Environmental Improvement (International
Paper), 7.625s, 2018 250 281,145
NR Hampden, PA, Industrial Development Authority (K-Mart), 5.75s, 2008 250 241,752
A New Morgan, PA, Industrial Development Rev. (Browning Ferris), 6.5s, 2019 500 510,960
NR Northampton County, PA, Industrial Development Rev. (Bethlehem Steel), 7.55s, 2017 800 824,480
BBB- Pennsylvania Economic Development Authority (MacMillam Bloedel), 7.6s, 2020 250 271,972
------
$ 2,967,404
- ----------------------------------------------------------------------------------------------------- --------- ------
Universities - 5.9%
AAA Allegheny County, PA, Higher Education & Building Authority Rev. (Community College), CAP
GTY, 5s, 2010 $500 $ 462,325
AAA Northampton County, PA, Higher Education Facilities Authority Rev. (LaFayette), FGIC, 5s,
2015 690 614,258
AA- Pennsylvania State University, 5.1s, 2018 250 225,825
A+ State of Pennsylvania, Higher Education Facilities Authority Rev. (Thomas Jefferson
University), 6s, 2019 625 624,868
AA- State of Pennsylvania, Higher Education Facilities Authority Rev. (Univ. of Penn.), 7s,
2008 400 450,232
------
$ 2,377,508
- ----------------------------------------------------------------------------------------------------- --------- ------
Other - 7.4%
BBB- Pennsylvania Convention, 6.75s, 2019 $250 $ 262,570
A Pennsylvania Finance Authority Rev., 6.6s, 2009 900 959,130
AAA Philadelphia, PA, Municipal Lease Refunding, FGIC, 5.625s, 2018 650 624,364
A Pittsburgh, PA, Urban Redevelopment Authority, Mortgage Refunding, 5.5s, 2010 400 377,136
AAA State of Pennsylvania, Industrial Development Authority Rev., AMBAC, 5.8s, 2009 400 412,160
AAA State of Pennsylvania, Industrial Development Authority Rev., AMBAC, 7s, 2007 300 345,399
------
$ 2,980,759
- ----------------------------------------------------------------------------------------------------- --------- ------
Total Municipal Bonds (Identified Cost, $38,846,464) $39,126,485
- ------------------------------------------------------------------------------------------------------------------- --------
Floating Rate Demand Notes - 1.7%
- ------------------------------------------------------------------------------------------------------------------- ---------
AAA Allegheny County, PA, Hospital (Presbyterian), MBIA, due 2020 $190 $ 190,000
AAA Allegheny County, PA, Hospital (Presbyterian), due 2020 200 200,000
NR Allegheny County, PA, Hospital (Presbyterian), due 2020 200 200,000
A+ Delaware County, PA, Airport Facilities (UPS), due 2015 100 100,000
- ----------------------------------------------------------------------------------------------------- --------- ------
Total Floating Rate Demand Notes, at Identified Cost $ 690,000
- ------------------------------------------------------------------------------------------------------------------- --------
Total Investments (Identified Cost, $39,536,464) $39,816,485
Other Assets, Less Liabilities - 1.4% 555,560
- --------------------------------------------------------------------------------------------------- ---------- --------
Net Assets - 100.0% $40,372,045
- ------------------------------------------------------------------------------------------------------------------- --------
See notes to financial statements
</TABLE>
15
<PAGE>
Financial Statements
Statements of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
September 30, 1995 Fund Fund Fund Fund Fund Fund
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $84,439,381 $180,403,031 $75,424,029 $242,157,698 $153,096,326 $39,536,464
Unrealized appreciation 4,986,796 5,470,928 5,412,923 17,131,314 9,021,453 280,021
--------- --------- --------- --------- --------- -----------
Total, at value $89,426,177 $185,873,959 $80,836,952 $259,289,012 $162,117,779 $39,816,485
Cash 19,970 -- 58,502 -- 91,800 78,205
Receivable for Fund shares sold 92,489 15,297 37,516 133,138 58,110 149,774
Receivable for investments sold 60,000 2,219,110 756,775 12,350,400 4,524,503 --
Interest receivable 1,498,645 2,729,340 1,311,630 4,817,696 2,433,309 662,138
Deferred organization expenses -- -- -- -- -- 4,119
Other assets 1,143 5,332 1,075 353 2,124 301
--------- --------- --------- --------- --------- -----------
Total assets $91,098,424 $190,843,038 $83,002,450 $276,590,599 $169,227,625 $40,711,022
--------- --------- --------- --------- --------- -----------
Liabilities:
Cash overdraft $ -- $ -- $ -- $ 742,352 $ -- $ --
Distributions payable 234,820 434,789 171,817 660,742 270,452 68,021
Payable for Fund shares reacquired 30,011 226,033 443,464 245,746 83,149 202,108
Payable for investments purchased -- -- -- 7,820,635 959,148 --
Payable for daily variation margin
on open futures contracts -- 55,000 -- -- -- 59,125
Payable to affiliates -
Management fee 2,722 5,703 2,472 8,013 4,982 221
Shareholder servicing agent fee 761 1,585 711 2,224 1,462 --
Distribution fee 54,548 48,839 47,392 166,047 91,117 5,636
Accrued expenses and other
liabilities 44,720 67,095 59,325 74,105 42,416 3,866
--------- --------- --------- --------- --------- -----------
Total liabilities $ 367,582 $ 839,044 $ 725,181 $ 9,719,864 $ 1,452,726 $ 338,977
--------- --------- --------- --------- --------- -----------
Net assets $90,730,842 $190,003,994 $82,277,269 $266,870,735 $167,774,899 $40,372,045
========= ========= ========= ========= ========= ===========
Net assets consist of:
Paid-in capital $85,879,277 $192,617,972 $80,984,952 $257,906,579 $164,295,102 $41,437,307
Unrealized appreciation on
investments 4,986,796 5,451,825 5,412,923 17,131,314 9,021,453 259,485
Accumulated net realized loss on
investments (129,396) (7,738,941) (3,914,281) (7,030,272) (4,892,783) (1,332,681)
Accumulated undistributed
(distributions in excess of) net
investment income (5,835) (326,862) (206,325) (1,136,886) (648,873) 7,934
--------- --------- --------- --------- --------- -----------
Total $90,730,842 $190,003,994 $82,277,269 $266,870,735 $167,774,899 $40,372,045
========= ========= ========= ========= ========= ===========
Shares of beneficial interest
outstanding:
Class A 8,140,938 18,709,032 6,921,256 23,360,736 13,216,842 1,807,335
Class B 474,078 782,182 903,990 909,113 2,545,413 2,494,881
--------- --------- --------- --------- --------- -----------
Total shares of beneficial
interest outstanding 8,615,016 19,491,214 7,825,246 24,269,849 15,762,255 4,302,216
========= ========= ========= ========= ========= ===========
Net assets:
Class A $85,738,012 $182,380,213 $72,768,788 $256,869,326 $140,685,914 $16,940,202
Class B 4,992,830 7,623,781 9,508,481 10,001,409 27,088,985 23,431,843
--------- --------- --------- --------- --------- -----------
Total net assets $90,730,842 $190,003,994 $82,277,269 $266,870,735 $167,774,899 $40,372,045
========= ========= ========= ========= ========= ===========
Class A shares:
Net asset value and redemption
price per share
(net assets / shares of
beneficial interest
outstanding) $10.53 $9.75 $10.51 $11.00 $10.64 $9.37
========= ========= ========= ========= ========= ===========
Offering price per share
(100/95.25 of net asset value
per share) $11.06 $10.24 $11.03 $11.55 $11.17 $9.84
========= ========= ========= ========= ========= ===========
Class B shares:
Net asset value and offering price
per share
(net assets / shares of
beneficial interest
outstanding) $10.53 $9.75 $10.52 $11.00 $10.64 $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
16
<PAGE>
Financial Statements - continued
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Six Months Ended September 30, 1995 Fund Fund Fund Fund Fund Fund
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Interest income $2,859,524 $ 5,889,582 $2,649,106 $ 9,067,307 $5,300,663 $1,103,622
-------- -------- -------- ---------- ---------- ------------
Expenses -
Management fee $ 248,052 $ 536,093 $ 230,587 $ 741,410 $ 466,324 102,149
Trustees' compensation 8,166 7,682 7,763 7,954 5,941 7,765
Shareholder servicing agent fee (Class A) 64,078 141,022 55,968 195,182 108,809 12,412
Shareholder servicing agent fee (Class B) 5,240 8,218 10,149 10,298 26,943 22,594
Distribution and service fees (Class A) 149,396 62,282 130,491 455,423 253,679 --
Distribution and service fees (Class B) 23,815 28,338 46,129 46,808 122,466 79,210
Custodian fee 21,011 41,995 15,301 56,764 35,971 8,817
Printing 8,886 17,732 6,976 13,370 13,091 4,893
Postage 2,055 6,565 4,563 8,457 7,687 2,335
Auditing fees 1,700 1,700 -- 1,600 1,750 1,700
Legal fees 228 1,294 2,949 5,169 14,123 13,165
Amortization of organization expenses -- 1,119 -- -- -- 881
Miscellaneous 26,450 37,249 38,168 35,746 45,524 9,889
-------- -------- -------- -------- ---------- -----------
Total expenses $ 559,077 $ 891,289 $ 549,044 $ 1,578,181 $1,102,308 $ 265,810
Fees paid indirectly (4,458) (7,489) -- (11,725) (2,877) (2,119)
Preliminary reduction of expenses by
investment adviser and distributor (42,599) -- (37,211) -- (72,330) (165,782)
-------- -------- -------- -------- ---------- ----------
Net expenses $ 512,020 $ 883,800 $ 511,833 $ 1,566,456 $1,027,101 $ 97,909
-------- -------- -------- -------- ---------- ----------
Net investment income $2,347,504 $ 5,005,782 $2,137,273 $ 7,500,851 $4,273,562 $1,005,713
-------- -------- -------- -------- ---------- ----------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) (identified cost
basis) -
Investment transactions $ 897,039 $ 264,202 $ 150,983 $ 886,214 $1,751,947 $ 133,527
Futures contracts (22,364) (2,100,752) (618,038) -- (155,746) (478,483)
-------- -------- -------- -------- ---------- ----------
Net realized gain (loss) on investments $ 874,675 $(1,836,550) $ (467,055) $ 886,214 $1,596,201 $ (344,956)
-------- -------- -------- -------- ---------- ----------
Change in unrealized appreciation
(depreciation) -
Investments $ 752,493 $ 3,837,678 $1,588,895 $ 3,075,822 $1,113,563 $ 843,231
Futures contracts -- (172,519) 124,147 -- -- (40,471)
-------- -------- -------- -------- ---------- ----------
Net unrealized gain on investments $ 752,493 $ 3,665,159 $1,713,042 $ 3,075,822 $1,113,563 $ 802,760
-------- -------- -------- -------- ---------- ----------
Net realized and unrealized gain
on investments $1,627,168 $ 1,828,609 $1,245,987 $ 3,962,036 $2,709,764 $ 457,804
-------- -------- -------- -------- ---------- ----------
Increase in net assets from
operations $3,974,672 $ 6,834,391 $3,383,260 $11,462,887 $6,983,326 $1,463,517
======== ======== ======== ======== ========== ==========
</TABLE>
See notes to financial statements
16
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Six Months Ended September 30, 1995 Fund Fund Fund Fund Fund Fund
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,347,504 $ 5,005,782 $ 2,137,273 $ 7,500,851 $ 4,273,562 $ 1,005,713
Net realized gain (loss) on investments 874,675 (1,836,550) (467,055) 886,214 1,596,201 (344,956)
Net unrealized gain on investments 752,493 3,665,159 1,713,042 3,075,822 1,113,563 802,760
------- ------- ------- ------- ------- -------
Increase in net assets from operations $ 3,974,672 $ 6,834,391 $ 3,383,260 $ 11,462,887 $ 6,983,326 $ 1,463,517
------- ------- ------- ------- ------- -------
Distributions declared to shareholders -
From net investment income (Class A) $(2,230,204) $ (4,841,273) $(1,936,334) $ (7,270,402) $ (3,742,337) $ (484,356)
From net investment income (Class B) (104,568) (164,509) (200,939) (227,347) (531,225) (521,952)
In excess of net investment income (Class A) -- (5,648) (8,137) (102,295) (58,165) --
In excess of net investment income (Class B) -- (192) (844) (3,101) (8,257) --
------- ------- ------- ------- ------- -------
Total distributions declared to
shareholders $(2,334,772) $ (5,011,622) $(2,146,254) $ (7,603,145) $ (4,339,984) $(1,006,308)
------- ------- ------- ------- ------- -------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 3,903,208 $ 5,976,716 $ 5,218,651 $ 8,005,967 $ 16,712,537 $ 2,970,674
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 941,892 2,291,435 1,122,383 3,460,737 2,637,766 621,687
Cost of shares reacquired (3,954,660) (14,423,020) (8,428,004) (19,682,318) (27,384,770) (2,605,408)
------- ------- ------- ------- ------- -------
Increase (decrease) in net assets from Fund
share transactions $ 890,440 $ (6,154,869) $(2,086,970) $ (8,215,614) $ 6,650,099 $15,805,778
------- ------- ------- ------- ------- -------
Total increase (decrease) in net assets $ 2,530,340 $ (4,332,100) $ (849,964) $ (4,355,872) $ 9,293,441 $16,262,987
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 $90,730,842 $190,003,994 $82,277,269 $266,870,735 $167,774,899 $40,372,045
======= ======= ======= ======= ======= =======
Accumulated undistributed (distributions in
excess of) net investment income included
in net assets at end of period $ (5,835) $ (326,862) $ (206,325) $ (1,136,886) $ (648,873) $ 7,934
======= ======= ======= ======= ======= =======
</TABLE>
Statements of Changes in Net Assets
<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
18
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
Alabama Fund
- ---------------------------------------- ------------------------ -------- ---------- ------ ------ --------
Two
Six Months Year Months
Ended Ended Ended Year Ended
September March March January
30, 31, 31, 31,
- ---------------------------------------- ------------ -------- -------- ---------- ------ ------ --------
1995 1995 1994 1994 1993 1992 1991
- ---------------------------------------- ------------ -------- -------- ---------- ------ ------ --------
(Unaudited)
- ---------------------------------------- ------------ -------- -------- ---------- ------ ------ --------
Class A
- ---------------------------------------- ------------ -------- -------- ---------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each
period):
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] $ 0.28 $ 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 $ 0.46 $ 0.65 $ (0.62) $ 1.24 $ 0.97 $ 1.01 $ 0.67
---------- ------ ------ -------- ---- ---- ------
Less distributions declared to shareholders -
From net investment income $ (0.27) $ (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 $ (0.27) $ (0.58) $ (0.09) $ (0.59) $ (0.59) $ (0.71) $ (0.55)
---------- ------ ------ -------- ---- ---- ------
Net asset value - end of period $ 10.53 $ 10.34 $ 10.27 $ 10.98 $ 10.33 $ 9.95 $ 9.65
========== ====== ====== ======== ==== ==== ======
Total return++ 4.54%+++ 6.51% (5.66)%+++ 12.26% 10.08% 10.92% 7.31%
Ratios (to average net assets)/Supplemental dataS.:
Expenses## 1.11%+ 1.15% 1.18%+ 1.21% 1.08% 0.95% 0.57%
Net investment income 5.26%+ 5.47% 5.17%+ 5.13% 5.79% 6.19% 6.63%
Portfolio turnover 21% 30% 4% 12% 17% 23% 64%
Net assets at end of period (000
omitted) $85,738 $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 period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### For the year ended January 31, 1992, the per share distribution in excess of net investment income was $0.004.
++ 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.
[S] The investment adviser did not impose all or a portion of its advisory, distribution or expense reimbursement fees 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 $ 0.27 $ 0.55 $ 0.09 $ 0.54 $ 0.55 $ 0.59 $ 0.52
Ratios (to average net assets):
Expenses## 1.21%+ 1.25% 1.28%+ 1.31% 1.18% 1.08% 1.33%
Net investment income 5.16%+ 5.37% 5.07%+ 5.03% 5.69% 6.06% 5.87%
</TABLE>
See notes to financial statements
19
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Alabama Fund
- ----------------------------------------------------- ------------------------ -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- ----------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994**
- ----------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- ----------------------------------------------------- ------------ -------- -------- ------------
Class B
- ----------------------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.34 $10.27 $10.98 $10.93
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.23 $ 0.47 $ 0.08 $ 0.18
Net realized and unrealized gain (loss) on
investments 0.19 0.09 (0.71) 0.07
---------- ------ ------ ----------
Total from investment operations $ 0.42 $ 0.56 $(0.63) $ 0.25
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income $(0.23) $(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 $(0.23) $(0.49) $(0.08) $(0.20)
---------- ------ ------ ----------
Net asset value - end of period $10.53 $10.34 $10.27 $10.98
========== ====== ====== ==========
Total return 4.11%+++ 5.64% (5.79)%+++ 2.29%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.93%+ 1.97% 2.01%+ 1.98%+
Net investment income 4.43%+ 4.63% 4.30%+ 3.98%+
Portfolio turnover 21% 30% 4% 12%
Net assets at end of period (000 omitted) $4,993 $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 the period ended September 30, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
See notes to financial statements
20
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Arkansas Fund
- -------------------------- -------------------- ------ -------- ----- ---------- ------ ------ ----------
Two Two
Six Months Year Months Year Six Months Year Months
Ended Ended Ended Ended Ended Ended Ended Year Ended
September March March January September March March January
30, 31, 31, 31, 30, 31, 31, 31,
- -------------------------- ---------- ------ ------ -------- ----- ---------- ------ ------ ----------
1995 1995 1994 1994 1993* 1995 1995 1994 1994**
- -------------------------- ---------- ------ ------ -------- ----- ---------- ------ ------ ----------
(Unaudited) (Unaudited)
- -------------------------- ---------- ------ ------ -------- ----- -------------------- ------ ----------
Class A Class B
- -------------------------- ---------- ------ ------ -------- ----- ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
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] $ 0.25 $ 0.53 $ 0.09 $ 0.56 $ 0.58 $ 0.21 $ 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 $ 0.34 $ 0.55 $ (0.68) $ 1.16 $ 0.93 $ 0.31 $ 0.43 $(0.71) $ 0.19
-------- ---- ---- ------ --- -------- ---- ---- --------
Less distributions declared to
shareholders -
From net investment
income $ (0.25) $ (0.53) $ (0.08) $ (0.55) $ (0.58) $(0.21) $(0.42) $(0.07) $(0.14)
From net realized gain on
investments### -- -- -- -- -- -- -- -- --
In excess of net
investment income#### -- -- (0.02) (0.02) -- -- -- -- --
In excess of net realized
gain on investments -- (0.05) -- -- -- -- (0.05) -- --
-------- ---- ---- ------ --- -------- ---- ---- --------
Total distributions
declared to shareholders $ (0.25) $ (0.58) $ (0.10) $ (0.57) $ (0.58) $(0.21) $(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++ 3.59%+++ 5.90% (6.61)%+++ 11.95% 10.11%+++ 3.30%+++ 4.67% (6.81)%+++ 2.18%+++
Ratios (to average net
assets)/Supplemental data[S]:
Expenses## 0.89%+ 0.75% 0.75%+ 0.63% 0.16%+ 1.65%+ 1.84% 1.82%+ 1.75%+
Net investment income 5.18%+ 5.51% 5.21%+ 5.30% 6.04%+ 4.42%+ 4.40% 4.11%+ 3.87%+
Portfolio turnover 3% 24% 1% 3% 10% 3% 24% 1% 3%
Net assets at end of
period (000 omitted) $182,380 $187,105 $195,042 $203,542 $124,644 $7,624 $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 the period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### For the year ended January 31, 1994, the per share distributions from net realized gain on investments and in excess of net
realized gain on investments were $0.0015 and $0.0003, respectively, for both Class A and Class B shares.
#### For the six months ended September 30, 1995, the per share distributions in excess of net investment income was $0.0003 for
both Class A and Class B shares. For the year ended March 31, 1994 and the year ended January 31, 1994, per share
distributions in excess of net investment income were $0.002 and $0.004, respectively, for Class B shares.
++ 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.
