<PAGE>
[LOGO] M F S ANNUAL REPORT FOR
THE FIRST NAME IN MUTUAL FUNDS YEAR ENDED
MARCH 31, 1995
MFS(R) MUNICIPAL SERIES TRUST
FOR THE STATES OF: ALABAMA, ARKANSAS, CALIFORNIA,
LOUISIANA, MISSISSIPPI, TENNESSEE, TEXAS AND WASHINGTON
[GRAPHIC OMITTED: An 8 1/2" x 11" photo of a highway.]
<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
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 Advisers)
Walter E. Robb, III
President and Treasurer,
Benchmark Advisors, Inc.
(Corporate Financial Consultants)
Arnold D. Scott*
Senior Executive Vice President and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames*
President and Chief Equity Officer,
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, Massachusetts 02116-3741
PORTFOLIO MANAGERS
David R. King*
Geoffrey L. Schechter*
David B. Smith*
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.
-------------------------------------------
TOP-RATED SERVICE
[SEAL] MFS was rated first when securities
firms evaluated the quality of
service they receive from 40
mutual fund companies. MFS got
high marks for answering calls
quickly, processing transactions
accurately and sending statements
out on time.
(Source: 1994 DALBAR Survey)
-------------------------------------------
Cover photo: Through their wide range of
investments, MFS mutual funds help you
share in America's growth.
*Affiliated with the Investment Adviser
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
During the fiscal year ended March 31, 1995, all classes of shares of the
individual state Funds available within the Trust enjoyed positive total
returns. For the most part, these returns underperformed the +7.43% return of
the Lehman Brothers Municipal Bond Index (the Lehman Index), an unmanaged index
of national municipal bond investments rated Baa or higher. However, although
this index is considered the benchmark for performance of municipal bonds, it is
comprised of municipal bonds issued nationwide, while each of the Funds in the
Trust is limited to investing in the bonds of a particular state. Because
individual indices for municipal bonds do not exist for all states, we have
provided on the following page a discussion of each Fund's performance relative
to the Lehman Index.
Economic Environment
The economic expansion, entering its fifth year, gained firmer underpinnings
in 1994 as employers significantly stepped up hiring levels. Increased
employment, stronger capital spending by businesses, and strengthening overseas
economies resulted in 4.1% real (adjusted for inflation) gross domestic product
growth last year. Interest rates rose substantially over the past year, which
should help restrain, but not curtail, the economic expansion. Based on sound
economic fundamentals both here and abroad, we expect the business expansion to
continue well into 1995. However, recent data, including a March rise in the
unemployment rate and the first decline in industrial production in six months,
indicate the increased likelihood of a deceleration in the economy.
Despite a stronger economy, inflation at the consumer level has remained
relatively benign at 2.7% in 1994, the fourth straight year of 3.0% or less. Due
to a prolonged period of below-trend-line growth and continued pressure on
corporations to emphasize effective cost controls, wage growth and unit labor
costs have remained subdued. However, as the economy has exhibited continuing
strength, various industrial commodity prices have been rising substantially
faster than consumer prices. Nevertheless, businesses have had difficulty
passing these price increases on to the consumer. With the economy continuing to
expand, we expect some upward movement in inflation from below 3% to the 3 1/2%
range.
Municipal Bond Market
Municipal bond investors experienced unusual volatility during the fiscal
year ended March 31, 1995, with long-term yields rising 100 basis points through
mid-November, then retracing to finish the fiscal year unchanged. The municipal
market was battered during the first half of the fiscal year by rising
inflationary fears spurred by strong economic growth, and by heavy selling by
tax-exempt mutual funds. However, the market began to improve in December, when
inflation fears subsided and market participants focused on the reduction in
municipal supply. During 1994, new-issue supply declined 44% from 1993's record
level and was down an additional 46% during the first three months of this year.
This reduction in supply, combined with historically heavy bond calls and
redemptions, should result in an unprecedented two consecutive years of fewer
bonds outstanding.
We believe municipals continue to represent good value based on our forecast
of stable to lower long-term interest rates, and that they should provide
attractive after-tax returns relative to alternative fixed-income investments.
Portfolio Strategy
While the portfolio structure of each individual Fund of the Trust will vary
according to both the supply of bonds within each state as well as to the
political and economic environment, each Fund is managed in a similar style.
From a near-term perspective, we have increased the duration (a measure of
interest rate sensitivity) of each Fund in order to benefit more fully from the
recent trend of declining interest rates. Additionally, each portfolio remains
fully invested in an effort to maintain dividends at as high a rate as is
consistent with our prospectus guidelines.
Longer term, we continue to emphasize call protection in order to enhance
shareholder value by enabling the portfolios to sustain their tax-exempt
distribution rates, and to provide opportunities for price appreciation during
periods when rates decline. Additionally, the downgrading of Washington, D.C. to
below investment grade, and the bankruptcy filing by Orange County, California
have demonstrated clearly the importance of fundamental credit analysis. We
continue to monitor closely the changing environment for electric utilities and
hospitals. Another sector which bears watching is multi-family housing due to
recent changes in HUD policies regarding housing assistance programs. As always,
we will look for opportunities to reduce our exposure to declining credits where
appropriate.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/A. Keith Brodkin /s/David R. King /s/Geoffrey L. Schechter /s/David B. Smith
A. Keith Brodkin David R. King, Geoffrey L. Schechter and David B. Smith
Chairman and President Portfolio Managers
April 17, 1995
The performance of shares of the individual state Funds listed on the following
page includes the reinvestment of distributions but excludes the effects of any
sales charges. Each Fund's results have been compared to the Lehman Index.
The portfolio of each Fund will tend to be structured in similar fashion with
respect to maturity and coupon and sector distribution, reflecting our views on
interest rates, credit quality and financing trends. However, each Fund's
performance will differ because of supply/demand and credit quality conditions,
which vary from state to state.
ALABAMA
For the fiscal year ended March 31, 1995, the total returns were +6.51% for
Class A shares and +5.64% for Class B shares. Both of these returns
underperformed the Lehman Index return of +7.43%. The primary reason for the
difference in the Fund's performance versus that of the Lehman Index was
attributable to our holdings in bonds with above- market coupons. While those
issues performed well relative to the market during calendar-year 1994, they
lagged the market during the rally that occurred during the first quarter of
1995.
ARKANSAS
During the 12 months ended March 31, 1995, Class A shares had a total return of
+5.90%, while Class B shares returned +4.67%. The difference in the Fund's
performance relative to the +7.43% return of the Lehman Index was attributable
to our holdings in bonds with above-market coupons. While those issues performed
well relative to the market during calendar-year 1994, they lagged the market
during the rally that occurred during the first quarter of 1995.
CALIFORNIA
The Fund's total returns for the fiscal year ended March 31, 1995 (+4.85% for
Class A shares, +3.73% for Class B shares and +3.79% for Class C shares)
underperformed the +7.43% return of the Lehman Index over the same period.
During the year, California investors were confronted not only with the
volatility of general market interest rates, but also with increased credit risk
manifested in the downgrading of the state's general obligation and agency debt,
the Orange County fall-out, the impact of regulatory changes in the utilities
industry and the uncertainty surrounding potential health care reform. We were
acutely credit-conscious during this period and increased the Fund's holdings of
insured and essential-purpose revenue bonds. We also reduced the Fund's exposure
to the electric utility, health care and state agency sectors. While this
emphasis on credit quality increased the interest rate sensitivity of the Fund
during a time of rising interest rates, it did allow us to reduce exposure to
downgrades and to have no direct exposure to Orange County or its investment
pool participants.
In addition to managing credit exposure, we reduced the Fund's interest rate
risk during the period by reducing its exposure to derivative securities, from a
high of about 5% of total assets to 1.3%, and by actively hedging its duration.
Although the unexpectedly sharp decline of interest rates from November 1994 to
March 31, 1995 caught the Fund defensively positioned, resulting in significant
underperformance during the recent rally, we believe that the changes made to
the portfolio during this period should add value going forward.
LOUISIANA
During the fiscal year ended March 31, 1995, the total returns of +7.18% for
Class A shares and +6.01% for Class B shares slightly underperformed the +7.43%
return of the Lehman Index. The underperformance was attributable to the
defensive posture which the Fund took during the year in an effort to protect
shareholders' capital. While this strategy benefited the Fund during the
sell-off in the bond market that occurred through November, it caused the Fund
to lag the market during the dramatic decline in interest rates during the first
quarter of 1995.
MISSISSIPPI
The Fund's total returns during the fiscal year ended March 31, 1995 of +6.08%
on Class A shares and +5.14% on Class B shares underperformed the +7.43% return
of the Lehman Index. The primary reason for the underperformance was the
defensive posture adopted by the Fund during the bond market sell-off in 1994,
as we reduced duration (interest rate sensitivity) and increased the coupon
structure in an effort to increase the dividend. While this strategy proved
beneficial during the first half of the fiscal year, it caused the Fund to lag
the market during the rally experienced in the first quarter of 1995.
TENNESSEE
For the fiscal year ended March 31, 1995, Class A shares provided a total return
of +5.86%, while Class B shares had a total return of +5.00%. Both returns
underperformed the +7.43% return of the Lehman Index. The difference in
performance was attributable to our holdings in bonds with above-market coupons,
which performed well relative to the market in calendar-year 1994, but lagged
the market during the first quarter of 1995.
TEXAS
During the fiscal year ended March 31, 1995, the total return of the Fund's
Class A shares, which was +7.42%, essentially matched that of the Lehman Index,
while Class B shares, which returned +6.35%, slightly underperformed the Lehman
Index. The Fund's results were attributable to a reasonably balanced coupon
structure which enabled the Fund to benefit from the rally experienced during
the first quarter of 1995, after having been defensively positioned during the
majority of 1994 in an effort to preserve shareholders' capital.
WASHINGTON
During the fiscal year ended March 31, 1995, both Class A shares, which had a
total return of +9.80%, and Class B shares, which returned +8.72%, outperformed
the +7.43% return of the Lehman Index. Throughout the period, the Fund was
positioned with a moderately long duration and a balanced coupon structure. This
strategy enabled the Fund to perform reasonably well during last year's sell-off
and also provided opportunities for appreciation during this year's rally.
PORTFOLIO MANAGER PROFILES
A graduate of the University of New Hampshire and the Babson College Graduate
School of Business Administration, David King began his career at MFS in 1985 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 and currently has portfolio management
responsibility for the Alabama, Arkansas and Tennessee Funds.
Geoff 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 Louisiana,
Mississippi and Texas Funds. Mr. Schechter is a Certified Public Accountant and
a Chartered Financial Analyst.
A graduate of Union College and the Babson College Graduate School of Business
Administration, David Smith began his career at MFS in 1988 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 Chartered Financial Analyst and currently has portfolio management
responsibilities for the California and Washington 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, the interest on which is exempt
from federal income taxes and from the personal income taxes, if any, of the
state to which the Fund's name relates. 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
The following information illustrates the growth of a hypothetical $10,000
investment for each Fund's Class A shares during the periods indicated in
comparison to various market indicators. Fund results reflect the deduction of
the 4.75% maximum sales charge; benchmark comparisons are unmanaged and do not
reflect any fees or expenses. You cannot invest in an index.
All results reflect the reinvestment of all dividends and capital gains. Please
note that effective September 7, 1993, Class B shares were offered and on
January 3, 1994, Class C shares were offered for certain Funds. Information on
the performance of these classes of shares appears below and on the following
pages.
<PAGE>
MFS ALABAMA MUNICIPAL BOND FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from February 1, 1990 to March 31, 1995)
Line graph representing the growth of a $10,000 investment for the period from
February 1, 1990 to March 31, 1995. The graph is scaled from $8,000 to $18,000
in $2,000 segments. The years are marked from 1990 to 1995. There are three
lines drawn to scale. One is a solid line representing MFS Alabama Fund (Class
A), a second line of short dashes represents the Lehman Brothers Municipal Bond
Index, and a third line of long dashes represents the Consumer Price Index.
MFS Alabama Fund (Class A) $14,079
Lehman Brothers Municipal Bond Index $14,996
Consumer Price Index $11,884
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
2/01/90<F1> -
1 Year 3 Years 5 Years 3/31/95
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Alabama Municipal Bond Fund (Class A) including 4.75% sales charge +1.48% +5.77% +7.07% +6.87%
-------------------------------------------------------------------------------------------------------------------------
MFS Alabama Municipal Bond Fund (Class A) at net asset value +6.51% +7.50% +8.12% +7.88%
-------------------------------------------------------------------------------------------------------------------------
MFS Alabama Municipal Bond Fund (Class B) with CDSC<F2> +1.64% -- -- -1.26%<F3>
-------------------------------------------------------------------------------------------------------------------------
MFS Alabama Municipal Bond Fund (Class B) without CDSC +5.64% -- -- +1.16%<F3>
-------------------------------------------------------------------------------------------------------------------------
Average Alabama tax-exempt municipal bond fund +6.23%(6) +7.38%(2) +7.92%(2) +7.83%(2)
-------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +7.43% +7.34% +8.24% +8.16%
-------------------------------------------------------------------------------------------------------------------------
Consumer Price Index +2.85% +2.82% +3.30% +3.40%
-------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Commencement of offering of Class A shares.
<F2>These returns reflect the current maximum Class B contingent deferred sales charge (CDSC) of 4%.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to March 31, 1995.
</TABLE>
<PAGE>
MFS ARKANSAS MUNICIPAL BOND FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from February 3, 1992 to March 31, 1995)
Line graph representing the growth of a $10,000 investment for the period from
February 3, 1992 to March 31, 1995. The graph is scaled from $9,000 to $14,000
in $1,000 segments. The years are marked from 1992 to 1995. There are three
lines drawn to scale. One is a solid line representing MFS Arkansas Fund (Class
A), a second line of short dashes represents the Consumer Price Index.
MFS Arkansas Fund (Class A) $11,611
Lehman Brothers Municipal Bond Index $12,377
Consumer Price Index $10,963
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
2/03/92<F1> -
1 Year 3 Years 5 Years 3/31/95
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Arkansas Municipal Bond Fund (Class A) including 4.75% sales charge +0.90% +5.15% -- +4.85%
-------------------------------------------------------------------------------------------------------------------------
MFS Arkansas Municipal Bond Fund (Class A) at net asset value +5.90% +6.87% -- +6.48%
-------------------------------------------------------------------------------------------------------------------------
MFS Arkansas Municipal Bond Fund (Class B) with CDSC<F2> +0.69% -- -- -2.59%<F3>
-------------------------------------------------------------------------------------------------------------------------
MFS Arkansas Municipal Bond Fund (Class B) without CDSC +4.67% -- -- -0.20%<F3>
-------------------------------------------------------------------------------------------------------------------------
Average other state tax-exempt municipal bond fund +5.79%(39) +6.56%(11) -- +6.27%(11)
-------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +7.43% +7.34% -- +6.97%
-------------------------------------------------------------------------------------------------------------------------
Consumer Price Index +2.85% +2.82% -- +2.95%
-------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Commencement of offering of Class A shares. Benchmark comparisons are from February 1, 1992.
<F2>These returns reflect the current maximum CDSC of 4%.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to March 31, 1995.
</TABLE>
<PAGE>
MFS CALIFORNIA MUNICIPAL BOND FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from July 1, 1985 to March 31, 1995)
Line graph representing the growth of a $10,000 investment for the period from
July 1, 1985 to March 31, 1995. The graph is scaled from $5,000 to $30,000 in
$5,000 segments. The years are marked from 1986 to 1995. There are three lines
drawn to scale. One is a solid line representing MFS California Fund (Class A),
a second line of short dashes represents the Lehman Brothers Municipal Bond
Index, and a third line of long dashes represents Consumer Price Index.
MFS California Fund (Class A) $20,158
Lehman Brothers Municipal Bond Index $23,487
Consumer Price Index $14,072
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
2/03/92<F1> -
1 Year 3 Years 5 Years 3/31/95
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------
MFS California Municipal Bond Fund (Class A) including 4.75% sales charge -0.08% +4.86% +6.6 +7.45%
--------------------------------------------------------------------------------------------------------------------------
MFS California Municipal Bond Fund (Class A) at net asset value +4.85% +6.57% +7.64% +7.99%
--------------------------------------------------------------------------------------------------------------------------
MFS California Municipal Bond Fund (Class B) with CDSC<F2> -0.22% -- -- -3.81%<F3>
--------------------------------------------------------------------------------------------------------------------------
MFS California Municipal Bond Fund (Class B) without CDSC +3.73% -- -- -1.47%<F3>
--------------------------------------------------------------------------------------------------------------------------
MFS California Municipal Bond Fund (Class C) +3.79% -- -- -2.03%<F4>
--------------------------------------------------------------------------------------------------------------------------
Average California tax-exempt municipal bond fund +5.95%(82) +6.77%(55) +7.57%(44) +8.21%(17)
--------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +7.43% +7.34% +8.24% +9.15%
--------------------------------------------------------------------------------------------------------------------------
Consumer Price Index +2.85% +2.82% +3.30% +3.57%
--------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Commencement of offering of Class A shares. Benchmark comparisons are from July 1, 1985.
<F2>These returns reflect the current maximum CDSC of 4%.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to March 31, 1995.
<F4>For the period from the commencement of offering of Class C shares, January 3, 1994 to March 31, 1995.
</TABLE>
<PAGE>
MFS LOUISIANA MUNICIPAL BOND FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from February 1, 1993 to March 31, 1995)
Line graph representing the growth of a $10,000 investment for the period from
February 1, 1993 to March 31, 1995. The graph is scaled from $9,500 to $12,000
in $500 segments. The years are marked from 1993 to 1995. There are three lines
drawn to scale. One is a solid line representing MFS Louisiana Fund (Class A), a
second line of short dashes represents the Lehman Brothers Municipal Bond Index,
and a third line of long dashes represents Consumer Price Index.
MFS Louisiana Fund (Class A) $10,593
Lehman Brothers Municipal Bond Index $11,269
Consumer Price Index $10,617
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
2/01/93<F1> -
1 Year 3 Years 5 Years 3/31/95
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------
MFS Louisiana Municipal Bond Fund (Class A) including 4.75% sales charge +2.09% -- -- +2.46%
--------------------------------------------------------------------------------------------------------------------------
MFS Louisiana Municipal Bond Fund (Class A) at net asset value +7.18% -- -- +4.78%
--------------------------------------------------------------------------------------------------------------------------
MFS Louisiana Municipal Bond Fund (Class B) with CDSC<F2> +2.01% -- -- -2.50%<F3>
--------------------------------------------------------------------------------------------------------------------------
MFS Louisiana Municipal Bond Fund (Class B) without CDSC +6.01% -- -- -0.14%<F4>
--------------------------------------------------------------------------------------------------------------------------
Average Louisiana tax-exempt municipal bond fund +6.09%(13) -- -- +4.90%(7)
--------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +7.43% -- -- +5.67%
--------------------------------------------------------------------------------------------------------------------------
Consumer Price Index +2.85% -- -- +2.80%
--------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Commencement of offering of Class A shares.
<F2>These returns reflect the current maximum Class B CDSC of 4%.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to March 31, 1995.
</TABLE>
<PAGE>
MFS MISSISSIPPI MUNICIPAL BOND FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from September 1, 1992 to March 31, 1995)
Line graph representing the growth of a $10,000 investment for the period from
September 1, 1992 to March 31, 1995. The graph is scaled from $9,500 to $14,000
in $1,000 segments. The years are marked from 1993 to 1995. There are three
lines drawn to scale. One is a solid line representing MFS Mississippi Fund
(Class A), a second line of short dashes represents the Lehman Brothers
Municipal Bond Index, and a third line of long dashes represents Consumer Price
Index.
MFS Mississippi Fund (Class A) $10,939
Lehman Brothers Municipal Bond Index $12,357
Consumer Price Index $11,169
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
2/01/93<F1> -
1 Year 3 Years 5 Years 3/31/95
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
MFS Mississippi Municipal Bond Fund (Class A) including 4.75% sales charge +1.03% -- -- +2.58%
---------------------------------------------------------------------------------------------------------------------------
MFS Mississippi Municipal Bond Fund (Class A) at net asset value +6.08% -- -- +4.48%
---------------------------------------------------------------------------------------------------------------------------
MFS Mississippi Municipal Bond Fund (Class B) with CDSC<F2> +1.15% -- -- -2.51%<F3>
---------------------------------------------------------------------------------------------------------------------------
MFS Mississippi Municipal Bond Fund (Class B) without CDSC +5.14% -- -- -0.14%<F3>
---------------------------------------------------------------------------------------------------------------------------
Average other state tax-exempt municipal bond fund +5.79%(39) -- -- +5.00%(14)
---------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +7.43% -- -- +5.62%
---------------------------------------------------------------------------------------------------------------------------
Consumer Price Index +2.85% -- -- +2.84%
---------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Commencement of offering of Class A shares. Benchmark comparisons are from August 1, 1992.
<F2>These returns reflect the current maximum Class B CDSC of 4%.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to March 31, 1995.
</TABLE>
<PAGE>
MFS TENNESSEE MUNICIPAL BOND FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from September 1, 1988 to March 31, 1995)
Line graph representing the growth of a $10,000 investment for the period from
September 1, 1988 to March 31, 1995. The graph is scaled from $8,000 to $18,000
in $2,000 segments. The years are marked from 1989 to 1995. There are three
lines drawn to scale. One is a solid line representing MFS Tennessee Fund (Class
A), a second line of short dashes represents the Lehman Brothers Municipal Bond
Index, and a third line of long dashes represents Consumer Price Index.
MFS Tennessee Fund (Class A) $15,347
Lehman Brothers Municipal Bond Index $17,149
Consumer Price Index $12,723
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
8/12/88<F1> -
1 Year 3 Years 5 Years 3/31/95
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------
MFS Tennessee Municipal Bond Fund (Class A) including 4.75% sales charge +0.85% +4.78% +6.21% +6.66%
--------------------------------------------------------------------------------------------------------------------------
MFS Tennessee Municipal Bond Fund (Class A) at net asset value +5.86% +6.49% +7.25% +7.44%
--------------------------------------------------------------------------------------------------------------------------
MFS Tennessee Municipal Bond Fund (Class B) with CDSC<F2> +1.00% -- -- -1.40%<F3>
--------------------------------------------------------------------------------------------------------------------------
MFS Tennessee Municipal Bond Fund (Class B) without CDSC +5.00% -- -- +1.02%<F3>
--------------------------------------------------------------------------------------------------------------------------
Average Tennessee tax-exempt municipal bond fund +6.24%(14) +6.70%(2) +7.38%(2) +7.79%(2)
--------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +7.43% +7.34% +8.24% +8.54%
--------------------------------------------------------------------------------------------------------------------------
Consumer Price Index +2.85% +2.82% +3.30% +3.73%
--------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Commencement of offering of Class A shares. Benchmark comparisons are from September 1, 1988.
<F2>These returns reflect the current maximum Class B CDSC of 4%.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to March 31, 1995.
