[Logo MFS INVESTMENT MANAGEMENT]
Annual Report
for Year Ended
March 31, 1997
MFS(R) Municipal Series Trust
For the States of: Alabama, Arkansas, California, Florida, Georgia, Maryland
and Massachusetts
[GRAPHIC Money]
Learning financial basics the easy way (see page 55)
<PAGE>
Table of Contents
Letter from the Chairman 1
Portfolio Managers' Overview 2
Portfolio Managers' Profiles 2
Performance Summary 3
Fund Facts 4
Portfolio of Investments 12
Financial Statements 25
Notes to Financial Statements 48
Independent Auditors' Report 54
The ABCs of Investing 55
The MFS Family of Funds(R) 56
Trustees and Officers 57
Highlights
[bullet] The municipal bond market experienced significant volatility during
the past 12 months, with yields on high-grade municipals ranging
from a high of almost 6% in June to a low of 5.3% in November,
before ending the year at 5.7%.
[bullet] The diminished concern about tax reform, as well as the improved
fiscal positions of most state and local governments, contributed to
the municipal bond market's strong relative performance.
[bullet] Demand for municipal securities by casualty insurance companies has
been strong, a result of these companies' continued profitability
and desire to reduce taxable income.
[bullet] The Funds are seeking to protect asset values when interest rates
rise by increasing their cash positions. We are also selectively
purchasing higher-yielding credits that, in the opinion of our
research group, have proven to be the best investments in most
markets.
<PAGE>
Letter from the Chairman
[photo of A. Keith Brodkin]
Dear Shareholders:
After more than six years of expansion, the U.S. economy is experiencing
another year of moderate growth in 1997, although a few signs point to the
possibility of a modest rise in inflation during the year. On the positive
side, the pattern of moderate growth and inflation set over the past few
years now seems fairly well entrenched in the economy and, short of a major
international or domestic crisis, appears to have enough momentum to remain
on track for some time. Also, gains in such important sectors as housing,
automobiles, industrial production, and exports indicate a fair amount of
underlying strength in the economy. However, some reason for caution can be
seen in the continuing high levels of consumer debt and rising personal
bankruptcies, as well as in the ongoing tightness in the labor market, which
could add some inflationary pressures to the economy. Given these somewhat
conflicting indicators, we expect real (inflation-adjusted) growth to revolve
around 2% in 1997, with more strength occurring earlier in the year.
In the bond markets, conflicting signals over the strength of the economy
have created near-term volatility, and the Federal Reserve Board has begun
taking measured steps to control inflation by raising short-term interest
rates. Should additional signs of more rapid economic growth and,
particularly, of higher inflation appear, we would expect the Fed to continue
its anti-inflationary stance. While inflationary forces largely remained in
check in 1996, the continued strength in the labor market means that a pickup
in inflation is still possible. At the same time, the U.S. budget deficit
continues to decline and, as a percentage of gross domestic product, is now
less than 2%, which we consider a positive development for the bond markets.
Although interest rates may move higher over the coming months, we believe
that, at current levels, fixed-income markets remain equitably valued.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
April 14, 1997
1
<PAGE>
7
Portfolio Managers' Overview
Dear Shareholders:
The municipal bond market experienced significant volatility during the
fiscal year ended March 31, 1997. High-grade municipal yields ranged from a
high of almost 6% in June to a low of 5.3% in November, before ending the
year at 5.7%. Municipals outperformed U.S. Treasuries during the period, as
yields on 30-year Treasury bonds rose approximately 50 basis points (0.50%)
to 7.1% (although principal value and interest on Treasury securities are
guaranteed by the U.S. government if held to maturity).
The primary reason for the strong relative performance of municipals was
the diminished concern about tax reform and its potential impact on the
market. This caused the ratio of municipal to Treasury yields to drop from a
fiscal-year high of approximately 85% last April to 82.5% by early May. This
relationship, like absolute yields, ranged widely during the fiscal year.
Generally, we witnessed strong demand for municipals and good relative
performance when yields rose, and underperformance by municipals when yields
declined. This trend was most visible during the fall of 1996, when the ratio
reached almost 80% and Treasury yields were close to their fiscal-year high
of 7.15%. The government market then rallied sharply, as a number of
statistics indicated a slowing economy. Municipals lagged, and the yield
ratio moved to over 84%, with yields on Treasuries dropping to 6.35%. The
ratio ended the fiscal year at about 80%.
During the year, demand for municipal securities by casualty insurance
companies was strong owing to these companies' continued profitability and
desire to reduce taxable income. Individual investors were also major buyers
when yields increased. During this period, mutual funds had generally flat
cash flows, as the equity market captivated the interest of most fund
investors. The supply of new municipal issues was essentially unchanged over
the period, while the redemption of older issues continued to run relatively
high. These factors helped create favorable supply/demand conditions for
municipals during the year.
Credit quality in the municipal market has generally continued its
improving trend, with most state and local budgets in very good shape. Health
care providers and utilities have come under pressure in particular markets,
while most corporate-backed industrial revenue bonds have done well. Unlike
some previous years, there has been no major credit event to impact the
market. This factor, combined with the increase in the issuance of insured
bonds from 43% of the market in 1995 to 47% currently, has caused yield
spreads for quality issues to continue narrowing, while lower-quality bonds
have outperformed.
Last year, our strategy was to remain fully invested and reduce interest
rate exposure by hedging in the futures market. This was effective when the
market sold off but, in many cases, the positive impact was more than offset
when the market rallied. This year, we are seeking to protect asset values
when rates rise by increasing our cash positions. Finally, we believe that
bond insurers will continue to grow market share and that credit spreads will
remain tight. In light of this expectation, we are selectively purchasing
higher-yielding credits recommended by our research group.
Respectfully,
/s/ David R. King and David B. Smith
David R. King and David B. Smith
Portfolio Managers
Portfolio Managers' Profiles
David R. 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 and Vice President - Investments in 1988. 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 B. 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.
2
<PAGE>
Performance Summary
The performance of the individual state Funds listed below and on the
following page includes the reinvestment of distributions but excludes the
effects of any sales charges. Each Fund's results have been compared to the
Lehman Brothers Municipal Bond Index (the Lehman Index), an unmanaged index
of municipal bond investments rated "Baa" or higher. However, while this
index is considered the benchmark for performance of municipal bonds, it is
comprised of municipal bonds issued nationwide, while each of the Funds in
the Trust is limited to investing in the bonds of a particular state. Because
individual indices do not exist for all of the states, we have provided a
discussion of each Fund's performance relative to the Lehman Index.
The portfolio of each Fund will tend to be structured with respect to
maturity and coupon and sector distribution, reflecting our views on interest
rates, credit quality, and financing trends. However, each Fund's performance
will differ because of supply/demand and credit quality conditions, which
vary from state to state.
Alabama
For the fiscal year ended March 31, 1997 the Fund provided a total return of
5.82% for Class A shares and 4.98% for Class B shares. These returns assume
the reinvestment of dividends and capital gains but exclude the effects of
any sales charges. The average Alabama fund returned 5.28%, according to
Lipper Analytical Services, an independent firm that reports mutual fund
performance, while the Lehman Index returned 5.45% over the same period. The
Fund benefited from its holdings of higher-yielding bonds relative to its
competitors.
Arkansas
For the fiscal year ended March 31, 1997 the Fund's Class A shares provided a
total return of 4.87%, while Class B shares returned 4.05%. These returns
assume the reinvestment of dividends and capital gains but exclude the
effects of any sales charges. These figures compare to a 5.04% return for the
average index for other states, according to Lipper Analytical Services, and
to a 5.45% return for the Lehman Index over the same period. Many
higher-yielding bonds performed well, while some shorter-maturity,
pre-refunded bonds underperformed.
California
The Fund's total returns for the fiscal year ended March 31, 1997 were 4.55%
for Class A shares, 3.64% for Class B shares, and 3.51% for Class C shares.
These returns assume the reinvestment of dividends and capital gains but
exclude the effects of any sales charges. These figures compare to a 5.23%
return for the average California fund, according to Lipper Analytical
Services, and to a 5.45% return for the Lehman Index over the same period.
The Fund's high average credit quality and longer-maturity bonds were a
disadvantage to its performance during the first three fiscal quarters
because lower-quality and shorter-maturity bonds outperformed during this
period. Our strategy of hedging the Fund's longer-maturity bonds augmented
performance through September 1996, but the severe underperformance of the
municipal market at the end of October caused this move to backfire. In
November, we shifted gears by unwinding the Fund's hedges, and in December we
shortened durations by moving our holdings into shorter-maturity bonds and
increasing our cash position. We are also looking to augment the Fund's
performance by increasing its holdings of lower-rated, investment-grade bonds
at appropriate yield spreads. This strategy has allowed the Fund to
outperform during the period's last fiscal quarter.
Florida
The Fund provided a total return of 3.43% for Class A shares and 2.56% for
Class B shares for the fiscal year ended March 31, 1997. These returns assume
the reinvestment of dividends and capital gains but exclude the effects of
any sales charges. These figures compare to a 4.79% return for the average
Florida fund, according to Lipper Analytical Services, and to a 5.45% return
for the Lehman Index over the same period. The underperformance was primarily
attributable to the defensive posture taken during the fourth quarter, when
interest rates declined dramatically.
Georgia
The Fund's total returns for the fiscal year ended March 31, 1997 were 4.47%
for Class A shares and 3.63% for Class B shares. These returns assume the
reinvestment of dividends and capital gains but exclude the effects of any
sales charges. These figures compare to a 4.89% return for the average
Georgia fund, according to Lipper Analytical Services, and to a 5.45% return
for the Lehman Index over the same period. We maintained the Fund's holdings
of high-quality, longer-maturity bonds during the fiscal year, hedging its
interest rate exposure during times of volatility. This strategy caused the
Fund to underperform holdings of lower-quality, shorter-maturity bonds. In
November, we shifted gears by unwinding the Fund's hedges, and in December we
shortened duration by moving our holdings into shorter-maturity bonds. We are
also looking to augment the Fund's performance by increasing its holdings of
lower-rated, investment-grade bonds at appropriate yield spreads. This
strategy has allowed the Fund to outperform during the period's last fiscal
quarter.
Maryland
For the fiscal year ended March 31, 1997 the Fund's Class A shares provided a
total return of 3.75%, and its Class B shares returned 3.03%. These returns
assume the reinvestment of dividends and capital gains but exclude the
effects of any sales charges. These figures compare to a 4.54% return for the
average Maryland fund, according to Lipper Analytical Services, and to a
5.45% return for the Lehman Index over the same period. The underperformance
was primarily attributable to the defensive posture taken during the fourth
quarter, when interest rates declined dramatically.
3
<PAGE>
Performance Summary -- continued
Massachusetts
The Fund's total returns for the fiscal year ended March 31, 1997 were 4.39%
for Class A shares and 3.66% for Class B shares. These figures compare to a
5.12% return for the average Massachusetts fund, according to Lipper
Analytical Services, and to a 5.45% return for the Lehman Index over the same
period. These returns assume the reinvestment of dividends and capital gains
but exclude the effects of any sales charges. We maintained the Fund's
holdings of high-quality, longer-maturity bonds during the fiscal year,
hedging its interest rate exposure during times of volatility. This strategy
caused the Fund to underperform holdings of lower-quality, shorter-maturity
bonds. In November, we shifted gears by unwinding the Fund's hedges, and in
December we reduced its holdings of short-dated pre-refunded bonds and
increased its cash position. We are also looking to augment the Fund's
performance by increasing its holdings of lower-rated, investment-grade bonds
at appropriate yield spreads. This strategy has allowed the Fund to improve
its relative performance during the period's last fiscal quarter.
Fund Facts
<TABLE>
<CAPTION>
Strategy: The investment objective of each 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:
<S> <C> <C> <C> <C> <C>
Alabama Class A: February 1, 1990 Georgia Class A: June 6, 1988
Class B: September 7, 1993 Class B: September 7, 1993
Arkansas Class A: February 3, 1992 Maryland Class A: October 31, 1984
Class B: September 7, 1993 Class B: September 7, 1993
California Class A: June 18, 1985 Massachusetts Class A: April 9, 1985
Class B: September 7, 1993 Class B: September 7, 1993
Class C: January 3, 1994
Florida Class A: February 3, 1992
Class B: September 7, 1993
</TABLE>
Net assets as of March 31, 1997
Alabama: $ 84.2 million
Arkansas: $151.8 million
California: $273.2 million
Florida: $ 95.0 million
Georgia: $ 69.8 million
Maryland: $143.8 million
Massachusetts: $250.1 million
Tax Form Summary
In January 1997, shareholders were mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1996.
Federal Income Tax Information on Distributions
The MFS Alabama Municipal Bond Fund has designated $694,193 as a long-term
capital gain.
Exempt-Interest Dividends
For federal income tax purposes, approximately 98.9% of the total dividends
paid by each Fund from net investment income during the year ended March
31, 1997, is designated as an exempt-interest dividend.
4
<PAGE>
Performance Summary -- continued
The following information illustrates the growth of a hypothetical $10,000
investment for each Fund's Class A shares for the periods indicated in
comparison to various market indicators. Fund results reflect the deduction
of the 4.75% maximum sales charge; benchmark comparisons are unmanaged and do
not reflect any fees or expenses. The performance of other share classes will
be greater than or less than the line shown, based on the differences in
loads and fees paid by shareholders investing in the different classes. It is
not possible to invest in an index.
MFS(R) ALABAMA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from February 1,
1990 through March 31, 1997)
[3 Line Graph]
MFS Alabama Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
2/1/90 9525 10000 10000
3/29/91 10289 10597 11023
3/31/93 12849 11272 13643
3/31/95 14080 11884 14996
3/31/97 15978 12564 17140
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Life of Fund++
-------------------------------------------------------------------------- -------- --------- --------- ----------------
<S> <C> <C> <C> <C>
MFS Alabama Municipal Bond Fund (Class A) including 4.75% sales charge +0.83% +4.78% +6.05% +6.76%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Alabama Municipal Bond Fund (Class A) at net asset value +5.82% +6.49% +7.08% +7.48%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Alabama Municipal Bond Fund (Class B) with CDSC +0.99% +4.72% +6.15% +7.04%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Alabama Municipal Bond Fund (Class B) at net asset value +4.98% +5.62% +6.46% +7.04%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Average Alabama tax-exempt municipal bond fund** +5.28% +6.05% +7.08% +7.06%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +7.81%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Consumer Price Index* +2.91% +2.83% +2.82% +3.24%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
</TABLE>
++For the period from the commencement of the Fund's investment operations,
February 1, 1990, to March 31, 1997.
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
Class B share results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior to the
commencement of offering of Class B shares. Because operating expenses
attributable to Class A shares are lower than those of Class B shares, Class
B share performance generally would have been lower than Class A share
performance. The Class A share performance included within the Class B share
performance with CDSC has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
5
<PAGE>
Performance Summary - continued
MFS(R) ARKANSAS MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from March 1,
1992 through March 31, 1997)
[3 Line Graph]
MFS Arkansas Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
3/92 9525 10000 10000
3/93 10792 10398 11260
3095 11611 10963 12377
3/97 12956 11549 14142
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Life of Fund++
--------------------------------------------------------------------------- -------- --------- --------- ----------------
<S> <C> <C> <C> <C>
MFS Arkansas Municipal Bond Fund (Class A) including 4.75% sales charge -0.15% +3.96% +5.30% +5.11%
--------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Arkansas Municipal Bond Fund (Class A) at net asset value +4.78% +5.65% +6.33% +6.10%
--------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Arkansas Municipal Bond Fund (Class B) with CDSC+++ +0.06% +3.79% +5.30% +5.27%
--------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Arkansas Municipal Bond Fund (Class B) at net asset value +4.05% +4.71% +5.63% +5.42%
--------------------------------------------------------------------------- -------- --------- --------- ----------------
Average other state tax-exempt municipal bond fund** +5.04% +5.95% +6.31% +6.09%
--------------------------------------------------------------------------- -------- --------- --------- ----------------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +6.96%
--------------------------------------------------------------------------- -------- --------- --------- ----------------
Consumer Price Index* +2.91% +2.83% +2.82% +2.90%
--------------------------------------------------------------------------- -------- --------- --------- ----------------
</TABLE>
++For the period from the commencement of the Fund's investment operations,
February 3, 1992 to March 31, 1997.
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
+++These returns reflect the current maximum Class B contingent deferred
sales charge (CDSC) of 2%.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share performance with CDSC, has been adjusted to reflect the CDSC
generally applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
6
<PAGE>
Performance Summary - continued
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the 5-year period ended
March 31, 1997)
[3 Line Graph]
MFS California Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
3/92 9523 10000 10000
3/93 10852 10309 11252
3/94 10994 10567 11513
3/95 11527 10869 12369
3/96 12433 11165 13406
3/97 12999 11491 14137
Growth of a Hypothetical $10,000 Investment (For the 10-year period ended
March 31, 1997)
[3 Line Graph]
MFS California Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
3/31/87 9532 10000 10000
3/31/89 10252 10904 10989
3/29/91 12150 12036 13270
3/31/93 15302 12803 16424
3/31/95 16253 13498 18053
3/31/97 18328 14272 20634
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
<S> <C> <C> <C> <C>
MFS California Municipal Bond Fund (Class A) including 4.75% sales charge -0.49% +4.06% +5.39% +6.24%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
MFS California Municipal Bond Fund (Class A) at net asset value +4.55% +5.74% +6.42% +6.76%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
MFS California Municipal Bond Fund (Class B) with CDSC -0.32% +3.84% +5.37% +6.39%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
MFS California Municipal Bond Fund (Class B) at net asset value +3.64% +4.76% +5.69% +6.39%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
MFS California Municipal Bond Fund (Class C) with CDSC++ +2.52% +4.68% +5.73% +6.41%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
MFS California Municipal Bond Fund (Class C) at net asset value +3.51% +4.68% +5.73% +6.41%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
Average California tax-exempt municipal bond fund** +5.23% +6.21% +6.61% +6.56%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +7.51%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
Consumer Price Index* +2.91% +2.83% +2.82% +3.62%
- ------------------------------------------------------------------------------ -------- --------- --------- -----------
</TABLE>
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
++Class C shares have no initial sales charge but will be subject to a 1%
CDSC if redeemed within 12 months of purchase.
Class B and Class C share results include the performance and operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares and Class C shares.
Because operating expenses attributable to Class B and Class C shares are
higher than those of Class A shares, Class B and Class C share performance
generally would have been lower than Class A share performance. These results
represent the percentage change in net asset value. Returns would have been
lower had sales charges been reflected.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
7
<PAGE>
Performance Summary - continued
MFS(R) FLORIDA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from March 1,
1992 through March 31, 1997)
[3 Line Graph]
MFS Florida Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
3/92 9525 10000 10000
3/93 10855 10398 11260
3/95 11701 10963 12377
3/97 13087 11549 14142
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Life of Fund++
-------------------------------------------------------------------------- -------- --------- --------- ----------------
<S> <C> <C> <C> <C>
MFS Florida Municipal Bond Fund (Class A) including 4.75% sales charge -1.49% +4.06% +5.55% +5.29%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Florida Municipal Bond Fund (Class A) at net asset value +3.43% +5.75% +6.58% +6.29%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Florida Municipal Bond Fund (Class B) with CDSC+++ -1.37% +3.90% +5.53% +5.43%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Florida Municipal Bond Fund (Class B) at net asset value +2.56% +4.81% +5.85% +5.59%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Average Florida tax-exempt municipal bond fund** +4.79% +6.35% +6.79% +6.09%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +6.96%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Consumer Price Index* +2.91% +2.83% +2.82% +2.90%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
</TABLE>
++For the period from the commencement of the Fund's investment operations,
February 3, 1992, to March 31, 1997.
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
+++These returns reflect the current maximum Class B contingent deferred
sales charge (CDSC) of 2%.
Class B share results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior to the
commencement of offering of Class B shares. Because operating expenses
attributable to Class A shares are lower than those of Class B shares, Class
B share performance generally would have been lower than Class A share
performance. The Class A share performance included within the Class B share
SEC performance has been adjusted to reflect the CDSC generally applicable to
Class B shares rather than the sales charge generally applicable to Class A
shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
8
<PAGE>
Performance Summary - continued
MFS(R) GEORGIA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the period from July 1, 1988
through March 31, 1997)
[3 Line Graph]
MFS Georgia Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
7/88 9525 10000 10000
3/90 10838 10953 11798
3/92 12888 11855 14173
3/95 15580 12885 17530
3/97 17348 13565 19748
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Life of Fund++
-------------------------------------------------------------------------- -------- --------- --------- ----------------
<S> <C> <C> <C> <C>
MFS Georgia Municipal Bond Fund (Class A) including 4.75% sales charge -0.47% +3.83% +5.08% +6.43%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Georgia Municipal Bond Fund (Class A) at net asset value +4.47% +5.53% +6.10% +7.02%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Georgia Municipal Bond Fund (Class B) with CDSC -0.33% +3.75% +5.16% +6.67%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
MFS Georgia Municipal Bond Fund (Class B) at net asset value +3.63% +4.68% +5.48% +6.67%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Average Georgia tax-exempt municipal bond fund** +4.89% +6.16% +6.38% +6.62%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +8.20%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
Consumer Price Index* +2.91% +2.83% +2.82% +3.57%
-------------------------------------------------------------------------- -------- --------- --------- ----------------
</TABLE>
++For the period from the commencement of the Fund's investment operations,
June 6, 1988, to March 31, 1997.
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share SEC performance has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
9
<PAGE>
Performance Summary - continued
MFS(R) MARYLAND MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the 5-year period ended
March 31, 1997)
[3 Line Graph]
MFS Maryland Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
3/31/92 9528 10000 10000
3/31/93 10537 10309 11252
3/31/94 10576 10567 11513
3/31/95 11264 10869 12369
3/29/96 11960 11165 13406
3/31/97 12408 11491 14137
Growth of a Hypothetical $10,000 Investment (For the 10-year period ended
March 31, 1997)
[3 Line Graph]
MFS Maryland Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
3/31/87 9528 10000 10000
3/31/89 10369 10904 13270
3/29/91 12218 12036 13270
3/31/93 14667 12803 16424
3/31/95 15680 13498 18063
3/31/97 17271 14272 20634
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------- -------- --------- --------- -----------
<S> <C> <C> <C> <C>
MFS Maryland Municipal Bond Fund (Class A) including 4.75% sales charge -1.17% +3.78% +4.40% +5.61%
--------------------------------------------------------------------------- -------- --------- --------- -----------
MFS Maryland Municipal Bond Fund (Class A) at net asset value +3.75% +5.47% +5.42% +6.13%
--------------------------------------------------------------------------- -------- --------- --------- -----------
MFS Maryland Municipal Bond Fund (Class B) with CDSC -0.92% +3.80% +4.54% +5.85%
--------------------------------------------------------------------------- -------- --------- --------- -----------
MFS Maryland Municipal Bond Fund (Class B) at net asset value +3.03% +4.72% +4.87% +5.85%
--------------------------------------------------------------------------- -------- --------- --------- -----------
Average Maryland tax-exempt municipal bond fund** +4.54% +5.98% +6.45% +6.27%
--------------------------------------------------------------------------- -------- --------- --------- -----------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +7.51%
--------------------------------------------------------------------------- -------- --------- --------- -----------
Consumer Price Index* +2.91% +2.83% +2.82% +3.62%
--------------------------------------------------------------------------- -------- --------- --------- -----------
</TABLE>
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share performance with CDSC has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
10
<PAGE>
Performance Summary - continued
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment (For the 5-year period ended
March 31, 1997)
[3 Line Graph]
MFS Massachusetts Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
3/31/92 9522 10000 10000
3/31/93 10702 10309 11252
3/31/94 10875 10869 12369
3/31/95 11515 10869 12369
3/29/96 12315 11165 13406
3/31/97 12856 11491 14137
Growth of a Hypothetical $10,000 Investment (For the 10-year period ended
March 31, 1997)
[3 Line Graph]
MFS Massachusetts Lehman Brothers
Municipal Bond Consumer Price Municipal
Fund - Class A Index -- U.S. Bond Index
3/31/87 9523 10000 10000
3/31/89 10243 10904 10989
3/29/91 11984 12036 13270
3/31/93 14824 12803 16424
3/31/95 15950 13498 18053
3/31/97 17808 14272 20634
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------- -------- --------- --------- -----------
<S> <C> <C> <C> <C>
MFS Massachusetts Municipal Bond Fund (Class A) including 4.75% sales charge -0.58% +4.05% +5.16% +5.94%
- --------------------------------------------------------------------------------- -------- --------- --------- -----------
MFS Massachusetts Municipal Bond Fund (Class A) at net asset value +4.39% +5.74% +6.19% +6.46%
- --------------------------------------------------------------------------------- -------- --------- --------- -----------
MFS Massachusetts Municipal Bond Fund (Class B) with CDSC -0.30% +4.10% +5.35% +6.20%
- --------------------------------------------------------------------------------- -------- --------- --------- -----------
MFS Massachusetts Municipal Bond Fund (Class B) at net asset value +3.66% +5.02% +5.67% +6.20%
- --------------------------------------------------------------------------------- -------- --------- --------- -----------
Average Massachusetts tax-exempt municipal bond fund** +5.12% +6.21% +6.73% +6.60%
- --------------------------------------------------------------------------------- -------- --------- --------- -----------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +7.51%
- --------------------------------------------------------------------------------- -------- --------- --------- -----------
Consumer Price Index* +2.91% +2.83% +2.82% +3.62%
- --------------------------------------------------------------------------------- -------- --------- --------- -----------
</TABLE>
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share performance with CDSC has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
11
<PAGE>
Portfolio of Investments - March 31, 1997
MFS ALABAMA MUNICIPAL BOND FUND
Municipal Bonds - 96.8%
- -------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------
General Obligation - 11.2%
Birmingham, AL, 8s, 2015 $1,150 $ 1,188,537
Hoover, AL, AMBAC, 5s, 2020 1,120 999,118
Huntsville, AL, 5.5s, 2020 1,500 1,415,985
Shelby County, AL, 7.4s, 2007 1,000 1,095,510
Shelby County, AL, 7.7s, 2017 800 875,376
Shelby County, AL, MBIA, 0s, 2011 3,000 1,244,280
State of Alabama, 0s, 2004 2,500 1,700,350
State of Alabama, 0s, 2006 1,165 683,249
State of Alabama, 7.1s, 2010### 250 270,290
-----------
$ 9,472,695
- -------------------------------------------------------------------------------
State and Local Appropriation - 4.4%
Alabama Building Renovation Finance Authority
Rev. (Fitch Light), 7.45s, 2011 $1,500 $ 1,640,175
Montgomery County, AL, Department of Human
Resources Rev., 7s, 2007 1,000 1,083,100
Puerto Rico Public Buildings Authority,
Education & Health, 5.6s, 2008 500 508,940
Puerto Rico Public Buildings Authority,
Education & Health, 5.5s, 2021 500 473,705
-----------
$ 3,705,920
- -------------------------------------------------------------------------------
Refunded and Special Obligations - 14.1%
Alabama Mental Health Finance Authority,
7.375s, 1999 $ 250 $ 268,235
Alexander City, AL, 0s, 2001 1,000 333,390
Alexander City, AL, 0s, 2001 1,000 310,030
Alexander City, AL, 0s, 2001 1,250 360,375
Baldwin County, AL, Eastern Shore Health Care
Authority (Thomas), 8.5s, 2001 1,000 1,146,430
Birmingham, AL, 7.4s, 1999 1,000 1,072,430
Birmingham, AL, Historical Preservation
Authority Rev. (Kelly Ingram/Civil Rights),
7.2s, 2001 1,000 1,098,030
Birmingham, AL, Public Parks & Recreation
Board Rev. (Legion Park), 7.25s, 1999 400 430,952
Birmingham, AL, Waterworks & Sewer Board Rev.,
7.2s, 2000 500 540,180
Gadsden East, AL, Medical Clinic Board Rev.
(Baptist Hospital), 7.8s, 2001 2,000 2,273,380
Hoover, AL, Board of Education, AMBAC, 6.625s,
2001 1,000 1,080,440
Morgan County-Decatur, AL, Hospital Board
Rev., 7.875s, 1999 750 809,872
Puerto Rico Highway & Transportation
Authority, 6.5s, 2002 1,000 1,093,000
University of Alabama, University Housing
Rev., MBIA, 7.1s, 2001 1,000 1,102,950
-----------
$11,919,694
- -------------------------------------------------------------------------------
Airport and Port Revenue - 5.6%
Alabama Docks Department, Docks Facilities
Rev., BIGI, 7.6s, 2012 $1,600 $ 1,692,944
Birmingham, AL, Airport Rev., AMBAC, 5.25s,
2020 1,000 913,460
Mobile, AL, Airport Authority Rev., 7.375s,
2012 1,000 1,055,490
Mobile, AL, Airport Authority Rev., 8.875s,
2015 1,000 1,082,180
-----------
$ 4,744,074
- -------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 3.4%
DeKalb & Cherokee County, AL, Gas Rev., AMBAC,
5.4s, 2016 $2,000 $ 1,899,620
Puerto Rico Telephone Authority Rev., AMBAC,
5.43s, 2004++++ 1,000 965,840
-----------
$ 2,865,460
- -------------------------------------------------------------------------------
Health Care Revenue - 6.9%
Baldwin County, AL, Eastern Shore Health Care
(Thomas Hospital), 6.75s, 2015 $1,000 $ 1,025,610
Birmingham, AL, Special Care Facilities
(Daughters of Charity-St. Vincents), 5.25s,
2015 1,000 926,810
Cullman, AL, Medical Park South Clinic, "A",
6.5s, 2023 1,000 998,610
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), 7s, 2015 695 748,119
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), 7s, 2015 2,030 2,105,394
-----------
$ 5,804,543
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 9.8%
Butler, AL, Industrial Development Board,
Solid Waste Rev. (James River Corp.), 8s,
2028 $1,000 $ 1,117,060
Camden, AL, Industrial Development Board
Pollution Control Rev.
(Macmillian Bloedel), 7.75s, 2009 500 534,355
Courtland, AL, Industrial Development Board
Solid Waste Disposal Rev. (Champion
International Corp.), 5.9s, 2017 1,000 961,220
Courtland, AL, Industrial Development Board
Solid Waste Disposal Rev. (Champion
International Corp.), 7.75s, 2020 1,485 1,574,516
Mobile, AL, Industrial Development Board, Dock
& Wharf Rev. (Ideal Basic Industries Inc.),
6.75s, 2004 270 270,931
Mobile, AL, Industrial Development Board, Dock
& Wharf Rev. (Ideal Basic Industries Inc.),
6.875s, 2009 1,075 1,079,139
Piedmont, AL, Industrial Development Board
Rev. (Springs Industries Project),
8.25s, 2010 1,000 1,080,230
Tarrant City, AL, Industrial Development Board
Rev. (Vulcan Materials Co.), 7.5s, 2011 1,500 1,626,165
-----------
$ 8,243,616
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 6.6%
Alabama Special Care Facilities Financing
Authority (Daughters of Charity), AMBAC, 5s,
2025 $1,500 $ 1,307,085
Huntsville, AL, Health Care Facilities Rev.,
MBIA, 6.375s, 2022 850 884,425
Lauderdale County & Florence, AL (Eliza Coffee
Memorial Hospital), MBIA, 5.75s, 2014 1,000 985,740
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), AMBAC, 5.875s,
2016 1,000 1,000,680
University of Alabama, Hospital Rev.
(Birmingham), MBIA, 5s, 2014 1,500 1,365,765
-----------
$ 5,543,695
- -------------------------------------------------------------------------------
12-AL
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.2%
Alabama Housing Finance Authority,
Multi-Family Residential Development Rev.
(St. Jude), FHA, 7.25s, 2023 $1,405 $ 1,482,626
Puerto Rico Housing Finance Corp.,
Multi-Family Mortgage Rev., 7.5s, 2015 355 371,160
-----------
$ 1,853,786
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 5.4%
Alabama Housing Finance Authority, Single
Collateral Home Mortgage Program, 5.7s, 2015 $1,700 $ 1,676,608
Alabama Housing Finance Authority, Single
Family Mortgage Rev., 6.55s, 2014 985 1,026,025
Alabama Housing Finance Authority, Single
Family Mortgage Rev., GNMA, 7.4s, 2022 705 716,569
Alabama Housing Finance Authority, Single
Family Mortgage Rev., GNMA, 7.5s, 2022 470 486,220
Alabama Housing Finance Authority, Single
Family Mortgage Rev., GNMA, 7.6s, 2022 150 158,412
Alabama Housing Finance Authority, Single
Family Mortgage Rev., GNMA, 7.75s, 2022 390 403,662
Alabama Housing Finance Authority, Single
Family Mortgage Rev., GNMA, 7.9s, 2022 40 41,402
-----------
$ 4,508,898
- -------------------------------------------------------------------------------
Universities - 6.8%
Alabama Agriculture & Mechanics University,
MBIA, 5.75s, 2013### $ 500 $ 499,345
Alabama Agriculture & Mechanics University,
MBIA, 5.5s, 2020 2,545 2,434,776
Alabama Board of Education Rev. (Shelton State
Community College), MBIA, 6s, 2014 1,000 1,025,670
Homewood, AL, Educational Building Authority,
Educational Facilities Rev. (Samford
University), 6.5s, 2016 1,000 1,038,420
University of Southern Alabama, Tuition Rev.,
AMBAC, 5s, 2015 775 703,134
-----------
$ 5,701,345
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 17.5%
Alabama Water Pollution Control Authority,
7.75s, 2012 $ 920 $ 968,125
Alabama Water Pollution Control Authority,
Revolving Fund Loan, AMBAC, 5.5s, 2020 1,500 1,431,585
Arab, AL, Waterworks Board, Water Rev., MBIA,
7.05s, 2016 1,000 1,083,100
Bessemer, AL, Water Rev., AMBAC, 5.75s, 2026 1,000 983,340
Birmingham, AL, Waterworks & Sewer Board Rev.,
5.375s, 2020 2,000 1,843,080
Fairview, AL, Water Rev. (East Cullman),
AMBAC, 8s, 2020 1,000 1,067,240
Jefferson County, AL, Sewer Rev., FGIC,
5.375s, 2027 2,190 2,029,473
Limestone County, AL, Water Authority Rev.,
FGIC, 7.7s, 2019 900 947,133
Limestone County, AL, Water Authority Rev.,
FGIC, 5.5s, 2026 2,650 2,516,573
Madison, AL, Water & Waste Board, MBIA, 5.5s,
2019 1,000 955,030
Orange Beach, AL, Water & Sewer Rev., AMBAC,
5.4s, 2020 1,000 942,040
-----------
$14,766,719
- -------------------------------------------------------------------------------
Miscellaneous Revenue - 2.9%
Birmingham, AL, Downtown Redevelopment
Authority, Social Security Administration
Building Rev., 0s, 2010 $2,435 $ 2,406,243
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $77,526,506) $81,536,688
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.9%
Lincoln County, WY, Pollution Control Rev.,
(Exxon), due 11/01/14 $ 300 $ 300,000
Unita County, WY, Pollution Control Rev.
(Chevron), due 8/15/20 1,300 1,300,000
- -------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,600,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $79,126,506) $83,136,688
Other Assets, Less Liabilities - 1.3% 1,072,500
- -------------------------------------------------------------------------------
Net Assets - 100.0% $84,209,188
- -------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
Portfolio of Investments - March 31, 1997
MFS ARKANSAS MUNICIPAL BOND FUND
Municipal Bonds - 98.2%
- -------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------
General Obligation - 2.9%
Arkansas College Savings, "A", 0s, 2009 $1,146 $ 593,788
Arkansas College Savings, "A", 0s, 2015 2,575 914,872
Arkansas College Savings, "B", 0s, 2012 1,200 517,152
Arkansas College Savings, "B", 0s, 2013 1,000 404,500
Arkansas College Savings, "B", 0s, 2014 1,150 436,172
Arkansas College Savings, "B", 0s, 2015 1,600 568,464
Mississippi County, AR, Community College
District, AMBAC, 6s, 2018 1,000 1,027,060
----------
$4,462,008
- -------------------------------------------------------------------------------
State and Local Appropriation - 4.4%
Arkansas Development Finance Authority,
Correctional Facilities Rev., MBIA, 7.125s,
2010 $2,000 $2,181,360
Arkansas Development Finance Authority, Local
Government Rev., 7.1s, 2008 2,440 2,621,268
Puerto Rico Public Buildings Authority, Public
Education & Health Rev., 6.45s, 2016++++ ss 2,000 1,874,880
----------
$6,677,508
- -------------------------------------------------------------------------------
Refunded and Special Obligations - 15.8%
Arkansas Development Finance Authority, Water
& Sewer Rev., MBIA, 7s, 2001 $2,900 $3,169,642
Arkansas Development Finance Authority, Water
& Sewer Rev., MBIA, 6.4s, 2002 2,000 2,157,400
Arkansas Housing Development Agency, Single
Family Mortgage Rev., ETM, 8.375s, 2010 800 944,096
Arkansas Housing Development Agency, Single
Family Mortgage Rev., ETM, 8.375s, 2011 1,000 1,234,850
Arkansas Waste Disposal & Pollution Control
Rev., 6.25s, 2002 4,000 4,260,000
Arkansas Water Resources Development
Authority, 6.375s, 2002### 1,000 1,046,990
Beaver, AR, Water District, Benton &
Washington Counties, Water Rev., 6.625s,
1999 500 534,435
Beaver, AR, Water District, Benton &
Washington Counties, Water Rev., 6.75s, 1999 1,750 1,875,860
Harrison, AR, Residential Housing Facilities
Board, Single Family Mortgage Rev., FGIC,
ETM, 7.4s, 2011 4,000 4,614,040
Sherwood, AR, Residential Housing Facilities
Board, Single Family Mortgage Rev., MBIA,
7.5s, 2010 1,250 1,458,262
13-AR
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Refunded and Special Obligations - continued
University of Arkansas, University Rev., 7.2s,
2000 $ 2,500 $ 2,747,250
-----------
$24,042,825
- -------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 15.9%
Jefferson County, AR, Pollution Control Rev.
(Arkansas Power & Light Co.), 6.3s, 2018 $ 1,050 $ 1,068,480
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2010 2,000 2,229,700
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2010 1,000 1,079,160
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2015 6,000 6,589,500
Pope County, AR, Solid Waste Disposal Rev.
(Arkansas Power & Light Co.), 8s, 2020 1,780 1,954,369
Pope County, AR, Solid Waste Disposal Rev.
(Arkansas Power & Light Co.), FSA, 8s, 2021 3,000 3,309,990
Puerto Rico Electric Power Authority Rev.,
5.25s, 2021 3,000 2,703,330
Puerto Rico Telephone Authority Rev., AMBAC,
5.43s, 2004++++ 4,000 3,863,360
West Memphis, AR, Public Utility Systems Rev.,
MBIA, 6.6s, 2009 1,250 1,362,625
-----------
$24,160,514
- -------------------------------------------------------------------------------
Health Care Revenue - 6.1%
Baxter County, AR, Hospital Rev.,
7.5s, 2021 $ 3,145 $ 3,354,111
Little Rock, AR, Health Facilities Board
(Baptist Medical Center), 6.9s, 2009 1,400 1,531,250
Little Rock, AR, Health Facilities Board
(Baptist Medical Center), 7s, 2017 3,250 3,437,395
Pulaski County, AR, Hospital Rev. (Children's
Hospital), 6.15s, 2017 1,000 1,005,520
-----------
$ 9,328,276
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 7.0%
Blytheville, AR, Solid Waste Recycling &
Sewerage Treatment Rev. (Nucor Corp.), 6.9s,
2021 $ 2,000 $ 2,105,840
Blytheville, AR, Solid Waste Recycling &
Sewerage Treatment Rev. (Nucor Corp.),
6.375s, 2023 3,565 3,650,810
Camden, AR, Environmental Improvement Rev.
(International Paper), 7.625s, 2018 1,000 1,112,530
Jonesboro, AR, Industrial Development Rev.
(Anheuser-Busch Co.), 6.5s, 2012 3,500 3,757,285
-----------
$10,626,465
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 8.4%
Arkansas Development Finance Authority, Health
Facilities Rev. (Sisters of Mercy), MBIA,
5s, 2013 $ 6,340 $ 5,860,569
Arkansas Development Finance Authority, Health
Facilities Rev. (Sisters of Mercy), MBIA,
5s, 2019 5,500 4,922,500
North Little Rock, AR, Health Facilities Rev.
(Baptist), MBIA, 5.5s, 2021 1,000 959,560
Pulaski County, AR, Health Facilities Board
Rev. (Sisters of Charity), MBIA, 6s, 2012 1,000 1,028,710
-----------
$12,771,339
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.3%
West Memphis, AR, Public Facilities Board
Mortgage Rev., AMBAC, 0s, 2011 $ 1,090 $ 454,683
- -------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 3.7%
Little Rock, AR, Hotel & Restaurant Gross
Receipts Tax Rev., 7.375s, 2015 $ 4,790 $ 5,562,388
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 17.6%
Arkansas Development Finance Authority, Single
Family Mortgage Rev., 0s, 2011 $ 5,000 $ 1,785,050
Arkansas Development Finance Authority, Single
Family Mortgage Rev., GNMA, 7.4s, 2023 1,310 1,364,142
Arkansas Development Finance Authority, Single
Family Mortgage Rev., GNMA, 7.45s, 2027 1,710 1,838,780
Arkansas Development Finance Authority, Single
Family Mortgage Rev., GNMA, 6.1s, 2030 1,000 981,980
Arkansas Development Finance Authority, Single
Family Mortgage Rev., GNMA, FNMA, 6.7s, 2027 2,870 2,941,607
Arkansas Housing Development Agency,
Residential Mortgage Rev., 0s, 2015 21,425 3,090,128
Jefferson County, AR, Health Care &
Residential Facilities Board, 7.25s, 2011 985 1,020,844
Lonoke County, AR, Residential Housing
Facilities Board, 7.375s, 2011 262 273,098
Lonoke County, AR, Residential Housing
Facilities Board, 7.9s, 2011 945 1,022,779
Mississippi County, AR, Public Facilities
Board, Mortgage Rev., 7.2s, 2010 1,265 1,382,101
North Little Rock, AR, Residential Housing
Facilities Board, 0s, 2010 21,925 8,995,827
Pulaski County, AR, Public Facilities Board
Rev., 0s, 2014 2,750 888,085
Saline County, AR, Residential Housing
Facilities Board, 7.875s, 2011 1,030 1,092,624
-----------
$26,677,045
- -------------------------------------------------------------------------------
Student Loan Revenue - 2.7%
Arkansas Student Loan Authority Rev., 7.15s,
2002 $ 835 $ 878,295
Arkansas Student Loan Authority Rev., 6.75s,
2006 1,190 1,221,820
Arkansas Student Loan Authority Rev., 6.25s,
2010 2,000 2,000,120
-----------
$ 4,100,235
- -------------------------------------------------------------------------------
Universities - 0.7%
Conway, AR, Public Facilities Rev., (Hendrix
College), 5.85s, 2016 $ 1,000 $ 995,190
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 10.0%
Arkansas Development Finance Authority, Water
& Sewer Rev., MBIA, 5s, 2012 $ 1,000 $ 949,650
Arkansas Development Finance Authority, Water
& Sewer Rev., MBIA, 5s, 2015 2,000 1,853,040
Arkansas Water Resources Development
Authority, 6.375s, 2021 1,000 1,044,660
Beaver, AR, Water District, Benton &
Washington Counties, Water & Sewer Rev.,
MBIA, 5.85s, 2008 2,000 2,068,100
Fort Smith, AR, Water & Sewer Rev., MBIA, 6s,
2012 2,250 2,341,777
Russellville, AR, Water Systems Rev., AMBAC,
6.25s, 2012 1,365 1,428,950
South Sebastian County, AR, Water Users Assn.,
5.95s, 2013 2,425 2,419,932
14-AR
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - continued
South Sebastian County, AR, Water Users Assn.,
6.15s, 2023 $1,000 $ 1,007,070
Texarkana, AR, Public Facilities Board,
Waterworks Facilities Rev.,
MBIA, 7s, 2007 2,000 2,058,640
-----------
$ 15,171,819
- -------------------------------------------------------------------------------
Miscellaneous Revenue - 2.7%
Arkansas Development Finance Authority,
Wastewater & Sewer Rev., 5.85s, 2019 $3,130 $ 3,114,068
Little Rock, Wastewater & Sewer Rev., 5.8s,
2016 1,000 1,000,640
------------
$ 4,114,708
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $144,066,525) $149,145,003
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.9%
- -------------------------------------------------------------------------------
Unita County, WY, Pollution Control Rev.
(Chevron), due 8/15/20, at Identified Cost $1,300 $ 1,300,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $145,366,525) $150,445,003
Other Assets, Less Liabilities - 0.9% $ 1,365,753
- -------------------------------------------------------------------------------
Net Assets - 100.0% $151,810,756
- -------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
Portfolio of Investments - March 31, 1997
MFS CALIFORNIA MUNICIPAL BOND FUND
Municipal Bonds - 93.9%
- -------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------
General Obligations - 7.3%
Palos Verdes, CA, Library District, 6.7s, 2016 $1,250 $ 1,313,063
State of California, 10s, 2007 1,055 1,465,300
State of California, 6.5s, 2010 1,235 1,359,043
State of California, 5.25s, 2017 2,500 2,333,225
State of California, AMBAC, 7.2s, 2008 1,600 1,863,408
State of California, AMBAC, 6.3s, 2010 6,000 6,532,680
State of California, AMBAC, 7s, 2010 2,000 2,311,800
State of California, FGIC, 5.25s, 2014 1,000 949,140
Walnut Valley, CA, AMBAC, 6s, 2011 1,600 1,676,448
-----------
$19,804,107
- -------------------------------------------------------------------------------
State and Local Appropriation - 13.4%
Banning, CA, Certificates of Participation,
Water System Improvement, AMBAC, 8s, 2019 $1,000 $ 1,275,840
California Public Works Board, Lease Rev.,
5.375s, 2013 2,000 1,913,800
California Public Works Board, Lease Rev.
(Department of Corrections), 7.4s, 2010 5,000 5,844,600
Fortuna, Parlier & Susanville, CA,
Certificates of Participation, "B", 7.375s,
2017 930 970,976
Grossmont, CA, Union High School District,
Certificates of Participation, MBIA, 0s,
2006 6,000 3,586,740
Los Angeles, CA, Building Authority, MBIA,
5.625s, 2011 3,375 3,428,122
Los Angeles, CA, Convention & Exhibition
Center Authority, Certificates of
Participation, AMBAC, 0s, 2005 2,400 1,558,968
Pasadena, CA, Certificates of Participation
(Pasadena Parking Facilities), 6.25s, 2018 $3,460 $ 3,565,461
Pomona, CA, Public Financing, 6.25s, 2010 4,020 4,099,556
Riverside County, CA, Asset Leasing Corp.,
"A", 6.25s, 2019 1,210 1,211,561
San Bernardino County, California Certificates
(Medical Center Financing), 5.5s, 2024 3,400 3,092,096
San Joaquin County, CA, Certificates of
Participation (General Hospital), 6.625s,
2020 2,000 2,064,460
Tulare County, CA, Certificates of
Participation (Capital Improvements
Program), MBIA, 6s, 2016 1,000 1,010,600
Visalia, CA, Utility Systems Department,
Certificates of Participation, MBIA, 0s,
2005 4,655 2,953,225
-----------
$36,576,005
- -------------------------------------------------------------------------------
Refunded and Special Obligations - 14.0%
Apple Valley, CA, Hospital Rev. (St. Mary's
Hospital), Certificates of Participation,
6.75s, 2001 $4,880 $ 5,364,438
California Educational Facilities Authority
Rev. (St. Mary's College), 7.5s, 2000 1,000 1,112,090
California Health Facilities Financing
Authority (Aids Hospice Foundation), CHFC,
7.15s, 2000 2,960 3,206,065
California Health Facilities Financing
Authority (St. Joseph Hospital), 6.75s, 2001 2,710 2,967,965
California Health Facilities Financing
Authority (Valley Memorial Hospital), 7.9s,
1997 500 511,535
California Statewide Community Development
Authority Rev., Certificates of
Participation (United Western Medical
Center), CHFC, 6.75s, 2001 3,000 3,305,460
Corona, CA, Certificates of Participation
(Corona Community Hospital), 8s, 2005 585 697,209
Hemet Valley, CA, Hospital District (Moreno
Valley Regional Medical Center), 8.25s, 1998 4,380 4,682,264
Los Angeles, CA, Convention & Exhibition
Center Authority, Certificates of
Participation, 9s, 2005 1,900 2,424,115
Los Angeles County, CA, Redevelopment Agency
Rev., Tax Allocation, ETM, MBIA, 0s, 2013 3,380 1,246,577
Mojave, CA, Water Agency Rev. (Morongo Basin),
6.6s, 2002 1,400 1,545,362
Northern California Power Agency, Public Power
Rev. (Hydro-Electric), 8s, 1998 290 303,989
Pomona, CA, Public Financing Authority Rev.,
"J", 7.875s, 2000 3,155 3,541,046
Pomona, CA, Single Family Mortgage Rev., FNMA,
GNMA, 7.375s, 2010 2,000 2,307,100
Pomona, CA, Single Family Mortgage Rev., GNMA,
7.5s, 2000 2,000 2,422,280
Southern California Public Power Transmission
Rev., Zero Coupon Prerefunded Series A, 2005 3,795 2,479,425
-----------
$38,116,920
- -------------------------------------------------------------------------------
15-CA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Airport and Port Revenue - 11.8%
California Maritime Infrastructure, San
Diegouni Port District, AMBAC, 5.375s, 2012 $3,250 $ 3,121,463
Long Beach, CA, Harbor Department Rev., MBIA,
5.375s, 2020 5,000 4,593,650
Los Angeles, CA, Department Airports Rev.,
Ontario International Airport, FGIC, 6s,
2017 6,600 6,616,038
Los Angeles, CA, Harbor Department Revenue,
5.375s, 2015 5,000 4,667,500
Los Angeles, CA, Harbor Department Rev.,
6.625s, 2025 2,000 2,092,220
Port Oakland, CA, Port Rev., MBIA, 5.5s, 2011 6,000 5,874,420
Port Oakland, CA, Port Rev., MBIA, 6.5s, 2016 1,000 1,047,360
San Francisco, CA, City & County Airports
Commission, International Airport Rev.,
FGIC, 6.5s, 2019 4,000 4,204,600
-----------
$32,217,251
- -------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 5.6%
California Pollution Control Financing
Authority Rev., 6.625s, 2009 $1,000 $ 1,057,190
Los Angeles, CA, Department of Water & Power,
Electric Plant Rev., 7.25s, 2030 1,000 1,095,660
Los Angeles, CA, Department of Water & Power,
Electric Plant Rev., 7.1s, 2031 1,050 1,148,175
M-S-R Public Power Agency (San Juan), MBIA,
6.75s, 2020 3,000 3,353,040
Redding California Joint Powers Financing
Authority, MBIA, 5.25s, 2015 1,000 937,410
Southern California Public Power Authority
(Southern Transmission Project), 0s, 2005 4,205 2,646,753
Southern California Public Power Authority,
Transmission Project Rev., RIBS, 7.812s,
2012++++ 5,000 5,133,500
-----------
$15,371,728
- -------------------------------------------------------------------------------
Health Care Revenue - 3.1%
California Health Facilities Financing
Authority (Downey Community Hospital),
5.625s, 2008 $3,000 $ 2,942,460
California Health Facilities Financing
Authority (Kaiser Permanente), 7s, 2018 1,000 1,061,850
California Statewide Community Development
Authority (St. Joseph's), 6.625s, 2021 4,205 4,427,192
-----------
$ 8,431,502
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 0.4%
California Pollution Control Financing
Authority (Frito-Lay, Inc.), 6.375s, 2004 $1,025 $ 1,090,323
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 5.6%
California Health Facilities Financing
Authority (American Baptist Homes West),
CHFC, 7.65s, 2014 $4,420 $ 4,611,121
California Health Facilities Financing
Authority (Sutter Health), MBIA, 7s, 2009 1,000 1,052,980
California Health Facilities Financing
Authority (Unihealth America), AMBAC,
7.625s, 2015 45 47,549
California Statewide Community Development
Authority, Certificates of Participation,
CHFC, 0s, 2007 6,645 3,482,844
California Statewide Community Development
Authority, Certificates of Participation,
CHFC, 0s, 2008 $6,345 $ 3,090,015
Desert Hospital District, CA, Hospital Rev.
