[MFS INVESTMENT MANAGEMENT logo] Semiannual Report
September 30, 1997
MFS(R) Municipal Series Trust
For the States of: Alabama, Arkansas, California, Florida, Georgia,
Maryland, and Massachusetts
[Graphic of eyeglasses and bonds]
Learning financial basics the easy way (see page 48)
<PAGE>
Table of Contents
Letter from the Chairman ............ 1
Portfolio Managers' Overview ......... 2
Portfolio Managers' Profiles ......... 2
Fund Facts ........................... 3
Performance Summary .................. 3
Portfolio of Investments ............ 5
Financial Statements .................. 17
Notes to Financial Statements ......... 40
MFS Investment Opportunities ......... 46
The MFS Family of Funds[RegTM] ...... 47
The ABCs of Investing ............... 48
Trustees and Officers ............... 49
Highlights
[bullet] The past six months saw a dramatic decline in interest rates, driven
by a moderation in economic activity. Yields on 30-year U.S. Treasury
bonds fell 0.67%, while yields on 30-year, "AAA"-rated municipal
bonds fell 0.50%.
[bullet] The Funds benefited from the continuing compression of yield spreads
between credit qualities, as the spread between insured "AAA"- and
"BBB"-rated bonds tightened from approximately 0.40% to approximately
0.20%, causing lower-rated investment-grade bonds to outperform.
[bullet] This compression stemmed from the improvement in the overall fiscal
condition of state and local governments and from the fact that over
half of all new-issue municipal bonds now come to the market insured
and are thus rated "AAA."
[bullet] The Funds have maintained a duration (or sensitivity to changes in
interest rates) that is neutral to slightly long relative to their
benchmark index, as our outlook for interest rates has turned
positive.
<PAGE>
Letter from the Chairman
[Photo of A. Keith Brodkin]
Dear Shareholders: An unprecedented combination of generally positive factors
has helped the U.S. economy enjoy a sustained period of relative stability and
moderate growth in which thousands of new jobs have been created every month,
inflation remains under control, and the investment climate -- at least until
now -- has beenfavorable. For example, the increased use of technology and other
productivity enhancements, as well as corporate restructuring and global
competition, is improving companies' balance sheets and helping control
inflation. Meanwhile, borrowing by corporations and governments continues to
decline, while consumer confidence is increasing, although consumer debt levels
are still uncomfortably high. The rapid pace of growth seen in the first quarter
slowed in the second quarter, to an annual rate of 3.3%. While real
(inflation-adjusted) growth could moderate further in the third quarter, we
believe economic momentum will carry well into the first quarter of 1998.
Although the economy appears to be in a modest lull, the money supply is
increasing at a rapid rate, and it still appears that Christmas sales could be
quite good. Because economic growth continues to be impressive, markets are
likely to begin focusing on the Federal Reserve Board's (the Fed's) willingness
to raise interest rates.
In the fixed-income markets, we have been encouraged by the Fed's decision not
to raise short-term interest rates. Inflation remains under control, and events
in the Pacific Rim countries appear to be clearly disinflationary. At the same
time, we are concerned that tight labor markets could lead to inflationary
pressures. As a result, our near-term outlook is neutral to modestly positive.
However, it is imperative that investors not lose sight of the potential for a
strengthening economy, which would encourage the Fed to tighten monetary
conditions.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
[Signature of A. Keith Brodkin]
A. Keith Brodkin
Chairman and President
October 15, 1997
1
<PAGE>
Portfolio Managers' Overview
Dear Shareholders:
The six-month period ended September 30, 1997, was marked by a dramatic decline
in interest rates. General market interest rates, as measured by the yield on
the 30-year U.S. Treasury bond, fell from 7.07% on April 1, 1997, to 6.40% on
September 30, a drop of 67 basis points (0.67%). Driving this steep decline in
interest rates was a moderation in the level of economic activity from the
torrid pace experienced during the first quarter of 1997. This, combined with a
continuation of low consumer inflation, led to a diminished probability of the
Fed's further tightening monetary policy in the near term. As fears of further
tightening faded, interest rates marched lower.
Municipal bond yields also declined during this period. The yield on 30-year
general-obligation bonds rated "AAA" by Standard & Poor's fell from 5.75% on
April 1, 1997, to 5.25% on September 30, a drop of 50 basis points (0.50%). This
resulted in a yield ratio of 30-year municipals to comparable-maturity Treasury
securities of 82%, slightly higher than the 81% ratio at the end of March.
(Principal value and interest on Treasury securities are guaranteed by the U.S.
government if held to maturity.) The modest increase is primarily attributable
to a surge in the issuance of tax-exempt bonds during the last half of
September, as issuers took advantage of the year's lowest interest rates.
The main factors impacting the performance of municipal bonds over this period
were the general decline in interest rates and the continued compression of
yield spreads between credit qualities. During the period, the spread between
insured "AAA"- and "BBB"-rated bonds tightened from approximately 40 basis
points (0.40%) to approximately 20 basis points (0.20%), causing lower-rated
investment-grade bonds to outperform. This compression stemmed from a
combination of factors. First, the overall fiscal condition of state and local
governments is the strongest it has been in several years, owing to a healthy
economy and generally sound fiscal practices. Second, over half of all new-issue
municipal bonds now come insured and are thus rated "AAA." These factors,
combined with investors' insatiable appetite for yield, have driven yield
spreads to historically low levels.
During the past six months, we have generally kept the Funds' duration (or
measure of interest-rate sensitivity) neutral to slightly long relative to the
benchmark Lehman Brothers Municipal Bond Index (an unmanaged index of national
municipal bond investments rated "Baa" or higher) as our outlook for interest
rates has turned positive. We have also been focusing on bonds with maturities
between 15 and 20 years that we believe provide attractive risk/reward
opportunities and on lower-investment-grade issues that have outperformed the
general market due to spread compression.
As long as the economy continues on its noninflationary, moderate growth path,
we will remain optimistic about the future course of interest rates. If
inflationary pressures rise or the Fed makes a "pre-emptive strike" against
inflation by tightening monetary policy, we will endeavor to take any steps
necessary to reduce the Funds' interest-rate sensitivity in an effort to protect
shareholders' capital.
Respectfully,
[Signatures of Geoffrey L. Schechter and David B. Smith]
Geoffrey L. Schechter David B. Smith
Portfolio Manager Portfolio Manager
Portfolio Managers' Profiles
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 Chartered Financial Analyst (C.F.A.) and currently
has portfolio management responsibilities for the Alabama and Florida state
Funds.
David B. Smith began his career at MFS in 1988 as a Senior Treasury Analyst in
the Corporate Treasury Department. A graduate of Union College and the Babson
College Graduate School of Business Administration, he was named a research
analyst in the Fixed Income Department in 1989, Investment Officer in 1990,
Assistant Vice President - Investments in 1991, and Vice President -
Investments in 1993. Mr. Smith is a Chartered Financial Analyst (C.F.A.) and
currently has portfolio management responsibilities for the Arkansas,
California, Georgia, Maryland, and Massachusetts state Funds.
2
<PAGE>
Fund Facts
Objective: 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. A small
portion of income may be subject to state, federal, and/or
alternative minimum tax. Capital gains, if any, are subject to a
capital gains tax.
Commencement of investment operations:
Alabama February 1, 1990
Arkansas February 3, 1992
California June 18, 1985
Florida February 3, 1992
Georgia June 6, 1988
Maryland October 31, 1984
Massachusetts April 9, 1985
Net assets as of September 30, 1997:
Alabama $ 84.3 million
Arkansas $146.5 million
California $271.8 million
Florida $ 94.3 million
Georgia $ 71.4 million
Maryland $146.8 million
Massachusetts $254.0 million
Class inception:
Alabama Class A February 1, 1990
Class B September 7, 1993
Arkansas Class A February 3, 1992
Class B September 7, 1993
California Class A June 18, 1985
Class B September 7, 1993
Class C January 3, 1994
Florida Class A February 3, 1992
Class B September 7, 1993
Georgia Class A June 6, 1988
Class B September 7, 1993
Maryland Class A October 31, 1984
Class B September 7, 1993
Massachusetts Class A April 9, 1985
Class B September 7, 1993
Performance Summary
Because mutual funds generally are designed for investors with long-term goals,
we have provided cumulative results as well as the average annual total returns
for Class A, Class B, and Class C shares for the applicable time periods.
Average Annual and Cumulative Total Rates of Return as of September 30, 1997
<TABLE>
<CAPTION>
Class A
-------------------------------------------------
MFS[RegTM] Alabama Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- ---------------------------------------- ---------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.05% +8.90% +39.93% +77.81%
- --------------------------------------- ------- ------ -------- -------
Average Annual Total Return -- +8.90% +6.95% +7.80%
- --------------------------------------- ------- ------ -------- -------
SEC Results -- +3.70% +5.91% +7.12%
- --------------------------------------- ------- ------ -------- -------
<CAPTION>
Class B
-----------------------------------------------
MFS[RegTM] Alabama Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- ---------------------------------------- ---------- -------- ------------ --------------
<S> <C> <C> <C> <C>
Cumulative Total Return +5.65% +8.07% +35.41% +71.96%
- --------------------------------------- ------- ------ -------- -------
Average Annual Total Return -- +8.07% +6.25% +7.33%
- --------------------------------------- ------- ------ -------- -------
SEC Results -- +4.07% +5.93% +7.33%
- --------------------------------------- ------- ------ -------- -------
<FN>
*For the period from the commencement of the Fund's investment operations,
February 1, 1990, through September 30, 1997.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Class A
------------------------------------------------
MFS[RegTM] Arkansas Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- ----------------------------------------- ---------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.23% +8.39% +35.92% +44.17%
- ---------------------------------------- ------- ------ -------- -------
Average Annual Total Return -- +8.39% +6.33% +6.68%
- ---------------------------------------- ------- ------ -------- -------
SEC Results -- +3.22% +5.30% +5.77%
- ---------------------------------------- ------- ------ -------- -------
<CAPTION>
Class B
-----------------------------------------------
MFS[RegTM] Arkansas Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- ----------------------------------------- ---------- -------- ------------ --------------
<S> <C> <C> <C> <C>
Cumulative Total Return +5.85% +7.62% +31.01% +38.98%
- ---------------------------------------- ------- ------ -------- -------
Average Annual Total Return -- +7.62% +5.55% +5.99%
- ---------------------------------------- ------- ------ -------- -------
SEC Results -- +3.62% +5.22% +5.85%
- ---------------------------------------- ------- ------ -------- -------
<FN>
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through September 30, 1997.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Class A
----------------------------------------------
MFS[RegTM] California Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ------------------------------------------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Cumulative Total Return +7.47% +8.97% +37.85% +124.85%
- ------------------------------------------ ------- ------ -------- ---------
Average Annual Total Return -- +8.97% +6.63% +8.44%
- ------------------------------------------ ------- ------ -------- ---------
SEC Results -- +3.73% +5.59% +7.91%
- ------------------------------------------ ------- ------ -------- ---------
<CAPTION>
Class B
----------------------------------------------
MFS[RegTM] California Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ------------------------------------------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Cumulative Total Return +7.03% +8.07% +32.63% +116.29%
- ------------------------------------------ ------- ------ -------- ---------
Average Annual Total Return -- +8.07% +5.81% +8.02%
- ------------------------------------------ ------- ------ -------- ---------
SEC Results -- +4.07% +5.49% +8.02%
- ------------------------------------------ ------- ------ -------- ---------
</TABLE>
3
<PAGE>
Performance Summary - continued
<TABLE>
<CAPTION>
Class C
----------------------------------------------
MFS California Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ------------------------------------ ---------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.92% +7.88% +32.75% +116.49%
- ----------------------------------- ------- ------ -------- ---------
Average Annual Total Return -- +7.88% +5.83% +8.03%
- ----------------------------------- ------- ------ -------- ---------
SEC Results -- +6.88% +5.83% +8.03%
- ----------------------------------- ------- ------ -------- ---------
</TABLE>
<TABLE>
<CAPTION>
Class A
------------------------------------------------
MFS[RegTM] Florida Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- ---------------------------------------- ---------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.41% +7.21% +37.33% +45.71%
- --------------------------------------- ------- ------ -------- -------
Average Annual Total Return -- +7.21% +6.55% +6.88%
- --------------------------------------- ------- ------ -------- -------
SEC Results -- +2.12% +5.50% +5.97%
- --------------------------------------- ------- ------ -------- -------
<CAPTION>
Class B
-----------------------------------------------
MFS[RegTM] Florida Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- ---------------------------------------- ---------- -------- ------------ --------------
<S> <C> <C> <C> <C>
Cumulative Total Return +5.88% +6.25% +32.00% +40.17%
- --------------------------------------- ------- ------ -------- -------
Average Annual Total Return -- +6.25% +5.71% +6.15%
- --------------------------------------- ------- ------ -------- -------
SEC Results -- +2.25% +5.39% +6.01%
- --------------------------------------- ------- ------ -------- -------
<FN>
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through September 30, 1997.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Class A
------------------------------------------------
MFS[RegTM] Georgia Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- ---------------------------------------- ---------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Cumulative Total Return +7.38% +9.20% +35.60% +95.37%
- --------------------------------------- ------- ------ -------- -------
Average Annual Total Return -- +9.20% +6.28% +7.45%
- --------------------------------------- ------- ------ -------- -------
SEC Results -- +4.04% +5.26% +6.89%
- --------------------------------------- ------- ------ -------- -------
<CAPTION>
Class B
-----------------------------------------------
MFS[RegTM] Georgia Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- ---------------------------------------- ---------- -------- ------------ --------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.98% +8.26% +31.19% +89.03%
- --------------------------------------- ------- ------ -------- -------
Average Annual Total Return -- +8.26% +5.58% +7.07%
- --------------------------------------- ------- ------ -------- -------
SEC Results -- +4.26% +5.26% +7.07%
- --------------------------------------- ------- ------ -------- -------
*For the period from the commencement of the Fund's investment operations, June
6, 1988, through September 30, 1997.
</TABLE>
<TABLE>
<CAPTION>
Class A
----------------------------------------------
MFS[RegTM] Maryland Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ----------------------------------------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.93% +8.17% +32.13% +107.26%
- ---------------------------------------- ------- ------ -------- ---------
Average Annual Total Return -- +8.17% +5.73% +7.56%
- ---------------------------------------- ------- ------ -------- ---------
SEC Results -- +3.03% +4.70% +7.04%
- ---------------------------------------- ------- ------ -------- ---------
<CAPTION>
Class B
----------------------------------------------
MFS[RegTM] Maryland Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ----------------------------------------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.58% +7.46% +28.30% +101.17%
- ---------------------------------------- ------- ------ -------- ---------
Average Annual Total Return -- +7.46% +5.11% +7.24%
- ---------------------------------------- ------- ------ -------- ---------
SEC Results -- +3.46% +4.78% +7.24%
- ---------------------------------------- ------- ------ -------- ---------
</TABLE>
<TABLE>
<CAPTION>
Class A
----------------------------------------------
MFS[RegTM] Massachusetts Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ---------------------------------------------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.66% +8.49% +35.15% +114.70%
- --------------------------------------------- ------- ------ -------- ---------
Average Annual Total Return -- +8.49% +6.21% +7.94%
- --------------------------------------------- ------- ------ -------- ---------
SEC Results -- +3.31% +5.19% +7.41%
- --------------------------------------------- ------- ------ -------- ---------
<CAPTION>
Class B
----------------------------------------------
MFS[RegTM] Massachusetts Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- ---------------------------------------------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.31% +7.77% +31.44% +108.61%
- --------------------------------------------- ------- ------ -------- ---------
Average Annual Total Return -- +7.77% +5.62% +7.63%
- --------------------------------------------- ------- ------ -------- ---------
SEC Results -- +3.77% +5.30% +7.63%
- --------------------------------------------- ------- ------ -------- ---------
</TABLE>
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share SEC results include the maximum 4.75% sales charge. Class B share
SEC results reflect the applicable contingent deferred sales charge (CDSC),
which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C
shares have no initial sales charge but, along with Class B shares, have higher
annual fees and expenses than Class A shares. Class C share purchases are
subject to a 1% CDSC if redeemed within 12 months of purchase.
Class B and Class C 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 inception of Class B 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. The Class A share performance included within
the Class B and Class C share SEC performance has been adjusted to reflect the
CDSC generally applicable to Class B and Class C shares rather than the initial
sales charge generally applicable to Class A shares.
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.