[S] The investment adviser did not impose all or a portion of its advisory, distribution or expense reimbursement fees 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
21
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Georgia Fund
- ------------------------ ------------------------ -------- ---------- ------ ------ ------ ------ --------
Two
Six Months Year Months
Ended Ended Ended Year Ended
September March March January
30, 31, 31, 31,
- ------------------------ ------------ -------- -------- ---------- ------ ------ ------ ------ --------
1995 1995 1994 1994 1993 1992 1991 1990 1989*
- ------------------------ ------------ -------- -------- ---------- ------ ------ ------ ------ --------
(Unaudited)
- ------------------------ ------------ -------- -------- ---------- ------ ------ ------ ------ --------
Class A
- ------------------------ ------------ -------- -------- ---------- ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
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] $ 0.27 $ 0.57 $ 0.09 $ 0.57 $ 0.58 $ 0.61 $ 0.63 $ 0.66 $ 0.32
Net realized and
unrealized gain (loss)
on investments 0.16 -- (0.92) 0.75 0.38 0.46 0.12 0.02 0.14
---------- ------ ------ -------- ---- ---- ---- ---- ------
Total from investment
operations $ 0.43 $ 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 $ (0.27) $ (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### -- -- (0.03) (0.03) -- -- -- -- --
In excess of net
realized gain on
investments -- (0.03) -- -- -- -- -- -- --
---------- ------ ------ -------- ---- ---- ---- ---- ------
Total distributions
declared to
shareholders $ (0.27) $ (0.60) $ (0.09) $ (0.59) $ (0.61) $ (0.68) $ (0.65) $ (0.68) $(0.26)
---------- ------ ------ -------- ---- ---- ---- ---- ------
Net asset value - end of
period $ 10.51 $ 10.35 $ 10.38 $ 11.30 $ 10.57 $ 10.22 $ 9.83 $ 9.73 $ 9.73
========== ====== ====== ======== ==== ==== ==== ==== ======
Total return++ 4.24%+++ 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## 1.13%+ 1.14% 1.18%+ 1.21% 1.08% 0.99% 0.74% 0.42% 0.40%+
Net investment income 5.20%+ 5.50% 5.05%+ 5.10% 5.75% 6.08% 6.46% 6.72% 6.18%+
Portfolio turnover 55% 56% 5% 14% 27% 36% 71% 99% --
Net assets at end of
period (000 omitted) $72,769 $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 the period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### For the six months ended September 30, 1995, the per share distribution in excess of net investment income was $0.0011 for
Class A shares.
++ 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.
[S] The investment adviser did not impose all or a portion of its advisory, distribution or expense reimbursement fees 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 $ 0.26 $ 0.56 $ 0.09 $ 0.56 $ 0.57 $ 0.60 $ 0.59 $ 0.57 $ 0.29
Ratios (to average net assets):
Expenses## 1.23%+ 1.24% 1.28%+ 1.31% 1.18% 1.09% 1.11% 1.31% 1.07%+
Net investment income 5.10%+ 5.40% 4.95%+ 5.00% 5.65% 5.98% 6.09% 5.83% 5.51%+
</TABLE>
See notes to financial statements
22
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Georgia Fund
- ----------------------------------------------------- ------------------------ -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30, 31, 31, January 31,
- ----------------------------------------------------- ------------ -------- -------- ------------
1995 1995 1994 1994**
- ----------------------------------------------------- ------------ -------- -------- ------------
(Unaudited)
- ----------------------------------------------------- ------------ -------- -------- ------------
Class B
- ----------------------------------------------------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.36 $10.38 $11.30 $11.26
---------- ------ ------ ----------
Income from investment operations# -
Net investment income $ 0.23 $ 0.47 $ 0.07 $ 0.19
Net realized and unrealized gain (loss) on
investments 0.16 0.02 (0.91) 0.05
---------- ------ ------ ----------
Total from investment operations $ 0.39 $ 0.49 $(0.84) $ 0.24
---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income $(0.23) $(0.47) $(0.07) $(0.18)
From net realized gain on investments -- (0.01) -- (0.01)
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 $(0.23) $(0.51) $(0.08) $(0.20)
---------- ------ ------ ----------
Net asset value - end of period $10.52 $10.36 $10.38 $11.30
========== ====== ====== ==========
Total return++ 3.80%+++ 4.88% (7.47)%+++ 5.34%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.95%+ 1.96% 1.99%+ 1.97%+
Net investment income 4.37%+ 4.66% 4.17%+ 3.83%+
Portfolio turnover 55% 56% 5% 14%
Net assets at end of period (000 omitted) $9,508 $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 the period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees
paid indirectly.
### For the six months ended September 30, 1995, the per share distribution in excess of net investment
income was $0.0010 for Class B shares.
++ 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.
</TABLE>
See notes to financial statements
23
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Massachusetts Fund
--------------------------------- -------------------- ------ -------- ----- ------ ----- ----- ------
Two
Six Months Year Months Year
Ended Ended Ended Ended
September March March January
30, 31, 31, 31,
--------------------------------- ---------- ------ ------ -------- ----- ------ ----- ----- ------
1995 1995 1994 1994 1993 1992 1991 1990 1989
--------------------------------- ---------- ------ ------ -------- ----- ------ ----- ----- ------
(Unaudited)
--------------------------------- ---------- ------ ------ -------- ----- ------ ----- ----- ------
Class A
--------------------------------- ---------- ------ ------ -------- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 10.84 $ 10.90 $ 11.75 $ 11.41 $ 11.05 $ 10.68 $ 10.58 $ 10.65 $ 10.60
-------- ---- ---- ------ --- ---- --- --- ----
Income from investment
operations# -
Net investment income $ 0.31 $ 0.64 $ 0.11 $ 0.64 $ 0.68 $ 0.73 $ 0.71 $ 0.72 $ 0.72
Net realized and unrealized gain
(loss) on investments 0.16 (0.03) (0.85) 0.58 0.39 0.43 0.11 (0.07) 0.05
-------- ---- ---- ------ --- ---- --- --- ----
Total from investment
operations $ 0.47 $ 0.61 $ (0.74) $ 1.22 $ 1.07 $ 1.16 $ 0.82 $ 0.65 $ 0.77
-------- ---- ---- ------ --- ---- --- --- ----
Less distributions declared to shareholders -
From net investment income $ (0.31) $ (0.64) $ (0.07) $ (0.64) $ (0.71) $ (0.78) $ (0.72)$ (0.72)$
(0.72)
From net realized gain on
investments -- (0.02) -- (0.20) -- -- -- -- --
In excess of net investment
income### -- -- (0.04) (0.04) -- -- -- -- --
In excess of net realized gain
on investments -- (0.01) -- -- -- -- -- -- --
From paid-in capital -- -- -- -- -- (0.01) -- -- --
-------- ---- ---- ------ --- ---- --- --- ----
Total distributions declared to
shareholders $ (0.31) $ (0.67) $ (0.11) $ (0.88) $ (0.71) $ (0.79) $ (0.72) $ (0.72) $ (0.72)
-------- ---- ---- ------ --- ---- --- --- ----
Net asset value - end of period $ 11.00 $ 10.84 $ 10.90 $ 11.75 $ 11.41 $ 11.05 $ 10.68 $ 10.58 $ 10.65
======== ==== ==== ====== === ==== === === ====
Total return++ 4.40%+++ 5.89% (6.34)%+++ 11.02% 10.03% 11.23% 8.12% 6.28% 7.65%
Ratios (to average net assets)/Supplemental
data:
Expenses## 1.15%+ 1.17% 1.19%+ 1.19% 1.08% 1.06% 1.07% 1.10% 1.07%
Net investment income 5.61%+ 6.01% 5.64%+ 5.71% 6.33% 6.65% 6.74% 6.75% 6.90%
Portfolio turnover 13% 31% 4% 30% 32% 51% 43% 52% 26%
Net assets at end of period (000
omitted) $256,869 $262,551 $277,748 $300,894 $270,778 $239,311 $213,679 $215,381 $212,763
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
## For the period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### For the period ended September 30, 1995, the per share distribution in excess of net investment income was $0.0042.
++ 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.
</TABLE>
See notes to financial statements
24
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Massachusetts Fund
- ---------------------------------------- --------------------- ------ ------------ -------- -------- ------------
Two
Six Months Year Months
Year Ended Ended Ended Ended Year Ended
January 31, September 30, March 31, March 31, January 31,
- ---------------------------------------- ---------- ------- ------ ------------ -------- -------- ------------
1988 1987 1986* 1995 1995 1994 1994**
- ---------------------------------------- ---------- ------- ------ ------------ -------- -------- ------------
(Unaudited)
- ---------------------------------------- ---------- ------- ------ ------------ -------- -------- ------------
Class A Class B
- ---------------------------------------- ---------- ------- ------ ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $ 11.25 $ 10.59 $ 9.52 $ 10.84 $10.90 $11.75 $11.91
-------- ----- ---- ---------- ------ ------ --------
Income from investment operations# -
Net investment income $ 0.71 $ 0.74 $ 0.54 $ 0.27 $ 0.55 $ 0.09 $ 0.23
Net realized and unrealized gain (loss)
on investments (0.65) 0.68 0.99 0.16 (0.02) (0.85) 0.04
-------- ----- ---- ---------- ------ ------ ----------
Total from investment operations $ 0.06 $ 1.42 $ 1.53 $ 0.43 $ 0.53 $(0.76) $ 0.27
-------- ----- ---- ---------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income### $ (0.71) $ (0.75) $ (0.46) $ (0.27) $(0.56) $(0.09) $(0.22)
From net realized gain on investments -- (0.01) -- -- (0.02) -- (0.20)
In excess of net investment income -- -- -- -- -- -- (0.01)
In excess of net realized gain on
investments -- -- -- -- (0.01) -- --
-------- ----- ---- ---------- ------ ------ ---------
Total distributions declared to
shareholders $ (0.71) $ (0.76) $ (0.46) $ (0.27) $(0.59) $(0.09) $(0.43)
-------- ----- ---- ---------- ------ ------ ----------
Net asset value - end of period $ 10.60 $ 11.25 $ 10.59 $ 11.00 $10.84 $10.90 $11.75
======== ===== ==== ========== ====== ====== ==========
Total return++ 0.80% 14.10% 20.51%+ 4.02%+++ 5.13% (6.46)%+++ 5.89%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.04% 0.87% 0.86%+ 1.87%+ 1.89% 1.91%+ 1.81%+
Net investment income 6.79% 6.83% 7.82%+ 4.86%+ 5.27% 4.89%+ 4.62%+
Portfolio turnover 27% 7% 27% 13% 31% 4% 30%
Net assets at end of period (000
omitted) $224,219 $242,119 $94,575 $10,001 $8,676 $4,993 $4,191
* For the period from the commencement of investment operations, April 9, 1985 to January, 31, 1986.
** 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 the period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### For the period ending September 30, 1995 and for the year ended March 31, 1994, the per share distribution in excess of net
investment income for Class B shares was $0.0037 and $0.0055, respectively.
++ 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.
</TABLE>
See notes to financial statements
25
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
New York Fund
- --------------------- ------------------------ -------- ---------- ------- ------ ------ ------ --------
Two
Six Months Year Months
Ended Ended Ended Year Ended
September 30, March 31, March 31, January 31,
- --------------------- ------------ -------- -------- ---------- ------- ------ ------ ------ --------
1995 1995 1994 1994 1993 1992 1991 1990 1989*
- --------------------- ------------ -------- -------- ---------- ------- ------ ------ ------ --------
(Unaudited)
- --------------------- ------------ -------- -------- ---------- ------- ------ ------ ------ --------
Class A
- --------------------- ------------ -------- -------- ---------- ------- ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout each
period):
Net asset value -
beginning of period $ 10.49 $ 10.50 $ 11.34 $ 10.78 $ 10.25 $ 9.90 $ 9.74 $ 9.79 $ 9.53
---------- ------ ------ -------- ----- ---- ---- ---- ------
Income from
investment
operations# -
Net investment
income[S] $ 0.28 $ 0.56 $ 0.09 $ 0.59 $ 0.63 $ 0.65 $ 0.65 $ 0.68 $ 0.29
Net realized and
unrealized gain
(loss) on
investments 0.15 0.05 (0.84) 0.74 0.58 0.44 0.16 0.01 0.21
---------- ------ ------ -------- ----- ---- ---- ---- ------
Total from
investment
operations $ 0.43 $ 0.61 $ (0.75) $ 1.33 $ 1.21 $ 1.09 $ 0.81 $ 0.69 $ 0.50
---------- ------ ------ -------- ----- ---- ---- ---- ------
Less distributions declared to
shareholders -
From net investment
income $ (0.28) $ (0.56) $ (0.06) $ (0.57) $ (0.65) $ (0.69) $(0.65) $(0.67) $(0.24)
From net realized
gain on investments -- -- -- (0.17) (0.03) (0.05) -- (0.06) --
In excess of net
investment
income### -- (0.01) (0.03) (0.03) -- -- -- -- --
In excess of net
realized gain on
investments -- (0.05) -- -- -- -- -- -- --
From paid-in capital -- -- -- -- -- -- -- (0.01) --
---------- ------ ------ -------- ----- ---- ---- ---- ------
Total distributions
declared to
shareholders $ (0.28) $ (0.62) $ (0.09) $ (0.77) $ (0.68) $ (0.74) $(0.65) $(0.74) $(0.24)
---------- ------ ------ -------- ----- ---- ---- ---- ------
Net asset value - end
of period $ 10.64 $ 10.49 $ 10.50 $ 11.34 $ 10.78 $ 10.25 $ 9.90 $ 9.74 $9.79
========== ====== ====== ======== ===== ==== ==== ==== ======
Total return++ 4.14%+++ 6.03% (6.58)%+++ 12.69% 12.23% 11.42% 8.74% 7.33% 8.16%+
Ratios (to average net
assets)/Supplemental dataS.:
Expenses## 1.10%+ 1.07% 1.03%+ 0.93% 0.53% 0.65% 0.54% 0.40% 0.40%+
Net investment
income 5.18%+ 5.43% 5.09%+ 5.21% 6.16% 6.44% 6.73% 6.88% 5.93%+
Portfolio turnover 55% 147% 15% 51% 61% 80% 188% 236% 32%
Net assets at end of
period (000
omitted) $140,686 $146,597 $162,621 $184,523 $135,749 $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 the period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### For the six months ended September 30, 1995, the per share distribution in excess of net investment income was $0.0043.
++ 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.
[S] The investment adviser did not impose all or a portion of its advisory, distribution or expense reimbursement fees 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 $ 0.28 $ 0.55 $ 0.07 $ 0.56 $ 0.57 $ 0.60 $0.61 $0.59 $0.26
Ratios (to average net assets):
Expenses## 1.20%+ 1.18% 1.23%+ 1.23% 1.13% 1.16% 0.95% 1.32% 1.09%+
Net investment income 5.08%+ 5.31% 4.88%+ 4.90% 5.56% 5.93% 6.33% 5.96% 5.24%+
</TABLE>
See notes to financial statements
26
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
New York Fund
- ----------------------------------------------------- ----------------------- -------- ------------
Two
Six Months Year Months
Ended Ended Ended
September March March Year Ended
30 31, 31, January 31,
- ----------------------------------------------------- ----------- -------- -------- ------------
1995 1995 1994 1994**
- ----------------------------------------------------- ----------- -------- -------- ------------
(Unaudited)
- ----------------------------------------------------- ----------- -------- -------- ------------
Class B
- ----------------------------------------------------- ----------- -------- -------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.49 $ 10.50 $11.34 $11.46
--------- ------ ------ ----------
Income from investment operations# -
Net investment income[S] $ 0.25 $ 0.47 $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on
investments 0.13 0.05 (0.83) 0.04
--------- ------ ------ ----------
Total from investment operations $ 0.38 $ 0.52 $(0.76) $ 0.22
--------- ------ ------ ----------
Less distributions declared to shareholders -
From net investment income $ (0.23) $ (0.47) $(0.07) $(0.18)
From net realized gain on investments -- -- -- (0.15)
In excess of net investment income### -- (0.01) (0.01) (0.01)
In excess of net realized gain on investments -- (0.05) -- --
--------- ------ ------ ----------
Total distributions declared to shareholders $ (0.23) $ (0.53) $(0.08) $(0.34)
--------- ------ ------ ----------
Net asset value - end of period $ 10.64 $ 10.49 $10.50 $11.34
========= ====== ====== ==========
Total return 3.71%+++ 5.17% (6.71)%+++ 5.20%+
Ratios (to average net assets)/Supplemental data[S]:
Expenses## 1.93%+ 1.89% 1.87%+ 1.79%+
Net investment income 4.34%+ 4.58% 4.21%+ 3.90%+
Portfolio turnover 55% 147% 15% 51%
Net assets at end of period (000 omitted) $27,089 $11,885 $6,265 $4,828
** 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 the period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees
paid indirectly.
### For the six months ended September 30, 1995, the per share distribution in excess of net investment
income was $0.0036.
[S] The investment adviser did not impose all or a portion of its advisory, distribution or expense
reimbursement fees 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 $ 0.25 $ 0.47 $ 0.07 $ 0.17
Ratios (to average net assets):
Expenses## 2.03%+ 1.91% 1.97%+ 2.00%+
Net investment income 4.24%+ 4.57% 4.11%+ 3.69%+
</TABLE>
27
See notes to financial statements
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Pennsylvania Fund
------------------------------ -------------------- ------ -------- ---------- ------ ------ ----------
Two Two
Six Months Year Months Year Six Months Year Months
Ended Ended Ended Ended Ended Ended Ended Year Ended
September March March January September March March January
30, 31, 31, 31, 30, 31, 31, 31,
------------------------------ ---------- ------ ------ -------- ---------- ------ ------ ----------
1995 1995 1994 1994* 1995 1995 1994 1994**
------------------------------ ---------- ------ ------ -------- ---------- ------ ------ ----------
(Unaudited) (Unaudited)
------------------------------ ---------- ------ ------ -------- ---------- ------ ------ ----------
Class A Class B
------------------------------ ---------- ------ ------ -------- ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 9.29 $ 9.15 $ 10.14 $ 9.53 $ 9.29 $ 9.15 $ 10.15 $ 10.06
-------- ---- ---- ------ -------- ---- ---- --------
Income from investment
operations# -
Net investment income[S] $ 0.27 $ 0.54 $ 0.09 $ 0.50 $ 0.26 $ 0.45 $ 0.06 $ 0.17
Net realized and unrealized
gain (loss)
on investments 0.08 0.18 (0.99) 0.62 0.08 0.18 (0.99) 0.10
-------- ---- ---- ------ -------- ---- ---- --------
Total from investment
operations $ 0.35 $ 0.72 $ (0.90) $ 1.12 $ 0.34 $ 0.63 $ (0.93) $ 0.27
-------- ---- ---- ------ -------- ---- ---- --------
Less distributions declared to
shareholders -
From net investment income### $ (0.27) $ (0.54) $ (0.09) $ (0.50) $ (0.24) $(0.45) $ (0.07) $ (0.17)
From net realized gain on
investments -- (0.01) -- (0.01) -- (0.01) -- (0.01)
In excess of net realized
gain on investments -- (0.03) -- -- -- (0.03) -- --
-------- ---- ---- ------ -------- ---- ---- --------
Total distributions declared
to shareholders $ (0.27) $ (0.58) $ (0.09) $ (0.51) $ (0.24) $(0.49) $ (0.07) $ (0.18)
-------- ---- ---- ------ -------- ---- ---- --------
Net asset value - end of
period $ 9.37 $ 9.29 $ 9.15 $ 10.14 $ 9.39 $ 9.29 $ 9.15 $ 10.15
======== ==== ==== ====== ======== ==== ==== ========
Total return ++ 3.85%+++ 8.14% (8.91)%+++ 12.12% 3.66%+++ 7.07% (9.16)%+++ 6.76%+
Ratios (to average net
assets)/Supplemental data[S]:
Expenses## 0.10%+ 0.01% 0.00%+ 0.00%+ 0.87%+ 1.01% 1.00%+ 1.00%+
Net investment income 5.82%+ 5.97% 5.43%+ 5.30%+ 5.06%+ 4.96% 4.37%+ 4.22%+
Portfolio turnover 22% 49% 1% 10% 22% 49% 1% 10%
Net assets at end of period
(000 omitted) $16,940 $16,411 $13,961 $13,987 $23,432 $7,699 $ 4,304 $ 3,401
* 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 the period ended September 30, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
### 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.
++ 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.
[S] The Adviser voluntarily agreed to maintain the 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:
Net investment income $ 0.23 $ 0.43 $ 0.06 $ 0.32 $ 0.21 $ 0.34 $ 0.04 $ 0.05
Ratios (to average net assets):
Expenses## 0.96%+ 1.18% 1.84%+ 1.94%+ 1.80%+ 2.26% 2.91%+ 2.50%+
Net investment income 4.96%+ 4.80% 3.60%+ 3.36%+ 4.13%+ 3.72% 2.47%+ 1.29%+
</TABLE>
See notes to financial statements
28
<PAGE>
Notes to Financial Statements (Unaudited)
(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
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, options and options on futures contracts listed on commodities
exchanges are valued at closing settlement prices. Over-the-counter options are
valued by brokers through the use of a pricing model which takes into account
closing bond valuations, implied volatility and short-term repurchase rates.
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. Investments in interest
rate futures for purposes other than hedging may be made to modify the duration
of the portfolio without incurring the additional transaction costs involved in
buying and selling the underlying securities. Investments in index contracts,
or contracts on related options, for purposes other than hedging may be made
when a Fund has cash on hand and wishes to participate in anticipated market
appreciation while the cash is being invested. 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 - Each Fund's custodian bank calculates its fee based on
the 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.
29
<PAGE>
Notes to Financial Statements (Unaudited) - continued
At March 31, 1995, the following Funds, for federal income tax purposes, had
capital loss carryfowards which may be applied against any net taxable realized
gains of each succeeding year until the earlier of its utilization or
expiration.