(Desert Hospital Corp.), Certificates of
Participation, FSA, MVRIC, 9.104s, 2020++++ 3,000 3,127,110
-----------
$15,411,619
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 6.4%
California Housing Finance Agency (Multi-Unit
Rental Housing),
6.7s, 2015 $2,750 $ 2,857,250
Palmdale, CA, Multi-Family Housing Rev., FNMA,
7.375s, 2024 1,000 1,061,030
Thousand Oaks, CA, Redevelopment Agency
(Shadow Hills Project), 7s, 2021 8,900 9,185,156
Yolo County, CA, Housing Authority Mortgage
Rev. (Walnut Park Apartments), FHA, 7.2s,
2033 4,150 4,375,511
-----------
$17,478,947
- -------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 1.8%
Los Angeles County CA, Metropolitan
Transportation Authority Rev., Refunding
General Union Station "A", FSA, 5.25s, 2013 $5,245 $ 5,016,790
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 2.7%
California Housing Finance Agency, 7.75s, 2010 $ 905 $ 953,978
California Housing Finance Agency, "A", 6s,
2020 2,500 2,471,800
California Housing Finance Agency, MBIA, 6s,
2010 1,400 1,402,772
California Housing Finance Agency, MBIA, 6s,
2016 2,000 1,990,260
Riverside, CA, Single Family Mortgage Rev.,
0s, 2014 625 94,804
San Bernardino County, CA, Single Family
Mortgage Rev., GNMA, 7.65s, 2023 225 233,806
Santa Ana, CA, Home Mortgage Rev., "A", FGIC,
8.875s, 2017 5 5,115
Southern California Home Finance Authority,
Single Family Mortgage Rev., GNMA, 7.625s,
2023 225 236,131
-----------
$ 7,388,666
- -------------------------------------------------------------------------------
Special Assessment District - 3.3%
Anaheim, CA, Public Finance Authority Rev.
(Redevelopment Project Alpha), MBIA, 0s,
2005 $3,210 $ 2,045,123
Brea, CA, Public Finance Authority Rev., MBIA,
0s, 2005 2,235 1,454,717
Brea, CA, Public Finance Authority Rev., MBIA,
0s, 2006 3,415 2,101,693
Concord, CA, Redevelopment Agency, Tax
Allocation, BIGI, 8s, 2018 40 42,378
Santa Cruz County, CA, Redevelopment Agency,
Subordinated Linve Oak/Soquel Community,
5.6s, 2017 1,455 1,363,961
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2007 1,150 658,904
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2008 1,125 604,294
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2009 1,175 590,555
-----------
$ 8,861,625
- -------------------------------------------------------------------------------
16-CA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Turnpike Revenue - 2.0%
Foothill/Eastern Transportation Corridor
Agency, CA, 0s, 2011 $ 5,000 $ 3,234,700
Foothill/Eastern Transportation Corridor
Agency, CA, 0s, 2020 10,000 2,291,100
------------
$ 5,525,800
- -------------------------------------------------------------------------------
Universities - 2.6%
California Education Facilities Authority Rev.
(College & University), 6s, 2012 $ 1,400 $ 1,371,566
California State University Housing System
Rev., 6.75s, 2010 1,705 1,821,435
California State University Housing System
Rev., 6.75s, 2011 3,570 3,813,795
------------
$ 7,006,796
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 9.6%
California Department of Water Resources,
Central Valley Project Rev., 7s, 2012 $ 1,495 $ 1,697,363
Fairfield-Suisun, CA, Sewer District Rev.,
MBIA, 0s, 2006 2,080 1,291,098
Metropolitan Water District, Linked Savers,
RIBS, 5.75s, 2018 10,000 9,854,500
Metropolitan Water District, South California,
5.75s, 2009 3,000 3,152,370
Metropolitan Water District, Waterworks Rev.,
5s, 2020 9,000 7,846,020
Pittsburg, CA, Public Financing Authority,
5.125s, 2015 2,700 2,507,733
------------
$ 26,349,084
- -------------------------------------------------------------------------------
Miscellaneous Revenue - 4.3%
California Public Capital Improvements
Financing Authority Rev., BIGI, 8.1s, 2018 $ 1,855 $ 1,938,419
Los Angeles County, CA, Public Works Rev.,
MBIA, "A", 5.25s, 2014 6,860 6,476,801
Los Angeles County, CA, Public Works Rev.,
MBIA, "A", 5.25s, 2016 1,230 1,150,198
South Coast Air Quality Management District,
AMBAC, 0s, 2005 3,480 2,255,840
------------
$ 11,821,258
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $245,674,326) $256,468,421
- -------------------------------------------------------------------------------
Rights - 0.1%
Shares
- -------------------------------------------------------------------------------
State of New Jersey, "D", due 2003,
(Identified Cost, $255,000) 2,000 $ 291,000
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.7%
Principal Amount
(000 Omitted)
- -------------------------------------------------------------------------------
California Health Facilities Financing
Authority Rev. (St. Joseph
Health Systems), "A", due 7/01/13 $ 2,835 $ 2,835,000
California Pollution Control Financing
Authority Rev. (Shell Oil Corp.), due
10/01/11 1,250 1,250,000
California Statewide Community Development
Authority (Sutter Health Obligation Group),
due 7/01/15 2,800 2,800,000
Orange County, CA, Sanitation District, due
8/01/16 600 600,000
- -------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 7,485,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $253,414,326) $264,244,421
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - 3.3% $ 8,917,253
- -------------------------------------------------------------------------------
Net Assets - 100.0% $273,161,674
- -------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
Portfolio of Investments - March 31, 1997
MFS FLORIDA MUNICIPAL BOND FUND
Municipal Bonds - 95.8%
- -------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------
General Obligations - 11.2%
Broward County, FL, Expressway Authority,
9.875s, 2009 $1,100 $ 1,557,314
Florida Board of Education, Capital Outlay,
9.125s, 2014 2,600 3,574,038
Marion County, FL, Public Improvement Rev.,
FSA, 5.3s, 2014 1,250 1,195,588
Palm Beach County, FL, 6.5s, 2010 2,000 2,183,140
State of Florida, Jacksonville Transportation,
6.4s, 2022 2,000 2,118,061
-----------
$10,628,141
- -------------------------------------------------------------------------------
State and Local Appropriation - 4.4%
Bay County, FL, School Board, Certificates of
Participation, AMBAC, 6.75s, 2012 $1,000 $ 1,107,600
Palm Beach County, FL, School Board
Certificates of Participation, AMBAC,
5.375s, 2015 1,000 955,270
Palm Beach County, FL, School Board,
Certificates of Participation, AMBAC,
6.375s, 2015 2,000 2,100,920
-----------
$ 4,163,790
- -------------------------------------------------------------------------------
Refunded and Special Obligations - 11.2%
Altamonte Springs FL, Health Facilities
Hospital Rev., ETM, "1", 5.7s, 2012 $1,175 $ 1,197,818
Brevard County, FL, Health Facilities
Authority Rev. (Wuesthoff Memorial), "B",
MBIA, 7.2s, 2002 1,000 1,122,190
Broward County, FL, School District, 7.125s,
1999 250 266,765
Charlotte County, FL Utility Rev., FGIC,
6.875s, 2003 500 563,750
Florida Board of Education, Capital Outlay,
7.25s, 2000 510 557,654
Florida Board of Education, Capital Outlay,
ETM, 9.125s, 2014 400 553,640
Florida Turnpike Authority Rev. (Fitch Light),
AMBAC, 7.125s, 2001 1,250 1,384,275
Gainesville, FL, Utility Systems Rev., AMBAC,
7.25s, 1998 500 531,790
Hillsborough County, FL, Capital Improvement
Rev. (County Center Project), 6.75s, 2002 1,500 1,647,900
Orange County, FL, Tourist Development Tax
Rev., AMBAC, 7.25s, 2000 500 550,340
Puerto Rico Electric Power Authority Rev., 7s,
2001 240 265,620
Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.625s, 2002 1,000 1,098,750
Puerto Rico Highway & Transportation
Authority, Highway Rev., 6.625s, 2002 100 109,875
Puerto Rico Public Buildings Authority Rev.,
6.875s, 2002 740 821,578
-----------
$10,671,945
- -------------------------------------------------------------------------------
17-FL
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Airport and Port Revenue - 5.8%
Dade County, FL, Aviation Authority Rev.
(Miami International), MBIA, 6.6s, 2022 $ 500 $ 530,895
Municipal Bonds - continuedHillsborough
County, FL, Aviation Authority Rev. (Delta
Airlines), 6.8s, 2024 1,500 1,533,150
Hillsborough County, FL, Aviation Authority
Rev. (Tampa International Airport), FGIC,
5.875s, 2015 750 750,915
Hillsborough County, FL, Aviation Authority
Rev. (USAir), 8.6s, 2022 2,400 2,650,032
------------
$ 5,464,992
- -------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 24.7%
Escambia County, FL, Utility Systems Rev.,
FGIC, 0s, 2015 $2,000 $ 711,460
Escambia County, FL, Utility Systems Rev.,
FGIC, 6.25s, 2015 1,500 1,606,605
Hillsborough County, FL, Industrial
Development Authority, Pollution Control
Rev. (Tampa Electric Co.), 8s, 2022 3,000 3,445,440
Jacksonville, FL, Electric Authority Rev.
(St. Johns River Power), 0s, 2010 4,995 2,324,223
Lakeland, FL, Electricity & Water Rev.,
Capital Appreciation, 0s, 2011 5,000 2,161,450
Lakeland, FL, Electricity & Water Rev.,
Capital Appreciation, 0s, 2012 3,000 1,211,130
Martin County, FL, Industrial Development
Authority (Indiantown Cogeneration
Project), 7.875s, 2025 3,625 4,116,659
Orlando, FL, Utility Commission, Water &
Electric Rev., 6.75s, 2017 1,500 1,697,025
Palm Beach County, FL, Solid Waste Development
(Osceola Power Project), 6.85s, 2014 2,000 1,547,720
Puerto Rico Electric Power Authority Rev.,
FSA, 6s, 2016 2,000 2,041,380
Puerto Rico Electric Power Authority Rev.,
MBIA, 6.125s, 2008 2,400 2,593,752
-----------
$23,456,844
- -------------------------------------------------------------------------------
Health Care Revenue - 8.3%
Brevard County, FL, Health Facilities
Authority Rev. (Friendly Village), 9.25s,
2012 $ 375 $ 387,368
Escambia County, FL, Health Facilities Rev.
(Baptist Hospital), 6s, 2014 2,500 2,432,975
Escambia County, FL, Health Facilities Rev.
(Baptist Hospital & Baptist Manor), 6.75s,
2014 1,000 1,034,720
Jacksonville, FL, Health Facilities Authority,
Industrial Development Rev. (Cypress
Village), 7s, 2014 1,250 1,299,250
Jacksonville, FL, Health Facilities Authority,
Industrial Development Rev. (National
Benevolent), 6.4s, 2016 1,825 1,821,423
Orange County, FL, Industrial Development
Authority Rev. (Friendly Village), 9.25s,
2012 335 345,971
St. Petersburg, FL, Health Facilities Rev.
(Swanholm Nursing), 10s, 2022 490 553,337
-----------
$ 7,875,044
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 2.2%
Escambia County, FL, Pollution Control
Rev. (Champion International Corp.),
6.95s, 2007 $1,000 $ 1,069,570
Escambia County, FL, Pollution Control Rev.
(Champion International Corp.), 6.85s, 2012 1,000 1,061,680
-----------
$ 2,131,250
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 12.0%
Brevard County, FL, Health Facilities
Authority Rev. (Wuesthoff Memorial), MBIA,
6.5s, 2007 $1,000 $ 1,078,700
Brevard County, FL, Health Facilities
Authority Rev. (Wuesthoff Memorial), MBIA,
5s, 2013 1,000 927,640
Charlotte County, FL, Health Care Facilities
Rev. (Bon Secours), FSA, 8.167s, 2027++++ 2,500 2,484,525
Hillsborough County, FL, Industrial
Development Rev. (University Community
Hospital), MBIA, 6.5s, 2019 1,000 1,089,800
Jacksonville, FL, Hospital Rev. (Baptist
Medical Center), MBIA, 7.3s, 2019 1,900 2,019,605
Jacksonville, FL, Hospital Rev. (University
Medical Center), Connie Lee, 6.6s, 2013 500 528,490
North Broward, FL, Hospital District Rev.,
Refunding & Improvement, MBIA, 5.375s, 2024 1,165 1,078,673
Tallahassee, FL, Health Facilities Authority
Rev. (Tallahassee Memorial Regional Medical
Center), MBIA, 6.625s, 2013 1,000 1,096,670
Tampa, FL, Allegheny Health System
(St. Joseph), MBIA, 6.5s, 2023 1,000 1,081,600
-----------
$11,385,703
- -------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.4%
Dade County, FL, Special Obligation, Capital
Appreciation Board, AMBAC, 0s, 2027 $5,500 $ 805,200
Jacksonville, FL, Excise Taxes Rev., FGIC, 0s,
2010 1,000 461,040
Jacksonville, FL, Excise Taxes Rev., FGIC, 0s,
2011 1,000 431,680
Puerto Rico Highway & Transportation Authority
Rev., MBIA, 5.5s, 2008 1,000 976,840
Puerto Rico Highway & Transportation Authority
Rev., MBIA, 5.5s, 2015 1,500 1,487,745
-----------
$ 4,162,505
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 0.9%
Dade County, FL, Housing Finance Authority,
Mortgage Rev., FNMA, GNMA, 7s, 2024 $ 75 $ 77,888
Dade County, FL, Housing Finance Authority,
Mortgage Rev., FSA, 6.95s, 2012 765 805,622
-----------
$ 883,510
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 6.0%
Lee County, FL, Industrial Development
Authority Rev. (Bonita Springs Utilities
Project), MBIA, 6.05s, 2015 $1,000 $ 1,017,000
Miramar, FL, Wastewater Improvement Rev.,
FGIC, 6.75s, 2016 1,500 1,627,830
Seminole, FL, Water & Sewer Improvement Rev.,
MBIA, 6s, 2019 3,000 3,101,880
-----------
$ 5,746,710
- -------------------------------------------------------------------------------
18-FL
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Miscellanous Revenue - 4.7%
Dade County, FL, Solid Waste Special
Obligation, Rev., AMBAC, 5.125s, 2010 $1,250 $ 1,198,013
Florida Department Environmental Preservation
Rev., MBIA, 5.5s, 2012 2,295 2,292,590
Palm Beach County, FL, Solid Waste Authority
Rev., "B", AMBAC,
5.375s, 2011 1,000 971,490
-----------
$ 4,462,093
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $87,398,925) $91,032,527
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.9%
- -------------------------------------------------------------------------------
Hillsborough County, FL, Pollution Control
Rev. (Tampa Electric Co.), due 5/15/18 $2,600 $ 2,600,000
St. Lucie County, FL, Pollution Control Rev.
(Power & Light Co.), due 3/01/27 200 200,000
- -------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,800,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost,
$90,198,925) $93,832,527
Other Assets, Less Liabilities - 1.3% 1,210,054
- -------------------------------------------------------------------------------
Net Assets - 100.0% $95,042,581
- -------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
Portfolio of Investments - March 31, 1997
MFS GEORGIA MUNICIPAL BOND FUND
Municipal Bonds - 94.9%
- -------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------
General Obligation - 9.0%
Fayette County, GA, School District, 6.125s,
2015 $1,500 $1,557,210
Fulton County, GA, School District, 6.375s,
2010 2,000 2,178,060
Fulton County, GA, School District, 6.375s,
2012 1,000 1,087,400
Fulton County, GA, School District, 6.375s,
2016 1,000 1,076,540
Territory of Virgin Islands, 7.75s, 2006 390 419,472
-----------
$6,318,682
- -------------------------------------------------------------------------------
State and Local Appropriation - 2.0%
Fulton County, GA, Building Authority Rev.
(Judicial Center), 0s, 2011 $3,000 $1,367,100
- -------------------------------------------------------------------------------
Refunded and Special Obligations - 10.9%
Columbia County, GA, Water and Sewer Rev.,
AMBAC, 6.9s, 2011 $1,000 $1,097,470
DeKalb County, GA, 7.5s, 2000 780 850,746
Hogansville, GA, Combined Public Utility
Systems Rev., 9s, 2000 2,200 2,536,666
Marietta, GA, Development Authority Rev. (Life
College, Inc.), CAPGTY, 7.2s, 1999 1,000 1,086,530
Marietta, GA, Development Authority Rev. (Life
College, Inc.), CAPGTY, 7.25s, 1999 1,000 1,087,770
Richmond County, GA, Development Authority
Rev., ETM, MBIA, 0s, 2021 5,000 934,000
-----------
$7,593,182
- -------------------------------------------------------------------------------
Airport and Port Revenue - 12.5%
Atlanta, GA, Airport Facilities Rev., 6.25s,
2021 $ 500 $ 502,905
Atlanta, GA, Airport Facilities Rev., AMBAC,
0s, 2010 6,000 2,799,600
Atlanta, GA, Airport Facilities Rev., MBIA,
0s, 2010 $5,100 $2,379,660
Atlanta, GA, Special Purpose Facilities Rev.
(Delta Airlines), 7.9s, 2018 1,000 1,071,480
Clayton County, GA, Development Authority,
Special Facilities Rev. (Delta Airlines),
7.625s, 2020 500 526,630
Puerto Rico Ports Authority (American
Airlines), 6.25s, 2026 1,425 1,430,386
-----------
$8,710,661
- -------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 13.1%
Appling County, GA, Development Authority
Pollution (Ogelthorpe Power Corp.), MBIA,
7.15s, 2021 $1,400 $1,539,818
Burke County, GA, Development Authority,
Pollution Control Rev. (Georgia Power
Vogel), 8.375s, 2017 1,000 1,028,130
Georgia Municipal Electric Authority, Power
Rev., AMBAC, 5.5s, 2009 1,225 1,238,157
Georgia Municipal Electric Authority, Power
Rev., AMBAC, 0s, 2013 1,675 674,623
Georgia Municipal Electric Authority, Power
Rev., BIGI, 0s, 2008 2,500 1,389,550
Georgia Municipal Electric Authority, Power
Rev., BIGI, 0s, 2009 1,500 780,450
Georgia Municipal Electric Authority, Power
Rev., MBIA, 6.5s, 2020 1,250 1,374,862
Monroe County, GA, Development Authority,
Pollution Control Rev. (Oglethorpe Power),
6.8s, 2012 1,000 1,111,410
------------
$9,137,000
- -------------------------------------------------------------------------------
Health Care Revenue - 4.1%
Richmond County, GA, Development Authority,
Nursing Home Refunding (Beverly
Enterprises), 8.75s, 2011 $1,190 $1,288,877
Royston, GA, Hospital Authority Rev. (Cobb
Health), 7.375s, 2014 1,565 1,620,479
-----------
$2,909,356
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 17.8%
Adel County, GA, Industrial Development
Authority, Pollution Control Rev.
(Weyerhaeuser Co.), AMBAC, 9s, 2006 $1,000 $1,018,140
Cartersville, GA, Development Authority Rev.,
Water & Wastewater Facilities,
(Anheuser-Busch Cos., Inc.), 7.4s, 2010 500 592,475
Cartersville, GA, Development Authority Rev.,
Water & Wastewater Facilities
(Anheuser-Busch Cos., Inc.), 6.75s, 2012 1,000 1,064,140
Effingham County, GA, Development Authority,
Pollution Control Rev. (Fort Howard Corp.),
7.9s, 2005 1,750 1,835,802
Emanuel County, GA, Development Authority
(Figgie Properties), 7.95s, 2004 475 473,409
Richmond County, GA, Development Authority
(International Paper Company), 5.8s, 2020 2,500 2,379,175
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Hershey Foods
Corp.), 6.6s, 2012 1,150 1,220,564
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Stone Container
Corp.), 7.4s, 2026 750 770,280
19-GA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - continued
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Union Camp
Corp.), 6.15s, 2017 $1,000 $ 1,032,440
Savannah, GA, Port Authority, Pollution
Control Rev. (Union Carbide Corp.), 7.55s,
2004 1,000 1,002,210
Wayne County, GA, Solid Waste Rev.
(ITT-Rayonier, Inc.), 8s, 2015 1,000 1,086,570
-----------
$12,475,205
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 2.1%
Albany-Dougherty County Georgia Hospital
Authority Rev. (Phoebe Putney Memorial
Hospital, Inc.) CARS, AMBAC, 7.47s, 2013++++ $1,550 $ 1,474,717
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.8%
Cobb County, GA, Housing Authority Rev.
(Signature Place Project), 6.875s, 2017 $1,500 $ 1,540,830
Hinesville, GA, Leased Housing Corp. Rev.
(Baytree Apartments), FHA, 6.7s, 2017 900 935,316
St. Mary's, GA (Cumberland Oaks Apartments),
FNMA, 7.375s, 2022 1,470 1,543,559
-----------
$ 4,019,705
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 2.8%
DeKalb County, GA, Housing Authority, Single
Family Mortgage Rev., GNMA, 7.75s, 2022 $ 495 $ 520,873
Georgia Housing & Finance Authority, 0s, 2031 7,775 636,928
Georgia Residential Finance Authority Rev.,
8s, 2020 360 377,903
Georgia Residential Finance Authority Rev.,
7.25s, 2021 365 386,225
-----------
$ 1,921,929
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 12.5%
Barnesville, GA, Water and Sewer Rev., 6.9s,
2022 $1,715 $ 1,782,074
Brunswick, GA, Water and Sewer Rev., MBIA,
6.1s, 2014 1,000 1,047,200
Cartersville, GA, Water and Sewer Rev., AMBAC,
7.2s, 2012 2,225 2,385,133
Fulton County, GA, Water and Sewer Rev., FGIC,
6.375s, 2014 3,250 3,516,955
-----------
$ 8,731,362
- -------------------------------------------------------------------------------
Miscellaneous Revenue - 2.3%
George L. Smith II/Georgia World Congress
Center Authority (Domed Stadium Project),
7.875s, 2020 $1,475 $ 1,608,783
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $62,373,938) $66,267,682
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.2%
- -------------------------------------------------------------------------------
Burke County, Development Authority, Pollution
Control Rev., due 9/01/26 $ 700 $ 700,000
Georgia Hospital Financing Authority Rev.
(Hospital Loan Program), due 3/01/01 858 858,000
- -------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,558,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $63,931,938) $67,825,682
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - 2.9% $ 2,011,942
- -------------------------------------------------------------------------------
Net Assets - 100.0% $69,837,624
- -------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
Portfolio of Investments - March 31, 1997
MFS MARYLAND MUNICIPAL BOND FUND
Municipal Bonds - 95.5%
- -------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------
General Obligation - 12.6%
Anne Arundel County, MD, 4.9s, 2011 $1,005 $ 940,841
Baltimore, MD, Consolidated Public
Improvement, 7.15s, 2009 2,120 2,447,243
Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.3s, 2009 700 690,032
Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.3s, 2010 815 795,245
Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.375s, 2011 900 879,516
Baltimore, MD, Consolidated Public
Improvement, FGIC, 5.375s, 2013 770 746,299
Baltimore, MD, Consolidated Public
Improvement, MBIA, 7s, 2009 1,000 1,148,730
Howard County, MD, Metropolitan District, 0s,
2008 1,975 1,076,493
Montgomery County, MD, Public Improvement, 0s,
2009 4,000 2,058,320
Prince George's County, MD, 0s, 2007 5,110 2,977,750
Prince George's County, MD, Public
Improvement, AMBAC, 5.5s, 2013 1,000 993,260
State of Maryland, 9s, 1999 350 387,356
Washington, MD, Suburban Sanitation District,
6.1s, 2015 1,070 1,115,422
Washington, MD, Suburban Sanitation District,
5.25s, 2016 865 817,736
Washington, MD, Suburban Sanitation District,
5.625s, 2020 1,000 975,260
-----------
$18,049,503
- -------------------------------------------------------------------------------
State and Local Appropriation - 14.7%
Calvert County, MD, Community Lease Rev.,
7.2s, 2010 $ 750 $ 809,670
Howard County, MD, Certificates of
Participation, 8.15s, 2021 450 579,672
Howard County, MD, Certificates of
Participation, "A", 8s, 2019 805 1,016,095
Howard County, MD, Certificates of
Participation, "B", 8s, 2019 385 485,959
Howard County, MD, Certificates of
Participation, "C", 8s, 2019 680 858,316
Maryland Stadium Authority, Sports Facilities
Leasing Rev., 7.6s, 2019 2,580 2,774,661
Maryland Stadium Authority, Sports Facilities
Leasing Rev., AMBAC, 5.875s, 2012 1,000 1,017,020
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2005 2,495 1,620,677
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2006 2,490 1,535,135
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2011 3,675 1,643,681
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2004 980 675,455
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2006 1,800 1,109,736
20-MD
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
State and Local Appropriation - continued
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2009 $ 1,500 $ 768,315
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2010 2,730 1,307,042
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2011 2,810 1,265,568
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2012 2,000 845,420
Puerto Rico Public Buildings Authority,
Education & Health Rev., 6.45s, 2016ss 3,000 2,812,320
-----------
$21,124,742
- -------------------------------------------------------------------------------
Refunded and Special Obligations - 11.1%
Baltimore, MD, Water Utility Rev., MBIA, 6.5s,
2000 $ 540 $ 570,045
Howard County, MD, Metropolitan District,
7.15s, 2000 500 540,475
Maryland Health & Higher Education Facilities
Authority Rev. (Sinai Hospital/ Baltimore),
7s, 2000 2,000 2,175,560
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland
Medical System), FGIC, 6.5s, 2001 1,000 1,067,250
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland
Medical System), FGIC, 7s, 2001 1,840 2,028,913
Montgomery County, MD, Revenue Authority Lease
Rev. (Regional Indoor Swim Center), 7.6s,
1998 750 786,975
Morgan, MD, State University Academic &
Auxiliary Facilities & Fees Rev., MBIA, 0s,
2006 1,135 707,911
Morgan, MD, State University Academic &
Auxiliary Facilities & Fees Rev., MBIA, 0s,
2008 1,400 771,456
Prince George's County, MD, Hospital Rev.
(Dimensions Health Corp.), 7.25s, 2002 2,000 2,252,800
Puerto Rico Aqueduct & Sewer Authority Rev.,
10.25s, 2009 500 679,235
Puerto Rico Electric Power Authority Rev., 8s,
1998 500 533,640
Puerto Rico Electric Power Authority Rev., 7s,
2001 1,000 1,106,750
Puerto Rico Public Improvement Rev., 6.8s,
2002 1,500 1,660,185
Washington, MD, Suburban Sanitation District,
6.9s, 2001 1,045 1,146,856
-----------
$16,028,051
- -------------------------------------------------------------------------------
Health Care Revenue - 11.7%
Berlin, MD, Hospital Rev. (Atlantic General
Hospital), 8.375s, 2022 $ 1,360 $ 1,403,153
Maryland Health & Higher Education Facilities
Authority Rev. (Doctors Community Hospital),
5.5s, 2024 2,000 1,790,060
Maryland Health & Higher Education Facilities
Authority Rev. (Good Samaritan Hospital),
5.7s, 2009 1,085 1,098,432
Maryland Health & Higher Education Facilities
Authority Rev. (Johns Hopkins Hospital), 0s,
2010 2,000 954,920
Maryland Health & Higher Education Facilities
Authority Rev. (Johns Hopkins Hospital), 5s,
2023 2,250 1,951,290
Maryland Health & Higher Education Facilities
Authority Rev. (Kennedy Institute), 6.75s,
2022 $ 500 $ 507,320
Maryland Health & Higher Education Facilities
Authority Rev. (Medlantic Hospital Care),
8.375s, 2014 3,540 3,635,722
Prince George's County, MD, Hospital Rev.
(Dimensions Health Corp.), 5.3s, 2024 3,000 2,671,650
Prince George's County, MD, Hospital Rev.
(Greater Southeast Healthcare System),
6.375s, 2023 2,900 2,798,152
-----------
$16,810,699
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 4.5%
Baltimore, MD, Industrial Revenue Board
(Weyerhaeuser), 9s, 2006 $ 3,150 $ 3,202,322
Baltimore, MD, Port Facilities Rev. (duPont
(E.I.) de Nemours & Co.), 6.5s, 2011 1,500 1,605,540
Cecil County, MD, Commissioners Industrial
Development Revenue Board, 5.25s, 2006 1,000 998,150
Upper Potomac, MD, River Commission, Pollution
Control Rev. (Westvaco), 10.5s, 2004 150 156,954
Upper Potomac, MD, River Commission, Pollution
Control Rev. (Westvaco), 9.125s, 2015 500 517,835
-----------
$ 6,480,801
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 6.4%
Maryland Health & Higher Education Facilities
Authority Rev. (Frederick Memorial
Hospital), FGIC, 5.25s, 2013 $ 4,550 $ 4,407,539
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland
Medical Center), FGIC, 5s, 2020 1,000 886,660
Maryland Health & Higher Education Facilities
Authority Rev., (Mercy Medical Center), FSA,
5.625s, 2017 2,000 1,951,080
Maryland Health & Higher Education Facilities
Authority Rev., (Mercy Medical Center), FSA,
5.75s, 2026 500 487,625
Maryland Industrial Development Finance
Authority, Economic Development Rev., (Bon
Secours Health System), FSA, 7.924s,
2022++++ 1,400 1,398,978
-----------
$ 9,131,882
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.6%
Baltimore, MD, City Housing, Multi-Family
Housing Rev., FNMA, 7.25s, 2023 $ 1,220 $ 1,273,936
Baltimore, MD, City Housing, Multi-Family
Housing Rev. (Greenhill), FHA, 7.75s, 2009 980 995,592
Maryland Community Development Administration,
Multi-Family Housing Rev., 7.375s, 2021 330 350,278
Maryland Community Development Administration,
Multi-Family Housing Rev., 8.4s, 2029 1,320 1,351,430
Maryland Community Development Administration,
Multi-Family Housing Rev., 0s, 2032 11,605 802,022
Maryland Community Development Administration,
Multi-Family Housing Rev., 7.8s, 2032 1,190 1,271,146
Montgomery County, MD, Housing Opportunities
Commission, Multi-Family Mortgage Rev.,
7.375s, 2032 510 536,326
-----------
$ 6,580,730
- -------------------------------------------------------------------------------
21-MD
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.7%
Puerto Rico Highway & Transportation Authority
Rev., 6.625s, 2012 $1,000 $ 1,066,230
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 7.6%
Maryland Community Development Administration,
Single Family Housing Rev., 7.7s, 2015 $ 615 $ 647,343
Maryland Community Development Administration,
Single Family Housing Rev., 5.875s, 2016 2,000 1,994,780
Maryland Community Development Administration,
Single Family Housing Rev., 8.25s, 2017 1,300 1,334,424
Maryland Community Development Administration,
Single Family Housing Rev., 7.625s, 2020 2,255 2,332,594
Maryland Community Development Administration,
Single Family Housing Rev., 8.25s, 2020 480 493,354
Maryland Community Development Administration,
Single Family Housing Rev., 6.75s, 2026 2,250 2,322,428
Maryland Community Development Administration,
Single Family Housing Rev., 7.625s, 2029 905 934,548
Maryland Community Development Administration,
Single Family Housing Rev., 7.85s, 2029 520 544,804
Montgomery County, MD, Housing Opportunities
Commission, Single Family Mortgage Rev.,
7.5s, 2017 365 383,589
------------
$ 10,987,864
- -------------------------------------------------------------------------------
Solid Waste Revenue - 7.3%
Northeast Maryland, Waste Disposal Authority
Solid Waste Rev., (Montgomery County
Project), 6s, 2006 $1,000 $ 1,016,560
Northeast Maryland, Waste Disposal Authority
Solid Waste Rev., (Montgomery County
Project), MBIA, 6.3s, 2016 5,000 5,086,600
Northeast Maryland, Waste Disposal Authority
(Southwest County Resource Recovery), MBIA,
7.2s, 2005 1,000 1,120,160
Prince George's County, MD, Solid Waste
Management, FSA, 5.25s, 2013 3,500 3,322,235
------------
$ 10,545,555
- -------------------------------------------------------------------------------
Universities - 4.1%
Maryland Health & Higher Education Facilities
Authority Rev., (Loyola College), MBIA,
5.5s, 2016 $3,000 $ 2,922,390
Maryland Health & Higher Education Facilities
Authority Rev. (Mount St. Mary's College),
6.5s, 2009 714 711,913
Morgan, MD, State University Academic &
Auxiliary Facilities Rev., MBIA, 6.05s, 2015 1,500 1,576,140
University of Maryland, Auxiliary Facilities &
Tuition Rev., 0s, 2004 1,000 685,370
------------
$ 5,895,813
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 4.1%
Baltimore, MD, Wastewater Rev., FGIC, 6s, 2015 $1,000 $ 1,049,790
Baltimore, MD, Wastewater Rev., MBIA, 5.65s,
2020++++ 2,000 1,951,760
Baltimore, MD, Wastewater Rev., MBIA, 7.58s,
2020++++ 3,000 2,837,460
------------
$ 5,839,010
- -------------------------------------------------------------------------------
Miscellaneous Revenue - 6.1%
Baltimore, MD, Parking Rev., 5.375s, 2013 $1,600 $ 1,513,632
Maryland Industrial Development Finance
Authority (American Center for Physics
Headquarters), 6.625s, 2017 1,500 1,533,870
Maryland Industrial Development Finance
Authority (YMCA/Baltimore), 8s, 2012 2,825 2,990,489
Maryland Industrial Development Finance
Authority (YMCA/Baltimore), 8.25s, 2012 895 948,011
Washington, D.C., Metropolitan Area Transit
Authority, Gross Rev., FGIC, 5.25s, 2014 1,900 1,790,408
------------
$ 8,776,410
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost $130,967,278) $137,317,290
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.9%
- -------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev.
(Exxon), due 11/01/14 $1,700 $ 1,700,000
New York City, NY, Water Finance Authority,
due 6/15/24 1,200 1,200,000
Unita County, WY, Pollution Control Rev.
(Chevron), due 8/15/20 1,300 1,300,000
- -------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 4,200,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $135,167,278) $141,517,290
Other Assets, Less Liabilities - 1.6% 2,266,272
- -------------------------------------------------------------------------------
Net Assets - 100.0% $143,783,562
- -------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
Portfolio of Investments - March 31, 1997
MFS MASSACHUSETTS MUNICIPAL BOND FUND
Municipal Bonds - 96.6%
- -------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------
General Obligation - 16.2%
Belmont, MA, 5s, 2015 $ 2,165 $1,993,662
Commonwealth of Massachusetts,
0s, 2004 10,000 6,730,800
Commonwealth of Massachusetts,
0s, 2005 2,000 1,290,160
Commonwealth of Massachusetts,
0s, 2005 2,000 1,267,780
Commonwealth of Massachusetts, AMBAC, 6s, 2008 3,000 3,185,700
Commonwealth of Massachusetts, AMBAC, 6.75s,
2009 2,500 2,736,175
Commonwealth of Massachusetts, AMBAC, 5s, 2016 2,000 1,813,460
Commonwealth of Massachusetts, FGIC, 0s, 2006 4,000 2,472,040
Commonwealth of Massachusetts, FGIC, 7s, 2009 1,250 1,436,363
Commonwealth of Massachusetts, MBIA, 7.5s,
2004 2,850 3,267,040
Gloucester, MA, AMBAC, 7s, 2009 225 244,037
Gloucester, MA, AMBAC, 7s, 2010 215 233,191
Haverhill, MA, FGIC, 7s, 2012 1,250 1,352,937
Holyoke, MA, 8s, 2001 595 625,958
Holyoke, MA, MBIA, 8s, 2001 1,700 1,905,887
Holyoke, MA, MBIA, 8.1s, 2005 500 584,775
Lawrence, MA, AMBAC, 9.75s, 2002 600 723,252
Lowell, MA, 8.4s, 2009 1,000 1,126,070
Lowell, MA, 5s, 2012 3,010 2,803,273
Mashpee, MA, 6.25s, 2008 1,530 1,676,390
22-MA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
General Obligation - continued
North Attleborough, MA, 5s, 2013 $ 2,240 $ 2,073,882
Northbridge, MA, 7.6s, 2001 325 354,429
Princeton, MA, AMBAC, 7.25s, 2009 490 530,205
-----------
$40,427,466
- -------------------------------------------------------------------------------
State and Local Appropriation - 8.3%
Massachusetts Bay Transportation Authority,
6.2s, 2016 $10,400 $10,995,296
Massachusetts Bay Transportation Authority,
7s, 2021 5,000 5,772,250
Massachusetts Bay Transportation Authority,
AMBAC, 5.25s, 2017 3,370 3,144,176
Massachusetts Industrial Finance Agency
(Vinfen Corp.), 7.1s, 2018 695 705,710
-----------
$20,617,432
- -------------------------------------------------------------------------------
Refunded and Special Obligations - 11.9%
Boston, MA, MBIA, 7.75s, 2008 $ 500 $ 531,820
Commonwealth of Massachusetts, 6.875s, 2010 4,000 4,391,640
Holyoke, MA, 9.85s, 2008 380 400,246
Lowell, MA, 7.625s, 2010 4,875 5,490,030
Massachusetts Federally Assisted Housing, 0s,
2023 4,995 870,828
Massachusetts Health & Education Facilities
Authority, 8s, 2010 1,750 1,939,823
Massachusetts Health & Education Facilities
Authority (Boston College), 5.25s, 2003 4,350 3,900,253
Massachusetts Industrial Finance Agency (Cape
Cod Health System), 8.5s, 2000 500 571,290
Massachusetts Industrial Finance Agency,
Tunnel Rev. (Mass. Turnpike), 9s, 2000 8,130 9,359,907
Massachusetts Port Authority, ETM, 12.75s,
2002 485 623,662
Massachusetts Port Authority, ETM, 13s, 2013 780 1,291,407
Palmer, MA, AMBAC, 7.7s, 2010 500 557,520
-----------
$29,928,426
- -------------------------------------------------------------------------------
Airport and Port Revenue - 4.8%
Massachusetts Port Authority,
5s, 2015 $ 5,600 $ 5,039,720
Massachusetts Port Authority, FGIC, 7.5s, 2020 4,500 4,852,935
Massachusetts Port Authority (USAir Project),
5.625s, 2011 2,140 2,092,128
-----------
$11,984,783
- -------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 0.4%
Puerto Rico Electric Power Authority, 5s, 2012 $ 1,035 $ 938,859
- -------------------------------------------------------------------------------
Health Care Revenue - 18.0%
Boston, MA, Industrial Development Finance
Authority Rev. (Alzheimers Center Project),
FHA, 5.5s, 2012 $ 750 $ 722,265
Boston, MA, Industrial Development Finance
Authority Rev. (Stonehedge Convalescent
Center), 10.75s, 2011 710 758,117
Massachusetts Health & Education Facilities
Authority (Beth Israel Hospital), 7s, 2014 3,000 3,147,870
Massachusetts Health & Education Facilities
Authority (Charlton Memorial Hospital),
7.25s, 2013 1,700 1,827,092
Massachusetts Health & Education Facilities
Authority (Children's Hospital), 6.125s,
2012 2,285 2,321,103
Massachusetts Health & Education Facilities
Authority (Emerson Hospital), ETM, 8s, 2018 $ 1,745 $ 1,947,350
Massachusetts Health & Education Facilities
Authority (Fairview Extended Care Facility),
10.25s, 2021 2,000 2,251,160
Massachusetts Health & Education Facilities
Authority (Massachusetts Eye & Ear
Infirmary), 7.375s, 2011 3,000 3,030,030
Massachusetts Health & Education Facilities
Authority (New England Deaconess Hospital),
6.875s, 2022 5,600 5,921,440
Massachusetts Health & Education Facilities
Authority (New England Deaconess Hospital),
7.2s, 2022 2,500 2,682,425
Massachusetts Health & Education Facilities
Authority (North Adams Regional Hospital),
6.625s, 2018 1,000 1,018,420
Massachusetts Industrial Finance Agency
(Beverly Enterprises), 8.375s, 2009 4,040 4,327,365
Massachusetts Industrial Finance Agency
(Continental Healthcare), 11.875s, 2015 5,320 5,429,326
Massachusetts Industrial Finance Agency
(Evanswood), 7.625s, 2014 1,200 1,190,616
Massachusetts Industrial Finance Agency
(Martha's Vineyard Long-Term Care Facility),
9.25s, 2022++ 3,000 2,122,500
Massachusetts Industrial Finance Agency
(Massachusetts Biomedical Research), 0s,
2004 5,000 3,348,650
Massachusetts Industrial Finance Agency
(Massachusetts Biomedical Research), 0s,
2010 5,300 2,382,032
Massachusetts Industrial Finance Agency
(Needham/Hamilton House), 11s, 2010 600 613,530
-----------
$45,041,291
------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 2.8%
Massachusetts Industrial Finance Agency
(Automatic Data Processing, Inc.), 8.25s,
2019 $ 900 $ 919,152
Massachusetts Industrial Finance Agency,
Pollution Control Rev. (Boston Edison Co.),
5.75s, 2014 1,900 1,831,505
Puerto Rico Ports Authority (American
Airlines), 6.3s, 2023 2,370 2,383,343
Puerto Rico Ports Authority (American
Airlines), 6.25s, 2026 1,500 1,505,670
Springfield, MA, Industrial Development
Finance Agency (Terminal Building), 10s,
2001 327 329,881
-----------
$ 6,969,551
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 3.6%
Massachusetts Health & Education Facilities
Authority (Beth Israel Hospital), AMBAC,
8.218s, 2025++++ $ 5,000 $ 4,936,650
Massachusetts Health & Education Facilities
Authority (Brigham & Women's Hospital),
MBIA, 6.75s, 2024 2,900 3,095,692
Massachusetts Health & Education Facilities
Authority (Newton Wellesley Hospital),
6.125s, 2015 1,000 1,030,030
-----------
$ 9,062,372
- -------------------------------------------------------------------------------
23-MA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.8%
Massachusetts Housing Finance Agency, 8.4s,
2021 $ 2,190 $ 2,286,579
Massachusetts Housing Finance Agency, 8.8s,
2021 1,995 2,091,777
Massachusetts Housing Finance Agency, 8.2s,
2027 720 751,997
Massachusetts Housing Finance Agency, AMBAC,
6.65s, 2019 1,500 1,561,230
Massachusetts Housing Finance Agency, FNMA,
6.9s, 2025 1,700 1,781,039
Somerville, MA, Housing Authority Rev.
(Clarendon Hill), 7.85s, 2010 1,000 1,059,770
------------
$ 9,532,392
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 4.2%
Massachusetts Housing Finance Agency, 8.1s,
2020 $ 2,270 $ 2,362,707
Massachusetts Housing Finance Agency, 8.1s,
2021 2,000 2,098,860
Massachusetts Housing Finance Agency, 7.95s,
2023 945 1,005,026
Massachusetts Housing Finance Agency, MBIA,
6.1s, 2015 2,000 2,028,280
Massachusetts Industrial Finance Agency, MBIA,
6.35s, 2022 3,000 3,013,620
------------
$ 10,508,493
- -------------------------------------------------------------------------------
Student Loan Revenue
Massachusetts Education Loan Authority, 9s,
2001 $ 85 $ 85,678
- -------------------------------------------------------------------------------
Universities - 6.6%
Massachusetts Health & Education Facilities
Authority (Boston University), MBIA, 9.335s,
2031++++ $ 5,000 $ 5,530,750
Massachusetts Health & Education Facilities
Authority (Wheaton College), 5.25s, 2019 1,000 920,940
Massachusetts Industrial Finance Agency
(Babson College Series), 5.375s, 2017 2,000 1,877,400
Massachusetts Industrial Finance Agency
(Brandeis University), 0s, 2004 1,000 682,870
Massachusetts Industrial Finance Agency
(Brandeis University), 0s, 2005 1,000 643,180
Massachusetts Industrial Finance Agency
(Brandeis University), 0s, 2009 1,000 503,340
Massachusetts Industrial Finance Agency
(Brandeis University), 0s, 2010 1,000 467,760
Massachusetts Industrial Finance Agency
(Brandeis University), 0s, 2011 500 219,840
Massachusetts Industrial Finance Agency (Curry
College), 8s, 2010 590 587,540
Massachusetts Industrial Finance Agency (Curry
College), 8s, 2014 1,945 1,967,912
Massachusetts Industrial Finance Agency
(Emerson College), 8.9s, 2018 1,000 1,093,850
Massachusetts Industrial Finance Agency
(Lesley College), 6.3s, 2025 2,000 2,026,420
------------
$ 16,521,802
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 9.0%
Massachusetts Water Pollution, Loan Program,
5.25s, 2014 $ 5,160 $ 4,925,942
Massachusetts Water Resources Authority, 6.5s,
2019 8,470 9,095,425
Massachusetts Water Resources Authority,
AMBAC, 5.25s, 2015 5,000 4,814,100
Massachusetts Water Resources Authority, MBIA,
5.25s, 2020 4,000 3,641,320
------------
$ 22,476,787
- -------------------------------------------------------------------------------
Miscellaneous Revenue - 7.0%
Martha's Vineyard, MA, Land Bank, (Land
Acquisition), 8.125s, 2011 $ 3,900 $ 3,997,695
Massachusetts Health & Education Facilities
Authority, 9.25s, 2014 2,250 2,395,845
Massachusetts Health & Education Facilities
Authority (Learning Center for Deaf
Children), 8s, 2020 1,500 1,500,360
Massachusetts Industrial Finance Agency (Park
School), 5.9s, 2026 3,385 3,293,300
Massachusetts Industrial Finance Agency
(Dexter School), 7.5s, 2011 1,720 1,817,404
Massachusetts Industrial Finance Agency
(Dexter School), 7.5s, 2021 2,900 3,066,373
Nantucket Island, MA, Land Bank, 7.75s, 2020 1,200 1,324,092
-------------
$ 17,395,069
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $229,796,491) $241,490,401
- -------------------------------------------------------------------------------
Rights - 0.1%
- -------------------------------------------------------------------------------
Shares
- -------------------------------------------------------------------------------
Georgia Municipal Electric Authority Power
Co., due 2016 (Identified Cost, $131,400) 10,000 $ 255,800
- -------------------------------------------------------------------------------
Floating Rate Demand Note - 1.0%
- -------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -------------------------------------------------------------------------------
Massachusetts Health & Education Facilities
Authority, due 1/01/35, at Identified Cost $ 2,600 $ 2,600,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $232,527,891) $244,346,201
Other Assets, Less Liabilities - 2.3% $ 5,731,618
- -------------------------------------------------------------------------------
Net Assets - 100.0% $250,077,819
- -------------------------------------------------------------------------------
Portfolio Footnotes:
ss Indexed security.
++Security valued by or at the direction of the Trustees.
++++Inverse floating rate security.
###Security segregated as collateral for an open futures contract.