</TABLE>
<PAGE>
MFS TEXAS MUNICIPAL BOND FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from February 1, 1992 to March 31, 1995)
Line graph representing the growth of a $10,000 investment for the period from
February 1, 1992 to March 31, 1995. The graph is scaled from $9,000 to $14,000
in $1,000 segments. The years are marked from 1992 to 1995. There are three
lines drawn to scale. One is a solid line representing MFS Texas Fund (Class A),
a second line of short dashes represents the Lehman Brothers Municipal Bond
Index, and a third line of long dashes represents Consumer Price Index.
MFS Texas Fund (Class A) $12,039
Lehman Brothers Municipal Bond Index $12,377
Consumer Price Index $10,963
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
8/12/88<F1> -
1 Year 3 Years 5 Years 3/31/95
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
MFS Texas Municipal Bond Fund (Class A) including 4.75% sales charge +2.34% +6.38% -- +6.06%
---------------------------------------------------------------------------------------------------------------------------
MFS Texas Municipal Bond Fund (Class A) at net asset value +7.42% +8.12% -- +7.71%
---------------------------------------------------------------------------------------------------------------------------
MFS Texas Municipal Bond Fund (Class B) with CDSC<F2> +2.35% -- -- -2.22%<F3>
---------------------------------------------------------------------------------------------------------------------------
MFS Texas Municipal Bond Fund (Class B) without CDSC +6.35% -- -- +0.15%<F3>
---------------------------------------------------------------------------------------------------------------------------
Average Texas tax-exempt municipal bond fund +6.32%(21) +7.63%(10) -- +7.56%(7)
---------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +7.43% +7.34% -- +6.97%
---------------------------------------------------------------------------------------------------------------------------
Consumer Price Index +2.85% +2.82% -- +2.95%
---------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Commencement of offering of Class A shares. Benchmark comparisons are from February 1, 1992.
<F2>These returns reflect the current maximum Class B CDSC of 4%.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to March 31, 1995.
</TABLE>
<PAGE>
MFS WASHINGTON MUNICIPAL BOND FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from September 1, 1992 to March 31, 1995)
Line graph representing the growth of a $10,000 investment for the period from
September 1, 1992 to March 31, 1995. The graph is scaled from $9,000 to $14,000
in $1,000 segments. The years are marked from 1992 to 1995. There are three
lines drawn to scale. One is a solid line representing MFS Washington Fund
(Class A), a second line of short dashes represents the Lehman Brothers
Municipal Bond Index, and a third line of long dashes represents Consumer Price
Index.
MFS Washington Fund (Class A) $11,332
Lehman Brothers Municipal Bond Index $12,357
Consumer Price Index $11,169
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
8/07/92<F1> -
1 Year 3 Years 5 Years 3/31/95
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
MFS Washington Municipal Bond Fund (Class A) including 4.75% sales charge +4.62% -- -- +4.60%
---------------------------------------------------------------------------------------------------------------------------
MFS Washington Municipal Bond Fund (Class A) at net asset value +9.80% -- -- +6.54%
---------------------------------------------------------------------------------------------------------------------------
MFS Washington Municipal Bond Fund (Class B) with CDSC<F2> +4.72% -- -- -1.29%<F3>
---------------------------------------------------------------------------------------------------------------------------
MFS Washington Municipal Bond Fund (Class B) without CDSC +8.72% -- -- +1.10%<F3>
---------------------------------------------------------------------------------------------------------------------------
Average Washington tax-exempt municipal bond fund +6.76%(7) -- -- +5.58%(2)
---------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +7.43% -- -- +5.62%
---------------------------------------------------------------------------------------------------------------------------
Consumer Price Index +2.85% -- -- +2.84%
---------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Commencement of offering of Class A shares. Benchmark comparisons are from August 1, 1992.
<F2>These returns reflect the current maximum Class B CDSC of 4%.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to March 31, 1995.
</TABLE>
<PAGE>
In the above tables, we have included the average annual total returns of state
tax-exempt funds (including the Funds) tracked by Lipper Analytical Services,
Inc. (an independent firm which reports mutual fund performance) for the
applicable time periods ended March 31, 1995. The number of funds in each state
tax-exempt category is noted parenthetically next to each respective return.
Because these returns do not reflect any applicable sales charge, we have also
included the Funds' results at net asset value (no sales charge) for comparison.
The Consumer Price Index is a popular measure of change in prices. All results
are historical and, therefore, are not an indication of future results. The
principal value and income return of an investment in a mutual fund will vary
with changes in market conditions, and shares, when redeemed, may be worth more
or less than their original cost. All Fund results reflect the applicable
expense subsidy which is explained in the Notes to Financial Statements. Had the
subsidy not been in effect, the results would have been less favorable. The
subsidy may be rescinded by MFS at any time.
<TABLE>
<CAPTION>
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS (For the year ended March 31, 1995)
Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
Sources of Distributions Paid<F1> Fund Fund Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(Class A) $0.54750 $0.52800 $0.30751 $0.55725 $0.54699 $0.55600 $0.59250 $0.56750
(Class B) $0.46332 $0.42180 $0.24990 $0.46599 $0.45586 $0.48203 $0.49423 $0.47384
(Class C) -- -- $0.25335 -- -- -- -- --
Short-term capital gains:
(Class A) $0.02285 $0.01457 $0.00449 $0.02120 $0.01200 -- $0.02041 --
(Class B) $0.02285 $0.01457 $0.00449 $0.02120 $0.01200 -- $0.02041 --
(Class C) -- -- $0.00449 -- -- -- -- --
Long-term capital gains (Class A
and Class B) $0.00261 $0.00541 -- $0.01720 $0.01558 $0.01133 $0.04400 $0.00731
Record date: 6/01/94
Payable date: 6/10/94
Long-term capital gains (Class A
and Class B) -- $0.03140 -- $0.01328 -- -- -- --
Record date: 12/01/94
Payable date: 12/10/94
<FN>
<F1>Estimated at time of report.
</TABLE>
TAX FORM SUMMARY
In January 1995, shareholders were mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1994.
EXEMPT-INTEREST DIVIDENDS
For federal income tax purposes, 99% of the total dividends paid by each Fund
from net investment income during the year ended March 31, 1995 is designated as
an exempt-interest dividend.
<PAGE>
PORTFOLIO OF INVESTMENTS - MARCH 31, 1995
MFS ALABAMA MUNICIPAL BOND 95.9%
---------------------------------------------------------------------------
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
---------------------------------------------------------------------------
General Obligation - 15.7%
AA Birmingham, AL, 5s, 2013 $1,000 $ 880,620
AA Birmingham, AL, 8s, 2015 1,150 1,254,201
AAA Covington County, AL, AMBAC, 5.5s, 2014 1,500 1,420,950
NR Cullman, AL, 6.5s, 2023 1,000 927,470
AAA Hoover, AL, Warrants, AMBAC, 5s, 2020 1,120 961,800
AAA Phoenix City, AL, MBIA, 6s, 2011 500 506,730
AAA Phoenix City, AL, MBIA, 6s, 2014 1,000 1,006,020
NR Shelby County, AL, Warrants, 7.4s, 2007 1,000 1,069,370
NR Shelby County, AL, Warrants, 7.7s, 2017 800 864,184
AAA Shelby County, AL, Warrants, MBIA, 0s,
2010 3,000 1,159,470
AAA Shelby County, AL, Warrants, MBIA, 0s,
2011 3,000 1,078,560
AA State of Alabama, 0s, 2002 500 338,640
AA State of Alabama, 0s, 2004 2,500 1,522,000
AA State of Alabama, 0s, 2006 1,165 608,654
AA State of Alabama, 7.1s, 2010 250 269,465
----------
$13,868,134
---------------------------------------------------------------------------
State and Local Appropriation - 4.7%
NR Alabama Building Renovation Finance
Authority Rev., 7.45s, 2011 $1,500 $ 1,641,420
AAA Birmingham-Jefferson, AL, Civic Center
Authority, MBIA, 5.5s, 2014 1,000 949,510
A Montgomery County, AL, Rev., Warrants
(Department of Human Resources Project),
7s, 2007 1,000 1,047,230
A Puerto Rico Public Buildings Authority,
5.6s, 2008 500 481,805
----------
$ 4,119,965
---------------------------------------------------------------------------
Refunded and Special Obligation - 12.0%
NR Alexander City, AL, Warrants, 0s, 2001 $1,000 $ 295,490
NR Alexander City, AL, Warrants, 0s, 2001 1,000 274,780
NR Alexander City, AL, Warrants, 0s, 2001 1,250 319,400
NR Birmingham, AL, 7.4s, 1999 1,000 1,100,220
AA Birmingham, AL, Historical Preservation
Authority (Kelly Ingram/Civil Rights),
7.2s, 2001 1,000 1,112,470
AA Birmingham, AL, Public Parks & Recreation
Board Rev. (Legion Park), 7.25s, 1999 400 440,160
NR Birmingham, AL, Waterworks & Sewer Board
Rev., 7.2s, 2000 500 550,375
BBB Gadsden East, AL, Medical Clinic Board
Rev. (Baptist Hospital), 7.8s, 2001 2,000 2,314,600
AAA Hoover, AL, Board of Education, AMBAC,
6.625s, 2001 1,000 1,090,750
NR Morgan County-Decatur, AL, Hospital Board
Rev., 7.875s, 1999 750 837,862
AAA Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.5s, 2002 1,000 1,103,710
AAA University of Alabama, University Rev.,
MBIA, 7.1s, 2001 1,000 1,119,020
----------
$10,558,837
---------------------------------------------------------------------------
Single Family Housing Revenue - 5.9%
NR Alabama Housing Finance Authority,
FNMA, GNMA, 6.55s, 2014 $2,525 $ 2,542,245
AAA Alabama Housing Finance Authority,
GNMA, 7.4s, 2022 705 741,363
AAA Alabama Housing Finance Authority,
GNMA, 7.5s, 2022 470 490,003
AAA Alabama Housing Finance Authority,
GNMA, 7.6s, 2022 150 158,278
AAA Alabama Housing Finance Authority,
GNMA, 7.75s, 2022 475 503,642
AAA Alabama Housing Finance Authority,
GNMA, 7.9s, 2022 745 791,845
----------
$ 5,227,376
---------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.1%
AAA Alabama Housing Finance Authority,
Residential Development Authority, FHA,
7.25s, 2023 $1,440 $ 1,492,905
AA Puerto Rico Housing Finance Corp.,
7.5S, 2015 355 376,044
----------
$ 1,868,949
---------------------------------------------------------------------------
Insured Health Care Revenue - 11.6%
AAA Birmingham Baptist Medical Center, AL,
Special Care Facilities, MBIA, 5.5s, 2013 $1,500 $ 1,405,710
AAA East AL, Health Care Authority Facilities
Rev., MBIA, 5.75s, 2013 1,000 965,650
AAA Huntsville, AL, Health Care Authority,
Health Care Facilities Rev., MBIA,
6.375s, 2022 3,500 3,551,940
AAA Morgan County-Decatur, AL, Hospital Board
Rev., Connie Lee, 6.1s, 2007 1,420 1,445,290
AAA University of Alabama Hospital Rev.,
MBIA, 5.5s, 2010 2,000 1,911,120
AAA University of South Alabama, Hospital
Auxiliary Rev., AMBAC, 5s, 2007 1,000 933,090
----------
$10,212,800
---------------------------------------------------------------------------
Health Care Revenue - 4.4%
BBB- Baldwin County, AL, Eastern Shore Health
Care Authority, Hospital Rev. (Thomas),
8.5s, 2016 $1,000 $ 1,074,390
A Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), 7s, 2015 2,725 2,809,366
----------
$ 3,883,756
---------------------------------------------------------------------------
Electric and Gas Utility Revenue - 1.0%
AAA Marshall County, AL, Gas, MBIA, 5s, 2013 $1,000 $ 885,380
---------------------------------------------------------------------------
Water and Sewer Utility Revenue - 9.3%
BBB Alabama Water Pollution Control Authority,
7.75s, 2012 $ 975 $ 1,027,679
AAA Alabama Water Pollution Control Authority,
AMBAC, 5.5s, 2016 1,000 936,230
AAA Arab, AL, Waterworks Board, Water Rev.,
MBIA, 7.05s, 2016 1,000 1,063,900
AA Birmingham, AL, Waterworks & Sewer Board
Rev., 5.3s, 2014 1,000 918,420
BBB- Fairview, AL, Government Utility Services,
Corporate Water Rev., 8s, 2020 1,000 1,066,670
AAA Limestone County, AL, Water Authority
Rev., FGIC, 7.7s, 2019 900 982,566
AAA Limestone County, AL, Water Authority
Rev., FGIC, 5.25s, 2020 1,450 1,299,620
AAA Madison County, AL, Water,
AMBAC, 5.25s, 2014 1,000 910,560
----------
$ 8,205,645
---------------------------------------------------------------------------
Turnpike Revenue - 0.8%
A Puerto Rico Commonwealth, 5.25s, 2020 $ 800 $ 694,360
---------------------------------------------------------------------------
Airport and Port Revenue - 5.6%
AAA Alabama Docks Department, Docks Facilities
Rev., BIGI, 7.6s, 2012 $2,600 $ 2,782,312
NR Mobile, AL, Airport Authority,
7.375s, 2012 1,000 1,024,120
NR Mobile, AL, Airport Authority,
8.875s, 2015 1,000 1,093,770
----------
$ 4,900,202
---------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.3%
A Alabama Mental Health Finance Authority,
7.375s, 2008 $ 250 $ 268,565
---------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 12.0%
BBB- Butler, AL, Industrial Development Rev.,
8s, 2028 $1,000 $ 1,047,920
NR Camden, AL, Industrial Development Board,
Pollution Control Rev., 7.75s, 2009 500 535,735
BBB Courtland, AL, Industrial Development
Board, Solid Waste Disposal Rev.,
5.9s, 2017 1,000 924,650
BBB Courtland, AL, Industrial Development
Board, Solid Waste Disposal Rev.,
7.75s, 2020 1,485 1,573,223
AA Mobile, AL, Industrial Development Board
(Mobil), 6s, 2014 2,500 2,465,100
BBB Mobile, AL, Industrial Development Board,
Dock & Wharf Rev. (Ideal Basic, Inc.),
6.75s, 2004 270 269,954
BBB Mobile, AL, Industrial Development Board,
Dock & Wharf Rev. (Ideal Basic, Inc.),
6.875s, 2009 1,075 1,074,892
BBB+ Piedmont, AL, Industrial Development Board
(Springs Industries, Inc.), 8.25s, 2010 1,000 1,081,140
AA- Tarrant City, AL, Industrial Development
Board Rev. (Vulcan Materials Co.),
7.5s, 2011 1,500 1,623,690
----------
$10,596,304
---------------------------------------------------------------------------
Universities - 7.6%
AAA Alabama State Board of Education Rev.
(Shelton State Community College), MBIA,
6s, 2014 $1,000 $ 1,003,670
AAA Alabama State University Rev.,
MBIA, 5.7s, 2015 1,450 1,399,380
AAA Auburn University, AL, University Rev.,
MBIA, 5.25s, 2012 1,000 916,010
AAA Auburn University, AL, University Rev.,
MBIA, 5.25s, 2013 1,000 913,310
NR Homewood, AL, Educational Building
Authority Rev. (Samford University),
6.5s, 2016 1,000 1,030,640
AA- UAB Educational Foundation, AL, Student
Housing Rev., 5.35s, 2019 1,630 1,482,615
----------
$ 6,745,625
---------------------------------------------------------------------------
Indexed Security - 0.9%
AAA Puerto Rico Telephone Authority Rev., 7-
Year Swap, "M", AMBAC, 4.47s, 2004* $1,000 $ 823,820
---------------------------------------------------------------------------
Other - 2.0%
NR Birmingham, AL, Downtown Redevelopment
Authority (Social Security
Administration),
0s, 2010 $2,985 $ 1,758,353
---------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $80,383,768) $84,618,071
---------------------------------------------------------------------------
Floating Rate Demand Notes - 2.6%
---------------------------------------------------------------------------
A- Phoenix City, AL, Industrial Development
Board, due 2028 $1,200 $ 1,200,000
NR Uinta County, WY, Pollution Control Rev.
(Chevron), due 2020 1,100 1,100,000
---------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,300,000
---------------------------------------------------------------------------
Total Investments (Identified Cost, $82,683,768) $86,918,071
Other Assets, Less Liabilities - 1.5% 1,282,431
---------------------------------------------------------------------------
Net Assets - 100.0% $88,200,502
---------------------------------------------------------------------------
*Indexed security (see Note 7).
See notes to financial statements
<PAGE>
Portfolio of Investments - March 31, 1995
MFS ARKANSAS MUNICIPAL BOND
Municipal Bonds - 97.3%
---------------------------------------------------------------------------
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
---------------------------------------------------------------------------
Student Loan Revenue - 1.3%
NR Arkansas Student Loan Authority Rev.,
7.15s, 2002 $ 1,000 $ 1,059,880
NR Arkansas Student Loan Authority Rev.,
6.75s, 2006 1,500 1,526,160
-----------
$ 2,586,040
---------------------------------------------------------------------------
General Obligation - 4.7%
AAA Mississippi County, AR, Community College
District, AMBAC, 6s, 2018 $ 1,650 $ 1,678,644
NR Northwest Arkansas Community College
District, 5.8s, 2012 1,000 999,890
A Puerto Rico Commonwealth Refunding,
6.45s, 2017 500 510,535
A Puerto Rico Commonwealth Refunding,
5.25s, 2018 2,000 1,749,460
AAA Pulaski County, AR, Special School
District,
FSA, 5.25s, 2013 3,495 3,223,788
AA State of Arkansas, Waste Disposal &
Pollution Control Rev., 6.25s, 2020 1,000 1,023,730
-----------
$ 9,186,047
---------------------------------------------------------------------------
State and Local Appropriation - 3.4%
AAA Arkansas Development Finance Authority
Correctional Facilities Rev., 7.125s, 2010 $ 2,000 $ 2,139,720
A Arkansas Development Finance Authority
Local Government Rev., 7.1s, 2008 2,440 2,639,641
NR Arkansas Development Finance Authority Rev.
(State Agencies Facilities), 5.875s, 2013 875 836,973
A Arkansas Development Finance Authority Rev.
(State Agencies Facilities), 5.875s, 2013 1,000 903,470
-----------
$ 6,519,804
---------------------------------------------------------------------------
Refunded and Special Obligation - 12.6%
AAA Arkansas Development Finance Authority,
Water Rev., MBIA, 7s, 2001 $ 2,900 $ 3,216,854
AAA Arkansas Development Finance Authority,
Water Rev., MBIA, 6.4s, 2002 3,495 3,788,440
AAA Arkansas Housing Development Agency Single
Family Mortgage Rev., 8.375s, 2010 800 970,408
AAA Arkansas Housing Development Agency Single
Family Mortgage Rev., 8.375s, 2011 1,000 1,215,710
A- Beaver Water District, AR, Benton &
Washington Counties, Water Rev.,
6.625s, 1999 500 540,985
A- Beaver Water District, AR, Benton &
Washington Counties, Water Rev.,
6.75s, 1999 1,750 1,902,355
AAA Harrison, AR, Residential Housing
Facilities Board, Single Family Mortgage
Rev., FGIC, 7.4s, 2011 4,000 4,484,400
AAA Puerto Rico Public Buildings Authority,
7.125s, 1998 1,500 1,631,865
AAA Sherwood, AR, Residential Housing
Facilities Board, Single Family Mortgage
Rev., 7.5s, 2010 1,250 1,415,838
NR State of Arkansas, Waste Disposal &
Pollution Control Rev., 6.25s, 2002 4,000 4,274,960
AA State of Arkansas, Water Resources
Development Authority, 6.375s, 2012 1,000 1,039,990
-----------
$ 24,481,805
---------------------------------------------------------------------------
Single Family Housing Revenue - 13.8%
NR Arkansas Development Finance Authority,
0s, 2011 $ 5,000 $ 1,577,450
AAA Arkansas Development Finance Authority,
Single Family Mortgage Rev., FNMA, GNMA,
5.65s, 2016 2,000 1,900,060
AAA Arkansas Development Finance Authority,
Single Family Mortgage Rev., FNMA, GNMA,
5.65s, 2016 1,000 950,030
AAA Arkansas Development Finance Authority,
Single Family Mortgage Rev., FNMA, GNMA,
6.7s, 2027 3,000 3,014,490
AAA Arkansas Development Finance Authority,
Single Family Mortgage Rev., GNMA,
7.4s, 2023 1,580 1,660,564
A+ Arkansas Housing Development Agency
Residential Mortgage Rev., 0s, 2015 33,000 3,744,510
NR Jefferson County, AR, Health Care &
Residential Facilities Board, 7.25s, 2011 1,000 1,027,080
NR Lonoke County, AR, Residential Housing
Facilities Board, 7.375s, 2011 418 430,661
NR Lonoke County, AR, Residential Housing
Facilities Board, 7.9s, 2011 1,186 1,294,394
NR Mississippi County, AR, Public Facilities
Board, Mortgage Rev., 7.2s, 2010 1,295 1,391,529
NR North Little Rock, AR, Residential Housing
Facilities Board, 0s, 2010 21,925 7,601,617
NR Pulaski County, AR, Public Facilities Board
Rev., FNMA, 0s, 2014 2,750 772,200
NR Saline County, AR, Residential Housing
Facilities Board, 7.875s, 2011 1,405 1,503,968
-----------
$ 26,868,553
---------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.8%
NR Maumelle, AR, Housing Development Corp.,
7.875s, 2014 $ 1,000 $ 1,061,000
AAA West Memphis, AR, Public Facilities Board
Rev., AMBAC, 0s, 2011 1,090 399,649
-----------
$ 1,460,649
---------------------------------------------------------------------------
Insured Health Care Revenue - 6.1%
AAA Arkansas Development Finance Authority
(Sisters of Mercy), MBIA, 5s, 2013 $ 6,340 $ 5,616,986
AAA Arkansas Development Finance Authority
(Sisters of Mercy), MBIA, 5s, 2019 6,000 5,177,100
AAA Pulaski County, AR, Health Facilities Board
Rev. (Sisters of Charity/Nazareth), MBIA,
6s, 2012 1,000 1,018,370
-----------
$ 11,812,456
---------------------------------------------------------------------------
Health Care Revenue - 8.7%
NR Baxter County, AR, Hospital Rev.,
7.5s, 2021 $ 3,145 $ 3,296,809
A+ Little Rock, AR, Health Facilities Board,
Hospital Rev. (Baptist Medical Center),
6.9s, 2009 1,400 1,493,702
A+ Little Rock, AR, Health Facilities Board,
Hospital Rev. (Baptist Medical Center),
5.5s, 2015 1,400 1,258,390
A Little Rock, AR, Health Facilities Board,
Hospital Rev. (Baptist Medical Center),
7s, 2017 3,250 3,407,138
A- Pulaski County, AR, Hospital Rev. (Arkansas
Children's Hospital), 6.15s, 2017 7,750 7,503,472
-----------
$ 16,959,511
---------------------------------------------------------------------------
Electric and Gas Utility Revenue - 13.7%
BBB Independence County, AR, Pollution Control
Rev. (AR, P&L), 6.25s, 2021 $ 3,000 $ 2,954,340
AA- Jefferson County, AR, Pollution Control
Rev. (Arkansas Electric Cooperative),
6.125s, 2008 2,000 2,002,640
BBB Jefferson County, AR, Pollution Control
Rev. (Arkansas Electric Cooperative),
6.3s, 2018 1,050 1,045,989
AAA Jonesboro, AR, City Water & Light Plant,
Public Utilities Systems Rev., AMBAC,
5.375s, 2007 1,000 976,700
AAA Jonesboro, AR, City Water & Light Plant,
Public Utilities Systems Rev., AMBAC,
5.25s, 2013 3,210 3,013,066
AAA North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2010 1,000 1,039,430
AAA North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2010 2,000 2,133,420
AAA North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2015 6,000 6,435,960
BBB Pope County, AR, Solid Waste Disposal Rev.