4
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS ALABAMA MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 11.2%
Commonwealth of Puerto Rico, Aqueduct & Sewer
Authority Rev., 5s, 2015 $1,300 $ 1,256,671
Hoover, AL, AMBAC, 5s, 2020 1,120 1,071,941
Huntsville, AL, 5.5s, 2020 1,000 1,001,310
Shelby County, AL, 7.4s, 2007 1,000 1,113,790
Shelby County, AL, 7.7s, 2017 800 887,024
Shelby County, AL, MBIA, 0s, 2011 3,000 1,319,100
State of Alabama, 0s, 2004 2,500 1,767,675
State of Alabama, 0s, 2006 1,165 710,312
State of Alabama, 7.1s, 2010 250 272,722
------------
$ 9,400,545
- ------------------------------------------------------------------------------------
State and Local Appropriation - 5.6%
Lawrence County, AL, Public Building Authority
(County Jail), 5s, 2027 $1,720 $ 1,626,036
Montgomery County, AL, Department of Human
Resources Rev., 7s, 2007 1,000 1,105,000
Puerto Rico Public Buildings Authority, 5.5s, 2021 500 507,320
Puerto Rico Public Buildings Authority, Education
& Health, 5.6s, 2008 500 530,445
Puerto Rico Public Buildings Authority, Education
& Health, 5.25s, 2021 1,000 970,900
------------
$ 4,739,701
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 11.9%
Alabama Building Renovation Finance Authority
Rev., (Fitch Light), 7.45s, 2011 $1,500 $ 1,653,540
Alexander City, AL, 0s, 2001 1,000 348,530
Alexander City, AL, 0s, 2001 1,000 324,110
Alexander City, AL, 0s, 2001 1,250 376,738
Baldwin County, AL, Eastern Shore Health Care
Authority (Thomas), 8.5s, 2001 1,000 1,153,220
Birmingham, AL, Historical Preservation Authority
Rev.(Kelly Ingram/Civil Rights), 7.2s, 2001 1,000 1,108,840
Birmingham, AL, Waterworks & Sewer Board Rev.,
7.2s, 2000 500 541,770
Gadsden East, AL, Medical Clinic Board Rev.
(Baptist Hospital), 7.8s, 2001 2,000 2,295,220
Hoover, AL, Board of Education, AMBAC,
6.625s, 2001 1,000 1,091,270
Puerto Rico Highway & Transportation Authority,
6.5s, 2002 1,000 1,111,610
------------
$10,004,848
- ------------------------------------------------------------------------------------
Airport and Port Revenue - 8.0%
Alabama Docks Department Facilities Rev., MBIA,
5.375s, 2017 $1,000 $ 982,500
Alabama Docks Department Facilities Rev., MBIA,
Refunding, 5.5s, 2022 1,000 976,170
Alabama, Docks Department, Docks Facilities Rev.,
BIGI, 7.6s, 2012 1,600 1,685,712
Birmingham, AL, Airport Rev., AMBAC,
5.25s, 2020 1,000 976,590
Mobile, AL, Airport Authority, Rev., 7.375s, 2012 1,000 1,081,710
Mobile, AL, Airport Authority Rev., 8.875s, 2015 975 1,074,099
------------
$ 6,776,781
- ------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 2.4%
DeKalb & Cherokee County, AL, Gas Rev.,
AMBAC, 5.4s, 2016 $2,000 $ 1,997,380
- ------------------------------------------------------------------------------------
Municipal Bonds - continued
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
Health Care Revenue - 5.9%
Baldwin County, AL, Eastern Shore Health Care
(Thomas Hospital), 6.75s, 2015 $1,000 $ 1,078,360
Cullman, AL, Medical Park South Clinic,
"A", 6.5s, 2023 1,000 1,039,500
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), 7s, 2015 695 754,596
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), 7s, 2015 2,030 2,146,624
------------
$ 5,019,080
- ------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 10.0%
Butler, AL, Industrial Developement Board, Solid
Waste Rev. (James River), 8s, 2028 $1,000 $ 1,136,540
Camden, AL, Industrial Development Board
Pollution Control Rev. (Macmillian Bloedel),
7.75s, 2009 500 547,935
Courtland, AL, Industrial Development Board, Solid
Waste Disposal Rev. (Champion International),
5.9s, 2017 1,000 1,019,740
Courtland, AL, Industrial Development Board, Solid
Waste Disposal Rev. (Champion International),
7.75s, 2020 1,485 1,599,063
Mobile, AL, Industrial Development Board, Dock &
Wharf Rev. (Ideal Basic Industries), 6.75s, 2004 270 271,517
Mobile, AL, Industrial Development Board, Dock &
Wharf Rev. (Ideal Basic Industries), 6.875s, 2009 1,075 1,081,461
Piedmont, AL, Industrial Development Board Rev.
(Springs Industries), 8.25s, 2010 1,000 1,100,560
Tarrant City, AL, Industrial Development Board
Rev. (Vulcan Materials), 7.5s, 2011 1,500 1,639,725
------------
$ 8,396,541
- ------------------------------------------------------------------------------------
Insured Health Care Revenue - 9.4%
Alabama Special Care Facilities Financing
Authority, (Daughters of Charity), AMBAC,
5s, 2025 $1,000 $ 928,950
Alabama Special Care Facilities Financing
Authority, (Daughters of Charity), AMBAC,
5s, 2025 1,500 1,401,570
Huntsville, AL, Health Care Facilities Rev., MBIA,
6.375s, 2022 850 918,833
Lauderdale County & Florence, AL, (Eliza Coffee
Memorial Hospital), MBIA, 5.75s, 2014 1,000 1,031,840
Montgomery AL Special Care Facilities (Baptist
Medical), FSA, 5.375s, 2019 1,150 1,141,904
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), AMBAC,
5.875s, 2016 1,000 1,038,560
University of Alabama, Hospital Rev.
(Birmingham), MBIA, 5s, 2014 1,500 1,451,370
------------
$ 7,913,027
- ------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.2%
Alabama Housing Finance Authority, Multi-Family
Residential Development Rev. (St. Jude), FHA,
7.25s, 2023 $1,395 $ 1,502,233
Puerto Rico Housing Finance Corp., Multi-Family
Mortgage Rev., 7.5s, 2015 355 373,968
------------
$ 1,876,201
- ------------------------------------------------------------------------------------
</TABLE>
5 - MAL
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Single Family Housing Revenue - 5.4%
Alabama Housing Finance Authority, Single Family
Mortgage Rev., Collateral Home Mortgage
Program, GNMA, 5.7s, 2015 $1,700 $ 1,756,678
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 6.55s, 2014 985 1,058,393
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 7.4s, 2022 695 721,514
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 7.5s, 2022 455 479,370
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 7.75s, 2022 365 383,593
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 7.6s, 2022 150 159,822
------------
$ 4,559,370
- ------------------------------------------------------------------------------------------
Universities - 7.1%
Alabama Agriculture & Mechanics University,
MBIA, 5.75s, 2013 $ 500 $ 521,505
Alabama Agriculture & Mechanics University,
MBIA, 5.5s, 2020 2,545 2,561,263
Alabama, Board of Education Rev., (Shelton State
Community College), MBIA, 6s, 2014 1,000 1,066,740
Homewood, AL, Educational Building Authority,
Educational Facilities Rev. (Samford University),
6.5s, 2016 1,000 1,075,330
University of Southern Alabama, Tuition Rev.,
AMBAC, 5s, 2015 775 747,115
------------
$ 5,971,953
- ------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 15.7%
Alabama Water Pollution Control Authority,
7.75s, 2012 $ 890 $ 944,415
Alabama Water Pollution Control Authority,
AMBAC, 5.5s, 2020 1,500 1,506,375
Arab, AL, Waterworks Board, Water Rev., MBIA,
7.05s, 2016 1,000 1,098,470
Bessemer, AL, Water Rev., AMBAC, 5.75s, 2026 1,000 1,028,550
Birmingham, AL, Waterworks & Sewer Board Rev.,
5.375s, 2020 2,000 1,988,320
Fairview, AL, Water Rev. (East Cullman), AMBAC, 8s, 2020 1,000 1,063,250
Jefferson County, AL, Sewer Rev., FGIC, 5.375s, 2027 1,000 990,640
Limestone County, AL, Water Authority Rev.,
FGIC, 7.7s, 2019 900 937,935
Limestone County, AL, Water Authority Rev.,
FGIC, 5.5s, 2026 2,650 2,664,601
Madison, AL, Water & Waste Board, MBIA, 5.5s, 2019 1,000 1,005,300
------------
$13,227,856
- ------------------------------------------------------------------------------------------
Other - 3.1%
Birmingham, AL, Downtown Redevelopment
Authority, Social Security Administration Building
Rev., 0s, 2010 $2,435 $ 2,601,043
- ------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $76,274,913) $82,484,326
- ------------------------------------------------------------------------------------------
Floating Rate Demand Note - 0.5%
- ------------------------------------------------------------------------------------------
Uinta County, WY, Pollution Control Rev.
(Chevron), due 10/01/97, at Identified Cost $ 400 $ 400,000
- ------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $76,674,913) $82,884,326
Other Assets, Less Liabilities - 1.6% 1,367,310
- ------------------------------------------------------------------------------------------
Net assets - 100.0% $84,251,636
- ------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS ARKANSAS MUNICIPAL BOND FUND
Municipal Bonds - 97.4%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 3.8%
Arkansas College Savings, "A", 0s, 2009 $1,146 $ 638,471
Arkansas College Savings, "A", 0s, 2015 2,575 999,847
Arkansas College Savings, "A", 0s, 2017 2,590 886,324
Arkansas College Savings, "B", 0s, 2012 1,200 559,020
Arkansas College Savings, "B", 0s, 2013 1,000 438,840
Arkansas College Savings, "B", 0s, 2014 1,150 474,950
Arkansas College Savings, "B", 0s, 2015 1,600 621,264
Commonwealth of Puerto Rico, 5.4s, 2025 1,000 988,720
------------
$ 5,607,436
- -------------------------------------------------------------------------------------
State and Local Appropriation - 5.9%
Arkansas Development Finance Authority,
Correctional Facilities Rev., MBIA, 7.125s, 2010 $2,000 $ 2,212,300
Arkansas Development Finance Authority,
Local Government Rev., 7.1s, 2008 2,440 2,666,505
Arkansas Development Finance Authority,
Single Family Mortgage Rev., 0s, 2011 5,000 1,853,950
Puerto Rico Public Buildings Authority, 5s, 2027 2,000 1,908,000
------------
$ 8,640,755
- -------------------------------------------------------------------------------------
Refunded and Special Obligations - 14.9%
Arkansas Development Finance Authority, Water &
Sewer Rev., MBIA, 7s, 2001 $2,900 $ 3,200,701
Arkansas Development Finance Authority, Water &
Sewer Rev., MBIA, 6.4s, 2002 2,000 2,194,600
Arkansas Housing Development Agency, Single
Family Mortgage Rev., ETM, 8.375s, 2010 1,000 1,310,000
Arkansas Waste Disposal & Pollution Control Rev.,
6.25s, 2002 4,000 4,336,560
Arkansas Water Resources Development Authority,
6.375s, 2002 1,000 1,075,750
Beaver, AR, Water District, Benton & Washington
Counties, Water Rev., 6.625s, 1999 500 535,230
Harrison, AR, Residential Housing Facilities Board,
Single Family Mortgage Rev., FGIC, ETM,
7.4s, 2011 4,000 4,921,440
Sherwood, AR, Residential Housing Facilities
Board, Single Family Mortgage Rev., MBIA,
7.5s, 2010 1,250 1,537,662
University of Arkansas, University Rev., 7.2s, 2000 2,500 2,765,850
------------
$21,877,793
- -------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 14.5%
Jefferson County, AR, Pollution Control Rev.
(Arkansas Power & Light), 6.3s, 2018 $1,050 $ 1,117,011
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2010 2,000 2,337,440
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2010 1,000 1,094,490
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2015 6,000 6,995,880
Pope County, AR, Solid Waste Disposal Rev.
(Arkansas Power & Light), 8s, 2020 1,780 1,970,745
Pope County, AR, Solid Waste Disposal Rev.
(Arkansas Power & Light), FSA, 8s, 2021 3,000 3,329,640
Puerto Rico Electric Power Authority Power,
MBIA, 5.5s, 2025 3,000 3,009,090
West Memphis, AR, Public Utility Systems Rev.,
MBIA, 6.6s, 2009 1,250 1,382,762
------------
$21,237,058
- -------------------------------------------------------------------------------------
</TABLE>
6 - MAR
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - 6.6%
Baxter County, AR, Hospital Rev., 7.5s, 2021 $ 3,145 $ 3,479,471
Little Rock, AR, Health Facilities Board (Baptist
Medical Center), 6.9s, 2009 1,400 1,634,388
Little Rock, AR, Health Facilities Board (Baptist
Medical Center), 7s, 2017 3,250 3,517,052
Pulaski County, AR, Hospital Rev. (Children's
Hospital), 6.15s, 2017 1,000 1,042,400
-------------
$ 9,673,311
- ------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 6.0%
Blytheville, AR, Solid Waste Recycling & Sewerage
Treatment Rev. (Nucor), 6.375s, 2023 $ 3,565 $ 3,806,457
Camden, AR, Environmental Improvement Rev.
(International Paper), 7.625s, 2018 1,000 1,169,610
Jonesboro, AR, Industrial Development Rev.
(Anheuser-Busch), 6.5s, 2012 3,500 3,852,660
-------------
$ 8,828,727
- ------------------------------------------------------------------------------------------
Insured Health Care Revenue - 8.7%
Arkansas Development Finance Authority, Health
Facilities Rev. (Sisters of Mercy), MBIA, 5s, 2013 $ 6,340 $ 6,359,020
Arkansas Development Finance Authority, Health
Facilities Rev. (Sisters of Mercy), MBIA, 5s, 2019 5,500 5,309,150
Pulaski County, AR, Health Facilities Board Rev.
(Sisters of Charity), MBIA, 6s, 2012 1,000 1,061,870
-------------
$ 12,730,040
- ------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.3%
West Memphis, AR, Public Facilities Board
Mortgage Rev., AMBAC, 0s, 2011 $ 1,090 $ 485,508
- ------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.9%
Little Rock, AR, Hotel & Restaurant Gross
Receipts Tax Rev., 7.375s, 2015 $ 4,790 $ 5,946,258
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2026 1,175 1,173,414
-------------
$ 7,119,672
- ------------------------------------------------------------------------------------------
Single Family Housing Revenue - 16.2%
Arkansas Development Finance Authority., Single
Family Mortgage Rev., GNMA, 7.4s, 2023 $ 1,255 $ 1,330,752
Arkansas Development Finance Authority., Single
Family Mortgage Rev., GNMA, FNMA,
6.7s, 2027 2,765 2,960,181
Arkansas Development Finance Authority, Single
Family Mortgage Rev., GNMA, 7.45s, 2027 1,695 1,887,823
Arkansas Housing Development Agency,
Residential Mortgage Rev., 0s, 2015 18,575 2,834,545
Jefferson County, AR, Health Care & Residential
Facilities Board, 7.25s, 2011 955 1,012,157
Lonoke County, AR, Residential Housing Facilities
Board, 7.375s, 2011 227 246,882
Lonoke County, AR, Residential Housing Facilities
Board, 7.9s, 2011 903 1,003,342
Mississippi County, AR, Public Facilities Board,
Mortgage Rev., 7.2s, 2010 1,110 1,235,519
North Little Rock, AR, Residential Housing
Facilities Board, 0s, 2010 21,830 9,128,869
Pulaski County, AR, Public Facilities Board Rev.,
0s, 2014 2,750 1,062,848
Saline County, AR, Residential Housing Facilities
Board, 7.875s, 2011 970 1,049,618
-------------
$ 23,752,536
- ------------------------------------------------------------------------------------------
Municipal Bonds - continued
- ------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------- ----------------- -------------
Student Loan Revenue - 2.7%
Arkansas Student Loan Authority Rev., 7.15s, 2002 $ 650 $ 698,490
Arkansas Student Loan Authority Rev., 6.75s, 2006 1,070 1,126,143
Arkansas Student Loan Authority Rev., 6.25s, 2010 2,000 2,106,640
-------------
$ 3,931,273
- ------------------------------------------------------------------------------------------
Universities - 0.7%
Conway, AR, Public Facilities Rev. (Hendrix
College), 5.85s, 2016 $ 1,000 $ 1,034,070
- ------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 12.2%
Arkansas Development Finance Authority,
Revolving Loan Fund, 5.85s, 2019 $ 2,130 $ 2,201,696
Arkansas Development Finance Authority, Water &
Sewer Rev., MBIA, 5s, 2012 1,000 1,000,070
Arkansas Development Finance Authority, Water &
Sewer Rev., MBIA, 5s, 2015 2,000 1,960,560
Arkansas Water Resources Development Authority,
6.375s, 2021 1,000 1,062,590
Beaver, AR, Water District, Benton & Washington
Counties, Water & Sewer Rev., MBIA, 5.85s, 2008 2,000 2,146,380
Fort Smith, AR, Water & Sewer Rev., MBIA,
6s, 2012 2,250 2,411,528
Puerto Rico Aqueduct & Sewer Authority Rev., 5s,
2019 1,000 947,840
Russellville, AR, Water Systems Rev., AMBAC,
6.25s, 2012 1,365 1,458,270
South Sebastian County, AR, Water Users Assn.,
5.95s, 2016 2,425 2,478,956
South Sebastian County, AR, Water Users Assn.,
6.15s, 2023 1,000 1,028,930
Texarkana, AR, Public Facilities Board, Waterworks
Facilities Rev., 5.2s, 2010 1,000 1,029,160
-------------
$ 17,725,980
- ------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $132,322,118) $142,644,159
- ------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.6%
- ------------------------------------------------------------------------------------------
Harris County, TX, Hospital Rev. (Methodist
Hospital), due 10/01/97 $ 500 $ 500,000
Uinta County, WY, Pollution Control Rev.