See notes to financial statements
24-MA
<PAGE>
Financial Statements
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Arkansas California Florida Georgia Maryland Massachusetts
March 31, 1997 Fund Fund Fund Fund Fund Fund Fund
- ---------------------------------- ------------ ------------- ------------- ------------ ------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $79,126,506 $145,366,525 $253,414,326 $90,198,925 $63,931,938 $135,167,278 $232,527,891
Unrealized appreciation 4,010,182 5,078,478 10,830,095 3,633,602 3,893,744 6,350,012 11,818,310
------------ ------------- ------------- ------------ ------------------------- -------------
Total, at value $83,136,688 $150,445,003 $264,244,421 $93,832,527 $67,825,682 $141,517,290 $244,346,201
Cash 84,729 84,275 40,322 91,319 2,344 34,348 57,188
Receivable for Fund shares sold 49,328 74,040 295,384 93,461 168,708 171,307 266,015
Receivable for investments sold 1,733,600 18,116 12,467,976 785,850 953,260 452,714 2,592,111
Interest receivable 1,413,328 2,252,334 3,802,145 1,655,756 1,105,884 2,177,384 3,916,395
Other assets 1,002 2,074 3,355 13,470 898 1,705 2,944
------------ ------------- ------------- ------------ ------------------------- -------------
Total assets $86,418,675 $152,875,842 $280,853,603 $96,472,383 $70,056,776 $144,354,748 $251,180,854
------------ ------------- ------------- ------------ ------------------------- -------------
Liabilities:
Distributions payable $ 220,386 $ 350,988 $ 692,964 $ 256,237 $ 144,110 $ 280,967 $ 615,214
Payable for Fund shares
reacquired 209,117 622,362 999,973 119,662 755 193,510 364,590
Payable for investments purchased 1,697,450 -- 5,851,656 986,303 -- -- --
Payable for daily variation
margin on open futures contracts 11,250 5,000 -- -- -- -- --
Payable to affiliates -
Management fee 5,081 9,171 12,007 5,727 3,438 7,091 12,321
Administrative fee 139 250 450 156 115 236 411
Shareholder servicing agent fee 1,201 2,168 3,902 1,354 993 2,048 3,620
Distribution and service fee 2,906 3,110 10,648 3,661 2,728 6,758 10,660
Accrued expenses and other
liabilities 61,957 72,037 120,329 56,702 67,013 80,576 96,219
------------ ------------- ------------- ------------ ------------------------- -------------
Total liabilities $ 2,209,487 $ 1,065,086 $ 7,691,929 $ 1,429,802 $ 219,152 $ 571,186 $ 1,103,035
------------ ------------- ------------- ------------ ------------------------- -------------
Net assets $84,209,188 $151,810,756 $273,161,674 $95,042,581 $69,837,624 $143,783,562 $250,077,819
============ ============= ============= ============ ========================= =============
Net assets consist of:
Paid-in capital $79,709,154 $154,706,572 $274,218,686 $98,703,387 $69,414,375 $143,012,764 $244,084,771
Unrealized appreciation on
investments and futures
contracts 3,908,651 5,037,750 10,830,095 3,633,602 3,893,744 6,350,012 11,818,310
Accumulated undistributed net
realized gain (loss) on
investments 411,611 (7,793,592) (11,509,098) (7,317,264) (3,429,047) (5,441,552) (5,217,806)
Accumulated undistributed
(distributions in excess of) net
investment income 179,772 (139,974) (378,009) 22,856 (41,448) (137,662) (607,456)
------------ ------------- ------------- ------------ ------------------------- -------------
Total $84,209,188 $151,810,756 $273,161,674 $95,042,581 $69,837,624 $143,783,562 $250,077,819
============ ============= ============= ============ ========================= =============
Shares of beneficial interest
outstanding:
Class A 7,339,789 14,835,381 42,498,099 8,335,775 5,765,143 11,612,305 21,628,872
Class B 694,527 776,303 6,703,433 1,525,437 962,443 1,597,546 1,399,249
Class C -- -- 703,318 -- -- -- --
------------ ------------- ------------- ------------ ------------------------- -------------
Total shares of beneficial
interest outstanding 8,034,316 15,611,684 49,904,850 9,861,212 6,727,586 13,209,851 23,028,121
============ ============= ============= ============ ========================= =============
Net assets:
Class A $76,928,225 $144,263,122 $232,611,902 $80,341,829 $59,842,922 $126,404,592 $234,873,541
Class B 7,280,963 7,547,634 36,693,746 14,700,752 9,994,702 17,378,970 15,204,278
Class C -- -- 3,856,026 -- -- -- --
------------ ------------- ------------- ------------ ------------------------- -------------
Total net assets $84,209,188 $151,810,756 $273,161,674 $95,042,581 $69,837,624 $143,783,562 $250,077,819
============ ============= ============= ============ ========================= =============
Class A shares:
Net asset value per share (net
assets / shares of beneficial
interest outstanding) $10.48 $ 9.72 $5.47 $ 9.64 $10.38 $10.89 $10.86
====== ====== ===== ====== ====== ====== ======
Offering price per share (100 /
95.25 of net asset value per
share) $11.00 $10.20 $5.74 $10.12 $10.90 $11.43 $11.40
====== ====== ===== ====== ====== ====== ======
Class B shares:
Net asset value and offering
price per share (net assets /
shares of beneficial interest
outstanding) $10.48 $ 9.72 $5.47 $ 9.64 $10.38 $10.88 $10.87
====== ====== ===== ====== ====== ====== ======
Class C shares:
Net asset value and offering
price per share (net assets /
shares of beneficial interest
outstanding) $ -- $ -- $5.48 $ -- $ -- $ -- $ --
====== ====== ===== ====== ====== ====== ======
</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
25
<PAGE>
Financial Statements - continued
Statement of Operations
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Year Ended March 31, 1997 Fund Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income:
Interest income $5,537,347 $9,991,542 $17,384,392 $ 6,100,621 $ 4,739,761 $ 9,352,266 $17,148,239
---------- ---------- ----------- ----------- ----------- ----------- -----------
Expenses -
Management fee $ 477,327 $ 908,167 $ 1,588,838 $ 549,091 $ 409,612 $ 813,556 $ 1,413,749
Trustees' compensation 16,743 18,509 35,030 16,915 18,150 20,735 20,098
Shareholder servicing agent fee 27,357 50,392 91,023 31,877 22,785 47,034 82,011
Shareholder servicing agent fee
(Class A) 91,118 180,728 283,882 96,750 73,967 151,710 276,574
Shareholder servicing agent fee
(Class B) 10,992 12,920 58,663 23,792 17,106 24,811 22,268
Shareholder servicing agent fee
(Class C) -- -- 4,647 -- -- -- --
Distribution and service fee
(Class A) 199,904 157,360 -- -- 160,929 463,635 852,786
Distribution and service fee
(Class B) 68,255 65,101 296,124 117,638 102,425 155,707 138,902
Distribution and service fee
(Class C) -- -- 40,308 -- -- -- --
Administrative fee 1,119 2,041 3,698 1,271 924 1,917 3,335
Custodian fee 32,095 71,619 126,876 47,670 33,837 66,638 113,102
Auditing fees 28,330 29,417 29,581 29,219 29,186 33,601 45,101
Printing 4,809 11,170 20,850 9,704 7,576 13,332 27,400
Postage 4,476 11,805 17,558 6,724 -- 10,411 14,070
Legal fees 1,445 2,944 7,212 3,939 2,122 4,590 7,557
Amortization of organization
expenses -- 2,082 -- 1,928 -- -- --
Miscellaneous 49,437 60,006 102,040 48,919 23,479 59,528 128,487
---------- ---------- ----------- ----------- ----------- ----------- -----------
Total expenses $1,013,407 $1,584,261 $ 2,706,330 $ 985,437 $ 902,098 $ 1,867,205 $ 3,145,440
Fees paid indirectly (7,554) (14,652) (34,413) (9,623) (11,946) (34,547) (22,491)
Reduction of expenses by
investment adviser -- -- (432,694) -- (48,303) (97,218) (169,487)
---------- ---------- ----------- ----------- ----------- ----------- -----------
Net expenses $1,005,853 $1,569,609 $ 2,239,223 $ 975,814 $ 841,849 $ 1,735,440 $ 2,953,462
---------- ---------- ----------- ----------- ----------- ----------- -----------
Net investment income $4,531,494 $8,421,933 $15,145,169 $ 5,124,807 $ 3,897,912 $ 7,616,826 $14,194,777
---------- ---------- ----------- ----------- ----------- ----------- -----------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) (identified
cost basis) -
Investment transactions $ 582,182 $ 273,482 $ 1,273,784 $ (284,305) $ 702,189 $ 345,471 $ 364,901
Futures contracts (87,997) (423,987) (1,833,990) (1,044,108) (310,522) (1,107,510) (703,960)
---------- ---------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) on
investments $ 494,185 $ (150,505) $ (560,206) $(1,328,413) $ 391,667 $ (762,039) $ (339,059)
---------- ---------- ----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) -
Investments $ (35,718) $ (354,925) $(1,533,353) $ (486,195) $(1,040,965) $(1,202,696) $(2,763,341)
Futures contracts (101,531) (40,728) 13,823 (60,055) 23,879 (286,761) (6,932)
---------- ---------- ----------- ----------- ----------- ----------- -----------
Net unrealized loss on
investments $ (137,249) $ (395,653) $(1,519,530) $ (546,250) $(1,017,086) $(1,489,457) $(2,770,273)
---------- ---------- ----------- ----------- ----------- ----------- -----------
Net realized and unrealized
gain (loss) on investments $ 356,936 $ (546,158) $(2,079,736) $(1,874,663) $ (625,419) $(2,251,496) $(3,109,332)
---------- ---------- ----------- ----------- ----------- ----------- -----------
Increase in net assets
from operations $4,888,430 $7,875,775 $13,065,433 $ 3,250,144 $ 3,272,493 $ 5,365,330 $11,085,445
========== ========== =========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements
26
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Year Ended March 31, 1997 Fund Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets:
From operations -
Net investment income $ 4,531,494 $ 8,421,933 $ 15,145,169 $ 5,124,807 $ 3,897,912 $ 7,616,826 $ 14,194,777
Net realized gain (loss)
on investments 494,185 (150,505) (560,206) (1,328,413) 391,667 (762,039) (339,059)
Net unrealized loss on
investments (137,249) (395,653) (1,519,530) (546,250) (1,017,086) (1,489,457) (2,770,273)
------------ ------------ ------------- ------------ ------------ ------------ ------------
Increase in net assets
from operations $ 4,888,430 $ 7,875,775 $ 13,065,433 $ 3,250,144 $ 3,272,493 $ 5,365,330 $ 11,085,445
------------ ------------ ------------- ------------ ------------ ------------ ------------
Distributions declared to
shareholders -
From net investment income
(Class A) $ (4,197,127) $ (7,990,669) $ (13,365,451) $ (4,467,721) $ (3,377,412) $ (6,713,171) $(13,195,047)
From net investment income
(Class B) (303,407) (332,561) (1,604,012) (634,657) (454,697) (679,183) (653,840)
From net investment income
(Class C) -- -- (175,706) -- -- -- --
From net realized gain on
investments (Class A) (638,656) -- -- -- -- -- --
From net realized gain on
investments (Class B) (55,537) -- -- -- -- -- --
In excess of net investment
income (Class A) -- -- (44,591) -- -- -- --
In excess of net investment
income (Class B) -- -- (5,352) -- -- -- --
In excess of net investment
income (Class C) -- -- (586) -- -- -- --
------------ ------------ ------------- ------------ ------------ ------------ ------------
Total distributions
declared to shareholders $ (5,194,727) $ (8,323,230) $ (15,145,169) $ (5,102,378) $ (3,832,109) $ (7,392,354) $(13,848,887)
------------ ------------ ------------- ------------ ------------ ------------ ------------
Fund share (principal)
transactions -
Net proceeds from sale of
shares $ 3,979,559 $ 9,627,230 $ 151,915,799 $ 43,852,042 $ 5,089,635 $ 11,277,965 $ 60,963,962
Net asset value of shares
issued to shareholders
in reinvestment of
distributions 2,180,791 3,747,332 6,490,899 1,953,163 2,000,992 3,935,520 6,335,241
Cost of shares reacquired (10,268,087) (41,972,562) (181,959,198) (50,911,287) (15,081,831) (22,393,495) (75,271,052)
------------ ------------ ------------- ------------ ------------ ------------ ------------
Decrease in net assets
from Fund share
transactions $ (4,107,737) $(28,598,000) $ (23,552,500) $ (5,106,082) $ (7,991,204) $ (7,180,010) $ (7,971,849)
------------ ------------ ------------- ------------ ------------ ------------ ------------
Total decrease in net
assets $ (4,414,034) $(29,045,455) $ (25,682,765) $ (6,958,316) $ (8,550,820) $ (9,207,034) $(10,735,291)
Net assets:
At beginning of period 88,623,222 180,856,211 298,844,439 102,000,897 78,388,444 152,990,596 260,813,110
------------ ------------ ------------- ------------ ------------ ------------ ------------
At end of period $ 84,209,188 $151,810,756 $ 273,161,674 $ 95,042,581 $ 69,837,624 $143,783,562 $250,077,819
============ ============ ============= ============ ============ ============ ============
Accumulated undistributed
(distributions in excess
of) net investment income
included in net assets at
end of period $ 179,772 $ (139,974) $ (378,009) $ 22,856 $ (41,448) $ (137,662) $ (607,456)
============ ============ ============= ============ ============ ============ ============
</TABLE>
See notes to financial statements
27
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Year Ended March 31, 1996 Fund Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <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 $ 4,164,450 $ 7,873,071 $ 14,526,680
Net realized gain (loss) on
investments 1,777,244 (1,676,263) 3,656,753 1,919,706 (260,587) (1,568,663) 3,156,482
Net unrealized gain (loss)
on investments (188,403) 3,646,737 2,718,243 532,266 1,210,949 3,005,501 533,091
----------- ------------ ------------- ------------ ------------ ------------ ------------
Increase in net assets from
operations $ 6,234,591 $ 11,690,563 $ 22,732,694 $ 7,793,230 $ 5,114,812 $ 9,309,909 $ 18,216,253
----------- ------------ ------------- ------------ ------------ ------------ ------------
Distributions declared to
shareholders -
From net investment income
(Class A) $(4,413,702) $ (9,375,278) $ (14,676,735) $ (4,746,329) $ (3,749,712) $ (7,300,383) $(14,053,457)
From net investment income
(Class B) (225,971) (326,899) (1,505,089) (605,261) (414,738) (552,380) 473,223)
From net investment income
(Class C) -- -- (175,874) -- -- -- --
In excess of net investment
income (Class A) -- -- (237,111) (4,074) (19,210) -- (35,743)
In excess of net investment
income (Class B) -- -- (24,316) (519) (2,125) -- (1,204)
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) $ (4,185,785) $ (7,852,763) $(14,563,627)
----------- ------------ ------------- ------------ ------------ ------------ ------------
Fund share (principal)
transactions -
Net proceeds from sale of
shares $ 6,801,657 $ 10,722,904 $ 95,667,192 $ 43,564,467 $ 9,527,957 $ 11,754,356 $ 41,490,140
Net asset value of shares
issued to shareholders in
reinvestment of
distributions 1,862,845 4,417,313 7,228,615 1,872,446 2,180,065 4,256,011 6,631,937
Cost of shares reacquired (9,836,700) (30,608,486) (115,238,042) (48,433,974) (17,375,838) (21,005,744) (62,188,200)
----------- ------------ ------------- ------------ ------------ ------------ ------------
Decrease in net assets from
Fund share transactions $(1,172,198) $(15,468,269) $ (12,342,235) $ (2,997,061) $ (5,667,816) $ (4,995,377) $(14,066,123)
----------- ------------ ------------- ------------ ------------ ------------ ------------
Total increase (decrease)
in net assets $ 422,720 $(13,479,883) $ (6,231,507) $ (560,014) $ (4,738,789) $ (3,538,231) $(10,413,497)
Net assets:
At beginning of period 88,200,502 194,336,094 305,075,946 102,560,911 83,127,233 156,528,827 271,226,607
----------- ------------ ------------- ------------ ------------ ------------ ------------
At end of period $88,623,222 $180,856,211 $ 298,844,439 $102,000,897 $ 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 $ 83,314 $ (261,708) $ (397,322) $ (4,593) $ (141,860) $ (523,799) $ (1,032,582)
=========== ============ ============= ============ ============ ============ ============
</TABLE>
See notes to financial statements
28
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Alabama Fund
- ---------------------------------------------------------------- ----------------------------------------------------
Two Months
Ended
Year Ended March 31, March 31,
- ---------------------------------------------------------------- ------------ ------------ ------------ ------------
1997 1996 1995 1994
- ---------------------------------------------------------------- ------------ ------------ ------------ ------------
Class A
- ---------------------------------------------------------------- ------------ ------------ ------------ ------------
<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 income ss $ 0.56 $ 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 $ 0.60 $ 0.73 $ 0.65 $ (0.62)
------------ ------------ ------------ ------------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.55) $ (0.55) $ (0.08)
From net realized gain on investments (0.09) -- -- --
In excess of net investment income++++ -- -- -- (0.01)
In excess of net realized gain on investments -- -- (0.03) --
------------ ------------ ------------ ------------
Total distributions declared to shareholders $ (0.64) $ (0.55) $ (0.58) $ (0.09)
------------ ------------ ------------ ------------
Net asset value - end of period $ 10.48 $ 10.52 $ 10.34 $ 10.27
============ ============ ============ ============
Total return++ 5.82% 7.13% 6.51% (5.66)%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.10% 1.14% 1.15% 1.18%+
Net investment income 5.28% 5.18% 5.47% 5.17%+
Portfolio turnover 22% 37% 30% 4%
Net assets at end of period (000 omitted) $76,928 $82,484 $83,805 $81,501
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, are 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.
ss 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 -- $0.54 $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>
- ---------------------------------------------------------------------------------------------------------------------
Year Ended January 31,
- ---------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991
- ---------------------------------------------------------------- ------------ ------------ ------------ ------------
<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 ss $ 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 ss:
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, are 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.
ss 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 $0.54 $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
29
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Alabama Fund
- -------------------------------------------------- ------------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
- -------------------------------------------------- ------------------------------- ------------- --------------
1997 1996 1995 1994 1994**
- -------------------------------------------------- --------- --------- --------- ------------- --------------
Class B
- -------------------------------------------------- --------- --------- --------- ------------- --------------
<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 $ 0.47 $ 0.46 $ 0.47 $ 0.08 $ 0.18
Net realized and unrealized gain (loss)
on investments 0.04 0.18 0.09 (0.71) 0.07
--------- --------- --------- ------------- --------------
Total from investment operations $ 0.51 $ 0.64 $ 0.56 $(0.63) $ 0.25
--------- --------- --------- ------------- --------------
Less distributions declared to
shareholders -
From net investment income $(0.47) $(0.46) $(0.46) $(0.08) $(0.18)
From net realized gain on investments (0.08) -- -- -- (0.02)
In excess of net realized gain on investments -- -- (0.03) -- --
--------- --------- --------- ------------- --------------
Total distributions declared to shareholders $(0.55) $(0.46) $(0.49) $(0.08) $(0.20)
--------- --------- --------- ------------- --------------
Net asset value - end of period $10.48 $10.52 $10.34 $10.27 $10.98
========= ========= ========= ============= ==============
Total return 4.98% 6.25% 5.64% (5.79)%+++ 2.29%+++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.90% 1.96% 1.97% 2.01%+ 1.98%+
Net investment income 4.48% 4.34% 4.63% 4.30%+ 3.98%+
Portfolio turnover 22% 37% 30% 4% 12%
Net assets at end of period (000 omitted) $7,281 $6,139 $4,396 $2,849 $2,269
**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.
</TABLE>
See notes to financial statements
30
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Fund
------------------------------------------------------------------------------------------------------------------------------
Two Months
Ended Year Ended Period Ended
Year Ended March 31, March 31, January 31, January 31,
--------------------------------------------- ----------- ----------- ------------------------ -------------- --------------
1997 1996 1995 1994 1994 1993*
--------------------------------------------- ----------- ----------- ------------------------ -------------- --------------
Class A
--------------------------------------------- ----------- ----------- ------------------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.75 $ 9.66 $ 9.69 $ 10.47 $ 9.88 $ 9.53
----------- ----------- ------------------------ -------------- --------------
Income from investment operations# -
Net investment income ss $ 0.50 $ 0.50 $ 0.53 $ 0.09 $ 0.56 $ 0.58
Net realized and unrealized gain (loss) on
investments (0.03) 0.09 0.02 (0.77) 0.60 0.35
----------- ----------- ------------------------ -------------- --------------
Total from investment operations $ 0.47 $ 0.59 $ 0.55 $ (0.68) $ 1.16 $ 0.93
----------- ----------- ------------------------ -------------- --------------
Less distributions declared to shareholders -
From net investment income $ (0.50) $ (0.50) $ (0.53) $ (0.08) $ (0.55) $ (0.58)
From net realized gain on investments++++ -- -- -- -- (0.00) --
In excess of net investment income -- -- -- (0.02) (0.02) --
In excess of net realized gain on
investments++++ -- -- (0.05) -- (0.00) --
----------- ----------- ------------------------ -------------- --------------
Total distributions declared to
shareholders $ (0.50) $ (0.50) $ (0.58) $ (0.10) $ (0.57) $ (0.58)
----------- ----------- ------------------------ -------------- --------------
Net asset value - end of period $ 9.72 $ 9.75 $ 9.66 $ 9.69 $ 10.47 $ 9.88
=========== =========== ======================== ============== ==============
Total return++ 4.87% 6.19% 5.90% (6.61)%+++ 11.95% 10.11%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 0.92% 0.93% 0.75% 0.75%+ 0.63% 0.16%+
Net investment income 5.14% 5.10% 5.51% 5.21%+ 5.30% 6.04%+
Portfolio turnover 9% 6% 24% 1% 3% 10%
Net assets at end of period (000 omitted) $144,263 $172,907 $187,105 $195,042 $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.
ss 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 -- -- $0.52 $0.09 $0.53 $0.52
Ratios (to average net assets):
Expenses## -- -- 0.82% 0.96%+ 0.91% 0.75%+
Net investment income -- -- 5.43% 5.01%+ 5.01% 5.45%+
</TABLE>
See notes to financial statements
31
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Arkansas Fund
----------------------------------------------------------- -----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
----------------------------------------------------------- --------- --------- --------- ------------ --------------
1997 1996 1995 1994 1994**
----------------------------------------------------------- --------- --------- --------- ------------ --------------
Class B
----------------------------------------------------------- --------- --------- --------- ------------ --------------
<S> <C> <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 $10.42
--------- --------- --------- ------------ --------------
Income from investment operations# -
Net investment income ss $ 0.42 $ 0.42 $ 0.42 $ 0.07 $ 0.23
Net realized and unrealized gain (loss) on investments (0.03) 0.10 0.01 (0.78) (0.04)
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.39 $ 0.52 $ 0.43 $(0.71) $ 0.19
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income $(0.42) $(0.42) $(0.42) $(0.07) $(0.14)
From net realized gain on investments++++ -- -- -- -- (0.00)
In excess of net investment income++++++ -- -- -- (0.00) (0.00)
In excess of net realized gain on investments++++ -- -- (0.05) -- (0.00)
--------- --------- --------- ------------ --------------
Total distributions declared to shareholders $(0.42) $(0.42) $(0.47) $(0.07) $(0.14)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 9.72 $ 9.75 $ 9.65 $ 9.69 $10.47
========= ========= ========= ============ ==============
Total return 4.05% 5.43% 4.67% (6.81)%+++ 2.18%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.71% 1.76% 1.84% 1.82%+ 1.75%+
Net investment income 4.34% 4.27% 4.40% 4.11%+ 3.87%+
Portfolio turnover 9% 6% 24% 1% 3%
Net assets at end of period (000 omitted) $7,548 $7,950 $7,231 $5,895 $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, 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 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 $0.003, respectively.
++++++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.
ss 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 -- -- $0.41 $0.07 $0.12
Ratios (to average net assets):
Expenses## -- -- 1.91% 2.02%+ 3.44%+
Net investment income -- -- 4.33% 3.91%+ 2.18%+
</TABLE>
See notes to financial statements
32
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
California Fund
- -------------------------------------------------- -----------------------------------------------------------------------------
Two Months Eleven Months
Ended Ended Year Ended
Year Ended March 31, March 31, January 31, February 28,
- -------------------------------------------------- ----------- ----------- ----------------------- --------------- --------------
1997 1996 1995 1994 1994 1993
- -------------------------------------------------- ----------- ----------- ----------------------- --------------- --------------
Class A
- -------------------------------------------------- ----------- ----------- ----------------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.52 $ 5.41 $ 5.47 $ 5.95 $ 5.88 $ 5.42
----------- ----------- ----------------------- --------------- --------------
Income from investment operations# -
Net investment income ss $ 0.30 $ 0.30 $ 0.31 $ 0.05 $ 0.30 $ 0.34
Net realized and unrealized gain (loss)
on investments (0.05) 0.11 (0.05) (0.48) 0.14 0.47
----------- ----------- ----------------------- --------------- --------------
Total from investment operations $ 0.25 $ 0.41 $ 0.26 $ (0.43) $ 0.44 $ 0.81
----------- ----------- ----------------------- --------------- --------------
Less distributions declared to shareholders -
From net investment income $ (0.30) $ (0.30) $ (0.31) $ (0.04) $ (0.29) $ (0.34)
From net realized gain on investments -- -- -- -- (0.07) (0.01)
In excess of net investment income++++ -- (0.00) (0.00) (0.01) (0.01) --
In excess of net realized gain on investments -- -- (0.01) -- -- --
----------- ----------- ----------------------- --------------- --------------
Total distributions declared to shareholders $ (0.30) $ (0.30) $ (0.32) $ (0.05) $ (0.37) $ (0.35)
----------- ----------- ----------------------- --------------- --------------
Net asset value - end of period $ 5.47 $ 5.52 $ 5.41 $ 5.47 $ 5.95 $ 5.88
=========== =========== ======================= =============== ==============
Total return++ 4.55% 7.86% 4.85% (7.21)%+++ 7.64%+++ 15.55%
Ratios (to average net assets)/Supplemental data ss:
Expenses## 0.66% 0.66% 0.69% 0.68%+ 0.60%+ 0.39%
Net investment income 5.36% 5.48% 5.80% 5.27%+ 4.99%+ 6.18%
Portfolio turnover 78% 69% 57% 8% 38% 64%
Net assets at end of period (000 omitted) $232,612 $259,817 $272,161 $313,790 $356,419 $272,179
+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 years ended March 31, 1996, and 1995, the per share distributions in excess of net investment income were $0.0049 and
$0.0027, respectively.
ss 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 $0.29 $0.29 $0.30 $0.05 $0.29 $0.32
Ratios (to average net assets):
Expenses## 0.81% 0.81% 0.84% 0.83%+ 0.78%+ 0.77%
Net investment income 5.21% 5.33% 5.65% 5.12%+ 4.82%+ 5.80%
</TABLE>
See notes to financial statements
33
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
California Fund
- -------------------------------------------------- -----------------------------------------------------------------
Year Ended February 28, 1992 1991 1990 1989 1988 1987
- -------------------------------------------------- ----------- --------- --------- --------- --------- ----------
Class A
- -------------------------------------------------- ----------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.26 $ 5.19 $ 5.06 $ 5.08 $ 5.38 $ 5.07
----------- --------- --------- --------- --------- ----------
Income from investment operations -
Net investment income ss $ 0.35 $ 0.33 $ 0.33 $ 0.32 $ 0.31 $ 0.32
Net realized and unrealized gain (loss)
on investments 0.20 0.07 0.13 (0.02) (0.29) 0.34
----------- --------- --------- --------- --------- ----------
Total from investment operations $ 0.55 $ 0.40 $ 0.46 $ (0.30) $ 0.02 $ 0.66
----------- --------- --------- --------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.37) $ (0.33) $ (0.33) $ (0.32) $ (0.31) $ (0.33)
From net realized gain on investments (0.02) -- -- -- (0.01) (0.02)
----------- --------- --------- --------- --------- ----------
Total distributions declared to shareholders $ (0.39) $ (0.33) $ (0.33) $ (0.32) $ (0.32) $ (0.35)
----------- --------- --------- --------- --------- ----------
Net asset value - end of period $ 5.42 $ 5.26 $ 5.19 $ 5.06 $ 5.08 $ 5.38
=========== ========= ========= ========= ========= ==========
Total return++ 10.69% 8.03% 9.28% 6.07% 0.83% 13.57%
Ratios (to average net assets)/Supplemental data ss:
Expenses 0.40% 0.87% 1.00% 1.28% 1.20% 1.04%
Net investment income 6.53% 6.39% 6.35% 6.35% 6.33% 6.25%
Portfolio turnover 73% 102% 243% 188% 240% 54%
Net assets at end of period (000 omitted) $177,291 $84,551 $68,879 $59,212 $59,479 $62,368
++ 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.
ss 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>
See notes to financial statements
34
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
California Fund
- -------------------------------------------------- -----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
- -------------------------------------------------- --------- --------- --------- ------------ --------------
1997 1996 1995 1994 1994**
- -------------------------------------------------- --------- --------- --------- ------------ --------------
Class B
- -------------------------------------------------- --------- --------- --------- ------------ --------------
<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 ss $ 0.25 $ 0.26 $ 0.25 $ 0.04 $ 0.10
Net realized and unrealized gain (loss)
on investments (0.05) 0.11 (0.05) (0.48) --
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.20 $ 0.37 $ 0.20 $ (0.44) $ 0.10
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income $ (0.25) $ (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 $ (0.25) $ (0.26) $ (0.26) $ (0.04) $ (0.17)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 5.47 $ 5.52 $ 5.41 $ 5.47 $ 5.95
========= ========= ========= ============ ==============
Total return 3.64% 6.93% 3.73% (7.38)%+++ 1.68%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.54% 1.54% 1.76% 1.69%+ 1.60%+
Net investment income 4.48% 4.59% 4.72% 4.18%+ 3.64%+
Portfolio turnover 78% 69% 57% 8% 38%
Net assets at end of period (000 omitted) $36,694 $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, 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 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.
ss 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 $0.24 $0.24 $0.04 $0.09 --
Ratios (to average net assets):
Expenses## 1.69% 1.91% 1.83%+ 1.81%+ --
Net investment income 4.33% 4.57% 4.04%+ 3.43%+ --
</TABLE>
See notes to financial statements
35
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
California Fund
- -------------------------------------------------- -----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
- -------------------------------------------------- --------- --------- --------- ------------ --------------
1997 1996 1995 1994 1994***
- -------------------------------------------------- --------- --------- --------- ------------ --------------
Class C
- -------------------------------------------------- --------- --------- --------- ------------ --------------
<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 ss $ 0.24 $ 0.25 $ 0.26 $ 0.03 $ 0.01
Net realized and unrealized gain (loss)
on investments (0.05) 0.11 (0.06) (0.46) 0.06
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.19 $ 0.36 $ 0.20 $(0.43) $ 0.07
--------- --------- --------- ------------ --------------
Less distributions declared to
shareholders -
From net investment income $(0.24) $(0.25) $(0.25) $(0.04) $(0.01)
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 $(0.24) $(0.25) $(0.26) $(0.04) $(0.01)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 5.48 $ 5.53 $ 5.42 $ 5.48 $ 5.95
========= ========= ========= ============ ==============
Total return 3.51% 6.77% 3.79% (7.22)%+++ 1.25%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.66% 1.67% 1.69% 1.64%+ 2.02%+
Net investment income 4.37% 4.47% 4.79% 3.92%+ 1.78%+
Portfolio turnover 78% 69% 57% 8% 38%
Net assets at end of period (000 omitted) $3,856 $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 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 two months ended March 31, 1994 and the period ended January 31,
1994, the per share distributions in excess of net investment income were $0.0008, $0.004, $0.001 and
$0.003, respectively.
ss 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 $ 0.23 $ 0.24 $ 0.25 $ 0.03 $ --
Ratios: (to average net assets):
Expenses## 1.81% 1.82% 1.84% 1.80%+ 3.53%+
Net investment income 4.22% 4.32% 4.64% 3.77%+ 0.27%+
</TABLE>
See notes to financial statements
36
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Florida Fund
------------------------------------------------- ------------------------------------------------------------------------------
Two Months Period
Ended Year Ended Ended
Year Ended March 31, March 31, January 31, January 31,
------------------------------------------------- ----------- ----------- ------------------------ -------------- -------------
1997 1996 1995 1994 1994 1993*
------------------------------------------------- ----------- ----------- ------------------------ -------------- -------------
Class A
------------------------------------------------- ----------- ----------- ------------------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.82 $ 9.60 $ 9.65 $ 10.63 $ 9.89 $ 9.53
----------- ----------- ------------------------ -------------- -------------
Income from investment operations# -
Net investment income ss $ 0.51 $ 0.52 $ 0.54 $ 0.09 $ 0.57 $ 0.58
Net realized and unrealized gain (loss) on
investments (0.18) 0.22 0.02 (0.98) 0.86 0.36
----------- ----------- ------------------------ -------------- -------------
Total from investment operations $ 0.33 $ 0.74 $ 0.56 $ (0.89) $ 1.43 $ 0.94
----------- ----------- ------------------------ -------------- -------------
Less distributions declared to
shareholders -
From net investment income $ (0.51) $ (0.52) $ (0.54) $ (0.08) $ (0.57) $ (0.58)
From net realized gain on investments -- -- (0.04) -- (0.11) --
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 $ (0.51) $ (0.52) $ (0.61) $ (0.09) $ (0.69) $ (0.58)
----------- ----------- ------------------------ -------------- -------------
Net asset value - end of period $ 9.64 $ 9.82 $ 9.60 $ 9.65 $ 10.63 $ 9.89
=========== =========== ======================== ============== =============
Total return++ 3.43% 7.81% 6.07% (8.39)%+++ 14.71% 10.28%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 0.86% 0.86% 0.60% 0.77%+ 0.49% 0.05%+
Net investment income 5.26% 5.26% 5.75% 5.15%+ 5.42% 6.27%+
Portfolio turnover 24% 56% 131% 19% 53% 54%
Net assets at end of period (000 omitted) $80,342 $87,553 $89,894 $108,579 $124,131 $74,329
*For the period from the commencement of offering Class A shares, 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.
ss 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 $0.52 $0.08 $0.52 $0.51
Ratios: (to average net assets):
Expenses## -- 0.90% 0.83% 1.12%+ 0.93% 0.81%+
Net investment income -- 5.22% 5.52% 4.80%+ 4.97% 5.51%+
</TABLE>
See notes to financial statements
37
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Florida Fund
- -------------------------------------------------- -----------------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
- -------------------------------------------------- ----------- ----------- ----------- ------------ --------------
1997 1996 1995 1994 1994**
- -------------------------------------------------- ----------- ----------- ----------- ------------ --------------
Class B
- -------------------------------------------------- ----------- ----------- ----------- ------------ --------------
<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 income ss $ 0.43 $ 0.43 $ 0.43 $ 0.07 $ 0.18
Net realized and unrealized gain (loss)
on investments (0.18) 0.22 0.04 (0.98) 0.03
----------- ----------- ----------- ------------ --------------
Total from investment operations $ 0.25 $ 0.65 $ 0.47 $(0.91) $ 0.21
----------- ----------- ----------- ------------ --------------
Less distributions declared to
shareholders -
From net investment income $ (0.43) $ (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 $ (0.43) $ (0.43) $ (0.51) $(0.07) $(0.28)
----------- ----------- ----------- ------------ --------------
Net asset value - end of period $ 9.64 $ 9.82 $ 9.60 $ 9.64 $10.62
=========== =========== =========== ============ ==============
Total return 2.56% 6.88% 5.06% (8.55)%+++ 4.87%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.72% 1.74% 1.68% 1.82%+ 1.64%+
Net investment income 4.40% 4.36% 4.63% 4.08%+ 3.82%+
Portfolio turnover 24% 56% 131% 19% 53%
Net assets at end of period (000 omitted) $14,701 $14,448 $12,667 $7,995 $7,244
**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.
++++For the year ended March 31, 1996, the per share distribution in excess of net investment income was $0.0012.
ss 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 -- $0.43 $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
38
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Georgia Fund
- -------------------------------------------------- ---------------------------------------------------
Two Months
Ended
Year Ended March 31, March 31,
- -------------------------------------------------- ----------- ----------- ----------- ------------
1997 1996 1995 1994
- -------------------------------------------------- ----------- ----------- ----------- ------------
Class A
- -------------------------------------------------- ----------- ----------- ----------- ------------
<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 ss $ 0.56 $ 0.54 $ 0.57 $ 0.09
Net realized and unrealized gain (loss)
on investments (0.10) 0.12 -- (0.92)
----------- ----------- ----------- ------------
Total from investment operations $ 0.46 $ 0.66 $ 0.57 $ (0.83)
----------- ----------- ----------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (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 $ (0.55) $ (0.54) $ (0.60) $ (0.09)
----------- ----------- ----------- ------------
Net asset value - end of period $ 10.38 $ 10.47 $ 10.35 $ 10.38
=========== =========== =========== ============
Total return++ 4.47% 6.48% 5.65% (7.34)%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.03% 1.17% 1.14% 1.18%+
Net investment income 5.34% 5.11% 5.50% 5.05%+
Portfolio turnover 27% 65% 56% 5%
Net assets at end of period (000 omitted) $59,843 $68,183 $74,432 $85,878
+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 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.
ss 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 $0.55 $0.53 $0.56 $0.09
Ratios (to average net assets):
Expenses## 1.10% 1.27% 1.24% 1.28%+
Net investment income 5.27% 5.01% 5.40% 4.95%+
</TABLE>
See notes to financial statements
39
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Georgia Fund
- --------------------------------------------- -----------------------------------------------------------------------------
Period Ended
Year Ended January 31, January 31,
- --------------------------------------------- -----------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989*
- --------------------------------------------- -----------------------------------------------------------------------------
Class A
- --------------------------------------------- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.57 $ 10.22 $ 9.83 $ 9.73 $ 9.73 $ 9.53
----------- ----------- ----------- ----------- ----------- --------------
Income from investment operations -
Net investment income ss $ 0.57 $ 0.58 $ 0.61 $ 0.63 $ 0.66 $ 0.32
Net realized and unrealized gain on
investments 0.75 0.38 0.46 0.12 0.02 0.14
----------- ----------- ----------- ----------- ----------- --------------
Total from investment operations $ 1.32 $ 0.96 $ 1.07 $ 0.75 $ 0.68 $ 0.46
----------- ----------- ----------- ----------- ----------- --------------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.60) $ (0.66) $ (0.63) $ (0.66) $(0.26)
From net realized gain on investments (0.01) (0.01) (0.02) (0.02) (0.02) --
In excess of net investment income (0.03) -- -- -- -- --
----------- ----------- ----------- ----------- ----------- --------------
Total distributions declared to
shareholders $ (0.59) $ (0.61) $ (0.68) $ (0.65) $ (0.68) $(0.26)
----------- ----------- ----------- ----------- ----------- --------------
Net asset value - end of period $ 11.30 $ 10.57 $ 10.22 $ 9.83 $ 9.73 $ 9.73
=========== =========== =========== =========== =========== ==============
Total return++ 12.71% 9.56% 11.29% 8.06% 7.19% 7.57%+
Ratios (to average net assets)/Supplemental data ss:
Expenses 1.21% 1.08% 0.99% 0.74% 0.42% 0.40%+
Net investment income 5.10% 5.75% 6.08% 6.46% 6.72% 6.18%+
Portfolio turnover 14% 27% 36% 71% 99% --
Net assets at end of period (000 omitted) $94,407 $64,649 $47,869 $29,214 $12,628 $4,383
*For the period from the commencement of investment operations, June 6, 1988, to January 31, 1989.
+Annualized.
++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.
ss 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 $ 0.60 $ 0.59 $ 0.57 $ 0.29
Ratios (to average net assets):
Expenses 1.31% 1.18% 1.09% 1.11% 1.31% 1.07%+
Net investment income 5.00% 5.65% 5.98% 6.09% 5.83% 5.51%+
</TABLE>
See notes to financial statements
40
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Georgia Fund
- --------------------------------------------- ---------------------------------------------------------------------
Two Months Period Ended
Year Ended March 31, Ended March 31, January 31,
- --------------------------------------------- ---------------------------------------------------------------------
1997 1996 1995 1994 1994**
- --------------------------------------------- ---------------------------------------------------------------------
Class B
- --------------------------------------------- ---------------------------------------------------------------------
<S> <C> <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 $11.26
----------- ----------- --------------------------- --------------
Income from investment operations# -
Net investment income ss $ 0.47 $ 0.45 $ 0.47 $ 0.07 $ 0.19
Net realized and unrealized gain (loss) on
investments (0.09) 0.12 0.02 (0.91) 0.05
----------- ----------- --------------------------- --------------
Total from investment operations $ 0.38 $ 0.57 $ 0.49 $(0.84) $ 0.24
----------- ----------- --------------------------- --------------
Less distributions declared to shareholders -
From net investment income $(0.47) $ (0.46) $(0.47) $(0.07) $(0.18)
From net realized gain on investments -- -- (0.01) -- (0.01)
In excess of net investment income++++ -- (0.00) -- (0.01) (0.01)
In excess of net realized gain on
investments -- -- (0.03) -- --
----------- ----------- --------------------------- --------------
Total distributions declared to
shareholders $(0.47) $ (0.46) $(0.51) $(0.08) $(0.20)
----------- ----------- --------------------------- --------------
Net asset value - end of period $10.38 $ 10.47 $10.36 $10.38 $11.30
=========== =========== =========================== ==============
Total return 3.63% 5.52% 4.88% (7.47)%+++ 5.34%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.83% 2.00% 1.96% 1.99%+ 1.97%+
Net investment income 4.53% 4.27% 4.66% 4.17%+ 3.83%+
Portfolio turnover 27% 65% 56% 5% 14%
Net assets at end of period (000 omitted) $9,995 $10,205 $8,695 $6,631 $5,766
**For the period from the commencement of offering of Class B shares, September 7, 1993, to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, 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 $0.002.
ss The investment adviser voluntarily waived a portion of its management fee for the period indicated. If this fee
had been incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.47 -- -- -- --
Ratios: (to average net assets):
Expenses## 1.90% -- -- -- --
Net investment income 4.46% -- -- -- --
</TABLE>
See notes to financial statements
41
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Maryland Fund
- ----------------------------------------------------------------------------------------------------------------------
Two Months
Ended
Year Ended March 31, March 31, Year Ended January 31,
- --------------------------------------------- -----------------------------------------------------------------------
1997 1996 1995 1994 1994 1993
- --------------------------------------------- -----------------------------------------------------------------------
Class A
- --------------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.04 $ 10.94 $ 10.89 $ 11.81 $ 11.40 $ 11.20
---------- ----------- ----------- ------------ ----------- -----------
Income from investment operations# -
Net investment income ss $ 0.57 $ 0.57 $ 0.59 $ 0.10 $ 0.62 $ 0.67
Net realized and unrealized gain (loss) on
investments (0.16) 0.09 0.09 (0.92) 0.53 0.24
---------- ----------- ----------- ------------ ----------- -----------
Total from investment operations $ 0.41 $ 0.66 $ 0.68 $ (0.82) $ 1.15 $ 0.91
---------- ----------- ----------- ------------ ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.56) $ (0.56) $ (0.59) $ (0.06) $ (0.61) $ (0.69)
From net realized gain on investments -- -- -- -- (0.07) (0.02)
In excess of net investment income++++ -- -- (0.00) (0.04) (0.04) --
In excess of net realized gain on
investments -- -- (0.04) -- (0.02) --
---------- ----------- ----------- ------------ ----------- -----------
Total distributions declared to
shareholders $ (0.56) $ (0.56) $ (0.63) $ (0.10) $ (0.74) $ (0.71)
---------- ----------- ----------- ------------ ----------- -----------
Net asset value - end of period $ 10.89 $ 11.04 $ 10.94 $ 10.89 $ 11.81 $ 11.40
========== =========== =========== ============ =========== ===========
Total return++ 3.75% 6.17% 6.51% (6.96)%+++ 10.27% 8.34%
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.12% 1.19% 1.21% 1.23%+ 1.25% 1.14%
Net investment income 5.21% 5.10% 5.46% 4.97%+ 5.42% 6.13%
Portfolio turnover 22% 15% 31% 1% 25% 5%
Net assets at end of period (000 omitted) $126,405 $139,297 $145,361 $161,290 $173,419 $145,794
+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, 1995, the per share distribution in excess of net investment income was $0.003.
ss The investment adviser voluntarily waived a portion of its management fee for the period indicated. If this fee
had been incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income $0.57 -- -- -- -- --
Ratios: (to average net assets):
Expenses## 1.19% -- -- -- -- --
Net investment income 5.14% -- -- -- -- --
</TABLE>
See notes to financial statements
42
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Maryland Fund
- --------------------------------------------- -------------------------------------------------------
Year Ended January 31, 1992 1991 1990 1989 1988
- --------------------------------------------- ---------------------- --------- --------- ----------
Class A
- --------------------------------------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.97 $ 10.79 $ 10.76 $ 10.62 $ 11.20
---------- ----------- --------- --------- ----------
Income from investment operations -
Net investment income $ 0.70 $ 0.70 $ 0.69 $ 0.69 $ 0.68
Net realized and unrealized gain (loss) on
investments 0.31 0.19 0.04 0.14 (0.57)
---------- ----------- --------- --------- ----------
Total from investment operations $ 1.01 $ 0.89 $ 0.73 $ 0.83 $ 0.11
---------- ----------- --------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.70) $ (0.69) $ (0.69) $ (0.67)
From net realized gain on investments (0.02) (0.01) (0.01) -- (0.01)
From paid-in capital -- -- -- -- (0.01)
---------- ----------- --------- --------- ----------
Total distributions declared to
shareholders $ (0.78) $ (0.71) $ (0.70) $ (0.69) $ (0.69)
---------- ----------- --------- --------- ----------
Net asset value - end of period $ 11.20 $ 10.97 $ 10.79 $ 10.76 $ 10.62
========== =========== ========= ========= ==========
Total return++ 9.55% 8.51% 6.90% 8.15% 1.25%
Ratios (to average net assets)/Supplemental data:
Expenses 1.16% 1.17% 1.18% 1.14% 1.10%
Net investment income 6.32% 6.45% 6.33% 6.52% 6.47%
Portfolio turnover 9% 41% 58% 34% 13%
Net assets at end of period (000 omitted) $119,120 $101,742 $93,175 $84,380 $79,906
++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
43
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Maryland Fund
- --------------------------------------------- -----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
- --------------------------------------------- -----------------------------------------------------------
1997 1996 1995 1994 1994**
- --------------------------------------------- -----------------------------------------------------------
Class B
- --------------------------------------------- -----------------------------------------------------------
<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 ss $ 0.50 $ 0.48 $ 0.51 $ 0.08 $ 0.22
Net realized and unrealized gain (loss) on
investments (0.17) 0.10 0.09 (0.91) (0.01)
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.33 $ 0.58 $ 0.60 $(0.83) $ 0.21
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income $ (0.48) $ (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 $ (0.48) $ (0.48) $ (0.55) $(0.09) $(0.29)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 10.88 $ 11.03 $ 10.93 $10.88 $11.80
========= ========= ========= ============ ==============
Total return 3.03% 5.41% 5.75% (7.08)%+++ 4.45%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.82% 1.91% 1.93% 1.95%+ 1.81%+
Net investment income 4.50% 4.36% 4.73% 4.19%+ 4.23%+
Portfolio turnover 22% 15% 31% 1% 25%
Net assets at end of period (000 omitted) $17,379 $13,694 $11,168 $6,478 $5,345
**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.
++++For the year ended March 31, 1995, the per share distribution in excess of net investment income was
$0.003.
ss The investment adviser voluntarily waived a portion of its management fee for the period indicated.
If this fee had been incurred by the Fund, the net investment income per share and the ratios would
have been:
Net investment income $ 0.49 -- -- -- --
Ratios: (to average net assets):
Expenses## 1.89% -- -- -- --
Net investment income 4.43% -- -- -- --
</TABLE>
See notes to financial statements
44
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Massachusetts Fund
- --------------------------------------------- ------------------------------------------------------------------------
Two Months
Ended
Year Ended March 31, March 31, Year Ended January 31,
- --------------------------------------------- ------------------------------------------------------------------------
1997 1996 1995 1994 1994 1993
- --------------------------------------------- ------------------------------------------------------------------------
Class A
- --------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.98 $ 10.84 $ 10.90 $ 11.75 $ 11.41 $ 11.05
---------- ----------- ----------- ------------- ----------- -----------
Income from investment operations# -
Net investment income ss $ 0.61 $ 0.60 $ 0.64 $ 0.11 $ 0.64 $ 0.68
Net realized and unrealized gain (loss) on
investments (0.14) 0.14 (0.03) (0.85) 0.58 0.39
---------- ----------- ----------- ------------- ----------- -----------
Total from investment operations $ 0.47 $ 0.74 $ 0.61 $ (0.74) $ 1.22 $ 1.07
---------- ----------- ----------- ------------- ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.59) $ (0.60) $ (0.64) $ (0.07) $ (0.64) $ (0.71)
From net realized gain on investments -- -- (0.02) -- (0.20) --
In excess of net investment income++++ -- (0.00) -- (0.04) (0.04) --
In excess of net realized gain on
investments -- -- (0.01) -- -- --
---------- ----------- ----------- ------------- ----------- -----------
Total distributions declared to
shareholders $ (0.59) $ (0.60) $ (0.67) $ (0.11) $ (0.88) $ (0.71)
---------- ----------- ----------- ------------- ----------- -----------
Net asset value - end of period $ 10.86 $ 10.98 $ 10.84 $ 10.90 $ 11.75 $ 11.41
========== =========== =========== ============= =========== ===========
Total return++ 4.39% 6.95% 5.89% (6.34)%+++ 11.02% 10.03%
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.12% 1.17% 1.17% 1.19%+ 1.19% 1.08%
Net investment income 5.55% 5.44% 6.01% 5.64%+ 5.71% 6.33%
Portfolio turnover 33% 31% 31% 4% 30% 32%
Net assets at end of period (000 omitted) $234,874 $249,497 $262,551 $277,748 $300,894 $270,778
+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 $0.002.
ss The investment adviser voluntarily waived a portion of its management fee for the period indicated. If this fee
had been incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income $0.60 -- -- -- -- --
Ratios: (to average net assets):
Expenses## 1.19% -- -- -- -- --
Net investment income 5.48% -- -- -- -- --
</TABLE>
See notes to financial statements
45
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Massachusetts Fund
- --------------------------------------------- -----------------------------------------------------------
Year Ended January 31, 1992 1991 1990 1989 1988
- --------------------------------------------- ---------------------- ----------- ----------- ------------
Class A
- --------------------------------------------- -----------------------------------------------------------
<S> <C> <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 $ 11.25
---------- ----------- ----------- ----------- -----------
Income from investment operations -
Net investment income $ 0.73 $ 0.71 $ 0.72 $ 0.72 $ 0.71
Net realized and unrealized gain (loss) on
investments 0.43 0.11 (0.07) 0.05 (0.65)
---------- ----------- ----------- ----------- -----------
Total from investment operations $ 1.16 $ 0.82 $ 0.65 $ 0.77 $ 0.06
---------- ----------- ----------- ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.78) $ (0.72) $ (0.72) $ (0.72) $ (0.71)
From paid-in capital (0.01) -- -- -- --
---------- ----------- ----------- ----------- -----------
Total distributions declared to
shareholders $ (0.79) $ (0.72) $ (0.72) $ (0.72) $ (0.71)
---------- ----------- ----------- ----------- -----------
Net asset value - end of period $ 11.05 $ 10.68 $ 10.58 $ 10.65 $ 10.60
========== =========== =========== =========== ===========
Total return++ 11.23% 8.12% 6.28% 7.65% 0.80%
Ratios (to average net assets)/Supplemental data:
Expenses 1.06% 1.07% 1.10% 1.07% 1.04%
Net investment income 6.65% 6.74% 6.75% 6.90% 6.79%
Portfolio turnover 51% 43% 52% 26% 27%
Net assets at end of period (000 omitted) $239,311 $213,679 $215,381 $212,763 $224,219
++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
46
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Massachusetts Fund
- --------------------------------------------- -----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
- --------------------------------------------- -----------------------------------------------------------
1997 1996 1995 1994 1994**
- --------------------------------------------- -----------------------------------------------------------
Class B
- --------------------------------------------- -----------------------------------------------------------
<S> <C> <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 $11.91
--------- --------- --------- ------------ --------------
Income from investment operations# -
Net investment income ss $ 0.53 $ 0.52 $ 0.55 $ 0.09 $ 0.23
Net realized and unrealized gain (loss) on
investments (0.13) 0.15 (0.02) (0.85) 0.04
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.40 $ 0.67 $ 0.53 $(0.76) $ 0.27
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income $ (0.52) $ (0.52) $(0.56) $(0.09) $(0.22)
From net realized gain on investments -- -- (0.02) -- (0.20)
In excess of net investment income++++ -- (0.00) -- -- (0.01)
In excess of net realized gain on
investments -- -- (0.01) -- --
--------- --------- --------- ------------ --------------
Total distributions declared to
shareholders $ (0.52) $ (0.52) $(0.59) $(0.09) $(0.43)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 10.87 $ 10.99 $10.84 $10.90 $11.75
========= ========= ========= ============ ==============
Total return 3.66% 6.27% 5.13% (6.46)%+++ 5.89%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.81% 1.90% 1.89% 1.91%+ 1.81%+
Net investment income 4.81% 4.71% 5.27% 4.89%+ 4.62%+
Portfolio turnover 33% 51% 31% 4% 30%
Net assets at end of period (000 omitted) $15,204 $11,316 $8,676 $4,993 $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, are based on average shares
outstanding.
##For fiscal year ending after September 1, 1995, the Fund's expenses are calculated without reduction
of fees paid indirectly.
++++For the year ended March 31, 1996, the per share distribution in excess of net investment income was
$0.0013.
ss The investment adviser voluntarily waived a portion of its management fee for the period indicated.
If this fee had been incurred by the Fund, the net investment income per share and the ratios would
have been:
Net investment income $0.52 -- -- -- --
Ratios: (to average net assets):
Expenses## 1.88% -- -- -- --
Net investment income 4.74% -- -- -- --
</TABLE>
See notes to financial statements
47
<PAGE>
Notes to Financial Statements
(1) Business and Organization
MFS Municipal Series Trust (the Trust) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Trust presently
consists of sixteen 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 listed on commodities exchanges are valued at
closing settlement prices. Securities for which there are no such quotations
or valuations are valued at fair value as determined in good faith by or at
the direction of the Trustees.
Deferred Organization Expenses -- Costs incurred by a Fund in connection with
its organization have been deferred and are being amortized on a
straight-line basis over a five-year period beginning on the date of
commencement of operations of the Fund.
Futures Contracts -- Each Fund may enter into futures contracts for the
delayed delivery of securities or contracts based on financial indices at a
fixed price on a future date. In entering such contracts, each Fund is
required to deposit either in cash or securities an amount equal to a certain
percentage of the contract amount. Subsequent payments are made or received
by the Fund each day, depending on the daily fluctuations in the value of the
underlying security, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. Each Fund's investment in futures
contracts is designed to hedge against anticipated future changes in interest
rates or securities prices. Investments in interest rate futures for purposes
other than hedging may be made to modify the duration of the portfolio
without incurring the additional transaction costs involved in buying and
selling the underlying securities. 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.