<TABLE>
<CAPTION>
Alabama Georgia Massachusetts New York Pennsylvania
Expiration Date Fund Fund Fund Fund Fund
============== ======= ========= =========== ========= ============
<S> <C> <C> <C> <C> <C>
March 31, 2002 $ -- $ -- $ -- $1,065,323 $ --
March 31, 2003 155,891 2,399,843 3,052,342 5,172,474 111,447
----- ------- --------- ------- ----------
Total $155,891 $2,399,843 $3,052,342 $6,237,797 $111,447
===== ======= ========= ======= ==========
</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 did not impose a
portion of its fee with respect to the Pennsylvania Fund, which is reflected as
a preliminary 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 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
September 30, 1995, the aggregate unreimbursed expenses owed to MFS by the
Pennsylvania Fund amounted to $190,512, including $8,154 incurred in the
current period.
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 period ended September 30, 1995 is a
net periodic pension expense for each Fund, as follows:
Alabama Arkansas Georgia Massachusetts New York Pennsylvania
Fund Fund Fund Fund Fund Fund
======= ======== ======= ============= ======== ============
$1,375 $891 $1,822 $2,013 $ -- $981
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$13,776, $22,173, $11,164, $26,460, $15,924 and $4,220 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 period
ended September 30, 1995.
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 at or above a certain dollar level, and other such
distribution-related expenses that are approved by the Fund. MFD retains the
service fee for accounts not attributable to a securities dealer for the period
ended September 30, 1995 which amounted to $2,278, $1,547, $2,385, $38,108 and
$10,500 for the Alabama, Arkansas, Georgia, Massachusetts and New York Funds,
respectively. MFD is not imposing the 0.10% distribution fee on the Alabama,
Georgia and New York funds for an indefinite period. The Trustees have
implemented a 0.10% service fee under the Class A distribution plan of the
Arkansas Fund; other fees payable under this Class A distribution plan will
become payable on such dates as the Trustees determine.
Fees incurred under the distribution plan during the period ended September 30,
1995 were 0.25%, 0.07%, 0.25%, 0.35% and 0.25% of average daily net assets
attributable to Class A shares on an annualized basis for the Alabama,
Arkansas, Georgia, Massachusetts, and New York Funds, respectively. In the case
of the Pennsylvania Fund, payments 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 the Funds 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 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
30
<PAGE>
Notes to Financial Statements (Unaudited) - continued
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 $118, $252, $336, $279 and $2,025 for the
Alabama, Arkansas, Georgia, Massachusetts and New York Funds, respectively for
Class B shares for the period ended September 30, 1995. Fees incurred under the
distribution plan during the period ended September 30, 1995 were 1.00%, 0.75%,
1.00%, 1.00%, 1.00% and 0.75% of each of the Fund's average daily net assets
attributable to Class B shares on an annualized basis for the Alabama,
Arkansas, Georgia, Massachusetts, New York and Pennsylvania Funds,
respectively.
A contingent deferred sales charge is imposed on shareholder redemption of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within 12 months following the share 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 period ended September 30, 1995 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 $ 5 $ -- $ 0 $ 0 $ 0 $ --
--- ---- ---- --------- -------- ----------
Class B $3,446 $14,571 $22,645 $17,922 $62,081 $32,780
=== ==== ==== ========= ======== ==========
</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
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, 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 $18,637 $ 5,648 $44,011 $34,950 $90,583 $22,725
Sales 18,420 13,750 46,169 44,983 87,891 7,362
</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 $84,439 $180,403 $75,424 $242,158 $153,096 $39,536
==== ===== ==== ========= ======== ==========
Gross unrealized appreciation $ 5,153 $ 6,923 $ 5,505 $ 17,587 $ 10,578 $ 822
Gross unrealized depreciation (166) (1,452) (92) (456) (1,556) (542)
---- ----- ---- --------- -------- ----------
Net unrealized appreciation $ 4,987 $ 5,471 $ 5,413 $ 17,131 $ 9,022 $ 280
==== ===== ==== ========= ======== ==========
</TABLE>
(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 Massachusetts Fund
----------------- ----------------- ------------------ -------------------
Period Ended September 30, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
=========================================== ====== ======= ====== ======= ====== ======== ====== ==========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 313 $ 3,267 546 $ 5,288 360 $ 3,764 532 $ 5,833
Shares issued to shareholders in
reinvestment of distributions 86 899 227 2,204 97 1,015 305 3,339
Shares reacquired (362) (3,790) (1,439) (13,968) (724) (7,550) (1,699) (18,583)
---- ----- ---- ----- ---- ------ ---- --------
Net increase (decrease) 37 $ 376 (666) $ (6,476) (267) $ (2,771) (862) $ (9,411)
==== ===== ==== ===== ==== ====== ==== ========
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
=========================================== ==== ===== ==== ===== ==== ====== ==== ========
Shares sold 1,021 $ 10,353 1,828 $ 17,573 1,076 $ 10,979 1,947 $ 20,608
Shares issued to shareholders in
reinvestment of distributions 164 1,663 569 5,424 210 2,148 689 7,371
Shares reacquired (1,017) (10,194) (3,147) (29,660) (2,370) (23,804) (3,891) (41,117)
---- ----- ---- ----- ---- ------ ---- --------
Net increase (decrease) 168 $ 1,822 (750) $ (6,663) (1,084) $(10,677) (1,255) $(13,138)
==== ===== ==== ===== ==== ====== ==== ========
New York Fund Pennsylvania Fund
---------------- ------------------
Period Ended September 30, 1995 (000 Omitted) Shares Amount Shares Amount
=========================================== ==== ===== ==== ===== ==== ====== ==== ========
Shares sold 1,313 $ 13,912 123 $ 1,155
Shares issued to shareholders in
reinvestment of distributions 218 2,316 35 325
Shares reacquired (2,286) (24,344) (118) (1,103)
---- ------ ---- --------
Net increase (decrease) (755) $ (8,116) 40 $ 377
==== ====== ==== ========
</TABLE>
31
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
Class A Shares New York Fund Pennsylvania Fund
------------------ -----------------
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount
=============================================== ===== ===== ===== ===== ====== ======== ===== ========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 6,955 $ 71,200 438 $ 3,991
Shares issued to shareholders in
reinvestment of distributions 527 5,440 72 652
Shares reacquired (9,004) (92,427) (269) (2,402)
---- ------ --- ------
Net increase (decrease) (1,522) $(15,787) 241 $ 2,241
==== ====== === ======
Class B Shares Arkansas Massachusetts
Alabama Fund Fund Georgia Fund Fund
------------ ------------ ---------------- ---------------
Period Ended September 30, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
=============================================== === === === === ==== ====== === ======
Shares sold 61 $ 636 71 $ 688 139 $ 1,455 199 $ 2,173
Shares issued to shareholders in reinvestment
of distributions 4 43 9 88 10 107 11 122
Shares reacquired (16) (164) (47) (455) (84) (878) (101) (1,100)
--- --- --- --- ---- ------ --- ------
Net increase 49 $ 515 33 $ 321 65 $ 684 109 $ 1,195
=== === === === ==== ====== === ======
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
=============================================== === === === === ==== ====== === ======
Shares sold 203 $ 2,054 167 $ 1,621 358 $ 3,643 428 $ 4,572
Shares issued to shareholders in reinvestment
of distributions 7 74 19 181 21 216 17 184
Shares reacquired (62) (626) (46) (436) (178) (1,799) (103) (1,084)
--- --- --- --- ---- ------ --- ------
Net increase 148 $ 1,502 140 $ 1,366 201 $ 2,060 342 $ 3,672
=== === === === ==== ====== === ======
Pennsylvania
New York Fund Fund
---------------- ---------------
Period Ended September 30, 1995 (000 Omitted) Shares Amount Shares Amount
=============================================== === === === === ==== ====== === ======
Shares sold 263 $ 2,800 191 $ 1,816
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 31 322 32 297
Shares reacquired (286) (3,041) (161) (1,503)
---- ------ --- ------
Net increase 1,413 $ 14,766 1,666 $15,429
==== ====== === ======
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount
=============================================== === === === === ==== ====== === ======
Shares sold 700 $ 7,239 428 $ 3,928
Shares issued to shareholders in reinvestment
of distributions 25 262 20 181
Shares reacquired (190) (1,925) (90) (820)
---- ------ --- ------
Net increase 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 period ended September 30, 1995 ranged from $176 to $1,534.
(7) Financial Instruments
The Funds trade 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
Fund Description Expiration Contracts Positions Depreciation
==================== ==================== ================= ======== ======== =============
<S> <C> <C> <C> <C> <C>
Arkansas Fund U.S. Treasury Bonds December 1995 40 Short $19,103
Pennsylvania Fund U.S. Treasury Bonds December 1995 43 Short $20,536
</TABLE>
32
<PAGE>
Notes to Financial Statements (Unaudited) - continued
At September 30, 1995, 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
September 30, 1995:
<TABLE>
<CAPTION>
Principal Unrealized
(000 Appreciation
Fund Description Index Omitted) Value (Depreciation)
============== =============================================== ================== ========== ========= =============
<S> <C> <C> <C> <C> <C>
Alabama Fund Puerto Rico Telephone Authority Rev., 4.35s, Corp. Swap Rate
2004 Curve $1,000 $ 925,050 $ (74,950)
Arkansas Fund Puerto Rico Public Building Authority, 5.31s, PSA Municipal
2016 Swap $2,000 $1,856,240 $ 143,760
Puerto Rico Telephone Authority Rev., 4.35s, Corp. Swap Rate
2004 Curve $4,000 $3,700,200 $(299,800)
New York Fund Puerto Rico Public Building Authority, 5.31s, PSA Municipal
2016 Swap $2,000 $1,856,240 $ 143,760
</TABLE>
(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, were combined
with those of the Fund. The aggregate net assets for Class B shares after the
acquisition were $26,703,916.
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, were
combined with those of the Fund. The aggregate net assets for Class B shares
after the acquisition were $22,646,372.
(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 Troy
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.
------------------------------------------------
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.
33
<PAGE>
MFS(R) Municipal Series Trust [DALBAR logo] Bulk Rate
U.S. Postage
500 Boylston Street P A I D
Boston, MA 02116 Permit #55638
Boston, MA
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
[MFS logo]
54/254
55/255
46/246
45/245
52/252
MST-3B-11/95-35M 30/230
<PAGE>
[FRONT COVER]
Semiannual Report
September 30, 1995
MFS(R) Municipal Series Trust
For the States of: California, Florida,
Louisiana, Mississippi,
Texas and Washington
<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
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
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
8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time.
(To use this service, your phone must be
equipped with a Telecommunications Device
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.
TOP-RATED SERVICE
[Logo: For the second year in a row,
"Number 1 MFS earned a #1 ranking in
Dalbar"] 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 respond-
ed, offering input on the quality of service
they receive 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."
(Source: 1995 DALBAR Survey)
<PAGE>
Letter to Shareholders
Dear Shareholders:
During the six months ended September 30, 1995, prices of 30-year U.S.
Treasury bonds rose, producing a decline in yields of approximately 94 basis
points (0.94%) to a level of 6.50%. The price rally was primarily
attributable to a consensus view that a slow but sustainable economic growth
rate had been achieved and that inflation would remain subdued. Municipal
bonds lagged Treasuries, with yields for long-term high-grade bonds declining
only 15 basis points (0.15%). Principal value and interest on Treasury
securities are guaranteed by the U.S. government if held to maturity. The
municipal market was hampered by concerns about tax reform, which could
remove its unique tax-exempt status, and the strong stock market, which has
captivated the interest of investors at the expense of municipal securities.
The ratio of long-term AAA-rated municipal yields to comparable U.S. Treasury
yields rose from 80% to 89% during the period, while all classes of each Fund
covered by this report experienced positive total returns for the six-month
period. A complete list of returns may be found on pages two and three of
this report.
Moderate, but sustainable growth appears to be the hallmark of the economic
expansion's fifth year. After slowing earlier in the summer, homebuying was
making modest gains by September 30, although consumer spending was still
showing some areas of weakness. Businesses, meanwhile, continued to work off
excess inventories and reduce factory output. At the same time, overseas
economies, particularly those of Germany and Japan, have not recovered as
expected, limiting U.S. export growth. However, the Federal Reserve Board's
consistent and, so far, successful efforts to fight inflation seem to be
giving consumers and businesses enough confidence to help maintain 2-1/2% to
3% real (adjusted for inflation) growth in gross domestic product, at least
through 1995.
Although the Federal Reserve implemented a one-quarter percentage point
decrease in short-term interest rates in July, the effects of its seven rate
increases, which began in early 1994 and ended in February of this year, are
still being felt throughout the economy. While there have been some increases
in commodity prices, companies have not been able to pass along most of those
higher costs. This is partly due to the need to keep fighting for market
share, and also because wages and benefits of U.S. workers are still growing
at a pace that is near or perhaps below the inflation rate, limiting consumer
buying power. At the end of July, the nation's employment cost index had
risen at a rate of just 2.8% over the previous year, helping to contain cost
pressures. At the same time, the bond markets have apparently become
convinced that economic growth will be contained for the near future and have
allowed long-term interest rates to decline. Although previous monetary
easing by the Federal Reserve has been followed by additional rate
reductions, prospects for further decreases in the current environment are
uncertain. Still, with long-term government bonds yielding approximately
6.50%, in an environment of 2-1/2% to 3% inflation, real rates of return in
the fixed-income markets remain relatively attractive.
We believe municipals offer attractive value at current levels. The yield
ratio of municipals to Treasuries of 89% is the highest level for this ratio
since October 1989, indicating the market is already compensating for a more
moderate version of tax reform, which, in our opinion, is the reform that
appears to have the best chance of passage. The tax-reform debate has
overshadowed a powerful fundamental trend--the low supply of new issues.
Issuance declined 44% in 1994 and has continued to decline in 1995. Combined
with a record amount of redemptions, we expect the supply of outstanding
municipals to actually shrink for an unprecedented second year in a row.
Therefore, any pickup in demand could have an even greater positive impact on
prices. Finally, any weakness in stock prices seems likely to bring investors
back to the municipal market.
During the six-month reporting period, we extended portfolio durations (a
measure of interest rate sensitivity) to participate in the market rally,
primarily by covering hedge positions and buying discount bonds. Currently,
durations are generally long relative to the benchmark Lehman Brothers
Municipal Bond Index, an unmanaged index of national municipal bonds rated
Baa or higher. When possible, we have swapped out of bonds with short call
features and into bonds with greater call protection. We have continued to
emphasize quality in the Funds, as the spread between high-grade and
lower-grade bonds is historically narrow. Finally, we moved out of
shorter-term bonds and into bonds in the 15- to 20-year maturity range, which
offer more yield and, we believe, better value relative to taxable
investments.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin /s/ Geoffrey L. Schechter and David B. Smith
A. Keith Brodkin Geoffrey L. Schechter and David B. Smith
Chairman and President Portfolio Managers
October 12, 1995
1
<PAGE>
Portfolio Manager Profiles
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 Florida,
Louisiana, Mississippi and Texas state Funds. Mr. Schechter is a Certified
Public Accountant (C.P.A.) and a Chartered Financial Analyst (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 Analyst 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 California and Washington 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 the state to which the Fund's name relates.
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.
Performance Summary
Because mutual funds like MFS Municipal Series Trust are designed for
investors with long-term goals, we have provided cumulative results as well
as the average annual total returns for Class A, Class B and Class C shares
for the applicable time periods.
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------
MFS California Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return+ +4.41% +8.97% +48.19% +128.31%
- ---------------------------------------------------------------------------------------------
Average Annual Total Return+ -- +8.97% +8.18% +8.61%
- ---------------------------------------------------------------------------------------------
SEC Average Annual Total Return++ -- +3.72% +7.14% +8.08%
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Class C***
------------------------------------------ ------------------------------------------
MFS California Municipal Bond Fund 6 Months 1 Year 9/07/93* - 9/30/95 6 Months 1 Year 1/03/94* - 9/30/95
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +3.98% +7.94% +1.59% +3.88% +7.86% +1.28%
- --------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return+ -- +7.94% +0.77% -- +7.86% +0.73%
- --------------------------------------------------------------------------------------------------------------------------------
SEC Average Annual Total Return++ -- +3.94% -1.00% -- +7.86% +0.73%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ --------------------------------------------
MFS Florida Municipal Bond Fund 6 Months 1 Year 2/03/92* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +4.65% +9.64% +28.55% +4.20% +8.71% +2.08%
- -----------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return+ -- +9.64% +7.11% -- +8.71% +1.00%
- -----------------------------------------------------------------------------------------------------------------------------------
SEC Average Annual Total Return++ -- +4.43% +5.69% -- +4.71% -0.77%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of offering of this class of shares.
+ These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++ The average annual total rate of return, as required by the Securities and
Exchange Commission (SEC), reflects the maximum sales charge of 4.75% for
Class A shares and the current maximum contingent deferred sales charge
(CDSC) of 4% for Class B shares.
*** Class C shares have no initial sales charge or CDSC but, along with Class B
shares, have higher annual fees and expenses than Class A shares.
2
<PAGE>
Performance Summary - continued
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ --------------------------------------------
MFS Louisiana Municipal Bond Fund 6 Months 1 Year 2/01/93* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return+ +4.61% +9.78% +15.76% +4.19% +8.79% +3.97%
- ----------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return+ -- +9.78% +5.63% -- +8.79% +1.90%
- ----------------------------------------------------------------------------------------------------------------------------------
SEC Average Annual Total Return++ -- +4.62% +3.74% -- +4.79% +0.12%
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Class B
------------------------------------------ --------------------------------------------
MFS Mississippi Municipal Bond Fund 6 Months 1 Year 8/06/92* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- ----------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return+ +4.58% +9.03% +17.46% +4.19% +8.20% +3.97%
- ----------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return+ -- +9.03% +5.24% -- +8.20% +1.90%
- ----------------------------------------------------------------------------------------------------------------------------------
SEC Average Annual Total Return++ -- +3.87% +3.63% -- +4.20% +0.11%
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Class B
------------------------------------------ --------------------------------------------
MFS Texas Municipal Bond Fund 6 Months 1 Year 2/03/92* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- ----------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return+ +4.23% +10.06% +31.74% +3.80% +9.17% +4.04%
- ----------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return+ -- +10.06% +7.83% -- +9.17% +1.94%
- ----------------------------------------------------------------------------------------------------------------------------------
SEC Average Annual Total Return++ -- +4.87% +6.40% -- +5.17% +0.15%
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Class B
------------------------------------------ --------------------------------------------
MFS Washington Municipal Bond Fund 6 Months 1 Year 8/07/92* - 9/30/95 6 Months 1 Year 9/07/93* - 9/30/95
- ----------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return+ +5.27% +11.61% +24.48% +4.86% +10.64% +6.68%
- ----------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return+ -- +11.61% +7.20% -- +10.64% +3.18%
- ----------------------------------------------------------------------------------------------------------------------------------
SEC Average Annual Total Return++ -- +6.26% +5.56% -- +6.64% +1.37%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of offering of this class of shares.
+ These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++ The average annual total rate of return, as required by the Securities and
Exchange Commission (SEC), reflects the maximum sales charge of 4.75% for
Class A shares and the current maximum contingent deferred sales charge
(CDSC) of 4% for Class B shares.
*** Class C shares have no initial sales charge or CDSC but, along with Class B
shares, have higher annual fees and expenses than Class A shares.
All results represent past performance and are not necessarily an indication
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
All results 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 by
MFS at any time.