(Chevron), due 10/01/97 1,900 1,900,000
- ------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,400,000
- ------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $134,722,118) $145,044,159
Other Assets, Less Liabilities - 1.0% 1,489,795
- ------------------------------------------------------------------------------------------
Net assets - 100.0% $146,533,954
- ------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS CALIFORNIA MUNICIPAL BOND FUND
Municipal Bonds - 96.5%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 11.3%
Cabrillo, CA, Unified School District, AMBAC,
0s, 2016 $3,225 $1,178,544
Center, CA, Unified School District, MBIA,
0s, 2015 2,270 871,226
Lucia Mar, CA, Unified School District, FGIC,
0s, 2013 1,350 588,182
</TABLE>
7 - MCA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - continued
Lucia Mar, CA, Unified School District, FGIC,
0s, 2014 $1,200 $ 492,048
Palos Verdes, CA, Library District, 6.7s, 2016 1,250 1,342,462
Redwood City, CA, Elementary School District,
FGIC, 5.5s, 2010 1,150 1,224,911
State of California, 10s, 2007 1,055 1,498,680
State of California, 6.5s, 2010 1,235 1,431,093
State of California, 5.5s, 2013 3,000 3,163,290
State of California, 5.25s, 2014 1,000 1,008,030
State of California, 5.25s, 2016 1,795 1,799,883
State of California, AMBAC, 7.2s, 2008 1,600 1,933,776
State of California, AMBAC, 5s, 2009 2,910 2,970,732
State of California, AMBAC, 6.3s, 2010 6,000 6,850,800
State of California, AMBAC, 7s, 2010 2,000 2,419,240
Walnut Valley, CA, AMBAC, 6s, 2011 1,600 1,773,136
------------
$30,546,033
- --------------------------------------------------------------------------------------
State and Local Appropriation - 13.5%
Banning, CA, Certificates of Participation, Water
System Improvement, AMBAC, 8s, 2019 $1,000 $ 1,346,650
California Public Works Board, Lease Rev.,
5.55s, 2010 4,000 4,237,840
California Public Works Board, Lease Rev.,
7.4s, 2010 5,000 6,168,650
Fortuna, Parlier & Susanville, CA, Certificates of
Participation, "B", 7.375s, 2017 930 996,030
Grossmont, CA, Union High School District,
Certificates of Participation, MBIA, 0s, 2006 6,000 3,920,880
Los Angeles, CA, Building Authority, MBIA,
5.625s, 2011 3,375 3,611,183
Los Angeles, CA, Convention & Exhibition Center
Authority, Certificates of Participation, AMBAC,
0s, 2005 2,400 1,668,720
Pasadena, CA, Certificates of Participation
(Pasadena Parking Facilities), 6.25s, 2018 3,460 3,851,222
Pomona, CA, Public Financing, 6.25s, 2010 4,020 4,446,241
San Joaquin County, CA, Certificates of
Participation (General Hospital), 6.625s, 2020 2,000 2,157,600
Tulare County, CA, Certificates of Participation
(Capital Improvements), MBIA, 6s, 2016 1,000 1,057,230
Visalia, CA, Utility Systems Department,
Certificates of Participation, MBIA, 0s, 2005 4,655 3,205,805
------------
$36,668,051
- --------------------------------------------------------------------------------------
Refunded and Special Obligations - 15.3%
Apple Valley, CA, Hospital Rev. (St. Mary's),
Certificates of Participation, 6.75s, 2001 $4,880 $ 5,431,147
California Educational Facilities Authority Rev. (St.
Mary's), 7.5s, 2000 1,000 1,116,510
California Health Facilities Financing Authority
Rev. (AIDS Hospice Foundation), 7.15s, 2000 2,960 3,214,145
California Health Facilities Financing Authority
Rev. (St. Joseph's), 6.75s, 2021 2,710 3,001,271
California Statewide Community Development
Authority Rev. (United Western Medical),
Certificates of Participation, 6.75s, 2001 3,000 3,349,290
Corona, CA, Certificates of Participation (Corona
Community Hospital), 8s, 2005 585 718,169
Desert Hospital District, CA, Insured Hospital Rev.
(Desert Hospital), 8.904s, 2020 3,000 3,630,840
Hemet Valley, CA, Hospital District Rev. (Moreno
Valley Regional Medical Center), 8.25s, 1998 4,030 4,241,454
Municipal Bonds - continued
- --------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------
Refunded and Special Obligations - continued
Los Angeles, CA, Convention & Exhibition Center
Authority, Certificates of Participation, 9s, 2005 $1,900 $ 2,498,234
Mojave, CA, Water Agency Rev. (Morongo Basin),
6.6s, 2002 1,400 1,572,466
Northern California Power Agency, Public Power
Rev. (Hydro-Electric), 8s, 1998 290 299,263
Pomona, CA, Public Financing Authority Rev.,
"J", 7.875s, 2000 3,155 3,550,921
Pomona, CA, Single Family Mortgage Rev., FNMA,
GNMA, 7.375s, 2010 2,000 2,400,800
Pomona, CA, Single Family Mortgage Rev.,
GNMA, 7.5s, 2000 2,000 2,555,320
Riverside County, CA, Asset Leasing Corp.,
6.25s, 2019 1,210 1,254,637
Southern California Public Power Transmission
Rev., 0s, 2005 3,795 2,664,318
------------
$41,498,785
- --------------------------------------------------------------------------------------
Airport and Port Revenue - 6.2%
Los Angeles, CA, Harbor Department Rev.,
5.375s, 2015 $5,000 $ 4,962,050
Los Angeles, CA, Harbor Department Rev.,
6.625s, 2025 2,000 2,165,800
Los Angeles, CA, Department Airports Rev.,
Ontario International Airport, FGIC, 6s, 2017 4,100 4,305,492
Port Oakland, CA, Port Rev., MBIA, 6.5s, 2016 1,000 1,082,670
San Francisco, CA, City & County Airports
Commission, International Airport Rev.,
FGIC, 6.5s, 2019 4,000 4,359,480
------------
$16,875,492
- --------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 6.1%
California Pollution Control Financing Authority
Rev. (Pacific Gas & Electric), 6.625s, 2009 $1,000 $ 1,083,550
Central Valley, CA, 6.2s, 2020 3,000 3,126,900
Los Angeles, CA, Department of Water & Power,
Electric Plant Rev., 7.25s, 2030 1,000 1,095,010
Los Angeles, CA, Department of Water & Power,
Electric Plant Rev., 7.1s, 2031 1,050 1,151,524
M-S-R Public Power Agency (San Juan), MBIA,
6.75s, 2020 3,000 3,558,000
Northern California Public Power Authority
(Geothermal), 5.85s, 2010 1,750 1,814,610
Puerto Rico Electric Power Authority, 5.5s, 2025 2,000 1,994,480
Southern California Public Power Transmission
Rev., 0s, 2005 4,205 2,828,830
------------
$16,652,904
- --------------------------------------------------------------------------------------
Health Care Revenue - 4.3%
California Health Facilities Financing Authority
(Downey Community Hospital), 5.625s, 2008 $3,000 $ 3,077,280
California Health Facilities Financing Authority
(Kaiser Permanente), 7s, 2018 1,000 1,066,660
California Hospital Rev., Refunding &
Improvement Project (Valley Health Systems),
6.5s, 2015 2,760 2,936,005
California Statewide Community Development
Authority (St. Joseph's), 6.625s, 2021 4,205 4,664,607
------------
$11,744,552
- --------------------------------------------------------------------------------------
</TABLE>
8 - MCA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Revenue (Corporate Guarantee) - 1.5%
California Pollution Control Financing Authority
Rev., 6.7s, 2007 $ 2,750 $ 2,830,025
California Pollution Control Financing Authority
Rev. (Frito-Lay), 0s, 6.375s, 2004 1,025 1,127,008
-------------
$ 3,957,033
- ------------------------------------------------------------------------------------------------
Insured Health Care Revenue - 4.6%
California Health Facilities Financing Authority
(American Baptist Homes West), 7.65s, 2014 $ 4,420 $ 4,575,982
California Health Facilities Financing Authority
(Sutter Health), MBIA, 7s, 2009 1,000 1,051,250
California Health Facilities Financing Authority
(Unihealth America), AMBAC, 7.625s, 2015 45 47,299
California Statewide Community Development
Authority, MBIA, 6s, 2011 1,015 1,113,252
California Statewide Community Development
Authority, Certificates of Participation, 0s, 2007 3,645 2,158,678
California Statewide Community Development
Authority, Certificates of Participation, 0s, 2008 6,345 3,525,536
-------------
$ 12,471,997
- ------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 6.6%
California Housing Finance Agency (Multi-Unit
Rental Housing), 6.7s, 2015 $ 2,750 $ 2,927,045
Palmdale, CA, Multi-Family Housing Rev., FNMA,
7.375s, 2024 1,000 1,088,700
Thousand Oaks, CA, Redevelopment Agency
(Shadow Hills), 7s, 2021 8,900 9,438,717
Yolo County, CA, Housing Authority Mortgage
Rev. (Walnut Park Apartments), FHA, 7.2s, 2033 4,150 4,491,752
-------------
$ 17,946,214
- ------------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 1.6%
Los Angeles, CA, Metropolitan Transportation
Authority Sales Tax Rev., FGIC, 5s, 2021 $ 4,670 $ 4,409,461
- ------------------------------------------------------------------------------------------------
Single Family Housing Revenue - 1.0%
California Housing Finance Agency, 7.75s, 2010 $ 800 $ 850,208
California Housing Finance Agency, MBIA,
6s, 2010 1,400 1,478,386
San Bernardino County, CA, Single Family
Mortgage Rev., GNMA, 7.65s, 2023 225 248,355
Southern California Home Finance Authority, Single
Family Mortgage Rev., GNMA, 7.625s, 2023 200 211,928
-------------
$ 2,788,877
- ------------------------------------------------------------------------------------------------
Special Assessment District - 5.7%
Anaheim, CA, Public Finance Authority Rev.,
MBIA, 0s, 2005 $ 3,210 $ 2,201,835
Brea, CA, Public Finance Authority Rev., MBIA,
0s, 2005 2,235 1,556,767
Brea, CA, Public Finance Authority Rev., MBIA,
0s, 2006 3,415 2,261,857
Concord, CA, Redevelopment Agency, Tax
Allocation, BIGI, 8s, 2018 40 41,932
Emeryville, CA, Public Financing Authority Rev,
6.5s, 2021 2,000 2,145,880
Pomona, CA, Public Financing Authority Rev,
Southwest Pomona Redevelopment, 5.75s, 2020 2,500 2,522,975
San Jose, CA, Redevelopment Agency, MBIA,
6s, 2010 1,000 1,112,620
Santa Cruz County, CA, Redevelopment Agency
(Oak/Soquel Community), 5.6s, 2017 1,455 1,484,827
- ------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Special Assesment District - continued
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2007 $ 1,150 $ 717,232
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2008 1,125 661,961
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2009 1,175 651,009
-------------
$ 15,358,895
- ------------------------------------------------------------------------------------------------
Turnpike Revenue - 2.3%
Foothill/Eastern Transportation Corridor Agency,
CA, 0s, 2011 $ 5,000 $ 3,561,600
Foothill/Eastern Transportation Corridor Agency,
CA, 0s, 2020 10,000 2,790,600
-------------
$ 6,352,200
- ------------------------------------------------------------------------------------------------
Universities - 3.0%
California Education Facilities Authority Rev.
(College & University), 6s, 2012 $ 1,400 $ 1,473,234
California Education Facilities Authority Rev.
(College & University), 6.3s, 2021 1,000 1,053,150
California State University Housing System Rev.,
6.75s, 2010 1,705 1,841,707
California State University Housing System Rev.,
6.75s, 2011 3,570 3,856,242
-------------
$ 8,224,333
- ------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 11.9%
California Department of Water Resources, Central
Valley Project Rev., 7s, 2012 $ 1,495 $ 1,824,334
Contra Costa, CA, Water District Rev., MBIA,
5s, 2024 7,000 6,633,760
Fairfield-Suisun, CA, Sewer District Rev., MBIA,
0s, 2006 2,080 1,393,766
Metropolitan Water District, Linked Savers, RIBS,
5.75s, 2018 10,000 10,616,600
Metropolitan Water District, South California,
5.75s, 2009 3,000 3,292,050
Metropolitan Water District, Waterworks Rev.,
5s, 2020 9,000 8,553,600
-------------
$ 32,314,110
- ------------------------------------------------------------------------------------------------
Other - 1.6%
California Public Capital Improvements Financing
Authority Rev., MBIA, 8.1s, 2018 $ 1,855 $ 1,927,772
South Coast Air Quality Management District Rev.,
AMBAC, 0s, 2005 3,480 2,423,959
-------------
$ 4,351,731
- ------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $240,047,313) $262,160,668
- ------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.3%
- ------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority
Rev. (St. Joseph Health Systems), "A", due 10/01/97 $ 865 $ 865,000
California Pollution Control Financing Authority
Rev. (Control Revenue), due 10/01/97 1,000 1,000,000
California Pollution Control Financing Authority
Rev. (Control Revenue), due 10/01/97 1,200 1,200,000
California Pollution Control Financing Authority
Rev. (Shell Oil), due 10/01/97 900 900,000
California Pollution Control Financing Authority
Rev. (Shell Oil), due 10/01/97 400 400,000
State of California (Floater Trust), due 9/10/97, due 9/10/97 2,000 2,000,000
- ------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 6,365,000
- ------------------------------------------------------------------------------------------------
</TABLE>
9 - MCA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Total Investments (Identified Cost, $246,412,313) $268,525,668
Other Assets, Less Liabilities - 1.2% 3,242,901
- ------------------------------------------------------------------------------------------
Net assets - 100.0% $271,768,569
- ------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS FLORIDA MUNICIPAL BOND FUND
Municipal Bonds - 96.7%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 9.6%
Dade County FL, AMBAC, 7.125s, 2016 $2,380 $ 2,962,791
Florida Board of Education, Capital Outlay,
9.125s, 2014 2,600 3,780,452
Palm Beach County, FL, 6.5s, 2010 2,000 2,308,280
------------
$ 9,051,523
- -------------------------------------------------------------------------------------
State and Local Appropriation - 3.6%
Bay County, FL, School Board, Certificates of
Participation, AMBAC, 6.75s, 2012 $1,000 $ 1,141,850
Palm Beach County, FL, School Board, Certification
of Participation, AMBAC, 6.375s, 2015 2,000 2,242,960
------------
$ 3,384,810
- -------------------------------------------------------------------------------------
Refunded and Special Obligations - 17.9%
Altamonte Springs, FL, Health Facilities Rev.,
ETM, 5.7s, 2012 $1,175 $ 1,272,525
Brevard County, FL, Health Facilities Authority
Rev. (Wuesthoff Memorial), MBIA, IBC,
7.2s, 2002 1,000 1,137,410
Charlotte County, FL Utility Rev., FGIC,
6.875s, 2003 500 576,005
Florida Board of Education, Capital Outlay, ETM,
9.125s, 2014 400 570,744
Florida Board of Education, Capital Outlay, "A",
7.25s, 2000 510 560,317
Florida Turnpike Authority Rev., "A", AMBAC,
7.125s, 2001 1,250 1,398,137
Hillsborough County, FL, Aviation Authority Rev.
(Delta Airlines), 6.8s, 2024 1,500 1,607,610
Hillsborough County, FL, Capital Improvement
Rev. (County Center), 6.75s, 2002 1,500 1,679,220
Hillsborough County, FL, Industrial Development
Authority, Pollution Control Rev. (Tampa Electric
Co.), 8s, 2022 3,000 3,503,610
Puerto Rico Electric Power Authority Rev.,
7s, 2001 240 268,301
Puerto Rico Highway & Transportation Authority
Highway Rev., 6.625s, 2002 1,000 1,116,940
Puerto Rico Highway & Transportation Authority,
Highway Rev., 6.625s, 2002 100 111,694
Puerto Rico Public Buildings Authority Rev.,
6.875s, 2002 740 834,416
State of Florida, Jacksonville Transportation,
6.4s, 2022 2,000 2,192,900
------------
$16,829,829
- -------------------------------------------------------------------------------------
Municipal Bonds - continued
- -------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------
Airport and Port Revenue - 4.8%
Hillsborough County, FL, Aviation Authority Rev.
(Tampa International), FGIC, 5.875s, 2015 $ 750 $ 787,193
Hillsborough County, FL, Aviation Authority Rev.