Legal fees and other related expenses incurred to preserve and protect the
value of a security owned are added to the cost of the security; other legal
fees are expensed. Capital infusions, which are generally non-recurring,
incurred to protect or enhance the value of high yield debt securities; are
reported as an addition to the cost basis of the security. Ongoing costs
incurred to protect or enhance an investment, or costs incurred to pursue
other claims or legal actions, are reported as operating expenses.
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
48
<PAGE>
Notes to Financial Statements - continued
issued after August 7, 1986 may be considered a tax-preference item to
shareholders. Distributions to shareholders are recorded on the ex-dividend
date.
Each Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax return
of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or accumulated net
realized gains.
During the year ended March 31, 1997, the following amounts were reclassified
from accumulated distributions in excess of net investment income to
accumulated net realized loss on investments due to timing differences
between book and tax accounting for accrued market discount on disposal of
securities:
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
========== ========= ============ ======== ========= =========== ===============
<S> <C> <C> <C> <C> <C> <C>
$65,498 $23,031 $69,842 $5,020 $34,609 $161,664 $79,236
</TABLE>
These changes had no effect on the net assets or the net asset value per
share of the Funds.
At March 31, 1997, the following Funds, for federal income tax purposes, had
capital loss carryforwards which may be applied against any net taxable
realized gains of each succeeding year until the earlier of their utilization
or expiration.
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Expiration Date Fund Fund Fund Fund Fund Fund Fund
================= ======== ============= ============== ============= ============= ============= ===============
<S> <C> <C> <C> <C> <C> <C> <C>
March 31, 2002 $ -- $ -- $ 277,504 $ -- $ -- $ -- $ --
March 31, 2003 -- -- $10,212,078 5,923,777 2,089,918 -- 3,052,342
March 31, 2004 -- 2,618,347 403,290 -- 1,339,129 4,231,087 1,732,935
March 31, 2005 -- 215,971 588,165 1,290,661 -- 1,055,172 405,182
-------- ----------- -------------- ------------- ------------- ------------- -----------------
Total $ $2,834,318 $11,481,037 $7,214,438 $3,429,047 $ 5,286,259 $5,190,459
======== =========== ============== ============= ============= ============= =================
</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 distribution and service
fees. All shareholders bear the common expenses of the Fund pro rata based on
settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
(3) Transactions with Affiliates
Investment Adviser -- The Trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.55%
of each Fund's average daily net assets. The investment adviser waived a
portion of its fee with respect to the California, Georgia, Maryland and
Massachusetts Funds, which is reflected as a 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 officers and
Trustees of the Trust are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Trust has
an unfunded defined benefit plan for all its independent Trustees and Mr.
Bailey. Included in Trustees' compensation for the year ended March 31, 1997,
is a net periodic pension expense for each Fund, as follows:
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
========= ========= ============ ======== ======== ========= ===============
$3,721 $3,198 $11,432 $3,201 $5,090 $5,425 $20,098
Administrator -- Effective March 1, 1997, the Trust has an administrative
services agreement with MFS to provide the Trust with certain financial,
legal, compliance, shareholder communications and other administrative
services. As a partial reimbursement for the cost of providing these
services, the Fund pays MFS an administrative fee up to 0.015% per annum of
the Fund's average daily net assets, provided that the administrative fee is
not assessed on Fund assets that exceed $3 billion.
Distributor -- MFD, a wholly owned subsidiary of MFS, as distributor,
received $65,389, $178,324, $347,772, $86,868, $61,423, $141,691 and $177,166
as its portion of the sales charge on sales of Class A shares of the Alabama,
Arkansas, California, Georgia, Florida, Maryland and Massachusetts Funds,
respectively, for the year ended March 31, 1997.
49
<PAGE>
Notes to Financial Statements - continued
The Trustees have adopted a distribution plan for Class A, Class B and Class
C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
Each Fund's distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service
fee to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum of the Fund's average daily net assets attributable to
Class A shares which are attributable to that securities dealer, a
distribution fee to MFD of up to 0.10% per annum of the Fund's average daily
net assets attributable to Class A shares, commissions to dealers and
payments to MFD wholesalers for sales at or above a certain dollar level, and
other such distribution-related expenses that are approved by the Fund. MFD
retains the service fee for accounts not attributable to a securities dealer,
which amounted to $57,575, $36,598, $19,500, $51,461 and $172,420 for the
Alabama, Arkansas, Georgia, Maryland and Massachusetts Funds for the year
ended March 31, 1997. Fees incurred under the distribution plan during the
year ended March 31, 1997 were 0.25%, 0.10%, 0.00%, 0.00%, 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, California, Florida,
Georgia, Maryland and Massachusetts Funds. Payments of the 0.10% per annum
distribution fee will commence on such date as the Trustees may determine for
the Alabama, Arkansas and Georgia Funds. Payments of the 0.35% per annum
distribution and service fee by the California and Florida Funds will
commence on such date as the Trustees may determine. In the case of the
Arkansas Fund, a portion of the service fee is currently being paid by the
Fund; payment of the remaining portion of the service fee will become payable
on such date as the Trustees may determine.
Each Fund's distribution plan provides that the Fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the Fund's average daily net assets attributable to Class B and
Class C shares. MFD will pay to securities dealers that enter into a sales
agreement with MFD all or a portion of the service fee attributable to Class
B and Class C shares, and will pay to such securities dealers all of the
distribution fee attributable to Class C shares. Except in the case of the up
to 0.25% per annum first year service fee, payments by the California and
Florida Funds will commence on such date to be determined by the Trustees. In
the case of the Arkansas Fund, except in the case of the up to 0.25% per
annum first year service fee, the service fee is currently 0.10% per annum on
Class B shares held over one year. 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 $4,153, $2,699,
$4,126, $4,680 and $1,836 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
$8,426 for the California Fund for Class C shares. Fees incurred under the
distribution plan during the year ended March 31, 1997, were 1.00%, 0.84%,
0.83%, 0.80%, 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 distribution plan during the year
ended March 31, 1997 were 1.00% of the Fund's average daily net assets
attributable to Class C shares for the California Fund 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 year ended March 31, 1997 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 $ -- $ -- $ 16,440 $ 10 $ 244 $ -- $ 47
-------- --------- ------------ --------- --------- --------- ---------------
Class B $7,246 $24,877 $171,782 $50,353 $45,183 $39,109 $29,809
-------- --------- ------------ --------- --------- --------- ---------------
Class C $ -- $ -- $ 3,203 $ -- $ -- $ -- $ --
======== ========= ============ ========= ========= ========= ===============
</TABLE>
Shareholder Servicing Agent -- MFSC, a wholly owned subsidiary of MFS, earns
a fee for its services as shareholder servicing agent. The fee is calculated
as a percentage of each Fund's average daily net assets at an effective
annual rate of 0.13%. Prior to January 1, 1997, the fee was calculated as a
percentage of each Fund's 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 $18,212 $14,435 $217,495 $23,004 $19,667 $30,967 $82,682
Sales 24,547 43,069 253,260 30,192 29,372 43,184 90,133
</TABLE>
50
<PAGE>
Notes to Financial Statements - continued
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 $79,124 $145,330 $253,441 $90,193 $63,932 $135,167 $232,542
========== ========= ============ ========= ========= =========== ===============
Gross unrealized appreciation $ 4,529 $ 5,929 $ 11,948 $ 4,250 $ 4,142 $ 7,102 $ 13,631
Gross unrealized depreciation (516) (814) (1,145) (610) (248) (752) (1,827)
---------- --------- ------------ --------- --------- ----------- ---------------
Net unrealized appreciation $ 4,013 $ 5,115 $ 10,803 $ 3,640 $ 3,894 $ 6,350 $ 11,804
========== ========= ============ ========= ========= =========== ===============
</TABLE>
(5) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
Alabama Fund Arkansas Fund California Fund
-------------------- ---------------------- ------------------------
Year Ended March 31, 1997
(000 Omitted) Shares Amount Shares Amount Shares Amount
=============================== ======= =========== ========= ============ =========== ============
<S> <C> <C> <C> <C> <C> <C>
Shares sold 241 $ 2,533 892 $ 8,719 25,463 $ 140,414
Shares issued to shareholders
in reinvestment
of distributions 192 2,024 368 3,589 1,024 5,658
Shares reacquired (933) (9,831) (4,159) (40,524) (31,073) (171,472)
------- ----------- --------- ------------ ----------- ------------
Net decrease (500) $(5,274) (2,899) $(28,216) (4,586) $ (25,400)
======= =========== ========= ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, 1996
(000 Omitted) Shares Amount Shares Amount Shares Amount
=============================== ======= =========== ========= ============ =========== ============
<S> <C> <C> <C> <C> <C> <C>
Shares sold 461 $ 4,854 952 $ 9,317 14,785 $ 82,615
Shares issued to shareholders
in reinvestment
of distributions 167 1,774 433 4,248 1,157 6,424
Shares reacquired (893) (9,492) (3,027) (29,685) (19,147) (106,882)
------- ----------- --------- ------------ ----------- ------------
Net decrease (265) $ (2,864) (1,642) $(16,120) (3,205) $ (17,843)
======= =========== ========= ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Florida Fund Georgia Fund Maryland Fund
-------------------- ---------------------- ------------------------
Year Ended March 31, 1997
(000 Omitted) Shares Amount Shares Amount Shares Amount
=============================== ======= =========== ========= ============ =========== ============
<S> <C> <C> <C> <C> <C> <C>
Shares sold 4,179 $40,872 285 $2,988 483 $5,314
Shares issued to shareholders
in reinvestment
of distributions 175 1,710 169 1,776 323 3,556
Shares reacquired (4,933) (48,215) (1,204) (12,622) (1,816) (19,969)
------- ----------- --------- ------------ ----------- ------------
Net decrease (579) $ (5,633) (750) $ (7,858) (1,010) $(11,099)
======= =========== ========= ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, 1996
(000 Omitted) Shares Amount Shares Amount Shares Amount
=============================== ======= =========== ========= ============ =========== ============
<S> <C> <C> <C> <C> <C> <C>
Shares sold 4,022 $ 39,659 599 $ 6,335 576 $ 6,386
Shares issued to shareholders
in reinvestment
of distributions 164 1,624 186 1,962 358 3,959
Shares reacquired (4,632) (45,774) (1,458) (15,415) (1,602) (17,764)
------- ----------- --------- ------------ ----------- ------------
Net decrease (446) $ (4,491) (673) $ (7,118) (668) (7,419)
======= =========== ========= ============ =========== ============
</TABLE>
51
<PAGE>
Notes to Financial Statements - continued
<TABLE>
<CAPTION>
Class A Shares - continued
Massachusetts Fund
---------------------------
Year Ended March 31, 1997
(000 Omitted) Shares Amount
==================================================== ========= ================
<S> <C> <C>
Shares sold 5,022 $ 54,988
Shares issued to shareholders in reinvestment of
distributions 543 5,952
Shares reacquired (6,660) (72,947)
--------- ----------------
Net decrease (1,095) $(12,007)
========= ================
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, 1996
(000 Omitted) Shares Amount
==================================================== ========= ================
<S> <C> <C>
Shares sold 3,359 $ 37,357
Shares issued to shareholders in reinvestment of
distributions 576 6,381
Shares reacquired (5,434) (60,354)
--------- ----------------
Net decrease (1,499) $(16,616)
========= ================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
Alabama Fund Arkansas Fund California Fund
------------------ ------------------- ---------------------
Year Ended March 31, 1997
(000 Omitted) Shares Amount Shares Amount Shares Amount
==================================================== ======== ======== ======== ========= ========= ==========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 137 $ 1,447 93 $ 908 1,772 $ 9,775
Shares issued to shareholders in reinvestment of
distributions 15 156 16 158 136 753
Shares reacquired (41) (437) (148) (1,448) (1,490) (8,212)
-------- -------- -------- --------- --------- ----------
Net increase (decrease) 111 $ 1,166 (39) $ (382) 418 $ 2,316
======== ======== ======== ========= ========= ==========
Year Ended March 31, 1996
(000 Omitted) Shares Amount Shares Amount Shares Amount
==================================================== ======== ======== ======== ========= ========= ==========
Shares sold 183 $ 1,948 143 $ 1,406 1,980 $11,011
Shares issued to shareholders in reinvestment of
distributions 8 88 17 169 130 724
Shares reacquired (33) (345) (94) (923) (1,194) (6,655)
-------- -------- -------- --------- --------- ----------
Net increase 158 $ 1,691 66 $ 652 916 $ 5,080
======== ======== ======== ========= ========= ==========
Florida Fund Georgia Fund Maryland Fund
------------------ ------------------- ---------------------
Year Ended March 31, 1997
(000 Omitted) Shares Amount Shares Amount Shares Amount
==================================================== ======== ======== ======== ========= ========= ==========
Shares sold 298 $ 2,980 201 $ 2,101 542 $ 5,964
Shares issued to shareholders in reinvestment of
distributions 25 243 22 225 34 379
Shares reacquired (269) (2,696) (236) (2,459) (220) (2,424)
-------- -------- -------- --------- --------- ----------
Net increase (decrease) 54 $ 527 (13) $ (133) 356 $ 3,919
======== ======== ======== ========= ========= ==========
Year Ended March 31, 1996
(000 Omitted) Shares Amount Shares Amount Shares Amount
==================================================== ======== ======== ======== ========= ========= ==========
Shares sold 396 $ 3,905 301 $ 3,193 485 $ 5,368
Shares issued to shareholders in reinvestment of
distributions 25 249 21 218 27 297
Shares reacquired (269) (2,660) (186) (1,961) (292) (3,242)
-------- -------- -------- --------- --------- ----------
Net increase 152 $ 1,494 136 $ 1,450 220 $ 2,423
======== ======== ======== ========= ========= ==========
</TABLE>
52
<PAGE>
Notes to Financial Statements - continued
Class B Shares - continued
Massachusetts Fund
--------------------
Year Ended March 31, 1997
(000 Omitted) Shares Amount
==================================================== ======== ==========
Shares sold 546 $ 5,976
Shares issued to shareholders in reinvestment of
distributions 35 383
Shares reacquired (212) (2,324)
-------- ----------
Net increase 369 $ 4,035
======== ==========
Year Ended March 31, 1996
(000 Omitted) Shares Amount
==================================================== ======== ==========
Shares sold 374 $ 4,133
Shares issued to shareholders in reinvestment of
distributions 23 251
Shares reacquired (166) (1,834)
-------- ----------
Net increase 231 $ 2,550
======== ==========
Class C Shares
California Fund
------------------
Year Ended March 31, 1997
(000 Omitted) Shares Amount
==================================================== ======== =========
Shares sold 312 $ 1,727
Shares issued to shareholders in reinvestment of
distributions 14 80
Shares reaquired (411) (2,275)
-------- ---------
Net decrease (85) $ (468)
======== =========
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 reaquired (307) (1,701)
-------- ---------
Net increase 75 $ 421
======== =========
(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 $400 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 the each of the Funds for the year ended March 31, 1997, ranged from $0 to
$2,853.
(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.
<TABLE>
<CAPTION>
Futures Contracts Unrealized
Fund Description Expiration Contracts Position Depreciation
================== ========================== =============== ============== ============= =================
<S> <C> <C> <C> <C> <C>
Alabama Fund Municipal Bond Index June 1997 45 Long $101,531
Arkansas Fund Municipal Bond Index June 1997 20 Long $40,728
</TABLE>
At March 31, 1997, each Fund had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
The Trust also invests in indexed securities whose value may be linked to
interest rates, commodities, indices or other financial indicators. Indexed
securities are fixed-income securities whose proceeds at maturity
(principal-indexed securities) or interest rates (coupon-indexed securities)
rise and fall according to the change in one or more specified underlying
instruments. Indexed securities may be more volatile than the underlying
instrument itself. The following is a summary of such securities held at
March 31, 1997.
<TABLE>
<CAPTION>
Principal Amount Unrealized
Fund Description Index (000 Omitted) Value Depreciation
=========== ================================================= ================= ================ ============= ===============
<S> <C> <C> <C> <C> <C>
Arkansas Puerto Rico Public Buildings Authority
Public Education and Health Rev., 6.45s, 2016 PSA Municipal Swap $2,000 $1,874,880 $(125,120)
Maryland Puerto Rico Public Buildings Authority
Public Education and Health Rev., 6.45s, 2016 PSA Municipal Swap 3,000 2,812,320 (187,680)
</TABLE>
53
<PAGE>
Independent Auditors' Report
To the Trustees of MFS Municipal Series Trust and Shareholders of the
Portfolios of MFS Municipal Series Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of MFS Alabama Municipal Bond Fund,
MFS Arkansas Municipal Bond Fund, MFS California Municipal Bond Fund, MFS
Florida Municipal Bond Fund, MFS Georgia Municipal Bond Fund, MFS Maryland
Municipal Bond Fund and MFS Massachusetts Municipal Bond Fund (portfolios of
MFS Municipal Series Trust) as of March 31, 1997, the related statements of
operations for the year then ended, the statements of changes in net assets
for the years ended March 31, 1997, and 1996, and the financial highlights
for each of the years in the three-year period ended March 31, 1997, the two
months ended March 31, 1994, and each of the years in the seven-year period
ended January 31, 1994, (except for MFS California Municipal Bond Fund which
is for each of the years in the three-year period ended March 31, 1997, the
two months ended March 31, 1994, the eleven months ended January 31, 1994,
and for each of the years in the seven-year period ended February 28, 1993).
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of the
securities owned at March 31, 1997 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
aforementioned portfolios of MFS Municipal Series Trust at March 31, 1997,
the results of their operations, the changes in their net assets, and their
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 25, 1997
-----------------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
54
<PAGE>
Introducing a quick and easy way to learn some financial basics:
The ABCs of Investing
part of MFS(R) Heritage Planning(SM)
[LOGO OF JUGGLING BLOCKS]
This series of brief messages provides an overview of investment topics,
including:
(bullet) Dollar-cost Averaging: a simple method of investing that could work
for anyone
(bullet) Interest Rate Changes: what every fixed-income investor should know
(bullet) Lump-sum Rollovers: how to handle a windfall
(bullet) Professional Financial Advisers: why even smart investors may need one
(bullet) Straw into Gold: tips for weaving small lifestyle changes into dollars
to invest
(bullet) Weathering Market Downturns: how to maintain perspective
(bullet) Basic Steps Smart Investors Take Automatically
The series will include messages on other topics as they become available.
You can read through each topic quickly - in five minutes at most. Of course,
these materials are not designed to turn you into an expert. Your financial
adviser can provide more information on any of the ABC subjects. A conversation
with your adviser might also provide an opportune occasion to review your
portfolio and to assess your present and future financial needs.
To request your free copy of The ABCs of Investing series, call MFS at
1-800-225-2606 any business day from 8 a.m. to 8 p.m. Eastern time.
As part of MFS Heritage Planning, your adviser has access to a wide range of MFS
materials he or she would be happy to share with you on topics related to the
intergenerational concerns of people today. These include financing college
tuition and a secure retirement, eldercare, tax-smart gifting strategies, estate
and health care planning, and other issues.
55
<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 1-800-225-2606
any business day from 8 a.m. to 8 p.m. Eastern time. This material should be
read carefully before investing or sending money.
Stock
- -------------------------------------------------------------------------------
Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
MFS(R) Capital Growth Fund
MFS(R) Emerging Growth Fund
MFS(R) Gold & Natural Resources Fund
MFS(R) Growth Opportunities Fund
MFS(R) Managed Sectors Fund
MFS(R) OTC Fund
MFS(R) Research Fund
MFS(R) Research Growth and Income Fund
MFS(R) Strategic Growth Fund
MFS(R) Value Fund
Stock and Bond
- -------------------------------------------------------------------------------
MFS(R) Total Return Fund
MFS(R) Utilities Fund
Bond
- -------------------------------------------------------------------------------
MFS(R) Bond Fund
MFS(R) Government Mortgage Fund
MFS(R) Government Securities Fund
MFS(R) High Income Fund
MFS(R) Intermediate Income Fund
MFS(R) Strategic Income Fund
Limited Maturity Bond
- -------------------------------------------------------------------------------
MFS(R) Government Limited Maturity Fund
MFS(R) Limited Maturity Fund
MFS(R) Municipal Limited Maturity Fund
World
- -------------------------------------------------------------------------------
MFS(R)/Foreign & Colonial Emerging Markets Equity Fund
MFS(R)/Foreign & Colonial International Growth Fund
MFS(R)/Foreign & Colonial International Growth and Income Fund
MFS(R) World Asset Allocation Fundsm
MFS(R) World Equity Fund
MFS(R) World Governments Fund
MFS(R) World Growth Fund
MFS(R) World Total Return Fund
National Tax-Free Bond
- -------------------------------------------------------------------------------
MFS(R) Municipal Bond Fund
MFS(R) Municipal High Income Fund
MFS(R) Municipal Income Fund
State Tax-Free Bond
- -------------------------------------------------------------------------------
Alabama, Arkansas, California, Florida, Georgia, Maryland, Massachusetts,
Mississippi, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Virginia, West Virginia
Money Market
- -------------------------------------------------------------------------------
MFS(R) Cash Reserve Fund
MFS(R) Government Money Market Fund
MFS(R) Money Market Fund
56
<PAGE>
MFS(R) Municipal Series Trust
Trustees
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Marshall N. Cohan - Private Investor
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE - Chief Executive Officer, Edmund Gibbons
Ltd.; Chairman, Bank of N.T. Butterfield & Son Ltd.
Abby M. O'Neill - Private Investor; Director, Rockefeller Financial Services,
Inc. (investment 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
Portfolio Managers
David R. King*
David B. Smith*
Treasurer
W. Thomas London*
Assistant Treasurer
James O. Yost*
*Affiliated with the Investment Adviser
Secretary
Stephen E. Cavan*
Assistant Secretary
James R. Bordewick, Jr.*
Custodian
State Street Bank and Trust Company
Auditors
Deloitte & Touche LLP
Investor Information
For MFS stock and bond market outlooks, call toll free:
1-800-637-4458 anytime from a touch-tone telephone.
For information on MFS mutual funds, call your financial
adviser or, for an information kit, call toll free:
1-800-637-2929 any business day from 9 a.m. to 5 p.m.
Eastern time (or leave a message anytime).
Investor Service
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day from 8
a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576 any
business day from 9 a.m. to 5 p.m. Eastern time. (To use this service, your
phone must be equipped with a Telecommunications Device for the Deaf.)
For share prices, account balances, and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
World Wide Web
www.mfs.com
[MFS 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."
57
<PAGE>
MFS(R) Municipal
Series Trust
[DALBAR Logo]
500 Boylston Street
Boston, MA 02116-3741
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 INVESTMENT MANAGEMENT Logo]
We invented the mutual fund(SM)
Bulk Rate
U.S. Postage
P A I D
Permit #55638
Boston, MA
54/254
55/255
27/227/327
40/240
56/256
45/245
(c) 1997 MFS Fund Distributors, Inc., 500 Boylston Street,
Boston, MA 02116-3741
MST-2A-5/97-52M
<PAGE>
[logo MFS INVESTMENT MANAGEMENT]
Annual Report
for Year Ended
March 31, 1997
MFS(R) Municipal Series Trust
For the States of: Mississippi, New York, North Carolina, Pennsylvania, South
Carolina, Tennessee, Virginia and West Virginia
[GRAPHIC Money]
<PAGE>
Table of Contents
Letter from the Chairman 1
Portfolio Managers' Overview 2
Portfolio Managers' Profiles 2
Performance Summary 3
Fund Facts 4
Portfolio of Investments 13
Financial Statements 29
Notes to Financial Statements 61
Independent Auditors' Report 68
Trustees and Officers 69
Highlights
[bullet] The municipal bond market experienced significant volatility during
the past 12 months, with yields on high-grade municipals ranging
from a high of almost 6% in June to a low of 5.3% in November,
before ending the year at 5.7%.
[bullet] The diminished concern about tax reform, as well as the improved
fiscal positions of most state and local governments, contributed to
the municipal market's strong relative performance.
[bullet] Demand for municipal securities by casualty insurance companies has
been strong, a result of these companies' continued profitability
and desire to reduce taxable income.
[bullet] The Funds are seeking to protect asset values when interest rates
rise by increasing their cash positions. We are also selectively
purchasing higher-yielding credits that, in the opinion of our
research group, have proven to be the best investments in most
markets.
<PAGE>
Letter from the Chairman
[photo of A. Keith Brodkin]
Dear Shareholders:
After more than six years of expansion, the U.S. economy is experiencing
another year of moderate growth in 1997, although a few signs point to the
possibility of a modest rise in inflation during the year. On the positive
side, the pattern of moderate growth and inflation set over the past few
years now seems fairly well entrenched in the economy and, short of a major
international or domestic crisis, appears to have enough momentum to remain
on track for some time. Also, gains in such important sectors as housing,
automobiles, industrial production, and exports indicate a fair amount of
underlying strength in the economy. However, some reason for caution can be
seen in the continuing high levels of consumer debt and rising personal
bankruptcies, as well as in the ongoing tightness in the labor market, which
could add some inflationary pressures to the economy. Given these somewhat
conflicting indicators, we expect real (inflation-adjusted) growth to revolve
around 2% in 1997, with more strength occurring earlier in the year.
In the bond markets, conflicting signals over the strength of the economy
have created near-term volatility, and the Federal Reserve Board has begun
taking measured steps to control inflation by raising short-term interest
rates. Should additional signs of more rapid economic growth and,
particularly, of higher inflation appear, we would expect the Fed to continue
its anti-inflationary stance. While inflationary forces largely remained in
check in 1996, the continued strength in the labor market means that a pickup
in inflation is still possible. At the same time, the U.S. budget deficit
continues to decline and, as a percentage of gross domestic product, is now
less than 2%, which we consider a positive development for the bond markets.
Although interest rates may move higher over the coming months, we believe
that, at current levels, fixed-income markets remain equitably valued.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
[/s/ A. Keith Brodkin]
A. Keith Brodkin
Chairman and President
April 14, 1997
1
<PAGE>
Portfolio Managers' Overview
Dear Shareholders:
The municipal bond market experienced significant volatility during the
fiscal year ended March 31, 1997. High-grade municipal yields ranged from a
high of almost 6% in June to a low of 5.3% in November, before ending the
year at 5.7%. Municipals outperformed U.S. Treasuries during the period, as
yields on 30-year Treasury bonds rose approximately 50 basis points (0.50%)
to 7.1% (although principal value and interest on Treasury securities are
guaranteed by the U.S. government if held to maturity).
The primary reason for the strong relative performance of municipals was
the diminished concern about tax reform and its potential impact on the
market. This caused the ratio of municipal to Treasury yields to drop from a
fiscal-year high of approximately 85% last April to 82.5% by early May. This
relationship, like absolute yields, ranged widely during the fiscal year.
Generally, we witnessed strong demand for municipals and good relative
performance when yields rose, and underperformance by municipals when yields
declined. This trend was most visible during the fall of 1996, when the ratio
reached almost 80% and Treasury yields were close to their fiscal-year high
of 7.15%. The government market then rallied sharply, as a number of
statistics indicated a slowing economy. Municipals lagged, and the yield
ratio moved to over 84%, with yields on Treasuries dropping to 6.35%. The
ratio ended the fiscal year at about 80%.
During the year, demand for municipal securities by casualty insurance
companies was strong owing to these companies' continued profitability and
desire to reduce taxable income. Individual investors were also major buyers
when yields increased. During this period, mutual funds had generally flat
cash flows, as the equity market captivated the interest of most fund
investors. The supply of new municipal issues was essentially unchanged over
the period, while the redemption of older issues continued to run relatively
high. These factors helped create favorable supply/demand conditions for
municipals during the year.
Credit quality in the municipal market has generally continued its
improving trend, with most state and local budgets in very good shape. Health
care providers and utilities have come under pressure in particular markets,
while most corporate-backed industrial revenue bonds have done well. Unlike
some previous years, there has been no major credit event to impact the
market. This factor, combined with the increase in the issuance of insured
bonds from 43% of the market in 1995 to 47% currently, has caused yield
spreads for quality issues to continue narrowing, while lower-quality bonds
have outperformed.
Last year, our strategy was to remain fully invested and reduce interest
rate exposure by hedging in the futures market. This was effective when the
market sold off but, in many cases, the positive impact was more than offset
when the market rallied. This year, we are seeking to protect asset values
when rates rise by increasing our cash positions. Finally, we believe that
bond insurers will continue to grow market share and that credit spreads will
remain tight. In light of this expectation, we are selectively purchasing
higher-yielding credits recommended by our research group.
Respectfully,
[/s/ David R. King, Geoffrey L. Schechter, and David B. Smith]
David R. King, Geoffrey L. Schechter, and David B. Smith
Portfolio Managers
Portfolio Managers' Profiles
David R. 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 and Vice President - Investments in 1988. Mr. King is a
Chartered Financial Analyst (C.F.A.) and currently has portfolio management
responsibilities for the Pennsylvania, South Carolina, and Tennessee state
Funds.
Geoffrey L. Schechter joined MFS in 1993 as an Investment Officer in the
Fixed Income Department. A graduate of the University of Texas and the Boston
University Graduate School of Business Administration, he was named Assistant
Vice President - Investments in 1994 and Vice President - Investments in
1995. Mr. Schechter is a Certified Public Accountant (C.P.A.) and a C.F.A.
and currently has portfolio management responsibilities for the Mississippi,
New York, and North Carolina state Funds.
David B. Smith has been a member of the MFS investment staff since 1988. A
graduate of Union College and the Babson College Graduate School of Business
Administration, he began his career at MFS as a Senior Treasury Analyst in
the Corporate Treasury Department. He was named a Research Analyst in the
Fixed Income Department in 1989, Investment Officer in 1990, Assistant Vice
President - Investments in 1991, and Vice President - Investments in 1993.
Mr. Smith is a C.F.A. and currently has portfolio management responsibilities
for the Virginia and West Virginia state Funds.
2
<PAGE>
Performance Summary
The performance of the individual state Funds listed below and on the
following page includes the reinvestment of distributions but excludes the
effects of any sales charges. Each Fund's results have been compared to the
Lehman Brothers Municipal Bond Index (the Lehman Index), an unmanaged index
of municipal bond investments rated "Baa" or higher. However, while this
index is considered the benchmark for performance of municipal bonds, it is
comprised of municipal bonds issued nationwide, while each of the Funds in
the Trust is limited to investing in the bonds of a particular state. Because
individual indices do not exist for all of the states, we have provided a
discussion of each Fund's performance relative to the Lehman Index.
The portfolio of each Fund will tend to be structured with respect to
maturity and coupon and sector distribution, reflecting our views on interest
rates, credit quality, and financing trends. However, each Fund's performance
will differ because of supply/demand and credit quality conditions, which
vary from state to state.
Mississippi
The Fund's total returns for the fiscal year ended March 31, 1997 of 5.22%
for Class A shares and 4.33% for Class B shares underperformed the 5.45%
return of the Lehman Index, as well as the 5.04% average return for other
state tax-exempt municipal bond funds over the same period, as reported by
Lipper Analytical Services, an independent firm that reports mutual fund
performance. These returns assume the reinvestment of dividends and capital
gains but exclude the effects of any sales charges. The Fund's
underperformance relative to the Lehman Index is primarily attributable to
the aggressively defensive posture taken during the fourth quarter of the
calendar year, a period when interest rates declined dramatically.
New York
The Fund's total returns for the fiscal year ended March 31, 1997 of 4.68%
for Class A shares and 3.77% for Class B shares underperformed the 5.45%
return of the Lehman Index, as well as the 4.82% average return for New York
state tax-exempt municipal bond funds over the same period, as reported by
Lipper Analytical Services. These returns assume the reinvestment of
dividends and capital gains but exclude the effects of any sales charges. The
Fund's underperformance relative to the Lehman Index is primarily
attributable to the aggressively defensive posture taken during the fourth
quarter of the calendar year, a period when interest rates declined
dramatically.
North Carolina
The Fund's total returns for the fiscal year ended March 31, 1997 of 5.09%
for Class A shares, 4.36% for Class B shares, and 4.41% for Class C shares
underperformed the 5.45% return of the Lehman Index over the same period.
These returns assume the reinvestment of dividends and capital gains but
exclude the effects of any sales charges. Class A shares outperformed the
4.79% average return over the same period for North Carolina state tax-exempt
municipal bond funds, as reported by Lipper Analytical Services, while Class
B and Class C shares modestly underperformed the average. The Fund's
underperformance relative to the Lehman Index is primarily attributable to
the aggressively defensive posture taken during the fourth quarter of the
calendar year, a period when interest rates declined dramatically.
Pennsylvania
For the fiscal year ended March 31, 1997 the Fund's Class A shares provided a
total return of 4.67%, and Class B shares returned 3.83%. These figures
compare to a 4.95% return for the average Pennsylvania fund, according to
Lipper Analytical Services, and to a 5.45% return for the Lehman Index over
the same period. These returns assume the reinvestment of dividends and
capital gains but exclude the effects of any sales charges. The
underperformance was primarily attributable to the defensive posture taken
during the fourth quarter, when interest rates declined dramatically.
South Carolina
For the fiscal year ended March 31, 1997 the Fund's Class A shares provided a
total return of 4.46%, and Class B shares returned 3.73%. These figures
compare to a 5.04% return for the average South Carolina fund, according to
Lipper Analytical Services, and to a 5.45% return for the Lehman Index over
the same period. These returns assume the reinvestment of dividends and
capital gains but exclude the effects of any sales charges. The primary
reason for the underperformance was the defensive posture taken during the
fourth quarter, when interest rates declined dramatically.
Tennessee
For the fiscal year ended March 31, 1997 the Fund's Class A shares provided a
total return of 4.48%, and Class B shares returned 3.76%. These returns
assume the reinvestment of dividends and capital gains but exclude the
effects of any sales charges. These figures compare to a 4.82% return for the
average Tennessee fund, according to Lipper Analytical Services, and to a
5.45% return for the Lehman Index over the same period. The underperformance
was primarily attributable to the defensive posture taken during the fourth
quarter, when interest rates declined dramatically.
3
<PAGE>
Performance Summary - continued
Virginia
The Fund's total returns for the fiscal year ended March 31, 1997 were 3.97%
for Class A shares, 3.24% for Class B shares, and 3.30% for Class C shares.
These returns assume the reinvestment of dividends and capital gains but
exclude the effects of any sales charges. These figures compare to a 4.92%
return for the average Virginia fund, according to Lipper Analytical
Services, and to a 5.45% return for the Lehman Index over the same period. We
maintained the Fund's holdings of high-quality longer-maturity bonds during
the fiscal year to support its dividend, hedging its interest rate exposure
during times of volatility. This strategy caused the Fund to underperform
holdings of shorter-maturity bonds. In November, we shifted gears by
unwinding the Fund's hedges, and in December we reduced its holdings of
short-dated pre-refunded bonds, reduced its holdings of longer-maturity
bonds, and increased its cash position. We are also looking to augment the
Fund's performance by increasing its holdings of lower-rated investment-grade
bonds at appropriate yield spreads.
West Virginia
The Fund's total returns for the fiscal year ended March 31, 1997 were 5.20%
for Class A shares and 4.47% for Class B shares. These figures compare to a
5.45% return for the Lehman Index and a 5.04% return for the average other
state tax-exempt fund, as reported by Lipper Analytical Services, over the
same period. These returns assume the reinvestment of dividends and capital
gains but exclude the effects of any sales charges. We maintained the Fund's
holdings of high-quality longer-maturity bonds during the fiscal year to
support its dividend, hedging its interest rate exposure during times of
volatility. In a low-issuance environment, the Fund participated in new deals
to improve its call protection and sold shorter-call bonds. In November, we
shifted gears by unwinding the Fund's hedges and increasing its cash
position. We are also looking to augment the Fund's performance by increasing
its holdings of lower-rated, investment-grade bonds at appropriate yield
spreads.
Fund Facts
Strategy: The investment objective of each 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:
<TABLE>
<S> <C> <C> <C>
Mississippi Class A: August 6, 1992 South Carolina Class A: October 31, 1984
Class B: September 7, 1993 Class B: September 7, 1993
New York Class A: June 6, 1988 Tennessee Class A: August 12, 1988
Class B: September 7, 1993 Class B: September 7, 1993
North Carolina Class A: October 31, 1984 Virginia Class A: October 31, 1984
Class B: September 7, 1993 Class B: September 7, 1993
Class C: January 3, 1994 Class C: January 3, 1994
Pennsylvania Class A: February 1, 1993 West Virginia Class A: October 31, 1984
Class B: September 7, 1993 Class B: September 7, 1993
</TABLE>
Net assets as of March 31, 1997
Mississippi: $ 77.6 million
New York: $148.3 million
North Carolina: $423.9 million
Pennsylvania: $ 41.8 million
South Carolina: $170.8 million
Tennessee: $122.4 million
Virginia: $412.9 million
West Virginia: $139.7 million
Tax Form Summary
In January 1997, a Tax Form Summary was mailed to shareholders reporting the
federal tax status of all distributions paid during the calendar year 1996.
Exempt-Interest Dividends
For federal income tax purposes, approximately 98.9% of the total dividends
paid by each Fund from net investment income during the year ended March 31,
1997 is designated as an exempt-interest dividend.
4
<PAGE>
Performance Summary - continued
The following information illustrates the growth of a hypothetical $10,000
investment for each Fund's Class A shares for the periods indicated in
comparison to various market indicators. Fund results reflect the deduction
of the 4.75% maximum sales charge; benchmark comparisons are unmanaged and do
not reflect any fees or expenses. The performance of other share classes will
be greater than or less than the line shown, based on the differences in
loads and fees paid by shareholders investing in the different classes. It is
not possible to invest in an index.
MFS(R) Mississippi Municipal Bond Fund
Growth of a Hypothetical $10,000 Investment (For the period from September 1,
1992 through March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS Mississippi Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
9/6/92 9525 10000 10000
3/31/93 9852 10221 10526
3/31/94 10085 10477 10770
3/31/95 10699 10776 11570
3/29/96 11553 11069 12540
3/31/97 12430 11361 13354
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years Life of Fund@
- -------------------------------------------------------------------------- ------ ------- -------------
<S> <C> <C> <C>
MFS Mississippi Municipal Bond Fund (Class A) including 4.75% sales charge +0.18% +4.70% +4.29%
- -------------------------------------------------------------------------- ------- ------- -------------
MFS Mississippi Municipal Bond Fund (Class A) at net asset value +5.22% +6.42% +5.38%
- -------------------------------------------------------------------------- ------- ------- -------------
MFS Mississippi Municipal Bond Fund (Class B) with CDSC@@ +0.33% +4.61% +4.31%
- -------------------------------------------------------------------------- ------- ------- -------------
MFS Mississippi Municipal Bond Fund (Class B) at net asset value +4.33% +5.52% +4.67%
- -------------------------------------------------------------------------- ------- ------- -------------
Average other state tax-exempt municipal bond fund** +5.04% +5.95% +6.18%
- -------------------------------------------------------------------------- ------- ------- -------------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +6.19%
- -------------------------------------------------------------------------- ------- ------- -------------
Consumer Price Index* +2.91% +2.83% +2.84%
- -------------------------------------------------------------------------- ------- ------- -------------
</TABLE>
@For the period from the commencement of the Fund's investment operations,
August 6, 1992, to March 31, 1997.
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
@@These returns reflect the current maximum Class B contingent deferred
sales charge (CDSC) of 2%.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share performance with CDSC has been adjusted to reflect the contingent
deferred sales charge (CDSC) generally applicable to Class B shares rather
than the sales charge generally applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
5
<PAGE>
Performance Summary - continued
MFS(R) New York Municipal Bond Fund
Growth of a Hypothetical $10,000 Investment (For the period from July 1, 1988
through March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS New York Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
7/6/88 9525 10000 10000
3/30/90 10825 10953 11798
3/31/92 13136 11855 14173
3/31/93 15085 12221 15948
3/31/95 16347 12885 17530
3/31/97 18323 13565 19748
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Life of Fund@
- ----------------------------------------------------------------------- ------ ------- ------- -------------
<S> <C> <C> <C> <C>
MFS New York Municipal Bond Fund (Class A) including 4.75% sales charge -0.28% +4.20% +5.83% +7.09%
- ----------------------------------------------------------------------- ------ ------- ------- -------------
MFS New York Municipal Bond Fund (Class A) at net asset value +4.68% +5.89% +6.86% +7.69%
- ----------------------------------------------------------------------- ------ ------- ------- -------------
MFS New York Municipal Bond Fund (Class B) with CDSC -0.21% +4.09% +5.91% +7.32%
- ----------------------------------------------------------------------- ------ ------- ------- -------------
MFS New York Municipal Bond Fund (Class B) at net asset value +3.77% +5.01% +6.22% +7.32%
- ----------------------------------------------------------------------- ------ ------- ------- -------------
Average New York tax-exempt municipal bond fund** +4.82% +5.72% +6.59% +6.47%
- ----------------------------------------------------------------------- ------ ------- ------- -------------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +8.20%
- ----------------------------------------------------------------------- ------ ------- ------- -------------
Consumer Price Index* +2.91% +2.83% +2.82% +3.57%
- ----------------------------------------------------------------------- ------ ------- ------- -------------
</TABLE>
@For the period from the commencement of the Fund's investment operations,
June 6, 1988, to March 31, 1997.
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
Class B share results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior to the
commencement of offering of Class B shares. Because operating expenses
attributable to Class A shares are lower than those of Class B shares, Class
B share performance generally would have been lower than Class A share
performance. The Class A share performance included within the Class B share
performance with CDSC has been adjusted to reflect the contingent deferred
sales charge (CDSC) generally applicable to Class B shares rather than the
sales charge generally applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
6
<PAGE>
Performance Summary - continued
MFS(R) North Carolina Municipal Bond Fund
Growth of a Hypothetical $10,000 Investment (For the 5-year period ended
March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS North Carolina Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
3/31/92 9522 10000 10000
3/31/93 10614 10309 11252
3/31/94 10752 10567 11513
3/31/95 11383 10869 12369
3/29/96 12129 11165 13406
3/31/97 12747 11491 14137
</TABLE>
Growth of a Hypothetical $10,000 Investment (For the 10-year period ended
March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS North Carolina Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
3/31/87 9527 10000 10000
3/31/89 10252 10904 10989
3/29/91 12035 12036 13270
3/31/93 14501 12803 16424
3/31/95 15551 13498 18053
3/31/97 17415 14272 20634
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------- ------ ------- ------- ---------
<S> <C> <C> <C> <C>
MFS North Carolina Municipal Bond Fund (Class A)
including 4.75% sales charge +0.07% +4.14% +4.98% +5.70%
- ------------------------------------------------------------------- ------ ------- ------- ---------
MFS North Carolina Municipal Bond Fund (Class A) at net asset value +5.09% +5.84% +6.01% +6.22%
- ------------------------------------------------------------------- ------ ------- ------- ---------
MFS North Carolina Municipal Bond Fund (Class B) with CDSC +0.36% +4.17% +5.12% +5.93%
- ------------------------------------------------------------------- ------ ------- ------- ---------
MFS North Carolina Municipal Bond Fund (Class B) at net asset value +4.36% +5.08% +5.44% +5.93%
- ------------------------------------------------------------------- ------ ------- ------- ---------
MFS North Carolina Municipal Bond Fund (Class C) with CDSC@ +3.42% +5.15% +5.51% +5.97%
- ------------------------------------------------------------------- ------ ------- ------- ---------
MFS North Carolina Municipal Bond Fund (Class C) at net asset value +4.41% +5.15% +5.51% +5.97%
- ------------------------------------------------------------------- ------ ------- ------- ---------
Average North Carolina tax-exempt municipal bond fund** +4.79% +5.95% +6.25% +6.11%
- ------------------------------------------------------------------- ------ ------- ------- ---------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +7.51%
- ------------------------------------------------------------------- ------ ------- ------- ---------
Consumer Price Index* +2.91% +2.83% +2.82% +3.62%
- ------------------------------------------------------------------- ------ ------- ------- ---------
</TABLE>
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
@Class C shares have no initial sales charge but will be subject to a 1%
CDSC if redeemed within 12 months of purchase.
Class B and Class C share results with CDSC include the performance and
operating expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for
periods prior to the commencement of offering of Class B shares and Class C
shares. Because operating expenses attributable to Class B and Class C shares
are higher than those of Class A shares, Class B and Class C share
performance generally would have been lower than Class A share performance.
These results represent the percentage change in net asset value. Returns
would have been lower had sales charges been reflected.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
7
<PAGE>
Performance Summary - continued
MFS(R) Pennsylvania Municipal Bond Fund
Growth of a Hypothetical $10,000 Investment (For the period from February 1,
1993 through March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS Pennsylvania Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
2/1/93 9525 10000 10000
3/31/93 9502 10070 10252
3/31/94 9728 10323 10490
3/31/95 10520 10617 11269
3/29/96 11240 10906 12214
3/31/97 11765 11225 12881
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years Life of Fund@
- --------------------------------------------------------------------------- ------- ------- -------------
<S> <C> <C> <C>
MFS Pennsylvania Municipal Bond Fund (Class A) including 4.75% sales charge -0.33% +4.81% +3.98%
- --------------------------------------------------------------------------- ------- ------- -------------
MFS Pennsylvania Municipal Bond Fund (Class A) at net asset value +4.67% +6.54% +5.21%
- --------------------------------------------------------------------------- ------- ------- -------------
MFS Pennsylvania Municipal Bond Fund (Class B) with CDSC@@ -0.12% +4.80% +4.05%
- --------------------------------------------------------------------------- ------- ------- -------------
MFS Pennsylvania Municipal Bond Fund (Class B) at net asset value +3.83% +5.70% +4.46%
- --------------------------------------------------------------------------- ------- ------- -------------
Average Pennsylvania tax-exempt municipal bond fund** +4.95% +6.19% +6.52%
- --------------------------------------------------------------------------- ------- ------- -------------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +6.27%
- --------------------------------------------------------------------------- ------- ------- -------------
Consumer Price Index* +2.91% +2.83% +2.82%
- --------------------------------------------------------------------------- ------- ------- -------------
</TABLE>
@For the period from the commencement of the Fund's investment operations
February 1, 1993, to March 31, 1997.
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
@@These returns reflect the current maximum Class B contingent deferred
sales charge (CDSC) of 3%.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share performance with CDSC has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
8
<PAGE>
Performance Summary - continued
MFS(R) South Carolina Municipal Bond Fund
Growth of a Hypothetical $10,000 Investment (For the 5-year period ended
March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS South Carolina Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
3/31/92 9525 10000 10000
3/31/92 10641 10309 11252
3/31/94 10808 10567 11513
3/31/95 11557 10869 12369
3/29/96 12273 11165 13406
3/31/97 12820 11491 14137
</TABLE>
Growth of a Hypothetical $10,000 Investment (For the 10-year period ended
March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS South Carolina Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
3/31/87 9527 10000 10000
3/31/89 10592 10904 10989
3/29/91 12471 12036 13270
3/31/93 15207 12803 16424
3/31/95 16516 13498 18053
3/31/97 18320 14272 20634
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
MFS South Carolina Municipal Bond Fund (Class A) including 4.75% sales charge -0.53% +4.15% +5.09% +6.24%
- ----------------------------------------------------------------------------- ------ ------- ------- --------
MFS South Carolina Municipal Bond Fund (Class A) at net asset value +4.46% +5.85% +6.12% +6.76%
- ----------------------------------------------------------------------------- ------ ------- ------- --------
MFS South Carolina Municipal Bond Fund (Class B) with CDSC -0.24% +4.22% +5.25% +6.48%
- ----------------------------------------------------------------------------- ------ ------- ------- --------
MFS South Carolina Municipal Bond Fund (Class B) at net asset value +3.73% +5.13% +5.58% +6.48%
- ----------------------------------------------------------------------------- ------ ------- ------- --------
Average South Carolina tax-exempt municipal bond fund** +5.04% +6.40% +6.48% +6.73%
- ----------------------------------------------------------------------------- ------ ------- ------- --------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +7.51%
- ----------------------------------------------------------------------------- ------ ------- ------- --------
Consumer Price Index* +2.91% +2.83% +2.82% +3.62%
- ----------------------------------------------------------------------------- ------ ------- ------- --------
</TABLE>
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share performance with CDSC has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
9
<PAGE>
Performance Summary - continued
MFS(R) Tennessee Municipal Bond Fund
Growth of a Hypothetical $10,000 Investment (For the period from September 1,
1988 through March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS Tennessee Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
9/12/88 9525 10000 10000
3/30/90 10810 10861 11552
3/31/92 12702 11755 13878
3/31/95 15316 12776 17166
3/31/97 17103 13451 19603
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Life of Fund@
- ------------------------------------------------------------------------ ------- ------- ------- -------------
<S> <C> <C> <C> <C>
MFS Tennessee Municipal Bond Fund (Class A) including 4.75% sales charge -0.49% +3.97% +5.09% +6.40%
- ------------------------------------------------------------------------ ------- ------- ------- -------------
MFS Tennessee Municipal Bond Fund (Class A) at net asset value +4.48% +5.66% +6.12% +7.00%
- ------------------------------------------------------------------------ ------- ------- ------- -------------
MFS Tennessee Municipal Bond Fund (Class B) with CDSC -0.21% +3.96% +5.23% +6.67%
- ------------------------------------------------------------------------ ------- ------- ------- -------------
MFS Tennessee Municipal Bond Fund (Class B) at net asset value +3.76% +4.88% +5.55% +6.67%
- ------------------------------------------------------------------------ ------- ------- ------- -------------
Average Tennessee tax-exempt municipal bond fund** +4.82% +6.05% +6.35% +6.94%
- ------------------------------------------------------------------------ ------- ------- ------- -------------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +8.11%
- ------------------------------------------------------------------------ ------- ------- ------- -------------
Consumer Price Index* +2.91% +2.83% +2.82% +3.54%
- ------------------------------------------------------------------------ ------- ------- ------- -------------
</TABLE>
@For the period from the commencement of the Fund's investment operations,
August 12, 1988 to March 31, 1997.
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share performance with CDSC has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
10
<PAGE>
Performance Summary - continued
MFS(R) Virginia Municipal Bond Fund
Growth of a Hypothetical $10,000 Investment (For the 5-year period ended
March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS Virginia Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
3/31/92 9528 10000 10000
3/31/93 10609 10309 11252
3/31/94 10713 10567 11513
3/31/95 11320 10869 12369
3/29/96 12059 11165 13406
3/31/97 12537 11491 14137
</TABLE>
Growth of a Hypothetical $10,000 Investment (For the 10-year period ended
March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS Virginia Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
3/31/87 9524 10000 10000
3/31/89 10489 10904 10989
3/29/91 12404 12036 13270
3/31/93 15034 12803 16424
3/31/95 16043 13498 18053
3/31/97 17767 14272 20634
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------- ------- ------- ------- --------
<S> <C> <C> <C> <C>
MFS Virginia Municipal Bond Fund (Class A) including 4.75% sales charge -0.98% +3.67% +4.62% +5.92%
- ----------------------------------------------------------------------- ------- ------- ------- --------
MFS Virginia Municipal Bond Fund (Class A) at net asset value +3.97% +5.38% +5.64% +6.43%
- ----------------------------------------------------------------------- ------- ------- ------- --------
MFS Virginia Municipal Bond Fund (Class B) with CDSC -0.70% +3.75% +4.78% +6.16%
- ----------------------------------------------------------------------- ------- ------- ------- --------
MFS Virginia Municipal Bond Fund (Class B) at net asset value +3.24% +4.66% +5.10% +6.16%
- ----------------------------------------------------------------------- ------- ------- ------- --------
MFS Virginia Municipal Bond Fund (Class C) with CDSC@ +2.31% +4.72% +5.15% +6.19%
- ----------------------------------------------------------------------- ------- ------- ------- --------
MFS Virginia Municipal Bond Fund (Class C) at net asset value +3.30% +4.72% +5.15% +6.19%
- ----------------------------------------------------------------------- ------- ------- ------- --------
Average Virginia tax-exempt municipal bond fund** +4.92% +6.06% +6.57% +6.57%
- ----------------------------------------------------------------------- ------- ------- ------- --------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +7.51%
- ----------------------------------------------------------------------- ------- ------- ------- --------
Consumer Price Index* +2.91% +2.83% +2.82% +3.62%
- ----------------------------------------------------------------------- ------- ------- ------- --------
</TABLE>
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
@Class C shares have no initial sales charge but will be subject to a 1%
CDSC if redeemed within 12 months of purchase.