3
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1995
MFS CALIFORNIA MUNICIPAL BOND FUND
Municipal Bonds - 97.7%
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- -------------------------------------------------------------------------------
General Obligation - 11.2%
AAA Beverly Hills, CA, MBIA-IBC, 5.75s,
2020 $ 1,500 $ 1,461,435
AAA Metropolitan Water District, 5.55s,
2020 2,000 1,914,900
AA- Palos Verdes, CA, Library District,
6.7s, 2016 1,250 1,301,675
AA- Santa Monica, CA, Malibu Unified School
District, 5.75s, 2018 1,475 1,447,241
A+ State of California, 10s, 2007 1,055 1,484,786
A State of California, 5.75s, 2023 2,415 2,287,705
AAA State of California, AMBAC, 7.2s, 2008 1,600 1,866,752
AAA State of California, AMBAC, 6.3s, 2010 6,000 6,450,720
AAA State of California, AMBAC, 7s, 2010 2,000 2,303,320
AAA State of California, AMBAC, 5.9s, 2025 5,000 4,931,500
AAA State of California, FSA, 5.5s, 2020 5,000 4,651,000
AAA Walnut Valley, CA, AMBAC, 6s, 2011 1,600 1,649,136
AAA Walnut Valley, CA, MBIA, 0s, 2007 1,150 601,945
AAA Walnut Valley, CA, MBIA, 0s, 2008 1,125 550,766
AAA Walnut Valley, CA, MBIA, 0s, 2009 1,175 536,975
---------
$33,439,856
- -------------------------------------------------------------------------------
State and Local Appropriation - 13.8%
AAA Banning, CA, Certificates of
Participation, Water System
Improvement, AMBAC, 8s, 2019 $ 1,000 $ 1,256,430
A- California Public Works Board, Lease
Rev., 6.75s, 2012 3,200 3,360,576
A- California Public Works Board, Lease
Rev. (Department of Corrections),
7.4s, 2010 5,000 5,751,900
NR Fortuna, Parlier & Susanville, CA,
Certificates of Participation, "B",
7.375s, 2017 930 964,577
AAA Grossmont, CA, Union High School
District, Certificates of
Participation, MBIA, 0s, 2006 6,000 3,279,000
AAA Los Angeles, CA, Convention &
Exhibition Center Authority,
Certificates of Participation, AMBAC,
0s, 2005 2,400 1,444,824
AAA Los Angeles County, CA, MBIA, 0s, 2013 3,380 1,130,204
A+ Pasadena, CA, Certificates of
Participation (Pasadena Parking
Facility), 6.25s, 2018 3,460 3,552,105
A- Pomona, CA, Public Financing, 6.25s,
2010 4,020 4,061,808
A Puerto Rico Public Buildings Authority,
5.31s, 2016 (Municipal Swap) S. 1,000 928,120
A Riverside County, CA, Asset Leasing
Corp., "A", 6.25s, 2019 1,210 1,210,254
A- San Francisco, CA, City & County
Redevelopment Agency, Lease Rev.,
5.5s, 2018 13,000 11,505,390
AAA Visalia, CA, Unified School District,
Certificates of Participation, MBIA,
0s, 2005 4,655 2,733,044
---------
$41,178,232
- -------------------------------------------------------------------------------
Refunded and Special Obligation - 18.8%
NR California Educational Facilities
Authority Rev. (St. Mary's College),
7.5s, 2000 $ 1,000 $ 1,156,100
A+ California Health Facilities Financing
Authority (AIDS Hospice Foundation),
CHFC, 7.15s, 2000 3,110 3,489,047
- -------------------------------------------------------------------------------
Refunded and Special Obligation - continued
NR California Health Facilities Financing
Authority (Brookside Hospital), 8.1s,
1997 $ 1,000 $ 1,096,490
NR California Health Facilities Financing
Authority (Daughters of Charity Queen
Angel), 9.25s, 2015 300 315,192
AA California Health Facilities Financing
Authority (St. Joseph Health System),
6.9s, 1999 1,000 1,105,940
AA- California Health Facilities Financing
Authority (St. Joseph Hospital),
6.75s, 2001 2,710 3,057,232
A California Health Facilities Financing
Authority (Valley Memorial Hospital),
7.9s, 1997 500 538,450
AAA California Health Facilities Financing
Authority Rev., AMBAC, 7.625s, 1998 1,205 1,341,165
AAA California Public Works Board, Lease
Rev. (University of California
Projects), 6.6s, 2002 3,500 3,984,610
AAA Concord, CA, Redevelopment Agency, Tax
Allocation, BIGI, 8s, 1998 1,810 2,019,489
AAA Concord, CA, Redevelopment Agency, Tax
Allocation (Central Concord), BIGI,
8s, 1998 370 412,824
AAA Corona, CA, Certificates of
Participation (Corona Community
Hospital), 8s, 2005 585 721,346
AAA Los Angeles, CA, Convention &
Exhibition Center Authority,
Certificates of Particpation, 7.375s,
1999 5,000 5,614,750
AAA Los Angeles, CA, Convention &
Exhibition Center Authority,
Certificates of Participation, 9s,
2005 1,900 2,520,939
AA- Los Angeles, CA, Department of Water
and Power, Electric Plant Rev., 7.9s,
2028 1,000 1,107,330
A Los Angeles, CA, Wastewater System
Rev., 6.8s, 1999 500 551,315
AAA Los Angeles, CA, Wastewater System
Rev., "B", 8.125s, 1997 2,500 2,745,100
AAA Northern California Power Agency,
Public Power Rev. (Hydro-Electric),
8s, 1998 290 318,385
AAA Oakland, CA, Redevelopment Agency,
Certificates of Participation, AMBAC,
8.125s, 1997 750 808,155
A- Pomona, CA, Public Financing Authority
Rev., "J", 7.875s, 2000 7,155 8,373,496
NR Pomona, CA, Single Family Mortgage
Rev., FNMA, GNMA, 7.375s, 2010 2,000 2,340,540
AAA Pomona, CA, Single Family Mortgage
Rev., GNMA, 7.5s, 2000 2,000 2,400,720
AAA Puerto Rico Highway and Special
Obligation and Transport Authority,
Highway Rev., 6.5s, 2002 2,750 3,088,552
AAA Sacramento, CA, Municipal Utility
District, Electric Rev., "W", 7.875s,
1998 2,500 2,793,275
AAA San Bernardino County, CA, Certificates
of Participation, 6.25s, 2001 2,000 2,182,780
4
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- -------------------------------------------------------------------------------
Refunded and Special Obligation - continued
A Tracy, CA, Hospital Rev., Certificates
of Participation (Tracy Community
Hospital), 8.625s, 1997 $2,000 $ 2,149,340
-----------
$56,232,562
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 1.6%
AA- California Housing Finance Agency,
7.75s, 2010 $1,210 $ 1,277,736
AA- California Housing Finance Agency,
8.1s, 2016 2,500 2,570,775
AA- California Housing Finance Agency,
7.875s, 2031 125 132,349
A+ Riverside County, CA, 0s, 2014 3,027 404,230
AAA San Bernardino County, CA, Single
Family Mortgage Rev., GNMA, 7.65s,
2023 225 232,067
AAA Santa Ana, CA, Home Mortgage Rev., "A",
FGIC, 8.875s, 2017 15 15,875
AAA Southern California Home Finance
Authority, Single Family Mortgage
Rev., GNMA, 7.625s, 2023 265 278,714
-----------
$ 4,911,746
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 7.3%
A+ California Housing Finance Agency
(Multi-Unit Rental Housing), 6.7s,
2015 $2,750 $ 2,844,627
NR Escondido, CA, Community Development
Authority (Las Villas del Norte),
8.875s, 2005 4,395 4,342,436
AAA Palmdale, CA, Multi-Family Housing
Rev., FNMA, 7.375s, 2024 1,000 1,070,430
BBB Thousand Oaks, CA, Redevelopment Agency
(Shadow Hills Project), 7s, 2021 8,900 9,161,571
A+ Yolo County, CA, Housing Authority
Mortgage Rev. (Walnut Park
Apartments), FHA, 7.2s, 2033 4,150 4,356,836
-----------
$21,775,900
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 7.6%
A Apple Valley, CA, Hospital Rev. (St.
Mary's Hospital), CHFC, 6.75s, 2012 $4,880 $ 4,997,754
A California Health Facilities Financing
Authority (American Baptist Homes
West), CHFC, 7.65s, 2014 4,420 4,695,454
AAA California Health Facilities Financing
Authority (Sutter Health), MBIA, 7s,
2009 1,000 1,071,740
AAA California Health Facilities Financing
Authority (Unihealth America), AMBAC,
7.625s, 2015 45 48,837
A California Statewide Communities
Development Authority, Certificates of
Participation, 6.75s, 2021 3,000 3,054,180
A+ California Statewide Communities
Development Authority, Certificates of
Participation, CHFC, 0s, 2007 6,645 3,082,084
A+ California Statewide Communities
Development Authority, Certificates of
Participation, CHFC, 0s, 2008 6,345 2,740,850
AAA Desert Hospital District, CA, Hospital
Rev., CGIC, 8.354s, 2020++++ 3,000 3,062,550
-----------
$22,753,449
- -------------------------------------------------------------------------------
Health Care Revenue - 6.2%
A- California Health Facilities Financing
Authority (Good Samaritan), 6.6s, 2000 $1,300 $ 1,378,663
A- California Health Facilities Financing
Authority (Good Samaritan), 6.65s,
2001 500 532,835
AA California Health Facilities Financing
Authority (Kaiser Permanente), 7s,
2018 1,000 1,062,540
AA California Statewide (St. Joseph's),
6.625s, 2021 4,205 4,399,860
NR Hemet Valley, CA, Hospital District,
8.25s, 2005 4,705 4,908,538
BBB Loma Linda, CA (Loma Linda University
Medical Center, Project B), 9s, 2012 460 472,825
AA Riverside, CA, Kaiser Permanente Rev.,
9s, 2015 750 769,793
A- San Joaquin County, CA, Certificates of
Participation (General Hospital),
6.625s, 2020 4,235 4,225,556
A- Stockton, CA, Hospital Rev. (St. Joseph
Hospital), "B", 9.4s, 2008 650 668,525
-----------
$18,419,135
- -------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 5.7%
AA- Los Angeles, CA, Department of Water
and Power, Electric Plant Rev., 8s,
2026 $ 1,000 $ 1,043,190
AA Los Angeles, CA, Department of Water
and Power, Electric Plant Rev., 7.25s,
2030 1,000 1,130,750
AA- Los Angeles, CA, Department of Water
and Power, Electric Plant Rev., 7.1s,
2031 1,050 1,184,284
A+ Modesto, CA, Irrigation District,
Certificates of Participation
(Geyser), 5s, 2017 4,300 3,670,480
AAA Northern California Public Power
Refunding (Geothermal), "93A", AMBAC,
5.85s, 2010 1,000 1,029,600
AAA Sacramento, CA, Municipal Utilities
District, MBIA, 5.25s, 2020 4,500 4,064,400
NR Southern California Public Power
Authority (Southern Transmission
Project), 0s, 2005 8,000 4,850,960
-----------
$16,973,664
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 13.4%
AA California Department of Water
Resources, Central Valley Project
Rev., 7s, 2012 $ 1,495 $ 1,707,410
AAA Contra Costa, CA, Water Rev., MBIA,
5.5s, 2019 4,000 3,771,400
AAA Eastern Municipal Water District, FGIC,
5.25s, 2023 2,000 1,798,280
AAA Fairfield-Suisun, CA, Sewer District
Rev., MBIA, 0s, 2006 2,080 1,188,720
AAA Los Angeles County, CA, Sanitation
District, MBIA-IBC, 5.25s, 2019 5,000 4,525,900
AA Metropolitan Water District, 5.5s, 2019 6,900 6,423,555
AA Metropolitan Water District, 5s, 2020 7,000 6,061,090
AA Metropolitan Water District, Linked
Savers, RIBS, 5.75s, 2018 10,000 9,763,600
BBB+ Mojave, CA, Water Agency (Morongo
Basin), 6.6s, 2022 1,400 1,422,526
AAA Redding, CA, Wastewater Rev., FGIC,
5.5s, 2018 1,500 1,415,520
5
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - continued
AA San Francisco, CA, 0s, 2019 $ 2,100 $ 495,096
AAA West Sacramento, CA, Financing
Authority Rev., FGIC, 5.5s, 2024 1,685 1,570,032
---------
$ 40,143,129
- -------------------------------------------------------------------------------
Turnpike Revenue - 0.9%
BBB- Foothill/Eastern Transportation
Corridor Agency, CA, 0s, 2011 $ 5,000 $ 2,678,500
- -------------------------------------------------------------------------------
Airport and Port Revenue - 1.4%
AAA San Francisco, CA, City & County
Airports Commission, International
Airport, FGIC, 6.5s, 2019 $ 4,000 $ 4,152,840
- -------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 3.0%
AAA Los Angeles County, CA, Metropolitan
Transportation Authority, FGIC, 5s,
2021 $10,415 $ 9,056,363
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 0.7%
NR California Pollution Control Financing
Authority (Frito-Lay, Inc.), 6.375s,
2004 $ 1,025 $ 1,086,951
A California Pollution Control Financing
Authority (Pacific Gas & Electric
Co.), 6.625s, 2009 1,000 1,059,220
---------
$ 2,146,171
- -------------------------------------------------------------------------------
Universities - 1.9%
A- California State University Housing
System Rev., 6.75s, 2010 $ 1,705 $ 1,789,500
A- California State University Housing
System Rev., 6.75s, 2011 3,570 3,736,398
---------
$ 5,525,898
- -------------------------------------------------------------------------------
Special Assessment District - 1.8%
AAA Anaheim, CA, Public Financing Authority
(Redevelopment Project Alpha), MBIA,
0s, 2005 $ 3,210 $ 1,894,028
AAA Brea, CA, Public Finance Authority,
MBIA, 0s, 2005 2,235 1,348,174
AAA Brea, CA, Public Finance Authority,
MBIA, 0s, 2006 3,415 1,926,060
AAA Concord, CA, Redevelopment Agency, Tax
Allocation, BIGI, 8s, 2018 40 44,124
---------
$ 5,212,386
- -------------------------------------------------------------------------------
Other - 2.4%
AAA California Public Capital Improvements
Financing Authority Rev., BIGI, 8.1s,
2018 $ 1,920 $ 2,085,275
AAA San Francisco, CA, Bay Area Rapid
Transportation, FGIC, 5.5s, 2020 3,065 2,887,169
AAA South Coast Air Quality Management
District, AMBAC, 0s, 2005 3,480 2,099,171
---------
$ 7,071,615
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $277,740,059) $291,671,446
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.4%
California Health Facilities Financing
(St. Joseph Health System), due
7/01/13 $ 1,000 $ 1,000,000
California Pollution Control Financing
Authority (Shell Oil Co.), due
10/01/06 100 100,000
California Pollution Control Financing
Authority (Shell Oil Co.), due
10/01/09 100 100,000
- -------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,200,000
- -------------------------------------------------------------------------------
Portfolio of Investments (Unaudited) - continued
Call Option Purchased - 0.1%
Principal
Amount
Issuer/Expiration of Contracts
Date/Strike Price (000 Omitted) Value
- --------------------------------------------------------------
State of New Jersey,
"D"/2003/102
(Premium Paid, $255,000) $2 $ 152,300
- --------------------------------------------------------------
Total Investments (Identified Cost,
$279,195,059) $293,023,746
Other Assets, Less Liabilities - 1.8% 5,490,625
- --------------------------------------------------------------
Net Assets - 100.0% $298,514,371
- --------------------------------------------------------------
[S] Indexed security.
++++ Inverse floating rate security.
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
MFS FLORIDA MUNICIPAL BOND FUND
Municipal Bonds - 96.9%
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
General Obligation - 10.6%
AAA Commonwealth of Puerto Rico, MBIA,
5.375s, 2022 $1,500 $ 1,410,015
AA Florida Board of Education, Capital
Outlay, 9.125s, 2014 2,600 3,596,736
AA Palm Beach County, FL, 6.5s, 2010 2,000 2,209,980
AA State of Florida, 9.875s, 2009 1,100 1,581,140
AA State of Florida, 6.4s, 2022 2,000 2,083,960
---------
$10,881,831
- ------------------------------------------------------------------------------
State and Local Appropriation - 5.0%
AAA Bay County, FL, School Board,
Certificates of Participation, AMBAC,
6.75s, 2012 $1,000 $ 1,111,190
AAA Palm Beach County, FL, School Board,
Certificates of Participation, AMBAC,
5.375s, 2015 2,000 1,895,440
AAA Palm Beach County, FL, School Board,
Certificates of Participation, AMBAC,
6.375s, 2015 2,000 2,078,480
---------
$ 5,085,110
- ------------------------------------------------------------------------------
Refunded and Special Obligation - 5.1%
AAA Broward County, FL, School District,
7.125s, 1999 $ 250 $ 276,215
AAA Florida Board of Education, Capital
Outlay, 7.25s, 2000 510 578,906
AAA Florida Board of Education, Capital
Outlay, ETM, 9.125s, 2014 400 544,200
AAA Florida Turnpike Authority Rev., AMBAC,
7.125s, 2001 1,250 1,433,650
AAA Gainesville, FL, Utility Systems Rev.,
AMBAC, 7.25s, 1998 500 550,535
AAA Orange County, FL, Tourist Development
Tax Rev., AMBAC, 7.25s, 2000 500 571,285
A- Puerto Rico Electric Power Authority
Rev., 7s, 2001 240 273,756
AAA Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.625s, 2002 100 113,029
AAA Puerto Rico Public Buildings Authority,
6.875s, 2002 740 847,048
---------
$ 5,188,624
- ------------------------------------------------------------------------------
6
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
Single Family Housing Revenue - 1.1%
NR Dade County, FL, Housing Finance
Authority, FNMA, GNMA, 7s, 2024 $ 75 $ 77,607
AAA Dade County, FL, Housing Finance
Authority, FSA, 6.95s, 2012 1,000 1,045,660
---------
$ 1,123,267
- ------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.5%
NR Florida Housing Finance Agency
(Southlake Apartments), 8.7s, 2021 $1,500 $ 1,513,605
- ------------------------------------------------------------------------------
Insured Health Care Revenue - 12.1%
AAA Brevard County, FL, Health Facilities
Authority Rev. (Wuesthoff Memorial),
MBIA, 6.5s, 2007 $1,000 $ 1,087,300
AAA Brevard County, FL, Health Facilities
Authority Rev. (Wuesthoff Memorial),
MBIA, 7.2s, 2013 1,000 1,116,710
AAA Charlotte County, FL, Public Facilities
Authority Rev. (Bon Secours), FSA,
7.814s, 2027++++ 2,500 2,489,650
AAA Hillsborough County, FL, Industrial
Development Authority (University
Community Hospital), 6.5s, 2019 1,000 1,081,800
AAA Jacksonville, FL, Hospital Rev.
(Baptist Medical), MBIA, 7.3s, 2019 1,900 2,061,348
AAA Jacksonville, FL, Hospital Rev.
(University Medical Center, Inc.),
Connie Lee, 6.6s, 2013 500 528,875
AAA Orange County, FL, Health Facilities
Authority Rev. (Adventist Health
System), AMBAC, 5.25s, 2020 2,000 1,823,240
AAA Tallahassee, FL, Health Facilities Rev.
(Tallahassee Memorial Regional
Medical), MBIA, 6.625s, 2013 1,000 1,101,870
AAA Tampa, FL, Alleghany Health System (St.
Joseph Hospital), MBIA, 6.5s, 2023 1,000 1,067,050
---------
$12,357,843
- ------------------------------------------------------------------------------
Health Care Revenue - 9.3%
NR Brevard County, FL, Health Facilities
Authority Rev. (Friendly Village),
9.25s, 2012 $ 375 $ 387,668
BBB+ Escambia County, FL, Health Facilities
Authority (Baptist Hospital), 6s, 2014 2,500 2,374,175
BBB+ Escambia County, FL, Health Facilities
Authority (Baptist Hospital & Baptist
Manor), 6.75s, 2014 1,000 1,021,550
NR Jacksonville, FL, Health Facilities
Authority, Industrial Development Rev.
(Cypress Village), 7s, 2014 1,250 1,276,363
NR Jacksonville, FL, Health Facilities
Authority, Industrial Development Rev.