(USAir), 8.6s, 2022 2,400 2,734,968
Pensacola, FL, Airport Rev., MBIA, 5.625s, 2014 1,000 1,021,970
------------
$ 4,544,131
- -------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 21.1%
Escambia County, FL, Utility Systems Rev., FGIC,
6.25s, 2015 $1,500 $ 1,699,860
Escambia County, FL, Utility Systems Rev., FGIC,
0s, 2015 1,000 399,740
Jacksonville, FL, Electric Authority Rev. (St. Johns
River Power), 0s, 2010 4,995 2,583,314
Lakeland, FL, Electricity & Water Rev., Capital
Appreciation, 0s, 2011 5,000 2,441,350
Lakeland, FL, Electricity & Water Rev., Capital
Appreciation, 0s, 2012 3,000 1,381,560
Martin County, FL, Industrial Development
Authority (Indiantown Cogeneration),
7.875s, 2025 3,625 4,175,239
Orlando, FL, Utility Commission, Water and
Electric Rev., 6.75s, 2017 1,500 1,795,530
Port St. Lucie, FL Utility Revenue, Capital
Appreciation, FGIC, 0s, 2021 2,405 594,901
Puerto Rico Electric Power Authority Rev., MBIA,
6.125s, 2008 2,400 2,691,336
Puerto Rico Electric Power Authority Rev., FSA,
6s, 2016 2,000 2,117,240
------------
$19,880,070
- -------------------------------------------------------------------------------------
Health Care Revenue - 8.7%
Brevard County, FL, Health Facilities Authority
Rev. (Friendly Village), 9.25s, 2012 $ 375 $ 384,337
Escambia County, FL, Health Facility Authority
Rev. (Baptist Hospital & Baptist Manor),
6.75s, 2014 1,000 1,081,630
Escambia County, FL, Health Facility Rev. (Baptist
Hospital), "B", 6s, 2014 2,500 2,563,825
Jacksonville, FL, Health Facilities Authority,
Industrial Development Rev. (National
Benevolent), 6.4s, 2016 1,825 1,928,149
Jacksonville, FL, Health Facilities Authority,
Industrial Development Rev. (National Cypress),
7s, 2014 1,250 1,373,575
Orange County, FL, Industrial Development Rev.
(Friendly Village), 9.25s, 2012 335 343,164
St. Petersburg, FL, Health Facilities Rev.
(Swanholm Nursing), 10s, 2022 480 548,146
------------
$ 8,222,826
- -------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 2.3%
Escambia County, FL, Industrial Development
Rev. (Champion International), 6.8s, 2012 $1,000 $ 1,096,900
Escambia County, FL, Pollution Control Rev.
(Champion International), 6.95s, 2007 1,000 1,101,230
------------
$ 2,198,130
- -------------------------------------------------------------------------------------
</TABLE>
10 - MFL
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------- ----------------- ------------
<S> <C> <C>
Insured Health Care Revenue - 10.4%
Brevard County, FL, Health Facilities Authority
Rev. (Wuesthoff Memorial), MBIA, 6.5s, 2007 $1,000 $ 1,098,690
Charlotte County, FL, Health Care Facilities Rev.
(Bon Secours), FSA, 7.843s, 2027 2,500 2,736,100
Hillsborough County, FL, Industrial Development
Rev. (University Community Hospital), MBIA,
6.5s, 2019 1,000 1,154,370
Jacksonville, FL, Hospital Rev. (University Medical
Center), CONNIE LEE, 6.6s, 2013 500 539,820
Jacksonville, FL, Hospital Rev. (Baptist Medical
Center), "A", MBIA, 7.3s, 2019 1,900 2,025,058
Tallahassee, FL, Health Facilities Rev. (Tallahassee
Memorial Regional Medical Center), MBIA,
6.625s, 2013 1,000 1,133,500
Tampa, FL, Allegheny Health System (St. Joseph's),
MBIA, 6.5s, 2023 1,000 1,118,790
------------
$ 9,806,328
- -----------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 3.8%
Jacksonville, FL, Excise Taxes Rev., FGIC, 0s, 2010 $1,000 $ 506,780
Jacksonville, FL, Excise Taxes Rev., FGIC, 0s, 2011 1,000 477,050
Puerto Rico Highway & Transportation, 5.5s, 2008 1,000 1,034,390
Puerto Rico Highway & Transportation Authority,
MBIA, 5.5s, 2015 1,500 1,576,485
------------
$ 3,594,705
- -----------------------------------------------------------------------------------------
Single Family Housing Revenue - 0.9%
Dade County, FL, Housing Finance Authority,
Mortgage Rev., "D", FSA, 6.95s, 2012 $ 670 $ 717,262
Dade County, FL, Housing Finance Authority,
Mortgage Rev., "E", 7s, 2024 75 79,360
------------
$ 796,622
- -----------------------------------------------------------------------------------------
Turnpike Revenue - 1.1%
Orlando & Orange County, FL, Expressway Florida,
FGIC, 6.324s, 2004 $1,000 $ 1,071,830
- -----------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 6.4%
Lee County, FL, Industrial Development Authority
Rev. (Bonita Springs), MBIA, 6.05s, 2015 $1,000 $ 1,062,300
Miramar, FL, Wastewater Improvement Rev., FGIC,
6.75s, 2016 1,500 1,683,780
Seminole, FL, Water & Sewer Improvement Rev.,
MBIA, 6s, 2019 3,000 3,325,320
------------
$ 6,071,400
- -----------------------------------------------------------------------------------------
Other - 6.1%
Dade County, FL, Solid Waste Special Obligation,
AMBAC, 5.125s, 2010 $1,250 $ 1,260,150
Florida Department of Environmental Preservation,
MBIA, 5.5s, 2012 2,295 2,386,777
Palm Beach County, FL, Criminal Justice Facilities,
FGIC, 5.75s, 2013 1,000 1,088,570
Palm Beach County, FL, Solid Waste Authority
Rev., Improvement Series "B", AMBAC,
5.375s, 2011 1,000 1,021,640
------------
$ 5,757,137
- -----------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $83,395,550) $91,209,341
- -----------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.9%
- -----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
St. Lucie County, FL, Pollution Control Rev. (Power
& Light), due 10/01/97 $ 400 $ 400,000
Pinellas County, FL, Health Facility Authority, due
10/01/97 1,400 1,400,000
- -----------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,800,000
- -----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $85,195,550) $93,009,341
Other Assets, Less Liabilities - 1.4% 1,329,823
- -----------------------------------------------------------------------------------------
Net assets - 100.0% $94,339,164
- -----------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS GEORGIA MUNICIPAL BOND FUND
Municipal Bonds - 98.1%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 8.6%
Fulton County, GA, School District, 6.375s, 2010 $2,000 $2,288,180
Fulton County, GA, School District, 6.375s, 2012 1,000 1,148,820
Fulton County, GA, School District, 6.375s, 2016 1,000 1,147,980
State of Georgia, 6.25s, 2011 1,000 1,139,610
Territory of Virgin Islands, 7.75s, 2006 365 401,489
-----------
$6,126,079
- -----------------------------------------------------------------------------------
State and Local Appropriation - 2.1%
Fulton County, GA, Building Authority Rev.
(Judicial Center), 0s, 2011 $3,000 $1,541,940
- -----------------------------------------------------------------------------------
Refunded and Special Obligations - 11.0%
Columbia County, GA, Water and Sewer Rev.,
AMBAC, 6.9s, 2011 $1,000 $1,108,920
DeKalb County, GA, 7.5s, 2000 780 851,893
Hogansville, GA, Combined Public Utility Systems
Rev., 9s, 2000 2,200 2,538,470
Marietta, GA, Development Authority Rev. (Life
College), CAPGTY, 7.25s, 1999 1,000 1,086,450
Richmond County, GA, Development Authority
Rev., 0s, 2021 8,700 2,269,134
-----------
$7,854,867
- -----------------------------------------------------------------------------------
Airport and Port Revenue - 13.4%
Atlanta, GA, Airport Facilities Rev., 6.25s, 2021 $ 500 $ 527,440
Atlanta, GA, Airport Facilities Rev., AMBAC,
0s, 2010 6,000 3,207,900
Atlanta, GA, Airport Facilities Rev., MBIA,
0s, 2010 5,100 2,726,715
Atlanta, GA, Special Purpose Facilities Rev. (Delta
Airlines), 7.9s, 2018 1,000 1,075,930
Clayton County, GA, Development Authority,
Special Facilities Rev. (Delta Airlines),
7.625s, 2020 500 535,770
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 1,425 1,513,165
-----------
$9,586,920
- -----------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 12.1%
Appling County, GA, Development Authority
Pollution (Ogelthorpe Power), MBIA, 7.15s, 2021 $1,400 $1,573,740
Georgia Municipal Electric Authority, Power Rev.,
AMBAC, 0s, 2013 1,675 744,655
Georgia Municipal Electric Authority, Power Rev.,
AMBAC, 5.5s, 2009 1,225 1,305,997
</TABLE>
11 - MGA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Electric and Gas Utility Revenue - continued
Georgia Municipal Electric Authority, Power Rev.,
MBIA, 0s, 2008 $2,500 $ 1,520,900
Georgia Municipal Electric Authority, Power Rev.,
MBIA, 0s, 2009 1,500 859,905
Georgia Municipal Electric Authority, Power Rev.,
MBIA, 6.5s, 2020 1,250 1,448,325
Monroe County, GA, Development Authority, Pollution
Control Rev. (Oglethorpe Power), 6.8s, 2012 1,000 1,168,180
------------
$ 8,621,702
- -----------------------------------------------------------------------------------------
Health Care Revenue - 4.2%
Richmond County, GA, Development Authority,
Nursing Home Refunding (Beverly Enterprises),
8.75s, 2011 $1,190 $ 1,323,101
Royston, GA, Hospital Authority Rev. (Cobb
Health), 7.375s, 2014 1,565 1,669,777
------------
$ 2,992,878
- -----------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 18.2%
Adel County, GA, Industrial Development
Authority, Pollution Control Rev. (Weyerhaeuser),
AMBAC, 9s, 2006 $1,000 $ 1,012,050
Cartersville, GA, Developement Authority Rev.,
Water & Wastewater Facilities (Anheuser-Busch),
5.625s, 2009 1,500 1,589,190
Cartersville, GA, Developement Authority Rev.,
Water & Wastewater Facilities (Anheuser-Busch),
7.4s, 2010 500 611,900
Cartersville, GA, Developement Authority Rev.,
Water & Wastewater Facilities (Anheuser-Busch),
6.75s, 2012 1,000 1,101,030
Effingham County, GA, Development Authority,
Pollution Control Rev. (Fort Howard), 7.9s, 2005 1,750 1,868,457
Emanuel County, GA, Development Authority
(Figgie Properties), 7.95s, 2004 475 478,601
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Hershey Foods),
6.6s, 2012 1,150 1,258,514
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Stone Container),
7.4s, 2026 1,750 1,893,832
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Union Camp),
6.15s, 2017 1,000 1,099,680
Savannah, GA, Port Authority, Pollution Control
Rev. (Union Carbide), 7.55s, 2004 1,000 1,002,640
Wayne County, GA, Solid Waste Rev.
(ITT-Rayonier), 8s, 2015 1,000 1,094,200
------------
$13,010,094
- -----------------------------------------------------------------------------------------
Insured Health Care Revenue - 2.3%
Albany-Dougherty County Georgia Hospital
Authority Rev. (Phoebe Putney Memorial
Hospital), AMBAC, 7.37s, 2013 $1,550 $ 1,640,799
- -----------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.8%
Cobb County, GA, Housing Authority Rev.
(Signature Place), 6.875s, 2017 $1,500 $ 1,583,460
Hinesville, GA, Leased Housing Corp. Rev. (Baytree
Apartments), FHA, 6.7s, 2017 900 962,172
St. Mary's, GA (Cumberland Oaks Apartments),
FNMA, 7.375s, 2022 1,470 1,565,785
------------
$ 4,111,417
- -----------------------------------------------------------------------------------------
Municipal Bonds - continued
- -----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
Single Family Housing Revenue - 2.6%
DeKalb County, GA, Housing Authority Rev.,
GNMA, 7.75s, 2022 $ 495 $ 522,467
Georgia Housing & Finance Authority, 0s, 2031 7,260 620,730
Georgia Residential Finance Authority Rev., 8s,
2020 345 364,817
Georgia Residential Finance Authority Rev., 7.25s,
2021 350 376,971
------------
$ 1,884,985
- -----------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 15.5%
Atlanta, GA, Water & Sewer Rev., FGIC,
5.25s, 2027 $2,000 $ 1,944,860
Barnesville, GA, Water and Sewer Rev., 6.9s, 2022 1,715 1,848,821
Brunswick, GA, Water and Sewer Rev., MBIA,
6.1s, 2014 1,000 1,109,080
Cartersville, GA, Water and Sewer Rev., AMBAC,
7.2s, 2012 2,225 2,422,291
Fulton County, GA, Water and Sewer Rev., FGIC,
6.375s, 2014 3,250 3,715,140
------------
$11,040,192
- -----------------------------------------------------------------------------------------
Other - 2.3%
George L. Smith II/Georgia World Congress Center
Authority (Domed Stadium), 7.875s, 2020 $1,475 $ 1,614,860
- -----------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $62,982,065) $70,026,733
- -----------------------------------------------------------------------------------------
Floating Rate Demand Note - 0.3%
- -----------------------------------------------------------------------------------------
Georgia Hospital Financing Authority Rev.
(Hospital Loan Program), due 10/01/97,
at Identified Cost $ 210 $ 210,000
- -----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $63,192,065) $70,236,733
Other Assets, Less Liabilities - 1.6% 1,135,191
- -----------------------------------------------------------------------------------------
Net assets - 100.0% $71,371,924
- -----------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS MARYLAND MUNICIPAL BOND FUND
Municipal Bonds - 96.4%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 13.1%
Anne Arundel County, MD, 4.9s, 2011 $1,005 $ 993,975
Baltimore, MD, Consolidated Public Improvement,
FGIC, 5.3s, 2009 700 732,123
Baltimore, MD, Consolidated Public Improvement,
MBIA, 7s, 2009 1,000 1,205,200
Baltimore, MD, Consolidated Public Improvement,
7.15s, 2009 2,120 2,564,352
Baltimore, MD, Consolidated Public Improvement,
FGIC, 5.3s, 2010 815 850,689
Baltimore, MD, Consolidated Public Improvement,
FGIC, 5.375s, 2011 900 942,804
Baltimore, MD, Consolidated Public Improvement,
FGIC, 5.375s, 2013 770 804,942
Commonwealth of Puerto Rico, 6.5s, 2023 2,000 2,203,280
Howard County, MD, Metropolitan District,
0s, 2008 1,975 1,168,331
Montgomery County, MD, Public Improvement,
0s, 2009 4,000 2,263,000
</TABLE>
12 - MMD
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - continued
Prince George's County, MD, 0s, 2007 $5,110 $ 3,178,829
State of Maryland, 9s, 1999 350 381,934
Washington, MD, Suburban Sanitation District,
6.1s, 2015 1,070 1,141,070
Washington, MD, Suburban Sanitation District,
5.25s, 2016 865 868,183
------------
$19,298,712
- -----------------------------------------------------------------------------------
State and Local Appropriation - 14.0%
Calvert County, MD, Community Lease Rev.,
7.2s, 2010 $ 750 $ 814,320
Howard County, MD, Certificates of Participation,
8.15s, 2021 450 615,564
Howard County, MD, Certificates of Participation,
"A", 8s, 2019 805 1,076,953
Howard County, MD, Certificates of Participation,
"B", 8s, 2019 385 515,065
Howard County, MD, Certificates of Participation,
"C", 8s, 2019 680 909,724
Maryland Stadium Authority, Sports Facilities
Leasing Rev., AMBAC, 5.875s, 2012 1,000 1,062,560
Maryland Stadium Authority, Sports Facilities
Leasing Rev., 7.6s, 2019 2,580 2,786,606
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2005 2,495 1,736,870
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2006 2,490 1,647,334
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2011 3,675 1,832,465
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2004 980 717,144
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2006 1,800 1,195,956
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2009 1,500 842,910
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2010 2,730 1,442,614
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2011 1,000 499,970
Puerto Rico Public Buildings Authority, 5s, 2027 3,000 2,862,000
------------
$20,558,055
- -----------------------------------------------------------------------------------
Refunded and Special Obligations - 10.6%
Baltimore, MD, Water Utility Rev., MBIA,
6.5s, 2000 $ 540 $ 573,701
Commonwealth of Puerto Rico, Public
Improvement Rev., 6.8s, 2021 1,500 1,686,600
Howard County, MD, Metropolitan District,
7.15s, 2000 500 542,975
Maryland Health & Higher Education Facilities
Authority Rev. (Sinai Hospital/Baltimore),
7s, 2000 2,000 2,186,340
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland Medical
System), FGIC, 7s, 2001 1,840 2,050,165
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland Medical
System), FGIC, 6.5s, 2021 1,000 1,079,920
Morgan, MD, State University Academic &
Auxiliary Facilities & Fees Rev., MBIA, 0s, 2006 1,135 757,896
Morgan, MD, State University Academic &
Auxiliary Facilities & Fees Rev., MBIA, 0s, 2008 1,400 834,834
Municipal Bonds - continued
- -----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------
Refunded and Special Obligations - continued
Prince George's County, MD, Hospital Rev.
