[front cover]
[MFS logo] Semiannual Report
September 30, 1996
MFS(R) Municipal Series Trust
For the States of: Alabama, Arkansas, California, Florida, Georgia,
Maryland, and Massachusetts
[photo of silhouette of 2 men speaking in front of window]
America learns how "We invented the mutual fund", (see page 48)
<PAGE>
Table of Contents
Letter from the Chairman 1
Fund Managers' Overview 2
Fund Managers' Profiles 2
Performance Summary 3
Fund Facts 4
Portfolio of Investments 5
Financial Statements 20
Notes to Financial Statements 42
MFS Family of Funds 47
Trustees and Officers 49
[screened box]
Highlights
[bullet] Concerns that strong economic data might translate into higher
inflation helped create a period of significant volatility in the
fixed-income markets over the past six months.
[bullet] In this environment the yield on long-term, high-grade municipal
bonds fluctuated from a low of 5.45% to a high of 6.00%, before
settling at 5.55% on September 30.
[bullet] The supply of new issues remains moderate as state and local
governments continue to be conservative relative to new spending and
borrowing, while the fiscal condition of these governments is the
strongest it has been in several years.
[bullet] We have generally kept portfolio durations (a measure of interest
rate sensitivity) neutral to short relative to the benchmark Lehman
Brothers Municipal Bond Index, a strategy which reduced the
volatility of the Funds, given the increase in yields.
[end screened box]
<PAGE>
Letter from the Chairman
[photo of A. Keith Brodkin]
Dear Shareholders:
As we enter the last quarter of 1996, the U.S. economy appears to have
settled into a pattern of moderate growth and inflation -- two factors that
we think can be important contributors to a favorable long-term investment
climate. During the first quarter of 1996, real (inflation-adjusted) economic
growth was 2.3% on an annualized basis, followed by a rate of 4.7% in the
second quarter. Real growth in gross domestic product has surpassed our
expectations this year, and we now expect that growth for all of 1996 could
exceed 2.5%. Although individual consumers appear to be carrying an excessive
debt load, the consumer sector itself, which represents two-thirds of the
economy, continues to be impressive in its support of the automobile and
housing markets. Consumer spending has also been positively impacted by
widespread job growth and, more recently, increasing wages. However, recent
statistics appear to be showing signs of a slowdown in consumer spending.
This is particularly true when considering overall retail sales, which have
been flat for several months. Furthermore, the economies of Europe and Japan
continue to be in the doldrums, weakening U.S. export markets while subduing
the capital spending plans of American corporations. While economic growth
should continue, we expect it could slacken toward the end of the year.
In the bond market, persistent signs of economic weakness led to decreases
in short-term interest rates by the Federal Reserve Board in late 1995 and
early 1996. Should signs of more rapid economic growth and, particularly, of
higher inflation resurface, we would expect the Fed to maintain its
anti-inflationary stance. In the beginning of the year, the bond market
traded in a narrow range as investors shifted between concern for the lack of
a budget resolution in Washington and hope that sluggish economic reports and
low inflation might lead to lower interest rates. Later, fixed-income markets
began reacting to conflicting signals regarding the economy's strength with
more volatile trading patterns marked by an upward bias in interest rates.
Interest rates may move even higher over the coming months, but we believe
the current rise in bond yields is reaching a point where fixed-income
markets are equitably valued.
Finally, as you may notice, this report to shareholders incorporates a
number of changes which we hope you will find informative and useful.
Following the Fund Managers' Overview, we have added new information on the
Funds' holdings. Near the back of the report, telephone numbers and addresses
are listed if you would like to contact MFS.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
October 10, 1996
1
<PAGE>
Fund Managers' Overview
Dear Shareholders:
The six months ended September 30, 1996 marked a period of significant
volatility in the fixed-income markets. Yields on 30-year U.S. Treasury bonds
ranged from a low of 6.60% to a high of 7.19% before settling at 6.92% on
September 30. This represented an increase of approximately 30 basis points
(0.30%) from the beginning of the period. The increase in rates experienced
during this period was primarily a result of concerns that
greater-than-expected job growth and other strong economic data would
translate into higher inflation rates.
Municipal bonds experienced the same type of volatility during this
period. The yield on long-term, high-grade municipals fluctuated between a
low of 5.45% and a high of 6.00% before settling at 5.55% on September 30.
This represented a decline of about 15 basis points (0.15%) from the
beginning of the period. Perhaps the most important aspect of the municipal
market during the past six months has been its dramatically favorable
performance compared to the U.S. Treasury market. The yield ratio of 30-year
municipals rated "AAA" by Standard & Poor's to comparable maturity Treasuries
has declined from 86% to 80%. (Note that the principal value and interest on
Treasury securities are guaranteed by the U.S. government if held to
maturity.) These trends are attributable to the municipal market's favorable
technical position. New-issue supply remains moderate as state and local
governments continue to be conservative relative to new spending and
borrowing. At the same time, the surge in redeemed bonds has led to a
decrease in the outstanding tradable supply. On the demand side, property and
casualty insurance companies have been strong buyers and retail interest has
remained consistent. Further aiding the decline in yield ratios has been the
apparent collapse of support for extreme tax reform proposals.
The overall strength of municipal credits has also contributed to the
market's good relative performance. The fiscal condition of state and local
governments is the strongest it has been in several years, owing to a healthy
economy and generally sound fiscal practices. Most revenue bond issuers have
also posted favorable results. These trends, along with the continued
dramatic proliferation of bond insurance, have resulted in continued
historically narrow yield spreads in the market. Attractive values and
unusual opportunities in the investment- grade segment of the municipal
market have therefore diminished.
During the past six months, we have generally kept portfolio durations
neutral to short relative to the benchmark Lehman Brothers Municipal Bond
Index (an unmanaged index of national municipal bond investments rated "Baa"
or higher), primarily by hedging with Treasury futures contracts. This
reduced the volatility of the Funds given the increase in yields. We expect
to maintain this position into the foreseeable future. We have also been
seeking to increase the Funds' dividends by purchasing bonds with higher book
yields, or yields comparable to those at the time of issuance, and bonds with
better call protection, that is, those not imminently eligible to be called
by the issuer. Finally, in light of very narrow yield spreads, we have tried
to improve credit quality when possible. We feel these strategies will
enhance the Funds' performance potential and earnings sustainability.
We are pleased to report that we recently made some key additions to our
staff of municipal credit analysts, and we believe the group is now one of
the strongest in the industry. The depth and experience of this staff will be
invaluable to us as we examine important credit developments such as: the new
welfare reform bill's effect on specific municipal credits; the fiscal
ramifications of future efforts to balance the federal budget; the
increasingly competitive environment facing electric utilities as a result of
deregulation trends; and the effects of continuing cost pressures on the
changing health care industry.
Respectfully,
/s/ David R. King /s/ David B. Smith
David R. King and David B. Smith
Fund Managers
[screened box]
Fund Managers' Profiles
David King has been a member of the MFS investment staff since 1985. A
graduate of the University of New Hampshire and the Babson College Graduate
School of Business Administration, he began his career at MFS as a member of
the Fixed Income Department and was named Assistant Vice President -
Investments in 1987. In 1988 he was named Vice President - Investments. Mr.
King is a Chartered Financial Analyst (C.F.A.) and currently has portfolio
management responsibilities for the Alabama, Arkansas, Florida, and Maryland
state Funds.
David Smith has been a member of the MFS investment staff since 1988. A
graduate of Union College and the Babson College Graduate School of Business
Administration, he began his career at MFS as a Senior Treasury Analyst in
the Corporate Treasury Department. He was named a Research Analyst in the
Fixed Income Department in 1989, Investment Officer in 1990, Assistant Vice
President - Investments in 1991 and Vice President - Investments in 1993. Mr.
Smith is a C.F.A. and currently has portfolio management responsibilities for
the California, Georgia, and Massachusetts state Funds.
[end screened box]
2
<PAGE>
Performance Summary
Because mutual funds like MFS Municipal Series Trust are designed for
investors with long-term goals, we have provided cumulative results as well
as the average annual total returns for Class A, Class B, and Class C shares
for the applicable time periods.
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MFS Alabama Municipal Bond Fund 6 Months 1 Year 5 Years Life 6 Months 1 Year 5 Years Life
-------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
Cumulative Total Return +3.05% +5.60% +41.97% +64.87% +2.62% +4.74% +38.43% +60.65%
-------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
Average Annual Total Return +3.05% +5.60% +7.26% +7.63% +2.62% +4.74% +6.72% +7.22%
-------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
SEC Results -- +0.54% +6.22% +6.86% -- +0.73% +6.41% +7.22%
-------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ ------------------------------------------
MFS Arkansas Municipal Bond Fund 6 Months 1 Year 5 Years Life 6 Months 1 Year 5 Years Life
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return +2.78% +5.36% -- +34.20% +2.34% +4.46% -- +30.13%
- ---------------------------------- ----------- ------- -------- --------- ----------- ------- --------- ----------
Average Annual Total Return +2.78% +5.36% -- +6.32% +2.34% +4.46% -- +5.64%
- ---------------------------------- ----------- ------- -------- --------- ----------- ------- --------- ----------
SEC Results -- +.32% -- +5.21% -- +0.45% -- +5.29%
- ---------------------------------- ----------- ------- -------- --------- ----------- ------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ ------------------------------------------
MFS California Municipal Bond Fund* 6 Months 1 Year 5 Years Life 6 Months 1 Year 5 Years Life
--------------------------------- ----------- -------- --------- ---------- ---------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return +3.11% +6.52% +39.60% +101.17% +2.65% +5.56% +35.41% +95.25%
--------------------------------- ----------- -------- --------- ---------- ---------- -------- --------- ----------
Average Annual Total Return +3.11% +6.52% +6.90% +7.24% +2.65% +5.56% +6.25% +6.92%
--------------------------------- ----------- -------- --------- ---------- ---------- -------- --------- ----------
SEC Results -- +1.52% +5.86% +6.72% -- +1.56% +5.94% +6.92%
--------------------------------- ----------- -------- --------- ---------- ---------- -------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
Class C
------------------------------------------
MFS California Municipal Bond Fund* 6 Months 1 Year 5 Years Life
--------------------------------- ----------- -------- --------- ----------
<S> <C> <C> <C> <C>
Cumulative Total Return +2.59% +5.45% +35.41% +95.61%
--------------------------------- ----------- -------- --------- ----------
Average Annual Total Return +2.59% +5.45% +6.31% +6.94%
--------------------------------- ----------- -------- --------- ----------
SEC Results -- +4.45% +6.31% +6.94%
--------------------------------- ----------- -------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ ------------------------------------------
MFS Florida Municipal Bond Fund 6 Months 1 Year 5 Years Life 6 Months 1 Year 5 Years Life
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return +2.66% +5.76% -- +30.15% +2.20% +4.82% -- +26.82%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
Average Annual Total Return +2.66% +5.76% -- +6.81% +2.20% +4.82% -- +6.12%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
SEC Results -- +0.72% -- +5.70% -- +0.82% -- +5.78%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ ------------------------------------------
MFS Georgia Municipal Bond Fund* 6 Months 1 Year 5 Years Life 6 Months 1 Year 5 Years Life
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return +2.72% +4.94% +37.20% +79.57% +2.40% +4.09% +33.89% +75.27%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
Average Annual Total Return +2.72% +4.94% +6.53% +7.24% +2.40% +4.09% +6.01% +6.93%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
SEC Results -- -0.01% +5.50% +6.61% -- +0.10% +5.69% +6.93%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ ------------------------------------------
MFS Maryland Municipal Bond Fund* 6 Months 1 Year 5 Years Life 6 Months 1 Year 5 Years Life
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return +2.55% +5.47% +33.07% +90.20% +2.19% +4.72% +30.08% +85.96%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
Average Annual Total Return +2.55% +5.47% +5.88% +6.64% +2.19% +4.72% +5.40% +6.40%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
SEC Results -- +0.45% +4.86% +6.13% -- +0.72% +5.07% +6.40%
--------------------------------- ----------- -------- --------- ---------- ----------- -------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ ------------------------------------------
MFS Massachusetts Municipal Bond Fund* 6 Months 1 Year 5 Years Life 6 Months 1 Year 5 Years Life
- --------------------------------------- ----------- -------- ------------------- ----------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative Total Return +2.63% +5.14% +37.65% +95.25% +2.25% +4.47% +34.71% +91.09%
- --------------------------------------- ----------- -------- ------------------- ----------- -------- -------------------
Average Annual Total Return +2.63% +5.14% +6.60% +6.92% +2.25% +4.47% +6.14% +6.69%
- --------------------------------------- ----------- -------- ------------------- ----------- -------- -------------------
SEC Results -- +0.13% +5.56% +6.40% -- +0.48% +5.83% +6.69%
- --------------------------------------- ----------- -------- ------------------- ----------- -------- -------------------
</TABLE>
*Performance results reflect any applicable expense subsidies and waivers,
without which the performance results would have been less favorable.
Subsidies and waivers may be rescinded at any time. See prospectus for
details.
3
<PAGE>
Performance Summary - continued
Class A SEC results include the maximum 4.75% sales charge. Class B SEC
results reflect the applicable contingent deferred sales charge (CDSC), which
declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C
shares have no initial sales charge, but along with Class B shares, have
higher annual fees and expenses than Class A shares. Class C share purchases
made on or after April 1, 1996 will be subject to a 1% CDSC if redeemed
within 12 months of purchase. See the prospectus for details.
Class B and Class C share performance includes the performance of the
relevant Fund's Class A shares for periods prior to the commencement of
offering of Class B shares on September 7, 1993 and of Class C shares on
January 3, 1994. Sales charges and operating expenses for Class A, Class B,
and Class C shares differ. The Class A share performance, which is included
within the Class B and Class C share SEC performance, has been adjusted to
reflect the CDSC generally applicable to Class B and Class C shares rather
than the initial sales charge generally applicable to Class A shares. Class B
and Class C share performance has not been adjusted, however, to reflect
differences in operating expenses (e.g., Rule 12b-1 fees), which generally
are lower for Class A shares.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past
performance is no guarantee of future results.
[screened box]
Fund Facts
Strategy: 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 its name refers.
Commencement of
investment operations: Alabama: February 1, 1990
Arkansas: February 3, 1992
California: June 18, 1985
Florida: February 3, 1992
Georgia: June 6, 1988
Maryland: October 31, 1984
Massachusetts: April 9, 1985
Size as of
September 30, 1996: Alabama: $87.0 million
Arkansas: $163.3 million
California: $291.8 million
Florida: $98.2 million
Georgia: $75.1 million
Maryland: $148.4 million
Massachusetts: $257.7 million
[end screened box]
4
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1996
MFS ALABAMA MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000) Omitted) Value
-- ------------------------------------------------------- --------------
General Obligation - 13.5%
Birmingham, AL, 8s, 2015 $1,150 $ 1,206,166
Birmingham, AL, 5.125s, 2017 1,000 916,570
Hoover, AL, AMBAC, 5s, 2020 1,120 1,008,470
Huntsville, AL, 5.5s, 2020 3,000 2,859,480
Shelby County, AL, 7.4s, 2007 1,000 1,073,590
Shelby County, AL, 7.7s, 2017 800 883,952
Shelby County, AL, MBIA, 0s, 2011 3,000 1,209,030
State of Alabama, 0s, 2004 2,500 1,658,575
State of Alabama, 0s, 2006 1,165 665,122
State of Alabama, 7.1s, 2010 250 271,925
--------------
$11,752,880
-- ------------------------------------------------------- --------------
State and Local Appropriation - 4.3%
Alabama Building Renovation Finance
Authority Rev., 7.45s, 2011 $1,500 $ 1,655,415
Montgomery County, AL, Department of
Human Resources Rev., 7s, 2007 1,000 1,059,840
Puerto Rico Public Buildings
Authority, Education & Health Rev.,
5.6s, 2008 500 502,750
Puerto Rico Public Buildings
Authority, Education & Health Rev.,
5.5s, 2021 500 481,655
--------------
$ 3,699,660
-- ------------------------------------------------------- --------------
Refunded and Special Obligations - 13.9%
Alabama Mental Health Finance
Authority, 7.375s, 1999 $ 250 $ 271,755
Alexander City, AL, 0s, 2001 1,000 327,110
Alexander City, AL, 0s, 2001 1,000 304,180
Alexander City, AL, 0s, 2001 1,250 353,575
Baldwin County, AL, Eastern Shore
Health Care Authority (Thomas),
8.5s, 2001 1,000 1,166,360
Birmingham, AL, Public Parks &
Recreation Board Rev. (Legion Park),
7.25s, 1999 400 436,480
Birmingham, AL, 7.4s, 1999 1,000 1,086,840
Birmingham, AL, Waterworks & Sewer
Board Rev., 7.2s, 2000 500 547,345
Birmingham, AL, Historical
Preservation Authority Rev. (Kelly
Ingram/Civil Rights), 7.2s, 2001 1,000 1,113,130
Gadsden East, AL, Medical Clinic Board
Rev. (Baptist Hospital), 7.8s, 2001 2,000 2,308,660
Hoover, AL, Board of Education, AMBAC,
6.625s, 2001 1,000 1,092,920
Morgan County-Decatur, AL, Hospital
Board Rev., 7.875s, 1999 750 822,465
Puerto Rico Highway & Transportation
Authority, 6.5s, 2002 1,000 1,106,420
University of Alabama, University
Housing Rev., MBIA, 7.1s, 2001 1,000 1,117,660
--------------
$12,054,900
-- ------------------------------------------------------- --------------
Airport and Port Revenue - 6.7%
Alabama, Docks Department, Docks
Facilities Rev., BIGI, 7.6s, 2012 $2,600 $ 2,781,090
Birmingham, AL, Airport Rev., AMBAC,
5.25s, 2020 1,000 923,380
Mobile, AL, Airport Authority Rev.,
7.375s, 2012 1,000 1,010,150
Mobile, AL, Airport Authority Rev.,
8.875s, 2015 1,000 1,087,000
--------------
$ 5,801,620
-- ------------------------------------------------------- --------------
Electric and Gas Utility Revenue - 3.3%
DeKalb & Cherokee County, AL, Gas
Rev., AMBAC, 5.4s, 2016 $2,000 $ 1,918,400
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000) Omitted) Value
-- ------------------------------------------------------- --------------
Electric and Gas Utility Revenue - continued
Puerto Rico Telephone Authority Rev.,
AMBAC, 5.59s, 2004S. $1,000 $ 930,210
--------------
$ 2,848,610
-- ------------------------------------------------------- --------------
Health Care Revenue - 6.7%
Baldwin County, AL, Eastern Shore
Health Care (Thomas Hospital),
6.75s, 2015 $1,000 $ 1,006,240
Birmingham, AL, Special Care
Facilities (Daughters of Charity-St.
Vincents), 5.25s, 2015 1,000 934,480
Cullman, AL, Medical Park South
Clinic, "A", 6.5s, 2023 1,000 978,850
Montgomery, AL, Medical Clinic Board
Rev. (Jackson Hospital & Clinic),
7s, 2015 695 757,974
Montgomery, AL, Medical Clinic Board
Rev. (Jackson Hospital & Clinic),
7s, 2015 2,030 2,115,179
--------------
$ 5,792,723
-- ------------------------------------------------------- --------------
Industrial Revenue (Corporate Guarantee) - 9.5%
Butler, AL, Industrial Development
Board, Solid Waste Rev. (James River
Corp.), 8s, 2028 $1,000 $ 1,103,070
Camden, AL, Industrial Development
Board Pollution Control Rev.
(Macmillian Bloedel), 7.75s, 2009 500 537,430
Courtland, AL, Industrial Development
Board, Solid Waste Disposal Rev.
(Champion International Corp.),
5.9s, 2017 1,000 959,640
Courtland, AL, Industrial Development
Board, Solid Waste Disposal Rev.
(Champion International Corp.),
7.75s, 2020 1,485 1,585,341
Mobile, AL, Industrial Development
Board, Dock & Wharf Rev. (Ideal
Basic), 6.75s, 2004 270 270,845
Mobile, AL, Industrial Development
Board, Dock & Wharf Rev. (Ideal
Basic), 6.875s, 2009 1,075 1,078,795
Piedmont, AL, Industrial Development
Board Rev. (Springs Industries),
8.25s, 2010 1,000 1,088,810
Tarrant City, AL, Industrial
Development Board Rev. (Vulcan
Materials Co.), 7.5s, 2011 1,500 1,638,060
--------------
$ 8,261,991
-- ------------------------------------------------------- --------------
Insured Health Care Revenue - 6.4%
Alabama, Special Care Facilities
Financing Authority, (Daughters of
Charity), AMBAC, 5s, 2025 $1,500 $ 1,322,760
Huntsville, AL, Health Care Facilities
Rev., MBIA, 6.375s, 2022 850 887,511
Lauderdale County & Florence, AL,
(Eliza Coffee Memorial Hospital),
MBIA, 5.75s, 2014 1,000 992,050
Montgomery, AL, Medical Clinic Board
Rev. (Jackson Hospital & Clinic),
AMBAC, 5.875s, 2016 1,000 1,008,210
University of Alabama, Hospital Rev.
(Birmingham), MBIA, 5s, 2014 1,500 1,387,275
--------------
$ 5,597,806
-- ------------------------------------------------------- --------------
5
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000) Omitted) Value
-- ------------------------------------------------------- --------------
Multi-Family Housing Revenue - 2.1%
Alabama Housing Finance Authority,
Multi-Family Residential Development
Rev. (St. Jude), FHA, 7.25s, 2023 $1,415 $ 1,483,939
Puerto Rico Housing Finance Corp.,
Multi-Family Mortgage Rev., 7.5s,
2015 355 372,512
--------------
$ 1,856,451
-- -------------------------------------- ---------------- --------------
Sales and Excise Tax Revenue - 1.5%
Alabama Mental Health Finance
Authority, MBIA, 5.5s, 2015 $1,300 $ 1,267,292
-- -------------------------------------- ---------------- --------------
Single Family Housing Revenue - 5.3%
Alabama Housing Finance Authority,
Single Family Mortgage Rev., 6.55s,
2014 $2,465 $ 2,570,379
Alabama Housing Finance Authority,
Single Family Mortgage Rev., GNMA,
7.4s, 2022 705 736,034
Alabama Housing Finance Authority,
Single Family Mortgage Rev., GNMA,
7.5s, 2022 470 496,955
Alabama Housing Finance Authority,
Single Family Mortgage Rev., GNMA,
7.6s, 2022 150 156,951
Alabama Housing Finance Authority,
Single Family Mortgage Rev., GNMA,
7.75s, 2022 410 430,758
Alabama Housing Finance Authority,
Single Family Mortgage Rev., GNMA,
7.9s, 2022 215 226,442
--------------
$ 4,617,519
-- -------------------------------------- ---------------- --------------
Universities - 8.4%
Alabama Agriculture & Mechanics
University, MBIA, 5.75s, 2013 $ 500 $ 501,785
Alabama Agriculture & Mechanics
University, MBIA, 5.5s, 2020 2,545 2,462,516
Alabama Board of Education Rev.,
(Shelton State Community College),
MBIA, 6s, 2014 1,000 1,039,910
Homewood, AL, Educational Building
Authority, Educational Facilities
Rev. (Samford University), 6.5s,
2016 1,000 1,045,090
UAB Educational Foundation, AL,
Student Housing Rev., 5.35s, 2019 1,630 1,517,237
University of Southern Alabama,
University Rev. (Tuition), AMBAC,
5s, 2015 775 714,697
--------------
$ 7,281,235
-- -------------------------------------- ---------------- --------------
Water and Sewer Utility Revenue - 14.0%
Alabama Water Pollution Control
Authority, 7.75s, 2012 $ 920 $ 977,840
Arab, AL, Waterworks Board, Water
Rev., MBIA, 7.05s, 2016 1,000 1,093,700
Bessemer, AL, Water Rev., AMBAC,
5.75s, 2026 1,000 995,820
Birmingham, AL, Waterworks & Sewer
Board Rev., 5.375s, 2020 2,000 1,889,540
Birmingham, AL, Waterworks & Sewer
Board Rev., 5.5s, 2020 1,000 960,620
Fairview, AL, Governmental Utility
Services, Corporate Water Rev. (East
Cullman), 8s, 2020 1,000 1,065,470
Limestone County, AL, Water Authority
Rev., FGIC, 7.7s, 2019 900 960,579
Limestone County, AL, Water Authority
Rev., FGIC, 5.25s, 2020 2,500 2,337,625
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000) Omitted) Value
-- ------------------------------------------------------- --------------
Water and Sewer Utility Revenue - continued
Limestone County, AL, Water Authority
Rev., FGIC, 5.5s, 2026 $1,000 $ 961,660
Orange Beach, AL, Water & Sewer Rev.,
AMBAC, 5.4s, 2020 1,000 952,520
--------------
$12,195,374
-- -------------------------------------- ---------------- --------------
Other - 2.4%
Birmingham, AL, Downtown Redevelopment
Authority, Social Security
Administration Building Rev., 0s,
2010 $2,985 $ 2,124,126
-- -------------------------------------- ---------------- --------------
Total Municipal Bonds (Identified Cost, $80,688,773) $85,152,187
------------------------------------------------------------ --------------
Floating Rate Demand Notes - 0.3%
- -----------------------------------------------------------------------------
Phenix City, AL, Environmental
Improvement Rev., due 10/01/25 $ 200 $ 200,000
Phenix City, AL, Environmental
Improvement Rev. (Mead Coated Board), due
6/01/28 100 100,000
----------------------------------------------------------- --------------
Total Floating Rate Demand Notes, at Identified Cost $ 300,000
------------------------------------------------------------ --------------
Total Investments (Identified Cost, $80,988,773) $85,452,187
Other Assets, Less Liabilities - 1.8% 1,550,597
- -----------------------------------------------------------------------------
Net Assets - 100.0% $87,002,784
------------------------------------------------------------ --------------
See portfolio footnotes and notes to financial statements
MFS ARKANSAS MUNICIPAL BOND FUND
Municipal Bonds - 98.9%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
General Obligation - 4.4%
Arkansas College Savings, "A", 0s, 2009 $1,146 $ 558,331
Arkansas College Savings, "A", 0s, 2015 2,575 863,655
Arkansas College Savings, "B", 0s, 2012 1,200 483,420
Arkansas College Savings, "B", 0s, 2013 1,000 383,240
Arkansas College Savings, "B", 0s, 2014 1,150 412,505
Arkansas College Savings, "B", 0s, 2015 1,600 536,640
Arkansas Waste Disposal & Pollution
Control Rev., 6.25s, 2020 1,000 1,041,900
Mississippi County, AR, Community
College District, AMBAC, 6s, 2018 1,000 1,030,830
Puerto Rico Aqueduct & Sewer Authority
Rev., 5s, 2015 1,000 916,520
Puerto Rico Public Improvements Rev.,
5.25s, 2018 1,000 934,690
---------------
$ 7,161,731
-- -------------------------------------- ----------------- ---------------
State and Local Appropriation - 4.1%
Arkansas Development Finance
Authority, Correctional Facilities
Rev., MBIA, 7.125s, 2010 $2,000 $ 2,187,140
Arkansas Development Finance
Authority, Local Government Rev.,
7.1s, 2008 2,440 2,631,199
Puerto Rico Public Buildings
Authority, Education & Health Rev.,
6.285s, 2016S. 2,000 1,845,240
---------------
$ 6,663,579
-- -------------------------------------- ----------------- ---------------
Refunded and Special Obligations - 14.8%
Arkansas Development Finance
Authority, Water & Sewer Rev., MBIA,
7s, 2001 $2,900 $ 3,212,214
Arkansas Development Finance
Authority, Water & Sewer Rev., MBIA,
6.4s, 2002 2,000 2,182,500
Arkansas Housing Development Agency,
Single Family Mortgage Rev., ETM,
8.375s, 2010 800 970,800
6
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Refunded and Special Obligations - continued
Arkansas Housing Development Agency,
Single Family Mortgage Rev., ETM,
8.375s, 2011 $ 1,000 $ 1,251,470
Arkansas Waste Disposal & Pollution
Control Rev., 6.25s, 2002 4,000 4,308,600
Arkansas Water Resources Development
Authority, 6.375s, 2002 1,000 1,048,520
Beaver, AR, Water District, Benton &
Washington Counties, Water Rev.,
6.625s, 1999 500 540,010
Beaver, AR, Water District, Benton &
Washington Counties, Water Rev.,
6.75s, 1999 1,750 1,896,317
Harrison, AR, Residential Housing
Facilities Board, Single Family
Mortgage Rev., FGIC, ETM, 7.4s, 2011 4,000 4,584,280
Puerto Rico Aqueduct & Sewer Authority
Rev., 7.875s, 1998 1,000 1,083,230
Puerto Rico Public Buildings
Authority, Education & Health Rev.,
7.125s, 1998 1,500 1,599,090
Sherwood, AR, Residential Housing
Facilities Board, Single Family
Mortgage Rev., MBIA, 7.5s, 2010 1,250 1,476,738
---------------
$24,153,769
-- -------------------------------------- ----------------- ---------------
Electric and Gas Utility Revenue - 14.3%
Jefferson County, AR, Pollution
Control Rev. (Arkansas Electric
Cooperative), 6.125s, 2008 $ 2,000 $ 2,007,780
Jefferson County, AR, Pollution
Control Rev. (Arkansas Power & Light
Co.), 6.3s, 2018 1,050 1,070,874
North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2010 2,000 2,212,920
North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2010 1,000 1,081,020
North Little Rock, AR, Electric Rev.,
MBIA, 6.5s, 2015 6,000 6,665,700
Pope County, AR, Solid Waste Disposal
Rev. (Arkansas Power & Light Co.),
8s, 2020 1,780 1,972,133
Pope County, AR, Solid Waste Disposal
Rev. (Arkansas Power & Light Co.),
FSA, 8s, 2021 3,000 3,353,070
Puerto Rico Telephone Authority Rev.,
AMBAC, 5.59s, 2004S. 4,000 3,720,840
West Memphis, AR, Public Utility
Systems Rev., MBIA, 6.6s, 2009 1,250 1,332,550
---------------
$23,416,887
-- -------------------------------------- ----------------- ---------------
Health Care Revenue - 7.4%
Baxter County, AR, Hospital Rev.,
7.5s, 2021### $ 3,145 $ 3,356,281
Little Rock, AR, Health Facilities
Board, Hospital Rev., 6.9s, 2009 1,400 1,540,280
Little Rock, AR, Health Facilities
Board, Hospital Rev., 7s, 2017 3,250 3,453,190
Pulaski County, AR, Hospital Rev.