(National Benevolent Assn./Cypress),
6.4s, 2016 1,825 1,780,945
NR Orange County, FL, Industrial
Development Authority Rev. (Friendly
Village), 9.25s, 2012 335 349,110
A+ Palm Beach County, FL, Health
Facilities Authority Rev. (Good
Samaritan Health System), 6.3s, 2022 1,750 1,768,882
NR St. Petersburg, FL, Health Facilities
Rev. (Swanholm Nursing), 10s, 2022 490 530,322
---------
$ 9,489,015
- ------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 26.9%
AAA Charlotte County, FL, Utility Systems
Rev., FGIC, 6.875s, 2021 $ 500 $ 552,290
AAA Escambia County, FL, Utilities
Authority, FGIC, 0s, 2015 2,000 648,380
AAA Escambia County, FL, Utilities
District, Utility Systems Rev., FGIC,
6.25s, 2015 1,500 1,586,295
AA- Hillsborough County, FL, Industrial
Development Authority, Pollution
Control Rev. (Tampa Electric Co.), 8s,
2022 3,000 3,519,270
AA Jacksonville, FL, Electric Authority
Rev., 0s, 2010 4,995 2,169,828
AA- Lakeland, FL, Electric & Water Rev.,
0s, 2011 5,000 2,044,950
AA- Lakeland, FL, Electric & Water Rev.,
0s, 2012 3,000 1,141,200
BBB- Martin County, FL, Industrial
Development Authority (Indiantown
Cogeneration Project), 7.875s, 2025 3,625 3,970,136
AA- Orlando, FL, Utilities Commission,
Water & Electric Rev., 6.75s, 2017 2,500 2,823,850
NR Palm Beach County, FL, Industrial
Development Rev. (Osceola Power
Project), 6.85s, 2014 3,000 2,970,480
NR Palm Beach County, FL, Solid Waste
Industrial Development Rev. (Osceola
Power), 6.95s, 2022 1,500 1,492,425
A- Puerto Rico Electric Power Authority
Rev., 6.125s, 2008 2,400 2,550,984
AAA Puerto Rico Electric Power Authority
Rev., FSA, 6s, 2016 2,000 2,020,960
---------
$27,491,048
- ------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 5.1%
AAA Bradenton, FL, Utility System Rev.,
FGIC, 0s, 2008 $1,000 $ 503,650
AAA Miramar, FL, Wastewater Improvement,
FGIC, 6.75s, 2016 1,500 1,646,025
AAA Seminole, FL, Water & Sewer Improvement
Rev., MBIA, 6s, 2019 3,000 3,073,620
---------
$ 5,223,295
- ------------------------------------------------------------------------------
Turnpike Revenue - 3.9%
AAA Florida Turnpike Authority Rev., FGIC,
5.5s, 2021 $2,100 $ 1,984,017
AAA Lee County, FL, Transportation Facility
Rev., MBIA, 5.75s, 2022 2,000 1,978,720
---------
$ 3,962,737
- ------------------------------------------------------------------------------
Airport and Port Revenue - 3.1%
AAA Dade County, FL, Aviation Rev., MBIA,
6.6s, 2022 $2,000 $ 2,090,160
B- Hillsborough County, FL, Aviation
Authority Rev. (US Air), 8.6s, 2022 1,000 1,045,430
---------
$ 3,135,590
- ------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.4%
AAA Jacksonville, FL, Capital Improvement
(Gator Bowl), AMBAC, 5.5s, 2014 $2,000 $ 1,939,900
AAA Jacksonville, FL, Excise Tax Rev.,
FGIC, 0s, 2010 1,000 424,980
AAA Jacksonville, FL, Excise Tax Rev.,
FGIC, 0s, 2011 1,000 395,200
A Puerto Rico Highway & Transportation
Authority Rev., 6.625s, 2018 1,000 1,048,290
7
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
Sales and Excise Tax Revenue - continued
AAA Sunrise, FL, Public Facilities Rev.,
MBIA, 0s, 2020 $3,100 $ 715,697
---------
$ 4,524,067
- ------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 6.1%
BBB Escambia County, FL, Pollution Control
Rev. (Champion International Corp.),
6.95s, 2007 $2,500 $ 2,645,350
BBB Escambia County, FL, Pollution Control
Rev. (Champion International Corp.),
6.8s, 2012 1,000 1,050,150
BBB Escambia County, FL, Pollution Control
Rev. (Champion International Corp.),
6.9s, 2022 1,000 1,042,350
BB Hillsborough County, FL, Aviation
Authority Rev. (Delta Air Lines),
6.8s, 2024 1,500 1,526,940
---------
$ 6,264,790
- ------------------------------------------------------------------------------
Other - 2.7%
AAA Gainesville, FL, Entitlement Rev.,
AMBAC, 5.5s, 2017 $1,250 $ 1,203,663
A Hillsborough County, FL, Capital
Improvement Rev., 6.75s, 2022 1,500 1,608,990
---------
$ 2,812,653
- ------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $94,609,432) $ 99,053,475
- ------------------------------------------------------------------------------
Floating Rate Demand Note - 1.0%
- ------------------------------------------------------------------------------
Hillsborough County, FL, Pollution
Control Rev. (Tampa Electric Co.), due
5/15/18, at Identified Cost $1,000 $ 1,000,000
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $95,609,432) $100,053,475
Other Assets, Less Liabilities - 2.1% 2,186,262
- ------------------------------------------------------------------------------
Net Assets - 100.0% $102,239,737
- ------------------------------------------------------------------------------
++++ Inverse floating rate security.
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
MFS LOUISIANA MUNICIPAL BOND FUND
Municipal Bonds - 97.2%
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
General Obligation - 13.8%
AAA Commonwealth of Puerto Rico, MBIA,
5.375s, 2022 $ 750 $ 705,008
AAA New Orleans, LA, AMBAC, 0s, 2008 1,800 884,556
AAA New Orleans, LA, AMBAC, 0s, 2016 1,000 287,510
AAA Orleans Parish, LA, MBIA, 6s, 2009 555 584,343
AAA State of Louisiana, AMBAC, 6.1s, 2011 250 260,655
AAA State of Louisiana, AMBAC, 6.5s, 2011 250 268,222
---------
$ 2,990,294
- ------------------------------------------------------------------------------
State and Local Appropriation - 3.1%
BBB Natchitoches Parish, LA, 7.2s, 2015 $ 650 $ 659,510
- ------------------------------------------------------------------------------
Refunded and Special Obligation - 1.3%
AAA Puerto Rico Public Buildings Authority,
6.875s, 2002 $ 250 $ 286,165
- ------------------------------------------------------------------------------
Single Family Housing Revenue - 9.2%
NR East Baton Rouge, LA, FNMA, GNMA, 6.8s,
2028 $ 500 $ 510,395
NR Jefferson Parish, LA, Home Mortgage
Authority, Single Family, GNMA, 6s,
2024 400 384,064
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
Single Family Housing Revenue - continued
NR Louisiana Housing Finance Agency,
Single Family Mortgage Rev., FNMA,
GNMA, 7.8s, 2026 $1,000 $1,100,300
--------
$1,994,759
- ------------------------------------------------------------------------------
Insured Health Care Revenue - 7.7%
AAA Jefferson Parish, LA, Hospital
Service District No. 2, Hospital
Rev., MBIA, 5.75s, 2016 $ 250 $ 244,622
AAA St. Tammany Parish, LA, Hospital
Rev., Connie Lee, 6.125s, 2009 500 510,810
AAA St. Tammany Parish, LA, Hospital
Rev., Connie Lee, 6.25s, 2014 500 510,130
AAA Tangipahoa Parish, LA, AMBAC, 6.125s,
2014 400 404,184
--------
$1,669,746
- ------------------------------------------------------------------------------
Health Care Revenue - 6.9%
A- St. Tammany Parish, LA, Hospital
Service District #1, Hospital Rev.,
6.5s, 2017 $1,000 $ 988,180
NR Westside Habilitation Center,
Cheneyville, LA, 8.375s, 2013 500 493,940
--------
$1,482,120
- ------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 4.6%
AAA Alexandria, LA, Utilities Rev., FGIC,
5.25s, 2012 $1,065 $1,002,847
- ------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 5.8%
AA- Louisiana Public Facilities Authority
Rev. (Baton Rouge Water Works Co.),
6.4s, 2010 $ 500 $ 517,950
AAA Terrebonne Parish, LA, Waterworks
Rev., FGIC, 5.95s, 2012 730 737,190
--------
$1,255,140
- ------------------------------------------------------------------------------
Turnpike Revenue - 4.8%
AAA Greater New Orleans, LA, MBIA, 6s,
2016 $ 500 $ 503,520
A- Mississippi River Bridge Authority,
6.75s, 2012 500 538,140
--------
$1,041,660
- ------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.7%
AAA East Baton Rouge Parish, LA, FGIC,
5.9s, 2020 $ 500 $ 496,765
AAA Louisiana Stadium & Exposition
District, FGIC, 5.9s, 2012 240 239,863
AAA Regional Transit Authority, LA, Sales
Tax Rev., FGIC, 0s, 2012 800 283,360
--------
$1,019,988
- ------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 21.3%
BB+ Calcasieu Parish, Inc., LA, Pollution
Control Rev. (States Utilities Co.),
6.75s, 2012 $ 800 $ 801,584
A- DeSoto Parish, LA, Environmental
Improvement Rev. (International
Paper Co.), 7.7s, 2018 750 846,765
A- DeSoto Parish, LA, Environmental
Improvement Rev. (International
Paper Co.), 6.55s, 2019 250 250,965
A Natchitoches Parish, LA, Solid Waste
Disposal Rev. (Williamette
Industries), 5.875s, 2023 830 795,323
NR Port New Orleans, LA, 8.5s, 2014 500 556,415
8
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - continued
BBB St. Charles Parish, LA, Environmental
Improvement Rev. (Louisiana Power),
6.875s, 2024 $ 250 $ 258,660
AAA St. Charles Parish, LA, Environmental
Improvement Rev. (Louisiana Power),
AMBAC, 6.875s, 2024 330 346,823
A+ Vidalia, LA (Alcoa), 5.875s, 2013 500 493,990
BB+ West Feliciana Parish, LA, 7.7s, 2014 250 264,843
---------
$ 4,615,368
- ------------------------------------------------------------------------------
Universities - 9.5%
AAA Louisiana Public Facilities Authority,
FGIC, 5.875s, 2012 (Corporate Swap)* $1,060 $ 1,066,571
AAA Louisiana State University &
Agriculture, FGIC, 5.75s, 2014 1,000 981,770
---------
$ 2,048,341
- ------------------------------------------------------------------------------
Other - 4.5%
AAA State of Louisiana, Public Finance
Authority (Our Lady of the Lake), FSA,
5.9s, 2021 $1,000 $ 980,310
- ------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $20,336,117) $21,046,248
- ------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.8%
- ------------------------------------------------------------------------------
East Baton Rouge Parish, LA, Pollution
Control Rev. (Exxon Corp.), due
11/01/19 $ 300 $ 300,000
Peninsula Ports Authority, VA (Shell
Oil Co.), due 12/01/05 100 100,000
St. Charles Parish, LA, Pollution
Control Rev. (Shell Oil Co.), due
10/01/22 200 200,000
- ------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 600,000
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $20,936,117) $21,646,248
Other Assets, Less Liabilities (1,357)
- ------------------------------------------------------------------------------
Net Assets - 100.0% $21,644,891
- ------------------------------------------------------------------------------
* Indexed security.
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
MFS MISSISSIPPI MUNICIPAL BOND FUND
Municipal Bonds - 97.5%
- ------------------------------------------------------------------------------
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
General Obligation - 10.6%
AAA DeSoto County, MS, School District,
MBIA, 4.75s, 2014 $1,440 $ 1,255,234
NR Gulfport, MS, 5s, 2011 1,085 1,012,424
AAA Hinds County, MS, MBIA, 6.25s, 2010 1,660 1,785,396
AAA Hinds County, MS, MBIA, 6.25s, 2011 1,285 1,372,663
BBB+ Jackson County, MS, Road Improvement,
6.5s, 2008 425 454,206
AAA Madison County, MS, School District,
AMBAC, 5s, 2012 1,155 1,064,252
AA- State of Mississippi, 5.1s, 2012 750 705,555
AA- State of Mississippi, 6.75s, 2014 1,800 1,926,054
---------
$ 9,575,784
- ------------------------------------------------------------------------------
State and Local Appropriation - 17.0%
NR Hinds Community College, MS, District M
Conference and Training Center, 6.5s,
2014 $1,320 $ 1,333,438
NR Hinds County, MS, School District,
Certificates of Participation (Utica
Project), 7.25s, 2012 1,000 1,103,560
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- ------------------------------------------------------------------------------
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
State and Local Appropriation - continued
AAA Medical Center Educational Building
Corp., MS (University of Mississippi
Medical Center), MBIA, 5.65s, 2009 $2,000 $ 1,978,120
AAA Medical Center Educational Building
Corp., MS (University of Mississippi
Medical Center), MBIA, 5.9s, 2023 5,000 4,879,200
A Puerto Rico Public Buildings Authority,
5.31s, 2016 (Municipal Swap)* 1,000 928,120
AAA State of Mississippi, Certificates of
Participation (Marshall County
Correctional Facility), MBIA, 5.625s,
2015 3,310 3,130,532
NR State of Mississippi, Certificates of
Participation (Rehabilitation
Services), 6.1s, 2014 2,000 2,005,940
---------
$15,358,910
- ------------------------------------------------------------------------------
Refunded and Special Obligation - 5.6%
AAA Commonwealth of Puerto Rico, Public
Improvement, 6.8s, 2002 $1,500 $ 1,710,525
AAA Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.625s, 2002 100 113,029
NR State of Mississippi, 6s, 2002 3,000 3,245,070
---------
$ 5,068,624
- ------------------------------------------------------------------------------
Single Family Housing Revenue - 4.5%
NR Mississippi Home Corp., GNMA, 6.5s,
2024 $2,650 $ 2,676,447
NR Mississippi Home Corp., GNMA, 6.625s,
2027 1,350 1,378,782
---------
$ 4,055,229
- ------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.3%
AAA Gulfport, MS, Community Development
(Oakview Apartments), FNMA, 7.4s, 2025 $1,755 $ 1,858,791
AAA Jackson, MS, Elderly Housing Corp.,
Mortgage Rev. (Delhaven Manor), "C",
FHA, 7.375s, 2024 1,990 2,028,825
---------
$ 3,887,616
- ------------------------------------------------------------------------------
Insured Health Care Revenue - 21.8%
AAA Alcorn County, Corinth, MS (Magnolia
Regional Health Center), AMBAC, 5.75s,
2013 $2,000 $ 1,932,240
AAA Gulfport, MS, Hospital Facilities,
MBIA, 6.125s, 2015 2,500 2,542,875
AAA Gulfport, MS, Hospital Facilities,
MBIA, 6.2s, 2018 1,000 1,019,060
AAA Hinds County, MS, Rev. (Methodist
Hospital & Rehabilitation Center),
AMBAC, 5.6s, 2012 3,055 3,005,661
AAA Mississippi Hospital Equipment &
Facilities Authority Rev., FSA, 5.5s,
2023 2,630 2,427,516
AAA Mississippi Hospital Equipment &
Facilities Authority Rev. (Baptist),
MBIA, 6.5s, 2010 1,190 1,267,267
AAA Mississippi Hospital Equipment &
Facilities Authority Rev. (Baptist),
MBIA, 6s, 2013 1,000 1,007,830
AAA Mississippi Hospital Equipment &
Facilities Authority Rev. (North
Mississippi Health Services), AMBAC,
5.25s, 2013 4,115 3,819,008
9
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
Insured Health Care Revenue - continued
AAA Mississippi Hospital Equipment &
Facilities Authority Rev. (Rush
Medical Foundation), Connie Lee, 6.7s,
2018 $2,500 $ 2,597,500
---------
$19,618,957
- ------------------------------------------------------------------------------
Health Care Revenue - 4.5%
NR Adams County, MS, Hospital Rev.
(Jefferson Davis Memorial Hospital),
8s, 2016 $1,000 $ 1,061,050
NR Mississippi Hospital Equipment &
Facilities Authority Rev., 5.7s, 2023 1,000 914,730
NR Mississippi Hospital Equipment &
Facilities Authority Rev. (Magnolia
Hospital), 7.375s, 2021 1,500 1,427,280
NR Mississippi Hospital Equipment &
Facilities Authority Rev. (Rankin
Medical), 5.6s, 2019 735 673,929
---------
$ 4,076,989
- ------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 11.0%
AAA Clarksdale, MS, Sewer & Wastewater
Treatment System Rev., MBIA, 6.1s,
2012 $1,885 $ 1,912,578
AAA Columbus, MS, Water & Sewer Rev., MBIA,
6.5s, 2013 1,000 1,062,390
AAA Gautier, MS, Utility District, Utility
Systems Rev., FGIC, 6.375s, 2019 1,300 1,339,624
AAA Harrison County, MS, Wastewater
Management District, Wastewater
Treatment, FGIC, 6.5s, 2006 1,375 1,484,972
AAA Harrison County, MS, Wastewater
Management District, Wastewater
Treatment, FGIC, 5.875s, 2025 1,500 1,474,275
AAA Meridian, MS, Water & Sewer Rev.,
AMBAC, 6s, 2010 1,500 1,538,595
AAA Meridian, MS, Water & Sewer Rev.,
AMBAC, 6.2s, 2012 650 668,635
AAA Meridian, MS, Water & Sewer Rev.,
AMBAC, 6.2s, 2013 400 411,468
---------
$ 9,892,537
- ------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 14.9%
BBB- Claiborne County, MS, Pollution Control
Rev. (Energy Resources, Inc.), 7.3s,
2025 $1,000 $ 1,035,890
A+ Jackson County, MS, Pollution Control
Rev. (Gulf Power Co.), 7.125s, 2021 2,000 2,057,620
A- Jackson County, MS, Solid Waste
Disposal Facilities Rev.
(International Paper), 5.55s, 2017 1,300 1,219,764
A Lowndes County, MS, Solid Waste
Disposal & Pollution Control Rev.
(Weyerhaeuser), 6.8s, 2022 4,250 4,693,700
BBB Mississippi Business Finance Corp.
(Jackson Municipal Airport/Airborne),
7.15s, 2007 985 1,058,786
A- Warren County, MS, Pollution Control
Rev. (International Paper), 6.6s, 2019 1,000 1,011,820
NR Warren County, MS, Pollution Control
Rev. (Mississippi Power & Light), 7s,
2022 1,000 1,035,860
NR Washington County, MS, Pollution
Control Rev. (Mississippi Power &
Light), 7s, 2022 1,230 1,272,214
---------
$13,385,654
- ------------------------------------------------------------------------------
Other - 3.3%
AAA Jackson, MS, Redevelopment Authority
(Jackson Street Area), MBIA, 5.7s,
2013 $1,035 $ 1,011,299
A Puerto Rico Highway & Transportation
Authority Rev., 6.625s, 2018 1,900 1,991,751
---------
$ 3,003,050
- ------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $85,865,832) $87,923,350
- ------------------------------------------------------------------------------
Floating Rate Demand Note - 0.2%
- ------------------------------------------------------------------------------
Perry County, MS, Pollution Control
Rev. (Leaf River Forest), due 3/01/02,
at Identified Cost $ 200 $ 200,000
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $86,065,832) $88,123,350
Other Assets, Less Liabilities - 2.3% 2,097,788
- ------------------------------------------------------------------------------
Net Assets - 100.0% $90,221,138
- ------------------------------------------------------------------------------
* Indexed security.
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
MFS TEXAS MUNICIPAL BOND FUND
Municipal Bonds - 94.6%
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ------------------------------------------------------------------------------
General Obligation - 26.3%
AAA Brownsville, TX, Public Improvement,
AMBAC, 0s, 2011 $ 250 $ 101,703
AAA Garland, TX, Independent School
District, PSF, 5.5s, 2015 1,245 1,205,720
NR La Grange, TX, Independent School
District, PSF, 4.875s, 2010 530 488,660
NR Robstown, TX, Independent School
District, PSF, 0s, 2016 1,480 440,433
AA State of Texas, 6.8s, 2010 1,000 1,038,650
AAA Valwood, TX, Public Improvement
Authority, MBIA, 0s, 2005 500 293,425
NR Wylie, TX, Independent School District,
PSF, 6.9s, 2013 1,100 1,236,235
---------
$ 4,804,826
- ------------------------------------------------------------------------------
State and Local Appropriation - 8.8%
AAA State of Texas Public Finance
Authority, MBIA, 6.25s, 2009 $1,000 $ 1,082,740
AAA State of Texas Public Finance
Authority, Building Rev., MBIA, 0s,
2013 1,500 533,130
---------
$ 1,615,870
- ------------------------------------------------------------------------------
Refunded and Special Obligation - 6.4%
NR Arlington, TX, Permanent Improvement,
6.7s, 2002 $ 100 $ 111,300
AAA Coastal Water Authority, TX, Water
Conveyance Systems Rev., AMBAC, 6.25s,
2017 250 255,448
NR Mesquite, TX, Independent School
District, PSF, 6.7s, 2001 400 442,712
AAA Puerto Rico Public Buildings Authority,
6.875s, 2002 250 286,165
AAA Texas National Research Laboratory
Commission Finance Corp., 7.1s, 2001 60 68,867
---------
$ 1,164,492
- ------------------------------------------------------------------------------
10
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Single Family Housing Revenue - 3.3%
NR Midland, TX, Housing Finance Corp., 8.15s, 2011 $ 327 $ 339,073
AA State of Texas, 7s, 2025 250 263,425
---------
$ 602,498
- ---------------------------------------------------------------------------------------------------------------
Insured Health Care Revenue - 8.2%
AAA Bexar County, TX, Health (Baptist), MBIA, 6.75s, 2019 $ 750 $ 796,493
AAA Copperas Cove, TX, Health Facilities Development Corp. (Adventist
Health System), MBIA, 5.5s, 2017 750 699,075
---------
$ 1,495,568
- ---------------------------------------------------------------------------------------------------------------
Health Care Revenue - 2.5%
AA Harris County, TX, Health Facilities Development Corp. (Texas
Children's Hospital), 5.5s, 2019 $ 500 $ 455,340
- ---------------------------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 6.1%
BBB+ Brazos River Authority, TX, Pollution Control Rev. (Texas Utilities),
8.25s, 2019 $ 250 $ 273,380
AAA Brazos River Authority, TX, Rev. (Houston Power & Light), AMBAC,
6.375s, 2012 250 258,760
AAA Texas Municipal Power Agency Rev., 0s, 2011 500 195,220
AAA Texas Municipal Power Agency Rev., MBIA, 0s, 2016 1,350 379,539
---------
$ 1,106,899
- ---------------------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 18.5%
AAA Bexar, TX, Metropolitan Water District, MBIA, 5.875s, 2022 $ 500 $ 493,055
AAA Colorado River, TX, Municipal Water District, Water Rev., AMBAC,
6.625s, 2021 250 273,317
AAA Houston, TX, Water & Sewage, AMBAC, 0s, 2010 2,000 835,700
AA State of Texas, Water Development, 5.25s, 2020 1,000 916,910
AAA Texas Water Resources Finance Authority Rev., AMBAC, 7.5s, 2013 800 865,264
---------
$ 3,384,246
- ---------------------------------------------------------------------------------------------------------------
Turnpike Revenue - 1.1%
A- Texas Turnpike Authority Rev. (North Dallas Tollway), 7.125s, 2015 $ 200 $ 210,458
- ---------------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 8.3%
BB+ Dallas-Fort Worth, TX, International Airport (American Airlines),
7.5s, 2025 $1,200 $ 1,264,800
BB Dallas-Fort Worth, TX, International Airport Facilities Improvement
Corp. Rev. (Delta Airlines), 7.125s, 2026 250 255,117
---------
$ 1,519,917
- ---------------------------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 5.1%
BBB Angelina & Neches River Authority, TX, Solid Waste Disposal Rev.