(Dimensions Health Corp.), 7.25s, 2017 $2,000 $ 2,286,060
Puerto Rico Aqueduct & Sewer Authority Rev.,
10.25s, 2009 500 704,930
Puerto Rico Electric Power Authority Rev.,
8s, 1998 500 525,710
Puerto Rico Electric Power Authority Rev.,
7s, 2001 1,000 1,117,920
Washington, MD, Suburban Sanitation District,
6.9s, 2001 1,045 1,158,822
------------
$15,505,873
- -----------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 2.0%
Puerto Rico Electric Power Authority Rev.,
5.375s, 2027 $3,000 $ 2,997,270
- -----------------------------------------------------------------------------------
Health Care Revenue - 12.3%
Berlin, MD, Hospital Rev. (Atlantic General
Hospital), 8.375s, 2022 $1,345 $ 1,432,869
Maryland Health & Higher Education Facilities
Authority Rev. (Bradford Oaks Nursing &
Rehabilation Center), 6.375s, 2027 1,500 1,513,455
Maryland Health & Higher Education Facilities
Authority Rev. (Doctors Community Hospital),
5.5s, 2024 2,000 1,916,380
Maryland Health & Higher Education Facilities
Authority Rev. (Good Samaritan Hospital),
5.7s, 2009 1,085 1,156,361
Maryland Health & Higher Education Facilities
Authority Rev. (Johns Hopkins Hospital),
0s, 2010 2,000 1,050,160
Maryland Health & Higher Education Facilities
Authority Rev. (John Hopkins Hosptial), 5s, 2023 2,250 2,158,875
Maryland Health & Higher Education Facilities
Authority Rev. (Kennedy Institute), 6.75s, 2022 500 524,620
Maryland Health & Higher Education Facilities
Authority Rev. (Medlantic Hospital Care Corp.),
8.375s, 2014 3,540 3,571,541
Maryland Health & Higher Education Facilities
Authority Rev. (Mercy Medical Center), FSA,
5.625s, 2017 1,800 1,856,952
Prince George's County, MD, Hospital Rev.
(Greater Southeast Healthcare System),
6.375s, 2023 2,900 2,998,716
------------
$18,179,929
- -----------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 4.5%
Baltimore, MD, Industrial Revenue Board
(Weyerhaeuser), 9s, 2006 $3,150 $ 3,185,059
Baltimore, MD, Port Facilities Rev. (duPont (E.I.)
de Nemours), 6.5s, 2011 1,500 1,639,035
Cecil County, MD, Commissioners Industrial
Development Revenue Board, 5.25s, 2006 1,000 1,036,550
Upper Potomac, MD, River Commission, Pollution
Control Rev. (Westvaco), 10.5s, 2004 150 157,367
Upper Potomac, MD, River Commission, Pollution
Control Rev. (Westvaco), 9.125s, 2015 500 518,755
------------
$ 6,536,766
- -----------------------------------------------------------------------------------
Insured Health Care Revenue - 5.0%
Maryland Health & Higher Education Facilities
Authority Rev. (Frederick Memorial Hospital),
FGIC, 5.25s, 2013 $4,550 $ 4,737,642
</TABLE>
13 - MMD
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Insured Health Care Revenue - continued
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland Medical
Center), FGIC, 5s, 2020 $ 1,000 $ 958,010
Maryland Industrial Development Finance
Authority, Economic Development Rev. (Bon
Secours Health System), FSA, 7.772s, 2022[dbldag][dbldag] 1,400 1,606,710
-------------
$ 7,302,362
- ---------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.5%
Baltimore, MD, City Housing, 7.75s, 2009 $ 930 $ 982,099
Baltimore, MD, City Housing, 7.25s, 2023 1,215 1,258,606
Maryland Community Development
Administration, 7.375s, 2021 330 354,536
Maryland Community Development
Administration, 8.4s, 2029 1,320 1,352,234
Maryland Community Development
Administration, 0s, 2032 11,605 829,293
Maryland Community Development
Administration, 7.8s, 2032 1,190 1,277,608
Montgomery County, MD, Housing Opportunities
Commission, 7.375s, 2032 510 543,787
-------------
$ 6,598,163
- ---------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.2%
Puerto Rico Highway & Transportation Authority
Rev., 6.625s, 2012 $ 1,000 $ 1,095,280
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2013 2,000 2,092,040
-------------
$ 3,187,320
- ---------------------------------------------------------------------------------------------
Single Family Housing Revenue - 5.9%
Maryland Community Development
Administration, 7.7s, 2015 $ 580 $ 614,475
Maryland Community Development
Administration, 5.875s, 2016 2,000 2,079,220
Maryland Community Development
Administration, 8.25s, 2017 1,300 1,334,463
Maryland Community Development
Administration, 8.25s, 2020 480 492,845
Maryland Community Development
Administration, 6.75s, 2026 2,250 2,417,603
Maryland Community Development
Administration, 7.625s, 2029 860 893,179
Maryland Community Development
Administration, 7.85s, 2029 390 411,543
Montgomery County, MD, Housing Opportunities
Commission, 7.5s, 2017 365 386,725
-------------
$ 8,630,053
- ---------------------------------------------------------------------------------------------
Solid Waste Revenue - 5.4%
Northeast Maryland, Waste Disposal Authority
(Montgomery County), 6s, 2006 $ 1,000 $ 1,070,990
Northeast Maryland, Waste Disposal Authority
(Montgomery County), MBIA, 6.3s, 2016 2,000 2,139,240
Northeast Maryland, Waste Disposal Authority
(Southwest County), MBIA, 7.2s, 2005 1,000 1,154,030
Prince George's County, MD (Solid Waste
Management), FSA, 5.25s, 2013 3,500 3,528,420
-------------
$ 7,892,680
- ---------------------------------------------------------------------------------------------
Municipal Bonds - continued
- ---------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------------
Universities - 5.2%
Maryland Health & Higher Education Facilities
Authority Rev. (John Hopkins University),
5.625s, 2027 $ 1,400 $ 1,433,824
Maryland Health & Higher Education Facilities
Authority Rev. (Loyola College), MBIA,
5.5s, 2016 3,000 3,078,450
Maryland Health & Higher Education Facilities
Authority Rev. (Mount St. Mary's College),
6.5s, 2009 692 726,918
Morgan, MD, State University, Academic &
Auxiliary Facilities Rev., MBIA, 6.05s, 2015 1,500 1,672,410
University of Maryland, Auxillary Facilities &
Tuition Rev., 0s, 2004 1,000 729,270
-------------
$ 7,640,872
- ---------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 5.1%
Baltimore, MD, Wastewater Rev., FGIC, 6s, 2015 $ 1,000 $ 1,116,650
Baltimore, MD, Wastewater Rev., MBIA,
5.65s, 2020 2,000 2,089,400
Baltimore, MD, Wastewater Rev., MBIA,
7.27s, 2020[dbldag][dbldag] 3,000 3,291,660
Puerto Rico Aqueduct & Sewer Authority Rev., 5s,
2019 1,000 947,840
-------------
$ 7,445,550
- ---------------------------------------------------------------------------------------------
Other - 6.6%
Baltimore County, MD, 5.375s, 2013 $ 1,600 $ 1,610,448
Maryland Industrial Development Finance
Authority (American Center for Physics),
6.625s, 2017 1,500 1,616,460
Maryland Industrial Development Finance
Authority (YMCA/Baltimore), 8s, 2012 2,825 3,204,680
Maryland Industrial Development Finance
Authority (YMCA/Baltimore), 8.25s, 2012 865 940,065
Washington D.C., Metropolitan Area Transportation
Authority, Gross Rev., FGIC, 5.25s, 2014 2,390 2,393,131
-------------
$ 9,764,784
- ---------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $129,692,315) $141,538,389
- ---------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.2%
- ---------------------------------------------------------------------------------------------
Harris County, TX, Health Facilities Development,
Special Facilities Rev. (Texas Medical Center), due
2/15/22 $ 100 $ 100,000
Harris County, TX, Hospital Rev. (Methodist
Hospital), due 12/01/25 700 700,000
Uinta County, WY, Pollution Control Rev.
(Chevron), due 8/15/20 2,400 2,400,000
- ---------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 3,200,000
- ---------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $132,892,315) $144,738,389
Other Assets, Less Liabilities - 1.4% 2,060,678
- ---------------------------------------------------------------------------------------------
Net assets - 100.0% $146,799,067
- ---------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
14 - MMD
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS MASSACHUSETTS MUNICIPAL BOND FUND
Municipal Bonds - 98.6%
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------- ----------------- -------------
<S> <C> <C>
General Obligation - 19.0%
Belmont, MA, 5s, 2015 $ 2,165 $ 2,142,354
Commonwealth of Massachusetts, 0s, 2004 10,000 7,182,600
Commonwealth of Massachusetts, 0s, 2005 2,000 1,387,760
Commonwealth of Massachusetts, 0s, 2005 2,000 1,366,400
Commonwealth of Massachusetts, 6s, 2008 3,000 3,332,640
Commonwealth of Massachusetts, AMBAC,
6.75s, 2009 2,500 2,768,525
Commonwealth of Massachusetts, AMBAC,
5.75s, 2010 3,000 3,254,640
Commonwealth of Massachusetts, FGIC, 0s, 2006 4,000 2,672,200
Commonwealth of Massachusetts, FGIC, 7s, 2009 1,250 1,494,250
Commonwealth of Massachusetts, FGIC,
5.75s, 2011 3,000 3,237,390
Commonwealth of Massachusetts, FGIC,
5.125s, 2015 3,985 3,926,699
Commonwealth of Massachusetts, MBIA, 7.5s, 2004 2,850 3,344,332
Gloucester, MA, AMBAC, 7s, 2009 225 245,826
Gloucester, MA, AMBAC, 7s, 2010 215 234,900
Haverhill, MA, FGIC, 7s, 2012 1,250 1,382,800
Holyoke, MA, 8s, 2001 490 525,207
Lawrence, MA, AMBAC, 9.75s, 2002 600 730,110
Lowell, MA, 8.4s, 2009 1,000 1,136,950
Lowell, MA, AMBAC, 5s, 2012 3,010 2,974,422
Mashpee, MA, MBIA, 6.25s, 2008 1,530 1,739,059
North Attleborough, MA, AMBAC, 5s, 2013 2,240 2,225,194
Northbridge, MA, 7.6s, 2001 325 357,754
Princeton, MA, AMBAC, 7.25s, 2009 490 533,394
------------
$48,195,406
- -----------------------------------------------------------------------------------------
State and Local Appropriation - 7.3%
Massachusetts Bay Transportation Authority,
6.2s, 2016 $10,400 $11,543,376
Massachusetts Bay Transportation Authority,
7s, 2021 5,000 6,164,650
Massachusetts Industrial Finance Agency (Vinfen),
7.1s, 2018 695 745,610
------------
$18,453,636
- -----------------------------------------------------------------------------------------
Refunded and Special Obligations - 14.1%
Boston, MA, MBIA, 7.75s, 1998 $ 500 $ 524,420
Commonwealth of Massachusetts, 6.875s, 2001 2,000 2,219,860
Holyoke, MA, 9.85s, 1997 360 368,881
Holyoke, MA, MBIA, 8s, 2001 1,700 1,920,949
Holyoke, MA, MBIA, 8.1s, 2005 500 593,015
Lowell, MA, 7.625s, 2001 4,875 5,525,861
Massachusetts Federally Assisted Housing, 0s, 2023 4,995 1,029,320
Massachusetts Health & Education Facilities
Authority (Suffolk University), 8s, 2000 1,750 1,945,370
Massachusetts Health & Education Facilities
Authority (Fairview Extended Care Facility),
10.25s, 2021 2,000 2,407,420
Massachusetts Health & Education Facilities
Authority (Newton-Wellesley Hospital), 8s, 2018 1,710 1,913,285
Massachusetts Industrial Finance Agency, (Mass.
Turnpike), 9s, 2020 8,020 9,241,606
Massachusetts Industrial Finance Agency (Cape Cod
Health System), 8.5s, 2000 500 573,005
Massachusetts Industrial Finance Agency (Dexter
School), 7.5s, 2011 1,655 1,864,887
Massachusetts Industrial Finance Agency (Dexter
School), 7.5s, 2021 2,900 3,267,778
Massachusetts Port Authority, 12.75s, 2002 485 623,521
Municipal Bonds - continued
- -----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
Refunded and Special Obligations - continued
Massachusetts Port Authority, ETM, 13s, 2013 $ 780 $ 1,337,739
Palmer, MA, AMBAC, 7.7s, 2010 500 559,545
------------
$35,916,462
- -----------------------------------------------------------------------------------------
Airport and Port Revenue - 6.5%
Massachusetts Port Authority (USAir), MBIA,
5.625s, 2011 $ 2,140 $ 2,210,406
Massachusetts Port Authority, 5s, 2015 5,600 5,394,592
Massachusetts Port Authority, FGIC, 7.5s, 2020 4,500 4,895,955
Puerto Rico Ports Authority (American Airlines),
6.3s, 2023 2,370 2,505,280
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 1,500 1,592,805
------------
$16,599,038
- -----------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 0.4%
Puerto Rico Electric Power Authority, 5s, 2012 $ 1,035 $ 1,010,398
- -----------------------------------------------------------------------------------------
Health Care Revenue - 14.4%
Boston, MA, Industrial Development Finance
Authority Rev. (Stonehedge Convalescent Center),
10.75s, 2011 $ 710 $ 754,446
Massachusetts Health & Education Facilities
Authority (Dana Farber), 6.25s, 2022 1,000 1,067,690
Massachusetts Health & Education Facilities
Authority (Beth Israel Hospital), 7s, 2014 3,000 3,173,970
Massachusetts Health & Education Facilities
Authority (Charlton Memorial Hospital),
7.25s, 2013 1,700 1,876,885
Massachusetts Health & Education Facilities
Authority (Children's Hospital), 6.125s, 2012 2,285 2,431,263
Massachusetts Health & Education Facilities
Authority (Massachusetts Eye & Ear Infirmary),
7.375s, 2011 3,000 3,130,830
Massachusetts Health & Education Facilities
Authority (New England Deaconess Hospital),
6.875s, 2022 5,600 6,119,624
Massachusetts Health & Education Facilities
Authority (New England Deaconess Hospital),
7.2s, 2022 2,500 2,730,725
Massachusetts Health & Education Facilities
Authority (North Adams Regional Hospital),
6.625s, 2018 1,000 1,054,470
Massachusetts Industrial Finance Agency (Beverly
Enterprises), 8.375s, 2009 4,040 4,492,561
Massachusetts Industrial Finance Agency
(Evanswood), 7.625s, 2014 1,200 1,254,084
Massachusetts Industrial Finance Agency (Martha's
Vineyard Long-Term Care Facility), 9.25s, 2022[dbldag] 3,000 1,684,500
Massachusetts Industrial Finance Agency
(Massachusetts Biomedical Research), 0s, 2004 5,000 3,622,550
Massachusetts Industrial Finance Agency
(Massachusetts Biomedical Research), 0s, 2010 5,300 2,689,114
Massachusetts Industrial Finance Agency
(Needham/Hamilton House), 11s, 2010 500 519,775
------------
$36,602,487
- -----------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 0.5%
Massachusetts Industrial Finance Agency
(Automatic Data Processing), 8.25s, 2019 $ 900 $ 915,318
Springfield, MA, Industrial Development Finance
Agency (Terminal Building), 10s, 2001 321 328,065
------------
$ 1,243,383
- -----------------------------------------------------------------------------------------
</TABLE>
15 - MMA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Insured Health Care Revenue - 4.9%
Boston, MA, Industrial Development Finance
Authority Rev. (Alzheimers Center), FHA,
5.5s, 2012 $ 750 $ 761,655
Massachusetts Health & Education Facilities
Authority (Beth Israel Hospital), AMBAC,
8.471s, 2025[dbldag][dbldag] 5,000 5,422,750
Massachusetts Health & Education Facilities
Authority (Brigham & Women's Hospital), MBIA,
6.75s, 2024 2,900 3,206,356
Massachusetts Health & Education Facility
Authority (Newton Wellsley College), MBIA,
6.125s, 2015 1,000 1,085,610
Massachusetts Health & Education Facility
Authority, MBIA, 5.375s, 2018 2,000 1,969,040
-------------
$ 12,445,411
- -----------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.8%
Massachusetts Housing Finance Agency, 8.4s, 2021 $ 2,190 $ 2,276,133
Massachusetts Housing Finance Agency, 8.2s, 2027 720 754,747
Massachusetts Housing Finance Agency, AMBAC,
6.65s, 2019 1,500 1,612,110
Massachusetts Housing Finance Agency, FHA,
8.8s, 2021 1,995 2,060,775
Massachusetts Housing Finance Agency, FNMA,
6.9s, 2025 1,700 1,831,155
Somerville, MA, Housing Authority Rev.