(Arkansas Children's Project),
6.15s, 2017 3,700 3,729,156
---------------
$12,078,907
-- -------------------------------------- ----------------- ---------------
Industrial Revenue (Corporate Guarantee) - 10.1%
Blytheville, AR, Solid Waste Recycling
& Sewerage Treatment Rev. (Nucor
Corp.), 6.9s, 2021 $ 4,000 $ 4,224,960
Industrial Revenue (Corporate Guarantee) - continued
Blytheville, AR, Solid Waste Recycling
& Sewerage Treatment Rev. (Nucor
Corp.), 6.375s, 2023 $ 7,195 $ 7,354,297
Camden, AR, Environmental Improvement
Rev. (International Paper), 7.625s,
2018 1,000 1,118,820
Jonesboro, AR, Industrial Development
Rev. (Anheuser-Busch Co.), 6.5s,
2012### 3,500 3,775,975
---------------
$16,474,052
-- -------------------------------------- ----------------- ---------------
Insured Health Care Revenue - 8.1%
Arkansas Development Finance
Authority, Health Facilities Rev.
(Sisters of Mercy), MBIA, 5s, 2013 $ 6,340 $ 5,890,431
Arkansas Development Finance
Authority, Health Facilities Rev.
(Sisters of Mercy), MBIA, 5s, 2019 5,500 4,973,815
Independence County, AR, Housing
Education Financing Authority Rev.
(White River), FSA, 5.5s, 2009 1,350 1,337,269
Pulaski County, AR, Health Facilities
Board Rev. (Sisters of Charity),
MBIA, 6s, 2012 1,000 1,028,320
---------------
$13,229,835
-- -------------------------------------- ----------------- ---------------
Multi-Family Housing Revenue - 0.3%
West Memphis, AR, Public Facilities
Board Mortgage Rev., AMBAC, 0s, 2011 $ 1,090 $ 440,197
-- -------------------------------------- ----------------- ---------------
Sales and Excise Tax Revenue - 3.5%
Little Rock, AR, Hotel & Restaurant
Gross Receipts Tax Rev., 7.375s,
2015 $ 4,790 $ 5,634,860
-- -------------------------------------- ----------------- ---------------
Single Family Housing Revenue - 16.0%
Arkansas Development Finance
Authority, Single Family Mortgage
Rev., 0s, 2011 $ 5,000 $ 1,723,450
Arkansas Development Finance
Authority, Single Family Mortgage
Rev., GNMA, 7.4s, 2023 1,405 1,466,890
Arkansas Development Finance
Authority, Single Family Mortgage
Rev., GNMA, 7.45s, 2027 1,710 1,841,910
Arkansas Development Finance
Authority, Single Family Mortgage
Rev., GNMA, FNMA, 6.7s, 2027 3,000 3,058,920
Arkansas Housing Development Agency,
Residential Mortgage Rev., 0s, 2015 25,525 3,491,054
Jefferson County, AR, Health Care &
Residential Facilities Board, 7.25s,
2011 1,000 1,037,990
Lonoke County, AR, Residential Housing
Facilities Board, 7.375s, 2011 295 303,388
Lonoke County, AR, Residential Housing
Facilities Board, 7.9s, 2011 987 1,070,612
Mississippi County, AR, Public
Facilities Board, Mortgage Rev.,
7.2s, 2010 1,295 1,418,957
North Little Rock, AR, Residential
Housing Facilities Board, 0s, 2010 21,925 8,736,674
Pulaski County, AR, Public Facilities
Board Rev., 0s, 2014 2,750 847,715
Saline County, AR, Residential Housing
Facilities Board, 7.875s, 2011 1,105 1,175,234
---------------
$26,172,794
-- -------------------------------------- ----------------- ---------------
Student Loan Revenue - 2.7%
Arkansas Student Loan Authority Rev.,
7.15s, 2002 $ 835 $ 886,144
Arkansas Student Loan Authority Rev.,
6.75s, 2006 1,500 1,542,180
7
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Student Loan Revenue - continued
Arkansas Student Loan Authority Rev.,
6.25s, 2010 $2,000 $ 1,994,780
---------------
$ 4,423,104
-- -------------------------------------- ----------------- ---------------
Universities - 2.6%
Conway, AR, Public Facilities Bond
Rev. (Hendrix College), 5.85s, 2016 $1,000 $ 1,005,770
University of Arkansas, University
Rev., 7.2s, 2010 2,500 2,784,775
University of Arkansas, University
Rev., 6.625s, 2012 500 526,210
---------------
$ 4,316,755
-- -------------------------------------- ----------------- ---------------
Water and Sewer Utility Revenue - 10.0%
Arkansas Development Finance
Authority, Water & Sewer Rev., MBIA,
5s, 2012 $1,000 $ 940,480
Arkansas Development Finance
Authority, Water & Sewer Rev., MBIA,
5s, 2015 2,000 1,870,500
Arkansas Water Resources Development
Authority, 6.375s, 2021 1,000 1,050,540
Beaver, AR, Water District, Benton &
Washington Counties, Water & Sewer
Rev., MBIA, 5.85s, 2008 2,000 2,057,200
Fort Smith, AR, Water & Sewer Rev.,
MBIA, 6s, 2012 2,250 2,341,733
Russellville, AR, Water Systems Rev.,
AMBAC, 6.25s, 2012 2,365 2,479,773
South Sebastian County, AR, Water
Users Association, 5.95s, 2013 2,425 2,442,921
South Sebastian County, AR, Water
Users Association, 6.15s, 2023 1,000 1,020,530
Texarkana, AR, Public Facilities
Board, Waterworks Facilities Rev.,
MBIA, 7s, 2007 2,000 2,079,140
---------------
$ 16,282,817
-- -------------------------------------- ----------------- ---------------
Other - 0.6%
Little Rock, AR, Wastewater & Sewer
Rev., 5.8s, 2016 $1,000 $ 1,010,130
-- -------------------------------------- ----------------- ---------------
Total Investments (Identified Cost, $155,437,353) $161,459,417
Other Assets, Less Liabilities - 1.1% 1,812,814
- -----------------------------------------------------------------------------
Net Assets - 100.0% $163,272,231
------------------------------------------------------------- ---------------
See portfolio footnotes and notes to financial statements
MFS CALIFORNIA MUNICIPAL BOND FUND
Municipal Bonds - 97.0%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
General Obligation - 10.2%
Baldwin Park, CA, Unified School
District, Capital Appreciation,
FGIC, 0s, 2017 $ 1,255 $ 371,505
Cabrillo, CA, Unified School District,
Capital Appreciation, AMBAC, 0s,
2019 2,000 520,840
Castaic, CA, Unified School District,
Capital Appreciation, FGIC, 0s, 2019 10,000 2,566,000
Clovis, CA, Unified School District,
Capital Appreciation, FGIC, 0s, 2008 1,765 920,448
Escondido, CA, Unified School
District, Capital Appreciation,
MBIA, 0s, 2014 2,500 861,525
Palo Alto, CA, Unified School
District, Capital Appreciation,
5.375s, 2018 5,000 4,852,450
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
General Obligation - continued
Palos Verdes, CA, Library District,
6.7s, 2016 $ 1,250 $ 1,319,987
Roseville, CA, Joint Unified School
District, FGIC, 0s, 2020 4,000 991,680
State of California, 0s, 2009 3,100 1,511,715
State of California, 10s, 2007 1,055 1,464,773
State of California, 6.5s, 2010### 1,235 1,360,970
State of California, AMBAC, 7.2s, 2008 1,600 1,863,200
State of California, AMBAC, 6.3s, 2010 6,000 6,540,180
State of California, AMBAC, 7s, 2010 2,000 2,317,520
Sulphur Springs, CA, Unified School
District, Capital Appreciation,
MBIA, 0s, 2016 2,215 691,811
Walnut Valley, CA, Unified School
District, Capital Appreciation,
AMBAC, 6s, 2011 1,600 1,684,896
---------------
$29,839,500
-- -------------------------------------- ----------------- ---------------
State and Local Appropriation - 13.1%
Banning, CA, Water System Improvement
Rev., Certificates of Participation,
AMBAC, 8s, 2019 $ 1,000 $ 1,292,580
California Public Works Board Lease
Rev. (Department of Corrections,
State Prison), 7.4s, 2010 5,000 5,797,000
California Public Works Board Lease
Rev. (Secretary of State), 6.75s,
2012 3,200 3,378,304
Fortuna, Parlier & Susanville, CA,
Certificates of Participation,
7.375s, 2017 930 968,632
Grossmont, CA, Union High School
District, Certificates of
Participation, MBIA, 0s, 2006 6,000 3,488,820
Los Angeles, CA, Convention &
Exhibition Center Authority,
Certificates of Participation,
AMBAC, 0s, 2005### 2,400 1,511,520
Pasadena, CA, Certificates of
Participation (Old Pasadena Parking
Facilities), 6.25s, 2018 3,460 3,613,728
Pomona, CA, Public Financing
Authority, Lease Rev., 6.25s, 2010 4,020 4,109,204
Riverside County, CA, Asset Leasing
Corp., 6.25s, 2019 1,210 1,212,795
San Francisco, CA, City & County
Redevelopment Agency, Agency Lease
Rev. (George R. Moscone Convention),
5.5s, 2018 5,000 4,680,250
San Joaquin County, CA, Certificates
of Participation, (General
Hospital), 6.625s, 2020 4,235 4,328,424
Tulare County, CA, Certificates
Participation (Capital Improvements
Program), MBIA, 6s, 2016 1,000 1,022,670
Visalia, CA, Utility Systems
Department, Certificates of
Participation, MBIA, 0s, 2005 4,655 2,887,171
---------------
$38,291,098
-- -------------------------------------- ----------------- ---------------
Refunded and Special Obligations - 15.7%
California Educational Facilities
Authority Rev. (St. Mary's College),
7.5s, 2000 $ 1,000 $ 1,129,230
California Health Facilities Financing
Authority Rev. (AIDS Hospice
Foundation), 7.15s, 2000 3,040 3,337,829
California Health Facilities Financing
Authority Rev., AMBAC, 7.625s, 1998 1,205 1,308,979
8
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Refunded and Special Obligations - continued
California Health Facilities Financing
Authority Rev. (Brookside Hospital),
8.1s, 1997 $ 1,000 $ 1,064,690
California Health Facilities Financing
Authority Rev. (St. Joseph's Health
System), 6.9s, 1999 1,000 1,084,330
California Health Facilities Financing
Authority Rev. (St. Joseph's
Hospital), 6.75s, 2001 2,710 3,005,363
California Health Facilities Financing
Authority Rev. (Valley Memorial
Hospital), 7.9s, 1997 500 521,955
Concord, CA, Redevelopment Agency
Rev., Tax Allocation, BIGI, 8s, 1998 370 401,239
Concord, CA, Redevelopment Agency
Rev., Tax Allocation, BIGI, 8s, 1998 40 43,377
Corona, CA, Certificates of
Participation (Corona Community
Hospital), 8s, 1998 585 706,499
Hemet Valley, CA, Hospital District
Rev. (Moreno Valley Regional Medical
Center), 8.25s, 1998 4,380 4,760,271
Los Angeles, CA, Convention &
Exhibition Center Authority,
Certificates of Participation, 9s,
2005 1,900 2,461,051
Los Angeles, CA, Department of Water &
Power, Electric Plant Rev., 7.9s,
1998 1,000 1,076,990
Los Angeles, CA, Wastewater System
Rev., 8.125s, 1997 2,500 2,663,775
Los Angeles, CA, Wastewater System
Rev., 6.8s, 1999 500 540,665
Los Angeles County, CA, Redevelopment
Agency Rev., Tax Allocation, MBIA,
ETM, 0s, 2013 3,380 1,229,340
Mojave, CA, Water Agency Rev. (Morongo
Basin), 6.6s, 2002 1,400 1,564,808
Northern California Power Agency,
Public Power Rev. (Hydro-Electric),
8s, 1998 290 309,076
Oakland, CA, Redevelopment Agency
Rev., Certificates of Participation,
AMBAC, 8.125s, 1997 750 781,215
Pomona, CA, Public Financing Authority
Rev., 7.875s, 2000 7,155 8,162,782
Pomona, CA, Single Family Mortgage
Rev., GNMA, ETM, 7.5s, 2000 2,000 2,457,020
Pomona, CA, Single Family Mortgage
Rev., GNMA, FNMA, ETM, 7.375s, 2010 2,000 2,335,820
Sacramento, CA, Municipal Utility
District, Electric Rev., 7.875s,
1998 2,500 2,718,825
Tracy, CA, Hospital Rev., Certificates
of Participation (Tracy Community
Memorial Hospital), 8.625s, 1997 2,000 2,063,600
---------------
$45,728,729
-- -------------------------------------- ----------------- ---------------
Airport and Port Revenue - 5.7%
Long Beach, CA, Harbor Department
Rev., MBIA, 5.375s, 2020 $ 5,000 $ 4,715,800
Long Beach, CA, Harbor Department
Rev., 5.25s, 2025 5,000 4,585,550
Los Angeles, CA, Harbor Department
Rev., 6.625s, 2025 2,000 2,116,680
Port Oakland, CA, Port Rev., MBIA,
6.5s, 2016 1,000 1,052,550
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Airport and Port Revenue - continued
San Francisco, CA, City & County
Airports Commission, International
Airport Rev., FGIC, 6.5s, 2019 $ 4,000 $ 4,240,560
---------------
$16,711,140
-- -------------------------------------- ----------------- ---------------
Electric and Gas Utility Revenue - 8.4%
California Pollution Control Financing
Authority Rev., (Pacific Gas &
Electric Co.), 6.625s, 2009 $ 1,000 $ 1,061,820
California Pollution Control Financing
Authority Rev., (San Diego Gas &
Electric Co.), 5.9s, 2014 4,020 4,130,027
Los Angeles, CA, Department of Water &
Power, Electric Plant Rev., 7.25s,
2030 1,000 1,105,650
Los Angeles, CA, Department of Water &
Power, Electric Plant Rev., 7.1s,
2031 1,050 1,160,376
M-S-R Public Power Agency, CA, (San
Juan), MBIA, 6.75s, 2020 3,000 3,463,380
Modesto, CA, Irrigation District,
Cetificates of Participation (Geyser
Geothermal Power), 5s, 2017 4,300 3,752,610
Southern California Public Power
Authority, Transmission Project
Rev., 0s, 2005 8,000 5,048,960
Southern California Public Power
Authority, Transmission Project Rev.
(Palo Verde), AMBAC, 0s, 2014 13,000 4,648,540
---------------
$24,371,363
-- -------------------------------------- ----------------- ---------------
Health Care Revenue - 1.9%
California Health Facilities Financing
Authority (Kaiser Permanente), 7s,
2018 $ 1,000 $ 1,060,170
California Statewide Community
Development Authority, Certificates
of Participation (St. Joseph's
Health Systems Group), 6.625s, 2021 4,205 4,446,241
---------------
$ 5,506,411
-- -------------------------------------- ----------------- ---------------
Industrial Revenue (Corporate Guarantee) - 0.4%
California Pollution Control Financing
Authority Rev. (Frito-Lay, Inc.),
6.375s, 2004 $ 1,025 $ 1,095,284
-- -------------------------------------- ----------------- ---------------
Insured Health Care Revenue - 8.0%
Apple Valley, CA, Hospital Rev.,
Certificates of Participation (St.
Mary's Hospital), 6.75s, 2012### $ 4,880 $ 5,074,810
California Health Facilities Financing
Authority (American Baptist Homes
West), 7.65s, 2014 4,420 4,654,304
California Health Facilities Financing
Authority (Sutter), MBIA, 7s, 2009 1,000 1,060,640
California Health Facilities Financing
Authority (UniHealth), AMBAC,
7.625s, 2015 45 48,155
California Statewide Community
Development Authority, Certificates
of Participation, Development
Authority Rev. (Triad), 0s, 2007 6,645 3,322,899
California Statewide Community
Development Authority, Certificates
of Participation, Development
Authority Rev. (Triad), 0s, 2008 6,345 2,959,371
9
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Insured Health Care Revenue - continued
California Statewide Community
Development Authority, Certificates
of Participation, Development
Authority Rev. (United Western
Medical Ctrs), 6.75s, 2021 $ 3,000 $ 3,130,650
Desert Hospital District, CA, Insured
Hospital Rev., Certificates of
Participation (Desert Hospital
Corp.), FSA, MVRIC 9.014s, 2020++++ 3,000 3,179,100
---------------
$ 23,429,929
-- -------------------------------------- ----------------- ---------------
Multi-Family Housing Revenue - 6.0%
California Housing Finance Agency
(Multi-Unit Rental Housing), 6.7s,
2015### $ 2,750 $ 2,861,650
Palmdale, CA, Multi-Family Housing
Rev. (Vln Green), FNMA, 7.375s, 2024 1,000 1,064,090
Thousand Oaks, CA, Redevelopment
Agency, Housing Rev., 7s, 2021 8,900 9,194,857
Yolo County, CA, Housing Authority
Mortgage Rev. (Walnut Park
Apartments), FHA, 7.2s, 2033 4,150 4,383,313
---------------
$ 17,503,910
-- -------------------------------------- ----------------- ---------------
Sales and Excise Tax Revenue - 1.7%
Los Angeles County, CA, Metropolitan
Transportation Authority Rev.,
AMBAC, 5s, 2025 $ 5,400 $ 4,854,384
-- -------------------------------------- ----------------- ---------------
Single Family Housing Revenue - 0.7%
California Housing Finance Agency,
7.75s, 2010 $ 1,210 $ 1,280,991
Riverside, CA, Single Family Mortgage
Rev., 0s, 2014 1,349 193,933
San Bernardino County, CA, Single
Family Mortgage Rev., GNMA, 7.65s,
2023 225 233,595
Santa Ana, CA, Home Mortgage Rev.,
FGIC, 8.875s, 2017 5 5,116
Southern California Home Finance
Authority, Single Family Mortgage
Rev., GNMA, 7.625s, 2023 250 263,292
---------------
$ 1,976,927
-- -------------------------------------- ----------------- ---------------
Special Assessment District - 5.0%
Anaheim, CA, Public Finance Authority
Rev., Tax Allocation (Alpha), MBIA,
0s, 2005 $ 3,210 $ 1,990,938
Brea, CA, Public Finance Authority
Rev., Tax Allocation, MBIA, 0s, 2005 2,235 1,416,543
Brea, CA, Public Finance Authority
Rev., Tax Allocation, MBIA, 0s, 2006 3,415 2,036,091
Chico, CA, Public Finance Authority
Rev. (Southeast Chico
Redevelopment), FGIC, 6.625s, 2021 1,735 1,847,220
Concord, CA, Redevelopment Agency
Rev., Tax Allocation, BIGI, 8s, 2018 40 43,052
Coronado, CA, Community Development
Agency, Tax Allocation Rev., FSA,
5.5s, 2022 2,500 2,426,150
Pittsburgh, CA, Redevelopment Agency
Rev., Tax Allocation (Los Medanos
Community Development), FGIC, 5.5s,
2015 2,250 2,205,585
Rancho Cucamonga, CA, Redevelopment
Agency Rev., Tax Allocation, MBIA,
5.25s, 2026 1,000 926,350
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Special Assessment District - continued
Walnut Valley, CA, Public Finance
Authority Rev. (Walnut Improvement)
MBIA, 0s, 2007 $ 1,150 $ 637,468
Walnut Valley, CA, Public Finance
Authority Rev. (Walnut Improvement)
MBIA, 0s, 2008 1,125 583,999
Walnut Valley, CA, Public Finance
Authority Rev. (Walnut Improvement)
MBIA, 0s, 2009 1,175 570,110
---------------
$ 14,683,506
-- -------------------------------------- ----------------- ---------------
Turnpike Revenue - 1.8%
Foothill, CA, Eastern Transportation
Corridor Agency, 0s, 2011 $ 5,000 $ 3,088,700
Foothill, CA, Eastern Transportation
Corridor Agency, 0s, 2020 10,000 2,139,100
---------------
$ 5,227,800
-- -------------------------------------- ----------------- ---------------
Universities - 2.4%
California Education Facilities
Authority Rev. (Pooled College &
University Projects), 6s, 2012 $ 1,400 $ 1,354,150
California State University Housing
System Rev., 6.75s, 2010 1,705 1,842,781
California State University Housing
System Rev., 6.75s, 2011 3,570 3,858,492
---------------
$ 7,055,423
-- -------------------------------------- ----------------- ---------------
Water and Sewer Utility Revenue - 12.7%
Big Bear Lake, CA, Water Rev., MBIA,
6s, 2022 $ 1,750 $ 1,839,775
Burbank, CA, Wastewater Treatment Rev,
FGIC, 5.5s, 2025 2,000 1,938,420
California Department of Water
Resources, Water Systems Rev.
(Central Valley), 7s, 2012 1,495 1,732,795
California Department of Water
Resources, Water Systems Rev.
(Central Valley), 5.25s, 2024 4,670 4,358,417
Contra Costa, CA, Water District Rev.,
MBIA, 5.5s, 2019 7,000 6,848,170
Contra Costa, CA, Water District Rev.,
MBIA, 5s, 2024 1,000 906,580
Fairfield-Suisun, CA, Sewer District
Rev., MBIA, 0s, 2006 2,080 1,250,663
Metropolitan Water District, Linked
Savers, RIBS, 5.75s, 2018 10,000 9,912,200
Metropolitan Water District,
Waterworks Rev., 5s, 2020 7,000 6,256,880
Redding, CA, Wastewater Rev., FGIC,
5.5s, 2018 1,500 1,467,900
San Francisco, CA, Public Utility
Systems Commission, Capital
Appreciation Rev., 0s, 2019 2,100 531,636
---------------
$ 37,043,436
-- -------------------------------------- ----------------- ---------------
Other - 3.3%
California Public Capital Improvements
Financing Authority Rev., BIGI,
8.1s, 2018 $ 1,890 $ 2,000,603
Los Angeles County, CA, Public Works
Rev., MBIA, 5.25s, 2014 2,240 2,134,518
San Francisco, CA, Bay Transportation
Tax Rev., FGIC, 5.5s, 2020 3,500 3,409,245
South Coast, CA, Air Quality
Management District Rev. (District
Building Corp.), AMBAC, 0s, 2005 3,480 2,196,159
---------------
$ 9,740,525
-- -------------------------------------- ----------------- ---------------
Total Municipal Bonds (Identified Cost, $267,765,237) $283,059,365
------------------------------------------------------------- ---------------
10
<PAGE>
Portfolio of Investments (Unaudited) - continued
Floating Rate Demand Notes - 0.6%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000) Omitted) Value
------------------------------- -------- ---------------- ---------------
California Health Facilities Financing
Authority Rev., Various Rate (St.