(Champion International), 7.375s, 2015 $ 100 $ 106,955
BBB Gulf Coast Waste Disposal Authority, TX (Champion International),
7.45s, 2026 100 107,025
BBB Gulf Coast Waste Disposal Authority, TX, Solid Waste Disposal Rev.
(Champion International), 7.25s, 2017 100 105,973
A Texas City, TX, Industrial Development Corp. (ARCO Pipe Line),
7.375s, 2020 500 605,780
---------
$ 925,733
- ---------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $16,207,070) $17,285,847
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
(000
Issuer Omitted) Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Floating Rate Demand Note - 3.3%
Harris County, TX, Industrial Development Corp. (Exxon Corp.), due
3/01/24, at Identified Cost $600 $ 600,000
- ---------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $16,807,070) $17,885,847
- ---------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 2.1% 390,052
- ---------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $18,275,899
- ---------------------------------------------------------------------------------------------------------------
See notes to financial statements
Portfolio of Investments (Unaudited) - September 30, 1995
</TABLE>
MFS WASHINGTON MUNICIPAL BOND FUND
Municipal Bonds - 96.9%
<TABLE>
<CAPTION>
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General Obligation - 31.3%
NR Cowlitz County, WA, School District No. 4, 6.7s, 2011 $ 150 $ 154,941
AA+ King County, WA, 6.125s, 2012 500 509,475
AA King County, WA, School District No. 414, 6.125s, 2006 250 267,235
AA- King County, WA, School District No. 415, 5.55s, 2011 500 489,820
A+ Kitsap County, WA, 6.75s, 2011 410 432,730
AAA Lewis County, WA, AMBAC, 6.25s, 2012 250 258,082
AA+ Pike Place Market Preservation & Development Authority, WA, Special
Obligation, 6.5s, 2017 185 191,637
AA+ Seattle, WA, 6.5s, 2012 170 176,777
A+ Seattle, WA, 5.65s, 2020 500 480,815
AA Spokane, WA, 6.125s, 2011 250 254,217
AA State of Washington, 0s, 2008 1,500 754,545
AA State of Washington, 6.4s, 2017 1,000 1,076,030
AA State of Washington, 5.5s, 2018 700 666,043
-----------
$5,712,347
- --------------------------------------------------------------------------------------------------------------
State and Local Appropriation - 2.5%
A+ Douglas County, WA, Public Utility District, No. 001, Wells
Hydroelectric, 7.7s, 2008 $ 315 $ 360,990
A State of Washington, Certificates of Participation (State Office
Building), 6s, 2012 100 101,453
-----------
$ 462,443
- --------------------------------------------------------------------------------------------------------------
Refunded and Special Obligation - 5.2%
A+ Douglas County, WA, Public Utility District No. 001, Wells
Hydroelectric, 7.7s, 2000 $ 185 $ 212,448
AAA Puerto Rico Highway and Special Obligation and Transport Authority,
Highway Rev., 6.5s, 2002 200 224,622
AAA Puerto Rico Public Buildings Authority, 6.875s, 2002 250 286,165
A+ Snohomish County, WA, Public Utility District No. 1, Electric Rev.,
6.8s, 2020 100 112,088
AA State of Washington, 6.7s, 2001 100 110,349
-----------
$ 945,672
- --------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.4%
NR Bellingham, WA, Housing Authority Rev. (Pacific Rim Project), 6.5s,
2022 $ 250 $ 252,026
- --------------------------------------------------------------------------------------------------------------
11
<PAGE>
Principal
Amount
S&P Bond (000
Rating Issuer Omitted) Value
- ---------------------------------------------------------------------------------------------------------------
Municipal Bonds - continued
Insured Health Care Revenue - 8.7%
AAA Washington Health Care Facilities Authority Rev. (Allenmore
Hospital), FGIC, 6.5s, 2013 $ 150 $ 153,054
AAA Washington Health Care Facilities Authority Rev. (Franciscan
Health/St. Claire), MBIA, 6.7s, 2021 250 261,942
AAA Washington Health Care Facilities Authority Rev. (Multicare Medical/
Tacoma), FGIC, 5.75s, 2022 700 667,779
AAA Washington Health Care Facilities Authority Rev. (Virginia Mason
Group/ Seattle), MBIA, 6.3s, 2017 500 511,755
-----------
$ 1,594,530
- ---------------------------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 28.2%
A+ Grant County, WA, Public Utility District No. 2 (Wanapum
Hydroelectric), 6.375s, 2023 $1,000 $ 1,018,180
A+ Grant County, WA, Public Utility District No. 2 (Wanapum
Hydroelectric), 6.75s, 2023 255 264,090
AAA Seattle, WA, Municipal Light & Power Rev., MBIA, 5.7s, 2020 400 381,088
AAA Snohomish County, WA, Public Utility District No. 1, Electric Rev.,
FGIC, 5.5s, 2020 500 467,595
AAA Tacoma, WA, Electric Systems Rev., AMBAC, 5.5s, 2012 1,000 962,270
AA Washington Public Power Supply System, Nuclear Project No. 1 Rev.,
7s, 2008 500 556,180
AA Washington Public Power Supply System, Nuclear Project No. 2 Rev.,
6s, 2012 500 488,990
AA Washington Public Power Supply System, Nuclear Project No. 3 Rev.,
0s, 2015 1,500 423,225
AA Washington Public Power Supply System, Nuclear Project No. 3 Rev.,
6.5s, 2018 100 101,378
Electric and Gas Utility Revenue - continued
AAA Washington Public Power Supply System, Nuclear Project No. 3 Rev.,
MBIA, 7.125s, 2016 $ 425 $ 483,468
-----------
$ 5,146,464
- ---------------------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 13.8%
AAA Richland, WA, Water & Sewer System Rev., MBIA, 6.25s, 2012 $ 500 $ 508,965
AA- Seattle, WA, Municipality of Metropolitan Seattle, Sewer Rev., 6.2s,
2032 500 505,120
AA Seattle, WA, Water Systems Rev., 5.5s, 2018 750 715,335
AA Seattle, WA, Water Systems Rev., 5.25s, 2023 675 612,495
A- Soos Creek, WA, Water & Sewer District, Water & Sewer Rev., 0s, 2010 200 83,053
A+ Vancouver, WA, Water & Sewer Rev., 6.5s, 2012 100 104,192
-----------
$ 2,529,160
- ---------------------------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.6%
NR King County, WA, Housing Authority Rev. (Sprintwood Manor), GNMA,
6.5s, 2012 $ 100 $ 102,514
- ---------------------------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 5.2%
A Port of Seattle, WA, Industrial Development Corp. (Weyerhaeuser Co.),
5.6s, 2014 $1,000 $ 960,050
- ---------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $17,180,251) $17,705,206
Other Assets, Less Liabilities - 3.1% 557,020
- ---------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $18,262,226
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements
Statements of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
California Florida Louisiana Mississippi Texas Washington
September 30, 1995 Fund Fund Fund Fund Fund Fund
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $279,195,059 $ 95,609,432 $20,936,117 $86,065,832 $16,807,070 $17,180,251
Unrealized appreciation 13,828,687 4,444,043 710,131 2,057,518 1,078,777 524,955
------------------------------------------------------------------------------------
Total, at value $293,023,746 $100,053,475 $21,646,248 $88,123,350 $17,885,847 $17,705,206
Cash 13,335 34,597 5,954 33,357 26,921 12,956
Receivable for investments sold 2,835,676 -- 673,745 712,219 254,348 652,863
Receivable for Fund shares sold 864,533 638,933 35,376 89,901 81,734 27,145
Interest receivable 4,687,983 1,954,610 413,862 1,680,005 262,178 283,047
Deferred organization expenses -- 2,960 6,096 6,550 2,497 2,119
Other assets 5,310 12,290 245 1,123 267 1,802
------------------------------------------------------------------------------------
Total assets $301,430,583 $102,696,865 $22,781,526 $90,646,505 $18,513,792 $18,685,138
------------------------------------------------------------------------------------
Liabilities:
Distributions payable $ 779,552 $ 282,719 $ 53,967 $ 211,909 $ 38,626 $ 35,508
Payable for Fund shares reacquired 16,080 142,989 -- 200,055 -- 500
Payable for investments purchased 2,014,989 -- 1,074,205 -- 195,220 383,178
Payable to affiliates -
Management fee 6,484 2,756 236 1,966 198 199
Shareholder servicing agent fee 2,555 879 -- -- -- --
Distribution fee 9,485 628 2,418 4,782 1,680 1,698
Accrued expenses and other liabilities 87,067 27,157 5,809 6,655 2,169 1,829
------------------------------------------------------------------------------------
Total liabilities $ 2,916,212 $ 457,128 $ 1,136,635 $ 425,367 $ 237,893 $ 422,912
------------------------------------------------------------------------------------
Net assets $298,514,371 $102,239,737 $21,644,891 $90,221,138 $18,275,899 $18,262,226
====================================================================================
Net assets consist of:
Paid-in capital $298,880,123 $104,417,490 $22,115,857 $92,499,597 $18,701,388 $18,257,924
Unrealized appreciation on investments 13,828,687 4,444,043 710,131 2,057,518 1,078,777 524,955
Accumulated undistributed net realized loss
on investments (13,803,174) (6,525,630) (1,194,632) (4,288,522) (1,500,627) (526,088)
Accumulated undistributed (distributions in
excess of) net investment income (391,265) (96,166) 13,535 (47,455) (3,639) 5,435
--------------------------------------------------------------------------------------
Total $298,514,371 $102,239,737 $21,644,891 $90,221,138 $18,275,899 $18,262,226
======================================================================================
Shares of beneficial interest outstanding:
Class A 47,748,148 9,055,020 1,915,355 8,495,055 1,531,765 1,570,464
Class B 5,874,355 1,394,990 392,910 1,202,399 288,002 290,430
Class C 704,372 -- -- -- -- --
--------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 54,326,875 10,450,010 2,308,265 9,697,454 1,819,767 1,860,894
======================================================================================
Net assets:
Class A $262,364,212 $ 88,593,351 $17,960,171 $79,025,671 $15,382,156 $15,411,603
Class B 32,274,912 13,646,386 3,684,720 11,195,467 2,893,743 2,850,623
Class C 3,875,247 -- -- -- -- --
--------------------------------------------------------------------------------------
Total net assets $298,514,371 $102,239,737 $21,644,891 $90,221,138 $18,275,899 $18,262,226
======================================================================================
Class A shares:
Net asset value and redemption price per share
(net assets / shares of beneficial
interest outstanding) $5.49 $9.78 $9.38 $9.30 $10.04 $9.81
======================================================================================
Offering price per share (100/95.25 of net
asset value per share) $5.76 $10.27 $9.85 $9.76 $10.54 $10.30
======================================================================================
Class B shares:
Net asset value and offering price per
share (net assets/shares of beneficial
interest outstanding) $5.49 $9.78 $9.38 $9.31 $10.05 $9.82
======================================================================================
Class C shares:
Net asset value, offering price, and
redemption price per share (net assets /
shares of beneficial interest outstanding) $5.50 $ -- $ -- $ -- $ -- $ --
======================================================================================
</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
13
<PAGE>
Financial Statements - continued
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
California Florida Louisiana Mississippi Texas Washington
Six Months Ended September 30, 1995 Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Interest income $ 9,496,227 $3,182,607 $ 640,933 $2,731,767 $ 597,188 $540,823
------------------------------------------------------------------------------------
Expenses -
Management fee $ 837,217 $ 281,204 $ 57,121 $ 249,899 $ 54,649 $ 50,030
Trustees' compensation 22,090 7,102 7,765 7,849 8,103 7,849
Shareholder servicing agent fee (Class A) 202,463 67,429 13,152 60,145 13,050 11,531
Shareholder servicing agent fee (Class B) 34,153 14,645 3,507 11,253 2,686 3,061
Shareholder servicing agent fee (Class C) 2,903 -- -- -- -- --
Distribution and service fee (Class B) 117,453 51,693 13,087 37,685 9,974 10,770
Distribution and service fee (Class C) 19,354 -- -- -- -- --
Custodian fee 45,334 23,508 6,095 21,488 5,199 4,908
Printing 19,831 7,134 3,604 6,804 3,206 2,623
Postage 4,579 5,131 2,558 3,923 2,361 2,621
Auditing fees -- 1,600 2,550 2,200 1,700 1,700
Legal fees 3,740 5,058 2,426 1,843 3,158 2,459
Amortization of organization expenses -- 1,036 873 1,784 938 574
Miscellaneous 22,815 37,651 14,365 33,207 18,805 31,792
------------------------------------------------------------------------------------
Total expenses $ 1,331,932 $ 503,191 $ 127,103 $ 438,080 $ 123,829 $129,918
Preliminary reduction of expenses by investment
adviser (227,478) (35,929) (91,491) (228,433) (93,928) (99,238)
Fees paid indirectly (20,501) (4,544) (1,673) (1,309) -- (1,653)
------------------------------------------------------------------------------------
Net expenses $ 1,083,953 $ 462,718 $ 33,939 $ 208,338 $ 29,901 $ 29,027
------------------------------------------------------------------------------------
Net investment income $ 8,412,274 $2,719,889 $ 606,994 $2,523,429 $ 567,287 $511,796
-----------------------------------------------------------------------------------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 530,354 $1,787,798 $ 11,254 $ 2,387 $ 178,471 $(77,792)
Futures contracts -- (532,353) (197,360) (618,038) (154,502) --
------------------------------------------------------------------------------------
Net realized gain (loss) on investments $ 530,354 $1,255,445 $(186,106) $ (615,651) $ 23,969 $(77,792)
------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $ 4,197,305 $ 693,000 $ 442,294 $1,953,147 $ (953,605) $492,296
Futures contracts -- 103,457 41,382 124,147 1,109,814 --
------------------------------------------------------------------------------------
Net unrealized gain on investments $ 4,197,305 $ 796,457 $ 483,676 $2,077,294 $ 156,209 $492,296
-----------------------------------------------------------------------------------
Net realized and unrealized gain on
investments $ 4,727,659 $2,051,902 $ 297,570 $1,461,643 $ 180,178 $414,504
------------------------------------------------------------------------------------
Increase in net assets from operations $13,139,933 $4,771,791 $ 904,564 $3,985,072 $ 747,465 $926,300
====================================================================================
</TABLE>
See notes to financial statements
14
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
California Florida Louisiana Mississippi Texas Washington
Six Months Ended September 30, 1995 (Unaudited) Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 8,412,274 $ 2,719,889 $ 606,994 $ 2,523,429 $ 567,287 $ 511,796
Net realized gain (loss) on investments 530,354 1,255,445 (186,106) (615,651) 23,969 (77,792)
Net unrealized gain on investments 4,197,305 796,457 483,676 2,077,294 156,209 492,296
---------------------------------------------------------------------------------------
Increase in net assets from operations $ 13,139,933 $ 4,771,791 $ 904,564 $ 3,985,072 $ 747,465 $ 926,300
--------------------------------------------------------------------------------------
Distributions declared to shareholders -
From net investment income (Class A) $ (7,580,094) $ (2,405,038) $ (527,791) $(2,271,617) $ (506,445) $ (441,954)
From net investment income (Class B) (742,799) (298,887) (82,795) (251,812) (61,442) (69,168)
From net investment income (Class C) (89,381) -- -- -- -- --
In excess of net investment income (Class A) (72,103) -- -- (12,876) (3,245) --
In excess of net investment income (Class B) (7,066) -- -- (1,427) (394) --
In excess of net investment income (Class C) (850) -- -- -- -- --
--------------------------------------------------------------------------------------
Total distributions declared to
shareholders $ (8,492,293) $ (2,703,925) $ (610,586) $(2,537,732) $ (571,526) $ (511,122)
-------------------------------------------------------------------------------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 24,105,264 $ 21,045,927 $ 2,957,436 $ 7,703,658 $ 2,007,481 $ 682,686
Net asset value of shares issued to
shareholders in reinvestment of distributions 3,713,961 910,111 294,206 1,262,959 326,851 296,154
Cost of shares reacquired (39,028,440) (24,345,078) (1,473,030) (8,654,706) (4,825,277) (1,203,031)
-------------------------------------------------------------------------------------
Increase (decrease) in net assets from Fund
share transactions $(11,209,215) $ (2,389,040) $ 1,778,612 $ 311,911 $(2,490,945) $ (224,191)
-------------------------------------------------------------------------------------
Total increase (decrease) in net assets $ (6,561,575) $ (321,174) $ 2,072,590 $ 1,759,251 $(2,315,006) $ 190,987
Net assets:
At beginning of period 305,075,946 102,560,911 19,572,301 88,461,887 20,590,905 8,071,239
-------------------------------------------------------------------------------------
At end of period $298,514,371 $102,239,737 $21,644,891 $90,221,138 $18,275,899 $18,262,226
-------------------------------------------------------------------------------------
Accumulated undistributed (distributions in
excess of) net investment income included
in net assets at the end of period $ (391,265) $ (96,166) $ 13,535 $ (47,455) $ (3,639) $ 5,435
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>
California Florida Louisiana Mississippi Texas Washington
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 $ 18,123,133 $ 6,140,573 $ 1,046,286 $ 5,130,366 $ 1,236,034 $ 1,107,314
Net realized loss on investments (13,230,556) (7,415,954) (959,194) (3,420,916) (1,461,157) (372,115)
Net unrealized gain on investments 8,579,734 7,473,153 1,146,721 3,106,779 1,623,234 916,248
--------------------------------------------------------------------------------------
Increase in net assets from operations $ 13,472,311 $ 6,197,772 $ 1,233,813 $ 4,816,229 $ 1,398,111 $ 1,651,447
-------------------------------------------------------------------------------------
Distributions declared to shareholders -
From net investment income (Class A) $ (16,697,698) $ (5,649,584) $ (922,531) $ (4,753,634) $(1,132,237) $ (977,079)
From net investment income (Class B) (1,163,387) (462,308) (109,353) (398,325) (95,908) (122,848)
From net investment income (Class C) (145,036) -- -- -- -- --
From net realized gain on investments (Class A) -- (425,441) (38,988) (14,334) (62,387) --
From net realized gain on investments (Class B) -- (36,769) (5,437) (1,273) (4,944) --
In excess of net investment income (Class A) -- -- -- (30,589) -- --
In excess of net investment income (Class B) -- -- -- (2,563) -- --
In excess of net realized gain on investments
(Class A) (252,101) (336,075) (43,294) (231,411) (58,780) (12,874)
In excess of net realized gain on
investments (Class B) (20,873) (29,046) (6,038) (20,544) (4,659) (1,694)
In excess of net realized gain on investments
(Class C) (2,849) -- -- -- -- --
-------------------------------------------------------------------------------------
Total distributions declared to
shareholders $ (18,281,944) $ (6,939,223) $(1,125,641) $ (5,452,673) $(1,358,915) $(1,114,495)
-------------------------------------------------------------------------------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 77,112,097 $ 67,775,415 $ 6,579,848 $ 22,690,809 $ 5,266,676 $ 2,662,499
Net asset value of shares issued to
shareholders in reinvestment
of distributions 7,886,955 2,464,452 629,725 2,809,324 791,694 590,085
Cost of shares reacquired (111,856,077) (83,511,284) (2,755,026) (22,467,966) (4,204,171) (5,624,138)
-------------------------------------------------------------------------------------
Increase (decrease) in net assets from Fund
share transactions $ (26,857,025) $(13,271,417) $ 4,454,547 $ 3,032,167 $ 1,854,199 $(2,371,554)
-------------------------------------------------------------------------------------
Total increase (decrease) in net assets $ (31,666,658) $(14,012,868) $ 4,562,719 $ 2,395,723 $ 1,893,395 $(1,834,602)
Net assets:
At beginning of period 336,742,604 116,573,779 15,009,582 86,066,164 18,697,510 19,905,841
-------------------------------------------------------------------------------------
At end of period $ 305,075,946 $102,560,911 $19,572,301 $ 88,461,887 $20,590,905 $18,071,239
=====================================================================================
Accumulated undistributed (distributions in
excess of) net investment income included
in net assets at the end of period $ (311,246) $ (112,130) $ 17,127 $ (33,152) $ 600 $ 4,761
=====================================================================================
</TABLE>
See notes to financial statements
15
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
California Fund
--------------------------------------------------------------------------------------------------------
Eleven
Six Months Two Months
Ended Year Months Ended Year Ended
September Ended Ended January February
30, March 31, March 31, 31, 28,
--------------------------------------------------------------------------------------------------------
1995 1995 1994 1994 1993 1992 1991 1990 1989
--------------------------------------------------------------------------------------------------------
(Unaudited)
--------------------------------------------------------------------------------------------------------
Class A
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value -
beginning of period $ 5.41 $ 5.47 $ 5.95 $ 5.88 $ 5.42 $ 5.26 $ 5.19 $ 5.06 $ 5.08
---------------------------------------------------------------------------------------------------------
Income from investment
operations# -
Net investment
incomeS. $ 0.15 $ 0.31 $ 0.05 $ 0.30 $ 0.34 $ 0.35 $ 0.33 $ 0.33 $ 0.32
Net realized and
unrealized gain (loss)
on investments 0.08 (0.05) (0.48) 0.14 0.47 0.20 0.07 0.13 (0.02)
---------------------------------------------------------------------------------------------------------
Total from investment
operations $ 0.23 $ 0.26 $(0.43) $ 0.44 $ 0.81 $ 0.55 $ 0.40 $ 0.46 $ 0.30
---------------------------------------------------------------------------------------------------------
Less distributions
declared to shareholders -
From net investment
income $(0.15) $(0.31) $(0.04) $(0.29) $(0.34) $(0.37) $(0.33) $(0.33) $(0.32)
From net realized
gain on investments -- -- -- (0.07) (0.01) (0.02) -- -- --
In excess of net
investment income -- -- (0.01) (0.01) -- -- -- -- --
In excess of net
realized gain on
investments -- (0.01) -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------
Total distributions
declared
to shareholders $(0.15) $(0.32) $(0.05) $(0.37) $(0.35) $(0.39) $(0.33) $(0.33) $(0.32)
-----------------------------------------------------------------------------------------------------------
Net asset value - end
of period $ 5.49 $ 5.41 $ 5.47 $ 5.95 $ 5.88 $ 5.42 $ 5.26 $ 5.19 $ 5.06
==========================================================================================================
Total return++ 4.41%+++ 4.85% (7.21)%+++ 7.64% 15.55% 10.69% 8.03% 9.28% 6.07%
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 0.63%+ 0.69% 0.68%+ 0.60%+ 0.39% 0.40% 0.87% 1.00% 1.28%
Net investment income 5.63%+ 5.80% 5.27%+ 4.99%+ 6.18% 6.53% 6.39% 6.35% 6.35%
Portfolio turnover 35% 57% 8% 38% 64% 73% 102% 243% 188%
Net assets at end of
period (000 omitted) $262,364 $272,161 $313,790 $356,419 $272,179 $177,291 $84,551 $68,879 $59,212
</TABLE>
+ Annualized.