(Clarendon Hill), GNMA, 7.85s, 2010 975 1,039,789
-------------
$ 9,574,709
- -----------------------------------------------------------------------------------------
Single Family Housing Revenue - 3.4%
Massachusetts Housing Finance Agency, 8.1s, 2020 $ 2,270 $ 2,350,109
Massachusetts Housing Finance Agency, 8.1s, 2021 2,000 2,093,180
Massachusetts Housing Finance Agency,
7.95s, 2023 840 898,699
Massachusetts Industrial Finance Agency, MBIA,
6.35s, 2022 3,000 3,168,540
-------------
$ 8,510,528
- -----------------------------------------------------------------------------------------
Student Loan Revenue
Massachusetts Education Loan Authority, 9s, 2001 $ 45 $ 45,398
- -----------------------------------------------------------------------------------------
Turnpike Revenue - 1.3%
Massachusetts Turnpike Authority, MBIA, 0s, 2018 $10,000 $ 3,347,800
- -----------------------------------------------------------------------------------------
Universities - 10.3%
Massachusetts Health & Education Facilities
Authority (Boston College), 5.25s, 2023 $ 4,350 $ 4,271,961
Massachusetts Health & Education Facilities
Authority (Boston University), MBIA,
9.142s, 2031[dbldag][dbldag] 5,000 5,897,650
Massachusetts Health & Education Facility
Authority (Boston College), 5.25s, 2018 3,500 3,456,215
Massachusetts Health & Education Facility
Authority (Wheaton College), 5.25s, 2019 1,000 983,370
Massachusetts Industrial Finance Agency (Babson
College), 5.25s, 2027 3,000 2,886,660
Massachusetts Industrial Finance Agency (Brandeis
University), MBIA, 0s, 2004 1,000 727,270
Municipal Bonds - continued
- -----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
Universities - continued
Massachusetts Industrial Finance Agency (Brandeis
University), MBIA, 0s, 2005 $ 1,000 $ 692,300
Massachusetts Industrial Finance Agency (Brandeis
University), MBIA, 0s, 2009 1,000 556,320
Massachusetts Industrial Finance Agency (Brandeis
University), MBIA, 0s, 2010 1,000 523,130
Massachusetts Industrial Finance Agency (Brandeis
University), MBIA, 0s, 2011 500 247,160
Massachusetts Industrial Finance Agency (Curry
College), 8s, 2010 575 589,490
Massachusetts Industrial Finance Agency (Curry
College), 8s, 2014 1,915 1,989,857
Massachusetts Industrial Finance Agency (Emerson
College), 8.9s, 2018 1,000 1,108,200
Massachusetts Industrial Finance Agency (Lesley
College), 6.3s, 2025 2,000 2,146,400
-------------
$ 26,075,983
- -----------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 9.0%
Massachusetts Water Resources Authority,
6.5s, 2019 $ 8,470 $ 9,883,897
Massachusetts Water Resources Authority, AMBAC,
5.25s, 2015 5,000 5,075,550
Massachusetts Water Resources Authority, MBIA,
5.25s, 2020 4,000 3,941,920
Massachusetts Water Resources Authority, MBIA,
5s, 2022 4,235 4,012,197
-------------
$ 22,913,564
- -----------------------------------------------------------------------------------------
Other - 3.7%
Martha's Vineyard, MA, Land Bank (Land
Acquisition), 8.125s, 2011 $ 3,900 $ 4,248,621
Massachusetts Health & Education Facilities
Authority (Learning Center for Deaf Children),
9.25s, 2014 2,250 2,400,795
Massachusetts Health & Education Facilities
Authority (Learning Center for Deaf Children),
8s, 2020 1,500 1,545,044
Nantucket Island, MA, Land Bank, 7.75s, 2020 1,200 1,336,464
-------------
$ 9,530,924
- -----------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $229,473,395) $250,465,127
- -----------------------------------------------------------------------------------------
Floating Rate Demand Note - 1.5%
- -----------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities
Authority, due 10/01/97, at Identified Cost $ 3,700 $ 3,700,000
- -----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $233,173,395) $254,165,127
Other Assets, Less Liabilities - (0.1)% (130,171)
- -----------------------------------------------------------------------------------------
Net assets - 100.0% $254,034,956
- -----------------------------------------------------------------------------------------
</TABLE>
Portfolio footnotes:
[dbldag]Security valued by or at the direction of the Trustees.
[dbldag][dbldag]Inverse floating rate security.
See notes to financial statements
16 - MMA
<PAGE>
Financial Statements
Statements of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
Alabama Arkansas California
September 30, 1997 Fund Fund Fund
- ----------------------------------------------------------- ------------- --------------- ----------------
<S> <C> <C> <C>
Assets:
Investments -
Identified cost $76,674,913 $134,722,118 $ 246,412,313
Unrealized appreciation 6,209,413 10,322,041 22,113,355
------------ ------------ --------------
Total investments, at value $82,884,326 $145,044,159 $ 268,525,668
Cash 70,195 99,136 30,314
Receivable for Fund shares sold 62,607 118,838 585,118
Receivable for investments sold 1,320,907 17,620 25,000
Interest receivable 1,273,418 2,057,786 3,832,288
Other assets 752 1,402 2,539
------------ ------------ --------------
Total assets $85,612,205 $147,338,941 $ 273,000,927
------------ ------------ --------------
Liabilities:
Distributions payable $ 217,179 $ 327,000 $ 640,275
Payable for Fund shares reacquired 121,748 408,503 442,868
Payable for investments purchased 967,430 -- --
Payable to affiliates -
Management fee 3,110 5,407 11,855
Administrative fee 104 180 445
Shareholder servicing agent fee 897 1,561 3,853
Distribution and service fee 2,163 517 10,413
Accrued expenses and other liabilities 47,938 61,819 122,649
------------ ------------ --------------
Total liabilities $ 1,360,569 $ 804,987 $ 1,232,358
------------ ------------ --------------
Net assets $84,251,636 $146,533,954 $ 271,768,569
------------ ------------ --------------
Net assets consist of:
Paid-in capital $76,990,980 $144,240,467 $ 260,394,595
Unrealized appreciation on investments 6,209,413 10,322,041 22,113,355
Accumulated undistributed net realized
gain (loss) on investments 893,313 (7,849,377) (10,362,605)
Accumulated undistributed
(distributions in excess of) net
investment income 157,930 (179,177) (376,776)
------------ ------------ --------------
Total $84,251,636 $146,533,954 $ 271,768,569
------------ ------------ --------------
Shares of beneficial interest outstanding:
Class A 7,125,706 13,796,368 39,765,890
Class B 654,895 757,208 6,974,327
Class C -- -- 699,781
------------ ------------ --------------
Total shares of beneficial interest
outstanding 7,780,601 14,553,576 47,439,998
------------ ------------ --------------
Net assets:
Class A $77,158,629 $138,911,311 $ 227,798,091
Class B 7,093,007 7,622,643 39,954,919
Class C -- -- 4,015,559
------------ ------------ --------------
Total net assets $84,251,636 $146,533,954 $ 271,768,569
------------ ------------ --------------
Class A shares:
Net asset value per share (net assets [divided by] shares
of beneficial interest outstanding) $ 10.83 $ 10.07 $ 5.73
------------ ------------ --------------
Offering price per share (100 [divided by] 95.25 of
NAV per share) $ 11.37 $ 10.57 $ 6.02
------------ ------------ --------------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial
interest outstanding) $ 10.83 $ 10.07 $ 5.73
------------ ------------ --------------
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial
interest outstanding) $ -- $ -- $ 5.74
------------ ------------ --------------
<CAPTION>
Florida Georgia Maryland Massachusetts
September 30, 1997 Fund Fund Fund Fund
- ----------------------------------------------------------- --------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $ 85,195,550 $ 63,192,065 $132,892,315 $233,173,395
Unrealized appreciation 7,813,791 7,044,668 11,846,074 20,991,732
------------- ------------- ------------ ------------
Total investments, at value $ 93,009,341 $ 70,236,733 $144,738,389 $254,165,127
Cash 21,692 74,618 5,095 5,038
Receivable for Fund shares sold 54,705 112,298 226,676 156,825
Receivable for investments sold -- 115,000 260,000 1,118,904
Interest receivable 1,628,371 1,118,635 2,149,831 3,833,057
Other assets 13,195 638 1,302 2,288
------------- ------------- ------------ ------------
Total assets $ 94,727,304 $ 71,657,922 $147,381,293 $259,281,239
------------- ------------- ------------ ------------
Liabilities:
Distributions payable $ 241,077 $ 142,784 $ 271,295 $ 588,870
Payable for Fund shares reacquired 90,116 79,055 222,562 1,211,616
Payable for investments purchased -- -- -- 3,333,500
Payable to affiliates -
Management fee 3,477 2,627 5,403 9,385
Administrative fee 116 88 180 313
Shareholder servicing agent fee 1,005 759 1,561 2,711
Distribution and service fee 3,727 2,119 5,246 8,176
Accrued expenses and other liabilities 48,622 58,566 75,979 91,712
------------- ------------- ------------ ------------
Total liabilities $ 388,140 $ 285,998 $ 582,226 $ 5,246,283
------------- ------------- ------------ ------------
Net assets $ 94,339,164 $ 71,371,924 $146,799,067 $254,034,956
------------- ------------- ------------ ------------
Net assets consist of:
Paid-in capital $ 94,566,830 $ 67,801,007 $139,872,321 $238,298,849
Unrealized appreciation on investments 7,813,791 7,044,668 11,846,074 20,991,732
Accumulated undistributed net realized
gain (loss) on investments (8,038,433) (3,429,583) (4,796,147) (4,629,155)
Accumulated undistributed
(distributions in excess of) net
investment income (3,024) (44,168) (123,181) (626,470)
------------- ------------- ------------ ------------
Total $ 94,339,164 $ 71,371,924 $146,799,067 $254,034,956
------------- ------------- ------------ ------------
Shares of beneficial interest outstanding:
Class A 7,862,636 5,586,003 11,188,306 21,055,451
Class B 1,575,128 987,991 1,739,904 1,456,078
Class C -- -- -- --
------------- ------------- ------------ ------------
Total shares of beneficial interest
outstanding 9,437,764 6,573,994 12,928,210 22,511,529
------------- ------------- ------------ ------------
Net assets:
Class A $ 78,595,847 $ 60,641,412 $127,051,772 $237,593,606
Class B 15,743,317 10,730,512 19,747,295 16,441,350
Class C -- -- -- --
------------- ------------- ------------ ------------
Total net assets $ 94,339,164 $ 71,371,924 $146,799,067 $254,034,956
------------- ------------- ------------ ------------
Class A shares:
Net asset value per share (net assets [divided by] shares
of beneficial interest outstanding) $ 10.00 $ 10.86 $ 11.36 $ 11.28
------------- ------------- ------------ ------------
Offering price per share (100 [divided by] 95.25 of
NAV per share) $ 10.50 $ 11.40 $ 11.93 $ 11.84
------------- ------------- ------------ ------------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial
interest outstanding) $ 9.99 $ 10.86 $ 11.35 $ 11.29
------------- ------------- ------------ ------------
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial
interest outstanding) $ -- $ -- $ -- $ --
------------- ------------- ------------ ------------
</TABLE>
On sales of $100,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
17
<PAGE>
Financial Statements - continued
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Alabama Arkansas California
Six Months Ended September 30, 1997 Fund Fund Fund
- ---------------------------------------------------- ------------- -------------- --------------
<S> <C> <C> <C>
Net investment income:
Interest income $2,640,268 $4,381,981 $ 7,909,663
---------- ---------- -----------
Expenses -
Management fee $ 232,566 $ 408,258 $ 545,107
Trustees' compensation 10,130 8,537 18,551
Shareholder servicing agent fee 55,134 96,781 177,160
Distribution and service fee (Class A) 97,860 70,681 --
Distribution and service fee (Class B) 36,876 32,183 158,317
Distribution and service fee (Class C) -- -- 19,427
Administrative fee 6,361 11,167 20,442
Custodian fee 17,773 30,673 48,358
Printing 4,605 9,467 11,354
Postage 1,817 5,773 8,686
Auditing fees 13,775 14,275 16,446
Legal fees 1,327 1,334 3,727
Miscellaneous 27,422 32,953 265,784
---------- ---------- -----------
Total expenses $ 505,646 $ 722,082 $ 1,293,359
Fees paid indirectly (5,070) (6,994) (15,801)
Preliminary reduction of expenses by
investment adviser (13,686) (23,766) (205,581)
---------- ---------- -----------
Net expenses $ 486,890 $ 691,322 $ 1,071,977
---------- ---------- -----------
Net investment income $2,153,378 $3,690,659 $ 6,837,686
---------- ---------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 299,342 $ (47,111) $ 1,146,493
Futures contracts 182,360 (8,674) --
---------- ---------- -----------
Net realized gain (loss) on
investments $ 481,702 $ (55,785) $ 1,146,493
---------- ---------- -----------
Change in unrealized appreciation -
Investments $2,199,231 $5,243,563 $11,283,260
Futures contracts 101,531 40,728 --
---------- ---------- -----------
Net unrealized gain on investments $2,300,762 $5,284,291 $11,283,260
---------- ---------- -----------
Net realized and unrealized gain
on investments $2,782,464 $5,228,509 $12,429,753
---------- ---------- -----------
Increase in net assets from
operations $4,935,842 $8,919,165 $19,267,439
---------- ---------- -----------
<CAPTION>
Florida Georgia Maryland Massachusetts
Six Months Ended September 30, 1997 Fund Fund Fund Fund
- ---------------------------------------------------- -------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $2,774,228 $2,201,988 $4,407,489 $ 8,072,363
---------- ---------- ---------- -----------
Expenses -
Management fee $ 258,334 $ 194,400 $ 399,825 $ 698,616
Trustees' compensation 8,434 9,172 9,240 10,201
Shareholder servicing agent fee 61,243 45,907 94,417 164,912
Distribution and service fee (Class A) -- 75,377 221,425 416,243
Distribution and service fee (Class B) 58,363 51,623 93,641 79,759
Distribution and service fee (Class C) -- -- -- --
Administrative fee 7,067 5,297 10,894 19,035
Custodian fee 19,791 14,618 30,110 51,519
Printing 5,410 6,586 12,971 14,925
Postage 3,538 2,311 8,302 8,298
Auditing fees 13,775 13,776 14,275 14,275
Legal fees 1,827 437 1,257 1,913
Miscellaneous 28,559 25,609 40,634 50,820
---------- ---------- ---------- -----------
Total expenses $ 466,341 $ 445,113 $ 936,991 $ 1,530,516
Fees paid indirectly (5,495) (9,083) (16,739) (16,253)
Preliminary reduction of expenses by
investment adviser (15,151) (35,493) (73,002) (127,555)
---------- ---------- ---------- -----------
Net expenses $ 445,695 $ 400,537 $ 847,250 $ 1,386,708
---------- ---------- ---------- -----------
Net investment income $2,328,533 $1,801,451 $3,560,239 $ 6,685,655
---------- ---------- ---------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (721,169) $ (536) $ 645,405 $ 588,651
Futures contracts -- -- -- --
---------- ---------- ---------- -----------
Net realized gain (loss) on
investments $ (721,169) $ (536) $ 645,405 $ 588,651
---------- ---------- ---------- -----------
Change in unrealized appreciation -
Investments $4,180,189 $3,150,924 $5,496,062 $ 9,173,422
Futures contracts -- -- -- --
---------- ---------- ---------- -----------
Net unrealized gain on investments $4,180,189 $3,150,924 $5,496,062 $ 9,173,422
---------- ---------- ---------- -----------
Net realized and unrealized gain
on investments $3,459,020 $3,150,388 $6,141,467 $ 9,762,073
---------- ---------- ---------- -----------
Increase in net assets from
operations $5,787,553 $4,951,839 $9,701,706 $16,447,728
---------- ---------- ---------- -----------
</TABLE>
See notes to financial statements
18
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Alabama Arkansas California
Six Months Ended September 30, 1997 Fund Fund Fund
- --------------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,153,378 $ 3,690,659 $ 6,837,686
Net realized gain (loss) on investments 481,702 (55,785) 1,146,493
Net unrealized gain on investments 2,300,762 5,284,291 11,283,260
------------ ------------- -------------
Increase in net assets from operations $ 4,935,842 $ 8,919,165 $ 19,267,439
------------ ------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (2,011,508) $ (3,529,673) $ (5,923,558)
From net investment income (Class B) (163,712) (160,986) (832,477)
From net investment income (Class C) -- -- (80,417)
In excess of net investment income (Class A) -- (37,493) --
In excess of net investment income (Class B) -- (1,710) --
------------ ------------- -------------
Total distributions declared to
shareholders $ (2,175,220) $ (3,729,862) $ (6,836,452)
------------ ------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 1,525,566 $ 3,633,267 $ 19,007,001
Net asset value of shares issued to
shareholders in reinvestment of
distributions 845,892 1,688,127 2,840,287
Cost of shares reacquired (5,089,632) (15,787,499) (35,671,380)
------------ ------------- -------------
Net decrease in net assets from
Fund share transactions $ (2,718,174) $ (10,466,105) $ (13,824,092)
------------ ------------- -------------
Total increase (decrease) in net assets $ 42,448 $ (5,276,802) $ (1,393,105)
Net assets:
At beginning of period 84,209,188 151,810,756 273,161,674
------------ ------------- -------------
At end of period $ 84,251,636 $ 146,533,954 $ 271,768,569