Joseph's Health Systems), "A", due
7/13/01 $1,105 $ 1,105,000
California Pollution Control Financing
Authority, Pollution Control Rev.
(Shell Oil), due 10/01/08 100 100,000
California Pollution Control Financing
Authority, Pollution Control Rev.
(Shell Oil), due 10/01/09 300 300,000
California Pollution Control Financing
Authority, Pollution Control Rev.
(Shell Oil), due 10/01/11 200 200,000
- ----------------------------------------- ---------------- ---------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,705,000
- ---------------------------------------------------------- ---------------
Rights - 0.1%
- -----------------------------------------------------------------------------
Issuer
- ----------------------------------------- ---------------- ---------------
State of New Jersey, "D", due 2003 $ 2 $ 232,900
- ----------------------------------------- ---------------- ---------------
Total Rights (Identified Cost, $255,000) $ 232,900
- ---------------------------------------------------------- ---------------
Total Investments (Identified Cost, $269,725,237) $284,997,265
Other Assets, Less Liabilities - 2.3% 6,812,073
- -----------------------------------------------------------------------------
Net Assets - 100.0% $291,809,338
- ---------------------------------------------------------- ---------------
See portfolio footnotes and notes to financial statements
MFS FLORIDA MUNICIPAL BOND FUND
Municipal Bonds - 96.6%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
General Obligation - 9.7%
Florida Board of Education
Administration, Capital Outlay,
9.125s, 2014### $2,600 $ 3,638,388
Palm Beach County, FL, 6.5s, 2010 2,000 2,189,960
State of Florida, 6.4s, 2022 2,000 2,139,900
State of Florida, Expressway
Authority, 9.875s, 2009 1,100 1,555,268
--------------
$ 9,523,516
-- -------------------------------------- ----------------- --------------
State and Local Appropriation - 3.3%
Bay County, FL, School Board,
Certificates of Participation,
AMBAC, 6.75s, 2012### $1,000 $ 1,114,050
Palm Beach County, FL, School Board,
AMBAC, 6.375s, 2015 2,000 2,118,760
--------------
$ 3,232,810
-- -------------------------------------- ----------------- --------------
Refunded and Special Obligations - 9.8%
Brevard County, FL, Health Facilities
Authority Rev. (Wuesthoff Memorial),
MBIA, 7.2s, 2002 $1,000 $ 1,137,920
Broward County, FL, School District
(UT), FSA, 7.125s, 1999 250 270,233
Charlotte County, FL, Utility Systems
Rev., FGIC, 6.875s, 2003### 500 569,805
Florida Board of Education
Administration, Capital Outlay,
7.25s, 2000 510 565,478
Florida Board of Education
Administration, Capital Outlay, ETM,
9.125s, 2014 400 559,120
Florida Turnpike Authority Rev. (Fitch
Light), AMBAC, 7.125s, 2001 1,250 1,403,188
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
Refunded and Special Obligations - continued
Gainesville, FL, Utility Systems Rev.,
AMBAC, 7.25s, 1998 $ 500 $ 538,585
Hillsborough County, FL, Capital
Improvement Rev. (County Center),
6.75s, 2002 1,500 1,668,030
Orange County, FL, Tourist Development
Tax Rev., AMBAC, 7.25s, 2000 500 558,130
Puerto Rico Electric Power Authority
Rev., 7s, 2001 240 269,239
Puerto Rico Highway & Transportation
Authority Rev., 6.625s, 2002 100 111,266
Puerto Rico Highway & Transportation
Authority Rev., 6.625s, 2002 1,000 1,112,660
Puerto Rico Public Buildings Authority
Rev., Guaranteed Public Education &
Health Facilities Rev., 6.875s, 2002 740 832,618
--------------
$ 9,596,272
-- -------------------------------------- ----------------- --------------
Airport and Port Revenue - 6.1%
Dade County, FL, Aviation Authority
Rev., MBIA, 6.6s, 2022 $1,000 $ 1,066,410
Hillsborough County, FL, Aviation
Authority Rev. (Delta), 6.8s, 2024 1,500 1,542,735
Hillsborough County, FL, Aviation
Authority Rev. (Tampa International
Airport), FGIC, 5.875s, 2015 750 756,810
Hillsborough County, FL, Aviation
Authority Rev. (USAir), 8.6s, 2022 2,400 2,600,760
--------------
$ 5,966,715
-- -------------------------------------- ----------------- --------------
Electric and Gas Utility Revenue - 26.5%
Escambia County, FL, Utility Systems
Rev., FGIC, 0s, 2015 $2,000 $ 700,940
Escambia County, FL, Utility Systems
Rev., FGIC, 6.25s, 2015 1,500 1,622,805
Hillsborough County, FL, Industrial
Development Authority, Pollution
Control Rev. (Tampa Electric Co.),
8s, 2022 3,000 3,479,610
Jacksonville, FL, Electric Authority
Rev. (St. Johns River Power), 0s,
2010 4,995 2,277,870
Lakeland, FL, Electricity and Water
Rev., Capital Appreciation, 0s, 2011 5,000 2,130,750
Lakeland, FL, Electricity and Water
Rev., Capital Appreciation, 0s, 2012 3,000 1,194,690
Martin County, FL, Industrial
Development Authority Rev.
(Indiantown Cogeneration Project),
7.875s, 2025 3,625 4,097,772
Orlando, FL, Utility Commission, Water
and Electric Rev., "D", 6.75s, 2017 2,500 2,876,600
Palm Beach County, FL, Solid Waste
Rev. (Osceola Power LP), 6.85s,
2014### 3,000 2,698,080
Puerto Rico Electric Power Authority
Rev., 6.125s, 2008 2,400 2,544,480
Puerto Rico Electric Power Authority
Rev., FSA, 6s, 2016 2,000 2,059,780
Tampa, FL, Utilities Tax Rev., Capital
Appreciation, AMBAC, 0s, 2016 1,000 314,470
--------------
$25,997,847
-- -------------------------------------- ----------------- --------------
11
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
Health Care Revenue - 9.2%
Brevard County, FL, Health Facilities
Authority Rev. (Friendly Village),
9.25s, 2012 $ 375 $ 387,169
Escambia County, FL, Health Facilities
Authority Rev. (Baptist Hospital),
6s, 2014 2,500 2,382,625
Escambia County, FL, Health Facilities
Authority Rev. (Baptist Hospital and
Baptist Manor), 6.75s, 2014### 1,000 1,025,960
Jacksonville, FL, Health Facilities
Authority, Industrial Development
Rev. (Cypress Village), 7s, 2014 1,250 1,297,050
Jacksonville, FL, Health Facilities
Authority, Industrial Development
Rev. (National Benevolent), 6.4s,
2016 1,825 1,825,237
Orange County, FL, Industrial
Development Rev., 9.25s, 2012 335 345,777
Palm Beach County, FL, Health
Facilities (Good Samaritan Health
Systems), 6.3s, 2022 1,250 1,275,250
St. Petersburg, FL, Health Facilities
Authority Rev. (Swanholm Nursing),
10s, 2022 490 530,376
--------------
$ 9,069,444
-- -------------------------------------- ----------------- --------------
Industrial Revenue (Corporate Guarantee) - 4.8%
Escambia County, FL, Industrial
Development Rev. (Champion
International Corp.), 6.8s, 2012 $1,000 $ 1,053,580
Escambia County, FL, Pollution Control
Rev. (Champion International Corp.),
6.95s, 2007### 2,500 2,650,425
Escambia County, FL, Pollution Control
Rev. (Champion International Corp.),
6.9s, 2022 1,000 1,047,570
--------------
$ 4,751,575
-- -------------------------------------- ----------------- --------------
Insured Health Care Revenue - 12.5%
Brevard County, FL, Health Facilities
Authority Rev. (Wuesthoff Memorial),
MBIA, 6.5s, 2007 $1,000 $ 1,083,530
Brevard County, FL, Health Facilities
Authority Rev. (Wuesthoff Memorial),
MBIA, 5s, 2013 1,000 932,410
Charlotte County, FL, Health Care
Facilities Rev. (Bon Secours), FSA,
7.826s, 2027### 2,500 2,518,150
Hillsborough County, FL, Industrial
Development Rev. (University
Community Hospital), MBIA, 6.5s,
2019 1,000 1,111,280
Jacksonville, FL, Hospital Rev.
(Baptist Medical Center), MBIA,
7.3s, 2019 1,900 2,044,704
Jacksonville, FL, Hospital Rev.
(University Medical Center), CONNIE
LEE, 6.6s, 2013 500 531,530
Orange County, FL, Health Facilities
Authority Rev. (Adventist Health
Systems), AMBAC, 5.25s, 2020 2,000 1,875,180
Tallahassee, FL, Health Facilities
Authority Rev. (Tallahassee Memorial
Regional Medical Center), MBIA,
6.625s, 2013 1,000 1,103,650
Tampa, FL, Allegheny Health System
(St. Joseph), MBIA, 6.5s, 2023 1,000 1,095,420
--------------
$12,295,854
-- -------------------------------------- ----------------- --------------
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
Multi-Family Housing Revenue - 1.5%
Florida Housing Finance Agency Rev.
(Southlake Apartments), 8.7s, 2021 $1,500 $ 1,497,075
-- -------------------------------------- ----------------- --------------
Sales and Excise Tax Revenue - 5.0%
Dade County, FL, Professional Sports
Franchise, MBIA, 0s, 2026 $3,660 $ 635,193
Dade County, FL, Special Obligation,
Capital Appreciation Board, AMBAC,
0s, 2027 7,500 1,095,900
Jacksonville, FL, Excise Taxes Rev.,
FGIC, 0s, 2010 1,000 447,400
Jacksonville, FL, Excise Taxes Rev.,
FGIC, 0s, 2011 1,000 419,360
Puerto Rico, Highway & Transportation
Authority Rev., MBIA, 5.5s, 2015 1,500 1,499,715
Sunrise, FL, Public Facilities Rev.,
MBIA, 0s, 2020 3,100 771,435
--------------
$ 4,869,003
-- -------------------------------------- ----------------- --------------
Single Family Housing Revenue - 1.0%
Dade County, FL, Housing Finance
Authority, Mortgage Rev., FNMA,
GNMA, 7s, 2024 $ 75 $ 77,701
Dade County, FL, Housing Finance
Authority, Mortgage Rev., FSA,
6.95s, 2012 905 950,132
--------------
$ 1,027,833
-- -------------------------------------- ----------------- --------------
Water and Sewer Utility Revenue - 5.9%
Lee County, FL, Industrial Development
Authority Rev. (Bonita Springs
Utilities Project), MBIA, 6.05s,
2015### $1,000 $ 1,025,070
Miramar, FL, Wastewater Improvement
Rev., FGIC, 6.75s, 2016 1,500 1,642,245
Seminole, FL, Water & Sewer
Improvement Rev., MBIA, 6s, 2019 3,000 3,162,600
--------------
$ 5,829,915
-- -------------------------------------- ----------------- --------------
Other - 1.3%
Florida, Department of Environmental
Preservation Rev., MBIA, 5.5s, 2012 $1,295 $ 1,276,870
-- -------------------------------------- ----------------- --------------
Total Municipal Bonds (Identified Cost, $90,219,794) $94,934,729
------------------------------------------------------------- --------------
Floating Rate Demand Notes - 1.9%
- -----------------------------------------------------------------------------
Dade County, FL, Industrial Development
Authority Rev. (Florida Power & Light
Co.), due 4/01/20 $ 900 $ 900,000
Hillsborough County, FL, Pollution Control
Rev., due 5/15/18 900 900,000
St. Lucie County, FL, Pollution Control
Rev. (Florida Power & Light Co.), due
3/01/27 100 100,000
------------------------------------------- ----------------- --------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,900,000
------------------------------------------------------------- --------------
Total Investments (Identified Cost, $92,119,794) $96,834,729
Other Assets, Less Liabilities - 1.4% 1,400,597
- -----------------------------------------------------------------------------
Net Assets - 100.0% $98,235,326
------------------------------------------------------------- --------------
See portfolio footnotes and notes to financial statements
12
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1996
MFS GEORGIA MUNICIPAL BOND FUND
Municipal Bonds - 97.7%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- ------------------------------------------------------- --------------
General Obligation - 9.8%
Fulton County, GA, School District,
6.375s, 2010 $2,000 $ 2,195,020
Fulton County, GA, School District,
6.375s, 2012 1,000 1,095,930
Fulton County, GA, School District,
6.375s, 2016 1,000 1,104,090
Paulding County, GA, School District,
MBIA, 6s, 2013 1,000 1,054,150
State of Georgia, 5.25s, 2011 1,500 1,476,780
Territory of Virgin Islands, 7.75s,
2006 390 416,376
--------------
$ 7,342,346
-- -------------------------------------- ---------------- --------------
State and Local Appropriation - 6.7%
Fulton County, GA, Building Authority
Rev. (Judicial Center Project) 0s,
2011 $3,000 $ 1,330,440
Fulton County, GA, Building Authority
Rev. (Judicial Center Project), 0s,
2012 6,015 2,500,977
Puerto Rico Public Buildings
Authority, Government Facilities
Guaranteed Rev., AMBAC, 6.25s, 2015 1,100 1,194,248
--------------
$ 5,025,665
-- -------------------------------------- ---------------- --------------
Refunded and Special Obligations - 8.2%
DeKalb County, GA, 7.5s, 2000 $ 780 $ 863,327
Fulton County, GA, School District,
7.625s, 1997 500 525,925
Hogansville, GA, Combined Public
Utility Systems Rev., 9s, 2000 2,200 2,586,232
Marietta, GA, Development Authority
Rev. (Life College, Inc.), 7.2s,
1999 1,000 1,100,700
Marietta, GA, Development Authority
Rev. (Life College, Inc.), 7.25s, 1999 1,000 1,102,160
--------------
$ 6,178,344
-- -------------------------------------- ---------------- --------------
Airport and Port Revenue - 7.4%
Atlanta, GA, Airport Facilities Rev.,
6.25s, 2021 $ 500 $ 505,485
Atlanta, GA, Airport Facilities Rev.,
AMBAC, 0s, 2010 5,100 2,312,544
Atlanta, GA, Airport Facilities Rev.,
MBIA, 0s, 2010 6,000 2,727,660
--------------
$ 5,545,689
-- -------------------------------------- ---------------- --------------
Electric and Gas Utility Revenue - 10.4%
Appling County, GA, Development
Authority (Ogelthorpe Power Corp.),
MBIA, 7.15s, 2021 $1,400 $ 1,555,554
Burke County, GA, Development
Authority, Pollution Control Rev.
(Georgia Power Vogel), 8.375s,
2017### 1,000 1,045,090
Georgia Municipal Electric Authority,
Power Rev., AMBAC, 0s, 2013 1,675 657,505
Georgia Municipal Electric Authority,
Power Rev., BIGI, 0s, 2008 2,500 1,333,000
Georgia Municipal Electric Authority,
Power Rev., BIGI, 0s, 2009 1,500 747,390
Monroe County, GA, Development
Authority, Pollution Control Rev.
(Oglethorpe Power), 6.8s, 2012 1,000 1,116,050
Municipal Electric Authority, GA,
Special Obligation Rev., 6.5s, 2020 1,250 1,379,662
--------------
$ 7,834,251
-- -------------------------------------- ---------------- --------------
Health Care Revenue - 5.3%
Fulton County, GA, Residential Care
Facilities, Elderly Authority Rev.
(Lenbrook Square Foundation), 9.75s, 2017 $1,050 $ 1,073,100
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- ------------------------------------------------------- --------------
Health Care Revenue - continued
Richmond County, GA, Development
Authority, Nursing Home Refunding
(Beverly Enterprises), 8.75s, 2011 $1,190 $ 1,283,688
Royston, GA, Hospital Authority Rev.
(Cobb Health), 7.375s, 2014 1,565 1,616,567
--------------
$ 3,973,355
-- -------------------------------------- ---------------- --------------
Industrial Revenue (Corporate Guarantee) - 17.5%
Adel County, GA, Industrial
Development Authority, Pollution
Control Rev. (Weyerhaeuser Co.),
AMBAC, 9s, 2006 $1,000 $ 1,018,220
Atlanta, GA, Special Purpose
Facilities Rev. (Delta Airlines),
7.9s, 2018 1,000 1,061,820
Cartersville, GA, Development
Authority Rev., Water & Wastewater
Facilities (Anheuser-Busch), 6.75s, 2012 1,000 1,074,310
Clayton County, GA, Development
Authority, Special Facilities Rev.
(Delta Airlines), 7.625s, 2020 500 529,690
Effingham County, GA, Development
Authority, Polution Control Rev.
(Fort Howard Corp.), 7.9s, 2005 1,750 1,838,147
Emanuel County, GA, Development
Authority (Figgie Properties),
7.95s, 2004 475 475,432
Puerto Rico Ports Authority (American
Airlines), 6.25s, 2026 1,425 1,437,754
Savannah, GA, Economic Development
Authority, Industrial Development
Rev., 6.6s, 2012 1,150 1,225,912
Savannah, GA, Economic Development
Authority, Industrial Development
Rev. (Hershey Foods Corp.), 6.6s, 2012 750 765,000
Savannah, GA, Economic Development
Authority, Industrial Development
Rev. (Union Camp Corp.), 6.15s, 2017 1,000 1,035,330
Savannah, GA, Port Authority,
Pollution Control Rev. (Union
Carbide Corp.), 7.55s, 2004 1,000 1,012,190
Wayne County, GA, Solid Waste Rev.
(ITT-Rayonier), 8s, 2015 1,000 1,096,540
--------------
$13,166,230
-- -------------------------------------- ---------------- --------------
Insured Health Care Revenue - 6.7%
Albany-Dougherty County, GA, Hospital
Authority Rev. (Phoebe Putney
Memorial Hospital, Inc.), AMBAC,
5.7s, 2013 $3,100 $ 3,061,064
Smyrna, GA, Hospital Authority Rev.,
Certificates of Participation
(Emory/ Adventist Hospital), 5.5s, 2026 2,000 1,934,700
--------------
$ 4,995,764
-- -------------------------------------- ---------------- --------------
Multi-Family Housing Revenue - 5.4%
Cobb County, GA, Housing Authority
Rev. (Signature Place Project),
6.875s, 2017 $1,500 $ 1,542,165
Hinesville, GA, Leased Housing Corp.
Rev. (Baytree Apartments), FHA,
6.7s, 2017 900 934,560
St. Mary's, GA (Cumberland Oaks
Apartments), FNMA, 7.375s, 2022 1,470 1,549,836
--------------
$ 4,026,561
-- -------------------------------------- ---------------- --------------
13
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- ------------------------------------------------------- --------------
Single Family Housing Revenue - 2.7%
DeKalb County, GA, Housing Authority
Rev., Single Family Mortgage Rev.,
GNMA, 7.75s, 2022 $ 495 $ 523,230
Georgia Housing & Finance Authority
Rev., 0s, 2031 9,175 696,107
Georgia Residential Finance Authority
Rev., 8.375s, 2019 5 5,122
Georgia Residential Finance Authority
Rev., 8s, 2020 365 384,447
Georgia Residential Finance Authority
Rev., 7.25s, 2021 365 387,101
--------------
$ 1,996,007
-- -------------------------------------- ---------------- --------------
Water and Sewer Utility Revenue - 15.6%
Barnesville, GA, Water and Sewer Rev.,
6.9s, 2022 $1,715 $ 1,804,403
Brunswick, GA, Water and Sewer Rev.,
MBIA, 6.1s, 2014 1,000 1,054,980
Cartersville, GA, Water and Sewer
Rev., AMBAC, 7.2s, 2012 2,225 2,397,860
Columbia County, GA, Water and Sewer
Rev., AMBAC, 6.9s, 2011 1,000 1,083,100
Douglasville-Douglas County, GA, Water
& Sewer Authority, AMBAC, 5.625s,
2015 1,800 1,808,982
Fulton County, GA, Water and Sewer
Rev., FGIC, 6.375s, 2014 3,250 3,555,955
--------------
$11,705,280
-- -------------------------------------- ---------------- --------------
Other - 2.1%
George L. Smith II/Georgia World
Congress Center Authority (Domed
Stadium Project), 7.875s, 2020 $1,475 $ 1,601,643
-- -------------------------------------- ---------------- --------------
Total Municipal Bonds (Identified Cost, $68,217,594) $73,391,135
------------------------------------------------------------ --------------
Floating Rate Demand Notes - 0.8%
- -----------------------------------------------------------------------------
Georgia Hospital Financing Authority Rev.
(Equipment), due 1/01/2003, at Identified
Cost $ 600 $ 600,000
----------------------------------------------------------- --------------
Total Investments (Identified Cost, $68,817,594) $73,991,135
Other Assets, Less Liabilities - 1.5% 1,115,261
- -----------------------------------------------------------------------------
Net Assets - 100.0% $75,106,396
------------------------------------------------------------ --------------
See portfolio footnotes and notes to financial statements
MFS MARYLAND MUNICIPAL BOND FUND
Municipal Bonds - 96.1%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
General Obligation - 14.1%
Anne Arundel County, MD, 4.9s, 2011 $1,005 $ 936,539
Baltimore, MD, Consolidated Public
Improvement, 7.15s, 2009 2,000 2,303,140
Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.3s, 2009 700 687,246
Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.3s, 2010 815 795,587
Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.375s, 2011 900 880,011
Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.375s, 2013 770 752,498
Baltimore, MD, Consolidated Public
Improvement, MBIA, 7s, 2009 1,000 1,148,860
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
General Obligation - continued
Howard County, MD, Metropolitan
District, 0s, 2008 $1,975 $ 1,039,719
Montgomery County, MD, Public
Improvement, 0s, 2009 4,000 1,993,360
Prince George's County, MD, 0s, 2007 5,110 2,879,230
Prince George's County, MD, Public
Improvement, AMBAC, 5.5s, 2013 1,000 1,000,140
Puerto Rico Aqueduct & Sewer Authority
Rev., 5s, 2019 2,000 1,803,600
State of Maryland, 9s, 1999 350 394,639
Washington, MD, Suburban Sanitation
District, 6.1s, 2015 1,070 1,119,252
Washington, MD, Suburban Sanitation
District, 5.25s, 2016 865 827,952
Washington, MD, Suburban Sanitation
District, 5.25s, 2017 2,535 2,408,706
---------------
$20,970,479
-- -------------------------------------- ----------------- ---------------
State and Local Appropriation - 14.8%
Calvert County, MD, Community Lease
Rev., 7.2s, 2010 $ 750 $ 814,875
Howard County, MD, Certificates of
Participation, 8.15s, 2021 450 591,619
Howard County, MD, Certificates of
Participation, "A", 8s, 2019### 805 1,036,639
Howard County, MD, Certificates of
Participation, "B", 8s, 2019### 385 495,784
Howard County, MD, Certificates of
Participation, "C", 8s, 2019 680 875,670
Maryland Stadium Authority, Sports
Facilities Leasing Rev., 7.6s, 2019 2,580 2,807,040
Maryland Stadium Authority, Sports
Facilities Leasing Rev., AMBAC,
5.875s, 2012 1,000 1,009,250
Prince George's County, MD,
Certificates of Participation, MBIA,
0s, 2005 2,495 1,580,258
Prince George's County, MD,
Certificates of Participation, MBIA,
0s, 2006 2,490 1,489,892
Prince George's County, MD,
Certificates of Participation, MBIA,
0s, 2011 3,675 1,586,497
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s,
2004 980 658,874
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s,
2006 1,800 1,077,030
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s,
2009 1,500 739,305
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s,
2010 2,730 1,264,427
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s,
2011 2,810 1,221,816
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s,
2012 2,480 1,009,781
Prince George's County, MD, Industrial
Development Authority, MBIA, 5.25s,
2019 1,000 940,450
Puerto Rico Public Buildings
Authority, Education & Health Rev.,
6.285s, 2016S. 3,000 2,767,860
---------------
$21,967,067
-- -------------------------------------- ----------------- ---------------
14
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Refunded and Special Obligations - 10.9%
Baltimore, MD, Water Utility Rev.,
MBIA, 6.5s, 2000 $ 540 $ 576,785
Howard County, MD, Metropolitan
District, 7.15s, 2000 500 547,990
Maryland Health & Higher Education
Facilities Authority Rev. (Sinai
Hospital/ Baltimore), 7s, 2000 2,000 2,204,200
Maryland Health & Higher Education
Facilities Authority Rev.
(University of Maryland Medical
System), FGIC, 6.5s, 2001 1,000 1,080,070
Maryland Health & Higher Education
Facilities Authority Rev.
(University of Maryland Medical
System), FGIC 7s, 2001 1,840 2,055,777
Montgomery County, MD, Revenue
Authority, Lease Rev. (Regional
Indoor Swim Center), 7.6s, 1998 750 798,240
Morgan, MD, State University Academic
& Auxiliary Facilities & Fees Rev.,
MBIA, 0s, 2006 1,135 686,822
Morgan, MD, State University Academic
& Auxiliary Facilities & Fees Rev.,
MBIA, 0s, 2008 1,400 755,636
Prince George's County, MD, Hospital
Rev. (Dimensions Health Corp.),
7.25s, 2002 2,000 2,284,560
Puerto Rico Aqueduct & Sewer Authority
Rev., 10.25s, 2009 500 690,015
Puerto Rico Electric Power Authority
Rev., 8s, 1998 500 542,215
Puerto Rico Electric Power Authority
Rev., 7s, 2001 1,000 1,121,830
Puerto Rico Public Improvement Rev.,
6.8s, 2002 1,500 1,682,115
Washington, MD, Suburban Sanitation
District, 6.9s, 2001 1,045 1,161,622
---------------
$16,187,877
-- -------------------------------------- ----------------- ---------------
Health Care Revenue - 12.7%
Berlin, MD, Hospital Rev. (Atlantic
General Hospital), 8.375s, 2022 $ 1,360 $ 1,433,671
Maryland Health & Higher Education
Facilities Authority Rev. (Doctors
Community Hospital), 5.5s, 2024 2,000 1,767,220
Maryland Health & Higher Education
Facilities Authority Rev. (Good
Samaritan Hospital), 5.7s, 2009 1,085 1,102,870
Maryland Health & Higher Education
Facilities Authority Rev. (Johns
Hopkins Hospital), 0s, 2010 2,000 933,660
Maryland Health & Higher Education
Facilities Authority Rev. (Johns
Hopkins Hospital), 5s, 2023 3,500 3,143,455
Maryland Health & Higher Education
Facilities Authority Rev. (Medlantic
Hospital Care), 8.375s, 2014 3,635 3,728,965
Maryland Health & Higher Education
Facilities Authority Rev. (Peninsula
Regional Medical), 5s, 2023 500 437,325
Maryland Industrial Development
Finance Authority, Economic
Development Rev. (Holy Cross Health
Systems), FSA, 5.5s, 2015 500 475,930
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Health Care Revenue - continued
Prince George's County, MD, Hospital
Rev. (Dimensions Health Corp.),
5.3s, 2024 $ 3,500 $ 3,161,760
Prince George's County, MD, Hospital
Rev. (Greater Southeast Healthcare
System), 6.375s, 2023 2,900 2,718,895
---------------
$18,903,751
-- -------------------------------------- ----------------- ---------------
Industrial Revenue (Corporate Guarantee) - 3.7%
Baltimore, MD, Industrial Revenue
Board (Weyerhaeuser), 9s, 2006 $ 3,150 $ 3,207,393
Baltimore, MD, Port Facilities Rev.