Class B and Class C share results with CDSC include the performance and
operating expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for
periods prior to the commencement of offering of Class B shares and Class C
shares. Because operating expenses attributable to Class B and Class C shares
are higher than those of Class A shares, Class B and Class C share
performance generally would have been lower than Class A share performance.
These results represent the percentage change in net asset value. Returns
would have been lower had sales charges been reflected.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
11
<PAGE>
Performance Summary - continued
MFS(R) West Virginia Municipal Bond Fund
Growth of a Hypothetical $10,000 Investment (For the 5-year period ended
March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS West Virginia Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
3/31/92 9528 10000 10000
3/31/93 10625 10309 11252
3/31/94 10859 10567 11513
3/31/95 11518 10869 12369
3/29/96 12276 11165 13406
3/31/97 12915 11491 14137
</TABLE>
Growth of a Hypothetical $10,000 Investment (For the 10-year period ended
March 31, 1997)
[3 line graph]
<TABLE>
<CAPTION>
MFS West Virginia Municipal Lehman Brothers Municipal
Bond Fund - Class A Consumer Price Index - U.S. Bond Index
<S> <C> <C> <C>
3/31/87 9522 10000 10000
3/31/89 10460 10904 10989
3/29/91 12330 12036 13270
3/31/93 15057 12803 16424
3/31/95 16322 13498 18053
3/31/97 18302 14272 20634
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------- ------- ------- ------- --------
<S> <C> <C> <C> <C>
MFS West Virginia Municipal Bond Fund (Class A) including 4.75% sales charge +0.16% +4.24% +5.24% +6.23%
- ---------------------------------------------------------------------------- ------- ------- ------- --------
MFS West Virginia Municipal Bond Fund (Class A) at net asset value +5.20% +5.95% +6.27% +6.75%
- ---------------------------------------------------------------------------- ------- ------- ------- --------
MFS West Virginia Municipal Bond Fund (Class B) with CDSC +0.48% +4.28% +5.40% +6.48%
- ---------------------------------------------------------------------------- ------- ------- ------- --------
MFS West Virginia Municipal Bond Fund (Class B) at net asset value +4.47% +5.19% +5.72% +6.48%
- ---------------------------------------------------------------------------- ------- ------- ------- --------
Average other state tax-exempt municipal bond fund** +5.04% +5.95% +6.31% +6.77%
- ---------------------------------------------------------------------------- ------- ------- ------- --------
Lehman Brothers Municipal Bond Index*** +5.45% +7.08% +7.17% +7.51%
- ---------------------------------------------------------------------------- ------- ------- ------- --------
Consumer Price Index* +2.91% +2.83% +2.82% +3.62%
- ---------------------------------------------------------------------------- ------- ------- ------- --------
</TABLE>
*The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
**Source: Lipper Analytical Services.
***Source: CDA/Wiesenberger.
Class B share results with CDSC include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods
prior to the commencement of offering of Class B shares. Because operating
expenses attributable to Class A shares are lower than those of Class B
shares, Class B share performance generally would have been lower than Class
A share performance. The Class A share performance included within the Class
B share performance with CDSC has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the sales charge generally
applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies
and waivers may be discontinued at any time. All results are historical and
assume the reinvestment of dividends and capital gains. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results.
12
<PAGE>
Portfolio of Investments - March 31, 1997
MFS MISSISSIPPI MUNICIPAL BOND FUND
Municipal Bonds - 96.2%
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------- ---------------- ---------------
<S> <C> <C>
General Obligation - 7.3%
Commonwealth of Puerto Rico, MBIA, 8.284s,
2008++++ $2,000 $ 2,099,200
Hinds County, MS, MBIA, 6.25s, 2010 1,660 1,771,336
Hinds County, MS, MBIA, 6.25s, 2011 1,285 1,369,386
Jackson County, MS, Road Improvement, 6.5s, 2008 425 441,830
-----------
$ 5,681,752
- -------------------------------------------------- ----------- -----------
State and Local Appropriation - 13.0%
Hinds Community College, MS, Conference and
Training Center, 6.5s, 2014 $1,320 $ 1,334,375
Medical Center Educational Building Corp., MS
(University of Mississippi Medical Center),
MBIA, 5.65s, 2009 2,000 2,015,340
Medical Center Educational Building Corp., MS
(University of Mississippi Medical Center),
MBIA, 5.9s, 2023 3,250 3,206,905
State of Mississippi, Certificates of
Participation (Marshall County Correctional
Facility), MBIA, 5.625s, 2015 1,560 1,510,485
State of Mississippi, Certificates of
Participation (Rehabilitation Services), 6.1s,
2014 2,000 2,007,660
-----------
$10,074,765
- -------------------------------------------------- ----------- -----------
Refunded and Special Obligations - 11.6%
Adams County, MS, Hospital Rev. (Jefferson Davis
Memorial Hospital), 8s, 2001 $1,000 $ 1,140,650
Commonwealth of Puerto Rico, Public Improvement
Rev., 6.8s, 2002 1,500 1,660,185
Puerto Rico Highway & Transportation Authority
Rev., 6.625s, 2002 1,900 2,087,625
State of Mississippi, 6s, 2002 2,000 2,115,200
State of Mississippi, 6.75s, 2004 1,800 1,994,652
-----------
$ 8,998,312
- -------------------------------------------------- ----------- -----------
Airport and Port Revenue - 2.6%
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 $2,000 $ 2,007,560
- -------------------------------------------------- ----------- -----------
Electric and Gas Utility Revenue - 6.2%
Claiborne County, MS, Pollution Control Rev.
(System Energy Resources, Inc.), 7.3s, 2025 $1,000 $ 1,041,190
Claiborne County, MS, Pollution Control Rev.
(System Energy Resources, Inc.), 6.2s, 2026 500 479,895
Puerto Rico Electric Power Authority Power, FSA,
8.328s, 2023++++ 1,000 991,930
Warren Counties, MS, Pollution Control Rev.
(Mississippi Power & Light), 7s, 2022 1,000 1,047,100
Washington County, MS, Pollution Control Rev.
(Mississippi Power & Light), 7s, 2022 1,230 1,287,933
-----------
$ 4,848,048
- -------------------------------------------------- ----------- -----------
Health Care Revenue - 1.9%
Mississippi Hospital Equipment & Facilities
Authority Rev. (Magnolia Regional Health
Center), 7.375s, 2021 $1,500 $ 1,519,725
- -------------------------------------------------- ----------- -----------
Industrial Revenue (Corporate Guarantee) - 7.3%
Lowndes County, MS, Solid Waste Disposal &
Pollution Control Rev. (Weyerhauser), 6.8s,
2022 $3,250 $ 3,617,120
Mississippi Business Finance Corp. (Jackson
Municipal Airport/Airborne Freight), 7.15s,
2007 985 1,049,045
Warren County, MS, Pollution Control Rev
(International Paper), 6.6s, 2019 1,000 1,021,510
-----------
$ 5,687,675
- -------------------------------------------------- ----------- -----------
Insured Health Care Revenue - 17.4%
Alcorn County, Corinth (Magnolia Regional Health
Center), AMBAC, 5.75s, 2013 $2,000 $ 1,995,360
Gulfport, MS, Hospital Facilities (Memorial
Hospital), MBIA, 6.125s, 2015 2,250 2,321,438
Gulfport, MS, Hospital Facilities (Memorial
Hospital), MBIA, 6.2s, 2018 1,000 1,033,460
Hinds County, MS, Rev. (Methodist Hospital &
Rehabilitition Center), AMBAC, 5.6s, 2012 3,055 3,038,717
Mississippi Development Bank, Special Obligation
(Adams County Hospital), FSA, 5.75s, 2016 1,000 975,900
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist), MBIA, 6.5s, 2010 1,190 1,286,259
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist), MBIA, 6s, 2013 750 764,355
Mississippi Hospital Equipment & Facilities
Authority Rev. (Rush Medical Foundation),
Connie Lee, 6.7s, 2018 2,000 2,092,020
-----------
$13,507,509
- --------------------------------------------------- ----------- -----------
Multi-Family Housing Revenue - 5.1%
Gulfport, MS, Community Development (Oakview
Apartments), FNMA, 7.4s, 2025 $1,755 $ 1,862,827
Jackson, MS, Elderly Housing Corp., Mortgage
Rev. (Delhaven Manor), "C", FHA, 7.375s, 2024 1,965 2,075,905
-----------
$ 3,938,732
- --------------------------------------------------- ----------- -----------
Single Family Housing Revenue - 7.0%
Mississippi Home Corp., GNMA, 6.5s, 2024 $2,650 $ 2,701,065
Mississippi Home Corp., GNMA, 6s, 2027 1,225 1,311,069
Mississippi Home Corp., GNMA, 6.625s, 2027 1,350 1,391,931
-----------
$ 5,404,065
- --------------------------------------------------- ----------- -----------
Universities - 2.1%
University of Mississippi, Educational Building
Corp., MBIA, 5s, 2016 $ 680 $ 616,359
University of Mississippi, Educational Building
Corp. (Athletic Facilities), 6.2s, 2016 1,000 1,003,790
-----------
$ 1,620,149
- --------------------------------------------------- ----------- -----------
Water and Sewer Utility Revenue - 14.7%
Clarksdale, MS, Sewer & Wastewater Treatment
System Rev., MBIA, 6.1s, 2012 $1,885 $ 1,936,196
Columbus, MS, Water & Sewer Rev., MBIA, 6.5s,
2013 1,000 1,070,880
Gautier, MS, Utility District, Utility Systems
Rev., FGIC, 6.375s, 2019 1,300 1,350,843
Harrison County, MS, Wastewater Management
District, Wastewater Treatment, FGIC, 6.5s,
2006 1,375 1,464,719
Harrison County, MS, Wastewater Management
District, Wastewater Treatment, FGIC, 5.875s,
2025 3,000 2,981,700
Meridian, MS, Water & Sewer Rev., AMBAC, 6s,
2010 1,500 1,542,990
Meridian, MS, Water & Sewer Rev., AMBAC, 6.2s,
2012 650 678,392
Meridian, MS, Water & Sewer Rev., AMBAC, 6.2s,
2013 400 416,300
-----------
$11,442,020
- --------------------------------------------------- ----------- -----------
Total Municipal Bonds (Identified Cost $72,067,324) $74,730,312
- --------------------------------------------------- ----------- -----------
13-MI
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -----------------------------------------------------------------------------------------------
Floating Rate Demand Note - 2.2%
- -----------------------------------------------------------------------------------------------
Jackson County, MS, Pollution Control Rev
(Chevron USA, Inc.), due 12/01/2016,
at Identified Cost $ 1,700 $ 1,700,000
- --------------------------------------------------------- ----------- -----------
Total Investments (Identified Cost, $73,767,324) $76,430,312
Other Assets, Less Liabilities - 1.6% 1,213,014
- ------------------------------------- -----------
Net assets - 100.0% $77,643,326
- ------------------------------------- -----------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments - March 31, 1997
MFS NEW YORK MUNICIPAL BOND FUND
Municipal Bonds - 97.2%
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------- ----------------- ---------------
<S> <C> <C>
General Obligation - 11.6%
Cheektowaga, NY, Central School District, FGIC,
5.875s, 2014 $ 650 $ 650,156
Cheektowaga, NY, Central School District, FGIC,
5.875s, 2015 750 750,180
New York, NY, 7.2s, 2008 1,000 1,085,050
New York, NY, 7.3s, 2010 365 419,195
New York, NY, 7.3s, 2010 515 556,705
New York, NY, 7.3s, 2011 5,000 5,420,450
New York, NY, 7.375s, 2013 1,600 1,732,656
New York, NY, 8.25s, 2016 160 181,269
New York, NY, FGIC, 6s, 2007 1,175 1,243,444
Oswego County, NY, 6.7s, 2009 1,000 1,104,900
Port Byron, NY, Central School District, AMBAC,
7.4s, 2012 500 592,830
Port Byron, NY, Central School District, AMBAC,
7.4s, 2013 500 593,715
Port Byron, NY, Central School District, AMBAC,
7.4s, 2014 500 597,245
Port Byron, NY, Central School District, AMBAC,
7.4s, 2015 500 597,375
Territory of Virgin Islands, 7.75s, 2006 390 419,472
Washingtonville, NY, Central School District,
FGIC, 7.35s, 2008 550 642,884
Washingtonville, NY, Central School District,
FGIC, 7.35s, 2009 550 643,489
---------------
$17,231,015
- -------------------------------------------------- ----------------- ---------------
State and Local Appropriation - 18.0%
Metropolitan Transportation Authority, NY,
Service Contract, 7.375s, 2008 $2,000 $ 2,247,720
Metropolitan Transportation Authority, NY,
Service Contract, 0s, 2012 2,200 886,644
Metropolitan Transportation Authority, NY,
Service Contract, 5.75s, 2013 1,825 1,786,693
Metropolitan Transportation Authority, NY,
Service Contract, 0s, 2014 4,750 1,670,908
Metropolitan Transportation Authority, NY,
Service Contract, 0s, 2014 3,500 1,231,195
Metropolitan Transportation Authority, NY,
Service Contract, 5.5s, 2017 1,200 1,123,248
New York Dormitory Authority Rev. (City
University), 5.75s, 2013 4,250 4,160,792
New York Dormitory Authority Rev. (City
University), 5.625s, 2016 1,450 1,380,096
New York Dormitory Authority Rev. (City
University), AMBAC, 5.75s, 2018 1,000 1,001,080
New York Dormitory Authority Rev. (City
University), AMBAC, 5.75s, 2018 800 800,864
State and Local Appropriation - continued
New York Dormitory Authority Rev. (State
University), 5.875s, 2017 $2,565 $ 2,552,585
New York Medical Care Facilities Finance Agency,
MBIA, 6s, 2025 1,300 1,311,752
New York Medical Care Facilities Finance Agency,
Mental Health Services, 6.375s, 2014 1,000 1,017,340
New York Urban Development Corp. (Correctional
Facilities), AMBAC, 0s, 2009 5,000 2,631,500
New York Urban Development Corp. (State
Facilities), AMBAC, 5.6s, 2015 2,750 2,731,135
Triborough Bridge & Tunnel Authority, NY, 0s,
2012 360 147,136
Troy, NY, Certificates of Participation,
Recreational Facilities Rev., 9.75s, 2010**++ 900 90,000
---------------
$26,770,688
- -------------------------------------------------- ----------------- ---------------
Refunded and Special Obligations - 14.7%
New York Local Government Assistance Corp.,
7.25s, 2001 $2,500 $ 2,768,325
New York Medical Care Facilities Finance Agency
(Montefiore Medical), FHA, 7.25s, 1999 3,175 3,391,979
New York Medical Care Facilities Finance Agency
(Montefiore Medical), FHA, 7.25s, 1999 1,750 1,869,595
New York Medical Care Facilities Finance Agency
(Presbyterian Hospital), FHA, 7.7s, 2000 750 833,812
New York Medical Care Facilities Finance Agency
(St. Luke's Hospital), FHA, 7.45s, 2000 2,600 2,840,110
New York Medical Care Facilities Finance Agency,
Mental Health Services, 7.875s, 2000 340 379,828
New York Medical Care Facilities Finance Agency,
Mental Health Services, 7.875s, 2000 560 625,598
New York Medical Care Facilities Finance Agency,
Mental Health Services, 7.3s, 2001 750 837,412
New York Urban Development Corp., State
Facilities Rev., 7.5s, 2001 1,000 1,116,340
New York, NY, 8s, 2001 490 556,968
New York, NY, 8.25s, 2001 1,840 2,123,747
New York, NY, Municipal Water & Sewer Finance
Authority, 7s, 2001 530 578,585
New York, NY, Municipal Water & Sewer Finance
Authority, 7s, 2001 225 245,626
New York, NY, Municipal Water & Sewer Finance
Authority, 7.375s, 2013 2,000 2,223,820
Puerto Rico Aqueduct & Sewer Authority Rev., 9s,
2005 250 312,693
Triborough Bridge & Tunnel Authority, NY,
7.375s, 2000 1,000 1,083,110
---------------
$21,787,548
- -------------------------------------------------- ----------------- ---------------
Airport and Port Revenue - 1.2%
Albany County, NY Airport Authority, FSA,
5.375s, 2017 $ 750 $ 687,195
New York, NY, Industrial Development Agency,
Special Facilities Rev. (American Airlines),
6.9s, 2024 1,000 1,069,080
---------------
$ 1,756,275
------------------------------------------------ ----------------- ---------------
</TABLE>
14-NY
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Electric and Gas Utility Revenue - 7.9%
New York Energy Research and Development
Authority, Electrical Facilities Rev. (Long
Island Lighting), 7.15s, 2022 $2,700 $ 2,875,014
New York Power Authority, FGIC, 6.5s, 2008 2,500 2,789,050
Port Authority NY & NJ, Special Obligation,
6.75s, 2019 1,750 1,794,240
Puerto Rico Electric Power Authority 0s, 2017 500 148,390
Puerto Rico Electric Power Authority, FSA,
8.328s, 2023++++ 1,500 1,487,895
Virgin Islands Water & Power Authority, Electric
Systems Rev., 7.4s, 2011 2,450 2,597,367
-----------
$11,691,956
- -------------------------------------------------- ----------- -----------
Health Care Revenue - 2.3%
Albany, NY, Industrial Development Authority,
Civic Facilities Rev., 8.25s, 2004 $1,965 $ 2,104,731
New York Medical Care Facilities Finance Agency,
Mental Health Services (Huntington Mortgage),
6.5s, 2014 1,250 1,265,463
-----------
$ 3,370,194
- -------------------------------------------------- ----------- -----------
Industrial Revenue (Corporate Guarantee) - 2.2%
Allegany County, NY, Industrial Development
Authority, Solid Waste Rev. (Atlantic
Richfield), 6.625s, 2016 $1,000 $ 1,042,880
Fulton County, NY, Industrial Development Agency
(Crossroads Incubator), 8.75s, 2009 1,075 1,141,510
Monroe County, NY, Industrial Development Agency
(Weyerhauser Co.), 9s, 2006 1,000 1,014,410
-----------
$ 3,198,800
- -------------------------------------------------- ----------- -----------
Insured Health Care Revenue - 6.4%
New York City Health & Hospital Corp., AMBAC,
7.54s, 2023++++ $3,200 $ 2,868,640
New York Dormitory Authority Rev. (Menorah
Campus), FHA, 7.4s, 2031 1,095 1,190,385
New York Dormitory Authority Rev. (St. Vincent's
Hospital), FHA, 7.375s, 2011 2,500 2,700,275
New York Medical Care Facilities Finance Agency
(New York Hospital), AMBAC, 6.5s, 2029 2,550 2,702,873
-----------
$ 9,462,173
- -------------------------------------------------- ----------- -----------
Multi-Family Housing Revenue - 0.4%
New York, NY, Housing Development Corp. (South
Bronx Cooperatives), 8.1s, 2023 $ 580 $ 603,119
- -------------------------------------------------- ----------- -----------
Sales and Excise Tax Revenue - 0.6%
Municipal Assistance Corp., City of Troy, MBIA,
0s, 2019 $1,935 $ 514,729
Municipal Assistance Corp., City of Troy, MBIA,
0s, 2020 1,690 436,392
-----------
$ 951,121
- -------------------------------------------------- ----------- -----------
Single Family Housing Revenue - 4.0%
New York Mortgage Agency Rev., 7.375s, 2011 $1,295 $ 1,359,387
New York Mortgage Agency Rev., 8.05s, 2011 135 139,444
New York Mortgage Agency Rev., 6.45s, 2017 2,355 2,448,376
New York Mortgage Agency Rev., 8.05s, 2021 320 334,765
New York Mortgage Agency Rev., 8.05s, 2022 555 588,056
New York Mortgage Agency Rev., 7.75s, 2023 995 1,049,954
-----------
$ 5,919,982
- -------------------------------------------------- ----------- -----------
Turnpike Revenue - 6.3%
Triborough Bridge & Tunnel Authority, NY, 5.5s,
2017 $8,000 $ 7,791,760
Triborough Bridge & Tunnel Authority, NY, MBIA,
0s, 2017 2,035 636,894
Virgin Islands Public Finance Authority, Highway
Rev., 7.7s, 2004 800 856,800
-----------
$ 9,285,454
- -------------------------------------------------- ----------- -----------
Universities - 4.7%
Hempstead Town, NY, Civic Facilities Rev
(Hofstra University), MBIA, 5.8s, 2015 $1,500 $ 1,504,110
Islip, NY, Community Development Agency Rev
(New York Institute of Technology), 7.5s, 2026 2,000 2,044,160
New York Dormitory Authority Rev. (Cornell
University), 7.375s, 2020 1,500 1,627,095
New York Dormitory Authority Rev. (Ithaca
College), AMBAC, 5s, 2013 1,895 1,756,930
-----------
$ 6,932,295
- -------------------------------------------------- ----------- -----------
Water and Sewer Utility Revenue - 14.2%
Buffalo, NY, Municipal Water Authority, FGIC,
5s, 2025 $1,000 $ 881,860
New York Environmental Facilities Corp. AMBAC,
6.25s, 2012 1,500 1,602,465
New York Enviromental Facilities Corp.,
Pollution Control Rev., 5.75s, 2010 3,235 3,342,725
New York Environmental Facilities Corp.,
Pollution Control Rev., 6.875s, 2010 2,000 2,178,240
New York Environmental Facilities Corp.,
Pollution Control Rev., 5.75s, 2012 1,100 1,118,403
New York Environmental Facilities Corp., Water
Facilities Rev., 8.85s, 2015 2,500 2,750,500
New York, NY, Municipal Water & Sewer Finance
Authority, 6s, 2010 620 647,987
New York, NY, Municipal Water & Sewer Finance
Authority, 7.1s, 2012 2,000 2,170,760
New York, NY, Municipal Water & Sewer Finance
Authority, 7s, 2015 745 804,347
New York, NY, Municipal Water & Sewer Finance
Authority, 7.6s, 2020 470 504,897
New York, NY, Municipal Water & Sewer Finance
Authority, 5.5s, 2023 1,500 1,382,790
Suffolk County, NY Water Authority, MBIA, 5.1s,
2012 1,895 1,818,973
Suffolk County, NY Water Authority, MBIA, 5.1s,
2013 2,000 1,906,220
-----------
$21,110,167
- -------------------------------------------------- ----------- -----------
Other - 2.7%
Dutchess, NY, Industrial Development Agency,
8.625s, 2016 $1,105 $ 1,169,897
New York City Industrial Development Civic
(YMCA), 5.8s, 2016 1,500 1,429,050
New York City Trust Cultural Resources (Museum
of Modern Art), AMBAC, 5.5s, 2021 1,500 1,427,355
------------
$ 4,026,302
- -------------------------------------------------------------------- ------------
Total Municipal Bonds (Identified Cost, $137,682,657) $144,097,089
------------
Shares
- -------------------------------------------------------------------- ------------
Rights - 0.3%
- -------------------------------------------------------------------- ------------
Georgia Municipal Electric Authority, due 2016 1,000 $ 17,906
North Carolina Eastern Power Agency, due 2018 5,000 140,400
State of New Jersey, "D", due 2013 2,000 291,000
- -------------------------------------------------------------------- ------------
Total Rights (Identified Cost, $400,200) $ 449,306
- -------------------------------------------------------------------- ------------
Principal Amount
(000 Omitted)
- -------------------------------------------------------------------- ------------
Floating Rate Demand Note - 0.8%
- ----------------------------------------------------------------------------------------
New York City Municipal Water Finance Authority,
due 06/15/23, at Identified Cost $ 1,200 $ 1,200,000
- --------------------------------------------------------------------- ------------
Total Investments (Identified Cost, $139,282,857 ) $145,746,395
Other Assets, Less Liabilities - 1.7% 2,565,387
- ----------------------------------------------------------------------------------------
Net assets - 100.0% $148,311,782
------------
See portfolio footnotes and notes to financial statements
</TABLE>
15-NY
<PAGE>
Portfolio of Investments - March 31, 1997
MFS NORTH CAROLINA MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------- ---------------- ---------------
<S> <C> <C>
General Obligation - 6.0%
Charlotte, NC, Water and Sewer, 5.8s, 2013 $ 1,780 $ 1,837,245
Charlotte, NC, Water and Sewer, 5.8s, 2014 5,050 5,197,763
Charlotte, NC, Water and Sewer, 5.6s, 2017 2,035 2,022,505
Charlotte, NC, Water and Sewer, 5.9s, 2019 2,820 2,893,940
Durham, NC, 5.9s, 2013 2,400 2,488,680
Durham, NC, 5.9s, 2014 2,400 2,480,904
Hertford County, NC, 9.5s, 2000 100 101,963
Hertford County, NC, 9.5s, 2001 100 102,822
Hertford County, NC, 9.5s, 2002 100 102,395
North Carolina Capital Improvement,
5.1s, 2015 8,875 8,389,005
---------------
$25,617,222
- --------------------------------------------------------------------- ---------------
State and Local Appropriation - 8.5%
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC,
0s, 2004 $ 3,435 $ 2,303,373
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC,
0s, 2005 4,810 3,036,120
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC,
0s, 2006 1,075 640,496
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC,
0s, 2008 3,000 1,578,900
Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC, 6.375s,
2010 1,100 1,180,146
Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC,
0s, 2011 425 185,109
Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC,
0s, 2013 1,000 380,140
Dare County, NC, MBIA, 6.6s, 2006 2,100 2,244,501
Durham, NC, Certificates of Participation
(Hospital and Office Facilities), 5.875s, 2009 1,460 1,500,237
Durham, NC, Certificates of Participation (New
Durham Corp.), 6.875s, 2009 1,750 1,890,910
Fayetteville, NC, Finance Corp. (Municipal
Building), MBIA, 5.625s, 2018 310 301,249
Franklin County, NC, Certificates of Participation
(Jail and School), FGIC,
6.625s, 2014 2,000 2,138,220
Greensboro, NC, Certificates of Participation
(Coliseum Arena Project), 6.25s, 2011 2,180 2,254,665
Harnett County, NC, Certificates of Participation,
AMBAC, 6.2s, 2006 1,000 1,066,020
Harnett County, NC, Certificates of Participation,
AMBAC, 6.2s, 2009 1,500 1,570,140
Pasquotank County, NC, Certificates of
Participation, MBIA, 5s, 2015+ 1,500 1,362,780
Puerto Rico Housing, Bank and Finance Agency,
7.5s, 2006 7,000 7,890,330
Puerto Rico Public Buildings Authority,
5.5s, 2007 2,550 2,572,440
Scotland County, NC, Certificates of Participation
(Jail/Courthouse Project), FSA, 6.75s, 2011 1,000 1,063,200
Union County, NC, Certificates of Participation,
AMBAC, 6.375s, 2012 1,000 1,056,720
---------------
$36,215,696
- --------------------------------------------------------------------- ---------------
Refunded and Special Obligations - 14.0%
Chapel Hill, NC, Parking Facilities Rev. (Rosemary
Street Project), 8.125s, 2000 $ 1,630 $ 1,841,330
Chapel Hill, NC, Parking Facilities Rev. (Rosemary
Street Project), 8.25s, 2000 3,305 3,747,242
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC, 6.75s,
2021 4,250 4,673,342
Craven, NC, Regional Medical Authority, MBIA,
7.2s, 2000 1,500 1,648,620
Dare County, NC, School Bonds, MBIA,
6.9s, 2000 800 862,888
Dare County, NC, School Bonds, MBIA,
6.9s, 2000 800 862,888
Dare County, NC, School Bonds, MBIA,
6.9s, 2000 500 539,305
Fayetteville, NC, Public Works Rev., FGIC, 7s,
2000 2,000 2,162,600
Greensboro, NC, 6.3s, 2011 4,165 4,495,493
North Carolina Eastern Municipal Power Agency,
7.75s, 1999 2,900 3,115,876
North Carolina Eastern Municipal Power Agency,
7.5s, 2010 2,595 3,044,143
North Carolina Eastern Municipal Power Agency, 5s,
2017 9,010 8,256,133
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Health Care),
7.25s, 1999 1,400 1,495,676
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Health Care), 0s, 2007 500 266,425
North Carolina Medical Care Commission, Hospital
Rev. (Mercy Hospital), 6.5s, 2015 1,000 1,063,570
North Carolina Medical Care Commission, Hospital
Rev. (Presbyterian Health),
7.3s, 2000 1,000 1,102,270
North Carolina Medical Care Commission, Hospital
Rev. (Presbyterian Health),
7.375s, 2000 12,315 13,604,011
Pender County, NC, Certificates of Participation
(Pender County Prison),
7.6s, 2001 1,900 2,131,059
Pender County, NC, Certificates of Participation
(Pender County Prison),
7.7s, 2001 1,000 1,125,340
Pitt County, NC, Hospital Rev. (Pitt Memorial
Hospital), MBIA, 6.75s, 2001 2,800 3,085,096
---------------
$59,123,307
- --------------------------------------------------------------------- ---------------
Airport and Port Revenue - 1.2%
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 $ 5,075 $ 5,094,183
- --------------------------------------------------------------------- ---------------
Electric and Gas Utility Revenue - 16.6%
Lincolnton, NC, Enterprise Systems, MBIA, 5.375s,
2021 $ 750 $ 703,320
New Hanover County, NC, Industrial Facilities Rev.
(Carolina Power and Light Co.), 6.9s, 2009 1,000 1,056,010
North Carolina Eastern Municipal Power Agency,
AMBAC, 6s, 2018 14,245 14,532,179
North Carolina Eastern Municipal Power Agency,
MBIA, 7s, 2007 5,000 5,670,300
North Carolina Eastern Municipal Power, MBIA,
7.25s, 2007 5,000 5,723,650
North Carolina Eastern Municipal Power, MBIA,
7.5s, 2010 3,005 3,543,256
16-NC
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- ---------------------------------------------------------------------- ---------------
Electric and Gas Utility Revenue - continued
North Carolina Municipal Power Agency,
No. 1, Catawba Electric Rev., AMBAC,
7.625s, 2014 $ 180 $ 187,076
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., FSA, 6.2s, 2018 4,300 4,408,317
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 0s, 2008 10,150 5,647,460
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 0s, 2009 10,000 5,209,000
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 6s, 2011 8,000 8,324,320
North Carolina Municipal Power Agency,
No. 1, Catawba Electric Rev., MBIA,
6.97s, 2012++++ 9,000 8,322,570
Puerto Rico Electric Power Authority Rev., FSA,
6s, 2016 5,000 5,103,450
Wake County, NC, Industrial Facilities Rev.
(Carolina Power and Light), 6.9s, 2009 2,000 2,134,340
---------------
$70,565,248
- --------------------------------------------------------------------- ---------------
Health Care Revenue - 20.0%
North Carolina Medical Care Commission, Hospital
Rev. (Carolina Medicorp), 6s, 2021 $19,000 $19,067,070
North Carolina Medical Care Commission, Hospital
Rev. (Duke University), 5.25s, 2021 10,000 9,142,800
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Health Care), 5.5s, 2015 8,040 7,735,766
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Health Care), 5.5s, 2019 8,000 7,589,040
North Carolina Medical Care Commission, Hospital
Rev. (Halifax Memorial), 6.75s, 2014 1,355 1,377,385
North Carolina Medical Care Commission, Hospital
Rev. (Halifax Memorial), 6.75s, 2024 4,500 4,558,545
North Carolina Medical Care Commission, Hospital
Rev. (Moore Memorial Hospital), 9.1s, 1999 800 825,736
North Carolina Medical Care Commission, Hospital
Rev. (Rex Hospital), 6.25s, 2017 6,850 7,043,786
North Carolina Medical Care Commission, Hospital
Rev. (Valdese General), 8.75s, 2016 5,475 6,103,147
North Carolina Medical Care Commission, Hospital
Rev. (Well Spring Retirement), 6.25s, 2017 2,500 2,427,175
North Carolina Medical Care Commission, Hospital
Rev. (Well Spring Retirement), 6.25s, 2021 2,500 2,406,625
Northern Hospital District, Surry County, NC,
Health Care Facilities Rev., 7.875s, 2021 4,530 4,796,908
Pitt County, NC, Hospital Rev. (Memorial
Hospital), 5.25s, 2021 8,050 7,285,894
University of North Carolina, Chapel Hill,
Hospital Rev. (University Hospital), 5.25s, 2026 5,000 4,558,400
---------------
$84,918,277
- --------------------------------------------------------------------- ---------------
Industrial Revenue (Corporate Guarantee) - 10.0%
Chatham County, NC, Industrial Facilities and
Pollution Control (Weyerhaeuser), 9s, 2006 $ 1,260 $ 1,278,157
Columbus County, NC, Industrial Facilities and
Pollution Control (International Paper), 5.8s,
2016 4,000 3,866,600
Gaston County, NC, Industrial Facilities and
Pollution Control Finance Authority (Combustion
Engineering, Inc.), 8.85s, 2015 $ 1,000 $ 1,120,900
Halifax County, NC, Industrial Facilities and
Pollution Control Finance Authority (Champion
International Corp.), 8.15s, 2019 1,500 1,611,300
Haywood County, NC, Industrial Facilities and
Pollution Control Finance Authority (Champion
International Corp.), 8.1s, 2009 2,500 2,673,825
Haywood County, NC, Industrial Facilities and
Pollution Control Finance Authority (Champion
International Corp.), 5.75s, 2025 11,500 10,736,745
Martin County, NC, Industrial Facilities and
Pollution Control Finance Authority
(Weyerhaeuser Co.), 7.25s, 2014 7,000 7,589,610
Martin County, NC, Industrial Facilities and
Pollution Control Finance Authority
(Weyerhaeuser Co.), 6.8s, 2024 7,500 7,998,825
Mecklenburg County, NC, Industrial Facilities and
Pollution Control Finance Authority (Precision
Steel), 7.75s, 2014 2,600 2,791,724
Surry County, NC, Industrial Facilities and
Pollution Control Finance Authority
(Weyerhaeuser Co.), 9.25s, 2002 1,500 1,733,580
Wake County, NC, Industrial Facilities and
Pollution Control Finance Authority
(Mallinkcodt), 6.75s, 2012 1,100 1,152,602
---------------
$42,553,868
- --------------------------------------------------------------------- ---------------
Insured Health Care Revenue - 2.7%
Cumberland County, NC, Hospital Facilities Rev.
(Cumberland County Hospital), MBIA, 0s, 2009 $ 1,800 $ 883,134
Cumberland County, NC, Hospital Facilities Rev.
(Cumberland County Hospital), MBIA, 6s, 2021 4,000 4,037,240
New Hanover County, NC, Hospital Facilities Rev.
(New Hanover Regional Medical Center), AMBAC,
5.75s, 2026 4,625 4,522,741
North Carolina Medical Care Commission, Hospital
Rev. (Wilson Memorial Hospital), AMBAC, 0s, 2013 1,000 381,980
North Carolina Medical Care Commission, Hospital
Rev. (Wilson Memorial Hospital), AMBAC, 0s, 2014 3,055 1,101,144
North Carolina Medical Care Commission, Hospital
Rev. (Wilson Memorial Hospital), AMBAC, 0s, 2015 1,140 384,226
---------------
$11,310,465
- --------------------------------------------------------------------- ---------------
Multi-Family Housing Revenue - 4.1%
Asheville, NC, Housing Authority (Asheville
Terrace Apartments), 7.1s, 2011 $ 5,000 $ 5,222,750
North Carolina Housing Finance Agency, FHA, 6.9s,
2024 4,880 5,122,146
North Carolina Housing Finance Agency, FHA, 6.05s,
2028 5,000 5,018,300
Salisbury, NC, Housing Corp. (Yadkin Senior
Citizens), FNMA, 6.75s, 2022 2,100 2,131,248
---------------
$17,494,444
- --------------------------------------------------------------------- ---------------
17-NC
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- ---------------------------------------------------------------------- ---------------
Single Family Housing Revenue - 4.0%
North Carolina Housing Finance Agency,
6.7s, 2018 $ 1,785 $ 1,859,702
North Carolina Housing Finance Agency, 8.125s,
2019 1,745 1,800,055
North Carolina Housing Finance Agency,
7.7s, 2021 2,215 2,280,542
North Carolina Housing Finance Agency,
7.8s, 2021 2,100 2,158,506
North Carolina Housing Finance Agency, 7.85s, 2028 5,640 5,842,983
North Carolina Housing Finance Agency,
7.6s, 2032 2,780 2,881,915
---------------
$ 16,823,703
- --------------------------------------------------------------------- ---------------
Solid Waste Revenue - 0.3%
Iredell, NC, Solid Waste Systems Rev.,
6.25s, 2012 $ 1,250 $ 1,272,000
- --------------------------------------------------------------------- ---------------
Turnpike Revenue - 0.6%
Puerto Rico Highway and Transportation Authority
Rev., 6.523s, 2007++++ $ 2,750 $ 2,735,535
- --------------------------------------------------------------------- ---------------
Universities - 5.9%
Appalachian State University, NC, MBIA, 6.1s, 2014 $ 1,140 $ 1,173,003
Appalachian State University, NC, MBIA, 6.125s,
2019 4,370 4,479,206
North Carolina Education Facilities Finance Agency
(Duke University), 6.75s, 2021 11,500 12,437,135
University of North Carolina (Centennial Campus),
MBIA, 5.125s, 2016 1,810 1,665,218
University of North Carolina (Chapel Hill),
0s, 2012 9,105 3,575,352
University of North Carolina (Chapel Hill),
0s, 2013 4,285 1,564,839
---------------
$ 24,894,753
- --------------------------------------------------------------------- ---------------
Water and Sewer Utility Revenue - 3.9%
Asheville, NC, Water and Sewer Systems Rev., FGIC,
5.7s, 2025 $ 2,500 $ 2,445,050
Charlotte, NC, Water and Sewer Systems Rev.,
5.25s, 2021 3,000 2,766,120
Kanapolis, NC, Certificates of Participation,
MBIA, 7.375s, 2010 5,000 5,333,050
Raleigh, NC, Water and Sewer Systems Rev., 5.125s,
2022 2,000 1,807,180
Winston-Salem, NC, Water and Sewer Systems Rev.,
6.25s, 2012 4,000 4,134,120
---------------
$ 16,485,520
- --------------------------------------------------------------------- ---------------
Total Municipal Bonds (Identified cost, $395,567,120) $415,104,221
- ---------------------------------------------------------------------- ---------------
Floating Rate Demand Notes - 0.6%
- --------------------------------------------------------------------------------------
Uinta County, WY, Pollution Control Rev.
(Chevron), due 8/15/00 $ 700 $ 700,000
Uinta County, WY, Pollution Control Rev.
(Chevron), due 12/01/22 2,000 2,000,000
- --------------------------------------------------------------------- ---------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,700,000
- --------------------------------------------------------------------- ---------------
Total Investments (Identified Cost, $398,267,120) $417,804,221
Other Assets, Less Liabilities - 1.5% 6,131,119
- --------------------------------------------------------------------- ---------------
Net assets - 100.0% $423,935,340
- ---------------------------------------------------------------------- ---------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments - March 31, 1997
MFS PENNSYLVANIA MUNICIPAL BOND FUND
Municipal Bonds - 93.8%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------- ---------------- --------------
<S> <C> <C>
General Obligation - 13.0%
Beaver County, PA, MBIA, 5.75s, 2015 $ 250 $ 249,553
Central Greene, PA, School District, AMBAC, 5.25s,
2024 750 692,250
Chester County, PA, 5.65s, 2011 500 506,495
Commonwealth of Puerto Rico, 6.35s, 2010 1,350 1,419,457
Dauphin County, PA, General Authority Rev., 5.8s,
2026 400 386,340
Dauphin County, PA, General Authority Rev., MBIA,
0s, 2020 240 59,815
Delaware County, PA, 5.125s, 2016 500 464,465
Greene County, PA, 6s, 2010 100 99,944
Northeastern York County, PA, School District,
FGIC, 0s, 2012 415 176,151
Oley Valley, PA, School District, AMBAC,
0s, 2011 810 365,350
Southeastern Area, PA, Special Schools Authority
Rev., 0s, 2007 360 201,395
State of Pennsylvania, 6.25s, 2010 300 325,497
Valley View, PA, School District, FGIC,
5.5s, 2014 500 486,605
--------------
$5,433,317
- --------------------------------------------------------------------- --------------
State and Local Appropriation - 2.1%
Philadelphia, PA, Municipal Authority Rev.
(Justice Lease), 8.625s, 2016 $ 345 $ 381,711
State of Pennsylvania, Certificates of
Participation, AMBAC, 5.4s, 2009 500 500,645
--------------
$ 882,356
- --------------------------------------------------------------------- --------------
Refunded and Special Obligations - 12.8%
Allegheny County, PA, Sanitation Authority, FGIC,
7.45s, 1999 $ 200 $ 212,088
Allegheny County, PA, Sanitation Authority, ETM,
0s, 2014 2,835 1,047,136
Bethlehem, PA, Water Authority Rev., MBIA, 6.1s,
2002 500 529,620
Philadelphia, PA, Gas Works Rev., ETM, 6s, 2013 1,645 1,702,871
Philadelphia, PA, Hospital and Higher Educational
Facilities, 7.25s, 2001 500 554,155
Puerto Rico Highways and Transportation Authority
Rev., 6.5s, 2002 250 273,250
Schuylkill County, PA, Redevelopment Authority
Rev., FGIC, 7s, 2007 300 329,151
Westmoreland County, PA, FGIC, ETM,
0s, 2018 1,000 290,450
Westmoreland County, PA, MBIA, ETM, 5.25s, 2009 400 395,888
--------------
$5,334,609
- --------------------------------------------------------------------- --------------
Airport and Port Revenue - 1.8%
Allegheny County, PA, Airport Rev. (Greater
Pittsburgh), FGIC, 7.75s, 2019 $ 750 $ 768,120
- --------------------------------------------------------------------- --------------
Electric and Gas Utility Revenue - 4.4%
Luzerne County, PA, Industrial Development
Authority, 6.05s, 2019 $ 300 $ 289,710
Luzerne County, PA, Industrial Development
Authority, AMBAC, 7.2s, 2017 500 549,385
Philadelphia, PA, Gas Works Rev.,
6.375s, 2014 750 764,610
Philadelphia, PA, Gas Works Rev.,
5.25s, 2015 250 226,410
--------------
$1,830,115
- --------------------------------------------------------------------- --------------
18-PA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- ---------------------------------------------------------------------- --------------
Health Care Revenue - 10.3%
Butler County, PA, Industrial Development
Authority (Sherwood Oaks), 5.75s, 2011 $ 400 $ 379,624
Chester County, PA, Health and Education (Main
Line), 5.5s, 2015 335 317,915
Cumberland County, PA, Municipal Refunding
(Carlisle Hospital), 6.8s, 2023 500 511,815
Montgomery County, PA, Industrial Development
Authority, Health Facilities Rev. (AHF/Ambler),
8.5s, 2023 210 212,638
Pennsylvania Higher Education Rev., 5.7s, 2011 550 551,199
Philadelphia, PA, Health and Educational
Facilities Authority (Children's Hospital),
5.375s, 2014 500 477,075
Philadelphia, PA, Health and Educational
Facilities Authority (Jeans Health),
6.6s, 2010 500 516,575
Philadelphia, PA, Health and Educational
Facilities Authority (Temple University),
6.625s, 2023 250 254,857
Philadelphia, PA, Hospitals and Higher Educational
Facilities Authority (Graduate Health), 6.25s,
2018 300 288,300
Scranton-Lackawanna, PA (Allied Health), 7.125s,
2005 500 530,755
Union County, PA, Hospital Authority Rev.
(Evangelical Community Hospital),
5.875s, 2023 300 275,046
--------------
$4,315,799
- --------------------------------------------------------------------- --------------
Industrial Revenue (Corporate Guarantee) - 5.1%
Erie County, PA, Industrial Development Authority,
Environmental Improvement (International Paper),
7.625s, 2018 $ 250 $ 278,132
Hampden, PA, Industrial Development Authority
(Kmart), 5.75s, 2008 250 240,338
New Morgan, PA, Industrial Development Authority
(Browning Ferris Co.), 6.5s, 2019 500 512,435
Northampton County, PA, Industrial Development
Authority (Bethlehem Steel), 7.55s, 2017 800 838,304
Pennsylvania Economic Development Authority
(MacMillan Bloedel), 7.6s, 2020 250 276,008
--------------
$2,145,217
- --------------------------------------------------------------------- --------------
Insured Health Care Revenue - 11.3%
Allegheny County, PA, Hospital Authority (Magee
Women's), FGIC, 0s, 2015 $1,000 $ 329,060
Allegheny County, PA, Hospital Authority (South
Hills Health System), MBIA,
5.8s, 2016 500 493,665
Allegheny County, PA, Hospital Authority
(University of Pittsburgh), MBIA,
5.35s, 2015 400 376,932
Blair County, PA, Hospital Authority (Altoona),
AMBAC, 5.5s, 2008 470 474,080
Dauphin County, PA, General Authority Hospital
Rev. (Hapsco Project), MBIA,
5.8s, 2002 355 369,477
Dauphin County, PA, General Authority Hospital
Rev. (Hapsco Project), MBIA,
5.5s, 2013 1,000 967,360
Delaware County, PA, Hospital Rev. (Crozer
Chester), MBIA, 5.3s, 2020 500 459,505
Doylestown, PA, Hospital Authority Rev., AMBAC,
5s, 2023 $ 500 $ 439,635
Lancaster County, PA, Hospital Rev. (Masonic),
AMBAC, 5s, 2020 400 353,908
Lehigh County, PA, Hospital Rev. (Lehigh Valley),
MBIA, 7s, 2016 250 283,852
Sayre, PA, Health Care Facilities (VHA, PA),
AMBAC, 6.375s, 2022 160 165,352
--------------
$4,712,826
- --------------------------------------------------------------------- --------------
Multi-Family Housing Revenue - 0.6%
Montgomery County, PA, Redevelopment Authority
(KBF Associates), 6.5s, 2025 $ 250 $ 245,215
- --------------------------------------------------------------------- --------------
Sales and Excise Tax Revenue - 3.5%
Puerto Rico Highway & Transportation Authority,
5.5s, 2008 $ 500 $ 488,420
Puerto Rico Highway & Transportation Authority,
5.5s, 2013 500 489,860
Puerto Rico Highway & Transportation Authority,
5.5s, 2015 500 495,915
--------------
$1,474,195
- --------------------------------------------------------------------- --------------
Single Family Housing Revenue - 8.0%
Pennsylvania Housing Finance Agency, 6.75s, 2014 $ 500 $ 521,540
Pennsylvania Housing Finance Agency, 6.4s, 2016 500 513,890
Pennsylvania Housing Finance Agency, 6.65s, 2021 250 258,415
Pennsylvania Housing Finance Agency, 6.125s, 2024 480 482,587
Pennslyvania Housing Finance Agency, FHA, VA,
5.75s, 2013 1,000 995,490
Philadelphia, PA, Redevelopment Authority, 6.1s,
2010 200 198,382
Pittsburgh, PA, Urban Development Corp., 5.5s,
2010 400 386,780
--------------
$3,357,084
- --------------------------------------------------------------------- --------------
Solid Waste Revenue - 2.3%
Harrisburg, PA, 5.875s, 2021 $1,000 $ 962,910
- --------------------------------------------------------------------- --------------
Turnpike Revenue - 2.5%
Delaware River Junction, Toll Bridge (Pennsylvania
Bridge), FGIC, 6.25s, 2012 $1,000 $1,035,630
- --------------------------------------------------------------------- --------------
Universities - 3.2%
Cumberland County, PA, Municipal Authority
(Messiah College), AMBAC, 5.125s, 2015 $ 300 $ 277,476
Pennsylvania Higher Education Facilities Authority
Rev. (Thomas Jefferson University), 6s, 2019 625 628,013
Pennsylvania Higher Education Facilities Authority
Rev. (University of Pennsylvania), 7s, 2008 400 447,320
--------------
$1,352,809
- --------------------------------------------------------------------- --------------
Water and Sewer Utility Revenue - 7.0%
Lancaster, PA, Sewer Authority, FGIC,
6.85s, 2011 $ 250 $ 255,500
Meadville, PA, Area Water Authority, FSA, 5.125s,
2014 250 232,455
Philadelphia, PA, Water Rev., 5.75s, 2013 275 264,465
Philadelphia, PA, Water Rev., FSA,
5.75s, 2013 300 298,344
Philadelphia, PA, Water Rev., MBIA,
5.5s, 2014 1,000 967,200
West View, PA, Water Rev., FGIC,
5.15s, 2017 1,000 926,760
--------------
$2,944,724
- --------------------------------------------------------------------- --------------
19-PA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- ---------------------------------------------------------------------- --------------
Other - 5.9%
Pennsylvania Convention Center Rev.,
6.75s, 2019 $ 250 $ 265,277
Pennsylvania Finance Authority Rev.,
6.6s, 2009 900 950,049
Pennsylvania Industrial Development Authority,
AMBAC, 7s, 2007 300 340,218
Pennsylvania Industrial Development Authority,
AMBAC, 5.8s, 2009 400 412,892
Philadelphia, PA, Industrial Development Authority
Lease, MBIA, 5.35s, 2012 500 482,920
--------------
$ 2,451,356
- --------------------------------------------------------------------- --------------
Total Municipal Bonds (Identified Cost, $38,851,870) $39,246,282
- ---------------------------------------------------------------------- --------------
Floating Rate Demand Note - 2.4%
- -------------------------------------------------------------------------------------
Allegheny County, due 3/01/20,
at Identified Cost $1,000 $ 1,000,000
- --------------------------------------------------------------------- --------------
Total Investments (Identified Cost, $39,851,870) $40,246,282
Other Assets, Less Liabilities - 3.8% 1,585,108
- ---------------------------------------------------------------------- --------------
Net assets - 100.0% $41,831,390
- ---------------------------------------------------------------------- --------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments - March 31, 1997
MFS SOUTH CAROLINA MUNICIPAL BOND FUND
Municipal Bonds - 97.4%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------- ---------------- ---------------
<S> <C> <C>
General Obligation - 3.2%
Charleston County, SC, 5.5s, 2014### $1,250 $ 1,234,450
Commonwealth of Puerto Rico, 5.4s, 2025 1,500 1,381,935
Puerto Rico Public Buildings Authority,
5.7s, 2009 1,000 1,018,980
Richland County, SC, School District No. 1, 5s,
2016 1,975 1,800,529
---------------
$ 5,435,894
- -------------------------------------------------- ---------------- ---------------
State and Local Appropriation - 7.5%
Berkeley County, SC, School District, AMBAC,
6.3s, 2016 $1,800 $ 1,881,828
Greenville County, SC, Certificates of
Participation (Courthouse & Detention Center),
AMBAC, 5.7s, 2017 1,750 1,701,018
Greenville County, SC, Certificates of
Participation (Greenville Technical College),
AMBAC, 5.9s, 2019 850 845,818
Hilton Head Island, SC, Public Finance Corp.,
Certificates of Participation, AMBAC, 5.75s,
2014 1,750 1,740,217
Lexington County, SC, School District No. 1,
Certificates of Participation (Gilbert Middle
School), MBIA, 6.65s, 2012 1,000 1,050,510
Myrtle Beach, SC, Public Finance Corp.,
Certificates of Participation (Convention
Center), 6.875s, 2017 2,500 2,574,525
Puerto Rico Public Buildings Authority,
5.5s, 2021 1,000 947,410
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of
Participation, 7.5s, 2006 175 177,229
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of
Participation, 7.5s, 2007 190 192,421
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of
Participation, 7.5s, 2008 $ 205 $ 207,612
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of
Participation, 7.5s, 2009 220 222,266
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of
Participation, 7.5s, 2012 270 271,474
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of
Participation, 7.5s, 2014 315 316,720
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of
Participation, 7.5s, 2018 635 638,467
---------------
$12,767,515
- -------------------------------------------------- ---------------- ---------------
Refunded and Special Obligations - 20.2%
Calhoun, SC, Solid Waste Disposal Rev. (Eastman
Kodak), 6.75s, 2017 $1,000 $ 1,110,510
Charlestown County, SC, Alumax Project, 6.5s,
2001 1,315 1,420,923
Charlestown County, SC, Certificates of
Participation (Charlestown Public Facilities
Corp.), MBIA, 7.1s, 2001 2,000 2,209,880
Columbia, SC, Waterworks & Sewer Rev.,
0s, 2004 1,500 1,073,190
Columbia, SC, Waterworks & Sewer Rev.,
0s, 2006 2,045 1,302,808
Commonwealth of Puerto Rico, Public Improvement
Rev., 6.8s, 2002 425 470,386
Greenville Hospital System, SC, Hospital
Facilities Rev., "A", FGIC, 7.8s, 1998 1,950 2,064,036
Greenville Hospital System, SC, Hospital
Facilities Rev., "B", FGIC, 7.8s, 1998 1,500 1,587,720
Greenwood County, SC, Hospital Rev. (Self
Memorial Hospital), BIGI, 8.25s, 1997 500 520,405
Laurens, SC, Utility Systems Rev., FGIC, 7.625s,
1998 1,100 1,161,908
Lexington County, SC, School District No. 1,
Certificates of Participation (White Knoll
Middle School), CGIC, 7.65s, 1999 1,400 1,508,738
Myrtle Beach, SC, Water & Sewer Rev., MBIA, 6s,
2000 1,780 1,845,611
Myrtle Beach, SC, Water & Sewer Rev., MBIA, 6s,
2000 1,750 1,814,505
North Charleston, SC, Sewer Rev., MBIA, 7.75s,
1998 1,250 1,333,138
Puerto Rico Aqueduct & Sewer Authority Rev., 9s,
2005 750 938,078
Puerto Rico Highway & Transportation Authority,
Highway Rev., 6.625s, 2002 300 329,625
Richland County, SC, 6.25s, 2000 1,260 1,335,209
Richland County, SC, Certificates of
Participation, FGIC, 0s, 2005 1,160 774,683
Richland County, SC, Certificates of
Participation, FGIC, 0s, 2006 1,160 729,535
Richland County, SC, Certificates of
Participation, FGIC, 0s, 2007 1,160 688,959
South Carolina Jobs Economic Development
Authority (Carolina Hospital System Project),
7.55s, 2002 2,000 2,281,960
South Carolina Public Service Authority (Santee
Cooper), 6.625s, 2002 4,000 4,391,040
South Carolina Public Service Authority, "C"
(Santee Cooper), 7.1s, 2001 1,220 1,349,893
20-SC
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------- ---------------
Refunded and Special Obligations - continued
Spartanburg County, SC, Hospital Facilities Rev.