------------ ------------- -------------
Accumulated undistributed (distributions in excess
of) net investment income included in net assets
at end of period $ 157,930 $ (179,177) $ (376,776)
------------ ------------- -------------
<CAPTION>
Florida Georgia Maryland Massachusetts
Six Months Ended September 30, 1997 Fund Fund Fund Fund
- --------------------------------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,328,533 $ 1,801,451 $ 3,560,239 $ 6,685,655
Net realized gain (loss) on investments (721,169) (536) 645,405 588,651
Net unrealized gain on investments 4,180,189 3,150,924 5,496,062 9,173,422
------------ ------------ -------------- --------------
Increase in net assets from operations $ 5,787,553 $ 4,951,839 $ 9,701,706 $ 16,447,728
------------ ------------ -------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (2,026,339) $ (1,571,423) $ (3,142,037) $ (6,314,798)
From net investment income (Class B) (325,051) (230,028) (403,721) (370,857)
From net investment income (Class C) -- -- -- --
In excess of net investment income (Class A) (2,605) (2,373) -- (17,959)
In excess of net investment income (Class B) (418) (347) -- (1,055)
------------ ------------ -------------- --------------
Total distributions declared to
shareholders $ (2,354,413) $ (1,804,171) $ (3,545,758) $ (6,704,669)
------------ ------------ -------------- --------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 4,108,220 $ 2,820,718 $ 6,594,982 $ 33,869,604
Net asset value of shares issued to
shareholders in reinvestment of
distributions 869,343 939,285 1,894,071 3,038,589
Cost of shares reacquired (9,114,120) (5,373,371) (11,629,496) (42,694,115)
------------ ------------ -------------- --------------
Net decrease in net assets from
Fund share transactions $ (4,136,557) $ (1,613,368) $ (3,140,443) $ (5,785,922)
------------ ------------ -------------- --------------
Total increase (decrease) in net assets $ (703,417) $ 1,534,300 $ 3,015,505 $ 3,957,137
Net assets:
At beginning of period 95,042,581 69,837,624 143,783,562 250,077,819
------------ ------------ -------------- --------------
At end of period $ 94,339,164 $ 71,371,924 $ 146,799,067 $ 254,034,956
------------ ------------ -------------- --------------
Accumulated undistributed (distributions in excess
of) net investment income included in net assets
at end of period $ (3,024) $ (44,168) $ (123,181) $ (626,470)
------------ ------------ -------------- --------------
</TABLE>
See notes to financial statements
19
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Alabama Arkansas California
Year Ended March 31, 1997 Fund Fund Fund
- --------------------------------------------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,531,494 $ 8,421,933 $ 15,145,169
Net realized gain (loss) on investments 494,185 (150,505) (560,206)
Net unrealized gain (loss) on investments (137,249) (395,653) (1,519,530)
-------------- ------------- ---------------
Increase (decrease) in net assets from
operations $ 4,888,430 $ 7,875,775 $ 13,065,433
-------------- ------------- ---------------
Distributions declared to shareholders -
From net investment income (Class A) $ (4,197,127) $ (7,990,669) $ (13,365,451)
From net investment income (Class B) (303,407) (332,561) (1,604,012)
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)
-------------- ------------- ---------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 3,979,559 $ 9,627,230 $ 151,915,799
Net asset value of shares issued to
shareholders in reinvestment of
distributions 2,180,791 3,747,332 6,490,899
Cost of shares reacquired (10,268,087) (41,972,562) (181,959,198)
-------------- ------------- ---------------
Net increase (decrease) in net assets from
Fund share transactions $ (4,107,737) $ (28,598,000) $ (23,552,500)
-------------- ------------- ---------------
Total increase (decrease) in net assets $ (4,414,034) $ (29,045,455) $ (25,682,765)
Net assets:
At beginning of period 88,623,222 180,856,211 298,844,439
-------------- ------------- ---------------
At end of period $ 84,209,188 $ 151,810,756 $ 273,161,674
-------------- ------------- ---------------
Accumulated undistributed (distributions in excess
of) net investment income included in net assets
at end of period $ 179,772 $ (139,974) $ (378,009)
-------------- ------------- ---------------
<CAPTION>
Florida Georgia Maryland Massachusetts
Year Ended March 31, 1997 Fund Fund Fund Fund
- --------------------------------------------------- ---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 5,124,807 $ 3,897,912 $ 7,616,826 $ 14,194,777
Net realized gain (loss) on investments (1,328,413) 391,667 (762,039) (339,059)
Net unrealized gain (loss) on investments (546,250) (1,017,086) (1,489,457) (2,770,273)
-------------- -------------- -------------- -------------
Increase (decrease) in net assets from
operations $ 3,250,144 $ 3,272,493 $ 5,365,330 $ 11,085,445
-------------- -------------- -------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (4,467,721) $ (3,377,412) $ (6,713,171) $ (13,195,047)
From net investment income (Class B) (634,657) (454,697) (679,183) (653,840)
From net investment income (Class C) -- -- -- --
From net realized gain on investments
(Class A) -- -- -- --
From net realized gain on investments
(Class B) -- -- -- --
In excess of net investment income (Class A) -- -- -- --
In excess of net investment income (Class B) -- -- -- --
In excess of net investment income (Class C) -- -- -- --
-------------- -------------- -------------- -------------
Total distributions declared to
shareholders $ (5,102,378) $ (3,832,109) $ (7,392,354) $ (13,848,887)
-------------- -------------- -------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 43,852,042 $ 5,089,635 $ 11,277,965 $ 60,963,962
Net asset value of shares issued to
shareholders in reinvestment of
distributions 1,953,163 2,000,992 3,935,520 6,335,241
Cost of shares reacquired (50,911,287) (15,081,831) (22,393,495) (75,271,052)
-------------- -------------- -------------- -------------
Net increase (decrease) in net assets from
Fund share transactions $ (5,106,082) $ (7,991,204) $ (7,180,010) $ (7,971,849)
-------------- -------------- -------------- -------------
Total increase (decrease) in net assets $ (6,958,316) $ (8,550,820) $ (9,207,034) $ (10,735,291)
Net assets:
At beginning of period 102,000,897 78,388,444 152,990,596 260,813,110
-------------- -------------- -------------- -------------
At end of period $ 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 $ 22,856 $ (41,448) $ (137,662) $ (607,456)
-------------- -------------- -------------- -------------
</TABLE>
See notes to financial statements
20
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Alabama Fund
- -----------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended -------------------------------------
September 30,
1997 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.48 $ 10.52 $ 10.34 $ 10.27
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.28 $ 0.56 $ 0.55 $ 0.56
Net realized and unrealized gain (loss) on
investments 0.35 0.04 0.18 0.09
---------- ------- --------- ---------
Total from investment operations $ 0.63 $ 0.60 $ 0.73 $ 0.65
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.28) $ (0.55) $ (0.55) $ (0.55)
From net realized gain on investments -- (0.09) -- --
In excess of net investment income[dbldag][dbldag] -- -- -- --
In excess of net realized gain on investments -- -- -- (0.03)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.28) $ (0.64) $ (0.55) $ (0.58)
---------- ------- --------- ---------
Net asset value - end of period $ 10.83 $ 10.48 $ 10.52 $ 10.34
---------- ------- --------- ---------
Total return[dbldag] 6.05%++ 5.82% 7.13% 6.51%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.09%+ 1.10% 1.14% 1.15%
Net investment income 5.13%+ 5.28% 5.18% 5.47%
Portfolio turnover 12% 22% 37% 30%
Net assets at end of period (000 omitted) $ 77,159 $76,928 $ 82,484 $ 83,805
+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.
[dbldag]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.
[dbldag][dbldag]For the year ended January 31, 1992, the per share distribution in excess of net investment income was $0.004.
[sec]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or distribution fee,
respectively, for the periods indicated. If these fees had been incurred by the Fund, the net investment income per share and the
ratios would have been:
Net investment income $ 0.28 $ -- $ 0.54 $ 0.55
Ratios (to average net assets):
Expenses## 1.12%+ -- 1.24% 1.25%
Net investment income 5.10%+ -- 5.08% 5.37%
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Two Months Year Ended January 31,
Ended ------------------------------------------------
March 31,
1994 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.98 $ 10.33 $ 9.95 $ 9.65 $ 9.53
----------- --------- --------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.55 $ 0.56 $ 0.60 $ 0.59
Net realized and unrealized gain (loss) on
investments (0.71) 0.69 0.41 0.41 0.08
----------- --------- --------- --------- ---------
Total from investment operations $ (0.62) $ 1.24 $ 0.97 $ 1.01 $ 0.67
----------- --------- --------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.54) $ (0.58) $ (0.65) $ (0.55)
From net realized gain on investments -- (0.04) (0.01) (0.06) --
In excess of net investment income[dbldag][dbldag] (0.01) (0.01) -- (0.00) --
In excess of net realized gain on investments -- -- -- -- --
----------- --------- --------- --------- ---------
Total distributions declared to shareholders $ (0.09) $ (0.59) $ (0.59) $ (0.71) $ (0.55)
----------- --------- --------- --------- ---------
Net asset value - end of period $ 10.27 $ 10.98 $ 10.33 $ 9.95 $ 9.65
----------- --------- --------- --------- ---------
Total return[dbldag] (5.66)%++ 12.26% 10.08% 10.92% 7.31%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.18%+ 1.21% 1.08% 0.95% 0.57%
Net investment income 5.17%+ 5.13% 5.79% 6.19% 6.63%
Portfolio turnover 4% 12% 17% 23% 64%
Net assets at end of period (000 omitted) $ 81,501 $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.
[dbldag]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.
[dbldag][dbldag]For the year ended January 31, 1992, the per share distribution in excess of net investment income was $0.004.
[sec]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 $ 0.09 $ 0.54 $ 0.55 $ 0.59 $ 0.52
Ratios (to average net assets):
Expenses## 1.28%+ 1.31%+ 1.18% 1.08% 1.33%
Net investment income 5.07%+ 5.03%+ 5.69% 6.06% 5.87%
</TABLE>
See notes to financial statements
21
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Alabama Fund
- -----------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended -------------------------------------
September 30,
1997 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.48 $ 10.52 $ 10.34 $ 10.27
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.23 $ 0.47 $ 0.46 $ 0.47
Net realized and unrealized gain (loss) on
investments 0.71 0.04 0.18 0.09
---------- ------- --------- ---------
Total from investment operations $ 0.94 $ 0.51 $ 0.64 $ 0.56
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.59) $ (0.47) $ (0.46) $ (0.46)
From net realized gain on investments -- (0.08) -- --
In excess of net realized gain on investments -- -- -- (0.03)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.59) $ (0.55) $ (0.46) $ (0.49)
---------- ------- --------- ---------
Net asset value - end of period $ 10.83 $ 10.48 $ 10.52 $ 10.34
---------- ------- --------- ---------
Total return 5.65%++ 4.98% 6.25% 5.64%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.84%+ 1.90% 1.96% 1.97%
Net investment income 4.38%+ 4.48% 4.34% 4.63%
Portfolio turnover 12% 22% 37% 30%
Net assets at end of period (000 omitted) $ 7,093 $ 7,281 $ 6,139 $ 4,396
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[sec]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 $ 0.23 $ -- $ -- $ --
Ratios (to average net assets):
Expenses## 1.87%+ -- -- --
Net investment income 4.35%+ -- -- --
<CAPTION>
- ------------------------------------------------------------------------------------------
Two Months Period
Ended Ended
March 31, January 31,
1994 1994**
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.98 $ 10.93
--------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.08 $ 0.18
Net realized and unrealized gain (loss) on
investments (0.71) 0.07
--------- ----------
Total from investment operations $ (0.63) $ 0.25
--------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.18)
From net realized gain on investments -- (0.02)
In excess of net realized gain on investments -- --
--------- ----------
Total distributions declared to shareholders $ (0.08) $ (0.20)
--------- ----------
Net asset value - end of period $ 10.27 $ 10.98
--------- ----------
Total return (5.79)%++ 2.29%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 2.01%+ 1.98%+
Net investment income 4.30%+ 3.98%+
Portfolio turnover 4% 12%
Net assets at end of period (000 omitted) $ 2,849 $ 2,269
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[sec]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or distribution fee,
respectively, for the periods indicated. If these fees had been incurred by the Fund, the net investment income per share and the
ratios would have been:
Net investment income $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
22
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Arkansas Fund
- --------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended ---------------------------------
September 30,
1997 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.72 $ 9.75 $ 9.66 $ 9.69
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.25 $ 0.50 $ 0.50 $ 0.53
Net realized and unrealized gain (loss) on investments 0.35 (0.03) 0.09 0.02
--------- -------- -------- --------
Total from investment operations $ 0.60 $ 0.47 $ 0.59 $ 0.55
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.25) $ (0.50) $ (0.50) $ (0.53)
From net realized gain on investments[dbldag][dbldag][dbldag] -- -- -- --
In excess of net investment income[dbldag][dbldag] (0.00) -- -- --
In excess of net realized gain on investments[dbldag][dbldag][dbldag] -- -- -- (0.05)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.25) $ (0.50) $ (0.50) $ (0.58)
--------- -------- -------- --------
Net asset value - end of period $ 10.07 $ 9.72 $ 9.75 $ 9.66
--------- -------- -------- --------
Total return[dbldag] 6.23%++ 4.87% 6.19% 5.90%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.90%+ 0.92% 0.93% 0.75%
Net investment income 4.98%+ 5.14% 5.10% 5.51%
Portfolio turnover 9% 9% 6% 24%
Net assets at end of period (000 omitted) $138,911 $144,263 $172,907 $187,105
*For the period from the commencement of the Fund's investment operations, February 3, 1992, through 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.
[dbldag]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.
[dbldag][dbldag]For the six months ended September 30, 1997, the per share distributions in excess of net investment income were
$0.003.
[dbldag][dbldag][dbldag]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.
[sec]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 $ 0.25 $ -- $ -- $ 0.52
Ratios (to average net assets):
Expenses## 0.93%+ -- -- 0.82%
Net investment income 4.95%+ -- -- 5.43%
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Two Months Period
Ended Year Ended Ended
March 31, January 31, January 31,
1994 1994 1993*
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.47 $ 9.88 $ 9.53
----------- -------- -----------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.56 $ 0.58
Net realized and unrealized gain (loss) on investments (0.77) 0.60 0.35
----------- -------- -----------
Total from investment operations $ (0.68) $ 1.16 $ 0.93
----------- -------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.55) $ (0.58)
From net realized gain on investments[dbldag][dbldag][dbldag] -- (0.00) --
In excess of net investment income[dbldag][dbldag] (0.02) (0.02) --
In excess of net realized gain on investments[dbldag][dbldag][dbldag] -- (0.00) --
----------- -------- -----------
Total distributions declared to shareholders $ (0.10) $ (0.57) $ (0.58)
----------- -------- -----------
Net asset value - end of period $ 9.69 $ 10.47 $ 9.88
----------- -------- -----------
Total return[dbldag] (6.61)%++ 11.95% 10.11%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.75%+ 0.63% 0.16%+
Net investment income 5.21%+ 5.30% 6.04%+
Portfolio turnover 1% 3% 10%
Net assets at end of period (000 omitted) $ 195,042 $203,542 $ 124,644
*For the period from the commencement of the Fund's investment operations, February 3, 1992, through 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.
[dbldag]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.
[dbldag][dbldag]For the six months ended September 30, 1997, the per share distributions in excess of net investment income were
$0.003.
[dbldag][dbldag][dbldag]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.