(duPont (E.I.) de Nemours & Co.),
6.5s, 2011 1,500 1,615,575
Upper Potomac, MD, River Commission,
Pollution Control Rev. (Westvaco),
10.5s, 2004 150 157,499
Upper Potomac, MD, River Commission,
Pollution Control Rev. (Westvaco),
9.125s, 2015 500 520,335
---------------
$ 5,500,802
-- -------------------------------------- ----------------- ---------------
Insured Health Care Revenue - 6.3%
Maryland Health & Higher Education
Facilities Authority Rev. (Arundel),
AMBAC, 5s, 2023 $ 500 $ 450,960
Maryland Health & Higher Education
Facilities Authority Rev. (Francis
Scott Key Medical Center), FGIC, 5s,
2013 1,000 932,760
Maryland Health & Higher Education
Facilities Authority Rev. (Frederick
Memorial Hospital), FGIC, 5.25s,
2013 2,250 2,190,330
Maryland Health & Higher Education
Facilities Authority Rev. (Johns
Hopkins Medical Hospital), AMBAC,
5.5s, 2026 500 482,370
Maryland Health & Higher Education
Facilities Authority Rev. (Mercy
Medical Center), AMBAC, 5.5s, 2022 1,000 960,130
Maryland Health & Higher Education
Facilities Authority Rev.
(University of Maryland Medical
Center), FGIC, 5.375s, 2013 1,000 965,770
Maryland Health & Higher Education
Facilities Authority Rev.
(University of Maryland Medical
Center), FGIC, 5s, 2020 2,000 1,794,680
Maryland Industrial Development
Finance Authority, Economic
Development Rev., FSA, 7.851s,
2022++++ 1,500 1,527,420
---------------
$ 9,304,420
-- -------------------------------------- ----------------- ---------------
Multi-Family Housing Revenue - 4.8%
Baltimore, MD, City Housing, Multi-
Family Housing Rev., FNMA, 7.25s,
2023 $ 1,230 $ 1,276,162
Baltimore, MD, City Housing, Multi-
Family Housing Rev. (Greenhill),
FHA, 7.75s, 2009 980 1,005,362
Maryland Community Development
Administration, Multi-Family Housing
Rev., 0s, 2032 11,605 720,439
Maryland Community Development
Administration, Multi-Family Housing
Rev., 7.375s, 2021 330 342,134
Maryland Community Development
Administration, Multi-Family Housing
Rev., 8.4s, 2029 1,320 1,357,712
15
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Multi-Family Housing Revenue - continued
Maryland Community Development
Administration, Multi-Family Housing
Rev., 7.5s, 2031 $ 65 $ 67,230
Maryland Community Development
Administration, Multi-Family Housing
Rev., 7.8s, 2032 1,190 1,248,596
Montgomery County, MD, Housing
Opportunities Commission, Multi-
Family Mortgage Rev., 7.375s, 2032 1,045 1,078,858
---------------
$ 7,096,493
-- -------------------------------------- ----------------- ---------------
Sales and Excise Tax Revenue - 0.7%
Puerto Rico Highway & Transportation
Authority Rev., 6.625s, 2012 $1,000 $ 1,060,330
-- -------------------------------------- ----------------- ---------------
Single Family Housing Revenue - 6.1%
Maryland Community Development
Administration, Single Family
Economic Development Rev., 7.7s,
2015 $ 615 $ 645,996
Maryland Community Development
Administration, Single Family
Housing Rev., 8.25s, 2017 1,300 1,350,622
Maryland Community Development
Administration, Single Family
Housing Rev., 7.625s, 2020 2,255 2,339,743
Maryland Community Development
Administration, Single Family
Housing Rev., 8.25s, 2020 480 500,011
Maryland Community Development
Administration, Single Family
Housing Rev., 6.75s, 2026 2,250 2,324,002
Maryland Community Development
Administration, Single Family
Housing Rev., 7.625s, 2029 905 937,236
Maryland Community Development
Administration, Single Family
Housing Rev., 7.85s, 2029 520 546,947
Montgomery County, MD, Housing
Opportunities Commission, Single
Family Mortgage Rev., 7.5s, 2017 365 382,922
---------------
$ 9,027,479
-- -------------------------------------- ----------------- ---------------
Solid Waste Revenue - 8.4%
Maryland Energy Financing
Administration, Solid Waste Rev.
(Hagerston), 9s, 2016 $1,000 $ 826,730
Northeast Maryland, Waste Disposal
Authority (Harford County Resource
Recovery), MBIA, 7.2s, 2005 1,000 1,132,250
Northeast Maryland, Waste Disposal
Authority (Montgomery County), 6s,
2006 1,000 1,018,090
Northeast Maryland, Waste Disposal
Authority (Montgomery County), MBIA,
6.3s, 2016 5,000 5,191,250
Prince George's County, MD, FSA,
5.25s, 2013 4,500 4,262,760
---------------
$ 12,431,080
-- -------------------------------------- ----------------- ---------------
Universities - 2.0%
Maryland Health & Higher Education
Facilities Authority Rev. (Mount St.
Mary's College), 6.5s, 2009 $ 735 $ 653,546
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- ---------------
Universities - continued
Morgan, MD, State University Academic
& Auxiliary Facilities Rev., MBIA,
6.05s, 2015 $1,500 $ 1,586,400
University of Maryland, Auxiliary
Facilities & Tuition Rev., 0s, 2004 1,000 665,240
---------------
$ 2,905,186
-- -------------------------------------- ----------------- ---------------
Water and Sewer Utility Revenue - 4.0%
Baltimore, MD, Wastewater Rev., FGIC,
6s, 2015 $1,000 $ 1,061,480
Baltimore, MD, Wastewater Rev., MBIA,
5.65s, 2020++++ 2,000 1,987,200
Baltimore, MD, Wastewater Rev., MBIA,
7.481s, 2020++++ 3,000 2,918,790
---------------
$ 5,967,470
-- -------------------------------------- ----------------- ---------------
Other - 7.6%
Baltimore, MD, Parking Rev., 5.375s,
2013 $1,600 $ 1,528,560
Maryland Health & Higher Education
Facilities Authority Rev. (Kennedy
Institute), 6.75s, 2022 500 504,525
Maryland Industrial Development
Finance Authority (American Center
for Physics Headquarters), 6.625s,
2017 1,500 1,537,695
Maryland Industrial Development
Finance Authority (YMCA/Baltimore),
8s, 2012 2,825 2,906,812
Maryland Industrial Development
Finance Authority (YMCA/Baltimore),
8.25s, 2012 925 956,579
Washington, D.C., Metropolitan Area
Transit Authority, Gross Rev., FGIC,
5.25s, 2014 4,000 3,838,440
---------------
$ 11,272,611
-- -------------------------------------- ----------------- ---------------
Total Municipal Bonds (Identified Cost, $135,256,608) $142,595,045
------------------------------------------------------------- ---------------
Floating Rate Demand Notes - 1.2%
- -----------------------------------------------------------------------------
Lincoln County, WY, Pollution Control
Rev. (Exxon), due 11/14/01 $ 400 $ 400,000
Sublette County, WY, Pollution Control
Rev. (Exxon), due 11/14/01 1,000 1,000,000
Uinta County, WY, Pollution Control
Rev. (Chevron), due 8/15/20 400 400,000
------------------------------------------- ----------------- ---------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,800,000
------------------------------------------------------------- ---------------
Total Investments (Identified Cost, $137,056,608) $144,395,045
Other Assets, Less Liabilities - 2.7% 3,974,167
- -----------------------------------------------------------------------------
Net Assets - 100.0% $148,369,212
------------------------------------------------------------- ---------------
See portfolio footnotes and notes to financial statements
MFS MASSACHUSETTS MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
General Obligation - 11.1%
Belmont, MA, 5s, 2015 $ 2,165 $2,016,633
Commonwealth of Massachusetts, 0s,
2004 10,000 6,580,500
Commonwealth of Massachusetts, 0s,
2005 2,000 1,266,520
Commonwealth of Massachusetts, 0s,
2005 2,000 1,244,900
Commonwealth of Massachusetts, 7s,
2009 1,250 1,420,600
16
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
General Obligation - continued
Commonwealth of Massachusetts, AMBAC,
6.75s, 2009 $ 2,500 $ 2,682,750
Commonwealth of Massachusetts, FGIC,
0s, 2006 4,000 2,403,560
Commonwealth of Massachusetts, MBIA,
7.5s, 2004 2,850 3,297,364
Gloucester, MA, AMBAC, 7s, 2009 225 245,673
Gloucester, MA, AMBAC, 7s, 2010 215 234,754
Haverhill, MA, FGIC, 7s, 2012### 1,250 1,361,550
Holyoke, MA, 8s, 2001 595 631,277
Holyoke, MA, MBIA, 8s, 2001 1,700 1,937,371
Holyoke, MA, MBIA, 8.1s, 2005 500 590,190
Lawrence, MA, AMBAC, 9.75s, 2002 600 737,796
Lowell, MA, 8.4s, 2009 1,000 1,135,300
Northbridge, MA, 7.6s, 2001 325 358,683
Princeton, MA, AMBAC, 7.25s, 2009 490 533,909
--------------
$28,679,330
-- -------------------------------------- ----------------- --------------
State and Local Appropriation - 9.7%
Massachusetts Bay Transportation
Authority, 6.2s, 2016 $10,400 $11,118,952
Massachusetts Bay Transportation
Authority, 7s, 2021 5,000 5,838,250
Massachusetts Bay Transportation
Authority, AMBAC, 5.25s, 2017 3,370 3,179,797
Massachusetts Bay Transportation
Authority, AMBAC, 5.375s, 2025 4,470 4,225,268
Massachusetts Industrial Finance
Agency (Vinfen Corp.), 7.1s, 2018 700 700,959
--------------
$25,063,226
-- -------------------------------------- ----------------- --------------
Refunded and Special Obligations - 14.6%
Boston, MA, MBIA, 7.75s, 2008### $ 500 $ 539,690
Commonwealth of Massachusetts, 6.875s,
2010 4,000 4,448,000
Holyoke, MA, 9.85s, 2008 380 411,327
Lowell, MA, 7.625s, 2010 4,875 5,571,881
Massachusetts Bay Transportation
Authority, 8.5s, 2014 3,000 3,335,940
Massachusetts Federally Assisted
Housing, 0s, 2023 4,995 886,113
Massachusetts Health & Education
Facilities Authority (Children's
Hospital), 7.75s, 2018 2,425 2,608,815
Massachusetts Health & Education
Facilities Authority
(Newton-Wellesley Hospital), BIGI,
8s, 2018 1,710 1,852,854
Massachusetts Health & Education
Facilities Authority (Saint
Elizabeth's Hospital), FHA, 7.75s,
2027 1,250 1,315,050
Massachusetts Health & Education
Facilities Authority (South Shore
Hospital), MBIA, 8.125s, 2017 1,070 1,125,169
Massachusetts Health & Education
Facilities Authority (Suffolk
University), 8s, 2010 1,750 1,974,473
Massachusetts Housing Finance Agency,
7.5s, 2029 930 935,589
Massachusetts Industrial Finance
Agency (Cape Cod Health System),
8.5s, 2020 500 581,650
Massachusetts Industrial Finance
Agency, Tunnel Rev. (Mass.
Turnpike), 9s, 2020 8,130 9,541,043
Massachusetts Port Authority, ETM,
12.75s, 2002 485 640,273
Massachusetts Port Authority, ETM,
13s, 2013 780 1,245,402
Palmer, MA, AMBAC, 7.7s, 2010 500 566,270
--------------
$37,579,539
-- -------------------------------------- ----------------- --------------
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
Airport and Port Revenue - 3.9%
Massachusetts Port Authority, 5s, 2015 $ 5,600 $ 5,120,472
Massachusetts Port Authority, FGIC,
7.5s, 2020 4,500 4,904,100
--------------
$10,024,572
-- -------------------------------------- ----------------- --------------
Electric and Gas Utility Revenue - 0.8%
Massachusetts Industrial Finance
Agency (Nantucket Electric Co.),
AMBAC, 5.875s, 2017 $ 2,000 $ 1,995,620
-- -------------------------------------- ----------------- --------------
Health Care Revenue - 17.9%
Boston, MA, Industrial Development
Finance Authority Rev. (Stonehedge
Convalescent Center), 10.75s, 2011 $ 755 $ 811,602
Massachusetts Health & Education
Facilities Authority (Beth Israel
Hospital), 7s, 2014 3,000 3,168,450
Massachusetts Health & Education
Facilities Authority (Charlton
Memorial Hospital), 7.25s, 2013 1,700 1,802,017
Massachusetts Health & Education
Facilities Authority (Children's
Hospital), 6.125s, 2012 2,285 2,354,236
Massachusetts Health & Education
Facilities Authority (Dana-Farber),
5.5s, 2027 2,500 2,308,275
Massachusetts Health & Education
Facilities Authority (Emerson
Hospital), ETM, 8s, 2018 1,745 1,976,178
Massachusetts Health & Education
Facilities Authority (Fairview
Extended Care Facility), 10.25s,
2021 2,000 2,259,500
Massachusetts Health & Education
Facilities Authority (Massachusetts
Eye & Ear Infirmary), 7.375s, 2011 3,000 3,018,060
Massachusetts Health & Education
Facilities Authority (New England
Deaconess Hospital), 6.875s, 2022 5,600 5,861,072
Massachusetts Health & Education
Facilities Authority (New England
Deaconess Hospital), 7.2s, 2022 2,500 2,663,000
Massachusetts Health & Education
Facilities Authority (North Adams
Regional Hospital), 6.625s, 2018 1,000 980,970
Massachusetts Industrial Finance
Agency (Beverly Enterprises),
8.375s, 2009 4,040 4,322,234
Massachusetts Industrial Finance
Agency (Continental Healthcare),
11.875s, 2015 5,395 5,543,147
Massachusetts Industrial Finance
Agency (Evanswood), 7.625s, 2014 1,200 1,188,264
Massachusetts Industrial Finance
Agency (Martha's Vineyard Long-Term
Care Facility), 9.25s, 2022 3,000 1,845,000
Massachusetts Industrial Finance
Agency (Massachusetts Biomedical
Research), 0s, 2004 5,000 3,204,300
Massachusetts Industrial Finance
Agency (Massachusetts Biomedical
Research), 0s, 2010 5,300 2,238,243
Massachusetts Industrial Finance
Agency (Needham/Hamilton House),
11s, 2010 600 612,018
--------------
$46,156,566
-- -------------------------------------- ----------------- --------------
Industrial Revenue (Corporate Guarantee) - 2.7%
Massachusetts Industrial Finance
Agency (Automatic Data Processing,
Inc.), 8.25s, 2019 $ 900 $ 919,008
17
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
Industrial Revenue (Corporate Guarantee) - continued
Massachusetts Industrial Finance
Agency, Pollution Control Rev.
(Boston Edison Co.), 5.75s, 2014 $1,900 $ 1,830,441
Puerto Rico Ports Authority (American
Airlines), 6.3s, 2023 2,370 2,393,747
Puerto Rico Ports Authority (American
Airlines), 6.25s, 2026 1,500 1,513,425
Springfield, MA, Industrial
Development Finance Agency (Terminal
Building), 10s, 2001 333 334,765
--------------
$ 6,991,386
-- -------------------------------------- ----------------- --------------
Insured Health Care Revenue - 3.5%
Massachusetts Health & Education
Facilities Authority (Beth Israel
Hospital), AMBAC, INFLOS, 8.623s,
2025++++ $5,000 $ 5,001,250
Massachusetts Health & Education
Facilities Authority (Brigham &
Women's Hospital), MBIA, 6.75s, 2024 2,000 2,158,520
Massachusetts Health & Education
Facilities Authority (Youville
Hospital), 6s, 2034 2,000 1,968,400
--------------
$ 9,128,170
-- -------------------------------------- ----------------- --------------
Other Revenue - 6.8%
Martha's Vineyard, MA, Land Bank,
(Land Acquisition), 8.125s, 2011 $4,000 $ 4,086,800
Massachusetts Health & Education
Facilities Authority (Learning
Center for Deaf Children), 9.25s,
2014 2,250 2,388,600
Massachusetts Health & Education
Facilities Authority (Learning
Center for Deaf Children), 8s, 2020 1,500 1,486,485
Massachusetts Housing Finance Agency
(Park School), 5.9s, 2026 3,385 3,366,856
Massachusetts Industrial Finance
Agency (Dexter School), 7.5s, 2011 1,720 1,823,854
Massachusetts Industrial Finance
Agency (Dexter School), 7.5s, 2021 2,900 3,097,838
Nantucket Island, MA, Land Bank,
7.75s, 2020 1,200 1,339,092
--------------
$ 17,589,525
-- -------------------------------------- ----------------- --------------
Multi-Family Housing Revenue - 4.3%
Massachusetts Housing Finance Agency,
8.4s, 2021 $2,190 $ 2,309,355
Massachusetts Housing Finance Agency,
8.8s, 2021 1,995 2,111,608
Massachusetts Housing Finance Agency,
8.2s, 2027 720 755,445
Massachusetts Housing Finance Agency,
AMBAC, 6.65s, 2019 1,500 1,562,715
Massachusetts Housing Finance Agency,
FNMA, 6.9s, 2025 1,700 1,783,555
Massachusetts Housing Finance Agency,
FNMA, 7.65s, 2028 1,430 1,480,279
Somerville, MA, Housing Authority
Revenue (Clarendon Hill), 7.85s,
2010 1,000 1,065,450
--------------
$ 11,068,407
-- -------------------------------------- ----------------- --------------
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-- --------------------------------------- ----------------- --------------
Single Family Housing Revenue - 4.1%
Massachusetts Housing Finance Agency,
8.1s, 2020 $2,270 $ 2,382,206
Massachusetts Housing Finance Agency,
8.1s, 2021 2,000 2,115,540
Massachusetts Housing Finance Agency,
7.95s, 2023 960 1,003,584
Massachusetts Housing Finance Agency,
MBIA, 6.1s, 2015 2,000 2,035,840
Massachusetts Industrial Finance
Agency, MBIA, 6.35s, 2022 3,000 3,011,820
--------------
$ 10,548,990
-- -------------------------------------- ----------------- --------------
Student Loan Revenue
Massachusetts Education Loan
Authority, 9s, 2001 $ 125 $ 126,930
-- -------------------------------------- ----------------- --------------
Universities - 9.5%
Massachusetts Health & Education
Facilities Authority (Boston
College), 5.25s, 2023 $4,350 $ 4,043,934
Massachusetts Health & Education
Facilities Authority (Smith
College), 5.75s, 2024 2,500 2,493,475
Massachusetts Health & Education
Facilities Authority (Williams
College), 5.5s, 2026 4,375 4,238,937
Massachusetts Health & Education
Facilities Authority (Boston
University), MBIA, RIBS, 9.456s,
2031++++ 5,000 5,600,100
Massachusetts Industrial Finance
Agency (Brandeis University), 0s,
2004 1,000 665,760
Massachusetts Industrial Finance
Agency (Brandeis University), 0s,
2005 1,000 626,730
Massachusetts Industrial Finance
Agency (Brandeis University), 0s,
2009 1,000 483,550
Massachusetts Industrial Finance
Agency (Brandeis University), 0s,
2010 1,000 451,700
Massachusetts Industrial Finance
Agency (Brandeis University), 0s,
2011 500 211,835
Massachusetts Industrial Finance
Agency (Curry College), 8s, 2010 605 597,565
Massachusetts Industrial Finance
Agency (Curry College), 8s, 2014 1,975 1,985,191
Massachusetts Industrial Finance
Agency (Emerson College), 8.9s, 2018 1,000 1,098,000
Massachusetts Industrial Finance
Agency (Lesley College), 6.3s, 2025 2,000 2,041,780
--------------
$ 24,538,557
-- -------------------------------------- ----------------- --------------
Water and Sewer Utility Revenue - 8.8%
Massachusetts Water Resources
Authority, 6.5s, 2019 $8,000 $ 8,767,360
Massachusetts Water Resources
Authority, 5.5s, 2022 5,150 4,917,787
Massachusetts Water Resources
Authority, AMBAC, 5.25s, 2015 5,000 4,817,200
Massachusetts Water Resources
Authority, MBIA, 5.25s, 2020 4,500 4,230,090
--------------
$ 22,732,437
-- -------------------------------------- ----------------- --------------
Total Municipal Bonds (Identified Cost, $237,153,610) $252,223,255
------------------------------------------------------------- --------------
18
<PAGE>
Portfolio of Investments (Unaudited) - continued
Floating Rate Demand Notes - 0.3%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------- -------- ----------------------------
Massachusetts Health & Education
Facilities Authority, due 7/01/05 $300 $300,000
Massachusetts Health & Education
Facilities Authority (Boston
University),
due 7/01/05 600 600,000
- ----------------------------------------- ----------------------------
Total Floating Rate Demand Notes, at Identified Cost $900,000
- ----------------------------------------------------------- -----------
Portfolio of Investments (Unaudited) - continued
Rights
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ----------------------------------------- ----------------- ---------------
Georgia Municipal Electric Authority
Power Co., due 2016 $ 10 $ 1,919
- ----------------------------------------- ----------------- ---------------
Total Rights (Identified Cost, $131,400) $ 1,919
- ----------------------------------------------------------- ---------------
Total Investments (Identified Cost, $238,185,010) $253,315,155
Other Assets, Less Liabilities - 1.8% 4,387,766
- -----------------------------------------------------------------------------
Net Assets - 100.0% $257,702,921
- ----------------------------------------------------------- ---------------
Portfolio Footnotes
[S.]Indexed security.
++++Inverse floating rate security.
###Security segregated as collateral for an open futures contract.
See notes to financial statements
19
<PAGE>
Financial Statements
Statements of Assets and Liabilities (Unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Alabama Arkansas California Florida
September 30, 1996 Fund Fund Fund Fund
- ------------------------------------------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $80,988,773 $155,437,353 $269,725,237 $ 92,119,794
Unrealized appreciation 4,463,414 6,022,064 15,272,028 4,714,935
------------ ------------- ------------- -------------
Total, at value $85,452,187 $161,459,417 $284,997,265 $ 96,834,729
Cash 99,543 66,229 61,627 999
Receivable for Fund shares sold 49,733 193,179 230,122 133,163
Receivable for investments sold 1,272,499 1,033,434 3,335,492 --
Receivable for daily variation margin on
open futures contracts -- 14,062 119,531 42,187
Interest receivable 1,479,001 2,369,249 4,259,528 1,785,177
Deferred organization expenses -- 1,954 -- 1,442
Other assets 1,002 2,074 3,355 12,028
------------ ------------- ------------- -------------
Total assets $88,353,965 $165,139,598 $293,006,920 $ 98,809,725
------------ ------------- ------------- -------------
Liabilities:
Distributions payable $ 224,679 $ 377,595 $ 741,476 $ 246,445
Payable for Fund shares reacquired 85,552 404,193 326,134 287,011
Payable for investments purchased 984,818 1,000,000 -- --
Payable to affiliates -
Management fee 3,928 7,377 9,668 4,445
Shareholder servicing agent fee 1,110 2,058 3,827 1,296
Distribution fee 2,203 4,354 10,025 4,046
Accrued expenses and other liabilities 48,891 71,790 106,452 31,156
------------ ------------- ------------- -------------
Total liabilities $ 1,351,181 $ 1,867,367 $ 1,197,582 $ 574,399
------------ ------------- ------------- -------------
Net assets $87,002,784 $163,272,231 $291,809,338 $ 98,235,326
------------ ------------- ------------- -------------
Net assets consist of:
Paid-in capital $81,912,883 $165,483,101 $289,730,010 $100,132,271
Unrealized appreciation on investments 4,463,414 5,927,982 14,918,884 4,432,692
Accumulated undistributed net realized gain
(loss) on investments 508,232 (7,940,245) (12,465,515) (6,368,394)
Accumulated undistributed (distributions in
excess of) net investment income 118,255 (198,607) (374,041) 38,757
------------ ------------- ------------- -------------
Total $87,002,784 $163,272,231 $291,809,338 $ 98,235,326
============ ============= ============= =============
Shares of beneficial interest outstanding:
Class A 7,597,077 15,900,607 45,637,171 8,535,048
Class B 644,437 808,175 6,339,642 1,471,705
Class C -- -- 714,226 --
------------ ------------- ------------- -------------
Total shares of beneficial interest
outstanding 8,241,514 16,708,782 52,691,039 10,006,753
------------ ------------- ------------- -------------
Net assets:
Class A $80,199,665 $155,376,409 $252,745,955 $ 83,789,379
Class B 6,803,119 7,895,822 35,102,670 14,445,947
Class C -- -- 3,960,713 --
------------ ------------- ------------- -------------
Total net assets $87,002,784 $163,272,231 $291,809,338 $ 98,235,326
------------ ------------- ------------- -------------
Class A shares:
Net asset value and redemption price per share
(net assets / shares of beneficial interest
outstanding) $10.56 $ 9.77 $5.54 $ 9.82
------------ ------------- ------------- -------------
Offering price per share (100 / 95.25 of net
asset value per share) $11.09 $10.26 $5.82 $10.31
------------ ------------- ------------- -------------
Class B shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest
outstanding) $10.56 $9.77 $ 5.54 $ 9.82
------------ ------------- ------------- -------------
Class C shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest
outstanding) -- -- $ 5.55 --
------------ ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
Georgia Maryland Massachusetts
September 30, 1996 Fund Fund Fund
- ------------------------------------------------- ------------ ------------- ------------------
<S> <C> <C> <C>
Assets:
Investments -
Identified cost $68,817,594 $137,056,608 $238,185,010
Unrealized appreciation 5,173,541 7,338,437 15,130,145
------------ ------------- ------------------
Total, at value $73,991,135 $144,395,045 $253,315,155
Cash 36,576 62,029 94,493
Receivable for Fund shares sold 15,581 243,912 105,833
Receivable for investments sold 25,000 1,823,724 2,188,843
Receivable for daily variation margin on open
futures contracts 14,063 60,469 56,250
Interest receivable 1,238,368 2,306,661 4,147,310
Deferred organization expenses -- -- --
Other assets 897 1,705 2,944
------------ ------------- ------------------
Total assets $75,321,620 $148,893,545 $259,910,828
------------ ------------- ------------------
Liabilities:
Distributions payable $ 150,366 $ 290,133 $ 627,286
Payable for Fund shares reacquired 4,209 174,394 142,383
Payable for investments purchased -- -- 1,361,437
Payable to affiliates -
Management fee 2,772 5,472 9,540
Shareholder servicing agent fee 983 1,325 3,262
Distribution fee 2,177 5,661 8,180
Accrued expenses and other liabilities 54,717 47,348 55,819
------------ ------------- ------------------
Total liabilities $ 215,224 $ 524,333 $ 2,207,907
------------ ------------- ------------------
Net assets $75,106,396 $148,369,212 $257,702,921
------------ ------------- ------------------
Net assets consist of:
Paid-in capital $74,024,368 $145,581,406 $249,194,636
Unrealized appreciation on investments 5,137,334 6,933,889 14,991,320
Accumulated undistributed net realized gain
(loss) on investments (3,971,075) (3,804,065) (5,798,339)
Accumulated undistributed (distributions in
excess of) net investment income (84,231) (342,018) (684,696)
------------ ------------- ------------------
Total $75,106,396 $148,369,212 $257,702,921
------------ ------------- ------------------
Shares of beneficial interest outstanding:
Class A 6,174,893 12,044,577 22,191,343
Class B 990,406 1,397,960 1,301,205
Class C -- -- --
------------ ------------- ------------------
Total shares of beneficial interest
outstanding 7,165,299 13,442,537 23,492,548
------------ ------------- ------------------
Net assets:
Class A $64,721,273 $132,947,869 $243,421,208
Class B 10,385,123 15,421,343 14,281,713
Class C -- -- --
------------ ------------- ------------------
Total net assets $75,106,396 $148,369,212 $257,702,921
------------ ------------- ------------------
Class A shares:
Net asset value and redemption price per share
(net assets / shares of beneficial interest
outstanding) $10.48 $11.04 $10.97
------------ ------------- ------------------
Offering price per share (100 / 95.25 of net
asset value per share) $11.00 $11.59 $11.52
------------ ------------- ------------------
Class B shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest
outstanding) $10.49 $11.03 $10.98
------------ ------------- ------------------
Class C shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest
outstanding) -- -- --
------------ ------------- ------------------
</TABLE>
On sales of $100,000 or more, the offering price of Class A shares is
reduced. A contingent deferred sales charge may be imposed on redemptions
of Class A, Class B and Class C shares.