(Arkansas Power & Light Co.), 8s, 2020 1,780 1,971,884
AAA Pope County, AR, Solid Waste Disposal Rev.
(Arkansas Power & Light Co.), 8s, 2021 3,000 3,361,770
A- Puerto Rico Electric Power Authority Rev.,
5s, 2012 500 435,380
AAA West Memphis, AR, Public Utility Systems
Rev., MBIA, 6.6s, 2009 1,250 1,326,613
-----------
$ 26,697,192
---------------------------------------------------------------------------
Water and Sewer Utility Revenue - 13.2%
AAA Arkansas Development Finance Authority,
Water Rev., MBIA, 5s, 2012 $ 1,000 $ 905,880
AAA Arkansas Development Finance Authority,
Water Rev., MBIA, 5s, 2015 3,000 2,680,170
AAA Arkansas Development Finance Authority,
Water Rev., MBIA, 5.4s, 2015 2,500 2,348,550
AAA Beaver Water District, AR, Benton &
Washington Counties, Water Rev., MBIA,
5.75s, 2007 2,000 2,041,780
AAA Beaver Water District, AR, Benton &
Washington Counties, Water Rev., MBIA,
5.85s, 2008 2,000 2,041,560
NR El Dorado, AR, Water Rev., 6s, 2012 1,000 1,011,100
AAA Fort Smith, AR, Water & Sewer, MBIA,
5.7s, 2008 1,450 1,459,933
AAA Fort Smith, AR, Water & Sewer, MBIA,
6s, 2012 2,250 2,286,990
A Puerto Rico Aqueduct & Sewer Authority,
7.875s, 2017 1,000 1,086,750
AAA Russellville, AR, Water Systems Rev.,
AMBAC, 6.25s, 2012 2,365 2,439,947
NR South Sebastian County, AR, Water Users
Assn., 5.95s, 2016 3,175 3,169,951
NR South Sebastian County, AR, Water Users
Assn., 6.15s, 2023 1,000 1,008,080
AA State of Arkansas, Water Resources
Development Authority, 6.375s, 2021 1,000 1,031,020
AAA Texarkana, AR, Public Facilities Board,
Waterworks Facilities Rev., MBIA, 7s, 2007 2,000 2,117,320
-----------
$ 25,629,031
---------------------------------------------------------------------------
Turnpike Revenue - 0.9%
A Puerto Rico Commonwealth, 5.5s, 2019 $ 2,000 $ 1,808,980
---------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.9%
NR Little Rock, AR, Hotel & Restaurant Gross
Receipts Tax, 7.375s, 2015 $ 4,790 $ 5,588,253
---------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 10.2%
AA- Blytheville, AR, Solid Waste Recycling &
Sewerage Treatment Rev. (Nucor Corp.),
6.9s, 2021 $ 5,000 $ 5,192,800
AA- Blytheville, AR, Solid Waste Recycling &
Sewerage Treatment Rev. (Nucor Corp.),
6.375s, 2023 8,945 8,950,367
A- Camden, AR, Environmental, 7.625s, 2018 1,000 1,079,730
AA- Jonesboro, AR, Industrial Development Rev.
(Anheuser-Busch Co.), 6.5s, 2012 3,500 3,661,595
A- Pine Bluff, AR, Solid Waste Disposal Rev.
(International Paper Co.), 5.55s, 2017 1,050 944,034
-----------
$ 19,828,526
---------------------------------------------------------------------------
Universities - 2.4%
NR Henderson State University, Arkadelphia,
AR, 6.6s, 2017 $ 925 $ 946,821
NR University of Arkansas, University Rev.,
7.2s, 2010 2,500 2,708,200
NR University of Arkansas, University Rev.,
6.625s, 2012 1,075 1,113,754
-----------
$ 4,768,775
---------------------------------------------------------------------------
Indexed Securities - 2.6%
A Puerto Rico Public Buildings Authority,
GTD, Public Educational & Health, PSA
Fixed Rate, 5.385s, 2016* $ 2,000 $ 1,743,100
AAA Puerto Rico Telephone Authority Rev., 7-
Year Swap, "M", AMBAC, 4.47s, 2004* 4,000 3,295,280
-----------
$ 5,038,380
---------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $187,600,752) $189,234,002
---------------------------------------------------------------------------
Floating Rate Demand Notes - 1.2%
---------------------------------------------------------------------------
NR Uinta County, WY, Pollution Control Rev.
(Chevron), due 2020 $ 2,000 $ 2,000,000
NR Wake County, NC, Industrial Facilities &
Pollution Control Rev., due 2017 300 300,000
---------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,300,000
---------------------------------------------------------------------------
Short-Term Obligation - 0.3%
---------------------------------------------------------------------------
New York City, NY, Municipal Water Finance
Authority,
due 2022, at Amortized Cost and Value $ 500 $ 500,000
---------------------------------------------------------------------------
Total Investments (Identified Cost, $190,400,752) $192,034,002
Other Assets, Less Liabilities - 1.2% 2,302,092
---------------------------------------------------------------------------
Net Assets - 100.0% $194,336,094
---------------------------------------------------------------------------
*Indexed security (see Note 7).
See notes to financial statements
<PAGE>
Portfolio of Investments - March 31, 1995
MFS CALIFORNIA MUNICIPAL BOND FUND
Municipal Bonds - 97.4%
---------------------------------------------------------------------------
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
---------------------------------------------------------------------------
General Obligation - 10.8%
AAA Metropolitan Water Distribution, Southern
California, 5.5s, 2010 $ 5,000 $ 4,792,150
AAA Metropolitan Water Distribution, Southern
California, 5.5s, 2010 1,000 958,430
AA- Palos Verdes, CA, Library District,
6.7s, 2016 1,250 1,285,337
AA- Santa Monica, CA, Malibu Unified School
District, 5.75s, 2018 1,475 1,405,690
NR State of California, 5.75s, 1996 4,000 4,044,240
A State of California, 10s, 2007 1,055 1,428,618
A State of California, 5.75s, 2023 2,415 2,250,297
AAA State of California, AMBAC, 7.2s, 2008 1,600 1,817,632
AAA State of California, AMBAC, 6.3s, 2010 6,000 6,269,880
AAA State of California, AMBAC, 7s, 2010 2,000 2,253,700
AAA State of California, AMBAC, 5.9s, 2025 2,000 1,931,980
AAA State of California, FGIC, 5.5s, 2015 1,330 1,245,612
AAA Walnut Valley, CA, AMBAC, 6s, 2011 1,600 1,616,128
AAA Walnut Valley, CA, MBIA, 0s, 2007 1,150 563,845
AAA Walnut Valley, CA, MBIA, 0s, 2008 1,125 514,057
AAA Walnut Valley, CA, MBIA, 0s, 2009 1,175 499,387
-----------
$ 32,876,983
---------------------------------------------------------------------------
State and Local Appropriation - 12.2%
AAA Banning, CA, Cetificates of
Participation, Water System Improvement,
8s, 2019 $ 1,000 $ 1,241,110
A- California Public Works Board, Lease
Rev., 6.75s, 2012 3,200 3,293,920
A- California Public Works Board, Lease Rev.
(Department of Corrections), 7.4s, 2010 5,000 5,658,000
NR Fortuna, Parlier & Susanville, CA,
Certificates of Participation, "B",
7.375s, 2017 930 957,807
AAA Grossmont, CA, Union High School
District, Certificates of Participation,
MBIA, 0s, 2006 6,000 3,086,100
AAA Los Angeles, CA, Convention & Exhibition
Center Authority, Certificates of
Participation, AMBAC, 0s, 2005 2,400 1,350,264
AAA Los Angeles County, CA, MBIA, 0s, 2013 3,380 1,083,053
A- Pomona, CA, Public Financing, 6.25s, 2010 4,020 3,971,720
A+ Riverside County, CA, Asset Leasing
Corp., "A", 6.25s, 2019 1,210 1,163,113
AAA Sacramento County, CA, Certificates of
Participation, MBIA, 5.5s, 2010 1,500 1,444,260
A- San Francisco, CA, City & County
Redevelopment Agency, Lease Rev.,
5.5s, 2018 13,000 11,294,920
AAA Visalia, CA, Unified School District,
Certificates of Participation, MBIA,
0s, 2005 4,655 2,581,849
-----------
$ 37,126,116
---------------------------------------------------------------------------
Refunded and Special Obligation - 19.4%
AAA Alhambra, CA, Insured Rev. (Atherton
Baptist Homes), "A", CHFC, 8.875s, 1995 $ 170 $ 174,894
NR California Educational Facilities
Authority Rev. (St. Mary's College),
7.5s, 2000 1,000 1,136,430
A+ California Health Facilities Financing
Authority (AIDS Hospice Foundation),
CHFC, 7.15s, 2000 3,110 3,430,703
NR California Health Facilities Financing
Authority (Brookside Hospital),
8.1s, 1997 1,000 1,098,240
AAA California Health Facilities Financing
Authority (Centinela Hospital Medical),
MBIA, 9.375s, 1995 150 156,086
NR California Health Facilities Financing
Authority (Daughters of Charity Queen
Angel), 9.25s, 1996 300 320,940
AA- California Health Facilities Financing
Authority (Mercy Health System),
9.125s, 1995 500 515,865
AAA California Health Facilities Financing
Authority (Methodist Hospital), CHFC,
9.2s, 1995 675 707,123
AA California Health Facilities Financing
Authority (St. Joseph Health System),
6.9s, 1999 1,000 1,089,810
AA- California Health Facilities Financing
Authority (St. Joseph Hospital),
6.75s, 2001 2,710 2,985,526
A California Health Facilities Financing
Authority (Valley Memorial Hospital),
7.9s, 1997 500 540,735
AAA California Health Facilities Financing
Authority Rev., AMBAC, 7.625s, 1998 1,205 1,335,465
AAA California Public Works Board, Lease Rev.
(University of California Projects),
6.6s, 2002 3,500 3,888,220
AAA Concord, CA, Redevelopment Agency, Tax
Allocation, 8s, 1998 1,810 2,016,449
AAA Concord, CA, Redevelopment Agency, Tax
Allocation (Central Concord), 8s, 1998 370 412,202
AAA Corona, CA, Certificates of Participation
(Corona Community Hospital), 8s, 2005 585 708,938
AAA Culver City, CA, Redevelopment Agency
(Slauson-Sepulveda), AMBAC, "B",
9.25s, 1995 190 199,095
AAA Inglewood, CA, Redevelopment Agency (La
Cienegna Redevelopment Project),
AMBAC, "B", 8.8s, 1995 400 418,152
A- Los Angeles, CA, Community Redevelopment
Agency (Central Business), 8.85s, 1995 225 231,602
AAA Los Angeles, CA, Convention & Exhibition
Center Authority, Certificates of
Participation, 7.375s, 1999 5,000 5,550,750
AAA Los Angeles, CA, Convention & Exhibition
Center Authority, Certificates of
Participation, 9s, 2005 1,900 2,479,044
AA Los Angeles, CA, Department of Water and
Power, Electric Plant Rev., 7.9s, 1998 1,000 1,104,660
A Los Angeles, CA, Wastewater System Rev.,
6.8s, 1999 500 544,405
AAA Los Angeles, CA, Wastewater System Rev.,
AMBAC, "B", 8.125s, 1997 2,500 2,753,500
AAA M-S-R Public Power Agency, CA (San Juan
Project Rev.), "B", 9.125s, 1995 100 103,187
AAA Northern California Power Agency, Public
Power Rev. (Hydro-Electric), 8s, 1998 290 318,089
AAA Oakland, CA, Redevelopment Agency,
Certificates of Participation,
9.25s, 1995 455 471,312
AAA Oakland, CA, Redevelopment Agency,
Certificates of Participation, AMBAC,
8.125s, 1997 750 813,563
AAA Ontario, CA, Redevelopment Authority, Tax
Allocation (Ontario Redevelopment),
FGIC, 8.75s, 1995 200 208,608
A- Pomona, CA, Public Financing Authority
Rev., "J", 7.875s, 2000 7,155 7,728,831
NR Pomona, CA, Single Family Mortgage Rev.,
FNMA, 7.375s, 2010 2,000 2,246,600
AAA Pomona, CA, Single Family Mortgage Rev.,
GNMA, 7.5s, 2000 2,000 2,357,260
AAA Puerto Rico Highway and Special
Obligation and Transport Authority,
Highway Rev., 6.5s, 2002 2,750 3,035,203
AAA Riverside, CA, Hospital Rev. (Riverside
Community Hospital), "A", 9.3s, 1995 300 314,445
AAA Sacramento, CA, Municipal Utility
District, Electric Rev., "W",
7.875s, 1998 2,500 2,786,300
AAA San Bernardino County, CA, Certificates
of Participation, 6.25s, 2001 2,000 2,133,800
AAA San Francisco, CA, Bay Area Rapid Transit
District, Sales Tax Rev., 9s, 1995 550 572,797
A Tracy, CA, Hospital Rev., Certificates of
Participation (Tracy Community),
8.625s, 1997 2,000 2,168,320
AAA Whittier, CA, Health Facilities Rev.
(Presbyterian Inter-Community Hospital),
MBIA, 9.5s, 1995 150 154,255
-----------
$ 59,211,404
---------------------------------------------------------------------------
Single Family Housing Revenue - 1.7%
AA- California Housing Finance Agency,
7.75s, 2010 $ 1,210 $ 1,280,119
AA- California Housing Finance Agency,
8.1s, 2016 2,500 2,597,800
AA- California Housing Finance Agency,
7.875s, 2031 205 217,497
A Riverside County, CA, 11.25s, 2014 4,014 509,029
AAA San Bernardino County, CA, Single Family
Mortgage Rev., GNMA, 7.65s, 2023 225 237,676
AAA Santa Ana, CA, Home Mortgage Rev., "A",
FGIC, 8.875s, 2017 15 15,864
AAA Southern California Home Finance
Authority, Single Family Mortgage Rev.,
GNMA, 7.625s, 2023 275 289,682
-----------
$ 5,147,667
---------------------------------------------------------------------------
Multi-Family Housing Revenue - 7.1%
A+ California Housing Finance Agency (Multi-
Unit Rental Housing), 6.7s, 2015 $ 2,750 $ 2,786,520
NR Escondido, CA, Community Development
Authority (Las Villas del Norte),
8.875s, 2005 4,495 4,434,273
AAA Palmdale, CA, Multi-Family Housing Rev.,
7.375s, 2024 1,000 1,071,890
BBB Thousand Oaks, CA, Redevelopment Agency
(Shadow Hills Project), 7s, 2021 8,900 9,108,616
A+ Yolo County, CA, Housing Authority
Mortgage Rev. (Walnut Park Apartments),
7.2s, 2033 4,150 4,332,724
-----------
$ 21,734,023
---------------------------------------------------------------------------
Insured Health Care Revenue - 6.3%
A Apple Valley, CA, Hospital Rev. (St.
Mary's Hospital), CHFC, 6.75s, 2012 $ 4,880 $ 4,958,763
A California Health Facilities Financing
Authority (American Baptist Homes West),
CHFC, 7.65s, 2014 4,420 4,643,519
AAA California Health Facilities Financing
Authority (Sutter Health), MBIA,
7s, 2009 1,000 1,053,720
AAA California Health Facilities Financing
Authority (Unihealth America), AMBAC,
7.625s, 2015 45 48,353
A California Statewide Communities
Development Corp., Certificates of
Participation, 6.75s, 2021 3,000 3,029,130
A+ California Statewide Communities
Development Authority, Certificates of
Participation, CHFC, 0s, 2007 6,645 2,859,543
A+ California Statewide Communities
Development Corp., Certificates of
Participation, CHFC, 0s, 2008 6,345 2,533,495
-----------
$ 19,126,523
---------------------------------------------------------------------------
Health Care Revenue - 7.4%
A California Health Facilities Financing
Authority (Good Samaritan), 6.6s, 2000 $ 1,300 $ 1,358,981
A California Health Facilities Financing
Authority (Good Samaritan), 6.65s, 2001 500 523,615
AA California Health Facilities Financing
Authority (Kaiser Permanente), 7s, 2018 1,000 1,032,660
AA California Statewide (St. Joseph's),
6.625s, 2021 4,205 4,295,996
NR Hemet Valley, CA, Hospital District,
8.25s, 2005 5,000 5,192,350
BBB Loma Linda, CA (Loma Linda University
Medical Center, Project B), 9s, 2012 460 482,765
AA Riverside, CA, Kaiser Permanente Rev.,
9s, 2015 750 783,338
A- San Joaquin County, CA, Certificates of
Participation (General Hospital),
6.625s, 2020 8,235 8,178,590
A- Stockton, CA, Hospital Rev. (St. Joseph
Hospital), "B", 9.4s, 2008 650 683,820
-----------
$ 22,532,115
---------------------------------------------------------------------------
Electric and Gas Utility Revenue - 4.1%
AA Los Angeles, CA, Department of Water and
Power, Electric Plant Rev., 9.2s, 2025 $ 190 $ 200,399
AA Los Angeles, CA, Department of Water and
Power, Electric Plant Rev., 8s, 2026 1,000 1,056,960
AA Los Angeles, CA, Department of Water and
Power, Electric Plant Rev., 7.25s, 2030 1,000 1,114,910
AA Los Angeles, CA, Department of Water and
Power, Electric Plant Rev., 7.1s, 2031 1,050 1,165,353
A+ Modesto, CA, Irrigation District,
Certificates of Participation (Geyser),
5s, 2017 4,300 3,582,115
A- Northern California Public Power
Refunding (Geothermal), "93A",
5.85s, 2010 1,000 954,970
NR Southern California Public Power
Authority (Southern Transmission
Project), 0s, 2005 8,000 4,482,000
-----------
$ 12,556,707
---------------------------------------------------------------------------
Water and Sewer Utility Revenue - 12.2%
AA California Department of Water Resources,
Central Valley Project Rev., 7s, 2012 $ 1,495 $ 1,666,551
AA California Department of Water Resources,
Central Valley Project Rev., 5.5s, 2022 3,510 3,190,836
AAA Contra Costa, CA, Water Rev., MBIA,
5.5s, 2019 4,000 3,687,080
AAA Fairfield-Suisun, CA, Sewer District
Rev., MBIA, 0s, 2006 2,080 1,112,904
AA Long Beach, CA, Water Rev., 6.125s, 2019 3,000 3,011,640
AAA Los Angeles, CA, Wastewater Refunding,
"93", MBIA, 5.7s, 2020 7,650 7,239,348
AAA Los Angeles, CA, Wastewater Refunding,
"93A", MBIA, 5.8s, 2021 3,000 2,875,290
AA Metropolitan Water District, Linked
Savers, RIBS, 5.75s, 2018 10,000 9,505,500
BBB+ Mojave, CA, Water Agency (Morongo Basin),
6.6s, 2022 1,400 1,391,096
AAA Redding, CA, Wastewater Rev., FGIC,
5.5s, 2018 1,500 1,393,155
AA San Francisco, CA, 0s, 2019 2,100 440,958
AAA West Sacramento, CA, Financing Authority
Rev., FGIC, 5.5s, 2024 1,685 1,543,308
-----------
$ 37,057,666
---------------------------------------------------------------------------
Airport and Port Revenue - 1.3%
AAA San Francisco, CA, City & County Airports
Commission, International Airport,
FGIC, 6.5s, 2019 $ 4,000 $ 4,070,560
---------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.6%
AAA Los Angeles County, CA, MBIA,
5.625s, 2018 $ 2,500 $ 2,347,175
AAA Los Angeles County, CA, MBIA,
5.75s, 2018 3,620 3,476,141
AAA South Orange County, CA, Financing
Authority, Special Tax Rev., MBIA,
6s, 2018 2,250 2,216,408
-----------
$ 8,039,724
---------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 2.0%
NR California Pollution Control Financing
Authority (Frito-Lay, Inc.),
6.375s, 2004 $ 1,025 $ 1,054,725
A California Pollution Control Financing
Authority (Pacific Gas & Electric Co.),
6.625s, 2009 1,000 1,035,920
A California Pollution Control Financing
Authority (Pacific Gas & Electric Co.),
5.85s, 2023 2,000 1,851,200
NR California Pollution Control Financing
Authority (U.S. Borax & Chemical Corp.),
8.75s, 2010 500 505,855
A+ San Diego, CA, Industrial Development
Rev. (San Diego Gas & Electric),
9.25s, 2020 1,500 1,550,085
-----------
$ 5,997,785
---------------------------------------------------------------------------
Universities - 1.8%
A- California State University Housing
System Rev., 6.75s, 2010 $ 1,705 $ 1,771,222
A- California State University Housing
System Rev., 6.75s, 2011 3,570 3,697,735
-----------
$ 5,468,957
---------------------------------------------------------------------------
Inverse Floater - 1.0%
AAA Sacramento, CA, Municipal Utility
District, Hospital Rev. (Desert
Hospital), FGIC, PSA Fixed Rate,
8.86s, 2020(S) $ 3,000 $ 3,128,220
---------------------------------------------------------------------------
Indexed Security - 0.2%
A Puerto Rico Public Buildings Authority,
GTD, Public Educational & Health, PSA
Fixed Rate, 5.385s, 2016* $ 1,000 $ 871,550
---------------------------------------------------------------------------
Other - 2.1%
AAA California Public Capital Improvements
Financing Authority Rev., BIGI,
8.1s, 2018 $ 1,920 $ 2,035,373
AAA Santa Margarita/Dana Point Authority
Rev., MBIA, 5.75s, 2020 2,575 2,452,842
AAA South Coast Air Quality Management
District, AMBAC, 0s, 2005 3,480 1,962,093
-----------
$ 6,450,308
---------------------------------------------------------------------------
Special Assessment District - 5.2%
AAA Anaheim, CA, Public Financing Authority
(Redevelopment Project Alpha), MBIA,
0s, 2005 $ 3,210 $ 1,776,703
AAA Brea, CA, Public Finance Authority, MBIA,
0s, 2005 2,235 1,260,138
AAA Brea, CA, Public Finance Authority, MBIA,
0s, 2006 3,415 1,801,583
AAA Concord, CA, Redevelopment Agency, Tax
Allocation, BIGI, 8s, 2018 40 44,079
AAA Pittsburgh, CA, Redevelopmental Agency,
FGIC, 5.5s, 2015 2,250 2,100,870
AAA San Marcos, CA, Publishing Facilities
Authority, CAP GTY, 5.5s, 2023 9,600 8,743,009
-----------
$ 15,726,382
---------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $287,388,608) $297,122,690
---------------------------------------------------------------------------
Floating Rate Demand Notes - 1.1%
---------------------------------------------------------------------------
A- California Pollution Control Financing
Authority (Shell Oil), due 2000 $ 1,100 $ 1,100,000
A- California Pollution Control Financing
Authority (Shell Oil), due 2008 100 100,000
A- California Pollution Control Financing
Authority (Shell Oil), due 2010 300 300,000
A- California Pollution Control Financing
Authority (Shell Oil), due 2011 200 200,000
A- California Pollution Control Financing
Authority (Shell Oil), DTC, due 2006 500 500,000
A- California Pollution Control Financing
Authority (Shell Oil), DTC, due 2007 100 100,000
AAA State of California, Health Facility (St.