(Mary Black Hospital), 8.25s, 1998 $ 500 $ 538,205
St. Andrews, SC, Public Services District, Sewer
System Rev., FGIC, 7.75s, 2018 1,000 1,047,470
York County, SC, School District No. 3,
7.5s, 1998 575 608,344
---------------
$34,436,759
- -------------------------------------------------- ---------------- ---------------
Airport and Port Revenue - 0.6%
Richland Lexington, SC, Airport Rev. (Columbia
Airport), "A", AMBAC,
5.7s, 2026 $1,000 $ 953,830
- -------------------------------------------------- ---------------- ---------------
Electric and Gas Utility Revenue - 13.1%
Camden, SC, Public Utility Rev., Refunding &
Improvement, MBIA, 5.5s, 2017 $1,500 $ 1,436,760
Colleton & Dorchester Counties, SC, Pollution
Control Rev., 6.6s, 2014 3,000 3,169,890
Fairfield County, SC, Pollution Control Rev.
(South Carolina Electric Co.), 6.5s, 2014 1,250 1,322,875
Oconee County, SC, Pollution Control Rev. (Duke
Power Co.), 7.5s, 2017 1,000 1,072,100
Piedmont Municipal Power Agency, SC, Electric
Rev., FGIC, 6.25s, 2021 4,600 4,895,826
Piedmont Municipal Power Agency, SC, Electric
Rev., FGIC, 5s, 2022 2,300 2,032,004
Puerto Rico Electric Power Authority, "S", MBIA,
6.125s, 2008 1,025 1,107,748
Puerto Rico Telephone Authority Rev., AMBAC,
5.87s, 2004 ss 1,000 965,840
South Carolina Public Service Authority, "A",
MBIA, 5.75s, 2022 500 490,900
South Carolina Public Service Authority, "B",
AMBAC, 5.5s, 2023 1,000 949,830
South Carolina Public Service Authority, FGIC,
5.875s, 2023 2,000 1,995,960
South Carolina Public Service Authority, MBIA,
7.193s, 2013++++ 3,000 2,838,810
---------------
$22,278,543
- -------------------------------------------------- ---------------- ---------------
Health Care Revenue - 7.0%
Greenville County, SC, First Mortgage Rev.
(Chestnut Hill), 10.125s, 2016 $1,895 $ 1,909,212
Greenville Hospital System, SC, Hospital
Facilities Rev., 6s, 2020 5,400 5,453,784
Horry County, SC, Hospital Facilities Rev.
(Conway Hospital), 6.75s, 2012 4,500 4,636,125
---------------
$11,999,121
- -------------------------------------------------- ---------------- ---------------
Industrial Revenue (Corporate Guarantee) - 10.9%
Chester County, SC, Industrial Development Rev.
(Springs Industries, Inc), 7.35s, 2014 $1,000 $ 1,069,140
Chester County, SC, Industrial Development Rev.
(Springs Industries, Inc.), 7.8s, 2014 1,025 1,103,115
Darlington County, SC, Industrial Development
Rev. (Nucor Corp.),
5.75s, 2023 2,000 1,923,920
Darlington County, SC, Industrial Development
Rev. (Sonoco Products Co.), 6.125s, 2025 1,500 1,523,910
Fairfield County, SC, Industrial Development
Rev. (Rite Aid, Inc.), 7.9s, 2016 2,950 3,021,154
Florence County, SC, Industrial Development Rev.
(Stone Container Corp.), 7.375s, 2007 945 989,330
Greenville County, SC, Industrial Development
Rev. (Kroger Co.), 7.85s, 2015 500 563,935
Lexington County, SC, Industrial Rev. (J. B.
White & Co.), 8s, 2005 600 649,638
Richland County, SC, Pollution Control Rev.
(Union Camp Corp.), 6.55s, 2020 $1,800 $ 1,886,220
Richland County, SC, Solid Waste Facilities Rev.
(Union Camp Corp.), 6.75s, 2022 2,000 2,071,000
York City, SC, Industrial Development Rev.
(Hoechst Celanese), 5.7s, 2024 4,000 3,866,920
---------------
$18,668,282
- -------------------------------------------------- ---------------- ---------------
Insured Health Care Revenue - 7.7%
Charleston County, SC, Hospital Facilities Rev.
(Medical Society Health Project), MBIA, 5s,
2022 $2,450 $ 2,123,317
Pickens & Richland Counties, SC, Hospital
Facilities Rev. (Baptist Hospital), AMBAC,
5.75s, 2021 3,000 2,949,630
South Carolina Jobs Economic Development
Authority, Hospital Facilities Rev. (Anderson
Area Medical Center), MBIA, 5.25s, 2015 1,750 1,632,382
South Carolina Jobs Economic Development
Authority, Hospital Facilities Rev. (Tuomey
Regional Medical Center), MBIA, 5.5s, 2020 3,390 3,214,093
Spartanburg County, SC, Health Service Rev.,
AMBAC, 5.3s, 2025 1,000 913,130
Spartanburg County, SC, Hospital Facilities
Rev., Health Services District Inc., AMBAC,
5.3s, 2020 2,500 2,315,100
---------------
$13,147,652
- -------------------------------------------------- ---------------- ---------------
Multi-Family Housing Revenue - 2.5%
South Carolina Housing Finance & Development
Authority (Fairway Apartments), FHA, 7.625s,
2033 $1,955 $ 2,046,025
South Carolina Housing Finance & Development
Authority (Hunting Ridge Apartments), 6.75s,
2025 1,000 1,015,020
South Carolina Housing Finance & Development
Authority (Runaway Bay Apartments), 6.125s,
2015 1,300 1,281,670
---------------
$ 4,342,715
- -------------------------------------------------- ---------------- ---------------
Sales and Excise Tax Revenue - 0.5%
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2026 $1,000 $ 930,100
- -------------------------------------------------- ---------------- ---------------
Single Family Housing Revenue - 4.6%
South Carolina Housing Finance & Development
Authority Rev., 7.55s, 2011 $1,750 $ 1,810,253
South Carolina Housing Finance & Development
Authority Rev., 8.6s, 2019 620 638,631
South Carolina Housing Finance & Development
Authority Rev., 7.75s, 2022 2,650 2,759,551
South Carolina Housing Finance & Development
Authority Rev., 7.8s, 2022 1,000 1,036,190
South Carolina Housing Finance & Development
Authority Rev., 7.9s, 2032 1,610 1,675,543
---------------
$ 7,920,168
- -------------------------------------------------- ---------------- ---------------
Solid Waste Revenue - 1.1%
Charleston County, SC, Resource Recovery Rev.
(Foster Wheeler), 9.25s, 2010 $1,750 $ 1,851,640
- -------------------------------------------------- ---------------- ---------------
Universities - 0.9%
Coastal Carolina University, SC, MBIA, 6.875s,
2026 $1,000 $ 1,079,700
University of South Carolina, University Rev.,
MBIA, 5.75s, 2026 515 499,432
---------------
$ 1,579,132
- -------------------------------------------------- ---------------- ---------------
21-SC
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------- ---------------
Water and Sewer Utility Revenue - 17.6%
Cayce, SC, Waterworks & Sewer Rev., AMBAC,
5.25s, 2015 $1,000 $ 938,310
Charleston County, SC, Waterworks & Sewer Rev.,
6s, 2012 2,000 2,039,220
Charleston County, SC, Waterworks & Sewer Rev.,
MBIA, 5s, 2022 3,150 2,771,811
Columbia, SC, Waterworks & Sewer Rev.,
0s, 2005 2,245 1,498,133
Columbia, SC, Waterworks & Sewer Rev.,
0s, 2006 9,330 5,862,599
Columbia, SC, Waterworks & Sewer Rev., 5.375s,
2012 3,500 3,443,510
Greenville, SC, Waterworks Rev., 5.5s, 2022 1,000 940,650
Laurens County, SC, Water & Sewer Commission,
Sewer System Rev., 5.5s, 2014 1,080 1,017,068
Myrtle Beach, SC, Water & Sewer Rev., MBIA,
5.5s, 2013 1,000 978,970
South Carolina Water Resources Authority Rev.
(Local Government Program),
7.25s, 2020 3,000 3,173,730
Spartanburg, SC, Waterworks Rev., FGIC, 6.05s,
2018 2,750 2,804,423
Western Carolina Regional Sewer Authority Rev.,
AMBAC, 0s, 2007 4,400 2,564,364
York County, SC, Water & Sewer Rev.,
6.5s, 2025 2,000 1,964,120
---------------
$ 29,996,908
- --------------------------------------------------- ---------------- ---------------
Total Municipal Bonds (Identified Cost, $158,311,434) $166,308,259
- -------------------------------------------------------------------- ---------------
Floating Rate Demand Note - 1.0%
- ------------------------------------------------------------------------------------
Charleston County, SC, Industrial Rev. (Massey
Coal), due 1/01/07, at Identified Cost $1,700 $ 1,700,000
- -------------------------------------------------- ---------------- ---------------
Total Investments (Identified Cost, $160,011,434) $168,008,259
Other Assets, Less Liabilities - 1.6% 2,771,126
- -------------------------------------------------------------------- ---------------
Net assets - 100.0% $170,779,385
- -------------------------------------------------------------------- ---------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments - March 31, 1997
MFS TENNESSEE MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------- ----------------- ---------------
<S> <C> <C>
General Obligation - 8.7%
Huntington, TN, School District, AMBAC, 5.35s,
2021 $1,050 $ 994,465
McKenzie, TN, High School District, FSA, 5.625s,
2017 500 491,375
Memphis, TN, 5.25s, 2012 800 771,056
Metropolitan Government of Nashville & Davidson
County, TN, 6.125s, 2014 1,000 1,029,660
Metropolitan Government of Nashville & Davidson
County, TN, 6.125s, 2019 1,255 1,284,819
Rutherford County, TN, 0s, 2015 1,500 507,000
Sevier County, TN, Public Building Authority,
AMBAC, 5.6s, 2015 800 783,648
Shelby County, TN, 5.125s, 2015 1,000 935,560
Shelby County, TN, Capital Appreciation
Refundings, "B", 0s, 2013 3,960 1,522,541
Shelby County, TN, Public Improvement, "B",
5.75s, 2021 1,000 987,060
Territory of Virgin Islands, 7.75s, 2006 390 419,472
Union County, TN, AMBAC, 5.25s, 2020 1,000 932,940
---------------
$10,659,596
- ---------------------------------------------------- ----------------- ---------------
State and Local Appropriation - 3.2%
Gatlinburg, TN, Public Building Authority
(Gatlinburg Convention Center), AMBAC, 6.9s,
2012 $1,000 $ 1,070,630
Puerto Rico Public Buildings Authority,
5.5s, 2021 1,000 947,410
Puerto Rico Public Buildings Authority, Public
Education & Health Refunding, 6.45s, 2016 ss 2,000 1,874,880
---------------
$ 3,892,920
- ---------------------------------------------------- ----------------- ---------------
Refunded and Special Obligations - 23.2%
Bristol, TN, Health & Educational Facilities
Board Rev. (Bristol Memorial), FGIC,
7s, 2001 $ 500 $ 548,395
Gladeville, TN, Utility District, Waterworks
Rev., FGIC, 7.4s, 2000 500 544,210
Knox County, TN, Health, Education & Housing
Facilities Board (Baptist East),
8.5s, 1999 1,180 1,289,835
Knox County, TN, Health, Education & Housing
Facilities Board (Baptist East),
8.6s, 1999 710 777,741
Knox County, TN, Health, Education & Housing
Facilities Board (Fort Sanders), MBIA, 8s, 1998 2,000 2,088,100
Knox County, TN, Health, Education & Housing
Facilities Board (Mercy Health), AMBAC, 7.6s,
1999 3,500 3,809,645
Knox County, TN, Industrial Development Board,
0s, 2016 8,325 2,291,706
Memphis, TN, Electric Systems Rev.,
6.75s, 2000 1,500 1,605,375
Memphis-Shelby County, TN, Airport Authority,
MBIA, 8s, 1998 3,500 3,671,850
Mt. Juliet, TN, Public Building Authority
(Madison), MBIA, 7.7s, 2004 1,100 1,353,605
Mt. Juliet, TN, Public Building Authority
(Madison), MBIA, 7.8s, 2004 3,500 4,326,980
Mt. Juliet, TN, Public Building Authority
(Popular Grove), 8.375s, 1999 1,430 1,552,937
New Tazewell, TN, Health, Educational & Housing
Facilities Board (Lincoln),
7.25s, 1997 2,000 2,040,000
Puerto Rico Highway & Transportation Authority
Rev., 8.125s, 1998 670 716,083
22-TN
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- ---------------------------------------------------------------------- ---------------
Refunded and Special Obligations - continued
Shelby County, TN, 6.5s, 1999 $1,120 $ 1,183,638
Wilson County, TN, Water & Wastewater Authority,
8s, 1999 500 541,050
---------------
$28,341,150
- ---------------------------------------------------- ----------------- ---------------
Electric and Gas Utility Revenue - 5.9%
Bolivar, TN, Electric Systems Rev., MBIA, 5.25s,
2016 $ 730 $ 680,805
Jackson, TN, Electric Systems Rev., Refunding &
Improvement, MBIA, 5s, 2018 1,000 895,840
Lawrenceburg, TN, Electric Rev., 5.5s, 2026 1,255 1,192,125
Metropolitan Government of Nashville & Davidson
County, TN, 0s, 2010 2,480 1,186,482
Metropolitan Government of Nashville & Davidson
County, TN, 0s, 2012 3,305 1,382,283
Puerto Rico Telephone Authority Rev., AMBAC,
5.87s, 2004 ss 2,000 1,931,680
---------------
$ 7,269,215
- ---------------------------------------------------- ----------------- ---------------
Health Care Revenue - 3.2%
Cookeville, TN, Industrial Development Board Rev.
(Cookeville General Hospital), 5.625s, 2016 $1,000 $ 948,130
Cookeville, TN, Industrial Development Board,
Hospital Rev. (Cookeville General), 5.75s, 2010 2,000 1,967,340
Knox County, TN, Health, Educational & Housing
Facilities Board (East Tennessee Children's),
6.5s, 2012 1,000 1,019,460
---------------
$ 3,934,930
- ---------------------------------------------------- ----------------- ---------------
Industrial Revenue (Corporate Guarantee) - 11.7%
Bristol, TN, Industrial Development Authority
(K-Mart Corp.), 7.5s, 2008 $1,105 $ 1,120,293
Hardeman County, TN (Correctional Facilities
Corp.), 7.75s, 2017 1,000 994,290
Humphreys County, TN, Certificates of
Participation (duPont), 6.7s, 2024 1,750 1,851,657
Knox County, TN, Industrial Development Board
(Kroger Co.), 8.1s, 2003 2,000 2,247,960
Lawrenceburg, TN, Industrial Development Board
(Tridon, Inc.), 9.875s, 2006 1,000 1,042,230
McMinn County, TN, Industrial Development Board,
Pollution Control Rev. (Bowater), 7.625s, 2016 1,000 1,063,770
Memphis-Shelby County, TN, Airport Authority
(Federal Express Corp.), 7.875s, 2009 2,755 3,051,218
Memphis-Shelby County, TN, Airport Authority
(Federal Express Corp.), 6.2s, 2014 1,000 1,003,780
Metropolitan Government of Nashville & Davidson
County, TN (Wilson Sporting), 7.75s, 2014 1,000 1,080,420
Puerto Rico Industrial, Medical & Environmental
Pollution Control Facilities, Finance Authority
Rev. (Baxter Travenol Laboratories), 8s, 2012 750 803,895
---------------
$14,259,513
- ---------------------------------------------------- ----------------- ---------------
Insured Health Care Revenue - 9.4%
Bristol, TN, Health, Education & Housing
Facilities Board (Bristol Memorial), FGIC,
7s, 2021 $2,825 $ 2,769,743
Johnson City, TN, Health & Education Financing
Authority (Johnson City Medical Center
Hospital), MBIA, 5.25s, 2016 1,375 1,269,648
Knox County, TN, Health, Educational & Housing
Facilities Board (Fort Sanders), MBIA, 5.75s,
2014 $3,250 $ 3,256,012
Knox County, TN, Health, Educational & Housing
Facilities Board (Fort Sanders), MBIA, 5.25s,
2023 1,750 1,600,147
Metropolitan Government of Nashville & Davidson
County, TN, Health & Education (Meharry Medical
College), AMBAC,
5s, 2024 3,000 2,648,550
---------------
$11,544,100
- ---------------------------------------------------- ----------------- ---------------
Multi-Family Housing Revenue - 5.8%
Franklin, TN, Industrial Development (Landings
Apartments), FSA, 6s, 2026 $1,000 $ 983,880
Franklin, TN, Industrial Development (Sussex
Downs), FHA, 6.75s, 2027 1,000 1,040,690
Jackson, TN, Health, Education & Housing
Facilities Board (Posthouse Apartments), FHA,
7.1s, 2028 1,610 1,682,386
Metropolitan Government of Nashville & Davidson
County, TN, Health & Education (Herman Street),
FHA, 7.25s, 2032 495 516,290
Metropolitan Government of Nashville & Davidson
County, TN, Industrial Development Board, FHA,
6.95s, 2026 1,000 1,042,580
Metropolitan Government of Nashville & Davidson
County, TN, Industrial Development Board, FHA,
7.5s, 2029 695 724,315
Metropolitan Government of Nashville & Davidson
County, TN, Industrial Development Board, FHA,
7.7s, 2029 1,000 1,042,000
---------------
$ 7,032,141
- ---------------------------------------------------- ----------------- ---------------
Sales and Excise Tax Revenue - 1.9%
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2026 $1,400 $ 1,302,140
Tennessee Local Development Authority Rev.,
Community Provider Loan, 7s, 2021 1,000 1,058,380
---------------
$ 2,360,520
- ---------------------------------------------------- ----------------- ---------------
Single Family Housing Revenue - 3.4%
Shelby County, TN, Single Family Mortgage Rev.,
FHA, 0s, 2015 $8,445 $ 1,345,373
Tennessee Housing Development Agency, 7.65s, 2022 950 985,558
Tennessee Housing Development Agency, 7.375s,
2023 1,000 1,037,520
Tennessee Housing Development Agency, 7.125s,
2026 800 846,008
---------------
$ 4,214,459
- ---------------------------------------------------- ----------------- ---------------
Universities - 2.4%
Jackson, TN, Health, Educational & Housing
Facilities Board (Lambuth University), Asset
Guaranty, 5.9s, 2015 $1,000 $ 988,730
Metropolitian Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University),
7.625s, 2016 1,000 1,048,810
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University), 5.2s,
2018 1,000 932,760
---------------
$ 2,970,300
- ---------------------------------------------------- ----------------- ---------------
23-TN
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- ---------------------------------------------------------------------- ---------------
Water and Sewer Utility Revenue - 19.1%
Madison, TN, Utility Waterworks Refunding, MBIA,
5s, 2019 $2,750 $ 2,488,530
Metropolitan Government of Nashville, TN, Water &
Sewer Rev., AMBAC, 6.075s, 2022 2,000 1,997,880
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., FGIC, 5.2s,
2013 2,000 1,914,320
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., FGIC, 5.1s,
2016 2,565 2,344,282
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., RIBS, AMBAC,
8.429s, 2022++++ 1,000 999,690
Mt. Juliet, TN, Public Building Authority
(Cumberland), 7.55s, 2024 1,205 1,272,106
Mt. Juliet, TN, Public Building Authority
(Hermitage), MBIA, 7.5s, 2009 300 318,612
Mt. Juliet, TN, Public Building Authority
(Milcroft), 7.55s, 2024 2,030 2,143,051
Mt. Juliet, TN, Public Building Authority (New
Market), 8.375s, 2024 560 599,122
Mt. Juliet, TN, Public Building Authority
(Tipton), 7.5s, 2004 330 348,094
Poplar Grove, TN, Utility District, Waterworks
Rev., 6.375s, 2011 500 508,240
Puerto Rico Aqueduct & Sewer Rev.,
6.25s, 2012 1,000 1,070,020
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2002 1,315 978,465
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2003 1,045 735,753
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2004 1,920 1,273,133
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2005 1,920 1,196,678
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2006 1,920 1,127,904
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2007 1,920 1,062,048
Wilson County, TN, Water & Wastewater Authority,
6s, 2014 1,000 992,180
---------------
$ 23,370,108
- ---------------------------------------------------- ----------------- ---------------
Total Municipal Bonds (Identified Cost, $115,312,773) $119,848,952
- ---------------------------------------------------------------------- ---------------
Shares
- ---------------------------------------------------- ----------------- ---------------
Right - 0.2%
- ---------------------------------------------------- ----------------- ---------------
State of New Jersey, "D", due 2013
(Identified Cost, $125,600) 2,000 $ 291,000
- ---------------------------------------------------- ----------------- ---------------
Principal Amount
(000 Omitted)
- ---------------------------------------------------- ----------------- ---------------
Floating Rate Demand Notes - 1.5%
- --------------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev., "D"
(Exxon), due 11/01/14 $ 600 $ 600,000
Uinta County, WY, Pollution Control Rev.
(Chevron), due 8/15/20 1,200 1,200,000
- ---------------------------------------------------- ----------------- ---------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,800,000
- ---------------------------------------------------------------------- ---------------
Total Investments (Identified Cost, $117,238,373) $121,939,952
Other Assets, Less Liabilities - 0.4% 495,865
- ---------------------------------------------------------------------- ---------------
Net assets - 100.0% $122,435,817
- ---------------------------------------------------------------------- ---------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments - March 31, 1997
MFS VIRGINIA MUNICIPAL BOND FUND
Municipal Bonds - 94.0%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------- ----------------- ---------------
<S> <C> <C>
General Obligation - 11.5%
Chesapeake, VA, Public Improvement,
5.375s, 2013 $ 3,500 $ 3,390,275
Lebanon, VA, 6.375s, 2011 1,625 1,604,752
Norfolk, VA, 5.25s, 2013 1,000 958,460
Norfolk, VA, 5.25s, 2014 2,750 2,631,777
Norfolk VA, 5.25s, 2015 3,000 2,866,920
Norfolk VA, 5.25s, 2016 2,930 2,779,750
Portsmouth, VA, 6.375s, 2012 1,555 1,621,196
Richmond, VA, 0s, 2006 3,500 2,168,810
Richmond, VA, 6.5s, 2006 4,000 4,251,920
Richmond, VA, 0s, 2007 5,280 3,095,717
Richmond, VA, 0s, 2008 7,270 3,994,283
Richmond, VA, 0s, 2009 5,175 2,659,122
Spotsylvania County, VA, FGIC, 6s, 2009 4,270 4,510,700
State of Virginia, 5.375s, 2015 3,160 3,081,980
State of Virginia (Higher Educational
Institute), 0s, 1998 1,295 1,236,233
State of Virginia (Higher Educational
Institute), 0s, 1999 1,300 1,183,039
Suffolk, VA, 6.5s, 2006 1,250 1,294,750
Virginia Public School Authority, 6.5s, 2013 1,875 2,004,094
Virginia Public School Authority, "A",
5.375s, 2017 2,295 2,184,014
---------------
$47,517,792
- ------------------------------------------------- ----------------- ---------------
State and Local Appropriation - 8.2%
Chesapeake, VA, Industrial Development
Authority (Chesapeake Court House), MBIA,
6.25s, 2011 $ 3,985 $ 4,227,567
Chesterfield County, VA, Industrial Development
Authority, Public Facilities, 7.5s, 2008 1,720 1,887,476
Henrico County, VA, Industrial Development
Authority, Lease Rev., 6.5s, 2010 5,000 5,419,650
New Kent County, VA, Industrial Development
Authority, Public Facilities, 7.5s, 2011 700 743,141
Virginia Biotechnology Research Park (Biotech
Two), 5.25s, 2018 8,800 8,208,816
Virginia Public Building Authority, MBIA, 0s,
2007 13,305 7,618,842
Virginia Public Building Authority, MBIA, 0s,
2008 10,650 5,715,003
---------------
$33,820,495
- ------------------------------------------------- ----------------- ---------------
Refunded and Special Obligations - 10.9%
Arlington County, VA, Industrial Development
Authority (Arlington Hospital), 7.125s, 2001 $ 4,450 $ 4,941,992
Carroll County, VA, Solid Waste Authority Rev.,
7.5s, 2001 2,265 2,544,048
Chesapeake, VA, Industrial Development
Authority (Sentara Life Care Corp.),
10s, 1997 1,080 1,126,926
Fairfax County, VA, Redevelopment & Housing
Authority (Little River Glen), 8.95s, 1999 3,805 3,904,843
Henrico County, Industrial Development
Authority (St. Mary's Hospital), 7.5s, 2007 790 870,098
Newport News, VA, 6.5s, 2000 5,405 5,826,212
Norfolk, VA, Industrial Development Authority
(Sentara Life Care Corp.),
10s, 1997 4,130 4,309,448
24-VA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------- ---------------
Refunded and Special Obligations - continued
Portsmouth, VA, 6.9s, 2000 $1,500 $ 1,627,095
Puerto Rico Aqueduct & Sewer Authority Rev.,
9s, 2005 4,150 5,190,695
Puerto Rico Aqueduct & Sewer Authority Rev.,
10.25s, 2009 400 543,388
Roanoke, VA, Industrial Development Authority,
Hospital Rev. (Memorial),
7.25s, 2000 1,750 1,916,635
Roanoke, VA, Industrial Development Authority,
Hospital Rev. (Roanoke Memorial), 7.5s, 2000 1,245 1,370,845
Virginia Beach, VA, Certificates of
Participation (Judical Center Project), FGIC,
7.25s, 2000 4,955 5,444,752
Virginia Beach, VA, Water & Sewer Rev., 6.625s,
2002 2,400 2,616,024
Virginia College Building Authority (Hampton
University), 7.75s, 1999 750 810,023
Virginia Resources Authority, Water & Sewer
System Rev., 7.875s, 1998 800 857,432
Virginia Resources Authority, Water & Sewer
System Rev., 7.5s, 1999 1,180 1,271,415
---------------
$45,171,871
- ------------------------------------------------- ----------------- ---------------
Airport and Port Revenue - 6.4%
Metropolitan Washington, DC, Airport Rev.,
7.6s, 2014 $5,030 $ 5,448,194
Metropolitan Washington, DC, Airport Rev.,
BIGI, 8.2s, 2018 3,500 3,744,825
Metropolitan Washington, DC, Airport Rev.,
MBIA, 5.75s, 2020 7,000 6,729,660
Peninsula Airport Commission, VA,
7.3s, 2021 2,400 2,601,456
Puerto Rico Ports Authority (American
Airlines), 6.3s, 2023 2,000 2,011,260
Puerto Rico Ports Authority (American
Airlines), 6.25s, 2026 6,000 6,022,680
---------------
$26,558,075
- ------------------------------------------------- ----------------- ---------------
Electric and Gas Utility Revenue - 5.0%
Halifax County, VA, Industrial Authority Rev.
(Old Dominion Electric), 6s, 2022 $5,000 $ 4,935,350
Pittsylvania County, VA, Industrial Development
Authority Rev., 7.5s, 2014 8,000 8,315,200
Puerto Rico Electric Power Authority,
5s, 2012 2,020 1,832,362
Puerto Rico Electric Power Authority,
6s, 2015 1,000 1,003,950
Puerto Rico Electric Power Authority,
5.5s, 2016 5,000 4,731,950
---------------
$20,818,812
- ------------------------------------------------- ----------------- ---------------
Health Care Revenue - 4.8%
Chesapeake, VA, Industrial Development
Authority (Sentara Life Care Corp.),
7.875s, 2008 $1,000 $ 1,066,110
Chesapeake, VA, Industrial Development
Authority (Sentara Life Care Corp.), 8s, 2018 4,000 4,251,120
Fairfax, Fauquier & Loudoun Counties, VA,
Health Center Commission, Nursing Home Rev.,
9s, 2020 1,890 1,975,012
Lynchburg, VA, Industrial Development Authority
(Central Health, Inc.), 8.125s, 2016 1,400 1,470,294
Martinsville, VA, Industrial Development
Authority, 6.75s, 2004 1,230 1,258,253
Norfolk, VA, Industrial Development Authority
(Sentara Life Care Corp.), "A", 7.875s, 2008 $1,000 $ 1,060,120
Norfolk, VA, Industrial Development Authority
(Sentara Life Care Corp.), "A", 7.9s, 2018 2,000 2,098,860
Peninsula Ports Authority, VA, Hospital
Facilities Rev. (Mary Immaculate),
7.375s, 2017 3,000 3,068,760
Peninsula Ports, VA, Health Care Rev.
(Riverside Health System), 6.625s, 2010 1,500 1,591,095
Suffolk, VA, Industrial Development Authority
(Louise Obici Memorial Hospital), 7.875s,
2005 1,740 1,822,337
---------------
$19,661,961
- ------------------------------------------------- ----------------- ---------------
Industrial Revenue (Corporate Guarantee) - 4.7%
Halifax, VA, Industrial Development Authority
(Tandy Corp.), 8.25s, 2008 $3,500 $ 3,727,325
Henrico County, VA, Industrial Development
Authority, 5.875s, 2017 2,250 2,193,908
Isle Wight County, VA, Industrial Development
(Union Camp), 6.55s, 2024 8,000 8,282,320
Lynchburg, VA, Industrial Development Authority
(Kroger Co.), 7.9s, 2011 1,000 1,117,630
Virginia Beach, VA, Development Authority
(Beverly Enterprises), 10s, 2010 1,315 1,445,632
West Point, VA, Industrial Development
Authority Solid Waste Disposal Rev.
(Chesapeake Corp. Project), 6.375s, 2019 2,600 2,631,200
---------------
$19,398,015
- ------------------------------------------------- ----------------- ---------------
Insured Health Care Revenue - 7.7%
Albemarle County, VA, Industrial Development
Authority, First Mortgage Rev., FHA, 8.9s,
2026 $2,150 $ 2,383,920
Front Royal-Warren County, VA, Industrial
Development Authority, FHA, 9.45s, 2024 1,000 1,091,750
Hanover County, VA, Industrial Development
Authority, MBIA, 6s, 2009 1,550 1,632,476
Hanover County, VA, Industrial Development
Authority (Memorial Regional Medical Center),
MBIA, 6.5s, 2008 1,000 1,088,280
Hanover County, VA, Industrial Development
Authority (Memorial Regional Medical Center),
MBIA, 6.5s, 2009 1,510 1,657,859
Henrico County, VA, Industrial Development
Authority Rev. (Bon Secours), MBIA,
6.25s, 2020 1,500 1,593,735
Henrico County, VA, Industrial Development
Authority Rev. (Bon Secours), FSA, RIBS,
8.005s, 2027++++ 8,700 8,646,843
Peninsula Ports Authority, VA, Hospital
Facilities Rev. (Wittaker Memorial), FHA,
8.7s, 2023 2,100 2,164,092
Roanoke, VA, Industrial Development Authority,
Hospital Rev. (Roanoke Memorial), MBIA,
6.125s, 2017 6,000 6,303,240
Winchester, VA, Industrial Development
Authority, AMBAC, 9.246s, 2014++++ 4,900 5,404,994
---------------
$31,967,189
- ------------------------------------------------- ----------------- ---------------
Multi-Family Housing Revenue - 3.2%
Alexandria, VA, Redevelopment & Housing Finance
Authority (Jefferson Village Apartments), 9s,
2018 $4,000 $ 4,105,440
25-VA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- -------------------------------------------------------------------- ---------------
Multi-Family Housing Revenue - continued
Norfolk, VA, Redevelopment & Housing Authority
(Dockside Apartments), FHA, 7.375s, 2028 $ 2,000 $ 2,098,380
Virginia Housing Development Authority, 6.5s,
2013 2,300 2,347,840
Virginia Housing Development Authority, 6.6s,
2022 4,635 4,772,845
---------------
$ 13,324,505
- ------------------------------------------------- ----------------- ---------------
Sales and Excise Tax Revenue - 2.5%
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2026 $ 2,000 $ 1,860,200
Virginia Port Authority, 8.2s, 2008 4,500 4,776,030
Virginia Transportation Board, Transportation
Contract Rev., 6.5s, 2018 3,500 3,655,260
---------------
$ 10,291,490
- ------------------------------------------------- ----------------- ---------------
Single Family Housing Revenue - 9.7%
Puerto Rico Housing Finance Corp., GNMA, 7.8s,
2021 $ 5 $ 5,178
Virginia Housing Development Authority, 7.22s,
2019++++ 7,500 6,966,525
Virginia Housing Development Authority, 6.2s,
2021 15,000 15,100,350
Virginia Housing Development Authority, 7.1s,
2022 2,000 2,070,440
Virginia Housing Development Authority, 6.3s,
2025 8,500 8,567,150
Virginia Housing Development Authority, 6.375s,
2026 7,000 7,096,740
Virginia Housing Development Authority, 0s,
2029 3,615 267,293
Virginia Housing Development Authority, 7.8s,
2038 100 103,322
---------------
$ 40,176,998
- ------------------------------------------------- ----------------- ---------------
Solid Waste Revenue - 0.8%
State of Virginia Research Authority, Waste
Disposal System Rev., FGIC, 5.5s, 2015 $ 3,230 $ 3,093,662
- ------------------------------------------------- ----------------- ---------------
Turnpike Revenue - 2.2%
Chesapeake Bay, VA, Bridge & Tunnel Authority,
FGIC, 0s, 2005 $ 4,535 $ 2,912,377
Chesapeake Bay, VA, Bridge & Tunnel, FGIC, 6s,
2007 5,700 6,055,623
---------------
$ 8,968,000
- ------------------------------------------------- ----------------- ---------------
Universities - 6.1%
Albemarle County, VA, Industrial Development
Authority Health Services Rev., 6.5s, 2022 $ 1,000 $ 1,020,060
Hampton Roads, VA, Medical College General
Rev., 6.875s, 2016 2,000 2,108,200
Hampton Roads, VA, Medical College General
Rev., 6.875s, 2016 1,500 1,581,150
Loudoun County, VA, Industrial Development
Authority, University Facilities, 6.25s, 2012 2,710 2,771,707
Rockingham County, VA, Industrial Development
Authority Rev. (Bridgewater), 6s, 2023 6,610 6,314,929
University of Virginia, University Rev.,
5.375s, 2014 5,190 4,971,501
Virginia College Building Authority,
Educational Facilities Rev. (Marymount),
7s, 2022 2,500 2,608,725
Virginia Polytechnic Institute, 5.5s, 2016 1,410 1,353,078
Virginia University, 5.4s, 2010 1,120 1,102,999
Virginia University, 5.4s, 2010 1,135 1,119,121
---------------
$ 24,951,470
- ------------------------------------------------- ----------------- ---------------
Water and Sewer Utility Revenue - 8.0%
Chesterfield County, VA, Water & Sewer Rev.,
0s, 2004 $ 5,025 $ 3,416,950
Chesterfield County, VA, Water & Sewer Rev.,
0s, 2005 4,815 3,086,174
Chesterfield County, VA, Water & Sewer Rev.,
0s, 2006 4,000 2,411,880
Chesterfield County, VA, Water & Sewer Rev.,
0s, 2007 6,000 3,379,320
Chesterfield County, VA, Water & Sewer Rev.,
0s, 2008 6,135 3,254,679
Chesterfield County, VA, Water & Sewer Rev.,
0s, 2009 6,135 3,043,880
Chesterfield County, VA, Water & Sewer Rev.,
0s, 2010 9,005 4,170,396
Fairfax County, VA, Water Authority Rev.,
6s, 2022 10,000 10,051,500
---------------
$ 32,814,779
- ------------------------------------------------- ----------------- ---------------
Other - 2.3%
Danville, VA, Industrial Development Authority,
Industrial Development Rev.,
8s, 2013 $ 3,040 $ 3,026,442
Loudoun, VA, Industrial Development Authority,
Industrial Development Rev., 7.125s, 2015 4,000 3,994,120
Pamunkey, VA, Regional Jail Authority, MBIA,
5.75s, 2018 2,500 2,466,425
---------------
$ 9,486,987
- ------------------------------------------------- ----------------- ---------------
Total Municipal Bonds (Identified Cost, $372,114,891) $388,022,101
- -------------------------------------------------------------------- ---------------
Shares
- ------------------------------------------------- ----------------- ---------------
Rights - 0.3%
- ------------------------------------------------------------------------------------
Georgia Municipal Electric Authority,
due 2016 20,000 $ 511,600
State of New Jersey, "D", due 2013 5,000 727,500
- ------------------------------------------------- ----------------- ---------------
Total Rights (Identified Cost, $576,800) $ 1,239,100
- -------------------------------------------------------------------- ---------------
Principal Amount
(000 Omitted)
- ------------------------------------------------- ----------------- ---------------
Floating Rate Demand Notes - 2.5%
- ------------------------------------------------------------------------------------
Peninsula Ports Authority, VA (Shell Oil Co.),
due 12/01/05 $ 5,000 $ 5,000,000
Peninsula Ports Authority, VA (Shell Oil Co.),
due 7/01/16 5,300 5,300,000
- ------------------------------------------------- ----------------- ---------------
Total Floating Rate Demand Notes, at Identified Cost $ 10,300,000
- -------------------------------------------------------------------- ---------------
Total Investments (Identified Cost, $382,991,691) $399,561,201
Other Assets, Less Liabilities - 3.2% 13,373,131
- -------------------------------------------------------------------- ---------------
Net assets - 100.0% $412,934,332
- -------------------------------------------------------------------- ---------------
See portfolio footnotes and notes to financial statements
</TABLE>
26-VA
<PAGE>
Portfolio of Investments - March 31, 1997
MFS WEST VIRGINIA MUNICIPAL BOND FUND
Municipal Bonds - 96.4%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ----------------------------------------------- ---------------- ---------------
<S> <C> <C>
General Obligation - 11.7%
Cabell, WV, Board of Education, MBIA,
6s, 2006 $ 500 $ 529,605
Charleston, WV, Public Improvement,
7.2s, 2008 1,240 1,426,186
Charleston, WV, Public Improvement,
7.2s, 2009 1,140 1,309,495
Jefferson County, WV, Board of Education,
FGIC, 6.85s, 2009 1,680 1,885,347
Monongalia County, WV, Board of Education,
MBIA, 7s, 2005 500 557,350
Ohio County, WV, Board of Education, MBIA,
5.25s, 2018 1,180 1,124,776
State of West Virginia, FGIC, 5s, 2021 2,000 1,786,700
State of West Virginia, FGIC, 5.25s, 2026 5,000 4,647,150
State of West Virginia, Water Development
Authority Rev., FSA, 6.2s, 2024 3,000 3,094,440
---------------
$16,361,049
- ----------------------------------------------- ---------------- ---------------
State and Local Appropriation - 6.5%
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s,
2007 $3,150 $ 1,806,462
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s,
2008 3,050 1,638,796
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s,
2009 2,500 1,241,200
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 7s,
2015 1,000 1,075,830
West Virginia School Building Authority,
6.75s, 2015 3,000 3,267,360
---------------
$ 9,029,648
- ----------------------------------------------- ---------------- ---------------
Refunded and Special Obligations - 8.6%
Kanawha County, WV, Building Commission (St.
Francis Hospital), ETM, 7.5s, 2007 $ 250 $ 279,088
Puerto Rico Aqueduct & Sewer Authority Rev.,
9s, 2005 1,500 1,876,155
South Charleston, WV, Hospital Rev. (Herbert
J. Thomas Memorial Hospital), BIGI, 8s,
1998 500 536,410
West Virginia Hospital Finance Authority
(Monogalia General Hospital), BIGI,
8.6s, 1997 1,000 1,011,220
West Virginia Parkways, Economic Development
& Tourism Authority, FGIC, 0s, 2005 2,250 1,464,862
West Virginia Parkways, Economic Development
& Tourism Authority, FGIC, 0s, 2007 2,000 1,144,680
West Virginia Parkways, Economic Development
Authority, FGIC, 0s, 2006 2,500 1,531,375
West Virginia Parkways, Economic Development
Authority, FGIC, 0s, 2008 610 332,468
West Virginia Water Development Authority,
8.125s, 1998 1,750 1,885,642
West Virginia Water Development Authority,
8.625s, 1998 750 813,795
West Virginia Water Development Authority,
7.4s, 2001 750 841,980
West Virginia Water Development Authority,
ETM, 7.1s, 2009 250 280,073
---------------
$11,997,748
- ----------------------------------------------- ---------------- ---------------
Electric and Gas Utility Revenue - 13.3%
Marshall County, WV, Pollution Control Rev.
(Ohio Power Co.), 6.85s, 2022 $2,000 $ 2,110,780
Marshall County, WV, Pollution Control Rev.
(Ohio Power Co.), MBIA, 6.85s, 2022 3,150 3,360,168
Mason County, WV, Pollution Control Rev.
(Appalachian Power), MBIA, 6.6s, 2022 7,000 7,340,690
McDowell County, WV, Industrial Development
Rev. (War Telephone Co.), 13.5s, 2001 365 366,504
Pleasants County, WV, Pollution Control Rev.
(West Penn Power), AMBAC, 6.15s, 2015 2,000 2,056,380
Putnam County, WV, Pollution Control Rev.
(Appalachian Power Co.), MBIA, 6.6s, 2019 3,200 3,364,608
---------------
$18,599,130
- ----------------------------------------------- ---------------- ---------------
Health Care Revenue - 9.9%
Berkeley County,WV, Building Commission,
Hospital Rev. (City Hospital Project),
6.5s, 2022 $2,500 $ 2,500,975
Hampshire County, WV, First Mortgage Rev.
(Rommey Health Care), 9.5s, 2022 1,280 1,348,352
Monongalia County, WV, Health Facilities Rev.
(Beverly Enterprises, Inc.), 10s, 2007 865 938,482
West Virginia Hospital Finance Authority
(Charleston Area Medical Center), 6.5s,
2023 2,000 2,071,020
West Virginia Hospital Finance Authority
(Fairmont General Hospital), 6.625s, 2019 2,000 1,922,240
West Virginia Hospital Finance Authority
(Logan General Hospital), 7.25s, 2020 5,000 5,099,000
---------------
$13,880,069
- ----------------------------------------------- ---------------- ---------------
Industrial Revenue (Corporate Guarantee) - 14.6%
Braxton County, WV, Solid Waste Disposal
(Weyerhaeuser), 6.5s, 2025 $2,000 $ 2,061,740
Jackson County, WV, Pollution Control Rev.
(Kaiser Aluminum & Chemical Corp.),
6.5s, 2008 1,330 1,299,969
Kanawha County, WV, Commercial Development
Rev. (Kroger Co.), 8s, 2011 1,000 1,120,030
Kanawha County, WV, Commercial Development
Rev. (May Department Stores Co.), 6.5s,
2003 3,000 3,231,630
Kanawha County, WV, Pollution Control Rev.
(Union Carbide Corp.), 8s, 2020 2,000 2,154,780
Monongalia County, WV, Commercial Development
Rev. (Kroger Co.), 7.7s, 2012 2,000 2,232,660
Ohio County, WV, Industrial Development Rev.
(Kroger Co.), 8.125s, 2011 2,000 2,253,340
Putnam County, WV, Industrial Development
Rev. (Rite Aid Corp.), 10.375s, 2002 590 592,596
South Charleston, WV, Pollution Control Rev.
(Union Carbide Corp.), 7.625s, 2005 2,500 2,830,300
Wierton, WV, Pollution Control Rev. (Weirton
Steel), 8.625s, 2014 2,550 2,642,284
---------------
$20,419,329
- ----------------------------------------------- ---------------- ---------------
Insured Health Care Revenue - 7.8%
Monongalia County, WV, Building Commission,
Health Rev. (Monongalia General Hospital),
MBIA, 6.625s, 2011 $1,000 $ 1,066,150
West Virginia Hospital Finance Authority
(Cabell Huntington Hospital), AMBAC, 6.25s,
2019 5,000 5,201,450
27-WV
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
- ---------------------------------------------------------------- ---------------
Insured Health Care Revenue - continued
West Virginia Hospital Finance Authority
(West Virginia University Hospital Corp.),
MBIA, 5s, 2016 $2,225 $ 1,996,381
West Virginia Hospital Finance Authority
(West Virginia University Medical Corp.),
MBIA, 7.875s, 2007 1,500 1,570,275
West Virginia Hospital Finance Authority
(West Virginia University Medical Corp.),
MBIA, 7.875s, 2018 1,000 1,046,850
---------------
$ 10,881,106
- ----------------------------------------------- ---------------- ---------------
Multi-Family Housing Revenue - 1.0%
Huntington, WV, Housing Corp., Multi- Family
Rev., FNMA, 7.5s, 2024 $ 800 $ 837,448
Webster County, WV, Housing Development Rev.
(Circlebrook), FHA, 6.35s, 2008 555 563,436
---------------
$ 1,400,884
- ----------------------------------------------- ---------------- ---------------
Single Family Housing Revenue - 8.2%
Berkeley County, WV, Residential Mortgage
Rev., 7.875s, 2012 $ 305 $ 312,091
Berkeley, Brooke & Fayette Counties, WV,
FGIC, 9.1s, 2011 65 66,730
Charles Town, WV, Residential Mortgage Rev.,
6.2s, 2011 845 853,349
Mason County, WV, 0s, 2014 1,700 457,266
West Virginia Housing Development Fund,
7.85s, 2014 840 861,739
West Virginia Housing Development Fund,
7.95s, 2017 1,590 1,651,676
West Virginia Housing Development Fund, 7.2s,
2018 5,000 5,235,100
West Virginia Housing Development Fund, 7.2s,
2020 2,000 2,094,040
---------------
$ 11,531,991
- ----------------------------------------------- ---------------- ---------------
Turnpike Revenue - 3.1%
West Virginia Parkways, Economic Development
& Tourism Authority, FGIC, 0s, 2006 $1,885 $ 1,149,115
West Virginia Parkways, Economic Development
& Tourism Authority, RIBS, FGIC, 7.555s,
2019++++ 3,300 3,130,809
---------------
$ 4,279,924
- ----------------------------------------------- ---------------- ---------------
Universities - 0.8%
West Virginia University Rev. (West Virginia
University Dormitory Project), MBIA,
6.75s, 2017 $1,000 $ 1,056,590
- ----------------------------------------------- ---------------- ---------------
Water and Sewer Utility Revenue - 8.1%
Beckley, WV, Industrial Development Rev.
(Beckley Water Co.), 7s, 2017 $2,000 $ 2,126,020
Charleston, WV, Sewer Rev., MBIA,
6.5s, 2017 2,260 2,396,436
West Virginia Water Development Authority,
7.625s, 2009 500 555,560
West Virginia Water Development Authority,
CGIC, 7.5s, 2009 1,100 1,176,472
West Virginia Water Development Authority,
FSA, 5s, 2018 1,270 1,125,614
West Virginia Water Development Authority,
FSA, 5.625s, 2033 2,300 2,202,571
West Virginia Water Development Authority,
FSA, 5.25s, 2035 2,000 1,800,440
---------------
$ 11,383,113
- ----------------------------------------------- ---------------- ---------------
Other - 2.8%
West Virginia Building Commission, Lottery
Rev., MBIA, 5.25s, 2010 $1,750 $ 1,695,680
West Virginia Hospital Finance Authority
(General Division Medical Building),
7.25s, 2014 2,000 2,180,540
---------------
$ 3,876,220
- ----------------------------------------------- ---------------- ---------------
Total Municipal Bonds (Identified Cost, $127,222,862) $134,696,801
- ---------------------------------------------------------------- ---------------
Floating Rate Demand Note - 1.7%
- ---------------------------------------------------------------------------------
Harris County, TX, Hospital Rev. (Methodist
Hospital), due 12/01/25, at Identified Cost $2,400 $ 2,400,000
--------------------------------------------- ---------------- ---------------
Total Investments (Identified Cost, $129,622,862) $137,096,801
Other Assets, Less Liabilities - 1.9% 2,596,906
Net assets - 100.0% $139,693,707
- ----------------------------------------------- ---------------- ---------------
Portfolio Footnotes:
**Non-income producing security - in default.
###Security segregated as collateral for an open futures contract.
+Restricted security.
ss Indexed security.
++Security valued by or at the direction of the Trustees.
++++Inverse floating rate security.