See notes to financial statements
20
<PAGE>
Financial Statements - continued
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Alabama Arkansas California Florida
Six Months Ended September 30, 1996 Fund Fund Fund Fund
- ------------------------------------------------------ ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $2,813,218 $5,208,964 $ 8,899,193 $3,126,728
------------- ------------- --------------- -------------
Expenses -
Management fee $ 241,650 $ 471,766 $ 804,492 $ 278,773
Trustees' compensation 8,912 9,649 23,723 3,376
Shareholder servicing agent fee (Class A) 61,008 122,752 189,930 65,316
Shareholder servicing agent fee (Class B) 7,182 8,670 38,574 15,713
Shareholder servicing agent fee (Class C) -- -- 3,173 --
Distribution and service fee (Class A) 101,679 81,835 -- --
Distribution and service fee (Class B) 32,645 34,727 146,087 58,452
Distribution and service fee (Class C) -- -- 21,151 --
Custodian fee 11,359 33,795 60,119 22,090
Printing 3,670 11,301 17,070 3,030
Postage 2,185 2,737 8,046 2,469
Auditing fees 15,038 15,976 16,026 13,888
Legal fees 1,334 1,265 3,916 2,836
Amortization of organization expenses -- 128 -- 486
Miscellaneous 18,710 38,750 56,197 25,280
------------- ------------- --------------- -------------
Total expenses $ 505,372 $ 833,351 $ 1,388,504 $ 491,709
Fees paid indirectly (3,995) (7,560) (16,064) (5,488)
Preliminary reduction of expenses by investment
adviser and distributor -- -- (219,419) --
------------- ------------- --------------- -------------
Net expenses $ 501,377 $ 825,791 $ 1,153,021 $ 486,221
------------- ------------- --------------- -------------
Net investment income $2,311,841 $4,383,173 $ 7,746,172 $2,640,507
------------- ------------- --------------- -------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (169,137) $ (366,763) $(1,821,867) $ (433,301)
Futures contracts -- 46,577 235,402 48,718
------------- ------------- --------------- -------------
Net realized gain (loss) on investments $ (169,137) $ (320,186) $(1,586,465) $ (384,583)
------------- ------------- --------------- -------------
Change in unrealized appreciation (depreciation) -
Investments $ 417,514 $ 588,660 $ 2,908,579 $ 595,138
Futures contracts -- (94,082) (339,320) (342,298)
------------- ------------- --------------- -------------
Net unrealized gain (loss) on investments $ 417,514 $ 494,579 $ 2,569,259 $ 252,840
------------- ------------- --------------- -------------
Net realized and unrealized gain (loss) on
investments $ 248,377 $ 174,393 $ 982,794 $ (131,743)
------------- ------------- --------------- -------------
Increase in net assets from operations $2,560,218 $4,557,566 $ 8,728,967 $2,508,764
============= ============= =============== =============
</TABLE>
<TABLE>
<CAPTION>
Georgia Maryland Massachusetts
Six Months Ended September 30, 1996 Fund Fund Fund
- ------------------------------------------------------ ------------- ------------- ---------------
<S> <C> <C> <C>
Net investment income:
Interest income $2,442,631 $4,771,411 $ 8,767,027
------------- ------------- ---------------
Expenses -
Management fee $ 210,599 $ 409,367 $ 708,094
Trustees' compensation 7,235 9,664 9,488
Shareholder servicing agent fee (Class A) 49,862 101,069 184,165
Shareholder servicing agent fee (Class B) 11,355 15,999 13,980
Shareholder servicing agent fee (Class C) -- -- --
Distribution and service fee (Class A) 83,104 235,827 429,717
Distribution and service fee (Class B) 51,616 72,722 63,175
Distribution and service fee (Class C) -- -- --
Custodian fee 16,339 30,386 51,999
Printing 3,611 -- 7,170
Postage -- 2,801 5,769
Auditing fees 12,962 13,962 28,162
Legal fees 682 3,770 23,733
Amortization of organization expenses -- -- --
Miscellaneous 7,467 23,821 57,533
------------- ------------- ---------------
Total expenses $ 454,832 $ 919,388 $ 1,582,985
Fees paid indirectly (6,078) (24,024) (13,220)
Preliminary reduction of expenses by investment
adviser and distributor (12,240) (20,159) (41,690)
------------- ------------- ---------------
Net expenses $ 436,514 $ 875,205 $ 1,528,075
------------- ------------- ---------------
Net investment income $2,006,117 $3,896,206 $ 7,238,952
------------- ------------- ---------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (170,671) $ 166,430 $(1,091,908)
Futures contracts (14,299) 547,354 93,080
------------- ------------- ---------------
Net realized gain (loss) on investments $ (184,970) $ 713,784 $ (998,828)
------------- ------------- ---------------
Change in unrealized appreciation (depreciation) -
Investments $ 238,832 $ (214,271) $ 548,494
Futures contracts (12,328) (691,309) (145,756)
------------- ------------- ---------------
Net unrealized gain (loss) on investments $ 226,504 $ (905,580) $ 402,738
------------- ------------- ---------------
Net realized and unrealized gain (loss) on
investments $ 41,534 $ (191,796) $ (596,090)
------------- ------------- ---------------
Increase in net assets from operations $2,047,650 $3,704,410 $ 6,642,862
============= ============= ===============
</TABLE>
See notes to financial statements
21
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Alabama Arkansas California Florida
Six Months Ended September 30, 1996 Fund Fund Fund Fund
- ---------------------------------------------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,311,841 $ 4,383,173 $ 7,746,172 $ 2,640,507
Net realized gain (loss) on investments (169,137) (320,186) (1,586,465) (384,583)
Net unrealized gain (loss) on investments 417,514 494,579 2,569,259 252,840
------------- -------------- ------------- -------------
Increase in net assets from operations $ 2,560,218 $ 4,557,566 $ 8,728,966 $ 2,508,764
------------- -------------- ------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $(2,132,579) $ (4,153,812) $ (6,840,502) $ (2,286,150)
From net investment income (Class B) (144,322) (166,260) (789,542) (310,987)
From net investment income (Class C) -- -- (92,848) --
------------- -------------- ------------- -------------
Total distributions declared to shareholders $(2,276,901) $ (4,320,072) $ (7,722,892) $ (2,597,137)
------------- -------------- ------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 1,811,873 $ 4,307,369 $ 81,453,368 $ 19,530,696
Net asset value of shares issued to shareholders
in reinvestment of distributions 931,454 1,936,694 3,295,186 1,017,979
Cost of shares reacquired (4,647,082) (24,065,537) (92,789,729) (24,225,873)
------------- -------------- ------------- -------------
Decrease in net assets from Fund share
transactions $(1,903,755) $(17,821,474) $ (8,041,175) $ (3,677,198)
------------- -------------- ------------- -------------
Total increase (decrease) in net assets $(1,620,438) $(17,583,980) $ (7,035,101) $ (3,765,571)
------------- -------------- ------------- -------------
Net assets:
At beginning of period 88,623,222 180,856,211 298,844,439 102,000,897
------------- -------------- ------------- -------------
At end of period $87,002,784 $163,272,231 $291,809,338 $ 98,235,326
============= ============== ============= =============
Accumulated undistributed (distributions in excess
of) net investment income included in net assets
at end of period $ 118,255 $ (198,607) $ (374,041) $ 38,757
============= ============== ============= =============
</TABLE>
<TABLE>
<CAPTION>
Georgia Maryland Massachusetts
Six Months Ended September 30, 1996 Fund Fund Fund
- ---------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,006,117 $ 3,896,206 $ 7,238,952
Net realized gain (loss) on investments (184,970) 713,784 (998,828)
Net unrealized gain (loss) on investments 226,504 (905,580) 402,738
------------- ------------- -------------
Increase in net assets from operations $ 2,047,651 $ 3,704,410 $ 6,642,862
------------- ------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $(1,723,526) $ (3,399,705) $ (6,596,110)
From net investment income (Class B) (224,962) (314,722) (294,957)
From net investment income (Class C) -- -- --
------------- ------------- -------------
Total distributions declared to shareholders $(1,948,488) $ (3,714,427) $ (6,891,067)
------------- ------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 2,283,829 $ 5,108,989 $ 32,568,007
Net asset value of shares issued to shareholders
in reinvestment of distributions 1,027,708 1,976,238 3,148,889
Cost of shares reacquired (6,692,748) (11,696,594) (38,578,880)
------------- ------------- -------------
Decrease in net assets from Fund share
transactions $(3,381,211) $ (4,611,367) $ (2,861,984)
------------- ------------- -------------
Total increase (decrease) in net assets $(3,282,049) $ (4,621,384) $ (3,110,189)
------------- ------------- -------------
Net assets:
At beginning of period 78,388,444 152,990,596 260,813,110
------------- ------------- -------------
At end of period $75,106,396 $148,369,212 $257,702,921
============= ============= =============
Accumulated undistributed (distributions in excess
of) net investment income included in net assets
at end of period $ (84,231) $ (342,018) $ (684,696)
============= ============= =============
</TABLE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Alabama Arkansas California Florida
Year Ended March 31, 1996 Fund Fund Fund Fund
- ---------------------------------------------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,645,750 $ 9,720,089 $ 16,357,698 $ 5,341,258
Net realized gain (loss) on investments 1,777,244 (1,676,263) 3,656,753 1,919,706
Net unrealized gain (loss) on investments (188,403) 3,646,737 2,718,243 532,266
------------- -------------- -------------- -------------
Increase in net assets from operations $ 6,234,591 $ 11,690,563 $ 22,732,694 $ 7,793,230
------------- -------------- -------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $(4,413,702) $ (9,375,278) $ (14,676,735) $ (4,746,329)
From net investment income (Class B) (225,971) (326,899) (1,505,089) (605,261)
From net investment income (Class C) -- -- (175,874) --
In excess of net investment income (Class A) -- -- (237,111) (4,074)
In excess of net investment income (Class B) -- -- (24,316) (519)
In excess of net investment income (Class C) -- -- (2,841) --
------------- -------------- -------------- -------------
Total distributions declared to shareholders $(4,639,673) $ (9,702,177) $ (16,621,966) $ (5,356,183)
------------- -------------- -------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 6,801,657 $ 10,722,904 $ 95,667,192 $ 43,564,467
Net asset value of shares issued to shareholders
in reinvestment of distributions 1,862,845 4,417,313 7,228,615 1,872,446
Cost of shares reacquired (9,836,700) (30,608,486) (115,238,042) (48,433,974)
------------- -------------- -------------- -------------
Decrease in net assets from Fund share
transactions $(1,172,198) $(15,468,269) $ (12,342,235) $ (2,997,061)
------------- -------------- -------------- -------------
Total increase (decrease) in net assets $ 422,720 $(13,479,883) $ (6,231,507) $ (560,014)
Net assets:
At beginning of period 88,200,502 194,336,094 305,075,946 102,560,911
------------- -------------- -------------- -------------
At end of period $88,623,222 $180,856,211 $ 298,844,439 $102,000,897
============= ============== ============== =============
Accumulated undistributed (distributions in excess
of) net investment income included in net assets
at end of period $ 83,314 $ (261,708) $ (397,322) $ (4,593)
============= ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
Georgia Maryland Massachusetts
Year Ended March 31, 1996 Fund Fund Fund
- ---------------------------------------------------- ------------- ------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,164,450 $ 7,873,071 $ 14,526,680
Net realized gain (loss) on investments (260,587) (1,568,663) 3,156,482
Net unrealized gain (loss) on investments 1,210,949 3,005,501 533,091
------------- ------------- --------------
Increase in net assets from operations $ 5,114,812 $ 9,309,909 $ 18,216,253
------------- ------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,749,712) $ (7,300,383) $(14,053,457)
From net investment income (Class B) (414,738) (552,380) (473,223)
From net investment income (Class C) -- -- --
In excess of net investment income (Class A) (19,210) -- (35,743)
In excess of net investment income (Class B) (2,125) -- (1,204)
In excess of net investment income (Class C) -- -- --
------------- ------------- --------------
Total distributions declared to shareholders $ (4,185,785) $ (7,852,763) $(14,563,627)
------------- ------------- --------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 9,527,957 $ 11,754,356 $ 41,490,140
Net asset value of shares issued to shareholders
in reinvestment of distributions 2,180,065 4,256,011 6,631,937
Cost of shares reacquired (17,375,838) (21,005,744) (62,188,200)
------------- ------------- --------------
Decrease in net assets from Fund share
transactions $ (5,667,816) $ (4,995,377) $(14,066,123)
------------- ------------- --------------
Total increase (decrease) in net assets $ (4,738,789) $ (3,538,231) $(10,413,497)
Net assets:
At beginning of period 83,127,233 156,528,827 271,226,607
------------- ------------- --------------
At end of period $ 78,388,444 $152,990,596 $260,813,110
============= ============= ==============
Accumulated undistributed (distributions in excess
of) net investment income included in net assets
at end of period $ (141,860) $ (523,799) $ (1,032,582)
============= ============= ==============
</TABLE>
See notes to financial statements
22
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Alabama Fund
- ------------------------------------------------- ----------------------------- --------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
- ------------------------------------------------- ---------------- ------------ --------- ------------
1996 1996 1995 1994
- ------------------------------------------------- ---------------- ------------ --------- ------------
Class A
- ------------------------------------------------- ---------------- ------------ --------- ------------
(Unaudited)
- ------------------------------------------------- ---------------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.52 $ 10.34 $ 10.27 $ 10.98
---------------- ------------ --------- ------------
Income from investment operations# -
Net investment incomeS. $ 0.28 $ 0.55 $ 0.56 $ 0.09
Net realized and unrealized gain (loss) on
investments 0.04 0.18 0.09 (0.71)
---------------- ------------ --------- ------------
Total from investment operations $ 0.32 $ 0.73 $ 0.65 $ (0.62)
---------------- ------------ --------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.28) $ (0.55) $ (0.55) $ (0.08)
From net realized gain on investments -- -- -- --
In excess of net investment income++++ -- -- -- (0.01)
In excess of net realized gain on investments -- -- (0.03) --
---------------- ------------ --------- ------------
Total distributions declared to shareholders $ (0.28) $ (0.55) $ (0.58) $ (0.09)
---------------- ------------ --------- ------------
Net asset value - end of period $ 10.56 $ 10.52 $ 10.34 $ 10.27
================ ============ ========= ============
Total return++ 3.05%+++ 7.13% 6.51% (5.66)%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.09%+ 1.14% 1.15% 1.18%+
Net investment income 5.32%+ 5.18% 5.47% 5.17%+
Portfolio turnover 12% 37% 30% 4%
Net assets at end of period (000 omitted) $80,200 $82,484 $83,805 $81,501
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares
outstanding.
##For the fiscal years ending after September 1, 1995, the Fund's expenses are calculated without
reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
++++For the year ended January 31, 1992, the per share distribution in excess of net investment income
was $0.004.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the
Fund, the net investment income per share and the ratios would have been:
Net investment income -- $ 0.54 $ 0.55 $ 0.09
Ratios (to average net assets):
Expenses -- 1.24% 1.25% 1.28%+
Net investment income -- 5.08% 5.37% 5.07%+
</TABLE>
<TABLE>
<CAPTION>
Alabama Fund
- ------------------------------------------------- -------------- --------- -------------------
Year Ended
January 31,
- ------------------------------------------------- -------------- --------- -------------------
1994 1993 1992 1991
- ------------------------------------------------- -------------- --------- -------------------
Class A
- ------------------------------------------------- -------------- --------- -------------------
(Unaudited)
- ------------------------------------------------- -------------- --------- -------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.33 $ 9.95 $ 9.65 $ 9.53
-------------- --------- -------------------
Income from investment operations# -
Net investment income[S.] $ 0.55 $ 0.56 $ 0.60 $ 0.59
Net realized and unrealized gain (loss) on
investments 0.69 0.41 0.41 0.08
-------------- --------- -------------------
Total from investment operations $ 1.24 $ 0.97 $ 1.01 $ 0.67
-------------- --------- -------------------
Less distributions declared to shareholders -
From net investment income $ (0.54) $ (0.58) $ (0.65) $ (0.55)
From net realized gain on investments (0.04) (0.01) (0.06) --
In excess of net investment income++++ (0.01) -- 0.00 --
In excess of net realized gain on investments -- -- -- --
-------------- --------- -------------------
Total distributions declared to shareholders $ (0.59) $ (0.59) $ (0.71) $ (0.55)
-------------- --------- -------------------
Net asset value - end of period $ 10.98 $ 10.33 $ 9.95 $ 9.65
============== ========= ===================
Total return++ 12.26% 10.08% 10.92% 7.31%
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.21% 1.08% 0.95% 0.57%+
Net investment income 5.13% 5.79% 6.19% 6.63%+
Portfolio turnover 12% 17% 23% 64%
Net assets at end of period (000 omitted) $ 87,344 $ 67,678 $ 48,476 $22,076
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares
outstanding.
##For the fiscal years ending after September 1, 1995, the Fund's expenses are calculated
without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the charge
had been included, the results would have been lower.
++++For the year ended January 31, 1992, the per share distribution in excess of net investment
income was $0.004.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their
management and distribution fee, respectively, for the periods indicated. If these fees had
been incurred by the Fund, the net investment income per share and the ratios would have
been:
Net investment income $ 0.54 $ 0.55 $ 0.59 $ 0.52
Ratios (to average net assets):
Expenses 1.31% 1.18% 1.08% 1.33%+
Net investment income 5.03% 5.69% 6.06% 5.87%+
</TABLE>
See notes to financial statements
23
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Alabama Fund
----------------------------------------------------------------- --------------------- --------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
---------------------------------------------------- ------------ --------------------- --------------
1996 1996 1995 1994 1994**
---------------------------------------------------- ------------ --------------------- --------------
Class B
---------------------------------------------------- ------------ --------------------- --------------
(Unaudited)
---------------------------------------------------- ------------ --------------------- --------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $ 10.52 $ 10.34 $ 10.27 $ 10.98 $ 10.93
---------------- ------------ --------------------- --------------
Income from investment operations# -
Net investment income $ 0.28 $ 0.46 $ 0.47 $ 0.08 $ 0.18
Net realized and unrealized gain
(loss) on investments (0.02) 0.18 0.09 (0.71) 0.07
---------------- ------------ --------------------- --------------
Total from investment operations $ 0.26 $ 0.64 $ 0.56 $ (0.63) $ 0.25
---------------- ------------ --------------------- --------------
Less distributions declared to
shareholders -
From net investment income $ (0.22) $ (0.46) $ (0.46) $ (0.08) $ (0.18)
From net realized gain on
investments -- -- -- -- (0.02)
In excess of net realized gain on
investments -- -- (0.03) -- --
---------------- ------------ --------------------- --------------
Total distributions declared to
shareholders $ (0.22) $ (0.46) $ (0.49) $ (0.08) $ (0.20)
---------------- ------------ --------------------- --------------
Net asset value - end of period $ 10.56 $ 10.52 $ 10.34 $ 10.27 $ 10.98
================ ============ ===================== ==============
Total return 2.62%+++ 6.25% 5.64% (5.79)%+++ 2.29%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.91%+ 1.96% 1.97% 2.01%+ 1.98%+
Net investment income 4.51%+ 4.34% 4.63% 4.30%+ 3.98%+
Portfolio turnover 12% 37% 30% 4% 12%
Net assets at end of period (000
omitted) $ 6,803 $ 6,139 $ 4,396 $ 2,849 $ 2,269
</TABLE>
**For the period from the commencement of offering Class B shares, September
7, 1993 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
See notes to financial statements
24
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Arkansas Fund
------------------------------------------------------------------------------- ----------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
------------------------------------------------------------------ ----------------------- ------------
1996 1996 1995 1994
------------------------------------------------------------------ ----------------------- ------------
Class A
------------------------------------------------------------------ ----------------------- ------------
(Unaudited)
------------------------------------------------------------------ ----------------------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.75 $ 9.66 $ 9.69 $ 10.47
---------------- ----------------------- ------------
Income from investment operations# -
Net investment income[S.] $ 0.26 $ 0.50 $ 0.53 $ 0.09
Net realized and unrealized gain (loss) on
investments 0.02 0.09 0.02 (0.77)
---------------- ----------------------- ------------
Total from investment operations $ 0.28 $ 0.59 $ 0.55 $ (0.68)
---------------- ----------------------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.26) $ (0.50) $ (0.53) $ (0.08)
From net realized gain on investments++++ -- -- -- --
In excess of net investment income -- -- -- (0.02)
In excess of net realized gain on investments++++ -- -- (0.05) --
---------------- ----------------------- ------------
Total distributions declared to shareholders $ (0.26) $ (0.50) $ (0.58) $ (0.10)
---------------- ----------------------- ------------
Net asset value - end of period $ 9.77 $ 9.75 $ 9.66 $ 9.69
================ ======================= ============
Total return++ 2.78%+++ 6.19% 5.90% (6.61)%+++
Ratios (to average net assets)/Supplemental
data[S.]:
Expenses## 0.93%+ 0.93% 0.75% 0.75%+
Net investment income 5.14%+ 5.10% 5.51% 5.21%+
Portfolio turnover 3% 6% 24% 1%
Net assets at end of period (000 omitted) $155,376 $172,907 $187,105 $195,042
*For the period from the commencement of investment operations, February 3, 1992 to January 31, 1993.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on average shares
outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction
for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
++++For the year ended January 31, 1994, the per share distributions from net realized gain on
investments and in excess of net realized gain on investments were $0.0015 and $0.0003, respectively,
for Class A shares.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the
Fund, the net investment income per share and the ratios would have been:
Net investment income -- -- $ 0.52 $ 0.09
Ratios (to average net assets):
Expenses -- -- 0.82% 0.96%+
Net investment income -- -- 5.43% 5.01%+
</TABLE>
<TABLE>
<CAPTION>
Arkansas Fund
------------------------------------------------------------------------ -----------
Year Ended
January 31,
------------------------------------------------------------------------ -----------
1994 1993*
------------------------------------------------------------------------ -----------
Class A
------------------------------------------------------------------------ -----------
(Unaudited)
------------------------------------------------------------------------ -----------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.88 $ 9.53
-------------- -----------
Income from investment operations# -
Net investment income[S.] $ 0.56 $ 0.58
Net realized and unrealized gain (loss) on investments 0.60 0.35
-------------- -----------
Total from investment operations $ 1.16 $ 0.93
-------------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.58)
From net realized gain on investments++++ 0.00 --
In excess of net investment income (0.02) --
In excess of net realized gain on investments++++ 0.00 --
-------------- -----------
Total distributions declared to shareholders $ (0.57) $ (0.58)
-------------- -----------
Net asset value - end of period $ 10.47 $ 9.88
============== ===========
Total return++ 11.95% 10.11%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 0.63% 0.16%+
Net investment income 5.30% 6.04%+
Portfolio turnover 3% 10%
Net assets at end of period (000 omitted) $203,542 $124,644
*For the period from the commencement of investment operations, February 3, 1992
to January 31, 1993.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If
the charge had been included, the results would have been lower.
++++For the year ended January 31, 1994, the per share distributions from net
realized gain on investments and in excess of net realized gain on investments
were $0.0015 and $0.0003, respectively, for Class A shares.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of
their management and distribution fee, respectively, for the periods indicated.