Joseph Health System), due 2013 1,200 1,200,000
----------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 3,500,000
----------------------------------------------------------------------------
Call Option Purchased - 0.1%
---------------------------------------------------------------------------
Principal Amount
Issuer/Expiration Date/Strike Price of Contracts
---------------------------------------------------------------------------
State of New Jersey, GOB, "D"/February 2003/102
(Premium Paid, $255,000) $ 2,000 $ 152,300
---------------------------------------------------------------------------
Total Investments (Identified Cost, $291,143,608) $300,774,990
Other Assets, Less Liabilities - 1.4% 4,300,956
---------------------------------------------------------------------------
Net Assets - 100.0% $305,075,946
---------------------------------------------------------------------------
*Indexed security (see Note 7).
(S)Inverse floating rate security.
See notes to financial statements
<PAGE>
Portfolio of Investments - March 31, 1995
MFS LOUISIANA MUNICIPAL BOND FUND
Municipal Bonds - 90.1%
---------------------------------------------------------------------------
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
---------------------------------------------------------------------------
General Obligation - 12.0%
AAA Monroe, LA, Special School District, MBIA,
5.75s, 2012 $ 500 $ 486,175
AAA New Orleans, LA, AMBAC, 0s, 2008 1,800 824,634
AAA New Orleans, LA, AMBAC, 0s, 2016 1,000 267,790
AAA State of Louisiana, AMBAC, 6.1s, 2011 250 254,305
AAA State of Louisiana, AMBAC, 6.5s, 2011 250 263,488
AAA State of Louisiana, MBIA, 5.625s, 2010 250 246,010
----------
$ 2,342,402
---------------------------------------------------------------------------
State and Local Appropriation - 3.3%
BBB Natchitoches Parish, LA, 7.2s, 2015 $ 650 $ 645,684
---------------------------------------------------------------------------
Refunded and Special Obligation - 1.4%
A Puerto Rico Public Buildings Authority,
6.875s, 2002 $ 250 $ 281,567
---------------------------------------------------------------------------
Single Family Housing Revenue - 4.5%
NR East Baton Rouge, LA, FNMA, GNMA,
6.8s, 2028 $ 500 $ 506,700
NR Jefferson Parish, LA, Home Mortgage
Authority, Single Family, GNMA, 6s, 2024 400 367,896
----------
$ 874,596
---------------------------------------------------------------------------
Insured Health Care Revenue - 11.7%
AAA Jefferson Parish, LA, Hospital Service
District No. 2, Hospital Rev., MBIA,
5.75s, 2016 $ 500 $ 477,495
AAA Louisiana Public Facilities Authority Rev.
(Medical Center of Louisiana), Connie Lee,
6.25s, 2010 400 406,440
AAA St. Tammany Parish, LA, Hospital Rev.,
Connie Lee, 6.125s, 2009 500 501,205
AAA St. Tammany Parish, LA, Hospital Rev.,
Connie Lee, 6.25s, 2014 500 502,215
AAA Tangipahoa Parish, LA, AMBAC,
6.125s, 2014 400 397,468
----------
$ 2,284,823
---------------------------------------------------------------------------
Health Care Revenue - 7.3%
A- St. Tammany Parish, LA, Hospital Service
District #1, Hospital Rev., 6.5s, 2017 $1,000 $ 952,220
NR Westside Habilitation Center, Cheneyville,
LA, 8.375s, 2013 500 478,185
----------
$ 1,430,405
---------------------------------------------------------------------------
Electric and Gas Utility Revenue - 8.9%
AAA Alexandria, LA, Utilities Rev., FGIC,
5.3s, 2012 $ 750 $ 691,170
BB+ Calcasieu Parish, Inc., 6.75s, 2012 800 770,968
AAA Natchitoches, LA, Utilities Rev., AMBAC,
5.375s, 2013 300 283,551
----------
$ 1,745,689
---------------------------------------------------------------------------
Water and Sewer Utility Revenue - 6.3%
AA- Louisiana Public Facilities Authority Rev.
(Baton Rouge Water Works Co.), 6.4s, 2010 $ 500 $ 511,825
AAA Terrebonne Parish, LA, Waterworks Rev.,
FGIC, 5.95s, 2012 730 723,554
----------
$ 1,235,379
---------------------------------------------------------------------------
Turnpike Revenue - 7.1%
AAA Greater New Orleans, LA, Expressway
Commission, Expressway Rev., MBIA,
5.5s, 2012 $ 400 $ 378,776
AAA Greater New Orleans, LA, MBIA,
6s, 2016 500 494,575
A- Mississippi River Bridge Authority,
6.75s, 2012 500 522,635
----------
$ 1,395,986
---------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.6%
AAA Louisiana Stadium & Exposition District,
FGIC, 5.75s, 2009 $ 400 $ 395,628
AAA Louisiana Stadium & Exposition District,
FGIC, 5.9s, 2012 240 237,624
AAA Regional Transit Authority, LA, Sales Tax
Rev., FGIC, 0s, 2012 800 265,768
----------
$ 899,020
---------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 15.1%
A- De Soto Parish, LA, Environmental,
7.7s, 2018 $ 750 $ 827,513
A Natchitoches Parish, LA, Solid Waste
Disposal Rev. (Williamette Industries),
5.875s, 2023 830 755,798
NR Port New Orleans, LA, 8.5s, 2014 500 522,140
BBB St. Charles Parish, LA, Environmental
Improvement Rev. (Louisiana Power),
6.875s, 2024 250 251,575
AAA St. Charles Parish, LA, Environmental
Improvement Rev. (Louisiana Power),
AMBAC, 6.875s, 2024 330 341,962
BB+ West Feliciana Parish, LA, 7.7s, 2014 250 256,700
----------
$ 2,955,688
---------------------------------------------------------------------------
Universities - 4.9%
AAA Louisiana State University & Agriculture,
FGIC, 5.75s, 2014 $1,000 $ 961,510
---------------------------------------------------------------------------
Other - 3.0%
AAA State of Louisiana, Public Finance
Authority (Our Lady of the Lake), FSA,
5.758s, 2021 $ 600 $ 577,387
---------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $17,362,299) $17,630,136
---------------------------------------------------------------------------
Floating Rate Demand Note - 1.5%
---------------------------------------------------------------------------
NR Uinta County, WY, Pollution Control Rev.
(Chevron), due 2020, at Identified Cost $ 300 $ 300,000
---------------------------------------------------------------------------
Total Investments (Identified Cost, $17,662,299) $17,930,136
Other Assets, Less Liabilities - 8.4% 1,642,165
---------------------------------------------------------------------------
Net Assets - 100.0% $19,572,301
---------------------------------------------------------------------------
See notes to financial statements
<PAGE>
Portfolio of Investments - March 31, 1995
MFS MISSISSIPPI MUNICIPAL BOND FUND
Municipal Bonds - 98.5%
---------------------------------------------------------------------------
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
---------------------------------------------------------------------------
General Obligation - 14.8%
NR Adams County, MS, 6.2s, 2011 $ 525 $ 526,423
NR Adams County, MS, 6.2s, 2012 560 561,518
NR Gulfport, MS, 5s, 2011 1,085 991,050
AAA Hinds County, MS, MBIA, 6.25s, 2010 1,660 1,724,906
AAA Hinds County, MS, MBIA, 6.25s, 2011 1,285 1,330,630
BBB+ Jackson County, MS, Road Improvement,
6.5s, 2008 425 448,175
AAA Madison County, MS, School District,
AMBAC, 5s, 2012 1,155 1,034,568
AA- State of Mississippi, 5.1s, 2012 750 687,698
AA- State of Mississippi, 5.75s, 2013 3,895 3,846,585
AA- State of Mississippi, 6.75s, 2014 1,800 1,922,580
----------
$13,074,133
---------------------------------------------------------------------------
State and Local Appropriation - 15.9%
NR Hinds Community College, MS, District M
Conference and Training Center, 6.5s, 2014 $1,320 $ 1,302,484
NR Hinds County, MS, School District,
Certificates of Participation (Utica
Project), 7.25s, 2012 1,000 1,065,070
AAA Medical Center Educational Building Corp.,
MS (University of Mississippi Medical
Center), MBIA, 5.65s, 2009 2,000 1,925,940
AAA Medical Center Educational Building Corp.,
MS (University of Mississippi Medical
Center), MBIA, 5.9s, 2023 5,000 4,748,500
NR State of Mississippi, Certificates of
Participation (Rehabilitation Services),
5.9s, 2008 1,660 1,609,718
NR State of Mississippi, Certificates of
Participation (Rehabilitation Services),
6.1s, 2014 3,475 3,371,827
----------
$14,023,539
---------------------------------------------------------------------------
Refunded and Special Obligation - 5.6%
AAA Commonwealth of Puerto Rico, Public
Improvement, 6.8s, 2002 $1,500 $ 1,682,640
AAA Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.625s, 2002 100 111,123
NR State of Mississippi, 6s, 2002 3,000 3,159,930
----------
$ 4,953,693
---------------------------------------------------------------------------
Single Family Housing Revenue - 2.9%
NR Mississippi Home Corp. Single Family Rev.,
GNMA, 6.5s, 2024 $2,650 $ 2,548,770
---------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.3%
AAA Gulfport, MS, Community, FNMA, Oakview,
7.4s, 2025 $1,755 $ 1,849,998
AAA Jackson, MS, Elderly Housing Corp.,
Mortgage Rev. (Delhaven Manor), "C",
7.375s, 2024 2,000 2,038,500
----------
$ 3,888,498
---------------------------------------------------------------------------
Insured Health Care Revenue - 18.8%
AAA Gulfport, MS, Hospital Facilities, MBIA,
5.8s, 2007 $1,000 $ 992,590
AAA Gulfport, MS, Hospital Facilities, MBIA,
6.125s, 2015 2,500 2,503,625
AAA Gulfport, MS, Hospital Facilities, MBIA,
6.2s, 2018 1,000 1,003,450
AAA Hinds County, MS, Rev. (Methodist Hospital
& Rehabilitation Center), AMBAC,
5.6s, 2012 3,055 2,940,560
AAA Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist), 6.5s, 2010 1,190 1,235,898
AAA Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist), 6s, 2013 1,000 982,470
AAA Mississippi Hospital Equipment & Facilities
Authority Rev. (North Mississippi Health
Services), AMBAC, 5.25s, 2013 4,865 4,418,977
AAA Mississippi Hospital Equipment & Facilities
Authority Rev. (Rush Medical Foundation),
Connie Lee, 6.7s, 2018 2,500 2,568,000
----------
$16,645,570
---------------------------------------------------------------------------
Health Care Revenue - 4.5%
NR Adams County, MS, Hospital Rev. (Jefferson
Davis Memorial Hospital), 8s, 2016 $1,000 $ 1,048,250
NR Mississippi Hospital Equipment & Facilities
Authority Rev., 5.7s, 2023 1,000 876,450
NR Mississippi Hospital Equipment & Facilities
Authority Rev. (Magnolia Hospital),
7.375s, 2021 1,500 1,396,800
NR Mississippi Hospital Equipment & Facilities
Authority Rev. (Rankin Medical),
5.6s, 2019 735 646,932
----------
$ 3,968,432
---------------------------------------------------------------------------
Water and Sewer Utility Revenue - 12.5%
AAA Clarksdale, MS, Sewer & Wastewater
Treatment System Rev., MBIA, 6.1s, 2012 $1,885 $ 1,886,640
AAA Columbus, MS, Water & Sewer Rev., MBIA,
6.5s, 2013 1,000 1,047,780
AAA Gautier, MS, Utility District, Utility
Systems Rev., FGIC, 6.375s, 2012 1,500 1,537,395
AAA Gautier, MS, Utility District, Utility
Systems Rev., FGIC, 6.375s, 2019 1,300 1,323,439
AAA Harrison County, MS, Wastewater Management
District, Wastewater Treatment, FGIC,
6.5s, 2006 1,375 1,468,665
AAA Jackson, MS, Water & Sewer Systems Rev.,
MBIA, 5.4s, 2009 1,250 1,201,175
AAA Meridian, MS, Water & Sewer Rev.,
AMBAC, 6s, 2010 1,500 1,501,605
AAA Meridian, MS, Water & Sewer Rev.,
AMBAC, 6.2s, 2012 650 658,561
AAA Meridian, MS, Water & Sewer Rev.,
AMBAC, 6.2s, 2013 400 405,268
----------
$11,030,528
---------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 13.5%
A+ Jackson County, MS, Pollution Control Rev.
(Gulf Power Co.), 7.125s, 2021 $2,000 $ 2,044,740
A- Jackson County, MS, Solid Waste Disposal
Facilities Rev. (International Paper),
5.55s, 2017 1,300 1,161,693
A Lowndes County, MS, Solid Waste Disposal &
Pollution Control Rev. (Weyerhaeuser),
6.8s, 2022 4,250 4,519,068
BBB+ Mississippi Business Finance Corp. (Jackson
Municipal Airport/Airborne), 7.15s, 2007 985 1,015,850
A- Warren County, MS, Pollution Control Rev.
(International Paper), 6.6s, 2019 1,000 999,040
NR Warren County, MS, Pollution Control Rev.
(Mississippi Power & Light), 7s, 2022 1,000 1,011,230
NR Washington County, MS, Pollution Control
Rev. (Mississippi Power & Light), 7s, 2022 1,230 1,230,627
----------
$11,982,248
---------------------------------------------------------------------------
Indexed Security - 1.0%
A Puerto Rico Public Buildings Authority,
GTD, Public Educational & Health, PSA
Fixed Rate, 5.385s, 2016* $1,000 $ 871,550
---------------------------------------------------------------------------
Other - 4.7%
NR Jackson, MS, Redevelopment Authority, Urban
Renewal, 5.5s, 2006 $ 345 $ 331,124
NR Jackson, MS, Redevelopment Authority, Urban
Renewal, 5.625s, 2007 325 311,925
A Puerto Rico Highway & Transportation
Authority Rev., 6.625s, 2018 3,400 3,493,330
----------
$ 4,136,379
---------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $87,018,969) $87,123,340
---------------------------------------------------------------------------
Floating Rate Demand Notes - 0.9%
---------------------------------------------------------------------------
NR Jackson County, MS, Pollution Control Rev.
(Chevron), due 2016 $ 500 $ 500,000
NR Jackson County, MS, Pollution Control Rev.
(Chevron), due 2023 200 200,000
NR Uinta County, WY, Pollution Control Rev.
(Chevron), due 2020 100 100,000
---------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 800,000
---------------------------------------------------------------------------
Total Investments (Identified Cost, $87,818,969) $87,923,340
Other Assets, Less Liabilities - 0.6% 538,547
---------------------------------------------------------------------------
Net Assets - 100.0% $88,461,887
---------------------------------------------------------------------------
*Indexed security (see Note 7).
See notes to financial statements
<PAGE>
Portfolio of Investments - March 31, 1995
MFS TENNESSEE MUNICIPAL BOND FUND
Municipal Bonds - 96.8%
---------------------------------------------------------------------------
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
---------------------------------------------------------------------------
General Obligation - 7.4%
A+ Chattanooga, TN, Public Improvement,
5.75s, 2017 $ 1,000 $ 996,160
AA Metropolitan Government of Nashville &
Davidson County, TN, 6.125s, 2014 1,000 1,014,350
AA Metropolitan Government of Nashville &
Davidson County, TN, 6.125s, 2019 3,255 3,290,284
AA+ Shelby County, TN, 5.1s, 2015 1,000 896,010
AA+ Shelby County, TN, 5.125s, 2015 1,000 898,900
AA+ Shelby County, TN, 5.125s, 2018 1,115 987,857
NR Territory of Virgin Islands, 7.75s, 2006 440 483,305
NR Williamson County, TN, Rural School
District, 5.8s, 2013 920 908,693
-----------
$ 9,475,559
---------------------------------------------------------------------------
State and Local Appropriation - 0.8%
AAA Gatlinburg, TN, Public Building Authority
(Gatlinburg Convention Center), AMBAC,
6.9s, 2012 $ 1,000 $ 1,062,150
---------------------------------------------------------------------------
Refunded and Special Obligation - 16.5%
AAA Bristol, TN, Health & Educational
Facilities Board Rev. (Bristol Memorial),
FGIC, 7s, 2001 $ 500 $ 556,630
AAA Bristol, TN, Health & Educational
Facilities Board Rev. (Bristol Memorial),
FGIC, 7s, 2001 250 278,315
AAA Gladeville, TN, Utility District,
Waterworks Rev., FGIC, 7.4s, 2000 500 556,925
AAA Knox County, TN, Health, Educational &
Housing Facilities Board (Fort Sanders),
MBIA, 8s, 2008 2,000 2,144,720
AAA Knox County, TN, Health, Educational &
Housing Facilities Board (Mercy Health),
AMBAC, 7.6s, 1999 3,500 3,885,105
NR Knox County, TN, Industrial Development
Board, 0s, 2016 8,325 1,890,275
NR Memphis, TN, Electric Systems Rev.,
6.75s, 2000 1,500 1,626,405
AAA Memphis-Shelby County, TN, Airport
Authority, MBIA, 8s, 2008 3,500 3,802,435
NR Mt. Juliet, TN, Public Building Authority
(Poplar Grove), 8.375s, 1999 1,430 1,620,390
NR New Tazewell, TN, Health, Educational &
Housing Facilities Board (Lincoln),
7.25s, 1997 2,000 2,131,960
AAA Puerto Rico Highway & Transportation
Authority Rev., 8.125s, 1998 670 751,050
AA+ Shelby County, TN, 6.5s, 1999 1,120 1,199,318
NR Wilson County, TN, Water & Wastewater
Authority, Waterworks Rev., 8s, 1999 500 561,140
-----------
$ 21,004,668
---------------------------------------------------------------------------
Single Family Housing Revenue - 12.2%
A Shelby County, TN, Single Family Mortgage
Rev., FHA, 0s, 2015 $10,000 $ 1,387,100
A+ Tennessee Housing Development Agency,
7.4s, 2016 425 443,560
A+ Tennessee Housing Development Agency,
8.25s, 2020 1,410 1,480,965
A+ Tennessee Housing Development Agency,
8.125s, 2021 8,985 9,390,763
A+ Tennessee Housing Development Agency,
7.65s, 2022 1,000 1,046,410
A+ Tennessee Housing Development Agency,
7.375s, 2023 1,000 1,046,620
A+ Tennessee Housing Development Agency,
7.125s, 2026 800 822,912
-----------
$ 15,618,330
---------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.7%
AAA Franklin, TN, Industrial Development Rev.,
FHA, 6.75s, 2027 $ 1,000 $ 1,015,640
NR Jackson, TN, Health, Education & Housing
Facilities Board, FHA, 7.1s, 2028 1,610 1,665,593
AAA Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational,
FHA, 7.25s, 2032 500 515,730
NR Metropolitan Government of Nashville &
Davidson County, TN, Industrial, FHA,
6.95s, 2026 1,000 1,030,610
A Metropolitan Government of Nashville &
Davidson County, TN, Industrial, FHA,
7.5s, 2029 695 732,405
A Metropolitan Government of Nashville &
Davidson County, TN, Industrial, FHA,
7.7s, 2029 1,000 1,054,450
-----------
$ 6,014,428
---------------------------------------------------------------------------
Insured Health Care Revenue - 9.4%
AAA Bristol, TN, Health & Educational
Facilities Board Rev. (Bristol Memorial),
FHA, 6.75s, 2010 $ 1,265 $ 1,375,156
AAA Bristol, TN, Health & Educational
Facilities (Bristol Memorial),
FHA, 8.87s, 2021 1,000 1,005,160
AAA Chattanooga-Hamilton County, TN, Hospital
Authority, FSA, 5.5s, 2013 2,000 1,880,300
AAA Johnson City, TN, Health Educational
Facilities Authority (Medical Center),
MBIA, OID, 5s, 2013 1,000 885,660
AAA Johnson City, TN, Health Educational
Facilities Authority, MBIA, 5.25s, 2016 2,625 2,363,550
AAA Knox County, TN, Health, Educational &
Housing, MBIA, 5.75s, 2011 1,500 1,484,190
AAA Knox County, TN, Health, Educational &
Housing Facilities Board, MBIA,
5.25s, 2023 2,375 2,077,626
AAA Shelby, TN, Health Educational & Finance
Authority Housing (Lebonhr), MBIA,
5.5s, 2019 1,000 920,690
-----------
$ 11,992,332
---------------------------------------------------------------------------
Health Care Revenue - 4.6%
NR Clarksville, TN, Hospital Rev. (Clarksville
Memorial Hospital), 6.375s, 2018 $ 1,000 $ 942,520
A- Cookeville, TN, Industrial Development
Board, Hospital Rev. (Cookeville General),
5.75s, 2010 2,000 1,785,240
NR Knox County, TN, Health, Educational &
Housing Facilities Board (Baptist East),
8.5s, 2004 1,410 1,482,107
NR Knox County, TN, Health, Educational &
Housing Facilities Board (Baptist East),
8.6s, 2016 710 743,051
BBB + Knox County, TN, Health, Educational &
Housing Facilities Board (East Tennessee
Children's), 6.5s, 2012 1,000 967,060
-----------
$ 5,919,978
---------------------------------------------------------------------------
Electric and Gas Utility Revenue - 0.8%
AA Knoxville, TN, Gas, 5.2s, 2011 $ 1,060 $ 962,363
---------------------------------------------------------------------------
Water and Sewer Utility Revenue - 19.6%
AA Memphis, TN, Sanitation Sewer & Water,
5.75s, 2014 $ 1,500 $ 1,470,540
AAA Metropolitan Government of Nashville &
Davidson County, TN, Water & Sewer Rev.,
FHA, 6.5s, 2010 1,000 1,074,550
AAA Metropolitan Government of Nashville &
Davidson County, TN, Water & Sewer Rev.,
FHA, 5.2s, 2013 2,000 1,838,440
AAA Metropolitan Government of Nashville &
Davidson County, TN, Water & Sewer Rev.,
FHA, 5.1s, 2016 3,585 3,200,258
NR Mt. Juliet, TN, Public Building Authority
(Cumberland), 7.55s, 2024 2,065 2,205,441
AAA Mt. Juliet, TN, Public Building Authority
(Hermitage), MBIA, 7.5s, 2009 300 322,344
AAA Mt. Juliet, TN, Public Building Authority
(Madison), MBIA, 7.7s, 2007 1,100 1,309,924
AAA Mt. Juliet, TN, Public Building Authority
(Madison), MBIA, 7.8s, 2019 3,500 4,074,000
NR Mt. Juliet, TN, Public Building Authority
(Milcroft), 7.55s, 2024 1,225 1,308,312
NR Mt. Juliet, TN, Public Building Authority
(New Market), 8.375s, 2024 570 614,859
NR Mt. Juliet, TN, Public Building Authority
(Tipton), 7.5s, 2004 380 409,796
NR Poplar Grove, TN, Utility District,
Waterworks Rev., 6.375s, 2011 500 507,040
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2002 1,315 877,697
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2003 1,045 656,124
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2004 1,920 1,131,782
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2005 1,920 1,060,512
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2006 1,920 991,776
AAA West Knox Utility District, Knox County,
TN, Water & Sewer Rev., MBIA, 0s, 2007 1,920 925,690
NR Wilson County, TN, Water & Wastewater
Authority, 6s, 2014 1,000 966,870
-----------
$ 24,945,955
---------------------------------------------------------------------------
Turnpike Revenue - 0.7%
A Puerto Rico Highway & Transportation
Authority, Highway Rev., 5.5s, 2015 $ 1,000 $ 922,890
---------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.8%
A- Tennessee Local Development Authority Rev.