+++ Not annualized.
# Per share data for the periods subsequent to January 31, 1994 is based on
average shares outstanding.
## For the six months ended September 30, 1995 and the year ended March 31,
1995, the per share distribution in excess of net investment income was
$0.0015 and $0.0027, respectively.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The investment adviser and the distributor did not impose a portion of
their management fee 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> <C> <C> <C> <C>
Net investment income $0.15 $0.30 $0.05 $0.29 $0.32 $0.33 -- -- --
Ratios (to average net assets):
Expenses 0.78%+ 0.84% 0.83%+ 0.78%+ 0.77% 0.79% -- -- --
Net investment income 5.48%+ 5.65% 5.12%+ 4.82%+ 5.80% 6.14% -- -- --
</TABLE>
See notes to financial statements
16
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
California Fund
-----------------------------------------------------------------------------------------
Six Months Two
Year Ended Ended Year Months
February September Ended Ended Year Ended
28, 30, March 31, March 31, January 31,
-----------------------------------------------------------------------------------------
1988 1987 1986* 1995 1995 1994 1994**
-----------------------------------------------------------------------------------------
(Unaudited)
-----------------------------------------------------------------------------------------
Class A Class B
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.38 $ 5.07 $ 4.76 $ 5.41 $ 5.47 $ 5.95 $ 6.02
-----------------------------------------------------------------------------------------
Income from investment
operations# -
Net investment income*** $ 0.31 $ 0.32 $ 0.20 $ 0.13 $ 0.25 $ 0.04 $ 0.10
Net realized and unrealized gain
(loss) on investments (0.29) 0.34 0.28 0.08 (0.05) (0.48) --
-----------------------------------------------------------------------------------------
Total from investment
operations $ 0.02 $ 0.66 $ 0.48 $ 0.21 $ 0.20 $ (0.44) $ 0.10
----------------------------------------------------------------------------------------
Less distributions declared to shareholders -
From net investment income## $ (0.31) $ (0.33) $ (0.17) $ (0.13) $ (0.25) $ (0.04) $ (0.10)
From net realized gain on
investments (0.01) (0.02) -- -- -- -- (0.07)
In excess of net realized gain
on investments -- -- -- -- (0.01) -- --
------------------------------------------------------------------------------------------
Total distributions declared to
shareholders $ (0.32) $ (0.35) $ (0.17) $ (0.13) $ (0.26) $ (0.04) $ (0.17)
----------------------------------------------------------------------------------------
Net asset value - end of period $ 5.08 $ 5.38 $ 5.07 $ 5.49 $ 5.41 $ 5.47 $ 5.95
==============================================================================================================================
Total return++ 0.83% 13.57% 9.77%+++ 3.98%+++ 3.73% (7.38)%+++ 1.68%+++
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 1.20% 1.04% 0.95%+ 1.45%+ 1.76% 1.69%+ 1.60%+
Net investment income 6.33% 6.25% 7.34%+ 4.79%+ 4.72% 4.18%+ 3.64%+
Portfolio turnover 240% 54% 23% 35% 57% 8% 38%
Net assets at end of period (000
omitted) $59,479 $62,368 $17,488 $32,275 $29,057 $ 21,252 $19,360
</TABLE>
* For the period from the commencement of investment operations, June 18,
1985 to February 28, 1986.
** 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 the six months ended September 30, 1995, the two months ended March 31,
1994 and the period ended January 31, 1994, the per share distribution in
excess of net investment income was $0.001, $0.002 and $0.003,
respectively, for Class B shares.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The investment adviser and the distributor did not impose a portion of
their management fee and distribuiton 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> <C> <C>
Net investment income -- -- -- $0.13 $0.24 $0.04 $0.09
Ratios (to average net assets):
Expenses -- -- -- 1.61%+ 1.91% 1.83%+ 1.81%+
Net investment income -- -- -- 4.64%+ 4.57% 4.04%+ 3.43%+
See notes to financial statements
</TABLE>
17
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
California Fund
--------------------------------------------------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
--------------------------------------------------------
1995 1995 1994 1994***
--------------------------------------------------------
(Unaudited)
--------------------------------------------------------
Class C
--------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.42 $ 5.48 $ 5.95 $ 5.89
--------------------------------------------------------
Income from investment operations# -
Net investment income**** $ 0.13 $ 0.26 $ 0.03 $ 0.01
Net realized and unrealized gain (loss) on
investments 0.08 (0.06) (0.46) 0.06
--------------------------------------------------------
Total from investment operations $ 0.21 $ 0.20 $(0.43) $ 0.07
--------------------------------------------------------
Less distributions declared to shareholders -
From net investment income## $(0.13) $(0.25) $(0.04) $(0.01)
In excess of net realized gain on investments -- (0.01) -- --
--------------------------------------------------------
Total distributions declared to shareholders $(0.13) $(0.26) $(0.04) $(0.01)
--------------------------------------------------------
Net asset value - end of period $ 5.50 $ 5.42 $ 5.48 $ 5.95
========================================================
Total return 3.88%+++ 3.79% (7.22)%+++ 1.25%+++
Ratios (to average net assets)/Supplemental data:****
Expenses++++ 1.63%+ 1.69% 1.64%+ 2.02%+
Net investment income 4.63%+ 4.79% 3.92%+ 1.78%+
Portfolio turnover 35% 57% 8% 38%
Net assets at end of period (000 omitted) $3,875 $3,858 $1,701 $ 917
</TABLE>
*** For the period from the commencement of offering of Class C shares,
January 3, 1994 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 the six months ended September 30, 1995, the two months ended March 31,
1994 and the period ended January 31, 1994, the per share distribution in
excess of net investment income was $0.001, $0.001 and $0.003,
respectively.
++++ For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
**** The investment adviser and the distributor did not impose a portion of
their management fee 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 $0.13 $0.25 $0.03 $ --
Ratios (to average net assets):
Expenses 1.78%+ 1.84% 1.80%+ 3.53%+
Net investment income 4.48%+ 4.64% 3.77%+ 0.27%+
</TABLE>
See notes to financial statements
18
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Florida Fund
-------------------------------------------------------------------------------------------------
Two Six Two
Six Months Year Months Year Months Year Months Year
Ended Ended Ended Ended Ended Ended Ended Ended
September March March January September March March January
30, 31, 31, 31, 30, 31, 31, 31,
-------------------------------------------------------------------------------------------------
1995 1995 1994 1994 1993* 1995 1995 1994 1994**
-------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
-------------------------------------------------------------------------------------------------
Class A Class B
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each
period):
Net asset value - beginning of
period $ 9.60 $ 9.65 $ 10.63 $ 9.89 $ 9.53 $ 9.60 $ 9.64 $10.62 $10.69
-------------------------------------------------------------------------------------------------
Income from investment
operations# -
Net investment income**** $ 0.26 $ 0.54 $ 0.09 $ 0.57 $ 0.58 $ 0.22 $ 0.43 $ 0.07 $ 0.18
Net realized and unrealized
gain (loss) on investments 0.18 0.02 (0.98) 0.86 0.36 0.18 0.04 (0.98) 0.03
-------------------------------------------------------------------------------------------------
Total from investment
operations $ 0.44 $ 0.56 $ (0.89) $ 1.43 $ 0.94 $ 0.40 $ 0.47 $(0.91) $ 0.21
-------------------------------------------------------------------------------------------------
Less distributions declared to
shareholders -
From net investment income $(0.26) $(0.54) $ (0.08) $(0.57) $(0.58) $(0.22) $(0.44) $(0.06) $(0.17)
From net realized gain on
investments -- (0.04) -- (0.11) -- -- (0.04) -- (0.10)
In excess of net investment
income -- -- (0.01) (0.01) -- -- -- 0.01) (0.01)
In excess of net realized gain
on investments -- (0.03) -- -- -- -- (0.03) -- --
-------------------------------------------------------------------------------------------------
Total distributions declared
to shareholders $(0.26) $(0.61) $ (0.09) $(0.69) $(0.58) $(0.22) $ (0.51) $(0.07) $(0.28)
-------------------------------------------------------------------------------------------------
Net asset value - end of period $ 9.78 $ 9.60 $ 9.65 $10.63 $ 9.89 $ 9.78 $ 9.60 $ 9.64 $10.62
=================================================================================================
Total return++ 4.65%+++ 6.07% (8.39)%+++ 14.71% 10.28%+ 4.20%+++ 5.06% (8.55)%+++ 4.87%+
Ratios (to average net assets)/Supplemental data:****
Expenses++++ 0.80%+ 0.60% 0.77%+ 0.49% 0.05%+ 1.65%+ 1.68% 1.82%+ 1.64%+
Net investment income 5.40%+ 5.75% 5.15%+ 5.42% 6.27%+ 4.53%+ 4.63% 4.08%+ 3.82%+
Portfolio turnover 33% 131% 19% 53% 54% 33% 131% 19% 53%
Net assets at end of period
(000 omitted) $88,593 $89,894 $108,579 $124,131 $74,329 $13,646 $12,667 $7,995 $7,244
</TABLE>
* 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.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
**** The investment adviser and the distributor did not impose a portion of
their management fee 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> <C> <C> <C> <C>
Net investment income $0.24 $0.52 $0.08 $0.52 $0.51 $0.19 $0.41 $0.06 $0.16
Ratios (to average net assets):
Expenses 0.87%+ 0.83% 1.12%+ 0.93% 0.81%+ 1.72%+ 1.91% 2.17%+ 2.09%+
Net investment income 5.00%+ 5.52% 4.80%+ 4.97% 5.51%+ 4.00%+ 4.40% 3.72%+ 3.38%+
</TABLE>
See notes to financial statements
19
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Louisiana Fund
-------------------------------------------------------------------------------------------
Two Two
Six Months Year Months Year Six Months Year Months
Ended Ended Ended Ended Ended Ended Ended Year Ended
September March March January September March March January
30, 31, 31, 31, 30, 31, 31, 31,
-------------------------------------------------------------------------------------------
1995 1995 1994 1994 1995 1995 1994 1994**
-------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
-------------------------------------------------------------------------------------------
Class A Class B
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each
period):
Net asset value - beginning of
period $ 9.24 $ 9.22 $ 10.13 $ 9.53 $ 9.24 $ 9.23 $10.13 $10.08
-------------------------------------------------------------------------------------------
Income from investment operations# -
Net investment income*** $ 0.28 $ 0.57 $ 0.09 $ 0.52 $ 0.24 $ 0.47 $ 0.07 $ 0.18
Net realized and unrealized gain
(loss) on investments 0.14 0.06 (0.91) 0.62 0.14 0.06 (0.89) 0.07
-------------------------------------------------------------------------------------------
Total from investment operations $ 0.42 $ 0.63 $ (0.82) $ 1.14 $ 0.38 $ 0.53 $(0.82) $ 0.25
-------------------------------------------------------------------------------------------
Less distributions declared to
shareholders -
From net investment income $ (0.28) $(0.56) $ (0.09) $(0.52) $(0.24) $(0.47) $(0.08) $(0.18)
From net realized gain on investments -- (0.02) -- (0.02) -- (0.02) -- (0.02)
In excess of net realized gain on
investments -- (0.03) -- -- -- (0.03) -- --
-------------------------------------------------------------------------------------------
Total distributions declared to
shareholders $ (0.28) $(0.61) $ (0.09) $(0.54) $(0.24) $(0.52) $(0.08) $(0.20)
-------------------------------------------------------------------------------------------
Net asset value - end of period $ 9.38 $ 9.24 $ 9.22 $10.13 $ 9.38 $ 9.24 $ 9.23 $10.13
===========================================================================================
Total return++ 4.61%+++ 7.18% (8.10)%+++ 12.33% 4.19%+++ 6.01% (8.16)%+++ 2.48%+++
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 0.20%+ 0.02% --%+ --% 1.02%+ 1.02% 1.00%+ 1.00%+
Net investment income 5.97%+ 6.25% 5.64%+ 5.41% 5.14%+ 5.25% 4.54%+ 4.32%+
Portfolio turnover 25% 81% 2% 33% 25% 81% 2% 33%
Net assets at end of period
(000 omitted) $17,960 $16,837 $13,401 $13,781 $3,685 $2,735 $1,608 $1,263
</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.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The Adviser voluntarily agreed to maintain the 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> <C> <C> <C>
Net investment income $0.11 $0.46 $ 0.05 $ 0.32 $ 0.10 $ 0.36 $ 0.03 $ 0.09
Ratios (to average net assets):
Expenses 1.09%+ 1.21% 2.33%+ 2.03% 1.97%+ 2.28% 3.40%+ 3.08%+
Net investment income 5.10%+ 5.06% 3.31%+ 3.38% 4.20%+ 3.99% 2.14%+ 2.24%+
</TABLE>
See notes to financial statements
20
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Mississippi Fund
-----------------------------------------------------------------------------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
-----------------------------------------------------------------------------------
1995 1995 1994 1994 1993*
-----------------------------------------------------------------------------------
(Unaudited)
-----------------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.15 $ 9.19 $ 10.00 $ 9.38 $ 9.53
-----------------------------------------------------------------------------------
Income from investment operations# -
Net investment income*** $ 0.26 $ 0.54 $ 0.09 $ 0.55 $ 0.24
Net realized and unrealized gain (loss)
on investments 0.15 (0.01) (0.81) 0.62 (0.15)
-----------------------------------------------------------------------------------
Total from investment operations $ 0.41 $ 0.53 $ (0.72) $ 1.17 $ 0.09
-----------------------------------------------------------------------------------
Less distributions declared to shareholders -
From net investment income## $ (0.26) $ (0.54) $ (0.09) $ (0.55) $ (0.24)
From net realized gain on
investments### -- -- -- -- --
In excess of net realized gain on
investments -- (0.03) -- -- --
-----------------------------------------------------------------------------------
Total distributions declared to
shareholders $ (0.26) $ (0.57) $ (0.09) $ (0.55) $ (0.24)
-----------------------------------------------------------------------------------
Net asset value - end of period $ 9.30 $ 9.15 $ 9.19 $ 10.00 $ 9.38
-----------------------------------------------------------------------------------
Total return++ 4.58%+++ 6.08% (7.20)%+++ 12.80% 5.00%+++
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 0.38%+ 0.22% 0.10%+ 0.03% --%+
Net investment income 5.65%+ 5.99% 5.69%+ 5.68% 5.59%+
Portfolio turnover 16% 47% 2% 28% 14%
Net assets at end of period (000 omitted) $79,026 $79,033 $79,541 $84,177 $41,212
</TABLE>
* For the period from the commencement of investment operations, August 6,
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 the six months ended September 30, 1995, the per share distributions in
excess of net investment income were $0.002 and $0.001 for Class A and
Class B shares, respectively. For the year ended March 31, 1995, the per
share distributions in excess of net investment income were $0.0035 and
$0.0029 for Class A and Class B shares, respectively. For the two months
ended March 31, 1994, the per share distribution in excess of net
investment income was $0.002 for Class B shares.
### For the year ended March 31, 1995, the per share distribution from net
realized gain on investments was $0.0016 for Class A and Class B shares.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The Adviser voluntarily agreed to maintain the 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 $0.24 $0.48 $0.08 $0.45 $0.19
Ratios (to average net assets):
Expenses 0.88%+ 0.93% 0.88%+ 1.01% 1.17%+
Net investment income 5.16%+ 5.28% 4.91%+ 4.69% 4.42%+
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
-----------------------------------------------------------------
1995 1995 1994 1994**
-----------------------------------------------------------------
(Unaudited)
-----------------------------------------------------------------
Class B
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.16 $ 9.19 $ 9.99 $ 9.94
-----------------------------------------------------------------
Income from investment operations# -
Net investment income*** $ 0.23 $ 0.45 $ 0.07 $ 0.18
Net realized and unrealized gain (loss)
on investments 0.15 -- (0.79) 0.05
-----------------------------------------------------------------
Total from investment operations $ 0.38 $ 0.45 $(0.72) $ 0.23
-----------------------------------------------------------------
Less distributions declared to shareholders -
From net investment income## $ (0.23) $(0.45) $(0.08) $(0.18)
From net realized gain on
investments### -- -- -- --
In excess of net realized gain on
investments -- (0.03) -- --
-----------------------------------------------------------------
Total distributions declared to
shareholders $ (0.23) $(0.48) $(0.08) $(0.18)
-----------------------------------------------------------------
Net asset value - end of period $ 9.31 $ 9.16 $ 9.19 $ 9.99
=================================================================
Total return++ 4.19%+++ 5.14% (7.27)%+++ 2.33%+++
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 1.11%+ 1.23% 1.10%+ 1.06%+
Net investment income 4.90%+ 4.97% 4.67%+ 4.29%+
Portfolio turnover 16% 47% 2% 28%
Net assets at end of period (000 omitted) $11,195 $9,429 $6,526 $6,268
</TABLE>
* For the period from the commencement of investment operations, August 6,
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 the six months ended September 30, 1995, the per share distributions in
excess of net investment income were $0.002 and $0.001 for Class A and
Class B shares, respectively. For the year ended March 31, 1995, the per
share distributions in excess of net investment income were $0.0035 and
$0.0029 for Class A and Class B shares, respectively. For the two months
ended March 31, 1994, the per share distribution in excess of net
investment income was $0.002 for Class B shares.
### For the year ended March 31, 1995, the per share distribution from net
realized gain on investments was $0.0016 for Class A and Class B shares.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The Adviser voluntarily agreed to maintain the 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>
Net investment income $0.20 $0.38 $0.06 $0.14
Ratios (to average net assets):
Expenses 1.68%+ 2.01% 1.95%+ 2.12%+
Net investment income 4.34%+ 4.19% 3.82%+ 3.23%+
</TABLE>
See notes to financial statements
21
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Texas Fund
-------------------------------------------------------------------------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
-------------------------------------------------------------------------------
1995 1995 1994 1994 1993*
-------------------------------------------------------------------------------
(Unaudited)
-------------------------------------------------------------------------------
Class A
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value--beginning of period $ 9.92 $ 9.88 $ 10.86 $ 10.01 $ 9.53
-------------------------------------------------------------------------------
Income from investment operations# -
Net investment income*** $ 0.29 $ 0.60 $ 0.10 $ 0.61 $ 0.57
Net realized and unrealized gain (loss)
on investments 0.12 0.09 (0.99) 0.86 0.47
-------------------------------------------------------------------------------
Total from investment operations $ 0.41 $ 0.69 $ (0.89) $ 1.47 $ 1.04
-------------------------------------------------------------------------------
Less distributions declared to shareholders -
From net investment income### $ (0.29) $ (0.59) $ (0.09) $ (0.61) $(0.56)
From net realized gain on
investments## -- (0.03) -- (0.01) --
In excess of net investment income -- -- -- -- --
In excess of net realized gain on
investments -- (0.03) -- -- --
-------------------------------------------------------------------------------
Total distributions declared to
shareholders $ (0.29) $ (0.65) $ (0.09) $ (0.62) $(0.56)
-------------------------------------------------------------------------------
Net asset value - end of period $ 10.04 $ 9.92 $ 9.88 $ 10.86 $10.01
===============================================================================
Total return++ 4.23%+++ 7.42% (8.13)%+++ 15.08% 11.30%+++
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 0.20%+ 0.02% 0.00%+ 0.00% 0.00%+
Net investment income 5.81%+ 6.16% 5.71%+ 5.74% 6.03%+
Portfolio turnover 30% 104% 1% 7% 40%
Net assets at end of period (000
omitted) $15,382 $18,318 $17,515 $18,987 $8,485
</TABLE>
* 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 the year ended January 31, 1994, the per share distribution in excess
of net realized gain on investments was $0.0008 for both Class A and Class
B shares.