See notes to financial statements
</TABLE>
28-WV
<PAGE>
Financial Statements
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mississippi New York North Carolina Pennsylvania
March 31, 1997 Fund Fund Fund Fund
- ------------------------------------------------- -------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $73,767,324 $139,282,857 $398,267,120 $39,851,870
Unrealized appreciation 2,662,988 6,463,538 19,537,101 394,412
-------------- --------------- ---------------- --------------
Total, at value $76,430,312 $145,746,395 $417,804,221 $40,246,282
Cash 7,914 216 88,364 911,077
Receivable for Fund shares sold 152,650 439,858 267,786 102,274
Receivable for investments sold -- 553,255 1,010,243 10,000
Interest receivable 1,415,843 2,240,894 7,210,616 642,253
Deferred organization expenses 1,218 -- -- 1,478
Other assets 18,743 1,846 5,017 455
-------------- --------------- ---------------- --------------
Total assets $78,026,680 $148,982,464 $426,386,247 $41,913,819
-------------- --------------- ---------------- --------------
Liabilities:
Distributions payable $ 181,216 $ 263,064 $ 739,448 $ 75,308
Payable for Fund shares reacquired 128,032 182,028 1,541,378 --
Payable to affiliates -
Management fee 4,671 8,921 20,929 1,142
Administrative fee 127 243 698 --
Shareholder servicing agent fee 1,104 2,109 6,046 --
Distribution and service fee 2,129 6,244 19,601 4,753
Accrued expenses and other liabilities 66,075 208,073 122,807 1,226
-------------- --------------- ---------------- --------------
Total liabilities $ 383,354 $ 670,682 $ 2,450,907 $ 82,429
-------------- --------------- ---------------- --------------
Net assets $77,643,326 $148,311,782 $423,935,340 $41,831,390
============== =============== ================ ==============
Net assets consist of:
Paid-in capital $79,286,211 $145,466,637 $415,111,865 $43,423,898
Unrealized appreciation on investments 2,662,988 6,463,538 19,537,101 394,412
Accumulated net realized loss on investments (4,342,088) (3,280,303) (9,998,905) (2,003,122)
Accumulated undistributed (distributions in
excess of) net investment income 36,215 (338,090) (714,721) 16,202
-------------- --------------- ---------------- --------------
Total $77,643,326 $148,311,782 $423,935,340 $41,831,390
============== =============== ================ ==============
Shares of beneficial interest outstanding:
Class A 7,125,487 11,475,221 32,631,174 1,828,105
Class B 1,176,682 2,522,769 3,379,267 2,682,075
Class C -- -- 674,343 --
-------------- --------------- ---------------- --------------
Total shares of beneficial interest
outstanding 8,302,169 13,997,990 36,684,784 4,510,180
============== =============== ================ ==============
Net assets:
Class A $66,629,742 $121,587,728 $377,111,536 $16,933,331
Class B 11,013,584 26,724,054 39,035,211 24,898,059
Class C -- -- 7,788,593 --
-------------- --------------- ---------------- --------------
Total net assets $77,643,326 $148,311,782 $423,935,340 $41,831,390
============== =============== ================ ==============
Class A shares:
Net asset value per share (net assets / shares
of beneficial interest outstanding) $9.35 $10.60 $11.56 $9.26
-------------- --------------- ---------------- --------------
Offering price per share (100 / 95.25 of net
asset value per share) $9.82 $11.13 $12.14 $9.72
-------------- --------------- ---------------- --------------
Class B shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest
outstanding) $9.36 $10.59 $11.55 $9.28
-------------- --------------- ---------------- --------------
Class C shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest
outstanding) $ -- $ -- $11.55 $ --
-------------- --------------- ---------------- --------------
</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
29
<PAGE>
Financial Statements - continued
Statements of Assets and Liabilities - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South Carolina Tennessee Virginia West Virginia
March 31, 1997 Fund Fund Fund Fund
- ------------------------------------------------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $160,011,434 $117,238,373 $382,991,691 $129,622,862
Unrealized appreciation 7,996,825 4,701,579 16,569,510 7,473,939
---------------- --------------- --------------- ---------------
Total, at value $168,008,259 $121,939,952 $399,561,201 $137,096,801
Cash 32,458 10,571 2,564 62,515
Receivable for Fund shares sold 134,782 35,677 80,158 19,448
Receivable for investments sold 520,000 120,000 8,490,823 506,257
Interest receivable 2,645,175 1,778,596 6,398,614 2,722,949
Other assets 2,063 1,370 5,076 1,584
---------------- --------------- --------------- ---------------
Total assets $171,342,737 $123,886,166 $414,538,436 $140,409,554
---------------- --------------- --------------- ---------------
Liabilities:
Distributions payable $ 332,770 $ 272,622 $ 928,550 $ 281,163
Payable for Fund shares reacquired 126,521 169,492 513,108 135,299
Payable for investments purchased -- 925,555 -- 206,898
Payable for daily variation margin on open
futures contracts 5,000 -- -- --
Payable to affiliates -
Management fee 8,411 6,036 20,350 8,410
Administrative fee 280 204 678 229
Shareholder servicing agent fee 2,430 1,744 5,879 1,988
Distribution and service fee 8,097 5,725 18,228 6,317
Accrued expenses and other liabilities 79,843 68,971 117,311 75,543
---------------- --------------- --------------- ---------------
Total liabilities $ 563,352 $ 1,450,349 $ 1,604,104 $ 715,847
---------------- --------------- --------------- ---------------
Net assets $170,779,385 $122,435,817 $412,934,332 $139,693,707
---------------- --------------- --------------- ---------------
Net assets consist of:
Paid-in capital $166,354,327 $118,844,972 $410,455,974 $136,248,851
Unrealized appreciation on investments 7,956,099 4,701,579 16,569,510 7,473,939
Accumulated net realized loss on investments (3,319,812) (1,094,486) (12,833,937) (3,599,403)
Accumulated distributions in excess of net
investment income (211,229) (16,248) (1,257,215) (429,680)
---------------- --------------- --------------- ---------------
Total $170,779,385 $122,435,817 $412,934,332 $139,693,707
---------------- --------------- --------------- ---------------
Shares of beneficial interest outstanding:
Class A 12,533,883 10,469,429 34,278,440 11,150,306
Class B 1,841,229 1,400,227 2,764,192 1,201,777
Class C -- -- 287,703 --
---------------- --------------- --------------- ---------------
Total shares of beneficial interest
outstanding 14,375,112 11,869,656 37,330,335 12,352,083
---------------- --------------- --------------- ---------------
Net assets:
Class A $148,908,081 $108,000,038 $379,185,138 $126,106,518
Class B 21,871,304 14,435,779 30,567,275 13,587,189
Class C -- -- 3,181,919 --
---------------- --------------- --------------- ---------------
Total net assets $170,779,385 $122,435,817 $412,934,332 $139,693,707
---------------- --------------- --------------- ---------------
Class A shares:
Net asset value per share (net assets / shares
of beneficial interest outstanding) $11.88 $10.32 $11.06 $11.31
---------------- --------------- --------------- ---------------
Offering price per share (100 / 95.25 of net
asset value per share) $12.47 $10.83 $11.61 $11.87
---------------- --------------- --------------- ---------------
Class B shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest
outstanding) $11.88 $10.31 $11.06 $11.31
---------------- --------------- --------------- ---------------
Class C shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest
outstanding) $ -- $ -- $11.06 $ --
---------------- --------------- --------------- ---------------
</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
30
<PAGE>
Financial Statements - continued
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mississippi New York North Carolina Pennsylvania
Year Ended March 31, 1997 Fund Fund Fund Fund
- ------------------------------------------------------ ------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $4,966,003 $ 9,787,701 $26,975,679 $2,472,558
------------- --------------- ---------------- --------------
Expenses -
Management fee $ 455,195 $ 856,664 $ 2,418,708 $ 236,150
Trustees' compensation 17,356 20,092 20,449 17,482
Shareholder servicing agent fee 25,460 48,750 139,356 13,032
Shareholder servicing agent fee (Class A) 82,498 146,204 449,338 20,628
Shareholder servicing agent fee (Class B) 19,336 45,733 58,534 41,832
Shareholder servicing agent fee (Class C) -- -- 10,874 --
Distribution and service fee (Class A) -- 320,773 1,382,796 --
Distribution and service fee (Class B) 91,722 274,467 361,436 199,947
Distribution and service fee (Class C) -- -- 93,824 --
Administrative fee 1,033 1,978 5,652 486
Custodian fee 37,863 69,920 146,209 21,822
Auditing fees 32,369 46,871 42,929 24,758
Printing 3,841 21,078 45,783 5,118
Postage 6,742 9,672 24,551 5,416
Legal fees 4,222 4,710 5,206 3,976
Amortization of organization expenses 3,558 -- -- 1,759
Miscellaneous 33,501 87,123 155,480 32,850
------------- --------------- ---------------- --------------
Total expenses $ 814,696 $ 1,954,035 $ 5,361,125 $ 625,256
Fees paid indirectly (5,095) (13,902) (42,863) (5,705)
Reduction of expenses by investment adviser -- -- (288,877) (376,017)
------------- --------------- ---------------- --------------
Net expenses $ 809,601 $ 1,940,133 $ 5,029,385 $ 243,534
------------- --------------- ---------------- --------------
Net investment income $4,156,402 $ 7,847,568 $21,946,294 $2,229,024
------------- --------------- ---------------- --------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 152,232 $ (97,546) $ 1,824,548 $ 171,938
Futures contracts (302,018) (387,086) (804,918) (743,528)
------------- --------------- ---------------- --------------
Net realized gain (loss) on investments $ (149,786) $ (484,632) $ 1,019,630 $ (571,590)
------------- --------------- ---------------- --------------
Change in unrealized appreciation (depreciation) -
Investments $ 174,966 $ (591,419) $(1,335,706) $ 182,944
Futures contracts 27,512 55,025 140,620 (32,023)
------------- --------------- ---------------- --------------
Net unrealized gain (loss) on investments $ 202,478 $ (536,394) $(1,195,086) $ 150,921
------------- --------------- ---------------- --------------
Net realized and unrealized gain (loss) on
investments $ 52,692 $(1,021,026) $ (175,456) $ (420,669)
------------- --------------- ---------------- --------------
Increase in net assets from operations $4,209,094 $ 6,826,542 $21,770,838 $1,808,355
============= =============== ================ ==============
</TABLE>
See notes to financial statements
31
<PAGE>
Financial Statements - continued
Statements of Operations - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South Carolina Tennessee Virginia West Virginia
Year Ended March 31, 1997 Fund Fund Fund Fund
- ------------------------------------------------------ ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $11,171,075 $ 7,867,854 $27,409,816 $9,368,813
---------------- --------------- --------------- ---------------
Expenses -
Management fee $ 980,523 $ 681,190 $ 2,377,579 $ 800,535
Trustees' compensation 20,449 18,818 17,449 20,449
Shareholder servicing agent fee 55,802 39,856 135,950 46,642
Shareholder servicing agent fee (Class A) 181,324 125,013 457,481 149,631
Shareholder servicing agent fee (Class B) 32,584 22,211 48,544 21,821
Shareholder servicing agent fee (Class C) -- -- 3,970 --
Distribution and service fee (Class A) 554,405 386,650 1,398,269 462,774
Distribution and service fee (Class B) 202,154 136,253 295,898 133,305
Distribution and service fee (Class C) -- -- 35,136 --
Administrative fee 2,269 1,627 5,513 1,895
Custodian fee 77,159 52,824 183,693 62,488
Auditing fees 33,630 27,369 32,581 31,270
Printing 12,924 1,483 25,166 10,232
Postage 10,284 8,174 21,331 8,579
Legal fees 5,676 2,522 4,870 4,237
Miscellaneous 45,355 33,875 135,984 41,221
---------------- --------------- --------------- ---------------
Total expenses $ 2,214,538 $ 1,537,865 $ 5,179,414 $1,795,079
Fees paid indirectly (15,818) (17,928) (67,464) (11,108)
Reduction of expenses by investment adviser (116,415) (82,026) (284,139) --
---------------- --------------- --------------- ---------------
Net expenses $ 2,082,305 $ 1,437,911 $ 4,827,811 $1,783,971
---------------- --------------- --------------- ---------------
Net investment income $ 9,088,770 $ 6,429,943 $22,582,005 $7,584,842
---------------- --------------- --------------- ---------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 391,815 $ 609,471 $ (314,126) $ (535,635)
Futures contracts (896,342) (632,595) (1,956,129) (202,933)
---------------- --------------- --------------- ---------------
Net realized loss on investments $ (504,527) $ (23,124) $(2,270,255) $ (738,568)
---------------- --------------- --------------- ---------------
Change in unrealized appreciation (depreciation) -
Investments $ (787,134) $(1,079,488) $(3,468,141) $ 427,849
Futures contracts (40,726) -- 66,028 23,878
---------------- --------------- --------------- ---------------
Net unrealized gain (loss) on investments $ (827,860) $(1,079,488) $(3,402,113) $ 451,727
---------------- --------------- --------------- ---------------
Net realized and unrealized loss on investments $(1,332,387) $(1,102,612) $(5,672,368) $ (286,841)
---------------- --------------- --------------- ---------------
Increase in net assets from operations $ 7,756,383 $ 5,327,331 $16,909,637 $7,298,001
================ =============== =============== ===============
</TABLE>
See notes to financial statements
32
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mississippi New York North Carolina Pennsylvania
Year Ended March 31, 1997 Fund Fund Fund Fund
- --------------------------------------------------------- ---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,156,402 $ 7,847,568 $ 21,946,294 $ 2,229,024
Net realized gain (loss) on investments (149,786) (484,632) 1,019,630 (571,590)
Net unrealized gain (loss) on investments 202,478 (536,394) (1,195,086) 150,921
---------------- --------------- --------------- ----------------
Increase in net assets from operations $ 4,209,094 $ 6,826,542 $ 21,770,838 $ 1,808,355
---------------- --------------- --------------- ----------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,636,582) $ (6,608,917) $ (19,960,583) $(1,021,497)
From net investment income (Class B) (488,656) (1,193,195) (1,572,775) (1,235,549)
From net investment income (Class C) -- -- (412,936) --
In excess of net investment income (Class A) -- -- (57,101) (5,499)
In excess of net investment income (Class B) -- -- (4,500) (6,652)
In excess of net investment income (Class C) -- -- (1,180) --
---------------- --------------- --------------- ----------------
Total distributions declared to shareholders $ (4,125,238) $ (7,802,112) $ (22,009,075) $ (2,269,197)
---------------- --------------- --------------- ----------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 5,147,902 $ 18,795,107 $ 150,297,565 $ 6,941,408
Net asset value of shares issued to shareholders in
reinvestment of distributions 1,796,462 4,479,249 12,769,917 1,339,280
Cost of shares reacquired (15,295,259) (36,503,476) (191,439,457) (8,188,392)
---------------- --------------- --------------- ----------------
Increase (decrease) in net assets from Fund share
transactions $ (8,350,895) $(13,229,120) $ (28,371,975) $ 92,296
---------------- --------------- --------------- ----------------
Total decrease in net assets $ (8,267,039) $(14,204,690) $ (28,610,212) $ (368,546)
Net assets:
At beginning of period 85,910,365 162,516,472 452,545,552 42,199,936
---------------- --------------- --------------- ----------------
At end of period $ 77,643,326 $148,311,782 $ 423,935,340 $41,831,390
---------------- --------------- --------------- ----------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of
period $ 36,215 $ (338,090) $ (714,721) $ 16,202
================ =============== =============== ================
</TABLE>
See notes to financial statements
33
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South Carolina Tennessee Virginia West Virginia
Year Ended March 31, 1997 Fund Fund Fund Fund
------------------------------------------------------------------------ --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 9,088,770 $ 6,429,943 $ 22,582,005 $ 7,584,842
Net realized loss on investments (504,527) (23,124) (2,270,255) (738,568)
Net unrealized gain (loss) on investments (827,860) (1,079,488) (3,402,113) 451,727
---------------- --------------- ---------------- ---------------
Increase in net assets from operations $ 7,756,383 $ 5,327,331 $ 16,909,637 $ 7,298,001
---------------- --------------- ---------------- ---------------
Distributions declared to shareholders -
From net investment income (Class A) $ (8,123,664) $ (5,716,145) $ (21,012,643) $ (6,960,660)
From net investment income (Class B) (895,171) (609,095) (1,346,865) (608,405)
From net investment income (Class C) -- -- (161,724) --
---------------- --------------- ---------------- ---------------
Total distributions declared to shareholders $ (9,018,835) $ (6,325,240) $ (22,521,232) $ (7,569,065)
---------------- --------------- ---------------- ---------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 14,266,849 $ 12,503,086 $ 158,319,115 $ 8,573,897
Net asset value of shares issued to shareholders in
reinvestment of distributions 4,940,927 3,089,989 10,962,194 4,100,851
Cost of shares reacquired (32,386,589) (14,905,124) (200,929,656) (19,870,458)
---------------- --------------- ---------------- ---------------
Increase (decrease) in net assets from Fund share
transactions $(13,178,813) $ 687,951 $ (31,648,347) $ (7,195,710)
---------------- --------------- ---------------- ---------------
Total decrease in net assets $(14,441,265) $ (309,958) $ (37,259,942) $ (7,466,774)
Net assets:
At beginning of period 185,220,650 122,745,775 450,194,274 147,160,481
---------------- --------------- ---------------- ---------------
At end of period $170,779,385 $122,435,817 $ 412,934,332 $139,693,707
---------------- --------------- ---------------- ---------------
Accumulated distributions in excess of net investment
income included in net assets at end of period $ (211,229) $ (16,248) $ (1,257,215) $ (429,680)
================ =============== ================ ===============
</TABLE>
See notes to financial statements
34
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mississippi New York North Carolina Pennsylvania
Year Ended March 31, 1996 Fund Fund Fund Fund
- --------------------------------------------------------- --------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,874,834 $ 8,386,733 $ 22,978,702 $ 2,103,242
Net realized gain (loss) on investments (468,604) 4,046,405 4,503,226 (391,379)
Net unrealized gain (loss) on investments 2,480,286 (907,958) 1,749,598 786,766
--------------- --------------- ---------------- ---------------
Increase in net assets from operations $ 6,886,516 $ 11,525,180 $ 29,231,526 $ 2,498,629
--------------- --------------- ---------------- ---------------
Distributions declared to shareholders -
From net investment income (Class A) $ (4,360,203) $ (7,263,571) $ (21,314,451) $ (990,676)
From net investment income (Class B) (514,631) (1,123,162) (1,292,311) (1,117,148)
From net investment income (Class C) -- -- (371,940) --
In excess of net investment income (Class A) (11,291) (76,432) (76,544) --
In excess of net investment income (Class B) (1,333) (11,819) (4,641) --
In excess of net investment income (Class C) -- -- (1,336) --
--------------- --------------- ---------------- ---------------
Total distributions declared to shareholders $ (4,887,458) $ (8,474,984) $ (23,061,223) $(2,107,824)
--------------- --------------- ---------------- ---------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 10,936,455 $ 34,552,591 $ 97,550,746 $ 6,446,099
Issued in connection with the acquisition of the
Advantage Fund -- 14,684,566 -- 14,818,825
Net asset value of shares issued to shareholders in
reinvestment of distributions 2,349,051 5,133,804 13,374,416 1,301,093
Cost of shares reacquired (17,836,086) (53,386,143) (128,090,675) (4,865,944)
--------------- --------------- ---------------- ---------------
Increase (decrease) in net assets from Fund share
transactions $ (4,550,580) $ 984,818 $ (17,165,513) $17,700,073
--------------- --------------- ---------------- ---------------
Total increase (decrease) in net assets $ (2,551,522) $ 4,035,014 $ (10,995,210) $18,090,878
Net assets:
At beginning of period 88,461,887 158,481,458 463,540,762 24,109,058
--------------- --------------- ---------------- ---------------
At end of period $ 85,910,365 $162,516,472 $ 452,545,552 $42,199,936
--------------- --------------- ---------------- ---------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of
period $ (33,004) $ (430,606) $ (1,035,031) $ 28,022
=============== =============== ================ ===============
</TABLE>
See notes to financial statements
35
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South Carolina Tennessee Virginia West Virginia
Year Ended March 31, 1996 Fund Fund Fund Fund
------------------------------------------------------------------------ --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 9,387,094 $ 6,446,216 $ 23,707,705 $ 7,530,240
Net realized gain (loss) on investments (27,045) 870,217 3,901,116 207,892
Net unrealized gain on investments 1,723,191 888,249 1,645,937 1,172,683
---------------- --------------- ---------------- ---------------
Increase in net assets from operations $ 11,083,240 $ 8,204,682 $ 29,254,758 $ 8,910,815
---------------- --------------- ---------------- ---------------
Distributions declared to shareholders -
From net investment income (Class A) $ (8,720,747) $ (5,935,131) $ (22,461,025) $ (6,996,162)
From net investment income (Class B) (666,347) (511,085) (1,128,382) (534,078)
From net investment income (Class C) -- -- (118,298) --
In excess of net investment income (Class A) (7,833) (26,378) (205,431) (26,236)
In excess of net investment income (Class B) (598) (2,271) (10,320) (2,003)
In excess of net investment income (Class C) -- -- (1,082) --
---------------- --------------- ---------------- ---------------
Total distributions declared to shareholders $ (9,395,525) $ (6,474,865) $ (23,924,538) $ (7,558,479)
---------------- --------------- ---------------- ---------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 19,862,472 $ 9,264,655 $ 92,397,697 $ 17,491,754
Net asset value of shares issued to shareholders in
reinvestment of distributions 5,148,735 3,118,511 12,033,414 4,098,096
Cost of shares reacquired (25,486,913) (18,945,783) (114,561,422) (13,443,792)
---------------- --------------- ---------------- ---------------
Increase (decrease) in net assets from Fund share
transactions $ (475,706) $ (6,562,617) $ (10,130,311) $ 8,146,058
---------------- --------------- ---------------- ---------------
Total increase (decrease) in net assets $ 1,212,009 $ (4,832,800) $ (4,800,091) $ 9,498,394
Net assets:
At beginning of period 184,008,641 127,578,575 454,994,365 137,662,087
---------------- --------------- ---------------- ---------------
At end of period $185,220,650 $122,745,775 $ 450,194,274 $147,160,481
---------------- --------------- ---------------- ---------------
Accumulated distributions in excess of net investment
income included in net assets at end of period $ (329,568) $ (176,038) $ (1,467,910) $ (445,457)
================ =============== ================ ===============
</TABLE>
See notes to financial statements
36
<PAGE>
Financial Statements - continued
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mississippi Fund
- ----------------------------------------------------- -------------------- ------------------------------------------------
Two Months
Ended
Year Ended March 31, March 31, Year Ended January 31,
- ----------------------------------------------------- ------------------------------- ------------ -------------------------
1997 1996 1995 1994 1994 1993*
- ----------------------------------------------------- --------- --------- --------------------- ------------ ------------
Class A
- ----------------------------------------------------- --------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.35 $ 9.15 $ 9.19 $ 10.00 $ 9.38 $ 9.53
--------- --------- --------------------- ------------ ------------
Income from investment operations# -
Net investment income ss $ 0.48 $ 0.52 $ 0.54 $ 0.09 $ 0.55 $ 0.24
Net realized and unrealized gain (loss) on
investments -- 0.20 (0.01) (0.81) 0.62 (0.15)
--------- --------- --------------------- ------------ ------------
Total from investment operations $ 0.48 $ 0.72 $ 0.53 $ (0.72) $ 1.17 $ 0.09
--------- --------- --------------------- ------------ ------------
Less distributions declared to shareholders -
From net investment income++++ $ (0.48) $ (0.52) $ (0.54) $ (0.09) $ (0.55) $ (0.24)
From net realized gain on investments++++++ -- -- (0.00) -- -- --
In excess of net realized gain on investments -- -- (0.03) -- -- --
--------- --------- --------------------- ------------ ------------
Total distributions declared to shareholders $ (0.48) $ (0.52) $ (0.57) $ (0.09) $ (0.55) $ (0.24)
--------- --------- --------------------- ------------ ------------
Net asset value - end of period $ 9.35 $ 9.35 $ 9.15 $ 9.19 $ 10.00 $ 9.38
========= ========= ===================== ============ ============
Total return++ 5.22% 7.99% 6.08% (7.20)%+++ 12.80% 5.00%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 0.87% 0.45% 0.22% 0.10%+ 0.03% 0.00%+
Net investment income 5.14% 5.51% 5.99% 5.69%+ 5.68% 5.59%+
Portfolio turnover 17% 31% 47% 2% 28% 14%
Net assets at end of period (000 omitted) $66,630 $74,435 $79,033 $79,541 $84,177 $41,212
*For the period from the commencement of investment operations, August 6, 1992, to January 31, 1993.
+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 years ended March 31, 1996 and 1995, the per share distributions in excess of net investment income were
$0.0013, and $0.0035, respectively.
++++++For the year ended March 31, 1995, the per share distribution from net realized gain on investments was $0.0016.
ssThe investment adviser voluntarily agreed to maintain the expenses of the Fund at not more than 1.30% of average daily
net assets for Class A shares for certain of the periods indicated. To the extent actual expenses were over/under
these limitations, the net investment income per share and the ratios would have been:
Net investment income -- $0.48 $0.48 $0.08 $0.45 $0.19
Ratios (to average net assets):
Expenses## -- 0.88% 0.93% 0.88%+ 1.01% 1.17%+
Net investment income -- 5.08% 5.28% 4.91%+ 4.69% 4.42%+
</TABLE>
See notes to financial statements
37
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mississippi Fund
- ----------------------------------------------------- -------------------- --------------------------------------
Two Months
Ended Year Ended
Year Ended March 31, March 31, January 31,
- ----------------------------------------------------- ------------------------------- ------------ --------------
1997 1996 1995 1994 1994**
- ----------------------------------------------------- --------- --------- --------------------- --------------
Class B
- ----------------------------------------------------- --------- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.36 $ 9.16 $ 9.19 $ 9.99 $ 9.94
--------- --------- --------------------- --------------
Income from investment operations# -
Net investment income ss $ 0.40 $ 0.44 $ 0.45 $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on
investments -- 0.20 -- (0.79) 0.05
--------- --------- --------------------- --------------
Total from investment operations $ 0.40 $ 0.64 $ 0.45 $(0.72) $ 0.23
--------- --------- --------------------- --------------
Less distributions declared to shareholders -
From net investment income++++ $ (0.40) $ (0.44) $(0.45) $(0.08) $(0.18)
From net realized gain on investments++++++ -- -- (0.00) -- --
In excess of net realized gain on investments -- -- (0.03) -- --
--------- --------- --------------------- --------------
Total distributions declared to shareholders $ (0.40) $ (0.44) $(0.48) $(0.08) $(0.18)
--------- --------- --------------------- --------------
Net asset value - end of period $ 9.36 $ 9.36 $ 9.16 $ 9.19 $ 9.99
========= ========= ===================== ==============
Total return 4.33% 7.11% 5.14% (7.27)%+++ 2.33%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.72% 1.28% 1.23% 1.10%+ 1.06%+
Net investment income 4.29% 4.67% 4.97% 4.67%+ 4.29%+
Portfolio turnover 17% 31% 47% 2% 28%
Net assets at end of period (000 omitted) $11,014 $11,475 $9,429 $6,526 $6,268
**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 years ended March 31, 1996 and 1995 and the two months ended March 31, 1994, the per share
distributions in excess of net investment income were $0.0011, $0.0029 and $0.002, respectively.
++++++For the year ended March 31, 1995, the per share distribution from net realized gain on investments was
$0.0016.
ss The investment adviser voluntarily agreed to maintain the expenses of the Fund at not more than 1.95% of
average daily net assets for Class B shares for certain of the periods indicated. To the extent actual
expenses were over/under these limitations, the net investment income per share and the ratios would have
been:
Net investment income -- $0.40 $0.38 $0.06 $0.14
Ratios (to average net assets):
Expenses## -- 1.71% 2.01% 1.95%+ 2.12%+
Net investment income -- 4.24% 4.19% 3.82%+ 3.23%+
</TABLE>
See notes to financial statements
38
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Fund
---------------------------------------------------------- ---------------------- ----------- ------------
Two Months
Ended
Year Ended March 31, March 31,
---------------------------------------------------------- ---------------------------------- ------------
1997 1996 1995 1994
--------------------------------------------------------------------- ----------- ----------- ------------
Class A
--------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.66 $ 10.49 $ 10.50 $ 11.34
----------- ----------- ----------- ------------
Income from investment operations # -
Net investment income ss $ 0.55 $ 0.55 $ 0.56 $ 0.09
Net realized and unrealized gain (loss) on investments (0.06) 0.17 0.05 (0.84)
----------- ----------- ----------- ------------
Total from investment operations $ 0.49 $ 0.72 $ 0.61 $ (0.75)
----------- ----------- ----------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.55) $ (0.56) $ (0.06)
In excess of net investment income++++ -- (0.00) (0.01) (0.03)
In excess of net realized gain on investments -- -- (0.05) --
----------- ----------- ----------- ------------
Total distributions declared to shareholders $ (0.55) $ (0.55) $ (0.62) $ (0.09)
----------- ----------- ----------- ------------
Net asset value - end of period $ 10.60 $ 10.66 $ 10.49 $ 10.50
=========== =========== =========== ============
Total return++ 4.68% 6.98% 6.03% (6.58)%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.11% 1.10% 1.07% 1.03%+
Net investment income 5.18% 5.09% 5.43% 5.09%+
Portfolio turnover 64% 102% 147% 15%
Net assets at end of period (000 omitted) $121,588 $134,449 $146,597 $162,621
+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 was
$0.0058.
ss The investment adviser and/or the distributor voluntarily waived a portion of their management 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 -- $0.54 $0.55 $0.07
Ratios (to average net assets):
Expenses## -- 1.20% 1.18% 1.23%+
Net investment income -- 4.99% 5.31% 4.88%+
</TABLE>
See notes to financial statements
39
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Fund
- ----------------------------------------------------- ---------------------- ------------------------------------------
Year Ended January 31, 1994 1993 1992 1991 1990 1989*
- ----------------------------------------------------- ----------- ----------- --------- --------- --------- ----------
Class A
- ----------------------------------------------------- ----------- ------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.78 $ 10.25 $ 9.90 $ 9.74 $ 9.79 $ 9.53
----------- ----------- --------- --------- --------- ----------
Income from investment operations -
Net investment income ss $ 0.59 $ 0.63 $ 0.65 $ 0.65 $ 0.68 $ 0.29
Net realized and unrealized gain on investments 0.74 0.58 0.44 0.16 0.01 0.21
----------- ----------- --------- --------- --------- ----------
Total from investment operations $ 1.33 $ 1.21 $ 1.09 $ 0.81 $ 0.69 $ 0.50
----------- ----------- --------- --------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.57) $ (0.65) $ (0.69) $ (0.65) $ (0.67) $(0.24)
From net realized gain on investments (0.17) (0.03) (0.05) -- (0.06) --
In excess of net investment income (0.03) -- -- -- -- --
From paid-in capital -- -- -- -- (0.01) --
----------- ----------- --------- --------- --------- ----------
Total distributions declared to shareholders $ (0.77) $ (0.68) $ (0.74) $ (0.65) $ (0.74) $(0.24)
----------- ----------- --------- --------- --------- ----------
Net asset value - end of period $ 11.34 $ 10.78 $ 10.25 $ 9.90 $ 9.74 $ 9.79
=========== =========== ========= ========= ========= ==========
Total return++ 12.69% 12.23% 11.42% 8.74% 7.33% 8.16%+
Ratios (to average net assets)/Supplemental data ss:
Expenses 0.93% 0.53% 0.65% 0.54% 0.40% 0.40%+
Net investment income 5.21% 6.16% 6.44% 6.73% 6.88% 5.93%+
Portfolio turnover 51% 61% 80% 188% 236% 32%
Net assets at end of period (000 omitted) $184,523 $135,749 $79,524 $37,385 $20,156 $6,412
*For the period from the commencement of investment operations, June 6, 1988, to January 31, 1989.
+Annualized.
++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.
ss The investment adviser and/or 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 $0.60 $0.61 $0.59 $0.26
Ratios (to average net assets):
Expenses 1.23% 1.13% 1.16% 0.95% 1.32% 1.09%+
Net investment income 4.91% 5.56% 5.93% 6.33% 5.96% 5.24%+
</TABLE>
See notes to financial statements
40
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Fund
---------------------------------------------------------- -------------------- --------- ------------ --------------
Two Months
Ended Year Ended
Year Ended March 31, March 31, January 31,
----------------------------------------------------------------------------------------- ------------ --------------
1997 1996 1995 1994 1994**
---------------------------------------------------------- --------- --------- --------- ------------ --------------
Class B
---------------------------------------------------------- --------- --------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.66 $ 10.49 $ 10.50 $11.34 $11.46
--------- --------- --------- ------------ --------------
Income from investment operations# -
Net investment income ss $ 0.47 $ 0.47 $ 0.47 $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on investments (0.07) 0.17 0.05 (0.83) 0.04
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.40 $ 0.64 $ 0.52 $(0.76) $ 0.22
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income $ (0.47) $ (0.47) $ (0.47) $(0.07) $(0.18)
From net realized gain on investments -- -- -- -- (0.15)
In excess of net investment income++++ -- (0.00) (0.01) (0.01) (0.01)
In excess of net realized gain on investments -- -- (0.05) -- --
--------- --------- --------- ------------ --------------
Total distributions declared to shareholders $ (0.47) $ (0.47) $ (0.53) $(0.08) $(0.34)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 10.59 $ 10.66 $ 10.49 $10.50 $11.34
========= ========= ========= ============ ==============
Total return 3.77% 6.10% 5.17% (6.71)%+++ 5.20%+
Ratios (to average net assets)/Supplemental data ss:
Expenses ## 1.92% 1.92% 1.89% 1.87%+ 1.79%+
Net investment income 4.37% 4.27% 4.58% 4.21%+ 3.90%+
Portfolio turnover 64% 102% 147% 15% 51%
Net assets at end of period (000 omitted) $26,724 $28,068 $11,885 $6,265 $4,828
**For the period from the commencement of offering of Class B shares, September 7, 1993, to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994 is based on average shares outstanding.
##For 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 $0.0048.
ss The investment adviser and/or distributor voluntarily waived a portion of their management 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 -- -- $0.47 $0.07 $0.17
Ratios (to average net assets):
Expenses## -- -- 1.91% 1.97%+ 2.00%+
Net investment income -- -- 4.57% 4.11%+ 3.69%+
</TABLE>
See notes to financial statements
41
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
North Carolina Fund
- --------------------------------------------------- ---------------------- ----------- -------------------------- -----------
Two Months
Ended Year Ended
Year Ended March 31, March 31, January 31,
- --------------------------------------------------- ---------------------------------- -------------------------- -----------
1997 1996 1995 1994 1994 1993
- --------------------------------------------------- ----------- ----------- ----------- -------------------------- -----------
Class A
- --------------------------------------------------- ----------- ----------- ----------- -------------------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each
period):
Net asset value - beginning of period $ 11.57 $ 11.42 $ 11.48 $ 12.37 $ 11.80 $ 11.45
----------- ----------- ----------- -------------------------- -----------
Income from investment operations# -
Net investment income ss $ 0.59 $ 0.59 $ 0.61 $ 0.10 $ 0.64 $ 0.65
Net realized and unrealized gain (loss) on
investments (0.01) 0.15 0.03 (0.89) 0.58 0.37
----------- ----------- ----------- -------------------------- -----------
Total from investment operations $ 0.58 $ 0.74 $ 0.64 $ (0.79) $ 1.22 $ 1.02
----------- ----------- ----------- -------------------------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.59) $ (0.59) $ (0.60) $ (0.07) $ (0.61) $ (0.67)
From net realized gain on investments -- -- (0.06) -- (0.01) --
In excess of net investment income++++ (0.00) (0.00) -- (0.03) (0.03) --
In excess of net realized gain on investments -- -- (0.04) -- -- --
----------- ----------- ----------- -------------------------- -----------
Total distributions declared to shareholders $ (0.59) $ (0.59) $ (0.70) $ (0.10) $ (0.65) $ (0.67)
----------- ----------- ----------- -------------------------- -----------
Net asset value - end of period $ 11.56 $ 11.57 $ 11.42 $ 11.48 $ 12.37 $ 11.80
=========== =========== =========== ========================== ===========
Total return++ 5.09% 6.56% 5.86% (6.39)%+++ 10.59% 9.23%
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.08% 1.17% 1.16% 1.16%+ 1.19% 1.07%
Net investment income 5.05% 5.04% 5.38% 4.96%+ 5.21% 5.80%
Portfolio turnover 33% 30% 58% 2% 12% 2%
Net assets at end of period (000 omitted) $377,112 $409,347 $429,131 $460,321 $495,158 $398,352
+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 years ended March 31, 1997 and 1996, the per share distributions in excess of net investment income were $0.002
and $0.002, respectively.
ss The investment adviser voluntarily waived a portion of its management fee, 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 $0.58 -- -- -- -- --
Ratios (to average net assets):
Expenses## 1.15% -- -- -- -- --
Net investment income 4.98% -- -- -- -- --
</TABLE>
See notes to financial statements
42
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
North Carolina Fund
---------------------------------------------------------- ---------------------- ----------- ----------- -----------
Year Ended January 31, 1992 1991 1990 1989 1988
--------------------------------------------------------------------- ----------- ----------- ----------- -----------
Class A
--------------------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.30 $ 11.18 $ 11.15 $ 11.13 $ 11.82
----------- ----------- ----------- ----------- -----------
Income from investment operations -
Net investment income $ 0.70 $ 0.72 $ 0.73 $ 0.74 $ 0.73
Net realized and unrealized gain (loss) on investments 0.26 0.17 0.03 0.02 (0.69)
----------- ----------- ----------- ----------- -----------
Total from investment operations $ 0.96 $ 0.89 $ 0.76 $ 0.76 $ 0.04
----------- ----------- ----------- ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.72) $ (0.73) $ (0.74) $ (0.73)
From net realized gain on investments (0.01) (0.05) -- -- --
From paid-in capital++++ (0.04) (0.00) -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions declared to shareholders $ (0.81) $ (0.77) $ (0.73) $ (0.74) $ (0.73)
----------- ----------- ----------- ----------- -----------
Net asset value - end of period $ 11.45 $ 11.30 $ 11.18 $ 11.15 $ 11.13
=========== =========== =========== =========== ===========
Total return++ 8.82% 8.34% 6.97% 7.12% 0.65%
Ratios (to average net assets)/Supplemental data:
Expenses 1.09% 1.09% 1.12% 1.11% 1.08%
Net investment income 6.17% 6.47% 6.48% 6.70% 6.71%
Portfolio turnover 39% 44% 61% 25% 10%
Net assets at end of period (000 omitted) $312,466 $226,806 $175,101 $129,287 $110,462
++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, 1991, the per share distribution from paid-in capital was $0.0005.
</TABLE>
See notes to financial statements
43
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
North Carolina Fund
---------------------------------------------------------- -------------------- --------- ------------- --------------
Two Months
Ended Year Ended
Year Ended March 31, March 31, January 31,
----------------------------------------------------------------------------------------- ------------- --------------
1997 1996 1995 1994 1994**
---------------------------------------------------------- --------- --------- --------- ------------- --------------
Class B
---------------------------------------------------------- --------- --------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.56 $ 11.42 $ 11.47 $ 12.36 $ 12.36
--------- --------- --------- ------------- --------------
Income from investment operations# -
Net investment income ss $ 0.50 $ 0.50 $ 0.52 $ 0.08 $ 0.22
Net realized and unrealized gain (loss) on investments -- 0.14 0.05 (0.89) 0.01
--------- --------- --------- ------------- --------------
Total from investment operations $ 0.50 $ 0.64 $ 0.57 $ (0.81) $ 0.23
--------- --------- --------- ------------- --------------
Less distributions declared to shareholders -
From net investment income $ (0.51) $ (0.50) $ (0.52) $ (0.08) $ (0.21)
From net realized gain on investments -- -- (0.06) -- (0.01)
In excess of net investment income++++ (0.00) (0.00) -- (0.00) (0.01)
In excess of net realized gain on investments -- -- (0.04) -- --
--------- --------- --------- ------------- --------------
Total distributions declared to shareholders $ (0.51) $ (0.50) $ (0.62) $ (0.08) $ (0.23)
--------- --------- --------- ------------- --------------
Net asset value - end of period $ 11.55 $ 11.56 $ 11.42 $ 11.47 $ 12.36
========= ========= ========= ============= ==============
Total return 4.36% 5.70% 5.20% (6.51)%+++ 4.58%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.78% 1.90% 1.88% 1.88%+ 1.84%+
Net investment income 4.36% 4.30% 4.64% 4.18%+ 4.03%+
Portfolio turnover 33% 30% 58% 2% 12%
Net assets at end of period (000 omitted) $39,035 $33,847 $26,260 $15,866 $13,379
**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 years ended March 31, 1997 and 1996, and the two months ended March 31, 1994, the per share distributions in
excess of net investment income were $0.001, $0.002 and $0.004, respectively.
ss The investment adviser voluntarily waived a portion of its management fee, 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 $0.49 -- -- -- --
Ratios (to average net assets):
Expenses## 1.85% -- -- -- --
Net investment income 4.29% -- -- -- --
</TABLE>
See notes to financial statements
44
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
North Carolina Fund
---------------------------------------------------------- -------------------- --------- ------------- ---------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
----------------------------------------------------------------------------------------- ------------- ---------------
1997 1996 1995 1994 1994***
---------------------------------------------------------- --------- --------- --------- ------------- ---------------
Class C
---------------------------------------------------------- --------- --------- --------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $11.56 $11.41 $11.47 $12.36 $ 12.24
--------- --------- --------- ------------- ---------------
Income from investment operations# -
Net investment income ss $ 0.52 $ 0.51 $ 0.53 $ 0.10 $ 0.02
Net realized and unrealized gain (loss) on investments (0.02) 0.15 0.04 (0.90) 0.12
--------- --------- --------- ------------- ---------------
Total from investment operations $ 0.50 $ 0.66 $ 0.57 $(0.80) $ 0.14
--------- --------- --------- ------------- ---------------
Less distributions declared to shareholders -
From net investment income $(0.51) $(0.51) $(0.53) $(0.09) $ (0.02)
From net realized gain on investments -- -- (0.06) -- --
In excess of net investment income++++ (0.00) (0.00) -- (0.00) (0.00)
In excess of net realized gain on investments -- -- (0.04) -- --
--------- --------- --------- ------------- ---------------
Total distributions declared to shareholders $(0.51) $(0.51) $(0.63) $(0.09) $ (0.02)
--------- --------- --------- ------------- ---------------
Net asset value - end of period $11.55 $11.56 $11.41 $11.47 $ 12.36
========= ========= ========= ============= ===============
Total return 4.41% 5.87% 5.18% (6.50)%+++ 16.50%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.73% 1.83% 1.81% 1.82%+ 1.44%+
Net investment income 4.40% 4.38% 4.71% 4.25%+ 2.33%+
Portfolio turnover 33% 30% 58% 2% 12%
Net assets at end of period (000 omitted) $7,789 $9,352 $8,149 $6,661 $ 4,584
***For the period from the commencement of offering of Class C shares, January 3, 1994, to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
++++For the years ended March 31, 1997 and 1996, the two months ended March 31, 1994, and the year ended January 31,
1994, the per share distributions in excess of net investment income were $0.002, $0.002, $0.002 and $0.003,
respectively.
ss The investment adviser waived a portion of its management fee 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 $0.51 -- -- -- --
Ratios (to average net assets):
Expenses## 1.80% -- -- -- --
Net investment income 4.33% -- -- -- --
</TABLE>
See notes to financial statements
45
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pennsylvania Fund
---------------------------------------------------------- -------------------- --------- ------------- ---------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
----------------------------------------------------------------------------------------- ------------- ---------------
1997 1996 1995 1994 1994*
---------------------------------------------------------- --------- --------- --------- ------------- ---------------
Class A
---------------------------------------------------------- --------- --------- --------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.37 $ 9.29 $ 9.15 $ 10.14 $ 9.53
--------- --------- --------- ------------- ---------------
Income from investment operations# -
Net investment income ss $ 0.53 $ 0.54 $ 0.54 $ 0.09 $ 0.50
Net realized and unrealized gain (loss) on investments (0.10) 0.09 0.18 (0.99) 0.62
--------- --------- --------- ------------- ---------------
Total from investment operations $ 0.43 $ 0.63 $ 0.72 $ (0.90) $ 1.12
--------- --------- --------- ------------- ---------------
Less distributions declared to shareholders -
From net investment income $ (0.54) $ (0.55) $ (0.54) $ (0.09) $ (0.50)
From net realized gain on investments -- -- (0.01) -- (0.01)
In excess of net investment income++++ (0.00) -- -- -- --
In excess of net realized gain on investments -- -- (0.03) -- --
--------- --------- --------- ------------- ---------------
Total distributions declared to shareholders $ (0.54) $ (0.55) $ (0.58) $ (0.09) $ (0.51)
--------- --------- --------- ------------- ---------------
Net asset value - end of period $ 9.26 $ 9.37 $ 9.29 $ 9.15 $ 10.14
========= ========= ========= ============= ===============
Total return++ 4.67% 6.85% 8.14% (8.91)%+++ 12.12%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 0.10% 0.10% 0.01% 0.00%+ 0.00%+
Net investment income 5.66% 5.76% 5.97% 5.43%+ 5.30%+
Portfolio turnover 42% 40% 49% 1% 10%
Net assets at end of period (000 omitted) $16,933 $18,030 $16,411 $13,961 $13,987
*For the period from the commencement of investment operations, February 1, 1993, to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for 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, 1997, the per share distributions in excess of net investment income was $0.003.
ss The investment adviser voluntarily agreed to maintain expenses of the Fund at not more than 1.30% of average daily
net assets for Class A shares. To the extent actual expenses were over/under these limitations, the net investment
income per share and the ratios would have been:
Net investment income $0.45 $0.45 $0.43 $0.06 $0.32
Ratios (to average net assets):
Expenses## 0.95% 1.00% 1.18% 1.84%+ 1.94%+
Net investment income 4.81% 4.86% 4.80% 3.60%+ 3.36%+
</TABLE>
See notes to financial statements
46
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pennsylvania Fund
---------------------------------------------------------- -------------------- --------- ------------- ---------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
----------------------------------------------------------------------------------------- ------------- ---------------
1997 1996 1995 1994 1994**
---------------------------------------------------------- --------- --------- --------- ------------- ---------------
Class B
---------------------------------------------------------- --------- --------- --------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.39 $ 9.29 $ 9.15 $10.15 $10.06
--------- --------- --------- ------------- ---------------
Income from investment operations# -
Net investment income ss $ 0.46 $ 0.50 $ 0.45 $ 0.06 $ 0.17
Net realized and unrealized gain (loss) on investments (0.11) 0.07 0.18 (0.99) 0.10
--------- --------- --------- ------------- ---------------
Total from investment operations $ 0.35 $ 0.57 $ 0.63 $(0.93) $ 0.27
--------- --------- --------- ------------- ---------------
Less distributions declared to shareholders -
From net investment income++++ $ (0.46) $ (0.47) $(0.45) $(0.07) $(0.17)
From net realized gain on investments -- -- (0.01) -- (0.01)
In excess of net realized gain on investments -- -- (0.03) -- --
--------- --------- --------- ------------- ---------------
Total distributions declared to shareholders $ (0.46) $ (0.47) $(0.49) $(0.07) $(0.18)
--------- --------- --------- ------------- ---------------
Net asset value - end of period $ 9.28 $ 9.39 $ 9.29 $ 9.15 $10.15
========= ========= ========= ============= ===============
Total return 3.83% 6.23% 7.07% (9.16)%+++ 6.76%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 0.90% 0.88% 1.01% 1.00%+ 1.00%+
Net investment income 4.86% 4.98% 4.96% 4.37%+ 4.22%+
Portfolio turnover 42% 40% 49% 1% 10%
Net assets at end of period (000 omitted) $24,898 $24,170 $7,699 $4,304 $3,401
**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, 1997, and the two months ended March 31, 1994, the per share distributions in excess of
net investment income were $0.002 and $0.001, respectively.
ss The investment adviser voluntarily agreed to maintain expenses of at not more than 1.95% of average daily net assets
for Class B shares. To the extent actual expenses were over/under these limitations, the net investment income per
share and the ratios would have been:
Net investment income $0.38 $0.41 $0.34 $0.04 $0.05
Ratios (to average net assets):
Expenses## 1.75% 1.85% 2.26% 2.91%+ 2.50%+
Net investment income 4.01% 4.01% 3.72% 2.47%+ 1.29%+
</TABLE>
See notes to financial statements
47
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South Carolina Fund
- -------------------------------------------------- ---------------------- ----------------------- ----------- -----------
Two Months
Ended
Year Ended March 31, March 31, Year Ended January 31,
- -------------------------------------------------- ---------------------------------------------- -----------------------
1997 1996 1995 1994 1994 1993
- -------------------------------------------------- ----------- ----------- ----------------------- -----------------------
Class A
- -------------------------------------------------- ----------- ----------- ----------------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.97 $ 11.86 $ 11.79 $ 12.74 $ 12.02 $ 11.74
----------- ----------- ----------------------- ----------- -----------
Income from investment operations# -
Net investment income ss $ 0.62 $ 0.62 $ 0.63 $ 0.08 $ 0.63 $ 0.67
Net realized and unrealized gain (loss) on
investments (0.10) 0.11 0.15 (0.92) 0.74 0.34
----------- ----------- ----------------------- ----------- -----------
Total from investment operations $ 0.52 $ 0.73 $ 0.78 $ (0.84) $ 1.37 $ 1.01
----------- ----------- ----------------------- ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.61) $ (0.62) $ (0.62) $ (0.08) $ (0.61) $ (0.69)
From net realized gain on investments -- -- (0.06) -- (0.01) (0.04)
In excess of net investment income++++ -- (0.00) -- (0.03) (0.03) --
In excess of net realized gain on investments -- -- (0.03) -- -- --
----------- ----------- ----------------------- ----------- -----------
Total distributions declared to shareholders $ (0.61) $ (0.62) $ (0.71) $ (0.11) $ (0.65) $ (0.73)
----------- ----------- ----------------------- ----------- -----------
Net asset value - end of period $ 11.88 $ 11.97 $ 11.86 $ 11.79 $ 12.74 $ 12.02
=========== =========== ======================= =========== ===========
Total return++ 4.46% 6.20% 6.93% (6.65)%+++ 11.69% 8.89%
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.10% 1.20% 1.19% 1.23%+ 1.22% 1.12%
Net investment income 5.17% 5.10% 5.37% 5.09%+ 5.06% 5.74%
Portfolio turnover 13% 18% 30% 4% 10% 11%
Net assets at end of period (000 omitted) $148,908 $166,801 $171,045 $173,316 $187,307 $144,539
+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 was $0.0006.
ss The investment adviser voluntarily waived a portion of its management fee 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 $ 0.16 -- -- -- -- --
Ratios (to average net assets):
Expenses## 1.16% -- -- -- -- --
Net investment income 5.11% -- -- -- -- --
</TABLE>
See notes to financial statements
48
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South Carolina Fund
----------------------------------------------------------- -----------------------------------------------------
Year Ended January 31, 1992 1991 1990 1989 1988
----------------------------------------------------------- ----------- --------- --------- --------- ----------
Class A
----------------------------------------------------------- ----------- ------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.45 $ 11.30 $ 11.24 $ 11.14 $ 11.54
----------- --------- --------- --------- ----------
Income from investment operations -
Net investment income $ 0.70 $ 0.71 $ 0.72 $ 0.76 $ 0.77
Net realized and unrealized gain (loss) on investments 0.40 0.21 0.06 0.11 (0.36)
----------- --------- --------- --------- ----------
Total from investment operations $ 1.10 $ 0.92 $ 0.78 $ 0.87 $ 0.41
----------- --------- --------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.71) $ (0.72) $ (0.77) $ (0.77)
From net realized gain on investments (0.05) (0.06) -- -- --
From paid-in capital -- -- -- -- (0.04)
----------- --------- --------- --------- ----------
Total distributions declared to shareholders $ (0.81) $ (0.77) $ (0.72) $ (0.77) $ (0.81)
----------- --------- --------- --------- ----------
Net asset value - end of period $ 11.74 $ 11.45 $ 11.30 $ 11.24 $ 11.14
=========== ========= ========= ========= ==========
Total return++ 9.95% 8.46% 7.13% 8.18% 3.92%
Ratios (to average net assets)/Supplemental data:
Expenses 1.15% 1.18% 1.21% 0.97% 0.81%
Net investment income 6.07% 6.30% 6.35% 6.90% 7.07%
Portfolio turnover 22% 47% 54% 27% 12%
Net assets at end of period (000 omitted) $101,434 $75,922 $57,675 $45,391 $34,025
++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
49
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South Carolina Fund
----------------------------------------------------------- ----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
----------------------------------------------------------- ------------------------------- ------------ --------------
1997 1996 1995 1994 1994**
----------------------------------------------------------- --------- --------- --------- ------------ --------------
Class B
----------------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.97 $ 11.86 $ 11.78 $ 12.73 $12.67
--------- --------- --------- ------------ --------------
Income from investment operations# -
Net investment income ss $ 0.54 $ 0.52 $ 0.54 $ 0.08 $ 0.21
Net realized and unrealized gain (loss) on investments (0.10) 0.12 0.17 (0.94) 0.06
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.44 $ 0.64 $ 0.71 $ (0.86) $ 0.27
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income $ (0.53) $ (0.53) $ (0.54) $ (0.08) $(0.20)
From net realized gain on investments -- -- (0.06) -- --
In excess of net investment income++++ -- (0.00) (0.00) (0.01) (0.01)
In excess of net realized gain on investments -- -- (0.03) -- --
--------- --------- --------- ------------ --------------
Total distributions declared to shareholders $ (0.53) $ (0.53) $ (0.63) $ (0.09) $(0.21)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 11.88 $ 11.97 $ 11.86 $ 11.78 $12.73
========= ========= ========= ============ ==============
Total return 3.73% 5.43% 6.26% (6.77)%+++ 5.47%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.79% 1.92% 1.90% 1.96%+ 1.90%+
Net investment income 4.48% 4.35% 4.63% 4.29%+ 3.86%+
Portfolio turnover 13% 18% 30% 4% 10%
Net assets at end of period (000 omitted) $21,871 $18,420 $12,964 $10,085 $8,217
**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 years ended March 31, 1996 and 1995, the per share distributions in excess of net investment income were
$0.0005 and $0.00436, respectively.
ss The investment adviser voluntarily waived a portion of its management fee 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 $ 0.53 -- -- -- --
Ratios (to average net assets):
Expenses## 1.85% -- -- -- --
Net investment income 4.42% -- -- -- --
</TABLE>
See notes to financial statements
50
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Tennessee Fund
- -------------------------------------------------- ---------------------- ----------------------------------------------
Two Months
Ended
Year Ended March 31, March 31, Year Ended January 31,
- -------------------------------------------------- ---------------------------------------------- ----------------------
1997 1996 1995 1994 1994 1993
- -------------------------------------------------- ----------- ----------- ----------------------- ----------- ----------
Class A
- -------------------------------------------------- ----------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.40 $ 10.27 $ 10.26 $ 10.94 $ 10.37 $ 10.10
----------- ----------- ----------------------- ----------- ----------
Income from investment operations# -
Net investment income ss $ 0.55 $ 0.54 $ 0.56 $ 0.09 $ 0.57 $ 0.57
Net realized and unrealized gain (loss) on
investments (0.09) 0.13 0.02 (0.68) 0.57 0.31
----------- ----------- ----------------------- ----------- ----------
Total from investment operations $ 0.46 $ 0.67 $ 0.58 $ (0.59) $ 1.14 $ 0.88
----------- ----------- ----------------------- ----------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.54) $ (0.54) $ (0.56) $ (0.07) $ (0.54) $ (0.57)
From net realized gain on investments++++ -- -- (0.00) -- -- (0.01)
In excess of net investment income++++++ -- (0.00) -- (0.02) (0.03) (0.03)
In excess of net realized gain on investments -- -- (0.01) -- -- --
----------- ----------- ----------------------- ----------- ----------
Total distributions declared to shareholders $ (0.54) $ (0.54) $ (0.57) $ (0.09) $ (0.57) $ (0.61)
----------- ----------- ----------------------- ----------- ----------
Net asset value - end of period $ 10.32 $ 10.40 $ 10.27 $ 10.26 $ 10.94 $ 10.37
=========== =========== ======================= =========== ==========
Total return++ 4.48% 6.66% 5.86% (5.39)%+++ 11.20% 9.03%
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.10% 1.21% 1.22% 1.21%+ 1.29% 1.14%
Net investment income 5.26% 5.18% 5.52% 5.31%+ 5.25% 5.89%
Portfolio turnover 20% 20% 27% 4% 12% 9%
Net assets at end of period (000 omitted) $108,000 $109,811 $117,572 $117,117 $123,050 $99,443
+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, 1995, the per share distribution from net realized gain on investments was $0.0014.