If these fees had been incurred by the Fund, the net investment income per share
and the ratios would have been:
Net investment income $ 0.53 $ 0.52
Ratios (to average net assets):
Expenses 0.91% 0.75%+
Net investment income 5.01% 5.45%+
</TABLE>
See notes to financial statements
25
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Arkansas Fund
- ----------------------------------------------------- ----------------------------- --------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
- ----------------------------------------------------- ---------------- ------------ --------- ------------
1996 1996 1995 1994
- ----------------------------------------------------- ---------------- ------------ --------- ------------
Class B
- ----------------------------------------------------- ---------------- ------------ --------- ------------
(Unaudited)
- ----------------------------------------------------- ---------------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.75 $ 9.65 $ 9.69 $ 10.47
---------------- ------------ --------- ------------
Income from investment operations# -
Net investment income[S.] $ 0.27 $ 0.42 $ 0.42 $ 0.07
Net realized and unrealized gain (loss) on
investments (0.04) 0.10 0.01 (0.78)
---------------- ------------ --------- ------------
Total from investment operations $ 0.23 $ 0.52 $ 0.43 $ (0.71)
---------------- ------------ --------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.21) $ (0.42) $ (0.42) $ (0.07)
From net realized gain on investments++++ -- -- -- --
In excess of net investment income++++++ -- -- -- 0.00
In excess of net realized gain on investments++++ -- -- (0.05) --
---------------- ------------ --------- ------------
Total distributions declared to shareholders $ (0.21) $ (0.42) $ (0.47) $ (0.07)
---------------- ------------ --------- ------------
Net asset value - end of period $ 9.77 $ 9.75 $ 9.65 $ 9.69
================ ============ ========= ============
Total return 2.34%+++ 5.43% 4.67% (6.81)%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.78%+ 1.76% 1.84% 1.82%+
Net investment income 4.29%+ 4.27% 4.40% 4.11%+
Portfolio turnover 3% 6% 24% 1%
Net assets at end of period (000 omitted) $ 7,896 $ 7,950 $ 7,231 $ 5,895
**For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31,
1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction
for fees paid indirectly.
++++For the year ended January 31, 1994, the per share distributions from net realized gain on
investments and in excess of net realized gain on investments were $0.0015 and $0.0003, respectively,
for Class B shares.
++++++For the period ended March 31, 1994 and the year ended January 31, 1994, the per share distributions
in excess of net investment income were $0.002 and $0.004, respectively, for Class B Shares.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the
Fund, the net investment income per share and the ratios would have been:
Net investment income -- -- $ 0.41 $ 0.07
Ratios (to average net assets):
Expenses -- -- 1.91% 2.02%+
Net investment income -- -- 4.33% 3.91%+
</TABLE>
<TABLE>
<CAPTION>
Arkansas Fund
- ----------------------------------------------------- --------------
Year Ended
January 31,
- ----------------------------------------------------- --------------
1994 **
- ----------------------------------------------------- --------------
Class B
- ----------------------------------------------------- --------------
(Unaudited)
- ----------------------------------------------------- --------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.42
--------------
Income from investment operations# -
Net investment income[S.] $ 0.23
Net realized and unrealized gain (loss) on
investments (0.04)
--------------
Total from investment operations $ 0.19
--------------
Less distributions declared to shareholders -
From net investment income $ (0.14)
From net realized gain on investments++++ 0.00
In excess of net investment income++++++ 0.00
In excess of net realized gain on investments++++ 0.00
--------------
Total distributions declared to shareholders $ (0.14)
--------------
Net asset value - end of period $ 10.47
==============
Total return 2.18%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.75%+
Net investment income 3.87%+
Portfolio turnover 3%
Net assets at end of period (000 omitted) $ 5,179
**For the period from the commencement of offering of Class B
shares, September 7, 1993 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994
is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for fees paid
indirectly.
++++For the year ended January 31, 1994, the per share
distributions from net realized gain on investments and in
excess of net realized gain on investments were $0.0015 and
$0.0003, respectively, for Class B shares.
++++++For the period ended March 31, 1994 and the year ended January
31, 1994, the per share distributions in excess of net
investment income were $0.002 and $0.004, respectively, for
Class B Shares.
[S.]The investment adviser and/or the distributor voluntarily
waived a portion of their management and distribution fee,
respectively, for the periods indicated. If these fees had
been incurred by the Fund, the net investment income per share
and the ratios would have been:
Net investment income $ 0.12
Ratios (to average net assets):
Expenses 3.44%+
Net investment income 2.18%+
</TABLE>
See notes to financial statements
26
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
California Fund
------------------------------------------------------------------------------- ----------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
------------------------------------------------------------------ ----------------------- ------------
1996 1996 1995 1994
------------------------------------------------------------------ ----------------------- ------------
Class A
------------------------------------------------------------------ ----------------------- ------------
(Unaudited)
------------------------------------------------------------------ ----------------------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.52 $ 5.41 $ 5.47 $ 5.95
---------------- ----------------------- ------------
Income from investment operations# -
Net investment income[S.] $ 0.15 $ 0.30 $ 0.31 $ 0.05
Net realized and unrealized gain (loss) on
investments 0.02 0.11 (0.05) (0.48)
---------------- ----------------------- ------------
Total from investment operations $ 0.17 $ 0.41 $ 0.26 $ (0.43)
---------------- ----------------------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.15) $ (0.30) $ (0.31) $ (0.04)
From net realized gain on investments -- -- -- --
In excess of net investment income++++ -- 0.00 0.00 (0.01)
In excess of net realized gain on investments -- -- (0.01) --
---------------- ----------------------- ------------
Total distributions declared to shareholders $ (0.15) $ (0.30) $ (0.32) $ (0.05)
---------------- ----------------------- ------------
Net asset value - end of period $ 5.54 $ 5.52 $ 5.41 $ 5.47
================ ======================= ============
Total return++ 3.11%+++ 7.86% 4.85% (7.21)%+++
Ratios (to average net assets)/Supplemental
data[S.]:
Expenses## 0.68%+ 0.66% 0.69% 0.68%+
Net investment income 5.42%+ 5.48% 5.80% 5.27%+
Portfolio turnover 31% 69% 57% 8%
Net assets at end of period (000 omitted) $252,746 $259,817 $272,161 $313,790
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995. Fund's expenses are calculated without reduction for
fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
++++For the years ended March 31, 1996 and 1995, the per share distributions in excess of net investment
income were $0.0049 and $0.0027, respectively.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management fee
and/or distribution fee, respectively, for certain of the period 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 $ 0.15 $ 0.29 $ 0.30 $ 0.05
Ratios (to average net assets):
Expenses 0.83%+ 0.81% 0.84% 0.83%+
Net investment income 5.27%+ 5.33% 5.65% 5.12%+
</TABLE>
<TABLE>
<CAPTION>
California Fund
------------------------------------------------------------------------- ---------------
Eleven Months
Ended Year Ended
January 31, February 28,
------------------------------------------------------------------------- ---------------
1994 1993
------------------------------------------------------------------------- ---------------
Class A
------------------------------------------------------------------------- ---------------
(Unaudited)
------------------------------------------------------------------------- ---------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.88 $ 5.42
--------------- ---------------
Income from investment operations# -
Net investment incomeS. $ 0.30 $ 0.34
Net realized and unrealized gain (loss) on investments 0.14 0.47
--------------- ---------------
Total from investment operations $ 0.44 $ 0.81
--------------- ---------------
Less distributions declared to shareholders -
From net investment income $ (0.29) $ (0.34)
From net realized gain on investments (0.07) (0.01)
In excess of net investment income++++ (0.01) --
In excess of net realized gain on investments -- --
--------------- ---------------
Total distributions declared to shareholders $ (0.37) $ (0.35)
--------------- ---------------
Net asset value - end of period $ 5.95 $ 5.88
=============== ===============
Total return++ 7.64%+++ 15.55%
Ratios (to average net assets)/Supplemental dataS.:
Expenses## 0.60%+ 0.39%
Net investment income 4.99%+ 6.18%
Portfolio turnover 38% 64%
Net assets at end of period (000 omitted) $356,419 $272,179
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average
shares outstanding.
##For fiscal years ending after September 1, 1995. Fund's expenses are calculated without
reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the
charge had been included, the results would have been lower.
++++For the years ended March 31, 1996 and 1995, the per share distributions in excess of
net investment income were $0.0049 and $0.0027, respectively.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their
management fee and/or distribution fee, respectively, for certain of the period
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 $ 0.29 $ 0.32
Ratios (to average net assets):
Expenses 0.78%+ 0.77%
Net investment income 4.82%+ 5.80%
</TABLE>
See notes to financial statements
27
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
California Fund
- ----------------------------------------------------- -------------------------- --------- ----------
Year Ended
February 28,
- ----------------------------------------------------- --------------- --------- --------- ----------
1992 1991 1990 1989
- ----------------------------------------------------- --------------- --------- --------- ----------
Class A
- ----------------------------------------------------- --------------- --------- --------- ----------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.26 $ 5.19 $ 5.06 $ 5.08
--------------- --------- --------- ----------
Income from investment operations -
Net investment incomeS. $ 0.35 $ 0.33 $ 0.33 $ 0.32
Net realized and unrealized gain (loss) on
investments 0.20 0.07 0.13 (0.02)
--------------- --------- --------- ----------
Total from investment operations $ 0.55 $ 0.40 $ 0.46 $ (0.30)
--------------- --------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.37) $ (0.33) $ (0.33) $ (0.32)
From net realized gain on investments (0.02) -- -- --
--------------- --------- --------- ----------
Total distributions declared to shareholders $ (0.39) $ (0.33) $ (0.33) $ (0.32)
--------------- --------- --------- ----------
Net asset value - end of period $ 5.42 $ 5.26 $ 5.19 $ 5.06
=============== ========= ========= ==========
Total return++ 10.69% 8.03% 9.28% 6.07%
Ratios (to average net assets)/Supplemental data[S.]:
Expenses 0.40% 0.87% 1.00% 1.28%
Net investment income 6.53% 6.39% 6.35% 6.35%
Portfolio turnover 73% 102% 243% 188%
Net assets at end of period (000 omitted) $177,291 $84,551 $68,879 $59,212
*For the period from the commencement of investment operations, June 18, 1985 to February 28, 1986.
+Annualized.
+++Not annualized.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had
been included, the results would have been lower.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management fee
and/or distribution fee, respectively, for certain of 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 $ 0.33 -- -- --
Ratios (to average net assets):
Expenses 0.79% -- -- --
Net investment income 6.14% -- -- --
</TABLE>
<TABLE>
<CAPTION>
California Fund
- ----------------------------------------------------- -------------------------
Year Ended
February 28,
- ----------------------------------------------------- ------------ ------------
1988 1987 1986*
- ----------------------------------------------------- ------------ ------------ ------------
Class A
- ----------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.38 $ 5.07 $ 4.76
------------ ------------ ------------
Income from investment operations -
Net investment income[S.] $ 0.31 $ 0.32 $ 0.20
Net realized and unrealized gain (loss) on
investments (0.29) 0.34 0.28
------------ ------------ ------------
Total from investment operations $ 0.02 $ 0.66 $ 0.48
------------ ------------ ------------
Less distributions declared to shareholders -
From net investment income $ (0.31) $ (0.33) $ (0.17)
From net realized gain on investments (0.01) (0.02) --
------------ ------------ ------------
Total distributions declared to shareholders $ (0.32) $ (0.35) $ (0.17)
------------ ------------ ------------
Net asset value - end of period $ 5.08 $ 5.38 $ 5.07
============ ============ ============
Total return++ 0.83% 13.57% 9.77%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses 1.20% 1.04% 0.95%+
Net investment income 6.33% 6.25% 7.34%+
Portfolio turnover 240% 54% 23%
Net assets at end of period (000 omitted) $59,479 $62,368 $17,488
*For the period from the commencement of investment operations, June 18, 1985 to February
28, 1986.
+Annualized.
+++Not annualized.
++Total returns for Class A shares do not include the applicable sales charge. If the
charge had been included, the results would have been lower.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their
management fee and/or distribution fee, respectively, for certain of 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 -- -- --
Ratios (to average net assets):
Expenses -- -- --
Net investment income -- -- --
</TABLE>
See notes to financial statements
28
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
California Fund
- ---------------------------------------- ----------------------------- --------- ------------ --------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
- ---------------------------------------- ---------------- ------------ --------- ------------ --------------
1996 1996 1995 1994 1994**
- ---------------------------------------- ---------------- ------------ --------- ------------ --------------
Class B
- ---------------------------------------- ---------------- ------------ --------- ------------ --------------
(Unaudited)
- ---------------------------------------- ---------------- ------------ --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each
period):
Net asset value - beginning of period $ 5.52 $ 5.41 $ 5.47 $ 5.95 $ 6.02
---------------- ------------ --------- ------------ --------------
Income from investment operations# -
Net investment income[S.] $ 0.14 $ 0.26 $ 0.25 $ 0.04 $ 0.10
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions -- 0.11 (0.05) (0.48) --
---------------- ------------ --------- ------------ --------------
Total from investment operations $ 0.14 $ 0.37 $ 0.20 $ (0.44) $ 0.10
---------------- ------------ --------- ------------ --------------
Less distributions declared to
shareholders -
From net investment income $ (0.12) $ (0.26) $ (0.25) $ (0.04) $ (0.10)
From net realized gain on investments -- -- -- -- (0.07)
In excess of net investment income++++ -- 0.00 -- 0.00 0.00
In excess of net realized gain on
investments -- -- (0.01) -- --
---------------- ------------ --------- ------------ --------------
Total distributions declared to
shareholders $ (0.12) $ (0.26) $ (0.26) $ (0.04) $ (0.17)
---------------- ------------ --------- ------------ --------------
Net asset value - end of period $ 5.54 $ 5.52 $ 5.41 $ 5.47 $ 5.95
================ ============ ========= ============ ==============
Total return 2.65%+++ 6.93% 3.73% (7.38)%+++ 1.68%+++
Ratios (to average net
assets)/Supplemental data[S.]:
Expenses## 1.58%+ 1.54% 1.76% 1.69%+ 1.60%+
Net investment income 4.52%+ 4.59% 4.72% 4.18%+ 3.64%+
Portfolio turnover 31% 69% 57% 8% 38%
Net assets at end of period (000
omitted) $35,103 $34,675 $29,057 $21,252 $19,360
**For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31,
1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for
fees paid indirectly.
++++For the year ended March 31, 1996, the two months ended March 31, 1994 and the period ended January 31,
1994 the per share distributions in excess of net investment income were $0.0041, $0.002 and $0.003,
respectively.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management fee and/or
distribution fee, respectively, for certain of 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 $ 0.14 $ 0.25 $ 0.24 $ 0.04 $ 0.09
Ratios (to average net assets):
Expenses 1.73%+ 1.69% 1.91% 1.83%+ 1.81%+
Net investment income 4.37%+ 4.43% 4.57% 4.04%+ 3.43%+
</TABLE>
See notes to financial statements
29
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
California Fund
- ---------------------------------------- ----------------------------- --------- ------------ --------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
- ---------------------------------------- ---------------- ------------ --------- ------------ --------------
1996 1996 1995 1994 1994***
- ---------------------------------------- ---------------- ------------ --------- ------------ --------------
Class C
- ---------------------------------------- ---------------- ------------ --------- ------------ --------------
(Unaudited)
- ---------------------------------------- ---------------- ------------ --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each
period):
Net asset value - beginning of period $ 5.53 $ 5.42 $ 5.48 $ 5.95 $ 5.89
---------------- ------------ --------- ------------ --------------
Income from investment operations# -
Net investment income[S.] $ 0.15 $ 0.25 $ 0.26 $ 0.03 $ 0.01
Net realized and unrealized gain (loss)
on investments -- 0.11 (0.06) (0.46) 0.06
---------------- ------------ --------- ------------ --------------
Total from investment operations $ 0.15 $ 0.36 $ 0.20 $ (0.43) $ 0.07
---------------- ------------ --------- ------------ --------------
Less distributions declared to
shareholders -
From net investment income $ (0.13) $ (0.25) $ (0.25) $ (0.04) $ (0.01)
From net realized gain on investment
income -- -- -- -- --
In excess of net investment income++++ -- 0.00 -- 0.00 0.00
In excess of net realized gain on
investments -- -- (0.01) -- --
---------------- ------------ --------- ------------ --------------
Total distributions declared to
shareholders $ (0.13) $ (0.25) $ (0.26) $ (0.04) $ (0.01)
---------------- ------------ --------- ------------ --------------
Net asset value - end of period $ 5.55 $ 5.53 $ 5.42 $ 5.48 $ 5.95
================ ============ ========= ============ ==============
Total return 2.59%+++ 6.77% 3.79% (7.22)%+++ 1.25%+++
Ratios (to average net
assets)/Supplemental data[S.]:
Expenses## 1.68%+ 1.67% 1.69% 1.64%+ 2.02%+
Net investment income 4.42%+ 4.47% 4.79% 3.92%+ 1.78%+
Portfolio turnover 31% 69% 57% 8% 38%
Net assets at end of period (000
omitted) $ 3,961 $ 4,353 $ 3,858 $ 1,701 $ 917
***For the period from the commencement of offering Class C shares, January 3, 1994 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for
fees paid indirectly.
++++For the year ended March 31, 1996, the two months ended March 31, 1994 and the period ended January 31,
1994, the per share distributions in excess of net investment income were $0.004, $0.001 and $0.003,
respectively.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management fee and/or
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the Fund,
the net investment income per share and the ratios would have been:
Net investment income $ 0.15 $ 0.24 $ 0.25 $ 0.03 --
Ratios (to average net assets):
Expenses 1.83%+ 1.82% 1.84% 1.80%+ 3.53%+
Net investment income 4.27%+ 4.32% 4.64% 3.77%+ 0.27%+
</TABLE>
See notes to financial statements
30
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Florida Fund
- ----------------------------------------------------- ----------------------------- --------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
- ----------------------------------------------------- ---------------- ------------ --------- ------------
1996 1996 1995 1994
- ----------------------------------------------------- ---------------- ------------ --------- ------------
Class A
- ----------------------------------------------------- ---------------- ------------ --------- ------------
(Unaudited)
- ----------------------------------------------------- ---------------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.82 $ 9.60 $ 9.65 $ 10.63
---------------- ------------ --------- ------------
Income from investment operations# -
Net investment loss[S.] $ 0.27 $ 0.52 $ 0.54 $ 0.09
Net realized and unrealized gain (loss) on
investments -- 0.22 0.02 (0.98)
---------------- ------------ --------- ------------
Total from investment operations $ 0.27 $ 0.74 $ 0.56 $ (0.89)
---------------- ------------ --------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.27) $ (0.52) $ (0.54) $ (0.08)
From net realized gain on investments -- -- (0.04) --
In excess of net investment income++++ -- 0.00 -- (0.01)
In excess of net realized gain on investments -- -- (0.03) --
---------------- ------------ --------- ------------
Total distributions declared to shareholders $ (0.27) $ (0.52) $ (0.61) $ (0.09)
---------------- ------------ --------- ------------
Net asset value - end of period $ 9.82 $ 9.82 $ 9.60 $ 9.65
================ ============ ========= ============
Total return++ 2.66%+++ 7.81% 6.07% (8.39)%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 0.85%+ 0.86% 0.60% 0.77%+
Net investment income 5.33%+ 5.26% 5.75% 5.15%+
Portfolio turnover 11% 56% 131% 19%
Net assets at end of period (000 omitted) $83,789 $87,553 $89,894 $108,579
*For the period from the commencement of investment operations, February 3, 1992 to January 31, 1993.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction
for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
++++For the year ended March 31, 1996, the per share distribution in excess of net investment income was
$0.0015 for Class A shares.
[S.]The investment advisor and/or the distributor voluntarily waived a portion of their management fee
and/or distribution fee, respectively, for the periods indicated. If these fees had been incurred by
the Fund, the net investment income per share and the ratios would have been:
Net investment income -- $ 0.52 $ 0.52 $ 0.08
Ratios (to average net assets):
Expenses -- 0.90% 0.83% 1.12%+
Net investment income -- 5.22% 5.52% 4.80%+
</TABLE>
<TABLE>
<CAPTION>
Florida Fund
- ----------------------------------------------------- -------------- ----------
Year Ended
January 31,
- ----------------------------------------------------- -------------- ----------
1994 1993*
- ----------------------------------------------------- -------------- ----------
Class A
- ----------------------------------------------------- -------------- ----------
(Unaudited)
- ----------------------------------------------------- -------------- ----------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.89 $ 9.53
-------------- ----------
Income from investment operations# -
Net investment loss[S.] $ 0.57 $ 0.58
Net realized and unrealized gain (loss) on
investments 0.86 0.36
-------------- ----------
Total from investment operations $ 1.43 $ 0.94
-------------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.57) $ (0.58)
From net realized gain on investments (0.11) --
In excess of net investment income++++ (0.01) --
In excess of net realized gain on investments -- --
-------------- ----------
Total distributions declared to shareholders $ (0.69) $ (0.58)
-------------- ----------
Net asset value - end of period $ 10.63 $ 9.89
============== ==========
Total return++ 4.71% 10.28%+
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 0.49% 0.05%+
Net investment income 5.42% 6.27%+
Portfolio turnover 53% 54%
Net assets at end of period (000 omitted) $124,131 $ 74,329
*For the period from the commencement of investment operations, February 3,
1992 to January 31, 1993.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
++++For the year ended March 31, 1996, the per share distribution in excess of
net investment income was $0.0015 for Class A shares.
[S.]The investment advisor and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for the
periods indicated. If these fees had been incurred by the Fund, the net
investment income per share and the ratios would have been:
Net investment income $ 0.52 $ 0.51
Ratios (to average net assets):
Expenses 0.93% 0.81%+
Net investment income 4.97% 5.51%+
</TABLE>
See notes to financial statements
31
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Florida Fund
--------------------------------------------------------------------------------------- --------------------- --------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
-------------------------------------------------------------------------- ------------ --------------------- --------------
1996 1996 1995 1994 1994**
-------------------------------------------------------------------------- ------------ --------------------- --------------
Class B
-------------------------------------------------------------------------- ------------ --------------------- --------------
(Unaudited)
-------------------------------------------------------------------------- ------------ --------------------- --------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.82 $ 9.60 $ 9.64 $ 10.62 $ 10.69
---------------- ------------ --------------------- --------------
Income from investment operations# -
Net investment lossS. $ 0.26 $ 0.43 $ 0.43 $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (0.05) 0.22 0.04 (0.98) 0.03
---------------- ------------ --------------------- --------------
Total from investment operations $ 0.21 $ 0.65 $ 0.47 $ (0.91) $ 0.21
---------------- ------------ --------------------- --------------
Less distributions declared to shareholders -
From net investment income $ (0.21) $ (0.43) $ (0.44) $ (0.06) $ (0.17)
From net realized gain on investments -- -- (0.04) -- (0.10)
In excess of net investment income -- 0.00 -- (0.01) (0.01)
In excess of net realized gain on investments -- -- (0.03) -- --
---------------- ------------ --------------------- --------------
Total distributions declared to shareholders $ (0.21) $ (0.43) $ (0.51) $ (0.07) $ (0.28)
---------------- ------------ --------------------- --------------
Net asset value - end of period $ 9.82 $ 9.82 $ 9.60 $ 9.64 $ 10.62
================ ============ ===================== ==============
Total return 2.20%+++ 6.88% 5.06% (8.55)%+++ 4.87%+
Ratios (to average net assets)/Supplemental dataS.:
Expenses## 1.73%+ 1.74% 1.68% 1.82%+ 1.64%+
Net investment income 4.44%+ 4.36% 4.63% 4.08%+ 3.82%+
Portfolio turnover 11% 56% 131% 19% 53%
Net assets at end of period (000 omitted) $14,446 $14,448 $12,667 $ 7,995 $ 7,244
**For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
++++For the year ended March 31, 1996, the per share distribution in excess of net investment income was $0.0012 for Class B
shares.
[S.]The investment advisor and/or the distributor voluntarily waived a portion of their management fee and/or distribution fee,
respectively, for the periods indicated. If these fees had been incurred by the Fund, the net investment income per share
and the ratios would have been:
Net investment income -- $ 0.43 $ 0.41 $ 0.06 $ 0.16
Ratios (to average net assets):
Expenses -- 1.78% 1.91% 2.17%+ 2.09%+
Net investment income -- 4.33% 4.40% 3.72%+ 3.38%+
</TABLE>
See notes to financial statements
32
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Georgia Fund
- ----------------------------------------------------- ----------------------------- --------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
- ----------------------------------------------------- ---------------- ------------ --------- ------------
1996 1996 1995 1994
- ----------------------------------------------------- ---------------- ------------ --------- ------------
Class A
- ----------------------------------------------------- ---------------- ------------ --------- ------------
(Unaudited)
- ----------------------------------------------------- ---------------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.47 $ 10.35 $ 10.38 $ 11.30
---------------- ------------ --------- ------------
Income from investment operations# -
Net investment income[S.] $ 0.28 $ 0.54 $ 0.57 $ 0.09
Net realized and unrealized gain (loss) on
investments 0.01 0.12 -- (0.92)
---------------- ------------ --------- ------------
Total from investment operations $ 0.29 $ 0.66 $ 0.57 $ (0.83)
---------------- ------------ --------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.28) $ (0.54) $ (0.56) $ (0.06)
From net realized gain on investments -- -- (0.01) --
In excess of net investment income++++ -- 0.00 -- (0.03)
In excess of net realized gain on investments -- -- (0.03) --
---------------- ------------ --------- ------------
Total distributions declared to shareholders $ (0.28) $ (0.54) $ (0.60) $ (0.09)
---------------- ------------ --------- ------------
Net asset value - end of period $ 10.48 $ 10.47 $ 10.35 $ 10.38
================ ============ ========= ============
Total return++ 2.72%+++ 6.48% 5.65% (7.34)%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.04%+ 1.17% 1.14% 1.18%+
Net investment income 5.33%+ 5.11% 5.50% 5.05%+
Portfolio turnover 8% 65% 56% 5%
Net assets at end of period (000 omitted) $64,721 $68,183 $74,432 $ 85,878
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without fees paid
indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
++++For the year ended March 31, 1996, the per share distribution in excess of net investment income for
Class A shares was $0.003.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the Fund,
the net investment income per share and the ratios would have been:
Net investment income $ 0.28 $ 0.53 $ 0.56 $ 0.09
Ratios (to average net assets):
Expenses 1.07%+ 1.27% 1.24% 1.28%+
Net investment income 5.30%+ 5.01% 5.40% 4.95%+
</TABLE>
<TABLE>
<CAPTION>
Georgia Fund
- ----------------------------------------------------- -------------- ----------
Year Ended
January 31,
- ----------------------------------------------------- -------------- ----------
1994 1993
- ----------------------------------------------------- -------------- ----------
Class A
- ----------------------------------------------------- -------------- ----------
(Unaudited)
- ----------------------------------------------------- -------------- ----------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.57 $ 10.22
-------------- ----------
Income from investment operations# -
Net investment income[S.] $ 0.57 $ 0.58
Net realized and unrealized gain (loss) on
investments 0.75 0.38
-------------- ----------
Total from investment operations $ 1.32 $ 0.96
-------------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.60)
From net realized gain on investments (0.01) (0.01)
In excess of net investment income++++ (0.03) --
In excess of net realized gain on investments -- --
-------------- ----------
Total distributions declared to shareholders $ (0.59) $ (0.61)
-------------- ----------
Net asset value - end of period $ 11.30 $ 10.57
============== ==========
Total return++ 12.71% 9.56%
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.21% 1.08%
Net investment income 5.10% 5.75%
Portfolio turnover 14% 27%
Net assets at end of period (000 omitted) $ 94,407 $64,649
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
++++For the year ended March 31, 1996, the per share distribution in excess of
net investment income for Class A shares was $0.003.