(Community Provider), 7s, 2021 $ 1,000 $ 1,049,590
---------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 14.3%
BBB Bristol, TN, Industrial Development (K-
Mart), 7.5s, 2008 $ 1,105 $ 1,167,421
AA Humphreys County, TN, Certificates of
Participation (DuPont), 6.7s, 2024 1,750 1,799,280
NR Knox County, TN, Industrial Development
Board (Kroger Co.), 8.1s, 2003 2,000 2,189,600
NR Lawrenceburg, TN, Industrial Development
Board (Tridon, Inc.), 9.625s, 2006 1,000 1,013,240
BBB + Maury County, TN, Industrial Development
Pollution Control Rev. (Saturn Corp.),
6.5s, 2024 1,500 1,463,445
BBB - McMinn County, TN, Industrial Development
Board, Pollution Control Rev. (Bowater),
7.625s, 2016 2,000 2,114,400
BBB Memphis-Shelby County, TN, Airport
Authority (Federal Express Corp.),
7.875s, 2009 2,755 2,983,334
BBB Memphis-Shelby County, TN, Airport
Authority (Federal Express Corp.),
6.2s, 2014 1,000 954,150
NR Metropolitan Government of Nashville &
Davidson County, TN, IDR (Wilson
Sporting), 7.75s, 2014 1,000 1,098,810
BB+ Metropolitan Nashville Airport Authority
(American Airlines, Inc.), 9.875s, 2005 2,500 2,598,000
A- Puerto Rico Industrial, Medical &
Environmental Pollution Control
Facilities, Finance Authority Rev. (Baxter
Travenol Laboratories), 8s, 2012 750 829,778
-----------
$ 18,211,458
---------------------------------------------------------------------------
Universities - 1.5%
AA Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board (Vanderbilt
University), 7.625s, 2016 $ 1,000 $ 1,071,700
AA Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board (Vanderbilt
University), 5.2s, 2018 1,000 887,630
-----------
$ 1,959,330
---------------------------------------------------------------------------
Inverse Floaters - 0.8%
AAA Metropolitan Government of Nashville &
Davidson County, Water & Sewer Rev., RIBS,
AMBAC, 7.668s, 2022(S) $ 1,000 $ 995,170
---------------------------------------------------------------------------
Indexed Securities - 2.7%
A Puerto Rico Public Buildings Authority,
GTD, Public Educational & Health, PSA
Fixed Rate, 5.385s, 2016* $ 2,000 $ 1,743,100
AAA Puerto Rico Telephone Authority Rev., 7-
Year Swap, "M", AMBAC, 4.47s, 2004* 2,000 1,647,640
-----------
$ 3,390,740
---------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $118,693,448) $123,524,941
---------------------------------------------------------------------------
Floating Rate Demand Notes - 2.0%
---------------------------------------------------------------------------
A- Sullivan County, TN, Industrial
Development, Pollution Control Rev.,
due 2016 $ 1,800 $ 1,800,000
NR Uinta County, WY, Pollution Control Rev.
(Chevron), due 2020 700 700,000
---------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,500,000
---------------------------------------------------------------------------
Call Option Purchased - 0.1%
---------------------------------------------------------------------------
Principal Amount
Issuer/Expiration Date/Strike Price of Contracts
---------------------------------------------------------------------------
State of New Jersey, GOB, "D"/February 2003/102
(Premium Paid, $125,600) $ 2,000 $ 152,300
---------------------------------------------------------------------------
Total Investments (Identified Cost, $121,319,048) $126,177,241
Other Assets, Less Liabilities - 1.1% 1,401,334
---------------------------------------------------------------------------
Net Assets - 100.0% $127,578,575
---------------------------------------------------------------------------
*Indexed security (see Note 7).
(S)Inverse floating rate security.
See notes to financial statements
<PAGE>
Portfolio of Investments - March 31, 1995
MFS TEXAS MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
---------------------------------------------------------------------------
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
---------------------------------------------------------------------------
General Obligation - 37.9%
NR Brenham, TX, Independent School District,
PSF, 5.25s, 2015 $1,110 $ 1,012,664
AAA Brownsville, TX, Public Improvement, AMBAC,
0s, 2011 250 95,812
AAA Clear Creek, TX, Independent School
District, PSF, 5.5s, 2014 1,000 942,710
AAA Garland, TX, Independent School District,
PSF, 5.5s, 2015 1,245 1,178,566
AAA Grapevine-Colleyville, TX, Independent
School District, PSF, 0s, 2014 530 162,816
NR La Grange, TX, Independent School District,
PSF, 4.875s, 2010 530 476,120
AAA Leander, TX, Independent School District,
PSF, 6s, 2018 1,000 997,410
NR Robstown, TX, Independent School District,
PSF, 0s, 2016 1,480 423,398
AA State of Texas, 6.8s, 2010 1,000 1,031,540
AAA Valwood, TX, Public Improvement Authority,
MBIA, 0s, 2005 500 276,375
NR Wylie, TX, Independent School District,
PSF, 6.9s, 2013 1,100 1,212,915
----------
$ 7,810,326
---------------------------------------------------------------------------
State and Local Appropriation - 8.6%
A- Texas National Research Laboratory
Commission Finance Corp., 7.1s, 2021 $ 200 $ 203,600
AAA State of Texas Public Finance Authority,
MBIA, 6.25s, 2009 1,000 1,048,970
AAA State of Texas Public Finance Authority,
Building Rev., MBIA, 0s, 2013 1,500 507,030
----------
$ 1,759,600
---------------------------------------------------------------------------
Refunded and Special Obligation - 5.2%
NR Arlington, TX, Permanent Improvement,
6.7s, 2002 $ 100 $ 108,744
AAA Coastal Water Authority, TX, Water
Conveyance Systems Rev., AMBAC,
6.25s, 2017 250 253,747
NR Mesquite, TX, Independent School District,
PSF, 6.2s, 2001 400 434,336
A Puerto Rico Public Buildings Authority,
6.875s, 2002 250 281,567
----------
$ 1,078,394
---------------------------------------------------------------------------
Single Family Housing Revenue - 3.1%
NR Midland, TX, Housing Finance Corp.,
8.15s, 2011 $ 359 $ 371,731
AA State of Texas, 7s, 2025 250 257,795
----------
$ 629,526
---------------------------------------------------------------------------
Insured Health Care Revenue - 17.1%
AAA Bexar County, TX, Health, MBIA, 6.5s, 2015 $ 500 $ 515,540
AAA Bexar County,TX, Health, MBIA, 6.75s, 2019 750 785,370
AAA North Central, TX, Health, MBIA,
5.75s, 2013 1,250 1,215,187
AAA Victoria County, TX, Health, AMBAC,
6.25s, 2016 1,000 1,012,670
----------
$ 3,528,767
---------------------------------------------------------------------------
Electric and Gas Utility Revenue - 4.3%
BBB Brazos River Authority, TX, Polloution
Control Rev. (Texas Utilities),
8.25s, 2019 $ 250 $ 268,710
AAA Brazos River Authority, TX, Rev. (Houston
Power & Light), AMBAC, 6.375s, 2012 250 256,752
AAA Texas Municipal Power Agency Rev.,
MBIA, 0s, 2016 1,350 363,028
----------
$ 888,490
---------------------------------------------------------------------------
Water and Sewer Utility Revenue - 9.3%
AAA Colorado River, TX, Municipal Water
District, Water Rev., AMBAC, 6.625s, 2021 $ 250 $ 268,720
AAA Houston, TX, Water & Sewer, AMBAC, 0s, 2010 2,000 789,200
AAA Texas Water Resources Finance Authority
Rev., AMBAC, 7.5s, 2013 800 852,824
----------
$ 1,910,744
---------------------------------------------------------------------------
Turnpike Revenue - 1.0%
A- Texas Turnpike Authority Rev. (North Dallas
Tollway), 7.125s, 2015 $ 200 $ 210,838
---------------------------------------------------------------------------
Airport and Port Revenue - 7.1%
BB+ Dallas-Fort Worth,TX (American Airlines),
7.5s, 2025 $1,200 $ 1,213,440
BB Dallas-Fort Worth, TX, International
Airport Facilities Improvement Corp. Rev.
(Delta Airlines), 7.125s, 2026 250 246,417
----------
$ 1,459,857
---------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 4.3%
BBB Angelina & Neches River Authority, TX,
Solid Waste Disposal Rev., 7.375s, 2015 $ 100 $ 104,922
BBB Gulf Coast Waste Disposal Authority, TX,
7.45s, 2026 100 105,024
BBB Gulf Coast Waste Disposal Authority, TX,
Solid Waste Disposal Rev., 7.25s, 2017 100 104,781
A Texas City, TX, Industrial Development
Corp. (ARCO Pipe Line), 7.375s, 2020 500 570,690
----------
$ 885,417
---------------------------------------------------------------------------
Total Investments (Identified Cost, $19,208,354) $20,161,959
Other Assets, Less Liabilities - 2.1% 428,946
---------------------------------------------------------------------------
Net Assets - 100.0% $20,590,905
---------------------------------------------------------------------------
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS - March 31, 1995
MFS WASHINGTON MUNICIPAL BOND FUND
Municipal Bonds - 96.8%
---------------------------------------------------------------------------
S&P Bond
Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
---------------------------------------------------------------------------
General Obligation - 29.7%
NR Cowlitz County, WA, School District No. 4,
6.7s, 2011 $ 150 $ 153,576
AA+ King County, WA, GO S'94A OID,
6.125s, 2012 500 504,975
AA King County, WA, School District No. 414,
6.125s, 2006 250 259,695
AA- King County, WA, School District No. 415,
5.55s, 2011 500 475,845
A+ Kitsap County, WA, 6.75s, 2011 410 429,799
AAA Lewis County, WA, 6.25s, 2012 250 254,987
AA+ Pike Place Market Preservation &
Development Authority, WA, Special
Obligation, 6.5s, 2017 185 189,214
AA+ Seattle, WA, 6.5s, 2012 170 175,197
A+ Seattle, WA, 5.65s, 2020 500 462,975
AA Spokane, WA, 6.125s, 2011 250 252,000
AA State of Washington, 0s, 2008 1,500 698,655
AA State of Washington, 6.75s, 2012 450 463,234
AA State of Washington, 6.4s, 2017 1,000 1,039,800
----------
$ 5,359,952
---------------------------------------------------------------------------
State and Local Appropriation - 2.5%
A+ Douglas County, WA, Public Utility District
No. 001, Wells Hydroelectric, 7.7s, 2008 $ 315 $ 357,210
A State of Washington, Certificates of
Participation (State Office Building),
6s, 2012 100 98,513
----------
$ 455,723
---------------------------------------------------------------------------
Refunded and Special Obligation - 5.1%
A+ Douglas County, WA, Public Utility District
No. 001, Wells Hydroelectric, 7.7s, 2000 $ 185 $ 210,732
AAA Puerto Rico Highway and Special Obligation
and Transport Authority, Highway Rev.,
6.5s, 2002 200 220,742
A Puerto Rico Public Buildings Authority,
6.875s, 2021 250 281,567
A+ Snohomish County, WA, Public Utility
District No. 1, Electric Rev., 6.8s, 2020 100 110,106
AA State of Washington, 6.7s, 2001 100 108,347
----------
$ 931,494
---------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.4%
NR Bellingham, WA, Housing Authority Rev.
(Pacific Rim Project), 6.5s, 2022 $ 250 $ 250,690
---------------------------------------------------------------------------
Insured Health Care Revenue - 9.6%
AAA Washington Health Care Facilities Authority
Rev. (Allenmore Hospital), FGIC,
6.5s, 2013 $ 150 $ 152,348
AAA Washington Health Care Facilities Authority
Rev. (Franciscan Health/St. Claire), MBIA,
6.7s, 2021 250 259,253
AAA Washington Health Care Facilities Authority
Rev. (Group Health Cooperative/Puget
Sound), MBIA, 6.25s, 2021 250 250,413
AAA Washington Health Care Facilities Authority
Rev. (Multicare Medical Center/Tacoma),
FGIC, 5.75s, 2022 400 370,940
AAA Washington Health Care Facilities Authority
Rev. (Swedish Hospital Medical Center/
Seattle), FGIC, 6.3s, 2022 200 200,446
AAA Washington Health Care Facilities Authority
Rev. (Virginia Mason Group/Seattle), MBIA,
6.3s, 2017 500 504,805
----------
$ 1,738,205
---------------------------------------------------------------------------
Electric and Gas Utility Revenue - 25.8%
A+ Grant County, WA, Public, 6.375s, 2023 $1,000 $ 1,000,940
A+ Grant County, WA, Public Utility Distric
No. 2 (Wanapum Hydroelectric), 6.75s, 2023 255 261,576
AAA Snohomish County, WA, Public Utility
District No. 1, Electric Rev., FGIC,
5.5s, 2020 500 463,070
AAA Tacoma, WA, Electric Systems Rev.,
AMBAC, 5.5s, 2012 1,000 947,310
AA Washington Public Power Supply System,
Nuclear Project No.1 Rev., 7s, 2008 500 549,345
AA Washington Public Power Supply System,
Nuclear Project No. 2 Rev., 6s, 2012 500 483,170
AA Washington Public Power Supply System,
Nuclear Project No. 3 Rev., 0s, 2015 1,500 386,580
AA Washington Public Power Supply System,
Nuclear Project No. 3 Rev., 6.5s, 2018 100 100,431
AAA Washington Public Power Supply System,
Nuclear Project No. 3 Rev., MBIA,
7.125s, 2016 425 479,175
----------
$ 4,671,597
---------------------------------------------------------------------------
Water and Sewer Utility Revenue - 13.7%
AAA Richland, WA, Water & Sewer Rev., MBIA,
6.25s, 2012 $ 500 $ 503,860
AA Seattle, WA, Drainage & Wastewater Utility
Rev., 5.75s, 2022 635 603,815
AA- Seattle, WA, Municipality of Metropolitan
Seattle, Sewer Rev., 6.2s, 2032 500 490,085
AA Seattle, WA, Water Systems Rev., 5.5s, 2018 750 688,365
A- Soos Creek, WA, Water & Sewer District,
Water & Sewer Rev., 0s, 2010 200 77,138
A+ Vancouver, WA, Water & Sewer Rev.,
6.5s, 2012 100 104,039
----------
$ 2,467,302
---------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.6%
NR King County, WA, Housing Authority Rev.
(Spiritwood Manor), GNMA, 6.5s, 2012 $ 100 $ 100,986
---------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 8.4%
BBB Pilchuck Development Corp., WA (Tramco,
Inc.), 6s, 2023 $ 690 $ 609,042
A Port of Seattle, WA, Industrial Development
Corp. (Weyerhaeuser Co.), 5.6s, 2014 1,000 917,240
----------
$ 1,526,282
---------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $17,469,572) $17,502,231
---------------------------------------------------------------------------
Floating Rate Demand Note - 1.7%
---------------------------------------------------------------------------
NR Uinta County, WY, Pollution Control Rev.