++++++For the year ended March 31, 1996, the per share distribution in excess of net investment income was $0.0024.
ss The investment adviser and/or distributor voluntarily waived a portion their management, distribution and expense
reimbursement fees 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 $ 0.54 -- -- -- -- $ 0.61
Ratios (to average daily net assets):
Expenses## 1.16% -- -- -- -- 1.17%
Net investment income 5.20% -- -- -- -- 6.23%
</TABLE>
See notes to financial statements
51
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Tennessee Fund
- ---------------------------------------------------- ------------------------------- --------------
Period Ended
January 31,
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 $ 9.90 $ 9.80 $ 9.68 $ 9.53
--------- --------- --------- --------------
Income from investment operations -
Net investment income ss $ 0.61 $ 0.62 $ 0.67 $ 0.22
Net realized and unrealized gain on investments 0.30 0.13 0.11 0.10
--------- --------- --------- --------------
Total from investment operations $ 0.91 $ 0.75 $ 0.78 $ 0.32
--------- --------- --------- --------------
Less distributions declared to shareholders -
From net investment income $ (0.66) $ (0.63) $ (0.66) $ (0.17)
From net realized gain on investments (0.05) (0.02) -- --
From paid-in capital++++ -- (0.00) -- --
--------- --------- --------- --------------
Total distributions declared to shareholders $ (0.71) $ (0.65) $ (0.66) $ (0.17)
--------- --------- --------- --------------
Net asset value - end of period $ 10.10 $ 9.90 $ 9.80 $ 9.68
========= ========= ========= ==============
Total return++ 9.50% 7.96% 8.30% 3.43%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses 1.15% 1.03% 0.53% 0.40%+
Net investment income 6.11% 6.37% 6.70% 5.98%+
Portfolio turnover 42% 58% 78% 5%
Net assets at end of period (000 omitted) $87,898 $72,108 $56,048 $15,832
*For the period from the commencement of investment operations, August 12, 1988, to January 31,
1989.
+Annualized.
+++Not annualized.
++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, 1991, the per share distribution from paid-in capital was
$0.0013.
ss The investment adviser voluntarily waived a portion of its management fee 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 -- -- $ 0.60 $ 0.20
Ratios (to average daily net assets):
Expenses -- -- 1.24% 0.95%+
Net investment income -- -- 5.99% 5.43%+
</TABLE>
See notes to financial statements
52
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Tennessee Fund
----------------------------------------------------------- ----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
----------------------------------------------------------- ------------------------------- ------------ --------------
1997 1996 1995 1994 1994**
----------------------------------------------------------- --------- --------- --------- ------------ --------------
Class B
----------------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.39 $ 10.26 $ 10.26 $10.95 $10.87
--------- --------- --------- ------------ --------------
Income from investment operations# -
Net investment income ss $ 0.47 $ 0.46 $ 0.48 $ 0.08 $ 0.19
Net realized and unrealized gain (loss) on investments (0.09) 0.14 0.01 (0.69) 0.08
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.38 $ 0.60 $ 0.49 $(0.61) $ 0.27
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income++++++ $ (0.46) $ (0.47) $ (0.48) $(0.08) $(0.19)
From net realized gain on investments++++ -- -- (0.00) -- --
In excess of net realized gain on investments -- -- (0.01) -- --
--------- --------- --------- ------------ --------------
Total distributions declared to shareholders $ (0.46) $ (0.47) $ (0.49) $(0.08) $(0.19)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 10.31 $ 10.39 $ 10.26 $10.26 $10.95
========= ========= ========= ============ ==============
Total return 3.76% 5.89% 5.00% (5.59)%+++ 2.48%+++
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.79% 1.93% 1.94% 1.93%+ 1.93%+
Net investment income 4.57% 4.43% 4.80% 4.49%+ 4.20%+
Portfolio turnover 20% 20% 27% 4% 12%
Net assets at end of period (000 omitted) $14,436 $12,935 $10,006 $5,294 $3,818
**For the period from the commencement of offering of Class B shares, September 7, 1993, to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees
paid indirectly.
++++For the year ended March 31, 1995, the per share distribution from net realized gain on investments was $0.0014.
++++++For the year ended March 31, 1996, the per share distribution in excess of net investment income was $0.0021.
ss The investment adviser voluntarily waived a portion of its management fee 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 $ 0.46 -- -- -- --
Ratios (to average net assets):
Expenses## 1.85% -- -- -- --
Net investment income 4.51% -- -- -- --
</TABLE>
See notes to financial statements
53
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Virginia Fund
- ------------------------------------------------- ---------------------- -----------------------------------------------
Two Months
Ended
Year Ended March 31, March 31, Year Ended January 31,
- ------------------------------------------------- ---------------------------------------------- -----------------------
1997 1996 1995 1994 1994 1993
- ------------------------------------------------- ----------- ---------------------- ------------ -----------------------
Class A
- ------------------------------------------------- ----------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.21 $ 11.09 $ 11.15 $ 12.07 $ 11.72 $ 11.44
----------- ---------------------- ------------ ----------- -----------
Income from investment operations# -
Net investment income ss $ 0.59 $ 0.59 $ 0.56 $ 0.10 $ 0.65 $ 0.68
Net realized and unrealized gain (loss) on
investments (0.15) 0.13 0.04 (0.92) 0.56 0.30
----------- ---------------------- ------------ ----------- -----------
Total from investment operations $ 0.44 $ 0.72 $ 0.60 $ (0.82) $ 1.21 $ 0.98
----------- ---------------------- ------------ ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.59) $ (0.60) $ (0.61) $ (0.06) $ (0.62) $ (0.70)
From net realized gain on investments++++++ -- -- (0.04) -- (0.20) (0.00)
In excess of net investment income++++ -- (0.00) (0.00) (0.04) (0.04) --
In excess of net realized gain on investments -- -- (0.01) -- -- --
----------- ---------------------- ------------ ----------- -----------
Total distributions declared to shareholders $ (0.59) $ (0.60) $ (0.66) $ (0.10) $ (0.86) $ (0.70)
----------- ---------------------- ------------ ----------- -----------
Net asset value - end of period $ 11.06 $ 11.21 $ 11.09 $ 11.15 $ 12.07 $ 11.72
=========== ====================== ============ =========== ===========
Total return++ 3.97% 6.52% 5.67% (6.80)%+++ 10.67% 8.88%
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.08% 1.18% 1.16% 1.17%+ 1.18% 1.08%
Net investment income 5.27% 5.20% 4.91% 5.33%+ 5.37% 6.02%
Portfolio turnover 42% 42% 27% 5% 22% 20%
Net assets at end of period (000 omitted) $379,185 $418,408 $430,688 $443,580 $479,333 $399,696
+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 years ended March 31, 1996 and 1995, the per share distributions in excess of net investment income were
$0.005 and $0.003, respectively.
++++++For the year ended January 31, 1993, the per share distribution from net realized gain on investments was $0.00348.
ss The investment adviser voluntarily waived a portion of its management 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 $ 0.58 -- -- -- -- --
Ratios (to average net assets):
Expenses## 1.14% -- -- -- -- --
Net investment income 5.21% -- -- -- -- --
</TABLE>
See notes to financial statements
54
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Virginia Fund
- -------------------------------------------------- ---------------------- -----------------------------------
Year Ended January 31, 1992 1991 1990 1989 1988
- -------------------------------------------------- ----------- ----------- ---------------------- -----------
Class A
- -------------------------------------------------- ----------- ----------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.16 $ 10.97 $ 10.91 $ 10.75 $ 11.38
----------- ----------- ---------------------- -----------
Income from investment operations -
Net investment income $ 0.71 $ 0.73 $ 0.73 $ 0.74 $ 0.72
Net realized and unrealized gain (loss) on
investments 0.34 0.19 0.06 0.16 (0.57)
----------- ----------- ---------------------- -----------
Total from investment operations $ 1.05 $ 0.92 $ 0.79 $ 0.90 $ 0.15
----------- ----------- ---------------------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.77) $ (0.73) $ (0.73) $ (0.74) $ (0.71)
From net realized gain on investments -- -- -- -- (0.05)
From paid-in capital -- -- -- -- (0.02)
----------- ----------- ---------------------- -----------
Total distributions declared to shareholders $ (0.77) $ (0.73) $ (0.73) $ (0.74) $ (0.78)
----------- ----------- ---------------------- -----------
Net asset value - end of period $ 11.44 $ 11.16 $ 10.97 $ 10.91 $ 10.75
=========== =========== ====================== ===========
Total return++ 9.76% 8.74% 7.46% 8.76% 1.61%
Ratios (to average net assets)/Supplemental data:
Expenses 1.08% 1.11% 1.12% 1.09% 1.04%
Net investment income 6.32% 6.64% 6.67% 6.91% 6.75%
Portfolio turnover 13% 38% 41% 38% 11%
Net assets at end of period (000 omitted) $328,664 $275,202 $240,553 $207,680 $192,104
++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
55
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Virginia Fund
- -------------------------------------------------- ----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
- -------------------------------------------------- ------------------------------- ------------ --------------
1997 1996 1995 1994 1994**
- -------------------------------------------------- --------- --------- --------- ------------ --------------
Class B
- -------------------------------------------------- --------- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.21 $ 11.08 $ 11.14 $ 12.06 $ 12.14
--------- --------- --------- ------------ --------------
Income from investment operations# -
Net investment income ss $ 0.51 $ 0.51 $ 0.53 $ 0.09 $ 0.22
Net realized and unrealized gain (loss) on
investments (0.15) 0.13 (0.01) (0.92) 0.01
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.36 $ 0.64 $ 0.52 $ (0.83) $ 0.23
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income $ (0.51) $ (0.51) $ (0.53) $ (0.09) $ (0.21)
From net realized gain on investments -- -- (0.04) -- (0.09)
In excess of net investment income++++ -- (0.00) (0.00) (0.00) (0.01)
In excess of net realized gain on investments -- -- (0.01) -- --
--------- --------- --------- ------------ --------------
Total distributions declared to shareholders $ (0.51) $ (0.51) $ (0.58) $ (0.09) $ (0.31)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 11.06 $ 11.21 $ 11.08 $ 11.14 $ 12.06
========= ========= ========= ============ ==============
Total return 3.24% 5.85% 4.91% (6.92)%+++ 4.93%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.78% 1.90% 1.88% 1.88%+ 1.82%+
Net investment income 4.57% 4.46% 4.84% 4.52%+ 4.25%+
Portfolio turnover 42% 42% 27% 5% 22%
Net assets at end of period (000 omitted) $30,567 $28,420 $22,007 $13,337 $10,877
**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 years ended March 31, 1996 and 1995, and the two months ended March 31, 1994, the per share
distributions in excess of net investment income were $0.002, $0.005 and $0.002, respectively.
ss The investment adviser voluntarily waived a portion of its management fee for certain of the periods
indicated. If these fees have been incurred by the Fund, the net investment income and the ratios would
have been:
Net investment income $ 0.50 -- -- -- --
Ratios (to average net assets):
Expenses## 1.84% -- -- -- --
Net investment income 4.51% -- -- -- --
</TABLE>
See notes to financial statements
56
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Virginia Fund
- -------------------------------------------------- ----------------------------------------------------------
Two Months
Ended Year Ended
Year Ended March 31, March 31, January 31,
- -------------------------------------------------- ------------------------------- ------------ --------------
1997 1996 1995 1994 1994***
- -------------------------------------------------- --------- --------- --------- ------------ --------------
Class C
- -------------------------------------------------- --------- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $11.21 $11.07 $11.14 $12.06 $ 11.94
--------- --------- --------- ------------ --------------
Income from investment operations# -
Net investment income ss $ 0.52 $ 0.51 $ 0.56 $ 0.08 $ 0.02
Net realized and unrealized gain (loss) on
investments (0.16) 0.15 (0.04) (0.91) 0.12
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.36 $ 0.66 $ 0.52 $(0.83) $ 0.14
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income++++ $(0.51) $(0.52) $(0.54) $(0.09) $ (0.02)
From net realized gain on investment income -- -- (0.04) -- --
In excess of net realized gain on investments -- -- (0.01) -- --
--------- --------- --------- ------------ --------------
Total distributions declared to shareholders $(0.51) $(0.52) $(0.59) $(0.09) $ (0.02)
--------- --------- --------- ------------ --------------
Net asset value - end of period $11.06 $11.21 $11.07 $11.14 $ 12.06
========= ========= ========= ============ ==============
Total return 3.30% 6.02% 4.85% (6.91)%+++ 17.05%+
Ratios (to average net assets)/Supplemental data ss:
Expenses## 1.72% 1.83% 1.80% 1.82%+ 1.18%+
Net investment income 4.63% 4.53% 4.90% 4.48%+ 1.79%+
Portfolio turnover 42% 42% 27% 5% 22%
Net assets at end of period (000 omitted) $3,182 $3,366 $2,300 $1,760 $ 833
***For the period from the commencement of offering of Class C shares, January 3, 1994, to January 31, 1994.
+Annualized.
+++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for
fees paid indirectly.
++++For the years ended March 31, 1996 and 1995, and January 31, 1994, the per share distributions in excess
of net investment income were $0.005, $0.002 and $0.002, respectively.
ss The investment adviser voluntarily waived a portion of its management fee for certain of the periods
indicated. If these fees had been incurred by the Fund, the net investment income and the ratios would
have been:
Net investment income $ 0.51 -- -- -- --
Ratios (to average net assets):
Expenses## 1.78% -- -- -- --
Net investment income 4.57% -- -- -- --
</TABLE>
See notes to financial statements
57
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
West Virginia Fund
- -------------------------------------------------- ---------------------- -----------------------------------------------
Two Months
Ended
Year Ended March 31, March 31, Year Ended January 31,
- -------------------------------------------------- ---------------------------------------------- -----------------------
1997 1996 1995 1994 1994 1993
- -------------------------------------------------- ----------- ----------- ----------------------- -----------------------
Class A
- -------------------------------------------------- ----------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.33 $ 11.21 $ 11.19 $ 12.06 $ 11.50 $ 11.20
----------- ----------- ----------------------- ----------- -----------
Income from investment operations# -
Net investment income $ 0.60 $ 0.61 $ 0.62 $ 0.01 $ 0.64 $ 0.66
Net realized and unrealized gain (loss) on
investments (0.02) 0.12 0.03 (0.78) 0.69 0.34
----------- ----------- ----------------------- ----------- -----------
Total from investment operations $ 0.58 $ 0.73 $ 0.65 $ (0.77) $ 1.33 $ 1.00
----------- ----------- ----------------------- ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.60) $ (0.61) $ (0.62) $ (0.06) $ (0.61) $ (0.69)
From net realized gain on investments -- -- -- -- (0.12) (0.01)
In excess of net investment income++++ -- (0.00) -- (0.04) (0.04) --
In excess of net realized gain on investments -- -- (0.01) -- -- --
----------- ----------- ----------------------- ----------- -----------
Total distributions declared to shareholders $ (0.60) $ (0.61) $ (0.63) $ (0.10) $ (0.77) $ (0.70)
----------- ----------- ----------------------- ----------- -----------
Net asset value - end of period $ 11.31 $ 11.33 $ 11.21 $ 11.19 $ 12.06 $ 11.50
=========== =========== ======================= =========== ===========
Total return++ 5.20% 6.58% 6.07% (6.37)%+++ 11.80% 9.12%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.17% 1.22% 1.19% 1.30%+ 1.24% 1.15%
Net investment income 5.28% 5.30% 5.62% 5.36%+ 5.30% 5.97%
Portfolio turnover 21% 11% 23% 2% 26% 19%
Net assets at end of period (000 omitted) $126,107 $134,514 $127,616 $130,726 $141,190 $115,289
+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 distributions in excess of net investment income was $0.002.
</TABLE>
See notes to financial statements
58
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
West Virginia Fund
- -------------------------------------------------- -------------------- -------------------------------
Year Ended January 31, 1992 1991 1990 1989 1988
- -------------------------------------------------- --------- --------- --------- --------- ----------
Class A
- -------------------------------------------------- --------- ------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.93 $ 10.72 $ 10.68 $ 10.51 $ 11.30
--------- --------- --------- --------- ----------
Income from investment operations -
Net investment income $ 0.70 $ 0.71 $ 0.71 $ 0.77 $ 0.77
Net realized and unrealized gain (loss) on
investments 0.34 0.21 0.04 0.18 (0.72)
--------- --------- --------- --------- ----------
Total from investment operations $ 1.04 $ 0.92 $ 0.75 $ 0.95 $ 0.05
--------- --------- --------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.71) $ (0.71) $ (0.78) $ (0.76)
From net realized gain on investments (0.01) -- -- -- (0.02)
From paid-in capital -- -- -- -- (0.06)
--------- --------- --------- --------- ----------
Total distributions declared to shareholders $ (0.77) $ (0.71) $ (0.71) $ (0.78) $ (0.84)
--------- --------- --------- --------- ----------
Net asset value - end of period $ 11.20 $ 10.93 $ 10.72 $ 10.68 $ 10.51
========= ========= ========= ========= ==========
Total return++ 9.84% 8.91% 7.26% 9.43% 0.76%
Ratios (to average net assets)/Supplemental data:
Expenses 1.17% 1.21% 1.22% 0.86% 0.79%
Net investment income 6.33% 6.59% 6.63% 7.01% 7.32%
Portfolio turnover 14% 37% 34% 9% 11%
Net assets at end of period (000 omitted) $80,440 $61,984 $52,398 $43,026 $36,276
++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
59
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
West Virginia Fund
- -------------------------------------------------- ----------------------------------------------------------
Two Months
Ended Period Ended
Year Ended March 31, March 31, January 31,
- -------------------------------------------------- ------------------------------- ------------ --------------
1997 1996 1995 1994 1994**
- -------------------------------------------------- --------- --------- --------- ------------ --------------
Class B
- -------------------------------------------------- --------- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.33 $ 11.21 $ 11.19 $12.06 $12.13
--------- --------- --------- ------------ --------------
Income from investment operations# -
Net investment income $ 0.52 $ 0.52 $ 0.53 $ 0.01 $ 0.22
Net realized and unrealized gain (loss) on
investments (0.02) 0.12 0.04 (0.87) 0.05
--------- --------- --------- ------------ --------------
Total from investment operations $ 0.50 $ 0.64 $ 0.57 $(0.86) $ 0.27
--------- --------- --------- ------------ --------------
Less distributions declared to shareholders -
From net investment income $ (0.52) $ (0.52) $ (0.54) $(0.01) $(0.21)
From net realized gain on investments -- -- -- -- (0.12)
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 $ (0.52) $ (0.52) $ (0.55) $(0.01) $(0.34)
--------- --------- --------- ------------ --------------
Net asset value - end of period $ 11.31 $ 11.33 $ 11.21 $11.19 $12.06
========= ========= ========= ============ ==============
Total return 4.47% 5.81% 5.30% (6.48)%+++ 5.59%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.87% 1.94% 1.91% 2.02%+ 1.89%+
Net investment income 4.57% 4.56% 4.87% 4.56%+ 4.14%+
Portfolio turnover 21% 11% 23% 2% 26%
Net assets at end of period (000 omitted) $13,587 $12,647 $10,046 $5,456 $4,530
**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 years ended March 31, 1996 and 1995, the per share distributions in excess of net investment
income were $0.002 and $0.005, respectively.
</TABLE>
See notes to financial statements
60
<PAGE>
Notes to Financial Statements
(1) Business and Organization
MFS Municipal Series Trust (the Trust) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Trust presently
consists of sixteen Funds, as follows: MFS Municipal Income Fund, MFS Alabama
Municipal Bond Fund, MFS Arkansas Municipal Bond Fund, MFS California
Municipal Bond Fund, MFS Florida Municipal Bond Fund, MFS Georgia Municipal
Bond Fund, MFS Maryland Municipal Bond Fund, MFS Massachusetts Municipal Bond
Fund, MFS Mississippi Municipal Bond Fund* (Mississippi Fund), MFS New York
Municipal Bond Fund* (New York Fund), MFS North Carolina Municipal Bond Fund*
(North Carolina Fund), MFS Pennsylvania Municipal Bond Fund* (Pennsylvania
Fund), MFS South Carolina Municipal Bond Fund* (South Carolina Fund), MFS
Tennessee Municipal Bond Fund* (Tennessee Fund), MFS Virginia Municipal Bond
Fund* (Virginia Fund), and MFS West Virginia Municipal Bond Fund* (West
Virginia Fund). Each Fund, except MFS Municipal Income Fund, is
non-diversified.
The Funds denoted with an asterisk above are included within these financial
statements.
(2) Significant Accounting Policies
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 listed on commodities exchanges are valued at
closing settlement prices. Securities for which there are no such quotations
or valuations are valued at fair value as determined in good faith by or at
the direction of the Trustees.
Deferred Organization Expenses -- Costs incurred by a Fund in connection with
its organization have been deferred and are being amortized on a
straight-line basis over a five-year period beginning on the date of
commencement of operations of the Fund.
Futures Contracts -- Each Fund may enter into futures contracts for the
delayed delivery of securities or contracts based on financial indices at a
fixed price on a future date. In entering such contracts, each Fund is
required to deposit either in cash or securities an amount equal to a certain
percentage of the contract amount. Subsequent payments are made or received
by the Fund each day, depending on the daily fluctuations in the value of the
underlying security, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. Each Fund's investment in futures
contracts is designed to hedge against anticipated future changes in interest
rates or securities prices. Investments in interest rate futures for purposes
other than hedging may be made to modify the duration of the portfolio
without incurring the additional transaction costs involved in buying and
selling the underlying securities. Investments in equity 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.
Legal fees and other related expenses incurred to preserve and protect the
value of a security owned are added to the cost of the security; other legal
fees are expensed. Capital infusions, which are generally non-recurring,
incurred to protect or enhance the value of high-yield debt securities, are
reported as an addition to the cost basis of the security. Costs that are
incurred to negotiate the terms or conditions of capital infusions or that
are expected to result in a plan of reorganization are reported as realized
losses. Ongoing costs incurred to protect or enhance an investment, or costs
incurred to pursue other claims or legal actions, are reported as operating
expenses.
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
61
<PAGE>
Notes to Financial Statements - continued
companies, which will enable each Fund to pay exempt-interest dividends. The
portion of such interest, if any, earned on private activity bonds issued
after August 7, 1986 may be considered a tax-preference item to shareholders.
Distributions to shareholders are recorded on the ex-dividend date.
Each Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax return
of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or accumulated net
realized gains.
During the year ended March 31, 1997, the following amounts were reclassified
from accumulated distributions in excess of net investment income to
accumulated net realized loss on investments due to differences between book
and tax accounting for accrued market discount on disposal of securities:
Mississippi New York North Carolina Pennsylvania
Fund Fund Fund Fund
========== ============= ========= ================ ==============
$38,055 $47,060 $383,091 $28,353
South Carolina Tennessee
Fund Fund
========== ================ ===========
$48,404 $55,087
With respect to the Virginia Fund, $149,922 was reclassified from accumulated
distributions in excess of net investment income, and $149,999 and $77 were
reclassified to accumulated net realized loss of investments and paid-in
capital, respectively, due to differences between book and tax accounting for
accrued market discount on disposal of securities.
These changes had no effect on the net assets or the net asset value per
share of the Funds.
At March 31, 1997, 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.
Mississippi New York North Carolina Pennsylvania
Expiration Date Fund Fund Fund Fund
================ ============= ============================= ==============
March 31, 2003 $ 940,501 $2,754,263 $9,778,287 $ 111,447
March 31, 2004 3,163,964 -- -- 1,259,709
March 31, 2005 228,833 502,292 -- 533,472
------------- ----------------------------- --------------
Total $4,333,298 $3,256,555 $9,778,287 $1,904,628
============= ============================= ==============
South Carolina Tennessee Virginia West Virginia
Expiration Date Fund Fund Fund Fund
================ ================ ============= ============== =============
March 31, 2003 $ -- $ 381,262 $ 6,639,093 $ 295,369
March 31, 2004 2,709,187 635,012 3,840,742 2,589,345
March 31, 2005 593,657 78,212 2,350,366 714,690
---------------- ------------- -------------- -------------
Total $3,302,844 $1,094,486 $12,830,201 $3,599,404
================ ============= ============== =============
Multiple Classes of Shares of Beneficial Interest -- Each Fund offers both
Class A and Class B shares. The North Carolina and Virginia Funds offer Class
C shares. The three classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Fund pro
rata based on settled shares outstanding of each class, without distinction
between share classes. Dividends are declared separately for each class. No
class has preferential dividend rights; differences in per share dividend
rates are generally due to differences in separate class expenses.
(3) Transactions with Affiliates
Investment Adviser -- The 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
waived a portion of its fee with respect to the North Carolina, Pennsylvania,
South Carolina, Tennessee and Virginia Funds, which is reflected as a
reduction of expenses in the Statement of Operations.
Under a temporary expense reimbursement agreement with MFS, MFS has
voluntarily agreed to pay all of the Pennsylvania Fund's operating expenses,
exclusive of management, distribution and service fees. The Pennsylvania Fund
in turn will pay MFS an expense reimbursement fee not greater than 0.40% of
its average daily net assets. To the extent that the expense reimbursement
fee exceeds the Pennsylvania Fund's actual expenses, the excess will be
applied to amounts paid by MFS in prior years. At March 31, 1997, the
aggregate unreimbursed expenses owed to MFS by the Pennsylvania Fund amounted
to $229,169, including $12,289 incurred in the current year. During the year
ended March 31, 1997, MFS voluntarily waived the reimbursement fee of
$171,165.
62
<PAGE>
Notes to Financial Statements - continued
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 officers and
Trustees of the Trust are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Trust has
an unfunded defined benefit plan for all its independent Trustees and Mr.
Bailey. Included in Trustees' compensation for the year ended March 31, 1997
is a net periodic pension expense for each Fund, as follows:
North
Mississippi New York Carolina Pennsylvania
Fund Fund Fund Fund
========== ============= ========= ========= ==============
$3,045 $4,781 $5,138 $3,284
South West
Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund
========== ========= =========== ========== =========
$5,136 $4,507 $5,138 $5,138
Administrator -- Effective March 1, 1997, the Trust has an administrative
services agreement with MFS to provide the Trust with certain financial,
legal, compliance, shareholder communications, and other administrative
services. As a partial reimbursement for the cost of providing these
services, each Fund pays MFS an administrative fee up to 0.015% per annum of
each Fund's average daily net assets, provided that the administrative fee is
not assessed on Fund assets that exceed $3 billion.
Distributor -- MFD, a wholly owned subsidiary of MFS, as distributor,
received $18,104, $19,546, $72,935, $11,850, $36,896, $25,070, $62,832 and
$38,916 as its portion of the sales charge on sales of Class A shares of the
Mississippi, New York, North Carolina, Pennsylvania, South Carolina,
Tennessee, Virginia and West Virginia Funds, respectively, for the year ended
March 31, 1997.
The Trustees have adopted a distribution plan for Class A, Class B, and Class
C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
Each Fund's distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service
fee to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum of the Fund's average daily net assets attributable to
Class A shares which are attributable to that securities dealer, a
distribution fee to MFD of up to 0.10% per annum of the Fund's average daily
net assets attributable to Class A shares, commissions to dealers and
payments to MFD wholesalers for sales at or above a certain dollar level, and
other such distribution-related expenses that are approved by the Fund. MFD
retains the service fee for accounts not attributable to a securities dealer,
which amounted to $46,322, $66,418, $45,613, $37,386, $99,075 and $27,053 for
the New York, North Carolina, South Carolina, Tennessee, Virginia and West
Virginia Funds for the year ended March 31, 1997. Fees incurred under the
distribution plan during the year ended March 31, 1997 were 0.00%, 0.25%,
0.35%, 0.00%, 0.35%, 0.35%, 0.35%, and 0.35% of each Fund's average daily net
assets attributable to Class A shares on an annualized basis for the
Mississippi, New York, North Carolina, Pennsylvania, South Carolina,
Tennessee, Virginia, and West Virginia Funds. Payments of the 0.35% per annum
of the distribution/service fee by the Mississippi Fund will commence on such
date to be determined by the Trustees. In the case of the New York and
Pennsylvania Funds, payments of up to 0.10% per annum of the distribution fee
will commence on such date to be determined by the Trustees. For the
Pennsylvania Fund, payments of up to 0.25% per annum of the service fee will
commence when the value of the net assets of the Fund attributable to Class A
shares first equals or exceeds $50 million.
Each Fund's distribution plan provides that the Fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the Fund's average daily net assets attributable to Class B and
Class C shares. MFD will pay to securities dealers that enter into a sales
agreement with MFD all or a portion of the service fee attributable to Class
B and Class C shares, and will pay to such securities dealers all of the
distribution fee attributable to Class C shares. Except in the case of the up
to 0.25% per annum first year service fee, payments by the Mississippi Fund
will commence on such date to be determined by the Trustees. In the case of
the Pennsylvania Fund, except in the case of the up to 0.25% per annum first
year service fee, payments will commence when the value of the net assets of
the Pennsylvania Fund attributable to Class A shares first equals or exceeds
$50 million. 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 $8,339, $5,589, $5,470, $5,835, $15,311, and $2,607
for the New York, North Carolina, South Carolina, Tennessee, Virginia, and
West Virginia Funds, respectively for Class B shares. MFS retains the service
fee for accounts not attributable to a securities dealer, which amounted to
$4,633 and $1,455 for the North Carolina and Virginia Funds, respectively,
for Class C shares. Fees incurred under the distribution plan during the year
ended March 31, 1997 were 0.80%, 1.00%, 1.00%, 0.80%, 1.00%, 1.00%, 1.00% and
1.00%, of each of the Fund's average daily net assets attributable to Class B
shares for the Mississippi, New York, North Carolina, Pennsylvania, South
Carolina, Tennessee, Virginia, and West Virginia Funds, respectively on an
annualized basis. Fees incurred under the distribution plan during the year
ended March 31, 1997 were 1.00% and 1.00% of each of the Fund's average daily
net assets attributable to Class C shares for the North Carolina and Virginia
Fund, respectively, 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 year ended March 31, 1997, on Class
A, Class B and Class C shares were as follows:
63
<PAGE>
Notes to Financial Statements - continued
North
Mississippi New York Carolina Pennsylvania
CDSC Imposed Fund Fund Fund Fund
============================ ========= =========== ==============
Class A $ -- $ 51 $ -- $11,294
============= ========= =========== ==============
Class B $48,353 $95,716 $103,158 $33,143
============= ========= =========== ==============
Class C $ -- $ -- $ 1,076 $ --
============= ========= =========== ==============
South West
Carolina Tennessee Virginia Virginia
CDSC Imposed Fund Fund Fund Fund
=============== ========= =========== ========= ==========
Class A $ 683 $ -- $ -- $ --
========= =========== ========= ==========
Class B $40,979 $53,602 $89,149 $54,376
========= =========== ========= ==========
Class C $ -- $ -- $ -- $ --
========= =========== ========= ==========
Shareholder Servicing Agent -- MFSC, a wholly owned subsidiary of MFS, earns
a fee for its services as shareholder servicing agent. The fee is calculated
as a percentage of each Fund's average daily net assets at an effective
annual rate of 0.13%. Prior to January 1, 1997, the fee was calculated as a
percentage of each Fund's 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):
North
Mississippi New York Carolina Pennsylvania
Fund Fund Fund Fund
========================= ========= =========== ==============
Purchases $13,914 $ 98,698 $142,694 $17,494
Sales 22,542 114,931 173,363 19,597
South West
Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund
============ ========= =========== =========== ==========
Purchases $23,175 $25,171 $175,712 $29,666
Sales 36,328 23,823 213,973 39,183
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Funds, as computed on a federal income tax basis,
are as follows (000 omitted):
<TABLE>
<CAPTION>
North
Mississippi New York Carolina Pennsylvania
Fund Fund Fund Fund
================================ ============= ====================== ==============
<S> <C> <C> <C> <C>
Aggregate cost $73,775 $139,305 $398,472 $39,850
============= ====================== ==============
Gross unrealized appreciation $ 2,791 $ 7,764 $ 20,959 $ 752
Gross unrealized depreciation (136) (1,323) (1,627) (356)
------------- ---------------------- --------------
Net unrealized appreciation $ 2,655 $ 6,441 $ 19,332 $ 396
============= ====================== ==============
</TABLE>
South West
Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund
=============================== ====================== =========== ===========
Aggregate cost $160,068 $117,236 $382,979 $129,623
====================== =========== ===========
Gross unrealized appreciation $ 8,606 $ 5,429 $ 17,955 $ 7,984
Gross unrealized depreciation (666) (725) (1,373) (510)
---------------------- ----------- -----------
Net unrealized appreciation $ 7,940 $ 4,704 $ 16,582 $ 7,474
====================== =========== ===========
(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 Mississippi Fund New York Fund North Carolina Fund
---------------------- ---------------------- ------------------------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
========================================= ========= ============ ========= ============ =========== ============
<S> <C> <C> <C> <C> <C> <C>
Shares sold 420 $ 3,942 1,336 $ 14,245 11,938 $ 138,759
Shares issued to shareholders in
reinvestment of distributions 170 1,601 355 3,792 989 11,523
Shares reacquired (1,427) (13,419) (2,824) (30,108) (15,681) (182,342)
--------- ------------ --------- ------------ ----------- ------------
Net decrease (837) $ (7,876) (1,133) $(12,071) (2,754) $ (32,060)
========= ============ ========= ============ =========== ============
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
========================================= ========= ============ ========= ============ =========== ============
Shares sold 877 $ 8,180 2,667 $ 28,693 7,027 $ 82,500
Shares issued to shareholders in
reinvestment of distributions 228 2,141 415 4,457 1,060 12,349
Shares reacquired (1,776) (16,709) (4,446) (47,873) (10,276) (120,480)
--------- ------------ --------- ------------ ----------- ------------
Net decrease (671) $ (6,388) (1,364) $(14,723) (2,189) $ (25,631)
========= ============ ========= ============ =========== ============
</TABLE>
64
<PAGE>
Notes to Financial Statements - continued
<TABLE>
<CAPTION>
Class A Shares -- continued Pennsylvania Fund South Carolina Fund Tennessee Fund
------------------- --------------------------------------------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
======================================= ======== ========= ===================== ========= ===========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 379 $ 3,531 747 $ 8,956 819 $ 8,497
Shares issued to shareholders in
reinvestment of distributions 70 653 368 4,404 266 2,759
Shares reacquired (546) (5,091) (2,517) (30,161) (1,175) (12,195)
-------- --------- --------------------- --------- -----------
Net decrease (97) $ (907) (1,402) $(16,801) (90) $ (939)
======== ========= ===================== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
======================================= ======== ========= ==================== ========= ===========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 302 $ 2,857 1,071 $ 12,906 527 $ 5,493
Shares issued to shareholders in
reinvestment of distributions 70 659 395 4,764 271 2,835
Shares reacquired (213) (2,014) (1,950) (23,552) (1,692) (17,696)
-------- --------- -------------------- --------- -----------
Net increase (decrease) 159 $ 1,502 (484) $ (5,882) (894) $ (9,368)
======== ========= ==================== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Virginia Fund West Virginia Fund
------------------------- ----------------------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount
========================================= =========== ============= ====================
<S> <C> <C> <C> <C>
Shares sold 13,538 $ 151,104 537 $ 6,100
Shares issued to shareholders in
reinvestment of distributions 921 10,293 326 3,704
Shares reacquired (17,500) (195,457) (1,584) (17,969)
----------- ------------- --------------------
Net decrease (3,041) $ (34,060) (721) $ (8,165)
=========== ============= ====================
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
========================================= =========== ============= ====================
Shares sold 7,192 $ 82,090 1,206 $ 13,870
Shares issued to shareholders in
reinvestment of distributions 1,009 11,447 328 3,752
Shares reacquired (9,726) (111,003) (1,047) (11,988)
----------- ------------- --------------------
Net increase (decrease) (1,525) $ (17,466) 487 $ 5,634
=========== ============= ====================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Mississippi Fund New York Fund North Carolina Fund
------------------- ----------------------------------------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
============================================ ======== ========= ======== =========== ======== ==========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 129 $ 1,206 427 $ 4,550 800 $ 9,310
Shares issued to shareholders in
reinvestment of distributions 21 195 64 687 84 973
Shares reacquired (199) (1,876) (600) (6,395) (432) (5,013)
-------- --------- -------- ----------- -------- ----------
Net increase (decrease) (49) $ (475) (109) $(1,158) 452 $ 5,270
======== ========= ======== =========== ======== ==========
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
============================================ ======== ========= ======== =========== ======== ==========
Shares sold 295 $ 2,757 544 $ 5,859 952 $11,119
Issued in connection with the acquisition of
the Advantage Fund -- -- 1,405 14,685 -- --
Shares issued to shareholders in
reinvestment of distributions 22 208 63 676 70 821
Shares reacquired (120) (1,127) (513) (5,513) (395) (4,599)
-------- --------- -------- ----------- -------- ----------
Net increase 197 $ 1,838 1,499 $15,707 627 $ 7,341
======== ========= ======== =========== ======== ==========
</TABLE>
65
<PAGE>
Notes to Financial Statements - continued
<TABLE>
<CAPTION>
Pennsylvania Fund South Carolina Fund Tennessee Fund
------------------- -----------------------------------------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
============================================ ======== ========= ======== ========= ======== ==========
<S> <C> <C> <C> <C> <C> <C>
Shares sold 364 $ 3,410 443 $ 5,311 385 $ 4,006
Shares issued to shareholders in
reinvestment of distributions 73 686 45 537 32 331
Shares reacquired (330) (3,097) (186) (2,226) (261) (2,710)
-------- --------- -------- --------- -------- ----------
Net increase 107 $ 999 302 $ 3,622 156 $ 1,627
======== ========= ======== ========= ======== ==========
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount Shares Amount
============================================ ======== ========= ======== ========= ======== ==========
Shares sold 376 $ 3,589 575 $ 6,957 362 $ 3,771
Issued in connection with the acquisition of
the Advantage Fund 1,604 14,819 -- -- -- --
Shares issued to shareholders in
reinvestment of distributions 68 642 32 384 27 284
Shares reacquired (300) (2,852) (161) (1,935) (120) (1,249)
-------- --------- -------- --------- -------- ----------
Net increase 1,748 $16,198 446 $ 5,406 269 $ 2,806
======== ========= ======== ========= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Virginia Fund West Virginia Fund
---------------------------------------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount
========================================= ======== ========= ======== ==========
<S> <C> <C> <C> <C>
Shares sold 552 $ 6,182 218 $ 2,474
Shares issued to shareholders in
reinvestment of distributions 51 567 35 397
Shares reacquired (375) (4,195) (167) (1,902)
-------- --------- -------- ----------
Net increase 228 $ 2,554 86 $ 969
======== ========= ======== ==========
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
========================================= ======== ========= ======== ==========
Shares sold 706 $ 8,043 317 $ 3,621
Shares issued to shareholders in
reinvestment of distributions 43 494 30 346
Shares reacquired (199) (2,269) (127) (1,455)
-------- --------- -------- ----------
Net increase 550 $ 6,268 220 $ 2,512
======== ========= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Class C North Carolina Fund Virginia Fund
----------------------------------------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount
========================================= =================== ======== ==========
<S> <C> <C> <C> <C>
Shares sold 191 $ 2,228 93 $ 1,033
Shares issued to shareholders in
reinvestment of distributions 24 274 9 102
Shares reacquired (350) (4,084) (114) (1,277)
------------------- -------- ----------
Net decrease (135) $(1,582) (12) $ (142)
=================== ======== ==========
Year Ended March 31, 1996 (000 Omitted) Shares Amount Shares Amount
========================================= =================== ======== ==========
Shares sold 334 $ 3,931 199 $ 2,264
Shares issued to shareholders in
reinvestment of distributions 18 205 8 92
Shares reacquired (257) (3,011) (114) (1,289)
------------------- -------- ----------
Net increase 95 $ 1,125 93 $ 1,067
=================== ======== ==========
</TABLE>
(6) Line of Credit
The Trust entered into an agreement which enables each of the Funds to
participate with other funds managed by MFS in an unsecured line of credit
with a bank which permits borrowings up to $400 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 the each of the Funds for the year ended March 31, 1997, ranged from $0 to
$4,781.
(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.
66
<PAGE>
Notes to Financial Statements - continued
Futures Contracts
<TABLE>
<CAPTION>
Unrealized
Fund Description Expiration Contracts Position Depreciation
===================== ================================== ============ =========== ===============
<S> <C> <C> <C> <C> <C>
South Carolina Fund Municipal Bond Index June 1997 20 Long $40,726
</TABLE>
At March 31, 1997, the South Carolina Fund had sufficient cash and/or
securities to cover margin requirements on open futures contracts.
The Trust also invests in indexed securities whose value may be linked to
interest rates, commodities, indices or other financial indicators. Indexed
securities are fixed-income securities whose proceeds at maturity
(principal-indexed securities) or interest rates (coupon-indexed securities)
rise and fall according to the change in one or more specified underlying
instruments. Indexed securities may be more volatile than the underlying
instrument itself. The following is a summary of such securities held at
March 31, 1997:
<TABLE>
<CAPTION>
Principal
Amount Unrealized
Fund Description Index (000 Omitted) Value Depreciation
===================== ========================================= ================================= ============= ==============
<S> <C> <C> <C> <C> <C>
South Carolina Fund Puerto Rico Telephone Authority
Rev., AMBAC, 5.87s, 2004 J.J. Kenny $1,000 $ 965,840 $ 34,160
Tennessee Fund Puerto Rico Public Building Authority,
Public Education & Health Refunding,
6.45s, 2016 PSA Municipal Swap $2,000 $1,874,880 $125,120
Puerto Rico Telephone Authority
Rev., 5.87s, 2004 J.J. Kenny $2,000 $1,931,680 $ 68,320
</TABLE>
(8) Restricted Securities
Each Fund may invest not more than 15% of its net assets in securities which
are subject to legal or contractual restrictions on resale. At March 31,
1997, the North Carolina Fund owned the following restricted security
(constituting 0.32% of its net assets). The North Carolina Fund does not have
the right to demand that such security be registered. The value of this
security is determined by valuations supplied by a pricing service.
<TABLE>
<CAPTION>
Principal
Date of Amount
Fund Description Acquisition (000 Omitted) Cost Value
===================== ===================================== ============== ============== ============= ============
<S> <C> <C> <C> <C> <C>
North Carolina Fund Pasquotank County, NC, Certificates
of Participation, MBIA, 5s, 2015 12/14/95 $1,500 $1,398,430 $1,362,780
</TABLE>
(9) Acquisition
At close of business on April 28, 1995, the New York Fund acquired all the
assets and liabilities of The New York Portfolio, a series of The Advantage
Municipal Bond Fund (the Advantage Fund). The acquisition was accomplished by
a tax free exchange of 1,405,222 Class B shares of the Fund (valued at
$14,684,566) for 1,595,965 shares of the Advantage Fund's net assets on that
date ($14,684,566), including $719,185 of unrealized depreciation, which were
combined with those of the Fund. The aggregate net assets for Class B shares
after the acquisition were $26,723,476.
At close of business on April 28, 1995, the Pennsylvania Fund acquired all
the assets and liabilities of The Pennsylvania Portfolio, a series of The
Advantage Municipal Bond Fund (the Advantage Fund). The acquisition was
accomplished by a tax free exchange of 1,603,769 Class B shares of the Fund
(valued at $14,818,825) for 1,580,698 shares of the Advantage Fund's net
assets on that date ($14,818,825), including $730,231 of unrealized
depreciation, which were combined with those of the Fund. The aggregate net
assets for Class B shares after the acquisition were $22,807,582.
67
<PAGE>
Independent Auditors' Report
To the Trustees of MFS Municipal Series Trust and Shareholders of the
Portfolios of MFS Municipal Series Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of MFS 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 (portfolios of MFS Municipal Series
Trust) as of March 31, 1997, the related statements of operations for the
year then ended, the statements of changes in net assets for the years ended
March 31, 1997 and 1996, and the financial highlights for each of the years
in the three-year period ended March 31, 1997, the two months ended March 31,
1994, and each of the years in the seven-year period ended January 31, 1994.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of the
securities owned at March 31, 1997 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
aforementioned portfolios of MFS Municipal Series Trust at March 31, 1997,
the results of their operations, the changes in their net assets, and their
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 25, 1997
------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
68
<PAGE>
MFS(R) Municipal Series Trust
Trustees
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Marshall N. Cohan - Private Investor
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery,
Brigham and Women's Hospital; Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE - Chief Executive Officer, Edmund Gibbons
Ltd.; Chairman, Bank of N.T. Butterfield & Son Ltd.
Abby M. O'Neill - Private Investor; Director, Rockefeller Financial Services,
Inc. (investment 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
Portfolio Managers
David R. King*
Geoffrey L. Schechter*
David B. Smith*
Treasurer
W. Thomas London*
Assistant Treasurer
James O. Yost*
*Affiliated with the Investment Adviser
Secretary
Stephen E. Cavan*
Assistant Secretary
James R. Bordewick, Jr.*
Custodian
State Street Bank and Trust Company
Auditors
Deloitte & Touche LLP
Investor Information
For MFS stock and bond market outlooks, call toll free:
1-800-637-4458 anytime from a touch-tone telephone.
For information on MFS mutual funds, call your financial
adviser or, for an information kit, call toll free:
1-800-637-2929 any business day from 9 a.m. to 5 p.m.
Eastern time (or leave a message anytime).
Investor Service
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day from 8
a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free:
1-800-637-6576 any business day from 9 a.m. to 5 p.m.
Eastern time. (To use this service, your phone must be
equipped with a Telecommunications Device for the Deaf.)
For share prices, account balances, and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
World Wide Web
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."
<PAGE>
MFS(R) Municipal [Dalbar logo]
Series Trust
500 Boylston Street
Boston, MA 02116-3741
MFS(R) Mississippi Municipal Bond Fund
MFS(R) New York Municipal Bond Fund
MFS(R) North Carolina Municipal Bond Fund
MFS(R) Pennsylvania Municipal Bond Fund
MFS(R) South Carolina Municipal Bond Fund
MFS(R) Tennessee Municipal Bond Fund
MFS(R) Virginia Municipal Bond Fund
MFS(R) West Virginia Municipal Bond Fund
[Logo MFS(R) INVESTMENT MANAGEMENT]
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(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