[S.]The investment adviser and/or the distributor voluntarily waived a portion
of their management and/or distribution fee, respectively, for the periods
indicated. If these fees had been incurred by the Fund, the net investment
income per share and the ratios would have been:
Net investment income $ 0.56 $ 0.57
Ratios (to average net assets):
Expenses 1.31% 1.18%
Net investment income 5.00% 5.65%
</TABLE>
See notes to financial statements
33
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Georgia Fund
- ----------------------------------------------------- ------------------------- --------- ----------
Year Ended
January 31,
- ----------------------------------------------------- -------------- --------- --------- ----------
1992 1991 1990 1989*
- ----------------------------------------------------- -------------- --------- --------- ----------
Class A
- ----------------------------------------------------- -------------- --------- --------- ----------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.83 $ 9.73 $ 9.73 $ 9.53
-------------- --------- --------- ----------
Income from investment operations -
Net investment income[S.] $ 0.61 $ 0.63 $ 0.66 $ 0.32
Net realized and unrealized gain on investments 0.46 0.12 0.02 0.14
-------------- --------- --------- ----------
Total from investment operations $ 1.07 $ 0.75 $ 0.68 $ 0.46
-------------- --------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.66) $ (0.63) $ (0.66) $ (0.26)
From net realized gain on investments (0.02) (0.02) (0.02) --
-------------- --------- --------- ----------
Total distributions declared to shareholders $ (0.68) $ (0.65) $ (0.68) $ (0.26)
-------------- --------- --------- ----------
Net asset value - end of period $ 10.22 $ 9.83 $ 9.73 $ 9.73
============== ========= ========= ==========
Total return++ 11.29% 8.06% 7.19% 7.57%+
Ratios (to average net assets)/Supplemental data[S.]:
Expenses 0.99% 0.74% 0.42% 0.40%+
Net investment income 6.08% 6.46% 6.72% 6.18%+
Portfolio turnover 36% 71% 99% --
Net assets at end of period (000 omitted) $ 47,869 $29,214 $12,628 $ 4,383
*For the period from the commencement of investment operations, June 6, 1988 to January 31, 1989.
+Annualized.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had
been included, the results would have been lower.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management
and/or distribution fee, respectively, for the periods indicated. If these fees had been
incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.60 $ 0.59 $ 0.57 $ 0.29
Ratios (to average net assets):
Expenses 1.09% 1.11% 1.31% 1.07%+
Net investment income 5.98% 6.09% 5.83% 5.51%+
</TABLE>
See notes to financial statements
34
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Georgia Fund
--------------------------------------------------------------------------------------- --------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
-------------------------------------------------------------------------- ------------ --------- ------------
1996 1996 1995 1994
-------------------------------------------------------------------------- ------------ --------- ------------
Class B
-------------------------------------------------------------------------- ------------ --------- ------------
(Unaudited)
-------------------------------------------------------------------------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.47 $ 10.36 $ 10.38 $ 11.30
---------------- ------------ --------- ------------
Income from investment operations# -
Net investment income[S.] $ 0.28 $ 0.45 $ 0.47 $ 0.07
Net realized and unrealized gain (loss) on investments (0.03) 0.12 0.02 (0.91)
---------------- ------------ --------- ------------
Total from investment operations $ 0.25 $ 0.57 $ 0.49 $ (0.84)
---------------- ------------ --------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.23) $ (0.46) $ (0.47) $ (0.07)
From net realized gain on investments -- -- $ (0.01) --
In excess of net investment income++++ -- 0.00 -- (0.01)
In excess of net realized gain on investments -- -- (0.03) --
---------------- ------------ --------- ------------
Total distributions declared to shareholders $ (0.23) $ (0.46) $ (0.51) $ (0.08)
---------------- ------------ --------- ------------
Net asset value - end of period $ 10.49 $ 10.47 $ 10.36 $ 10.38
================ ============ ========= ============
Total return 2.40%+++ 5.52% 4.88% (7.47)%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.86%+ 2.00% 1.96% 1.99%+
Net investment income 4.51%+ 4.27% 4.66% 4.17%+
Portfolio turnover 8% 65% 56% 5%
Net assets at end of period (000 omitted) $10,385 $10,205 $ 8,695 $ 6,631
**For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for
fees paid indirectly.
++++For the year ended March 31, 1996, the per share distribution in excess of net investment income for Class B
shares was $0.002.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.28 -- -- --
Ratios (to average net assets):
Expenses 1.89%+ -- -- --
Net investment income 4.48%+ -- -- --
</TABLE>
<TABLE>
<CAPTION>
Georgia Fund
---------------------------------------------------------- --------------
Year Ended
January 31,
---------------------------------------------------------- --------------
1994**
---------------------------------------------------------- --------------
Class B
---------------------------------------------------------- --------------
(Unaudited)
---------------------------------------------------------- --------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.26
--------------
Income from investment operations# -
Net investment income[S.] $ 0.19
Net realized and unrealized gain (loss) on investments 0.05
--------------
Total from investment operations $ 0.24
--------------
Less distributions declared to shareholders -
From net investment income $ (0.18)
From net realized gain on investments $ (0.01)
In excess of net investment income++++ (0.01)
In excess of net realized gain on investments --
--------------
Total distributions declared to shareholders $ (0.20)
--------------
Net asset value - end of period $ 11.30
==============
Total return 5.34%+
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.97%+
Net investment income 3.83%+
Portfolio turnover 14%
Net assets at end of period (000 omitted) $ 5,766
**For the period from the commencement of offering of Class B shares,
September 7, 1993 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based
on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses
are calculated without reduction for fees paid indirectly.
++++For the year ended March 31, 1996, the per share distribution in
excess of net investment income for Class B shares was $0.002.
[S.]The investment adviser and/or the distributor voluntarily waived a
portion of their management and/or distribution fee, respectively, for
the periods indicated. If these fees had been incurred by the Fund,
the net investment income per share and the ratios would have been:
Net investment income --
Ratios (to average net assets):
Expenses --
Net investment income --
</TABLE>
See notes to financial statements
35
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Maryland Fund
- ----------------------------------------------------- ----------------------------- ----------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
- ----------------------------------------------------- ---------------- ------------ ----------- ------------
1996 1996 1995 1994
- ----------------------------------------------------- ---------------- ------------ ----------- ------------
Class A
- ----------------------------------------------------- ---------------- ------------ ----------- ------------
(Unaudited)
- ----------------------------------------------------- ---------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.04 $ 10.94 $ 10.89 $ 11.81
---------------- ------------ ----------- ------------
Income from investment operations# -
Net investment income[S.] $ 0.29 $ 0.57 $ 0.59 $ 0.10
Net realized and unrealized gain (loss) on
investments (0.01) 0.09 0.09 (0.92)
---------------- ------------ ----------- ------------
Total from investment operations $ 0.28 $ 0.66 $ 0.68 $ (0.82)
---------------- ------------ ----------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.28) $ (0.56) $ (0.59) $ (0.06)
From net realized gain on investments -- -- -- --
In excess of net investment income++++ -- -- 0.00 (0.04)
In excess of net realized gain on investments -- -- (0.04) --
---------------- ------------ ----------- ------------
Total distributions declared to shareholders $ (0.28) $ (0.56) $ (0.63) $ (0.10)
---------------- ------------ ----------- ------------
Net asset value - end of period $ 11.04 $ 11.04 $ 10.94 $ 10.89
================ ============ =========== ============
Total return++ 2.55%+++ 6.17% 6.51% (6.96)%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.13%+ 1.19% 1.21% 1.23%+
Net investment income 5.29%+ 5.10% 5.46% 4.97%+
Portfolio turnover 11% 15% 31% 1%
Net assets at end of period (000 omitted) $132,948 $139,297 $145,361 $161,290
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on average shares outstanding.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
++++For the year ended March 31, 1995, the share distribution in excess of net investment income was $0.003.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the Fund,
the net investment income per share and the ratios would have been:
Net investment income $ 0.29 -- -- --
Ratios (to average net assets):
Expenses 1.19%+ -- -- --
Net investment income 5.64%+ -- -- --
</TABLE>
<TABLE>
<CAPTION>
Maryland Fund
- ----------------------------------------------------- -------------- -----------
Year Ended
January 31,
- ----------------------------------------------------- -------------- -----------
1994 1993
- ----------------------------------------------------- -------------- -----------
Class A
- ----------------------------------------------------- -------------- -----------
(Unaudited)
- ----------------------------------------------------- -------------- -----------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.40 $ 11.20
-------------- -----------
Income from investment operations# -
Net investment income[S.] $ 0.62 $ 0.67
Net realized and unrealized gain (loss) on
investments 0.53 0.24
-------------- -----------
Total from investment operations $ 1.15 $ 0.91
-------------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.61) $ (0.69)
From net realized gain on investments (0.07) (0.02)
In excess of net investment income++++ (0.04) --
In excess of net realized gain on investments (0.02) --
-------------- -----------
Total distributions declared to shareholders $ (0.74) $ (0.71)
-------------- -----------
Net asset value - end of period $ 11.81 $ 11.40
============== ===========
Total return++ 10.27% 8.34%
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.25% 1.14%
Net investment income 5.42% 6.13%
Portfolio turnover 25% 5%
Net assets at end of period (000 omitted) $173,419 $145,794
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on
average shares outstanding.
++Total returns for Class A shares do not include the applicable sales charge.
If the charge had been included, the results would have been lower.
++++For the year ended March 31, 1995, the share distribution in excess of net
investment income was $0.003.
[S.]The investment adviser and/or the distributor voluntarily waived a portion
of their management and/or distribution fee, respectively, for the periods
indicated. If these fees had been incurred by the Fund, the net investment
income per share and the ratios would have been:
Net investment income -- --
Ratios (to average net assets):
Expenses -- --
Net investment income -- --
</TABLE>
See notes to financial statements
36
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Maryland Fund
------------------------------------------------------------------------------------ --------- ----------
Year Ended
January 31,
------------------------------------------------------------------------ ----------- --------- ----------
1992 1991 1990 1989
------------------------------------------------------------------------ ----------- --------- ----------
Class A
------------------------------------------------------------------------ ----------- --------- ----------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 10.97 $ 10.79 $ 10.76 $ 10.62
-------------- ----------- --------- ----------
Income from investment operations -
Net investment income $ 0.70 $ 0.70 $ 0.69 $ 0.69
Net realized and unrealized gain (loss) on investments 0.31 0.19 0.04 0.14
-------------- ----------- --------- ----------
Total from investment operations $ 1.01 $ 0.89 $ 0.73 $ 0.83
-------------- ----------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.70) $ (0.69) $ (0.69)
From net realized gain on investments (0.02) (0.01) (0.01) --
From paid-in capital -- -- -- --
-------------- ----------- --------- ----------
Total distributions declared to shareholders $ (0.78) $ (0.71) $ (0.70) $ (0.69)
-------------- ----------- --------- ----------
Net asset value - end of period $ 11.20 $ 10.97 $ 10.79 $ 10.76
============== =========== ========= ==========
Total return++ 9.55% 8.51% 6.90% 8.15%
Ratios (to average net assets)/Supplemental data:
Expenses 1.16% 1.17% 1.18% 1.14%
Net investment income 6.32% 6.45% 6.33% 6.52%
Portfolio turnover 9% 41% 58% 34%
Net assets at end of period (000 omitted) $119,120 $101,742 $93,175 $84,380
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
</TABLE>
<TABLE>
<CAPTION>
Maryland Fund
------------------------------------------------------------------------- ----------
Year Ended
January 31,
------------------------------------------------------------------------- ----------
1988 1987
------------------------------------------------------------------------- ----------
Class A
------------------------------------------------------------------------- ----------
Per share data (for a share outstanding throughout each period):
<S> <C> <C>
Net asset value - beginning of period $ 11.20 $ 10.44
--------------- ----------
Income from investment operations -
Net investment income $ 0.68 $ 0.71
Net realized and unrealized gain (loss) on investments (0.57) 0.78
--------------- ----------
Total from investment operations $ 0.11 $ 1.49
--------------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.67) $ (0.73)
From net realized gain on investments (0.01) --
From paid-in capital (0.01) --
--------------- ----------
Total distributions declared to shareholders $ (0.69) $ (0.73)
--------------- ----------
Net asset value - end of period $ 10.62 $ 11.20
=============== ==========
Total return++ 1.25% 14.86%
Ratios (to average net assets)/Supplemental data:
Expenses 1.10% 1.10%
Net investment income 6.47% 6.60%
Portfolio turnover 13% 11%
Net assets at end of period (000 omitted) $79,906 $ 81,712
++Total returns for Class A shares do not include the applicable sales charge. If the
charge had been included, the results would have been lower.
</TABLE>
See notes to financial statements
37
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Maryland Fund
--------------------------------------------------------------------------------------- --------------------- --------------
Six Months Two Months
Ended Year Ended Ended Year Ended
September 30, March 31, March 31, January 31,
-------------------------------------------------------------------------- ------------ --------------------- --------------
1996 1996 1995 1994 1994**
-------------------------------------------------------------------------- ------------ --------------------- --------------
Class B
-------------------------------------------------------------------------- ------------ --------------------- --------------
(Unaudited)
-------------------------------------------------------------------------- ------------ --------------------- --------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.03 $ 10.93 $ 10.88 $ 11.80 $ 11.88
---------------- ------------ --------------------- --------------
Income from investment operations# -
Net investment income[S.] $ 0.29 $ 0.48 $ 0.51 $ 0.08 $ 0.22
Net realized and unrealized gain (loss) on investments (0.06) 0.10 0.09 (0.91) (0.01)
---------------- ------------ --------------------- --------------
Total from investment operations $ 0.23 $ 0.58 $ 0.60 $ (0.83) $ 0.21
---------------- ------------ --------------------- --------------
Less distributions declared to shareholders -
From net investment income $ (0.23) $ (0.48) $ (0.51) $ (0.08) $ (0.21)
From net realized gain on investments -- -- -- -- (0.05)
In excess of net investment income++++ -- -- 0.00 (0.01) (0.01)
In excess of net realized gain on investments -- -- (0.04) -- (0.02)
---------------- ------------ --------------------- --------------
Total distributions declared to shareholders $ (0.23) $ (0.48) $ (0.55) $ (0.09) $ (0.29)
---------------- ------------ --------------------- --------------
Net asset value - end of period $ 11.03 $ 11.03 $ 10.93 $ 10.88 $ 11.80
================ ============ ===================== ==============
Total return 2.19%+++ 5.41% 5.75% (7.08)%+++ 4.45%+
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.84%+ 1.91% 1.93% 1.95%+ 1.81%+
Net investment income 4.57%+ 4.36% 4.73% 4.19%+ 4.23%+
Portfolio turnover 11% 15% 31% 1% 25%
Net assets at end of period (000 omitted) $15,421 $13,694 $11,168 $ 6,478 $ 5,345
**For the period from the commencement of offering of Class B shares, September 7, 1993 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 are based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
++++For the year ended March 31, 1995, the per share distribution in excess of net investment income was $0.003.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or distribution fee,
respectively, for the periods indicated. If these fees had been incurred by the Fund, the net investment income per share
and the ratios would have been:
Net investment income $ 0.29 -- -- -- --
Ratios (to average net assets):
Expenses 1.87%+ -- -- -- --
Net investment income 4.54%+ -- -- -- --
</TABLE>
See notes to financial statements
38
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Fund
--------------------------------------------------------------------------------------- ----------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
-------------------------------------------------------------------------- ------------ ----------- ------------
1996 1996 1995 1994
-------------------------------------------------------------------------- ------------ ----------- ------------
Class A
-------------------------------------------------------------------------- ------------ ----------- ------------
(Unaudited)
-------------------------------------------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.98 $ 10.84 $ 10.90 $ 11.75
---------------- ------------ ----------- ------------
Income from investment operations# -
Net investment income[S.] $ 0.31 $ 0.60 $ 0.64 $ 0.11
Net realized and unrealized gain (loss) on investments (0.02) 0.14 (0.03) (0.85)
---------------- ------------ ----------- ------------
Total from investment operations $ 0.29 $ 0.74 $ 0.61 $ (0.74)
---------------- ------------ ----------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.30) $ (0.60) $ (0.64) $ (0.07)
From net realized gain on investments -- -- (0.02) --
In excess of net investment income++++ -- 0.00 -- (0.04)
In excess of net realized gain on investments -- -- (0.01) --
---------------- ------------ ----------- ------------
Total distributions declared to shareholders $ (0.30) $ (0.60) $ (0.67) $ (0.11)
---------------- ------------ ----------- ------------
Net asset value - end of period $ 10.97 $ 10.98 $ 10.84 $ 10.90
================ ============ =========== ============
Total return++ 2.63%+++ 6.95% 5.89% (6.34)%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.16%+ 1.17% 1.17% 1.19%+
Net investment income 5.67%+ 5.44% 6.01% 5.64%+
Portfolio turnover 17% 31% 31% 4%
Net assets at end of period (000 omitted) $243,421 $249,497 $262,551 $277,748
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for
fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been included,
the results would have been lower.
++++For the year ended March 31, 1996, the per share distribution in excess of net investment income for Class A
shares was $0.002.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.31 -- -- --
Ratios (to average net assets):
Expenses 1.19%+ -- -- --
Net investment income 5.64%+ -- -- --
</TABLE>
<TABLE>
<CAPTION>
Massachusetts
Fund
------------------------------------------------------------------------ -----------
Year Ended
January 31,
------------------------------------------------------------------------ -----------
1994 1993
------------------------------------------------------------------------ -----------
Class A
------------------------------------------------------------------------ -----------
(Unaudited)
------------------------------------------------------------------------ -----------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.41 $ 11.05
-------------- -----------
Income from investment operations# -
Net investment income[S.] $ 0.64 $ 0.68
Net realized and unrealized gain (loss) on investments 0.58 0.39
-------------- -----------
Total from investment operations $ 1.22 $ 1.07
-------------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.64) $ (0.71)
From net realized gain on investments (0.20) --
In excess of net investment income++++ (0.04) --
In excess of net realized gain on investments -- --
-------------- -----------
Total distributions declared to shareholders $ (0.88) $ (0.71)
-------------- -----------
Net asset value - end of period $ 11.75 $ 11.41
============== ===========
Total return++ 11.02% 10.03%
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.19% 1.08%
Net investment income 5.71% 6.33%
Portfolio turnover 30% 32%
Net assets at end of period (000 omitted) $300,894 $270,778
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average
shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If
the charge had been included, the results would have been lower.
++++For the year ended March 31, 1996, the per share distribution in excess of net
investment income for Class A shares was $0.002.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of
their management and/or distribution fee, respectively, for the periods
indicated. If these fees had been incurred by the Fund, the net investment income
per share and the ratios would have been:
Net investment income -- --
Ratios (to average net assets):
Expenses -- --
Net investment income -- --
</TABLE>
See notes to financial statements
39
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Massachusetts Fund
- ---------------------------------------------------- -------------------------- ----------- -----------
Year Ended
January 31,
- ---------------------------------------------------- -------------- ----------- ----------- -----------
1992 1991 1990 1989
- ---------------------------------------------------- -------------- ----------- ----------- -----------
Class A
- ---------------------------------------------------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.68 $ 10.58 $ 10.65 $ 10.60
-------------- ----------- ----------- -----------
Income from investment operations -
Net investment income $ 0.73 $ 0.71 $ 0.72 $ 0.72
Net realized and unrealized gain (loss) on
investments 0.43 0.11 (0.07) 0.05
-------------- ----------- ----------- -----------
Total from investment operations $ 1.16 $ 0.82 $ 0.65 $ 0.77
-------------- ----------- ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.78) $ (0.72) $ (0.72) $ (0.72)
From net realized gain on investments -- -- -- --
From paid-in capital (0.01) -- -- --
-------------- ----------- ----------- -----------
Total distributions declared to shareholders $ (0.79) $ (0.72) $ (0.72) $ (0.72)
-------------- ----------- ----------- -----------
Net asset value - end of period $ 11.05 $ 10.68 $ 10.58 $ 10.65
============== =========== =========== ===========
Total return++ 11.23% 8.12% 6.28% 7.65%
Ratios (to average net assets)/Supplemental data:
Expenses 1.06% 1.07% 1.10% 1.07%
Net investment income 6.65% 6.74% 6.75% 6.90%
Portfolio turnover 51% 43% 52% 26%
Net assets at end of period (000 omitted) $239,311 $213,679 $215,381 $212,763
++Total returns for Class A shares do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
</TABLE>
<TABLE>
<CAPTION>
Massachusetts Fund
- ---------------------------------------------------- ---------------- -----------
Year Ended
January 31,
- ---------------------------------------------------- ---------------- -----------
1988 1987
- ---------------------------------------------------- ---------------- -----------
Class A
- ---------------------------------------------------- ---------------- -----------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.25 $ 10.59
---------------- -----------
Income from investment operations -
Net investment income $ 0.71 $ 0.74
Net realized and unrealized gain (loss) on
investments (0.65) 0.68
---------------- -----------
Total from investment operations $ 0.06 $ 1.42
---------------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.71) $ (0.75)
From net realized gain on investments -- (0.01)
From paid-in capital -- --
---------------- -----------
Total distributions declared to shareholders $ (0.71) $ (0.76)
---------------- -----------
Net asset value - end of period $ 10.60 $ 11.25
================ ===========
Total return++ 0.80% 14.10%
Ratios (to average net assets)/Supplemental data:
Expenses 1.04% 0.87%
Net investment income 6.79% 6.83%
Portfolio turnover 27% 7%
Net assets at end of period (000 omitted) $224,219 $242,119
++Total returns for Class A shares do not include the applicable sales charge. If
the charge had been included, the results would have been lower.
</TABLE>
See notes to financial statements
40
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Massachusetts Fund
--------------------------------------------------------------------------------------- --------- ------------
Six Months Two Months
Ended Year Ended Ended
September 30, March 31, March 31,
-------------------------------------------------------------------------- ------------ --------- ------------
1996 1996 1995 1994
-------------------------------------------------------------------------- ------------ --------- ------------
Class B
-------------------------------------------------------------------------- ------------ --------- ------------
(Unaudited)
-------------------------------------------------------------------------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value-beginning of period $ 10.99 $ 10.84 $ 10.90 $ 11.75
---------------- ------------ --------- ------------
Income from investment operations# -
Net investment income[S.] $ 0.31 $ 0.52 $ 0.55 $ 0.09
Net realized and unrealized gain (loss) on investments (0.09) 0.15 (0.02) (0.85)
---------------- ------------ --------- ------------
Total from investment operations $ 0.22 $ 0.67 $ 0.53 $ (0.76)
---------------- ------------ --------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.23) $ (0.52) $ (0.56) $ (0.09)
From net realized gain on investments -- -- (0.02) --
In excess of net investment income++++ -- 0.00 -- --
In excess of net realized gain on investments -- -- (0.01) --
---------------- ------------ --------- ------------
Total distributions declared to shareholders $ (0.23) $ (0.52) $ (0.59) $ (0.09)
---------------- ------------ --------- ------------
Net asset value - end of period $ 10.98 $ 10.99 $ 10.84 $ 10.90
================ ============ ========= ============
Total return 2.25%+++ 6.27% 5.13% (6.46)%+++
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.89%+ 1.90% 1.89% 1.91%+
Net investment income 4.91%+ 4.71% 5.27% 4.89%+
Portfolio turnover 17% 51% 31% 4%
Net assets at end of period (000 omitted) $14,282 $11,316 $ 8,676 $ 4,993
**For the period from the commencement of offering Class B shares, September 7, 1993 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for
fees paid indirectly.
++++For the year ended March 31, 1996, the per share distribution in excess of net investment income for Class B
shares was $0.0013.
[S.]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or
distribution fee, respectively, for the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.31 -- -- --
Ratios (to average net assets):
Expenses 1.92%+ -- -- --
Net investment income 4.88%+ -- -- --
</TABLE>
<TABLE>
<CAPTION>
Massachusetts Fund
---------------------------------------------------------- ------------------
Year Ended
January 31,
---------------------------------------------------------- ------------------
1994**
---------------------------------------------------------- ------------------
Class B
---------------------------------------------------------- ------------------
(Unaudited)
---------------------------------------------------------- ------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value-beginning of period $ 11.91
------------------
Income from investment operations# -
Net investment income[S.] $ 0.23
Net realized and unrealized gain (loss) on investments 0.04
------------------
Total from investment operations $ 0.27
------------------
Less distributions declared to shareholders -
From net investment income $ (0.22)
From net realized gain on investments (0.20)
In excess of net investment income++++ (0.01)
In excess of net realized gain on investments --
------------------
Total distributions declared to shareholders $ (0.43)
------------------
Net asset value - end of period $ 11.75
==================
Total return 5.89%+
Ratios (to average net assets)/Supplemental data[S.]:
Expenses## 1.81%+
Net investment income 4.62%+
Portfolio turnover 30%
Net assets at end of period (000 omitted) $ 4,191
**For the period from the commencement of offering Class B shares, September
7, 1993 to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++++For the year ended March 31, 1996, the per share distribution in excess of
net investment income for Class B shares was $0.0013.
[S.]The investment adviser and/or the distributor voluntarily waived a portion
of their management and/or distribution fee, respectively, for the periods
indicated. If these fees had been incurred by the Fund, the net investment
income per share and the ratios would have been:
Net investment income --
Ratios (to average net assets):
Expenses --
Net investment income --
</TABLE>
See notes to financial statements
41
<PAGE>
Notes to Financial Statements (Unaudited)
(1) Business and Organization
MFS Municipal Series Trust (the Trust) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Trust presently
consists of 16 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* (Florida Fund), MFS Georgia Municipal Bond Fund*
(Georgia Fund), MFS Maryland Municipal Bond Fund* (Maryland Fund), MFS
Massachusetts Municipal Bond Fund* (Massachusetts Fund), MFS Mississippi
Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North Carolina
Municipal Bond Fund, MFS Pennsylvania Municipal Bond Fund, MFS South Carolina
Municipal Bond Fund, MFS Tennessee Municipal Bond Fund, MFS Virginia
Municipal Bond Fund, and MFS West Virginia Municipal Bond Fund. Each Fund,
except MFS Municipal Income Fund, is non-diversified.