(Chevron), due 2020, at Identified Cost $ 300 $ 300,000
---------------------------------------------------------------------------
Total Investments (Identified Cost, $17,769,572) $17,802,231
Other Assets, Less Liabilities - 1.5% 269,008
---------------------------------------------------------------------------
Net Assets - 100.0% $18,071,239
---------------------------------------------------------------------------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
--------------------------------------------------------------------------------------------------------------------------------
Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
March 31, 1995 Fund Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $82,683,768 $190,400,752 $291,143,608 $17,662,299 $87,818,969 $121,319,048 $19,208,354 $17,769,572
Unrealized
appreciation 4,234,303 1,633,250 9,631,382 267,837 104,371 4,858,193 953,605 32,659
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total, at value $86,918,071 $192,034,002 $300,774,990 $17,930,136 $87,923,340 $126,177,241 $20,161,959 $17,802,231
Cash 68,847 63,232 72,503 15,421 21,789 97,571 -- 65,018
Receivable for
investments sold 1,027,788 -- 1,062,031 1,410,694 1,018,362 181,818 234,410 --
Receivable for Fund
shares sold 135,156 150,965 582,274 225,156 263,156 411,888 91,972 1,566
Interest receivable 1,454,079 2,960,126 4,801,164 341,151 1,687,470 2,085,621 282,829 296,286
Deferred organization
expenses -- -- -- 6,969 8,334 -- 3,435 2,693
Other assets 1,161 6,994 4,871 187 1,146 1,638 255 266
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total assets $89,605,102 195,215,319 $307,297,833 $19,929,714 $90,923,597 $128,955,777 $20,774,860 $18,168,060
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Liabilities:
Cash overdraft $ -- $ -- $ -- $ -- $ -- $ -- $ 138,294 $ --
Distributions payable 225,922 466,876 801,804 48,501 206,997 295,821 42,378 36,711
Payable for
investments
purchased 936,678 -- 949,781 302,046 2,237,191 412,198 -- --
Payable for Fund
shares reacquired 120,539 323,233 276,845 -- 7,838 491,721 -- 50,842
Payable for daily
variation margin
on closed futures
contracts -- -- 18,753 -- -- -- -- 6,691
Payable to
affiliates -
Management fee 1,332 2,936 3,353 107 728 1,927 113 100
Shareholder
servicing
agent fee 372 814 1,313 -- -- 544 -- --
Distribution fee 51,424 199 901 75 257 73,314 62 76
Accrued expenses and
other liabilities 68,333 85,167 169,137 6,684 8,699 101,677 3,108 2,401
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total liabilities $ 1,404,600 $ 879,225 $ 2,221,887 $ 357,413 $ 2,461,710 $ 1,377,202 $ 183,955 $ 96,821
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Net assets $88,200,502 $194,336,094 $305,075,946 $19,572,301 $88,461,887 $127,578,575 $20,590,905 $18,071,239
=========== ============ ============ =========== =========== ============ =========== ===========
Net assets consist of:
Paid-in capital $84,988,837 $198,772,841 $310,089,338 $20,337,245 $92,187,686 $124,719,638 $21,192,333 $18,482,115
Unrealized
appreciation
(depreciation)
on investments 4,234,303 1,786,666 9,631,382 226,455 (19,776) 4,892,818 922,568 32,659
Accumulated net
realized loss
on investments (1,004,071) (5,902,391) (14,333,528) (1,008,526) (3,672,871) (1,805,579) (1,524,596) (448,296)
Accumulated
undistributed
(distributions in
excess of) net
investment income (18,567) (321,022) (311,246) 17,127 (33,152) (228,302) 600 4,761
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total $88,200,502 $194,336,094 $305,075,946 $19,572,301 $88,461,887 $127,578,575 $20,590,905 $18,071,239
=========== ============ ============ =========== =========== ============ =========== ===========
Shares of beneficial
interest outstanding:
Class A 8,104,410 19,375,430 50,289,065 1,822,351 8,633,487 11,452,723 1,845,870 1,601,912
Class B 425,077 749,100 5,369,741 295,986 1,029,073 974,973 228,942 282,252
Class C -- -- 712,083 -- -- -- -- --
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total shares
of beneficial
interest
outstanding 8,529,487 20,124,530 56,370,889 2,118,337 9,662,560 12,427,696 2,074,812 1,884,164
=========== ============ ============ =========== =========== ============ =========== ===========
Net assets:
Class A $83,804,867 $187,104,982 $272,161,170 $16,837,135 $79,033,292 $117,572,482 $18,317,785 $15,363,822
Class B 4,395,635 7,231,112 29,057,048 2,735,166 9,428,595 10,006,093 2,273,120 2,707,417
Class C -- -- 3,857,728 -- -- -- -- --
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total net assets $88,200,502 $194,336,094 $305,075,946 $19,572,301 $88,461,887 $127,578,575 $20,590,905 $18,071,239
=========== ============ ============ =========== =========== ============ =========== ===========
Class A shares:
Net asset value and
redemption price per
share (net assets /
shares of beneficial
interest outstanding) $10.34 $ 9.66 $ 5.41 $ 9.24 $ 9.15 $10.27 $ 9.92 $ 9.59
====== ====== ====== ====== ====== ====== ====== ======
Offering price per
share (100/95.25 of
net asset value
per share) $10.86 $10.14 $ 5.68 $ 9.70 $ 9.61 $10.78 $10.41 $10.07
====== ====== ====== ====== ====== ====== ====== ======
Class B shares:
Net asset value,
offering price, and
redemption price per
share (net assets /
shares of beneficial
interest outstanding) $10.34 $ 9.65 $ 5.41 $ 9.24 $ 9.16 $10.26 $ 9.93 $ 9.59
====== ====== ====== ====== ====== ====== ====== ======
Class C shares:
Net asset value,
offering price, and
redemption price per
share (net assets /
shares of beneficial
interest outstanding) $ -- $ -- $ 5.42 $ -- $ -- $ -- $ -- $ --
====== ====== ====== ====== ====== ====== ====== ======
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.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Operations
--------------------------------------------------------------------------------------------------------------------------------
Year Ended Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
March 31, 1995 Fund Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income:
Interest $ 5,701,782 $ 12,421,358 $ 20,605,991 $ 1,070,704 $ 5,405,579 $ 8,488,724 $ 1,258,387 $ 1,134,419
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Expenses -
Management fee $ 474,038 $ 1,093,773 $ 1,746,273 $ 93,993 $ 478,963 $ 692,926 $ 112,189 $ 101,091
Trustees'
compensation 14,727 13,335 41,169 13,470 15,585 15,009 13,594 12,226
Shareholder servicing
agent fees (Class A) 123,373 287,850 434,586 22,431 118,525 177,357 27,742 23,942
Shareholder servicing
agent fees (Class B) 8,141 14,886 54,620 4,655 17,492 17,047 4,142 5,282
Shareholder servicing
agent fees (Class C) -- -- 4,589 -- -- -- -- --
Distribution and
service fees
(Class A) 289,903 -- -- -- -- 413,832 -- --
Distribution and
service fees
(Class B) 37,007 67,664 248,272 21,147 79,585 77,488 18,838 24,013
Distribution and
service fees
(Class C) -- -- 30,592 -- -- -- -- --
Custodian fee 35,171 72,185 135,451 -- 38,379 67,918 1,039 438
Printing 12,318 25,605 34,604 3,580 29,462 17,286 4,120 6,730
Postage 5,965 8,389 21,632 2,140 8,644 9,534 3,289 4,067
Auditing fees 31,993 29,493 42,318 25,843 33,793 27,843 28,143 23,393
Legal fees 1,804 423 7,785 2,473 3,600 3,516 1,322 2,121
Amortization of
organization
expenses 3,229 2,244 -- 1,741 3,558 -- 1,868 1,149
Miscellaneous 66,911 90,843 157,667 37,642 68,339 72,617 41,376 52,105
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total expenses $ 1,104,580 $ 1,706,690 $ 2,959,558 $ 229,115 $ 895,925 $ 1,592,373 $ 257,662 $ 256,557
Reduction of expenses
by investment
adviser and
distributor (82,488) (152,542) (476,700) (204,697) (620,712) -- (235,309) (229,452)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Net expenses $ 1,022,092 $ 1,554,148 $ 2,482,858 $ 24,418 $ 275,213 $ 1,592,373 $ 22,353 $ 27,105
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Net investment
income $ 4,679,690 $ 10,867,210 $ 18,123,133 $ 1,046,286 $ 5,130,366 $ 6,896,351 $ 1,236,034 $ 1,107,314
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Realized and
unrealized gain
(loss) on
investments:
Realized gain (loss)
(identified cost
basis) -
Investment
transactions $ (842,153) $ (3,715,123) $(12,640,317) $ (827,903) $(3,066,576) $ (1,828,734) $(1,402,194) $ (682,332)
Futures contracts 121,465 (1,098,870) (590,239) (131,291) (354,340) 146,443 (58,963) 310,217
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Net realized loss
on investments $ (720,688) $ (4,813,993) $(13,230,556) $ (959,194) $(3,420,916) $ (1,682,291) $(1,461,157) $ (372,115)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Change in unrealized
appreciation
(depreciation) -
Investments $ 1,647,211 $ 4,634,372 $ 9,419,721 $ 1,236,932 $ 3,481,213 $ 1,755,271 $ 1,716,481 $ 989,283
Futures contracts (239,563) (71,304) (839,987) (90,211) (374,434) (88,656) (93,247) (73,035)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Net unrealized gain
on investments $ 1,407,648 $ 4,563,068 $ 8,579,734 $ 1,146,721 $ 3,106,779 $ 1,666,615 $ 1,623,234 $ 916,248
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Net realized and
unrealized gain
(loss) on
investments $ 686,960 $ (250,925) $ (4,650,822) $ 187,527 $ (314,137) $ (15,676) $ 162,077 $ 544,133
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Increase in net
assets from
operations $ 5,366,650 $ 10,616,285 $ 13,472,311 $ 1,233,813 $ 4,816,229 $ 6,880,675 $ 1,398,111 $ 1,651,447
=========== ============ ============ =========== =========== ============ =========== ===========
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
----------------------------------------------------------------------------------------------------------------------------------
Year Ended Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
March 31, 1995 Fund Fund Fund Fund Fund Fund Fund Fund
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
From operations -
Net investment income $ 4,679,690 $ 10,867,210 $ 18,123,133 $ 1,046,286 $ 5,130,366 $ 6,896,351 $ 1,236,034 $ 1,107,314
Net realized loss on
investments (720,688) (4,813,993) (13,230,556) (959,194) (3,420,916) (1,682,291) (1,461,157) (372,115)
Net unrealized gain
on investments 1,407,648 4,563,068 8,579,734 1,146,721 3,106,779 1,666,615 1,623,234 916,248
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Increase in net
assets from
operations $ 5,366,650 $ 10,616,285 $ 13,472,311 $ 1,233,813 $ 4,816,229 $ 6,880,675 $ 1,398,111 $ 1,651,447
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Distributions declared
to shareholders -
From net investment
income (Class A) $(4,455,164) $(10,558,798) $(16,697,698) $ (922,531) $(4,753,634) $ (6,505,625) $(1,132,237) $ (977,079)
From net investment
income (Class B) (169,047) (299,458) (1,163,387) (109,353) (398,325) (369,736) (95,908) (122,848)
From net investment
income (Class C) -- -- (145,036) -- -- -- -- --
In excess of net
investment income
(Class A) -- -- -- -- (30,589) -- -- --
In excess of net
investment income
(Class B) -- -- -- -- (2,563) -- -- --
From net realized
gain on investments
(Class A) -- -- -- (38,988) (14,334) (16,392) (62,387) --
From net realized
gain on investments
(Class B) -- -- -- (5,437) (1,273) (887) (4,944) --
In excess of net
realized gain on
investments (Class A) (208,081) (1,025,561) (252,101) (43,294) (231,411) (116,960) (58,780) (12,874)
In excess of net
realized gain on
investments (Class B) (8,165) (37,275) (20,873) (6,038) (20,544) (6,328) (4,659) (1,694)
In excess of net
realized gain on
investments (Class C) -- -- (2,849) -- -- -- -- --
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total distributions
declared to
shareholders $(4,840,457) $(11,921,092) $(18,281,944) $(1,125,641) $(5,452,673) $ 7,015,928 $(1,358,915) $(1,114,495)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Fund share (principal)
transactions -
Net proceeds from
sale of shares $12,406,978 $ 19,194,317 $ 77,112,097 $ 6,579,848 $22,690,809 $ 18,228,934 $ 5,266,676 $ 2,662,499
Net asset value of
shares issued to
shareholders in
reinvestment of
distributions 1,737,757 5,605,569 7,886,955 629,725 2,809,324 3,344,948 791,694 590,085
Cost of shares
reacquired (10,820,302) (30,096,110) (111,856,077) (2,755,026) (22,467,966) (16,270,748) (4,204,171) (5,624,138)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Increase (decrease)
in net assets from
Fund share
transactions $ 3,324,433 $ (5,296,224) $(26,857,025) $ 4,454,547 $ 3,032,167 $ 5,303,134 $ 1,854,199 $(2,371,554)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total increase
(decrease) in
net assets $ 3,850,626 $ (6,601,031) $(31,666,658) $ 4,562,719 $ 2,395,723 $ 5,167,881 $ 1,893,395 $(1,834,602)
Net assets:
At beginning of
period 84,349,876 200,937,125 336,742,604 15,009,582 86,066,164 122,410,694 18,697,510 19,905,841
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
At end of period $88,200,502 $194,336,094 $305,075,946 $19,572,301 $88,461,887 $127,578,575 $20,590,905 $18,071,239
=========== ============ ============ =========== =========== ============ =========== ===========
Accumulated
undistributed
(distributions in
excess of) net
investment income
included in net assets
at end of period $ (18,567) $ (321,022) $ (587,069) $ 17,127 $ (33,152) $ (228,302) $ 600 $ 4,761
=========== ============ ============ =========== =========== ============ =========== ===========
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
---------------------------------------------------------------------------------------------------------------------------------
Two Months Ended Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
March 31, 1994 Fund Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
From operations -
Net investment income $ 742,930 $ 1,760,234 $ 3,193,864 $ 138,157 $ 816,978 $ 1,087,145 $ 182,698 $ 189,192
Net realized gain
(loss) on investments (218,380) (20,373) (976,424) 39,307 7,732 94,514 68,685 (65,318)
Net unrealized loss
on investments (5,633,075) (15,902,664) (28,853,607) (1,454,210) (7,417,766) (8,087,840) (1,911,784) (1,927,403)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Decrease in net
assets from
operations $(5,108,525) $(14,162,803) $(26,636,167) $(1,276,746) $(6,593,056) $ (6,906,181) $(1,660,401) $(1,803,529)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Distributions declared
to shareholders -
From net investment
income (Class A) $ (642,206) $ (1,439,155) $ (2,653,924) $ (129,131) $ (779,929) $ (790,324) $ (170,722) $ (177,648)
From net investment
income (Class B) (17,979) (36,688) (137,986) (11,054) (48,348) (22,485) (7,965) (12,167)
From net investment
income (Class C) -- -- (7,584) -- -- -- -- --
In excess of net
investment income
(Class A) (74,580) (328,710) (419,447) -- -- (250,457) (6,751) (1,973)
In excess of net
investment income
(Class B) -- (1,266) (8,601) -- (1,522) -- (538) (653)
In excess of net
investment income
(Class C) -- -- (210) -- -- -- -- --
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total distributions
declared to
shareholders $ (734,765) $ (1,805,819) $ (3,227,752) $ (140,185) $ (829,799) $ (1,063,266) $ (185,976) $ (192,441)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Fund share (principal)
transactions -
Net proceeds from
sale of shares $ 2,704,768 $ 9,384,274 $ 19,676,257 $ 1,611,118 $ 6,980,902 $ 4,465,521 $ 1,598,909 $ 1,727,976
Net asset value of
shares issued to
shareholders in
reinvestment of
distributions 181,462 818,684 1,275,275 80,378 400,986 473,801 102,408 101,972
Cost of shares
reacquired (2,305,866) (2,018,441) (31,041,059) (307,796) (4,338,205) (1,436,635) (1,101,058) (664,502)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Increase (decrease)
in net assets from
Fund share
transactions $ 580,364 $ 8,184,517 $(10,089,527) $ 1,383,700 $ 3,043,683 $ 3,502,687 $ 600,259 $ 1,165,446
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total decrease in
net assets $(5,262,926) $ (7,784,105) $(39,953,446) $ (33,231) $(4,379,172) $ (4,466,760) $(1,246,118) $ (830,524)
Net assets:
At beginning of period 89,612,802 208,721,230 376,696,050 15,042,813 90,445,336 126,877,454 19,943,628 20,736,365
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
At end of period $84,349,876 $200,937,125 $336,742,604 $15,009,582 $86,066,164 $122,410,964 $18,697,510 $19,905,841
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Accumulated
undistributed
(distributions in
excess of) net
investment income
included in net assets
at end of period $ (74,046) $ (329,976) $ (428,258) $ 2,725 $ 21,593 $ (249,292) $ (7,289) $ (2,626)
=========== ============ ============ =========== =========== ============ =========== ===========
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
---------------------------------------------------------------------------------------------------------------------------------
Year Ended Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
January 31, 1994 Fund Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
From operations -
Net investment income $ 4,093,023 $ 9,049,640 $ 16,104,535 $ 528,534 $ 3,785,856 $ 5,988,734 $ 791,080 $ 823,862
Net realized gain on
investments 355,593 158,439 1,728,772 30,592 29,039 314,357 25,837 127,728
Net unrealized gain
on investments 4,630,945 9,452,611 6,269,162 533,944 3,900,962 5,637,130 993,292 919,736
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Increase in net
assets from
operations $ 9,079,561 $ 18,660,690 $ 24,102,469 $ 1,093,070 $ 7,715,857 $ 11,940,221 $ 1,810,209 $ 1,871,326
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Distributions declared
to shareholders -
From net investment
income (Class A) $(3,971,212) $ (8,969,014) $(15,677,655) $ (508,129) $(3,683,450) $ (5,699,354) $ (782,629) $ (808,437)
From net investment
income (Class B) (21,255) (43,862) (181,793) (15,652) (66,029) (38,741) (10,458) (15,592)
From net investment
income (Class C) -- -- (174) -- -- -- -- --
From net realized
gain on investments
(Class A) (289,469) (30,747) (3,880,957) (23,406) -- -- (22,456) (124,418)
From net realized
gain on investments
(Class B) (2,977) (472) (112,146) (2,068) -- -- (866) (6,837)
In excess of net
investment income
(Class A) (82,527) (283,037) (387,929) -- -- (274,002) (3,729) --
In excess of net
investment income
(Class B) -- (1,354) (6,394) -- -- -- (282) --
In excess of net
investment income
(Class C) -- -- (47) -- -- -- -- --
In excess of net
realized gain on
investments (Class A) -- (5,086) -- -- -- -- (1,304) --
In excess of net
realized gain on
investments (Class B) -- (103) -- -- -- -- (50) --
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total distributions
declared to
shareholders $(4,367,440) $ (9,333,675) $(20,247,095) $ (549,255) $(3,749,479) $ (6,012,097) $ (821,774) $ (995,284)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Fund share (principal)
transactions -
Net proceeds from sale
of shares $24,894,651 $ 82,745,126 $142,746,057 $15,436,731 $51,554,267 $ 26,902,090 $11,014,264 $11,380,038
Net asset value of
shares issued to
shareholders in
reinvestment of
distributions 966,178 4,144,147 7,883,784 320,926 1,862,922 2,655,325 423,123 455,552
Cost of shares
reacquired (8,638,316) (12,138,750) (49,967,989) (1,258,659) (8,150,342) (8,051,357) (967,568) (1,548,837)
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Increase in net
assets from Fund
share transactions $17,222,513 $ 74,750,523 $100,661,852 $14,498,998 $45,266,847 $ 21,506,058 $10,469,819 $10,286,753
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
Total increase in
net assets $21,934,634 $ 84,077,538 $104,517,226 $15,042,813 $49,233,225 $ 27,434,182 $11,458,254 $11,162,795
Net assets:
At beginning of period 67,678,168 124,643,692 272,178,824 -- 41,212,111 99,443,272 8,485,374 9,573,570
----------- ------------ ------------ ----------- ----------- ------------ ----------- -----------
At end of period $89,612,802 $208,721,230 $376,696,050 $15,042,813 $90,445,336 $126,877,454 $19,943,628 $20,736,365
=========== ============ ============ =========== =========== ============ =========== ===========
Accumulated
undistributed
(distributions in
excess of) net
investment income
included in net assets
at end of period
$ (82,211) $ (284,391) $ (394,370) $ 4,753 $ 34,414 $ (273,171) $ (4,011) $ 623
=========== ============ ============ =========== =========== ============ =========== ===========
*For the eleven months ended January 31, 1994.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
-----------------------------------------------------------------------------------------------------------------------------------
Alabama Fund
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
March 31, January 31, March 31, January 31,
-----------------------------------------------------------------------------------------------------------------------------------
1995 1994<F8> 1994 1993 1992 1991 1995 1994<F8> 1994<F1>
-----------------------------------------------------------------------------------------------------------------------------------
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 $10.27 $10.98 $10.33 $ 9.95 $ 9.65 $ 9.53 $10.27 $10.98 $10.93
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations<F7> -
Net investment income
(loss)<F5> $ 0.56 $ 0.09 $ 0.55 $ 0.56 $ 0.60 $ 0.59 $ 0.47 $ 0.08 $ 0.18
Net realized and
unrealized gain (loss)
on investments 0.09 (0.71) 0.69 0.41 0.41 0.08 0.09 (0.71) 0.07
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.65 $(0.62) $ 1.24 $ 0.97 $ 1.01 $ 0.67 $ 0.56 $(0.63) $ 0.25
------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions
declared to
shareholders -
From net investment
income $(0.55) $(0.08) $(0.54) $(0.58) $(0.65) $(0.55) $(0.46) $ (0.08) $(0.18)
From net realized gain
on investments -- -- (0.04) (0.01) (0.06) -- -- -- (0.02)
In excess of net
investment income<F2> -- (0.01) (0.01) -- -- -- -- -- --
In excess of net
realized gain on
investments (0.03) -- -- -- -- -- (0.03) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions
declared to
shareholders $(0.58) $(0.09) $(0.59) $(0.59) $(0.71) $(0.55) $(0.49) $(0.08) $(0.20)
====== ====== ====== ====== ====== ====== ====== ====== ======
Net asset value -
end of period $10.34 $10.27 $10.98 $10.33 $ 9.95 $ 9.65 $10.34 $10.27 $10.98
====== ====== ====== ====== ====== ====== ====== ====== ======
Total return<F6> 6.51% (5.66)%<F4> 12.26% 10.08% 10.92% 7.31% 5.64% (5.79)%<F4> 2.29%<F4>
Ratios (to average net
assets)/Supplemental
data<F5>:
Expenses 1.15% 1.18%<F3> 1.21% 1.08% 0.95% 0.57%<F3> 1.97% 2.01%<F3> 1.98%<F3>
Net investment income 5.47% 5.17%<F3> 5.13% 5.79% 6.19% 6.63%<F3> 4.63% 4.30%<F3> 3.98%<F3>
Portfolio turnover 30% 4% 12% 17% 23% 64% 30% 4% 12%
Net assets at end of
period (000 omitted) $83,805 $81,501 $87,344 $67,678 $48,476 $22,076 $ 4,396 $ 2,849 $ 2,269
<F1> For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
<F2> Per share distributions in excess of net investment income for the year ended January 31, 1992 were $0.004.
<F3> Annualized.
<F4> Unannualized.
<F5> 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 $ 0.55 $ 0.09 $ 0.54 $ 0.55 $ 0.59 $ 0.52 -- -- --
Ratios (to average
net assets):
Expenses 1.25% 1.28%<F3> 1.31% 1.18% 1.08% 1.33%<F3> -- -- --
Net investment
income 5.37% 5.07%<F3> 5.03% 5.69% 6.06% 5.87%<F3> -- -- --
<F6> 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.
<F7> Per share data for the periods beginning after January 31, 1994 are based on average shares outstanding.
<F8> For the two months ended March 31, 1994.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
----------------------------------------------------------------------------------------------------------------------------------
Arkansas Fund
----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
March 31, January 31, March 31, January 31,
----------------------------------------------------------------------------------------------------------------------------------
1995 1994<F5> 1994 1993<F1> 1995 1994<F5> 1994<F2>
----------------------------------------------------------------------------------------------------------------------------------
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 $ 9.69 $10.47 $ 9.88 $ 9.53 $ 9.69 $10.47 $10.42
------ ------ ------ ------ ------ ------ ------
Income from investment operations<F10> -
Net investment income<F8> $ 0.53 $ 0.09 $ 0.56 $ 0.58 $ 0.42 $ 0.07 $ 0.23
Net realized and unrealized gain
(loss) on investments 0.02 (0.77) 0.60 0.35 0.01 (0.78) (0.04)
------ ------ ------ ------ ------ ------ ------
Total from investment operations $ 0.55 $(0.68) $ 1.16 $ 0.93 $ 0.43 $(0.71) $ 0.19
------ ------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.53) $(0.08) $(0.55) $(0.58) $(0.42) $(0.07) $(0.14)
From net realized gain on investments<F3> -- -- -- -- -- -- --
In excess of net investment income<F4> -- (0.02) (0.02) -- -- -- --
In excess of net realized gain on investments (0.05) -- -- -- (0.05) -- --
------ ------ ------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.58) $(0.10) $(0.57) $(0.58) $(0.47) $(0.07) $(0.14)
------ ------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.66 $ 9.69 $10.47 $ 9.88 $ 9.65 $ 9.69 $10.47
====== ====== ====== ====== ====== ====== ======
Total return<F9> 5.90% (6.61)%<F7> 11.95% 10.11%<F7> 4.67% (6.81)%<F7> 2.18%<F7>
Ratios (to average net assets)/
Supplemental data<F8>:
Expenses 0.75% 0.75%<F6> 0.63% 0.16%<F6> 1.84% 1.82%<F6> 1.75%<F6>
Net investment income 5.51% 5.21%<F6> 5.30% 6.04%<F6> 4.40% 4.11%<F6> 3.87%<F6>
Portfolio turnover 24% 1% 3% 10% 24% 1% 3%
Net assets at end of period (000 omitted) $187,105 $195,042 $203,542 $124,644 $7,231 $5,895 $5,179
<FN>
<F1>For the period from the commencement of investment operations, February 3, 1992 to January 31, 1993.
<F2>For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
<F3>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 $0.0016 and $0.0003, respectively, for both Class A and Class B shares.
<F4>Per share distributions in excess of net investment income for the two months ended March 31, 1994 and the year ended January
31, 1994, respectively, were $0.002 and $0.004 for Class B shares.
<F5>For the two months ended March 31, 1994.
<F6>Annualized.
<F7>Unannualized.
<F8>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%<F6> 0.91% 0.75%<F6> 1.91% 2.02%<F6> 3.44%<F6>
Net investment income 5.43% 5.01%<F6> 5.01% 5.45%<F6> 4.33% 3.91%<F6> 2.18%<F6>
<F9>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.
<F10>Per share data for the periods beginning after January 31, 1994 are based on average shares outstanding.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
California Fund
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
March 31, January 31, February 28,
-----------------------------------------------------------------------------------------------------------------------------------
1995 1994<F8> 1994<F7> 1993 1992 1991
-----------------------------------------------------------------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.47 $ 5.95 $ 5.88 $ 5.42 $ 5.26 $ 5.19
------ ------ ------ ------ ------ ------
Income from investment operations<F5>-
Net investment income<F3> $ 0.31 $ 0.05 $ 0.30 $ 0.34 $ 0.35 $ 0.33
Net realized and unrealized gain (loss) on investments (0.05) (0.48) 0.14 0.47 0.20 0.07
------ ------ ------ ------ ------ ------
Total from investment operations $ 0.26 $(0.43) $ 0.44 $ 0.81 $ 0.55 $ 0.40
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.31) $(0.04) $(0.29) $(0.34) $(0.37) $(0.33)
From net realized gain on investments -- -- (0.07) (0.01) (0.02) --
In excess of net investment income<F6> -- (0.01) (0.01) -- -- --
In excess of net realized gain on investments (0.01) -- -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions declared to shareholders (0.32) $(0.05) $(0.37) $(0.35) $(0.39) $(0.33)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 5.41 $ 5.47 $ 5.95 $ 5.88 $ 5.42 $ 5.26
====== ====== ====== ====== ====== ======
Total return<F4> 4.85% (7.21)%<F2> 7.64% 15.55% 10.69% 8.03%
Ratios (to average net assets)/Supplemental data<F3>:
Expenses 0.69% 0.68%<F1> 0.60%<F1> 0.39% 0.40% 0.87%
Net investment income 5.80% 5.27%<F1> 4.99%<F1> 6.18% 6.53% 6.39%
Portfolio turnover 57% 8% 38% 64% 73% 102%
Net assets at end of period (000 omitted) $272,161 $313,790 $356,419 $272,179 $177,291 $84,551
<FN>
<F1>Annualized.