### For the six months ended September 30, 1995, the two months ended March 31,
1994 and the year ended January 31, 1994, the per share distribution in
excess of net investment income was $0.0019, $0.004 and $0.003,
respectively, for Class A shares. For the six months ended September 30,
1995, the per share distribution in excess of net investment income was
$0.0016 for Class B shares.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The Adviser voluntarily agreed to maintain the 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 $0.24 $0.49 $0.07 $0.44 $0.32
Ratios (to average net assets):
Expenses 1.14%+ 1.17% 1.67%+ 1.56% 2.67%+
Net investment income 4.87%+ 5.01% 4.04%+ 4.18% 3.36%+
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
-----------------------------------------------------------------
1995 1995 1994 1994**
-----------------------------------------------------------------
(Unaudited)
-----------------------------------------------------------------
Class B
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value--beginning of period $ 9.93 $ 9.89 $10.86 $10.79
-----------------------------------------------------------------
Income from investment operations# -
Net investment income*** $ 0.25 $ 0.50 $ 0.08 $ 0.19
Net realized and unrealized gain (loss)
on investments 0.12 0.10 (0.96) 0.09
-----------------------------------------------------------------
Total from investment operations $ 0.37 $ 0.60 $(0.88) $ 0.28
-----------------------------------------------------------------
Less distributions declared to shareholders -
From net investment income### $(0.25) $(0.50) $(0.08) $(0.19)
From net realized gain on
investments## -- (0.03) -- (0.01)
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 $(0.25) $(0.56) $(0.09) $(0.21)
-----------------------------------------------------------------
Net asset value - end of period $10.05 $ 9.93 $ 9.89 $10.86
=================================================================
Total return++ 3.80%+++ 6.35% (8.19)%+++ 2.65%+++
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 1.01%+ 1.02% 1.00%+ 1.00%+
Net investment income 4.99%+ 5.14% 4.68%+ 4.41%+
Portfolio turnover 30% 104% 1% 7%
Net assets at end of period (000
omitted) $2,894 $2,273 $1,183 $ 956
</TABLE>
* 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 the year ended January 31, 1994, the per share distribution in excess
of net realized gain on investments was $0.0008 for both Class A and Class
B shares.
### For the six months ended September 30, 1995, the two months ended March 31,
1994 and the year ended January 31, 1994, the per share distribution in
excess of net investment income was $0.0019, $0.004 and $0.003,
respectively, for Class A shares. For the six months ended September 30,
1995, the per share distribution in excess of net investment income was
$0.0016 for Class B shares.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The Adviser voluntarily agreed to maintain the 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>
Net investment income $0.20 $0.38 $0.05 $0.11
Ratios (to average net assets):
Expenses 2.02%+ 2.24% 2.74%+ 2.90%+
Net investment income 3.99%+ 3.92% 2.94%+ 2.51%+
</TABLE>
See notes to financial statements
22
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Washington Fund
-------------------------------------------------------------------------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
-------------------------------------------------------------------------------
1995 1995 1994 1994 1993*
-------------------------------------------------------------------------------
(Unaudited)
-------------------------------------------------------------------------------
Class A
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.59 $ 9.29 $ 10.25 $ 9.54 $ 9.53
-------------------------------------------------------------------------------
Income from investment operations# -
Net investment income*** $ 0.28 $ 0.57 $ 0.09 $ 0.57 $ 0.22
Net realized and unrealized gain (loss)
on investments 0.22 0.31 (0.96) 0.78 0.01
-------------------------------------------------------------------------------
Total from investment operations $ 0.50 $ 0.88 $ (0.87) $ 1.35 $ 0.23
-------------------------------------------------------------------------------
Less distributions declared to shareholders -
From net investment income## $ (0.28) $ (0.57) $ (0.09) $ (0.57) $(0.22)
From net realized gain on investments -- -- -- (0.07) --
In excess of net realized gain on
investments -- (0.01) -- -- --
-------------------------------------------------------------------------------
Total distributions declared to
shareholders $ (0.28) $ (0.58) $ (0.09) $ (0.64) $(0.22)
-------------------------------------------------------------------------------
Net asset value - end of period $ 9.81 $ 9.59 $ 9.29 $ 10.25 $ 9.54
===============================================================================
Total return++ 5.27%+++ 9.80% (8.47)%+++ 14.55% 2.72%+++
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 0.20%+ 0.02% --%+ --% --%+
Net investment income 5.74%+ 6.17% 5.69%+ 5.63% 5.64%+
Portfolio turnover 11% 44% 3% 26% 12%
Net assets at end of period (000 omitted) $15,412 $15,364 $17,993 $19,208 $9,574
</TABLE>
* For the period from the commencement of investment operations, August 7,
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 the two months ended March 31, 1994, the per share distributions in
excess of net investment income were $0.001 and $ 0.004 for Class A and
Class B shares, respectively.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The Adviser voluntarily agreed to maintain the 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 $0.23 $0.45 $0.07 $0.42 $0.12
Ratios (to average net assets):
Expenses 1.30%+ 1.26% 1.43%+ 1.46% 2.47%+
Net investment income 4.66%+ 4.92% 4.26%+ 4.17% 3.17%+
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
-----------------------------------------------------------------
1995 1995 1994 1994**
-----------------------------------------------------------------
(Unaudited)
-----------------------------------------------------------------
Class B
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $9.59 $ 9.29 $10.24 $10.26
-----------------------------------------------------------------
Income from investment operations# -
Net investment income*** $0.24 $ 0.48 $ 0.07 $ 0.18
Net realized and unrealized gain (loss)
on investments 0.23 0.30 (0.94) 0.05
-----------------------------------------------------------------
Total from investment operations $0.47 $ 0.78 $(0.87) $ 0.23
-----------------------------------------------------------------
Less distributions declared to shareholders -
From net investment income## $(0.24) $(0.47) $(0.08) $(0.18)
From net realized gain on investments -- -- -- (0.07)
In excess of net realized gain on
investments -- (0.01) -- --
-----------------------------------------------------------------
Total distributions declared to
shareholders $(0.24) $(0.48) $(0.08) $(0.25)
-----------------------------------------------------------------
Net asset value - end of period $9.82 $ 9.59 $ 9.29 $10.24
=================================================================
Total return++ 4.86%+++ 8.72% (8.54)%+++ 2.30%+++
Ratios (to average net assets)/Supplemental data:***
Expenses++++ 0.97%+ 1.02% 1.00%+ 1.00%+
Net investment income 4.97%+ 5.14% 4.56%+ 4.28%+
Portfolio turnover 11% 44% 3% 26%
Net assets at end of period (000 omitted) $2,851 $2,707 $1,913 $1,528
</TABLE>
* For the period from the commencement of investment operations, August 7,
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 the two months ended March 31, 1994, the per share distributions in
excess of net investment income were $0.001 and $ 0.004 for Class A and
Class B shares, respectively.
++ 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 fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
*** The Adviser voluntarily agreed to maintain the 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>
Net investment income $0.18 $0.36 $0.05 $0.10
Ratios (to average net assets):
Expenses 2.14%+ 2.33% 2.51%+ 2.79%+
Net investment income 3.22%+ 3.83% 3.05%+ 2.49%+
</TABLE>
See notes to financial statements
23
<PAGE>
Notes to Financial Statements (Unaudited)
(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, MFS Arkansas Municipal Bond Fund, MFS California
Municipal Bond Fund* (California Fund), MFS Florida Municipal Bond Fund*
(Florida Fund), MFS Georgia Municipal Bond Fund, MFS Louisiana Municipal Bond
Fund* (Louisiana Fund), MFS Maryland Municipal Bond Fund, MFS Massachusetts
Municipal Bond Fund, MFS Mississippi Municipal Bond Fund* (Mississippi Fund),
MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS
Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS
Tennessee Municipal Bond Fund, MFS Texas Municipal Bond Fund* (Texas Fund),
MFS Virginia Municipal Bond Fund, MFS Washington Municipal Bond Fund*
(Washington 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
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, options and options on futures contracts listed on
commodities exchanges are valued at closing settlement prices.
Over-the-counter options are valued by brokers through the use of a pricing
model which takes into account closing bond valuations, implied volatility
and short-term repurchase rates. 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. Investments in index contracts, or
contracts on related options, for purposes other than hedging may be made
when a Fund has cash on hand and wishes to participate in anticipated market
appreciation while the cash is being invested. 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.
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.
24
<PAGE>
Notes to Financial Statements (Unaudited) - continued
At March 31, 1995, the following Funds, for federal income tax purposes, had
capital loss carryfowards 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 California Florida Louisiana Mississippi Texas Washington
Date Fund Fund Fund Fund Fund Fund
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
March 31, 2002 $ 277,504 $ -- $ -- $ -- $ -- $ --
March 31, 2003 10,169,212 6,439,058 542,107 $940,501 1,019,734 247,673
---------------------------------------------------------------------------------------------
Total $ 10,446,716 $6,439,058 $542,107 $940,501 $1,019,734 $247,673
=============================================================================================
</TABLE>
Multiple Classes of Shares of Beneficial Interest - Each Fund offers both
Class A and Class B shares. The California Fund offers Class C shares. The
three 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 effective annual rate
of 0.55% of each Fund's average daily net assets. The investment adviser did
not impose a portion of its fee with respect to each of the Funds, which is
reflected as a preliminary 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 Louisiana, Mississippi, Texas and
Washington Funds' operating expenses, exclusive of management and
distribution fees. The Louisiana, Mississippi, Texas and Washington Funds in
turn will pay MFS an expense reimbursement fee not greater than 0.40% of each
Fund's 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 September 30, 1995, the aggregate unreimbursed
expenses owed to MFS by each Fund were as follows:
<TABLE>
<CAPTION>
Louisiana Mississippi Texas Washington
Fund Fund Fund Fund
===============================================
<S> <C> <C> <C> <C>
Amount relating to the period ended September 30, 1995 $ 13,773 $(31,665) $ 19,532 $ 31,150
Total amount since commencement of reimbursement agreements 201,608 21,890 232,174 222,078
===============================================
</TABLE>
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 period ended September 30,
1995 is a net periodic pension expense for each Fund, as follows:
<TABLE>
<CAPTION>
California Florida Louisiana Mississippi Texas Washington
Fund Fund Fund Fund Fund Fund
===============================================================
<S> <C> <C> <C> <C> <C> <C>
$4,740 $1,161 $981 $1,065 $1,319 $1,065
===============================================================
</TABLE>
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$28,445, $18,973, $12,059, $27,385, $2,959 and $3,366 as its portion of the
sales charge on sales of Class A shares of the California, Florida,
Louisiana, Mississippi, Texas and Washington Funds, respectively, for the
period ended September 30, 1995.
The Trustees have adopted separate distribution plans for Class A, Class B,
and Class C 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 at or above a certain
dollar level, and other such distribution-related expenses that are approved
by the Fund. Payments under the distribution plan by the Funds will commence
on such date to be determined by the Trustees.
The Class B and Class C distribution plans provide that the Funds will pay
MFD a distribution fee of 0.75% per annum, and a service fee of up to 0.25%
per annum, of the Fund's average daily net assets attributable to Class B and
Class C shares. The service fee is not charged on Class B shares held over
one year. MFD will pay to securities dealers that enter into a sales
agreement with MFD all or a portion of the service fee attributable to Class
B and Class C shares, and will pay to such securities dealers all of the
distribution fee attributable to Class C shares. The service fee is intended
to be additional consideration for services rendered by the dealer with
respect to Class B and Class C shares. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $409 for
the California Fund for Class C shares. Fees incurred under the distribution
plans during the period ended September 30, 1995 were 1.00% of each of the
Fund's average daily net assets attributable to Class B and Class C shares on
an annualized basis.
25
<PAGE>
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within 12 months following the share 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 period ended September 30, 1995 on
Class A and Class B shares were as follows:
<TABLE>
<CAPTION>
California Florida Louisiana Mississippi Texas Washington
CDSC imposed Fund Fund Fund Fund Fund Fund
================================================================
<S> <C> <C> <C> <C> <C> <C>
Class A $ 4,789 $ -- $ -- $17,463 $ -- $ --
----------------------------------------------------------------
Class B $37,455 $23,857 $4,036 $ 8,801 $361 $6,663
================================================================
</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
effective annual rate of up to 0.15%, up to 0.22% and up to 0.15%
attributable to Class A, Class B and Class C 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>
California Florida Louisiana Mississippi Texas Washington
Fund Fund Fund Fund Fund Fund
===================================================================
<S> <C> <C> <C> <C> <C> <C>
Purchases $102,636 $32,675 $7,991 $14,228 $5,677 $1,932
Sales $113,676 $35,756 $5,144 $15,366 $8,760 $2,176
===================================================================
</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>
California Florida Louisiana Mississippi Texas Washington
Fund Fund Fund Fund Fund Fund
===================================================================
<S> <C> <C> <C> <C> <C> <C>
Aggregate cost $279,195 $95,609 $20,936 $86,066 $16,807 $17,180
===================================================================
Gross unrealized appreciation $ 14,901 $ 4,579 $ 718 $ 2,714 $ 1,085 $ 642
Gross unrealized depreciation (1,072) (135) (8) (656) (6) (117)
-------------------------------------------------------------------
Net unrealized appreciation $ 13,829 $ 4,444 $ 710 $ 2,058 $ 1,079 $ 525
===================================================================
</TABLE>
(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 California Fund Florida Fund Louisiana Fund Mississippi Fund
-------------------- ------------------ --------------- ----------------
Period Ended September 30, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
===============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 3,339 $ 18,290 1,983 $ 19,154 198 $ 1,841 630 $5,845
Shares issued to shareholders in reinvestment
of distributions 606 3,315 81 786 26 245 126 1,162
Shares reacquired (6,486) (35,529) (2,370) (23,066) (131) (1,213) (895) (8,299)
-------------------------------------------------------------------------------
Net increase (decrease) (2,541) $(13,924) (306) $ (3,126) 93 $ 873 (139) $(1,292)
===============================================================================
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
===============================================================================
Shares sold $ $
10,839 $ 58,024 6,609 61,425 561 5,055 2,121 $19,211
Shares issued to shareholders in reinvestment
of distributions 1,356 7,227 233 2,203 62 561 292 2,636
Shares reacquired (19,244) (102,193) (8,730) (81,517) (253) (2,281) (2,431) (21,719)
-------------------------------------------------------------------------------
Net increase (decrease) (7,049) $(36,942) (1,888) $(17,889) 370 $3,335 (18) $ 128
===============================================================================
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Class A Shares - continued Texas Fund Washington Fund
---------------- -----------------
Period Ended September 30, 1995 (000 Omitted) Shares Amount Shares Amount
======================================
<S> <C> <C> <C> <C>
Shares sold 137 $ 1,364 50 $ 472
Shares issued to shareholders in reinvestment
of distributions 30 300 26 257
Shares reacquired (481) (4,746) (107) (1,037)
--------------------------------------
Net decrease (314) $(3,082) (31) $ (308)
======================================
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount
======================================
Shares sold 402 $ 3,917 183 $ 1,709
Shares issued to shareholders in reinvestment
of distributions 75 732 56 517
Shares reacquired (403) (3,875) (573) (5,314)
--------------------------------------
Net increase (decrease) 74 $ 774 (334) $(3,088)
======================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares California Fund Florida Fund Louisiana Fund Mississippi Fund
--------------------- ------------------- ------------------ --------------------
Period Ended September 30, 1995
(000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
=========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 920 $ 5,042 194 $ 1,892 120 $ 1,115 201 $ 1,859
Shares issued to shareholders in reinvestment of
distributions 65 358 13 124 5 50 11 101
Shares reacquired (480) (2,642) (131) (1,279) (28) (260) (39) (356)
-----------------------------------------------------------------------------------------
Net increase 505 $ 2,758 76 $ 737 97 $ 905 173 $ 1,604
=========================================================================================
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
=========================================================================================
Shares sold 2,519 13,408 675 6,350 168 $ 1,525 385 $ 3,480
Shares issued to shareholders in reinvestment of
distributions 109 580 28 262 8 68 19 173
Shares reacquired (1,141) (6,041) (213) (1,994) (54) (474) (85) (749)
-----------------------------------------------------------------------------------------
Net increase 1,487 $ 7,947 490 $4,618 122 $ 1,119 319 $ 2,904
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Texas Fund Washington Fund
------------------- --------------------
Period Ended September 30, 1995
(000 Omitted) Shares Amount Shares Amount
===============================================
<S> <C> <C> <C> <C>
Shares sold 64 $ 643 21 $ 210
Shares issued to shareholders in reinvestment of distributions 3 27 4 39
Shares reacquired (8) (79) (17) (165)
-----------------------------------------------
Net increase 59 $ 591 8 $ 84
===============================================
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount
===============================================
Shares sold 137 1,349 102 $ 954
Shares issued to shareholders in reinvestment of
distributions 6 60 8 73
Shares reacquired (34) (330) (34) (310)
-----------------------------------------------
Net increase 109 $1,079 76 $ 717
===============================================
</TABLE>
<TABLE>
<CAPTION>
Class C Shares California Fund
-------------------
Period Ended September 30, 1995 (000 Omitted) Shares Amount
===================
<S> <C> <C>
Shares sold 141 $ 774
Shares issued to shareholders in reinvestment of distributions 8 41
Shares reacquired (157) (858)
-------------------
Net decrease (8) $ (43)
===================
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Class C Shares - continued California Fund
--------------------
Year Ended March 31, 1995 (000 Omitted) Shares Amount
--------------------
<S> <C> <C>
Shares sold 1,073 $ 5,680
Shares issued to shareholders in reinvestment of distributions 15 80
Shares reacquired (686) (3,622)
--------------------
Net increase 402 $ 2,138
====================
</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 period ended September 30, 1995 ranged from $117
to $1,822.
(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.
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
September 30, 1995:
<TABLE>
<CAPTION>
Principal
Amount Unrealized
(000 Appreciation
Fund Description Index Omitted) Value (Depreciation)
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
California Fund Puerto Rico Public Buildings Authority, 5.31s, 2016 PSA Municipal Swap $1,000 $ 928,120 $(71,880)
Louisiana Fund Louisiana Public Facilities Authority, FGIC, 5.875s, 2012 Corp. Swap Rate Curve $1,060 $1,066,571 $ 14,978
Mississippi Fund Puerto Rico Public Buildings Authority, 5.31s, 2016 PSA Municipal Fund Swap $1,000 $ 928,120 $(71,880)
</TABLE>
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.
28
<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 any time). This material should be read carefully before investing
or sending money.
Stock
Massachusetts Investors Trust
- ------------------------------------------
Massachusetts Investors Growth Stock Fund
- ------------------------------------------
MFS Capital Growth Fund
- ------------------------------------------
MFSEmerging 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
(formerly MFS Income & Opportunity Fund)
Limited Maturity Bond
- ------------------------------------------
MFS Government Limited Maturity Fund
- ------------------------------------------
MFS Limited Maturity Fund
- ------------------------------------------
MFS Municipal Limited Maturity Fund
- ------------------------------------------
World
- ------------------------------------------
MFS World Asset Allocation Fund
- ------------------------------------------
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
- ------------------------------------------
29
<PAGE>
[BACK COVER]
MFS(R) Municipal [Logo: "Number 1 Dalbar Top-Rated Service"]
Series Trust
500 Boylston Street
Boston, MA 02116
MFS(R) California Municipal Bond Fund
MFS(R) Florida Municipal Bond Fund
MFS(R) Louisiana Municipal Bond Fund
MFS(R) Mississippi Municipal Bond Fund
MFS(R) Texas Municipal Bond Fund
MFS(R) Washington Municipal Bond Fund
[Logo: MFS] THE FIRST NAME IN MUTUAL FUNDS
Bulk Rate
U.S. Postage
P A I D
Permit #55638
Boston, MA
27/227/327
56/256
49/249
58/258
57/257
MST-3C 11/95 23M59/259