The Funds denoted with an asterisk above are included within these financial
statements.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. Because each Fund invests primarily in the securities of a single
state and its political subdivisions, each Fund is vulnerable to the effects
of changes in the legal, political and economic environment of the particular
state.
Investment Valuations - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, are valued on the
basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon
exchange or over-the-counter prices. Short-term obligations, which mature in
60 days or less, are valued at amortized cost, which approximates market
value. Futures contracts, options and options on futures contracts listed on
commodities exchanges are valued at closing settlement prices.
Over-the-counter options are valued by brokers through the use of a pricing
model which takes into account closing bond valuations, implied volatility
and short-term repurchase rates. Securities for which there are no such
quotations or valuations are valued at fair value as determined in good faith
by or at the direction of the Trustees.
Deferred Organization Expenses - Costs incurred by a Fund in connection with
its organization have been deferred and are being amortized on a
straight-line basis over a five-year period beginning on the date of
commencement of operations of the Fund.
Futures Contracts - Each Fund may enter into futures contracts for the
delayed delivery of securities or contracts based on financial indices at a
fixed price on a future date. In entering such contracts, each Fund is
required to deposit either in cash or securities an amount equal to a certain
percentage of the contract amount. Subsequent payments are made or received
by the Fund each day, depending on the daily fluctuations in the value of the
underlying security, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. Each Fund's investment in futures
contracts is designed to hedge against anticipated future changes in interest
rates or securities prices. Investments in interest rate futures for purposes
other than hedging may be made to modify the duration of the portfolio
without incurring the additional transaction costs involved in buying and
selling the underlying securities. Investments in index contracts, or
contracts on related options, for purposes other than hedging may be made
when a Fund has cash on hand and wishes to participate in anticipated market
appreciation while the cash is being invested. Should interest rates or
securities prices move unexpectedly, the Fund may not achieve the anticipated
benefits of the futures contracts and may realize a loss.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and original issue discount are amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Fees Paid Indirectly - The Trust's custodian bank calculates its fee based on
each Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by each
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Trust's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided. Each Fund files a tax return
annually using tax accounting methods required under provisions of the Code
which may differ from generally accepted accounting principles, the basis on
which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial
statements may differ from that reported on each Fund's tax return and,
consequently, the character of distributions to shareholders reported in the
financial highlights may differ from that reported to shareholders on Form
1099-DIV.
Distributions paid by each Fund from net interest received on tax-exempt
municipal bonds are not includable by shareholders as gross income for
federal income tax purposes because each Fund intends to meet certain
requirements of the Code applicable to regulated investment companies, which
will enable each Fund to pay exempt-interest dividends. The portion of such
interest, if any, earned on private activity bonds issued after August 7,
1986 may be considered a tax-preference item to shareholders. Distributions
to shareholders are recorded on the ex-dividend date.
42
<PAGE>
Notes to Financial Statements (Unaudited)
Each Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax return
of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or accumulated net
realized gains.
At March 31, 1996, the following Funds, for federal income tax purposes, had
capital loss carryforwards which may be applied against any net taxable
realized gains of each succeeding year until the earlier of their utilization
or expiration.
<TABLE>
<CAPTION>
Arkansas California Florida Georgia Maryland Massachusetts
Expiration Date Fund Fund Fund Fund Fund Fund
================ ============= ============== ============= ============= ================== ==================
<S> <C> <C> <C> <C> <C> <C>
March 31, 2002 $ -- $ 277,504 $ -- $ -- $ -- $ --
March 31, 2003 -- 10,212,078 5,923,777 2,399,843 -- 3,052,342
March 31, 2004 7,618,347 403,290 -- 1,339,129 4,231,087 1,732,935
------------- -------------- ------------- ------------- ------------------ ------------------
Total $7,618,347 $10,892,872 $5,923,777 $3,738,972 $4,231,087 $4,785,277
============= ============== ============= ============= ================== ==================
</TABLE>
Multiple Classes of Shares of Beneficial Interest - Each Fund offers both
Class A and Class B shares. The California Fund offers Class C shares. The
three classes of shares differ in their respective shareholder servicing
agent, distribution and service fees. All shareholders bear the common
expenses of the Fund pro rata based on settled shares outstanding, without
distinction between share classes. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate
of 0.55% of each Fund's average daily net assets. The investment adviser did
not impose a portion of its fee with respect to the California, Georgia,
Maryland and Massachusetts Funds, which is reflected as a preliminary
reduction of expenses in the Statement of Operations.
The Trust pays no compensation directly to its Trustees who are officers of
the investment adviser, or to officers of the Trust, all of whom receive
remuneration for their services to the Trust from MFS. Certain of the
officers and Trustees of the Trust are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Trust has
an unfunded defined benefit plan for all its independent Trustees and Mr.
Bailey. Included in Trustees' compensation for the period ended September 30,
1996 is a net periodic pension expense for each Fund, as follows:
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
== ======== ========= ============ ======== ============== ============== ==============
<S> <C> <C> <C> <C> <C> <C> <C>
$1,866 $1,603 $5,732 $ -- $2,397 $2,576 $2,400
</TABLE>
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$5,872, $24,040, $25,569, $5,907, $5,086, $17,853 and $17,040 as its portion
of the sales charge on sales of Class A shares of the Alabama, Arkansas,
California, Florida, Georgia, Maryland and Massachusetts Funds, respectively
for the period ended September 30, 1996.
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:
Each Class A distribution plan provides that each Fund will pay MFD up to
0.35% per annum of its average daily net assets attributable to Class A
shares in order that MFD may pay expenses on behalf of the Fund related to
the distribution and servicing of its shares. These expenses include a
service fee to each securities dealer who 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, which amounted to $29,039, $19,472, $9,847, $27,095 and
$87,289 for the Alabama, Arkansas, Georgia, Maryland and Massachusetts Funds
for the period ended September 30, 1996. Fees incurred under these
distribution plans during the period ended September 30, 1996 were 0.25%,
0.10%, 0.25%, 0.35%, and 0.35% of each Fund's average daily net assets
attributable to Class A shares on an annualized basis for the Alabama,
Arkansas, Georgia, Maryland and Massachusetts Funds, respectively. Service
fees payments made under the distribution plan by the Arkansas Fund have been
established by the Trustees of the Trust at up to 0.10%, subject to increase
on such date or dates as the Trustees of the Trust may determine.
Distribution fee payments made under the Class A distribution plan by the
Alabama, Arkansas, California, Florida, and Georgia Funds will commence on
such date to be determined by the Trustees.
The Class B and Class C distribution plans provide that each Fund will pay
MFD a distribution fee of 0.75% per annum, and a service fee of up to 0.25%
per annum, of the Fund's average daily net assets attributable to Class B and
Class C shares. The service fee is currently suspended for the California and
Florida Funds' Class B shares held over one year. Except in the case of the
0.25% per annum first year service fee, service fees payable under the
Arkansas Fund's Class B distribution plan have been established by the
Trustees of the Trust at up to 0.10%, subject to increase on such date or
dates as the Trustees of the Trust may determine. Except in the case of the
0.25% per annum Class B service fee paid by the California Fund and the
Florida Fund upon the sale of Class B shares, payment of the Class B service
fee will be suspended until such date as the Trustees of the Trust may
determine. MFD will pay to securities dealers who 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
43
<PAGE>
Notes to Financial Statements (Unaudited) - continued
to Class C shares. The service fee is intended to be additional consideration
for services rendered by the dealer with respect to Class B and Class C
shares. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $2,012, $1,412, $1,815, $2,414 and $888
for the Alabama, Arkansas, Georgia, Maryland and Massachusetts Funds,
respectively for Class B shares. MFS retains the service fee for accounts not
attributable to a securities dealer, which amounted to $4,194 for the
California Fund for Class C shares. Fees incurred under each Fund's Class B
distribution plan during the period ended September 30, 1996 were 1.00%,
0.88%, 0.83%, 0.82%, 1.00%, 1.00% and 1.00%, of each of the Fund's average
daily net assets attributable to Class B shares for the Alabama, Arkansas,
California, Florida, Georgia, Maryland and Massachusetts Funds, respectively,
on an annualized basis. Fees incurred under the Class C distribution plan
during the period ended September 30, 1996 were 1.00% of the California
Fund's average daily net assets attributable to Class C shares on an
annualized basis.
Purchases over $1 million of Class A shares are subject to a contingent
deferred sales charge in the event of a shareholder redemption within 12
months following such purchase. A contingent deferred sales charge is imposed
on shareholder redemptions of Class B shares in the event of a shareholder
redemption within six years of purchase. A contingent deferred sales charge
is imposed on shareholder redemptions of Class C shares in the event of a
shareholder redemption within 12 months of purchases made on or after April
1, 1996. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the period ended September 30, 1996 on
Class A, Class B and Class C shares were as follows:
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
CDSC imposed Fund Fund Fund Fund Fund Fund Fund
=============== ======== ========= ============ ========= ========= ========= ===============
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $ -- $ -- $ 1,686 $ 10 $ -- $ -- $ --
-------- --------- ------------ --------- --------- --------- ---------------
Class B $4,093 $10,259 $74,715 $26,470 $15,625 $7,986 $14,252
-------- --------- ------------ --------- --------- --------- ---------------
Class C $ -- $ -- $ 664 $ -- $ -- $ -- $ --
-------- --------- ------------ --------- --------- --------- ---------------
</TABLE>
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder serving agent. The fee is calculated as a
percentage of the average daily net assets of each class of shares at an
effective annual rate of up to 0.15%, up to 0.22% and up to 0.15%
attributable to Class A, Class B and Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations were as follows (000
omitted):
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
============ ========= ========= ============ ========= ========= ========= ===============
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases $10,378 $ 5,588 $88,117 $10,790 $5,779 $15,301 $45,596
Sales $12,543 $21,784 $97,493 $14,791 $8,412 $22,460 $43,663
</TABLE>
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Funds, as computed on a federal income tax basis,
are as follows (000 omitted):
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
================================= ========= ======================= ========= ========= ========= ===============
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate cost $80,989 $155,437 $269,725 $92,120 $68,818 $137,057 $238,185
========= ======================= ========= ========= ========= ===============
Gross unrealized appreciation $ 4,233 $ 5,116 $ 14,791 $ 4,320 $ 5,157 $ 6,490 $ 13,817
Gross unrealized (depreciation) (230) (906) (481) (395) (17) (848) (1,313)
--------- ----------------------- --------- --------- --------- ---------------
Net unrealized appreciation $ 4,463 $ 6,022 $ 15,272 $ 4,715 $ 5,174 $ 7,338 $ 15,130
========= ======================= ========= ========= ========= ===============
</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
-------------------------------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount Shares Amount
============================================= =================== ========= ============
<S> <C> <C> <C> <C>
Shares sold 101 $ 1,061 400 $ 3,882
Shares issued to shareholders in reinvestment
of distributions 83 869 191 1,858
Shares reacquired (428) (4,470) (2,425) (23,491)
------------------- --------- ------------
Net decrease (244) $(2,540) (1,834) $(17,751)
=================== ========= ============
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
============================================= =================== ========= ============
Shares sold 461 $ 4,854 952 $ 9,317
Shares issued to shareholders in reinvestment
of distributions 167 1,774 433 4,248
Shares reacquired (893) (9,492) (3,027) (29,685)
------------------- --------- ------------
Net decrease (265) $(2,864) (1,642) $(16,120)
=================== ========= ============
</TABLE>
<TABLE>
<CAPTION>
Class A Shares California Fund Florida Fund
---------------------------------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount Shares Amount
============================================= ======================= ========= ===========
<S> <C> <C> <C> <C>
Shares sold 13,858 $ 75,928 1,884 $ 18,335
Shares issued to shareholders in reinvestment
of distributions 525 2,883 92 896
Shares reacquired (15,830) (86,745) (2,356) (22,910)
----------------------- --------- -----------
Net decrease (1,447) $ (7,934) (380) $ (3,679)
======================= ========= ===========
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
============================================= ======================= ========= ===========
Shares sold 14,785 $ 82,615 4,022 $ 39,659
Shares issued to shareholders in reinvestment
of distributions 1,157 6,424 164 1,624
Shares reacquired (19,147) (106,882) (4,632) (45,774)
----------------------- --------- -----------
Net decrease (3,205) $ (17,843) (446) $ (4,491)
======================= ========= ===========
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Class A Shares Georgia Fund
----------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount
=============================================== ======== ======== ========= ===========
<S> <C> <C> <C> <C>
Shares sold 119 $ 1,238
Shares issued to shareholders in
reinvestment of distributions 87 910
Shares reacquired (546) (5,695)
--------- -----------
Net decrease (340) $ (3,547)
========= ===========
Year Ended March 31, 1996 (000 Omitted) Shares Amount
=============================================== ======== ======== ========= ===========
Shares sold 599 $ 6,335
Shares issued to shareholders in reinvestment
of distributions 186 1,962
Shares reacquired (1,458) (15,415)
--------- -----------
Net decrease (673) $ (7,118)
========= ===========
Class B Shares Alabama Fund Arkansas Fund
----------------------------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount Shares Amount
=============================================== ======== ======== ========= ===========
Shares sold 72 $ 751 44 $ 425
Shares issued to shareholders in reinvestment
of distributions 6 62 8 79
Shares reacquired (17) (177) (59) (575)
-------- -------- --------- -----------
Net increase (decrease) 61 $ 636 (7) $ (71)
======== ======== ========= ===========
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
=============================================== ======== ======== ========= ===========
Shares sold 183 $1,948 143 $ 1,406
Shares issued to shareholders in
reinvestment of distributions 8 88 17 169
Shares reacquired (33) (345) (94) (923)
-------- -------- --------- -----------
Net increase 158 $1,691 66 $ 652
======== ======== ========= ===========
Class B Shares Georgia Fund
----------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount
=============================================== ======== ======== ========= ===========
Shares sold 100 $ 1,046
Shares issued to shareholders in
reinvestment of distributions 11 117
Shares reacquired (96) (998)
--------- -----------
Net increase 15 $ 165
========= ===========
Year Ended March 31, 1996 (000 Omitted) Shares Amount
=============================================== ======== ======== ========= ===========
Shares sold 301 $ 3,193
Shares issued to shareholders in
reinvestment of distributions 21 218
Shares reacquired (186) (1,961)
--------- -----------
Net increase 136 $ 1,450
========= ===========
Class C Shares
Period Ended September 30, 1996 (000 Omitted)
=============================================== ======== ======== ========= ===========
Shares sold
Shares issued to shareholders in reinvestment
of distributions
Shares reacquired
Net decrease
Year Ended March 31, 1996 (000 Omitted)
=============================================== ======== ======== ========= ===========
Shares sold
Shares issued to shareholders in
reinvestment of distributions
Shares reacquired
Net increase
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Maryland Fund Massachusetts Fund
--------------------------------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount Shares Amount
=============================================== ==================== ========= ============
<S> <C> <C> <C> <C>
Shares sold 257 $ 2,806 2,635 $ 29,006
Shares issued to shareholders in
reinvestment of distributions 164 1,801 302 2,983
Shares reacquired (978) (10,930) (3,470) (37,803)
-------------------- --------- ------------
Net decrease (557) $ (6,323) (533) $ (5,814)
==================== ========= ============
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
=============================================== ==================== ========= ============
Shares sold 576 $ 6,386 3,359 $ 37,357
Shares issued to shareholders in reinvestment
of distributions 358 3,959 576 6,281
Shares reacquired (1,602) (17,764) (5,434) (60,354)
-------------------- --------- ------------
Net decrease (668) $ (7,419) (1,499) $(16,716)
==================== ========= ============
Class B Shares California Fund Florida Fund
--------------------------------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount Shares Amount
=============================================== ==================== ========= ============
Shares sold 877 $ 4,803 123 $ 1,196
Shares issued to shareholders in reinvestment
of distributions 68 371 13 122
Shares reacquired (890) (4,880) (135) (1,316)
-------------------- --------- ------------
Net increase (decrease) 55 $ 294 1 $ 2
==================== ========= ============
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
=============================================== ==================== ========= ============
Shares sold 1,980 $ 11,011 396 $ 3,905
Shares issued to shareholders in
reinvestment of distributions 130 724 25 249
Shares reacquired (1,194) (6,655) (269) (2,660)
-------------------- --------- ------------
Net increase 916 $ 5,080 152 $ 1,494
==================== ========= ============
Class B Shares Maryland Fund Massachusetts Fund
--------------------------------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount Shares Amount
=============================================== ==================== ========= ============
Shares sold 211 $ 2,303 327 $ 3,562
Shares issued to shareholders in
reinvestment of distributions 16 175 15 166
Shares reacquired (70) (766) (71) (776)
-------------------- --------- ------------
Net increase 157 $ 1,712 271 $ 2,952
==================== ========= ============
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
=============================================== ==================== ========= ============
Shares sold 485 $ 5,368 374 $ 4,133
Shares issued to shareholders in
reinvestment of distributions 27 297 23 251
Shares reacquired (292) (3,242) (166) (1,834)
-------------------- --------- ------------
Net increase 220 $ 2,423 231 $ 2,550
==================== ========= ============
Class C Shares California Fund
========= -----------------------
Period Ended September 30, 1996 (000 Omitted) Shares Amount
=============================================== ==================== ========= ============
Shares sold 132 $ 722
Shares issued to shareholders in reinvestment
of distributions 7 40
Shares reacquired (213) (1,165)
========= --------- ------------
Net decrease (74) $ (403)
========= ========= ============
Year Ended March 31, 1996 (000 Omitted) Shares Amount
=============================================== ==================== ========= ============
Shares sold 368 $ 2,042
Shares issued to shareholders in
reinvestment of distributions 14 80
Shares reacquired (307) (1,701)
========= --------- ------------
Net increase 75 $ 421
========= ========= ============
</TABLE>
45
<PAGE>
(6) Line of Credit
The Trust entered into an agreement which enables each of the Funds to
participate with other funds managed by MFS in an unsecured line of credit
with a bank which permits borrowings up to $350 million, collectively.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average
daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated
to each of the Funds for the period ended September 30, 1996 ranged from $391
to $1,428.
(7) Financial Instruments
The Trust trades financial instruments with off-balance sheet risk in the
normal course of its investing activities in order to manage exposure to
market risks such as interest rates. These financial instruments include
futures contracts. The notional or contractual amounts of these instruments
represent the investment a Fund has in particular classes of financial
instruments and does not necessarily represent the amounts potentially
subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions
are considered.
Futures Contracts
<TABLE>
<CAPTION>
Unrealized
Fund Description Expiration Contracts Position Depreciation
==================== ==================================== ============ =========== ===============
<S> <C> <C> <C> <C> <C>
Arkansas Fund U.S. Treasury Bonds December 1996 50 Short $ 94,082
California Fund U.S. Treasury Bonds December 1996 425 Short $353,144
Florida Fund U.S. Treasury Bonds December 1996 150 Short $282,243
Georgia Fund U.S. Treasury Bonds December 1996 50 Short $ 36,207
Maryland Fund U.S. Treasury Bonds December 1996 215 Short $404,548
Massachusetts Fund U.S. Treasury Bonds December 1996 200 Short $138,824
</TABLE>
At September 30, 1996, each Fund had sufficient cash and/or securities to
cover margin requirements on open futures contracts.
The Trust also invests in indexed securities whose value may be linked to
interest rates, commodities, indices or other financial indicators. Indexed
securities are fixed-income securities whose proceeds at maturity
(principal-indexed securities) or interest rates (coupon-indexed securities)
rise and fall according to the change in one or more specified underlying
instruments. Indexed securities may be more volatile than the underlying
instrument itself. The following is a summary of such securities held at
September 30, 1996:
<TABLE>
<CAPTION>
Principal
Amount Unrealized
Fund Description Index (000 Omitted) Value Depreciation
================ ===================================================== ================================= =========================
<S> <C> <C> <C> <C> <C>
Alabama Fund Puerto Rico Telephone Authority Rev., 5.59s, 2004 J.J. Kenny $1,000 $ 930,210 $ 69,790
Arkansas Fund Puerto Rico Telephone Authority Rev., 5.59s, 2004 J.J. Kenny $4,000 $3,720,840 $279,160
Puerto Rico Public Buildings Authority, 6.285s, 2016 PSA Municipal Swap $2,000 $1,845,240 $154,760
Maryland Fund Puerto Rico Public Buildings Authority, 6.285s, 2016 PSA Municipal Swap $3,000 $2,767,860 $232,140
</TABLE>
---------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
46
<PAGE>
The MFS Family of Funds(R)
America's Oldest Mutual Fund Group
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-637-2929
any business day from 9 a.m. to 5 p.m. Eastern time (or leave a message
anytime). This material should be read carefully before investing or sending
money.
<TABLE>
<S> <C>
Stock World
- ------------------------------------- ------------------------------------------
Massachusetts Investors Trust MFS(R)/Foreign & Colonial Emerging Markets
Equity Fund
Massachusetts Investors Growth Stock Fund
MFS(R)/Foreign & Colonial International
MFS(R) Capital Growth Fund Growth Fund
MFS(R) Emerging Growth Fund MFS(R)/Foreign & Colonial International
Growth and Income Fund
MFS(R) Gold & Natural Resources Fund
MFS(R) World Asset Allocation Fund (SM)
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
Bond MFS(R) Municipal Income Fund
- ---------------------------------------
MFS(R) Bond Fund State Tax-Free Bond
--------------------------------------------
MFS(R) Government Mortgage Fund Alabama, Arkansas, California, Florida,
Georgia, Maryland, Massachusetts,
MFS(R) Government Securities Fund Mississippi, New York, North Carolina,
Pennsylvania, South Carolina, Tennessee,
MFS(R) High Income Fund Virginia, West Virginia
MFS(R) Intermediate Income Fund
Money Market
MFS(R) Strategic Income Fund --------------------------------------------
MFS(R) Cash Reserve Fund
Limited Maturity Bond
- --------------------------------------- MFS(R) Government Money Market Fund
MFS(R) Government Limited Maturity Fund
MFS(R) Money Market Fund
MFS(R) Limited Maturity Fund
MFS(R) Municipal Limited Maturity Fund
</TABLE>
47
<PAGE>
Ads Illustrate MFS' Unparalleled Experience
[rounded box]
MERCURY GEMINI APOLLO MFS
[long-distance shot of earth from moon]
MFS' new advertisements look back at some of the most important events of the
twentieth century to demonstrate a simple point -- no other fund company can
match MFS' experience. MFS has been managing money for investors since 1924 when
we "invented" the nation's first fund, Massachusetts Investors Trust.
Print and broadcast ads will offer dramatic portraits of what that 72 years'
worth of experience means. By the time the Apollo rockets began taking off for
the moon, for example, MFS had already been exploring the universe of stocks for
more than four decades. The company was also on the scene, as other ads will
illustrate, when Louis Armstrong was redefining jazz and when the great
racehorse Whirlaway was galloping to a Triple Crown victory.
As MFS Chairman Keith Brodkin emphasizes, in today's increasingly competitive
mutual fund industry, it's important to have a recognizable brand name. The
goal of the MFS ad campaign is to increase public awareness of the company and
its unique role in the industry as the inventor of the mutual fund.
The across-the-board strength of the MFS Family of Funds(R) will be highlighted
in the print ads, which cite the performance results and Morningstar ratings of
various MFS funds.
The broadcast ads appear on a number of cable and network television news and
sports programs. The print ads appear in newspapers such as The Wall Street
Journal and USA Today; in financial magazines such as Kiplinger's Personal
Finance and Money, and in leisure magazines such as Golf Digest and Tennis.
(The cost of the campaign is being underwritten by MFS. It is neither a fund
shareholder nor an annuity contractholder expense.)
48
<PAGE>
MFS Municipal Series Trust
Trustees
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Marshall N. Cohan - Private Investor
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery, Brigham and Women's
Hospital; Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE - Chief Executive Officer, Edmund Gibbons
Ltd.; Chairman, Bank of N.T. Butterfield & Son Ltd.
Abby M. O'Neill - Private Investor; Director, Rockefeller Financial Services,
Inc. (investment advisers)
Walter E. Robb, III - President and Treasurer, Benchmark Advisors, Inc.
(corporate financial consultants); President, Benchmark Consulting Group,
Inc. (office services); Trustee, Landmark Funds (mutual funds)
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial Services
Company
J. Dale Sherratt - President, Insight Resources, Inc. (acquisition planning
specialists)
Ward Smith - Former Chairman (until 1994), NACCO Industries; Director,
Sundstrand Corporation
Investment Adviser
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
Distributor
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
Fund Managers*
David R. King
David B. Smith
Treasurer
W. Thomas London*
*Affiliated with the Investment Adviser
Assistant Treasurer
James O. Yost*
Secretary
Stephen E. Cavan*
Assistant Secretary
James R. Bordewick, Jr.*
Custodian
State Street Bank and Trust Company
Investor Information
For MFS stock and bond market outlooks, call toll free: 1-800-637-4458
anytime from a touch-tone telephone.
For information on MFS mutual funds, call your financial adviser or, for
an information kit, call toll free:
1-800-637-2929 any business day from 9 a.m. to 5 p.m. Eastern time (or leave
a message anytime).
Investor Service
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576
any business day from 9 a.m. to 5 p.m. Eastern time. To use this service,
your phone must be equipped with a Telecommunications Device for the Deaf.
For share prices, account balances and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
Web Site
http://www.mfs.com
[Dalbar logo]
For the third year in a row, MFS earned a #1 ranking in the DALBAR, Inc.
Broker/Dealer Survey, Main Office Operations Service Quality Category. The firm
achieved a 3.48 overall score on a scale of 1 to 4 in the 1996 survey. A total
of 110 firms responded, offering input on the quality of service they received
from 29 mutual fund companies nationwide. The survey contained questions about
service quality in 15 categories, including "knowledge of phone service
contacts," "accuracy of transaction processing," and "overall ease of doing
business with the firm."
49
<PAGE>
[back cover]
MFS(R) Municipal [Dalbar logo] Bulk Rate
Series Trust U.S. Postage
P A I D
500 Boylston Street 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) Florida Municipal Bond Fund
MFS(R) Georgia Municipal Bond Fund
MFS(R) Maryland Municipal Bond Fund
MFS(R) Massachusetts Municipal Bond Fund
[MFS logo]
54/254
55/255
27/227/327
MST-3A-11/96 40/240
MST-3A-11/96-36M 46/246
56/256
45/245
(C) 1996 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116