<F2>Unannualized.
<F3>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 $ 0.30 $ 0.05 $ 0.29 $ 0.32 $ 0.33
Ratios (to average net assets):
Expenses 0.84% 0.83%<F1> 0.78%<F1> 0.77% 0.79%
Net investment income 5.65% 5.12%<F1> 4.82%<F1> 5.80% 6.14%
<F4>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.
<F5>Per share data for the periods beginning after January 31, 1994 are based on average shares outstanding.
<F6>Per share distributions in excess of net investment income for the year ended March 31, 1995 were $0.0027 for Class A shares.
<F7>For the eleven months ended January 31, 1994.
<F8>For the two months ended March 31, 1994.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------------------------
California Fund
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
February 28, March 31, January 31, March 31, January 31,
-----------------------------------------------------------------------------------------------------------------------------------
1990 1989 1988 1987 1986<F1> 1995 1994<F4> 1994<F2> 1995 1994<F4> 1994<F3>
-----------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <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 $ 5.06 $ 5.08 $ 5.38 $ 5.07 $ 4.76 $ 5.47 $ 5.95 $ 6.02 $ 5.48 $ 5.95 $ 5.89
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations<F6> -
Net investment
income<F10> $ 0.33 $ 0.32 $ 0.31 $ 0.32 $ 0.20 $ 0.25 $ 0.04 $ 0.10 $ 0.26 $ 0.03 $ 0.01
Net realized and
unrealized gain
(loss) on investments 0.13 (0.02) (0.29) 0.34 0.28 (0.05) (0.48) -- (0.06) (0.46) 0.06
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.46 $ 0.30 $ 0.02 $ 0.66 $ 0.48 $ 0.20 $(0.44) $ 0.10 $ 0.20 $(0.43) $ 0.07
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions
declared to
shareholders -
From net investment
income $(0.33) $(0.32) $(0.31) $(0.33) $(0.17) $(0.25)$(0.04) $(0.10) $(0.25) $(0.04) $(0.01)
From net realized
gain on
investments -- -- (0.01) (0.02) -- -- -- (0.07) -- -- --
In excess of net
investment income<F7> -- -- -- -- -- -- -- -- -- -- --
In excess of net
realized gain on
investments -- -- -- -- -- (0.01) -- -- (0.01) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions
declared to
shareholders $(0.33) $(0.32) $(0.32) $(0.35) $(0.17) $(0.26)$(0.04) $(0.17) $(0.26) $(0.04) $(0.01)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value -
end of period $ 5.19 $ 5.06 $ 5.08 $ 5.38 $ 5.07 $ 5.41 $ 5.47 $ 5.95 $ 5.42 $ 5.48 $ 5.95
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return<F5> 9.28% 6.07% 0.83% 13.57% 9.77% 3.73% (7.38)%<F9> 1.68%<F9> 3.79% (7.22)%<F9> 1.25%
Ratios (to average net
assets)/
Supplemental data<F10>:
Expenses 1.00% 1.28% 1.20% 1.04% 0.95%<F8>1.76% 1.69%<F8> 1.60%<F8> 1.69% 1.64%<F8> 2.02%<F8>
Net investment income 6.35% 6.35% 6.33% 6.25% 7.34%<F8>4.72% 4.18%<F8> 3.64%<F8> 4.79% 3.92%<F8> 1.78%<F8>
Portfolio turnover 243% 188% 240% 54% 23% 57% 8% 38% 57% 8% 38%
Net assets at end of
period (000 omitted) $68,879 $59,212 $59,479 $62,368 $17,488 $29,057 $21,252 $19,360 $3,858 $1,701 $917
<FN>
<F1> For the period from the commencement of investment operations, June 18, 1985 to February 28, 1986.
<F2> For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
<F3> For the period from the commencement of offering of Class C shares, January 3, 1994 to January 31, 1994.
<F4> For the two months ended March 31, 1994.
<F5> 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.
<F6> Per share data for the periods beginning after January 31, 1994 are based on average shares outstanding.
<F7> Per share distributions in excess of net investment income for the two months ended March 31, 1994 were $0.002 and $0.001
for Class B and Class C shares, respectively, and for the eleven months ended January 31, 1994 were $0.003 for both Class B
and Class C shares.
<F8> Annualized.
<F9> Unannualized.
<F10>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 -- -- -- -- -- $ 0.24 $ 0.04 $ 0.09 $ 0.25 $ 0.03 $ 0.00
Ratios (to average
net assets):
Expenses -- -- -- -- -- 1.91% 1.83%<F8> 1.81%<F8> 1.84% 1.80%<F8> 3.53%<F8>
Net investment income -- -- -- -- -- 4.57% 4.04%<F8> 3.43%<F8> 4.64% 3.77%<F8> 0.27%<F8>
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
----------------------------------------------------------------------------------------------------------------------------------
Louisiana Fund
----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
March 31, January 31, March 31, January 31,
----------------------------------------------------------------------------------------------------------------------------------
1995 1994<F7> 1994 1995 1994<F7> 1994<F1>
----------------------------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.22 $10.13 $ 9.53 $ 9.23 $10.13 $10.08
------ ------ ------ ------ ------ ------
Income from investment operations<F6> -
Net investment income<F4> $ 0.57 $ 0.09 $ 0.52 $ 0.47 $ 0.07 $ 0.18
Net realized and unrealized gain (loss)
on investments 0.06 (0.91) 0.62 0.06 (0.89) 0.07
------ ------ ------ ------ ------ ------
Total from investment operations $ 0.63 $(0.82) $ 1.14 $ 0.53 $(0.82) $ 0.25
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.56) $(0.09) $(0.52) $(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 $(0.61) $(0.09) $(0.54) $(0.52) $(0.08) $(0.20)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.24 $ 9.22 $10.13 $ 9.24 $ 9.23 $10.13
====== ====== ====== ====== ====== ======
Total return<F5> 7.18% (8.10)%<F3> 12.33% 6.01% (8.16)%<F3> 2.48%<F3>
Ratios (to average net assets)/
Supplemental data<F4>:
Expenses 0.02% 0.00%<F2> 0.00% 1.02% 1.00%<F2> 1.00%<F2>
Net investment income 6.25% 5.64%<F2> 5.41% 5.25% 4.54%<F2> 4.32%<F2>
Portfolio turnover 81% 2% 33% 81% 2% 33%
Net assets at end of period (000 omitted) $16,837 $13,401 $13,781 $2,735 $1,608 $1,263
<FN>
<F1>For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
<F2>Annualized.
<F3>Unannualized.
<F4>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, and if the expense reimbursement agreement had not been in
effect, the net investment income per share and the ratios would have been:
Net investment income $ 0.46 $ 0.05 $ 0.32 $ 0.36 $ 0.03 $ 0.09
Ratios (to average net assets):
Expenses 1.21% 2.33%<F2> 2.03% 2.28% 3.40%<F2> 3.08%<F2>
Net investment income 5.06% 3.31%<F2> 3.38% 3.99% 2.14%<F2> 2.24%<F2>
<F5>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.
<F6>Per share data for the periods beginning after January 31, 1994 are based on average shares outstanding.
<F7>For the two months ended March 31, 1994.
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
----------------------------------------------------------------------------------------------------------------------------------
Mississippi Fund
----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
March 31, January 31, March 31, January 31,
----------------------------------------------------------------------------------------------------------------------------------
1995 1994<F9> 1994 1993<F1> 1995 1994<F9> 1994<F2>
----------------------------------------------------------------------------------------------------------------------------------
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 $ 9.19 $10.00 $ 9.38 $ 9.53 $ 9.19 $ 9.99 $ 9.94
------ ------ ------ ------ ------ ------ ------
Income from investment operations<F7> -
Net investment income<F5> $ 0.54 $ 0.09 $ 0.55 $ 0.24 $ 0.45 $ 0.07 $ 0.18
Net realized and unrealized gain (loss)
on investments (0.01) (0.81) 0.62 (0.15) -- (0.79) 0.05
------ ------ ------ ------ ------ ------ ------
Total from investment operations $ 0.53 $(0.72) $ 1.17 $ 0.09 $ 0.45 $(0.72) $ 0.23
------ ------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income<F8> $(0.54) $(0.09) $(0.55) $(0.24) $(0.45) $(0.08) $(0.18)
From net realized gain on investments<F10> -- -- -- -- -- -- --
In excess of net investment income<F11> -- -- -- -- -- -- --
In excess of net realized gain on investments (0.03) -- -- -- (0.03) -- --
------ ------ ------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.57) $(0.09) $(0.55) $(0.24) $(0.48) $(0.08) $(0.18)
------ ------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.15 $ 9.19 $10.00 $ 9.38 $ 9.16 $ 9.19 $ 9.99
====== ====== ====== ====== ====== ====== ======
Total return<F6> 6.08% (7.20)%<F4> 12.80% 5.00%<F4> 5.14% (7.27)%<F4> 2.33%<F4>
Ratios (to average net assets)/
Supplemental data<F5>:
Expenses 0.22% 0.10%<F3> 0.03% 0.00%<F3> 1.23% 1.10%<F3> 1.06%<F3>
Net investment income 5.99% 5.69%<F3> 5.68% 5.59%<F3> 4.97% 4.67%<F3> 4.29%<F3>
Portfolio turnover 47% 2% 28% 14% 47% 2% 28%
Net assets at end of period (000 omitted) $79,033 $79,541 $84,177 $41,212 $9,429 $6,526 $6,268
<FN>
<F1> For the period from the commencement of investment operations, August 6, 1992 to January 31, 1993.
<F2> For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
<F3> Annualized.
<F4> Unannualized.
<F5> 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, and if the reimbursement agreement had not been in effect,
the net investment income per share and the ratios would have been:
Net investment income $ 0.48 $ 0.08 $ 0.45 $ 0.19 $ 0.38 $ 0.06 $ 0.14
Ratios (to average net assets):
Expenses 0.93% 0.88%<F3> 1.01% 1.17%<F3> 2.01% 1.95%<F3> 2.12%<F3>
Net investment income 5.28% 4.91%<F3> 4.69% 4.42%<F3> 4.19% 3.82%<F3> 3.23%<F3>
<F6> 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.
<F7> Per share data for the periods beginning after January 31, 1994 are based on average shares outstanding.
<F8> The per share distribution in excess of net investment income for the two months ended March 31, 1994 was $0.002 for Class B
shares.
<F9> For the two months ended March 31, 1994.
<F10>The per share distribution from net realized gain on investments for the year ended March 31, 1995 was $0.0016 for Class A and
Class B shares.
<F11>The per share distributions in excess of net investment income for the year ended March 31, 1995 were $0.0035 and $0.0029 for
Class A and Class B shares, respectively.
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------------------------
Tennessee Fund
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
March 31, January 31, March 31, January 31,
-----------------------------------------------------------------------------------------------------------------------------------
1995 1994<F3> 1994 1993 1992 1991 1990 1989<F1> 1995 1994<F3> 1994<F2>
-----------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <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 $10.26 $10.94 $10.37 $10.10 $ 9.90 $ 9.80 $ 9.68 $ 9.53 $10.26 $10.95 $10.87
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations<F7> -
Net investment
income<F10> $ 0.56 $ 0.09 $ 0.57 $ 0.57 $ 0.61 $ 0.62 $ 0.67 $ 0.22 $ 0.48 $ 0.08 $ 0.19
Net realized and
unrealized gain (loss)
on investments 0.02 (0.68) 0.57 0.31 0.30 0.13 0.11 0.10 0.01 (0.69) 0.08
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.58 $(0.59) $ 1.14 $ 0.88 $ 0.91 $ 0.75 $ 0.78 $ 0.32 $ 0.49 $(0.61) $ 0.27
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions
declared to
shareholders -
From net investment
income $(0.56) $(0.07) $(0.54) $(0.57) $(0.66) $(0.63) $(0.66) $(0.17) $(0.48) $(0.08) $(0.19)
From net realized gain
on investments<F5> -- -- -- (0.01) (0.05) (0.02) -- -- -- -- --
In excess of net
investment income -- (0.02) (0.03) (0.03) -- -- -- -- -- -- --
In excess of net realized
gain on investments (0.01) -- -- -- -- -- -- -- (0.01) -- --
From paid-in capital<F4> -- -- -- -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions
declared to
shareholders $(0.57) $(0.09) $(0.57) $(0.61) $(0.71) $(0.65) $(0.66) $(0.17) $(0.49) $(0.08) $(0.19)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value -
end of period $10.27 $10.26 $10.94 $10.37 $10.10 $ 9.90 $ 9.80 $ 9.68 $10.26 $10.26 $10.95
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return<F6> 5.86% (5.39)%<F9> 11.20% 9.03% 9.50% 7.96% 8.30% 3.43%<F9> 5.00% (5.59)%<F9> 2.48%<F9>
Ratios (to average net
assets)/Supplemental
data<F10>:
Expenses 1.22% 1.21%<F8> 1.29% 1.14% 1.15% 1.03% 0.53% 0.40%<F8> 1.94% 1.93%<F8> 1.93%<F8>
Net investment income 5.52% 5.31%<F8> 5.25% 5.89% 6.11% 6.37% 6.70% 5.98%<F8> 4.80% 4.49%<F8> 4.20%<F8>
Portfolio turnover 27% 4% 12% 9% 42% 58% 78% 5% 27% 4% 12%
Net assets at end of
period (000 omitted) $117,572 $117,117 $123,050 $99,443 $87,898 $72,108 $56,048 $15,832 $10,006 $5,294 $3,818
<FN>
<F1> For the period from the commencement of investment operations, August 12, 1988 to January 31, 1989.
<F2> For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
<F3> For the two months ended March 31, 1994.
<F4> The per share distribution from paid-in capital for the year ended January 31, 1991 was $0.0013.
<F5> The per share distribution from net realized gain on investments for the year ended March 31, 1995 was $0.0014 for
Class A and Class B shares.
<F6> 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.
<F7> Per share data for the periods beginning after January 31, 1994 are based on average shares outstanding.
<F8> Annualized.
<F9> Unannualized.
<F10>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 -- -- -- -- -- $ 0.61 $ 0.60 $ 0.20 -- -- --
Ratios (to average
net assets):
Expenses -- -- -- -- -- 1.17% 1.24% 0.95%<F8> -- -- --
Net investment income -- -- -- -- -- 6.23% 5.99% 5.43%<F8> -- -- --
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
----------------------------------------------------------------------------------------------------------------------------------
Texas Fund
----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
March 31, January 31, March 31, January 31,
----------------------------------------------------------------------------------------------------------------------------------
1995 1994<F10> 1994 1993<F1> 1995 1994<F10> 1994<F2>
----------------------------------------------------------------------------------------------------------------------------------
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 $ 9.88 $10.86 $10.01 $ 9.53 $ 9.89 $10.86 $10.79
------ ------ ------ ------ ------ ------ ------
Income from investment operations<F9> -
Net investment income<F7> $ 0.60 $ 0.10 $ 0.61 $ 0.57 $ 0.50 $ 0.08 $ 0.19
Net realized and unrealized gain
(loss) on investments 0.09 (0.99) 0.86 0.47 0.10 (0.96) 0.09
------ ------ ------ ------ ------ ------ ------
Total from investment operations $ 0.69 $(0.89) $ 1.47 $ 1.04 $ 0.60 $(0.88) $ 0.28
------ ------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.59) $(0.09) $(0.61) $(0.56) $(0.50) $(0.08) $(0.19)
From net realized gain on investments<F4> (0.03) -- (0.01) -- (0.03) -- (0.01)
In excess of net investment income<F3> -- -- -- -- -- (0.01) (0.01)
In excess of net realized gain on investments (0.03) -- -- -- (0.03) -- --
------ ------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.65) $(0.09) $(0.62) $(0.56) $(0.56) $(0.09) $(0.21)
------ ------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.92 $ 9.88 $10.86 $10.01 $ 9.93 $ 9.89 $10.86
====== ====== ====== ====== ====== ====== ======
Total return<F8> 7.42% (8.13)%<F6> 15.08% 11.30%<F6> 6.35% (8.19)%<F6> 2.65%<F6>
Ratios (to average net assets)/
Supplemental data<F7>:
Expenses 0.02% 0.00%<F5> 0.00% 0.00%<F5> 1.02% 1.00%<F5> 1.00%<F5>
Net investment income 6.16% 5.71%<F5> 5.74% 6.03%<F5> 5.14% 4.68%<F5> 4.41%<F5>
Portfolio turnover 104% 1% 7% 40% 104% 1% 7%
Net assets at end of period (000 omitted) $18,318 $17,515 $18,987 $8,485 $2,273 $1,183 $956
<FN>
<F1> For the period from the commencement of investment operations, February 3, 1992 to January 31, 1993.
<F2> For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
<F3> The per share distributions in excess of net investment income for the two months ended March 31, 1994 and for the year
ended January 31, 1994 were $0.004 and $0.003, respectively, for Class A shares.
<F4> 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.
<F5> Annualized.
<F6> Unannualized.
<F7> 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, and if the expense reimbursement agreement had not been in
effect, the net investment income per share and the ratios would have been:
Net investment income $ 0.49 $ 0.07 $ 0.44 $ 0.32 $ 0.38 $ 0.05 $ 0.11
Ratios (to average net assets):
Expenses 1.17% 1.67%<F5> 1.56% 2.67%<F5> 2.24% 2.74%<F5> 2.90%<F5>
Net investment income 5.01% 4.04%<F5> 4.18% 3.36%<F5> 3.92% 2.94%<F5> 2.51%<F5>
<F8> 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.
<F9> Per share data for the periods beginning after January 31, 1994 are based on average shares outstanding.
<F10>For the two months ended March 31, 1994.
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
----------------------------------------------------------------------------------------------------------------------------------
Washington Fund
----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
March 31, January 31, March 31, January 31,
----------------------------------------------------------------------------------------------------------------------------------
1995 1994<F8> 1994 1993<F1> 1995 1994<F8> 1994<F2>
----------------------------------------------------------------------------------------------------------------------------------
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 $ 9.29 $10.25 $ 9.54 $ 9.53 $ 9.29 $10.24 $10.26
------ ------ ------ ------ ------ ------ ------
Income from investment operations<F7> -
Net investment income<F5> $ 0.57 $ 0.09 $ 0.57 $ 0.22 $ 0.48 $ 0.07 $ 0.18
Net realized and unrealized gain (loss)
on investments 0.31 (0.96) 0.78 0.01 0.30 (0.94) 0.05
------ ------ ------ ------ ------ ------ ------
Total from investment operations $ 0.88 $(0.87) $ 1.35 $ 0.23 $ 0.78 $(0.87) $ 0.23
------ ------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.57) $(0.09) $(0.57) $(0.22) $(0.47) $(0.08) $(0.18)
From net realized gain on investments -- -- (0.07) -- -- -- (0.07)
In excess of net investment income<F9> -- -- -- -- -- -- --
In excess of net realized gain on investments (0.01) -- -- -- (0.01) -- --
------ ------ ------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.58) $(0.09) $(0.64) $(0.22) $(0.48) $(0.08) $(0.25)
------ ------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.59 $ 9.29 $10.25 $ 9.54 $ 9.59 $ 9.29 $10.24
====== ====== ====== ====== ====== ====== ======
Total return<F6> 9.80% (8.47)%<F4> 14.55% 2.72%<F4> 8.72% (8.54)%<F4> 2.30%<F4>
Ratios (to average net assets)/
Supplemental data<F5>:
Expenses 0.02% 0.00%<F3> 0.00% 0.00%<F3> 1.02% 1.00%<F3> 1.00%<F3>
Net investment income 6.17% 5.69%<F3> 5.63% 5.64%<F3> 5.14% 4.56%<F3> 4.28%<F3>
Portfolio turnover 44% 3% 26% 12% 44% 3% 26%
Net assets at end of period (000 omitted) $15,364 $17,993 $19,208 $9,574 $2,707 $1,913 $1,528
<FN>
<F1>For the period from the commencement of investment operations, August 7, 1992 to January 31, 1993.
<F2>For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
<F3>Annualized.
<F4>Unannualized.
<F5>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, and if the expense reimbursement agreement had not been
in effect, the net investment income per share and the ratios would have been:
Net investment income $ 0.45 $ 0.07 $ 0.42 $ 0.12 $ 0.36 $ 0.05 $ 0.10
Ratios (to average net assets):
Expenses 1.26% 1.43%<F3> 1.46% 2.47%<F3> 2.33% 2.51%<F3> 2.79%<F3>
Net investment income 4.92% 4.26%<F3> 4.17% 3.17%<F3> 3.83% 3.05%<F3> 2.49%<F3>
<F6>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.
<F7>Per share data for the periods beginning January 31, 1994 are based on average shares outstanding.
<F8>For the two months ended March 31, 1994.
<F9>Per share distributions in excess of net investment income for the two months ended March 31, 1994 were $0.001 and $0.004 for
Class A and Class B shares, respectively.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Municipal Series Trust (the Trust) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Trust presently
consists of nineteen Funds, as follows: MFS Municipal Income Fund, MFS Alabama
Municipal Bond Fund* (Alabama Fund), MFS Arkansas Municipal Bond Fund* (Arkansas
Fund), MFS California Municipal Bond Fund* (California Fund), MFS Florida
Municipal Bond 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* (Tennessee 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 for MFS Municipal Income Fund, is non-diversified.
The Funds denoted with an asterisk above are included within these financial
statements.
During 1994, the Trust changed its fiscal year end from January 31 to March 31.
(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 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.
Repurchase Agreements - Each Fund may enter into repurchase agreements with
institutions that the Trust's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. Each Fund requires
that the securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those securities
in the event of a default under the repurchase agreement. Each Fund monitors, on
a daily basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Fund under each such repurchase agreement.
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.
Written Options - Each Fund may write covered call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security purchased by the Fund. Each Fund, as writer of an option, may have no
control over whether the underlying securities may be sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as a part of an income-producing strategy reflecting the view of
the Fund's management on the direction of interest rates.
Futures Contracts - Each Fund may enter into financial 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 financial futures contracts is
designed to hedge against anticipated future changes in interest rates. For
example, interest rate futures may be used in modifying the duration of the
portfolio without incurring the additional transaction costs involved in buying
and selling the underlying securities. Such transactions may also be entered
into for non-hedging purposes to the extent permitted by applicable law. Should
interest rates move unexpectedly, each Fund may not achieve the anticipated
benefits of the financial 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 both financial statement
and tax reporting purposes as required by federal income tax regulations.
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. That 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 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.
The temporary differences resulting in excess distributions from net investment
income or accumulated net realized gains, arose primarily from the differences
between book and tax accounting due to timing of distributions, losses deferred
for tax purposes and pension expense accruals. Net investment income, net
realized gains and net assets were not affected by this change.
Multiple Classes of Shares of Beneficial Interest - Each Fund offers both Class
A and Class B shares. Class B shares were first offered to the public on
September 7, 1993. Effective January 3, 1994, the California Fund began to offer
Class C shares. The three classes of shares differ in their respective
shareholder servicing agent, distribution and service fees. Shareholders of each
class bear certain expenses that pertain only to that particular class. 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, including distribution and shareholder service fees.
(3) Transactions with Affiliates
Investment Adviser - The Trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
each Fund's average daily net assets. The investment adviser voluntarily agreed
to reduce its fees with respect to the Arkansas Fund to 0.20% of average daily
net assets through October 31, 1993, increasing by 0.05% each calendar quarter
thereafter subject to a maximum of 0.55%; with respect to the California Fund to
0.40% of average net assets; with respect to the Mississippi Fund to 0.00% of
average daily net assets through October 31, 1993 increasing by 0.05% each
calendar quarter thereafter subject to a maximum of 0.55%; and with respect to
the Louisiana, Texas, and Washington Funds to 0.00% of average net assets
through February 28, 1995, and at 0.20% of average net assets thereafter. For
the period presented the amounts of such voluntary reductions, which are
reflected as a reduction of expenses on the Statements of Operations, are as
follows:
<TABLE>
<CAPTION>
Arkansas California Louisiana Mississippi Texas Washington
Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended March 31, 1995 $152,542 $476,700 $90,451 $283,718 $108,347 $97,720
</TABLE>
Under an expense reimbursement agreement with MFS, MFS has agreed to pay all of
the operating expenses, exclusive of management and distribution fees, of the
Louisiana, Mississippi, Texas and Washington Funds until December 31, 2001 (or
December 31, 2002 in the case of the Louisiana Fund) or to the date upon which
the expenses attributable to each Fund is repaid. To accomplish the
reimbursement, each Fund will pay an expense reimbursement fee to MFS of 0.40%
of average daily net assets, with a limitation that immediately after any such
payment the aggregate expenses of each such Fund, including the management fee
but excluding any distribution plan fees, will not exceed 0.95% of average daily
net assets. MFS voluntarily reduced, for an indefinite period, its expense
reimbursement fee to 0.00% of average daily net assets for each Fund. For the
year ended March 31, 1995, the amounts so reduced were as follows:
<TABLE>
<CAPTION>
Louisiana Mississippi Texas Washington
Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$68,281 $347,870 $81,510 $73,447
</TABLE>
To the extent that actual expenses are under the agreed-upon expense
limitations, the excess of the limitation over actual expenses will be applied
to amounts reimbursed by the investment adviser in prior years. At March 31,
1995, unreimbursed expenses owed to the adviser were as follows:
<TABLE>
<CAPTION>
Louisiana Mississippi Texas Washington
Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amount relating to the year ended March 31, 1995 $ 45,965 $(10,876) $ 45,452 $ 58,285
Total amount since commencement of reimbursement agreements 187,835 53,556 232,174 190,927
</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[fjMFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Trust has an
unfunded defined benefit plan for all its independent Trustees. Included in
Trustees' compensation for the period presented is a net periodic pension
expense for each Fund, as follows:
<PAGE>
<TABLE>
<CAPTION>
Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
Fund Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended March 31, 1995 $3,786 $2,448 $11,819 $2,529 $4,644 $4,068 $2,653 $1,285
</TABLE>
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$29,302, $100,116, $74,444, $23,685, $53,458, $41,320, $6,637 and $8,434 for the
year ended March 31, 1995 as its portion of the sales charge on sales of Class A
shares of the Alabama, Arkansas, California, Louisiana, Mississippi, Tennessee,
Texas and Washington Funds, respectively.
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%
of its average daily net assets attributable to Class A shares annually 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. The service fees retained amounted to
$7,477 and $8,346 for the Alabama and Tennessee Funds, respectively. In the case
of the Alabama Fund, MFD is currently waiving the 0.10% distribution fee,
which amounted to $82,488 for the year ended March 31, 1995, for an indefinite
period. Payments under the distribution plan by the Arkansas, California,
Louisiana, Mississippi, Texas, and Washington Funds, will commence on such date
to be determined by the Trustees. Fees incurred under the distribution plan
during the year ended March 31, 1995 were 0.35% and 0.25% of average daily net
assets attributable to Class A shares of the Tennessee and Alabama Funds,
respectively, on an annualized basis and amounted to the following:
Alabama Tennessee
Class A Shares Fund Fund
-------------------------------------------------------------------------------
Total fees incurred under the distribution plan $289,903 $413,832
The Class B and Class C Distribution Plans provide that the Funds will pay MFD a
monthly distribution fee, equal to 0.75% per annum, and a quarterly 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 retains the service fee for accounts not
attributable to a securities dealer. For Class B, the service fees retained
amounted to $527 and $570 for the Alabama and Tennessee Funds. For Class C, the
service fees retained amounted to $1,731 for the California Fund. 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.
Fees incurred under the distribution plans during the year ended March 31, 1995
were 1.00% of average daily net assets attributable to Class B and Class C
shares on an annualized basis and amounted to the following:
<PAGE>
<TABLE>
<CAPTION>
Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
Class B Shares Fund Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total fees incurred under
the distribution plan $37,007 $67,664 $248,272 $21,147 $79,585 $77,488 $18,838 $24,013
California
Class C Shares Fund
--------------------------------------------------------------------------------------------------------------------------
Total fees incurred under the distribution plan $30,592
</TABLE>
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 year ended March 31, 1995
for Class A and Class B shares were the following:
<TABLE>
<CAPTION>
Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
CDSC imposed Fund Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $ 4 $ 2,159 $ 15,182 $ -- $ 1,770 $ -- $ 3,008 $18,268
Class B 22,060 12,360 137,206 4,920 14,243 13,716 10,470 7,867
------ ------ ------- ----- ------ ------ ------ -----
$22,064 $14,519 $152,388 $4,920 $16,013 $13,716 $13,478 $26,135
</TABLE>
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earned
fees for its services as shareholder servicing agent for the year ended March
31, 1995, as specified below. The fee is calculated as a percentage of 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.
<TABLE>
<CAPTION>
Alabama Arkansas California Louisiana Mississippi Tennessee Texas Washington
Fees paid by Fund Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $123,373 $287,850 $434,586 $22,431 $118,525 $177,357 $27,742 $ 23,942
Class B $ 8,141 $ 14,886 $ 54,620 $ 4,655 $ 17,492 $ 17,047 $ 4,142 $ 5,282
Class C -- -- $ 4,589 -- -- -- -- --
</TABLE>
(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 California Louisiana Mississippi Tennessee Texas Washington
Fees paid by Fund Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchases $27,924 $45,103 $174,300 $16,878 $45,324 $40,947 $22,221 $6,221
Sales $25,102 $46,441 $199,967 $13,375 $39,735 $33,193 $20,490 $7,924
</TABLE>
<PAGE>
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 California Louisiana Mississippi Tennessee Texas Washington
Fund Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aggregate cost $82,684 $190,401 $291,144 $17,662 $87,828 $121,319 $19,208 $17,770
------- -------- -------- ------- ------- -------- ------- -------
Gross unrealized appreciation $ 4,634 $ 4,734 $ 11,533 $ 406 $ 1,680 $ 6,223 $ 961 $ 375
Gross unrealized depreciation (400) (3,101) (1,902) (138) (1,585) (1,365) (7) (342)
---- ------ ------ ---- ------ ------ -- ----
Net unrealized appreciation $ 4,234 $ 1,633 $ 9,631 $ 268 $ 95 $ 4,858 $ 954 $ 33
======= ======== ======== ======= ======= ======== ======= =======
</TABLE>
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 their utilization or
expiration.
<TABLE>
<CAPTION>
Alabama California Louisiana Mississippi Tennessee Texas Washington
Expiration Date Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
March 31, 2002 $ -- $ 277,504 $ -- $ -- $ -- $ -- $ --
March 31, 2003 155,891 10,169,212 542,107 940,501 381,262 1,019,734 247,673
</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 California Fund Louisiana Fund
----------------- ---------------- ----------------- ------------------
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 1,021 $10,353 1,828 $17,573 10,839 $ 58,024 561 $ 5,055
Shares issued to shareholders in
reinvestment of distributions 164 1,663 569 5,424 1,356 7,227 62 561
Shares reacquired (1,017) (10,194) (3,147) (29,660) (19,244) (102,193) (253) (2,281)
------ ------- ------ ------- ------- -------- ---- ------
Net increase (decrease) 168 $ 1,822 (750) $(6,663) (7,049) $(36,942) 370 $ 3,335
====== ======= ====== ======= ======= ======== ==== =======
<CAPTION>
Two Months Ended March 31, 1994
(000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 180 $ 1,947 810 $ 8,244 2,485 $ 14,294 115 $ 1,127
Shares issued to shareholders in
reinvestment of distributions 17 175 80 798 215 1,203 8 75
Shares reacquired (216) (2,299) (199) (2,018) (5,297) (30,073) (31) (304)
------ ------- ------ ------- ------- -------- ---- ------
Net increase (decrease) (19) $ (177) 691 $ 7,024 (2,597) $(14,576) 92 $ 898
====== ======= ====== ======= ======= ======== ==== =======
<PAGE>
<CAPTION>
Year Ended January 31, 1994
(000 Omitted)<F1> Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 2,116 $22,650 7,555 $77,199 20,782 $122,320 1,428 $13,909
Shares issued to shareholders in
reinvestment of distributions 89 957 401 4,120 1,322 7,768 31 314
Shares reacquired (803) (8,638) (1,141) (11,716) (8,459) (49,705) (99) (982)
------ ------- ------ ------- ------- -------- ----- -------
Net increase 1,402 $14,969 6,815 $69,603 13,645 $ 80,383 1,360 $13,241
====== ======= ====== ======= ======= ======== ===== =======
<FN>
<F1>For the eleven months ended January 31, 1994 for the California Fund.
</TABLE>
<TABLE>
<CAPTION>
Mississippi Fund Tennessee Fund Texas Fund Washington Fund
---------------- ---------------- ---------------- -----------------
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 2,121 $19,211 1,284 $13,091 402 $ 3,917 183 $ 1,709
Shares issued to shareholders in
reinvestment of distributions 292 2,636 311 3,153 75 732 56 517
Shares reacquired (2,431) (21,719) (1,555) (15,606) (403) (3,875) (573) (5,314)
------ ------- ------ ------- ----- ------- ---- -------
Net increase (decrease) (18) $ 128 40 $ 638 74 $ 774 (334) $(3,088)
====== ======= ====== ======= ===== ======= ==== =======
<CAPTION>
Two Months Ended March 31, 1994
(000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 640 $ 6,194 254 $ 2,715 116 $ 1,199 120 $ 1,182
Shares issued to shareholders in
reinvestment of distributions 40 379 44 459 10 98 10 95
Shares reacquired (446) (4,327) (135) (1,431) (102) (1,028) (68) (665)
---- ------- ---- ------- ---- ------- --- -------
Net increase 234 $ 2,246 163 $ 1,743 24 $ 269 62 $ 612
==== ======= ==== ======= ==== ======= === =======
Year Ended January 31, 1994
(000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 4,669 $45,330 2,162 $23,094 951 $10,063 975 $ 9,814
Shares issued to shareholders in
reinvestment of distributions 188 1,835 245 2,628 40 419 44 443
Shares reacquired (832) (8,111) (747) (8,011) (91) (960) (149) (1,489)
----- ------- ----- ------- --- ------- ---- -------
Net increase 4,025 $39,054 1,660 $17,711 900 $ 9,522 870 $ 8,768
===== ======= ===== ======= === ======= ==== =======
<CAPTION>
Class B Shares
Alabama Fund Arkansas Fund California Fund Louisiana Fund
---------------- ---------------- ---------------- ------------------
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 203 $ 2,054 167 $ 1,621 2,519 $13,408 168 $ 1,525
Shares issued to shareholders in
reinvestment of distributions 7 74 19 181 109 580 8 68
Shares reacquired (62) (626) (46) (436) (1,141) (6,041) (54) (474)
--- ------- --- ------- ------ ------- --- -------
Net increase 148 $ 1,502 140 $ 1,366 1,487 $ 7,947 122 $ 1,119
=== ======= === ======= ====== ======= === =======
<CAPTION>
Two Months Ended March 31, 1994
(000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 71 $ 758 112 $ 1,141 784 $ 4,481 49 $ 484
Shares issued to shareholders in
reinvestment of distributions 1 6 2 20 12 69 1 4
Shares reacquired (1) (7) -- -- (168) (952) (1) (4)
--- ------- --- ------- ---- ------- -- -------
Net increase 71 $ 757 114 $ 1,161 628 $ 3,598 49 $ 484
=== ======= === ======= ==== ======= == =======
<CAPTION>
Year Ended January 31, 1994
(000 Omitted)<F1> Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 206 $ 2,245 534 $ 5,546 3,280 $19,513 152 $ 1,528
Shares issued to shareholders in
reinvestment of distributions 1 8 2 25 19 116 1 7
Shares reacquired -- -- (41) (423) (44) (263) (28) (277)
--- ------- --- ------- ----- ------- --- -------
Net increase 207 $ 2,253 495 $ 5,148 3,255 $19,366 125 $ 1,258
=== ======= === ======= ===== ======= === =======
<CAPTION>
Mississippi Fund Tennessee Fund Texas Fund Washington Fund
----------------- ----------------- ----------------- -----------------
Year Ended March 31, 1995 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 385 $ 3,480 505 $ 5,138 137 $ 1,349 102 $ 954
Shares issued to shareholders in
reinvestment of distributions 19 173 19 192 6 60 8 73
Shares reacquired (85) (749) (65) (664) (34) (330) (34) (310)
--- ------- --- ------- --- ------- --- -------
Net increase 319 $ 2,904 459 $ 4,666 109 $ 1,079 76 $ 717
=== ======= === ======= === ======= === =======
<CAPTION>
Two Months Ended March 31, 1994
(000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 82 $ 787 166 $ 1,750 38 $ 400 56 $ 545
Shares issued to shareholders in
reinvestment of distributions 2 22 1 15 1 4 1 8
Shares reacquired (1) (11) (1) (5) (7) (73) -- --
-- ------- --- ------- -- ------- -- -------
Net increase 83 $ 798 166 $ 1,760 32 $ 331 57 $ 553
== ======= === ======= == ======= == =======
<CAPTION>
Year Ended January 31, 1994 (000 Omitted) Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 628 $ 6,224 352 $ 3,806 88 $ 952 154 $ 1,566
Shares issued to shareholders in
reinvestment of distributions 3 28 2 27 1 4 1 13
Shares reacquired (4) (39) (4) (40) (1) (8) (6) (60)
--- ------- --- ------- -- ------- --- -------
Net increase 627 $ 6,213 350 $ 3,793 88 $ 948 149 $ 1,519
=== ======= === ======= == ======= === =======
<FN>
<F1>For the eleven months ended January 31, 1994 for the California Fund.
</TABLE>
<TABLE>
<CAPTION>
Class C Shares 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
===== =======
Two Months Ended March 31, 1994 (000 Omitted) Shares Amount
----------------------------------------------------------------------------
Shares sold 158 $ 901
Shares issued to shareholders in reinvestment
of distributions 1 4
Shares reacquired (3) (16)
----- -------
Net increase 156 $ 889
===== =======
Eleven Months Ended January 31, 1994 (000 Omitted)** Shares Amount
----------------------------------------------------------------------------
Shares sold 154 $ 913
Shares issued to shareholders in reinvestment
of distributions -- --
Shares reacquired -- --
----- -------
Net increase 154 $ 913
===== =======
**For the period from the commencement of offering of Class C shares, January
3, 1994 to January 31, 1994.
</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, or an affiliate of MFS, in an
unsecured line of credit with a bank which permits borrowings up to $350
million, collectively. Borrowings may be made to temporarily finance the
repurchase of Fund shares. Interest is charged to each Fund, based on its
borrowings, at a rate equal to the bank's base rate. In addition, a commitment
fee, based on the average daily unused portion of the line of credit, is
allocated among the participating Funds at the end of each quarter. The
commitment fee allocated to each of the Funds for the year ended March 31, 1995
ranged from $244 to $5,035.
(7) Financial Instruments
The Funds may 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 written
options and futures contracts. The notional or contractual amounts of these
instruments represent the investment each 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.
A summary of open futures contracts under these financial instruments at March
31, 1995 is as follows:
<PAGE>
Unrealized
Appreciation
Fund Description Expiration Contracts Position (Depreciation)
--------------------------------------------------------------------------------
Arkansas U.S. Treasury June 1995 286 Short $ 153,416
Louisiana U.S. Treasury June 1995 20 Short $ (41,382)
Mississippi U.S. Treasury June 1995 60 Short $(124,147)
Tennessee U.S. Treasury June 1995 66 Short $ 34,625
Texas U.S. Treasury June 1995 15 Short $ (31,037)
At March 31, 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
indices. Indexed securities may be more volatile than the underlying instrument
itself. The following is a summary of indexed securities held at March 31, 1995:
<TABLE>
<CAPTION>
Unrealized
Principal Appreciation
Fund Description Index (000 Omitted) Value (Depreciation)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alabama Fund Puerto Rico Telephone Authority Rev., 4.47s, 2004 Corp. Swap Rate Curve $1,000 $ 823,820 $(176,180)
Arkansas Fund Puerto Rico Public Buildings Authority, 5.385s, 2016 PSA Municipal Swap $2,000 $1,743,100 $(256,900)
Puerto Rico Telephone Authority Rev., 4.47s, 2004 Corp. Swap Rate Curve $4,000 $3,295,280 $(704,720)
California Fund Puerto Rico Public Buildings Authority, 5.385s, 2016 PSA Municipal Swap $1,000 $ 871,550 $(128,450)
Mississippi Fund Puerto Rico Public Buildings Authority, 5.385s, 2016 PSA Municipal Swap $1,000 $ 871,550 $(128,450)
Tennessee Fund Puerto Rico Public Buildings Authority, 5.385s, 2016 PSA Municipal Swap $2,000 $1,743,100 $(256,900)
Puerto Rico Telephone Authority Rev., 4.47s, 2004 Corp. Swap Rate Curve $2,000 $1,647,640 $(352,360)
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Municipal Series Trust and the Shareholders of the
Portfolios of MFS Municipal Series Trust:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of MFS Alabama Municipal Bond Fund, MFS Arkansas
Municipal Bond Fund, MFS California Municipal Bond Fund, MFS Louisiana Municipal
Bond Fund, MFS Mississippi Municipal Bond Fund, MFS Tennessee Municipal Bond
Fund, MFS Texas Municipal Bond Fund and MFS Washington Municipal Bond Fund
(portfolios of MFS Municipal Series Trust) as of March 31, 1995, the related
statements of operations for the year then ended, the statements of changes in
net assets for the year ended March 31, 1995, the two months ended March 31,
1994 and for the year ended January 31, 1994 (except for the MFS California
Municipal Bond Fund which is for the eleven months ended January 31, 1994), and
the financial highlights for each of the years in the eight-year period ended
March 31, 1995 (except for MFS California Municipal Bond Fund which is for the
year ended March 31, 1995, the two months ended March 31, 1994, the eleven
months ended January 31, 1994 and for each of the years in the eight-year period
ended February 28, 1993). These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
March 31, 1995 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
aforementioned portfolios of MFS Municipal Series Trust at March 31, 1995, the
results of their operations, the changes in their net assets, and their
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 5, 1995
-------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
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.
<TABLE>
<S> <C>
STOCK LIMITED MATURITY BOND
========================================= ========================================
Massachusetts Investors Trust MFS(R) Government Limited Maturity Fund
----------------------------------------- ----------------------------------------
Massachusetts Investors Growth Stock Fund MFS(R) Limited Maturity Fund
----------------------------------------- ----------------------------------------
MFS(R) Capital Growth Fund MFS(R) Municipal Limited Maturity Fund
----------------------------------------- ----------------------------------------
MFS(R) Emerging Growth Fund WORLD
----------------------------------------- ========================================
MFS(R) Gold & Natural Resources Fund MFS(R) World Asset Allocation Fund
----------------------------------------- ----------------------------------------
MFS(R) Growth Opportunities Fund MFS(R) World Equity Fund
----------------------------------------- ----------------------------------------
MFS(R) Managed Sectors Fund MFS(R) World Governments Fund
----------------------------------------- ----------------------------------------
MFS(R) OTC Fund MFS(R) World Growth Fund
----------------------------------------- ----------------------------------------
MFS(R) Research Fund MFS(R) World Total Return Fund
----------------------------------------- ----------------------------------------
MFS(R) Value Fund
-----------------------------------------
STOCK AND BOND NATIONAL TAX-FREE BOND
========================================= ========================================
MFS(R) Total Return Fund MFS(R) Municipal Bond Fund
----------------------------------------- ----------------------------------------
MFS(R) Utilities Fund MFS(R) Municipal High Income Fund
----------------------------------------- (closed to new investors)
----------------------------------------
BOND MFS(R) Municipal Income Fund
========================================= ----------------------------------------
MFS(R) Bond Fund
-----------------------------------------
MFS(R) Government Mortgage Fund STATE TAX-FREE BOND
----------------------------------------- ========================================
MFS(R) Government Securities Fund Alabama, Arkansas, California, Florida,
----------------------------------------- Georgia, Louisiana, Maryland, Massachusetts,
MFS(R) High Income Fund Mississippi, New York, North Carolina,
----------------------------------------- Pennsylvania, South Carolina, Tennessee,
MFS(R) Intermediate Income Fund Texas, Virginia, Washington, West Virginia
----------------------------------------- ----------------------------------------
MFS(R) Strategic Income Fund
(formerly MFS(R) Income & Opportunity Fund MONEY MARKET
----------------------------------------- ========================================
MFS(R) Cash Reserve Fund
----------------------------------------
MFS(R) Government Money Market Fund
----------------------------------------
MFS(R) Money Market Fund
----------------------------------------
<PAGE>
MFS(R) MUNICIPAL NUMBER BULK RATE
SERIES TRUST 1 U.S. POSTAGE
DALBAR PAID
500 Boylston Street TOP-RATED SERVICE PERMIT #55638
Boston, MA 02116 BOSTON, MA
MFS(R) Alabama Municipal Bond Fund
MFS(R) Arkansas Municipal Bond Fund
MFS(R) California Municipal Bond Fund
MFS(R) Louisiana Municipal Bond Fund
MFS(R) Mississippi Municipal Bond Fund
MFS(R) Tennessee Municipal Bond Fund
MFS(R) Texas Municipal Bond Fund
MFS(R) Washington Municipal Bond Fund
[Logo] MFS
THE FIRST NAME IN MUTUAL FUNDS
54/254
55/255
27/227/337
49/249
58/258
53/253
57/257
MST-2B 5/95 28.5M 59/259
</TABLE>