[sec]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 $ 0.09 $ 0.53 $ 0.52
Ratios (to average net assets):
Expenses## 0.96%+ 0.91% 0.75%+
Net investment income 5.01%+ 5.01% 5.45%+
</TABLE>
See notes to financial statements
23
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Arkansas Fund
- ----------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended -----------------------------------
September 30,
1997 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------
Class B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.72 $ 9.75 $ 9.65 $ 9.69
---------- ------- --------- ---------
Income from investment operations #-
Net investment income[sec] $ 0.21 $ 0.42 $ 0.42 $ 0.42
Net realized and unrealized gain (loss) on investments 0.35 (0.03) 0.10 0.01
---------- ------- --------- ---------
Total from investment operations $ 0.56 $ 0.39 $ 0.52 $ 0.43
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.21) $ (0.42) $ (0.42) $ (0.42)
From net realized gain on investments[dbldag][dbldag][dbldag] -- -- -- --
In excess of net investment income[dbldag][dbldag] (0.00) -- -- --
In excess of net realized gain on investments[dbldag][dbldag][dbldag] -- -- -- (0.05)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.21) $ (0.42) $ (0.42) $ (0.47)
---------- ------- --------- ---------
Net asset value - end of period $ 10.07 $ 9.72 $ 9.75 $ 9.65
---------- ------- --------- ---------
Total return 5.85%++ 4.05% 5.43% 4.67%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.65%+ 1.71% 1.76% 1.84%
Net investment income 4.25%+ 4.34% 4.27% 4.40%
Portfolio turnover 9% 9% 6% 24%
Net assets at end of period (000 omitted) $ 7,623 $ 7,548 $ 7,950 $ 7,231
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]For the six months ended September 30, 1997, the period ended March 31, 1994, and the period ended January 31,
1994, the per share distributions in excess of net investment income were $0.002, $0.002, and $0.004, respectively.
[dbldag][dbldag][dbldag]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.
[sec]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 $ 0.21 $ -- $ -- $ 0.41
Ratios (to average net assets):
Expenses## 1.68%+ -- -- 1.91%
Net investment income 4.22%+ -- -- 4.33%
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Two Months
Ended Period Ended
March 31, January 31,
1994 1994**
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.47 $ 10.42
--------- ----------
Income from investment operations #-
Net investment income[sec] $ 0.07 $ 0.23
Net realized and unrealized gain (loss) on investments (0.78) (0.04)
--------- ----------
Total from investment operations $ (0.71) $ 0.19
--------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.07) $ (0.14)
From net realized gain on investments[dbldag][dbldag][dbldag] -- (0.00)
In excess of net investment income[dbldag][dbldag] (0.00) (0.00)
In excess of net realized gain on investments[dbldag][dbldag][dbldag] -- (0.00)
--------- ----------
Total distributions declared to shareholders $ (0.07) $ (0.14)
--------- ----------
Net asset value - end of period $ 9.69 $ 10.47
--------- ----------
Total return (6.81)%++ 2.18%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.82%+ 1.75%+
Net investment income 4.11%+ 3.87%+
Portfolio turnover 1% 3%
Net assets at end of period (000 omitted) $ 5,895 $ 5,179
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]For the six months ended September 30, 1997, the period ended March 31, 1994, and the period ended January 31,
1994, the per share distributions in excess of net investment income were $0.002, $0.002, and $0.004, respectively.
[dbldag][dbldag][dbldag]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.
[sec]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 $ 0.07 $ 0.12
Ratios (to average net assets):
Expenses## 2.02%+ 3.44%+
Net investment income 3.91%+ 2.18%+
</TABLE>
See notes to financial statements
24
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
California Fund
- ------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended --------------------------------------
September 30,
1997 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.47 $ 5.52 $ 5.41 $ 5.47
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.14 $ 0.30 $ 0.30 $ 0.31
Net realized and unrealized gain (loss) on investments 0.26 (0.05) 0.11 (0.05)
--------- -------- -------- --------
Total from investment operations $ 0.40 $ 0.25 $ 0.41 $ 0.26
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.14) $ (0.30) $ (0.30) $ (0.31)
From net realized gain on investments -- -- -- --
In excess of net investment income[dbldag][dbldag] -- -- (0.00) (0.00)
In excess of net realized gain on investments -- -- -- (0.01)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.14) $ (0.30) $ (0.30) $ (0.32)
--------- -------- -------- --------
Net asset value - end of period $ 5.73 $ 5.47 $ 5.52 $ 5.41
--------- -------- -------- --------
Total return[dbldag] 7.47%++ 4.55% 7.86% 4.85%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.65%+ 0.66% 0.66% 0.69%
Net investment income 5.13%+ 5.36% 5.48% 5.80%
Portfolio turnover 30% 78% 69% 57%
Net assets at end of period (000 Omitted) $227,798 $232,612 $259,817 $272,161
+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.
[dbldag]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.
[dbldag][dbldag]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.
[sec]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 $ 0.14 $ 0.29 $ 0.29 $ 0.30
Ratios (to average net assets):
Expenses## 0.80%+ 0.81% 0.81% 0.84%
Net investment income 4.98%+ 5.21% 5.33% 5.65%
<CAPTION>
- ------------------------------------------------------------------------------------------------
Two Months Eleven Months
Ended Ended
March 31, January 31,
1994 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.95 $ 5.88
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.05 $ 0.30
Net realized and unrealized gain (loss) on investments (0.48) 0.14
----------- ---------
Total from investment operations $ (0.43) $ 0.44
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.04) $ (0.29)
From net realized gain on investments -- (0.07)
In excess of net investment income[dbldag][dbldag] (0.01) (0.01)
In excess of net realized gain on investments -- --
----------- ---------
Total distributions declared to shareholders $ (0.05) $ (0.37)
----------- ---------
Net asset value - end of period $ 5.47 $ 5.95
----------- ---------
Total return[dbldag] (7.21)%++ 7.64%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.68%+ 0.60%+
Net investment income 5.27%+ 4.99%+
Portfolio turnover 8% 38%
Net assets at end of period (000 Omitted) $ 313,790 $356,419
+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.
[dbldag]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.
[dbldag][dbldag]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.
[sec]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 $ 0.05 $ 0.29
Ratios (to average net assets):
Expenses## 0.83%+ 0.78%+
Net investment income 5.12%+ 4.82%+
</TABLE>
See notes to financial statements
25
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
California Fund
- -------------------------------------------------------------------------------------------------------
Year Ended February 28, 1993 1992 1991
- -------------------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.42 $ 5.26 $ 5.19
-------- -------- ---------
Income from investment operations -
Net investment income[sec] $ 0.34 $ 0.35 $ 0.33
Net realized and unrealized gain (loss) on investments 0.47 0.20 0.07
-------- -------- ---------
Total from investment operations $ 0.81 $ 0.55 $ 0.40
-------- -------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.34) $ (0.37) $ (0.33)
From net realized gain on investments (0.01) (0.02) --
-------- -------- ---------
Total distributions declared to shareholders $ (0.35) $ (0.39) $ (0.33)
-------- -------- ---------
Net asset value - end of period $ 5.88 $ 5.42 $ 5.26
-------- -------- ---------
Total return[dbldag] 15.55% 10.69% 8.03%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 0.39% 0.40% 0.87%
Net investment income 6.18% 6.53% 6.39%
Portfolio turnover 64% 73% 102%
Net assets at end of period (000 omitted) $272,179 $177,291 $ 84,551
[dbldag]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.
[sec]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 $ 0.32
Ratios (to average net assets):
Expenses 0.77%
Net investment income 5.80%
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1990 1989 1988
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.06 $ 5.08 $ 5.38
--------- --------- ---------
Income from investment operations -
Net investment income[sec] $ 0.33 $ 0.32 $ 0.31
Net realized and unrealized gain (loss) on investments 0.13 (0.02) (0.29)
--------- --------- ---------
Total from investment operations $ 0.46 $ (0.30) $ 0.02
--------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.33) $ (0.32) $ (0.31)
From net realized gain on investments -- -- (0.01)
--------- --------- ---------
Total distributions declared to shareholders $ (0.33) $ (0.32) $ (0.32)
--------- --------- ---------
Net asset value - end of period $ 5.19 $ 5.06 $ 5.08
--------- --------- ---------
Total return[dbldag] 9.28% 6.07%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 1.00% 1.28% 1.20%
Net investment income 6.35% 6.35% 6.33%
Portfolio turnover 243% 188% 240%
Net assets at end of period (000 omitted) $ 68,879 $ 59,212 $59,479
[dbldag]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.
[sec]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
26
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
California Fund
- -----------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended -------------------------------------
September 30,
1997 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.47 $ 5.52 $ 5.41 $ 5.47
---------- ------- --------- ------------
Income from investment operations# -
Net investment income[sec] $ 0.12 $ 0.25 $ 0.26 $ 0.25
Net realized and unrealized gain (loss) on investments 0.26 (0.05) 0.11 (0.05)
---------- ------- --------- ------------
Total from investment operations $ 0.38 $ (0.20) $ 0.37 $ 0.20
---------- ------- --------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.12) $ (0.25) $ (0.26) $ (0.25)
From net realized gain on investments -- -- -- --
In excess of net investment income[dbldag][dbldag] -- -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.01)
---------- ------- --------- ------------
Total distributions declared to shareholders $ (0.12) $ (0.25) $ (0.26) $ (0.26)
---------- ------- --------- ------------
Net asset value - end of period $ 5.73 $ 5.47 $ 5.52 $ 5.41
---------- ------- --------- ------------
Total return 7.03%++ 3.64% 6.93% 3.73%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.47%+ 1.54% 1.54% 1.76%
Net investment income 4.31%+ 4.48% 4.59% 4.72%
Portfolio turnover 30% 78% 69% 57%
Net assets at end of period (000 omitted) $ 39,955 $36,694 $ 34,675 $ 29,057
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]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.
[sec]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 $ 0.12 $ 0.24 $ 0.24 $ 0.04
Ratios (to average net assets):
Expenses## 1.62%+ 1.69% 1.91% 1.83%+
Net investment income 4.16%+ 4.33% 4.57% 4.04%+
<CAPTION>
- ---------------------------------------------------------------------------------------------
Two Months Period
Ended Ended
March 31, January 31,
1994 1994**
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.95 $ 6.02
----------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.04 $ 0.10
Net realized and unrealized gain (loss) on investments (0.48) --
----------- ----------
Total from investment operations $ (0.44) $ 0.10
----------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.04) $ (0.10)
From net realized gain on investments -- (0.07)
In excess of net investment income[dbldag][dbldag] (0.00) (0.00)
In excess of net realized gain on investments -- --
----------- ----------
Total distributions declared to shareholders $ (0.04) $ (0.17)
----------- ----------
Net asset value - end of period $ 5.47 $ 5.95
----------- ----------
Total return (7.38)%++ 1.68%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.69%+ 1.60%+
Net investment income 4.18%+ 3.64%+
Portfolio turnover 8% 38%
Net assets at end of period (000 omitted) $ 21,252 $ 19,360
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]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.
[sec]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 $ 0.09 $ --
Ratios (to average net assets):
Expenses## 1.81%+ --
Net investment income 3.43%+ --
</TABLE>
See notes to financial statements
27
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
California Fund
- --------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended ---------------------------------
September 30,
1997 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------------------------------------------
Class C
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.48 $ 5.53 $ 5.42 $ 5.48
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.12 $ 0.24 $ 0.25 $ 0.26
Net realized and unrealized gain (loss) on investments 0.26 (0.05) 0.11 (0.06)
---------- ------- --------- ---------
Total from investment operations $ 0.38 $ 0.19 $ 0.36 $ 0.20
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.12) $ (0.24) $ (0.25) $ (0.25)
In excess of net investment income[dbldag][dbldag] -- -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.01)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.12) $ (0.24) $ (0.25) $ (0.26)
---------- ------- --------- ---------
Net asset value - end of period $ 5.74 $ 5.48 $ 5.53 $ 5.42
---------- ------- --------- ---------
Total return 6.92%++ 3.51% 6.77% 3.79%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.65%+ 1.66% 1.67% 1.69%
Net investment income 4.14%+ 4.37% 4.47% 4.79%
Portfolio turnover 30% 78% 69% 57%
Net assets at end of period (000 omitted) $ 4,016 $ 3,856 $ 4,353 $ 3,858
***For the period from the commencement of the Fund's offering of Class C shares, January 3, 1994, through 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.
[dbldag][dbldag]For the year ended March 31, 1996, the two months ended March 31, 1994, and the period ended January 31, 1994,
the per share distributions in excess of net investment income were $0.004, $0.001, and $0.003, respectively.
[sec]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 $ 0.11 $ 0.23 $ 0.24 $ 0.25
Ratios (to average net assets):
Expenses## 1.80%+ 1.81% 1.82% 1.84%
Net investment income 3.99%+ 4.22% 4.32% 4.64%
<CAPTION>
- --------------------------------------------------------------------------------------------
Two Months Period
Ended Ended
March 31, January 31,
1994 1994***
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.95 $ 5.89
----------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.03 $ 0.01
Net realized and unrealized gain (loss) on investments (0.46) 0.06
----------- ----------
Total from investment operations $ (0.43) $ 0.07
----------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.04) $ (0.01)
In excess of net investment income[dbldag][dbldag] (0.00) (0.00)
In excess of net realized gain on investments -- --
----------- ----------
Total distributions declared to shareholders $ (0.04) $ (0.01)
----------- ----------
Net asset value - end of period $ 5.48 $ 5.95
----------- ----------
Total return (7.22)%++ 1.25%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.64%+ 2.02%+
Net investment income 3.92%+ 1.78%+
Portfolio turnover 8% 38%
Net assets at end of period (000 omitted) $ 1,701 $ 917
***For the period from the commencement of the Fund's offering of Class C shares, January 3, 1994, through 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.
[dbldag][dbldag]For the year ended March 31, 1996, the two months ended March 31, 1994, and the period ended January 31, 1994,
the per share distributions in excess of net investment income were $0.004, $0.001, and $0.003, respectively.
[sec]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 $ 0.03 $ --
Ratios (to average net assets):
Expenses## 1.80%+ 3.53%+
Net investment income 3.77%+ 0.27%+
</TABLE>
See notes to financial statements
28
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Florida Fund
- ---------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended ------------------------------------
September 30,
1997 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
(Unaudited)
- ---------------------------------------------------------------------------------------------------------
Class A
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $ 9.64 $ 9.82 $ 9.60 $ 9.65
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.25 $ 0.51 $ 0.52 $ 0.54
Net realized and unrealized gain (loss) on
investments 0.36 (0.18) 0.22 0.02
---------- ------- --------- ---------
Total from investment operations $ 0.61 $ 0.33 $ 0.74 $ 0.56
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.25) $ (0.51) $ (0.52) $ (0.54)
From net realized gain on investments -- -- -- (0.04)
In excess of net investment income[dbldag][dbldag] (0.00) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.03)
---------- ------- --------- ---------
Total distributions declared to
shareholders $ (0.25) $ (0.51) $ (0.52) $ (0.61)
---------- ------- --------- ---------
Net asset value - end of period $ 10.00 $ 9.64 $ 9.82 $ 9.60
---------- ------- --------- ---------
Total return[dbldag] 6.41%++ 3.43% 7.81% 6.07%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.83%+ 0.86% 0.86% 0.60%
Net investment income 5.06%+ 5.26% 5.26% 5.75%
Portfolio turnover 9% 24% 56% 131%
Net assets at end of period (000 omitted) $ 78,596 $80,342 $ 87,553 $ 89,894
*For the period from the commencement of the Fund's offering of Class A shares, February 3, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
[dbldag]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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.0003 and $0.0015, respectively.
#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.
[sec]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 $ 0.25 $ -- $ 0.52 $ 0.52
Ratios (to average net assets):
Expenses## 0.86%+ -- 0.90% 0.83%
Net investment income 5.03%+ -- 5.22% 5.52%
<CAPTION>
- ------------------------------------------------------------------------------------------------
Two Months Period
Ended Year Ended Ended
March 31, January 31, January 31,
1994 1994 1993*
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $ 10.63 $ 9.89 $ 9.53
----------- -------- -----------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.57 $ 0.58
Net realized and unrealized gain (loss) on
investments (0.98) 0.86 0.36
----------- -------- -----------
Total from investment operations $ (0.89) $ 1.43 $ 0.94
----------- -------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.57) $ (0.58)
From net realized gain on investments -- (0.11) --
In excess of net investment income[dbldag][dbldag] (0.01) (0.01) --
In excess of net realized gain on investments -- -- --
----------- -------- -----------
Total distributions declared to
shareholders $ 0.09 $ (0.69) $ (0.58)
----------- -------- -----------
Net asset value - end of period $ 9.65 $ 10.63 $ 9.89
----------- -------- -----------
Total return[dbldag] (8.39)%++ 14.71% 10.28%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.77%+ 0.49% 0.05%+
Net investment income 5.15%+ 5.42% 6.27%+
Portfolio turnover 19% 53% 54%
Net assets at end of period (000 omitted) 108,579 $124,131 $ 74,329
*For the period from the commencement of the Fund's offering of Class A shares, February 3, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
[dbldag]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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.0003 and $0.0015, respectively.
#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.
[sec]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 $ 0.08 $ 0.52 $ 0.51
Ratios (to average net assets):
Expenses## 1.12%+ 0.93% 0.81%+
Net investment income 4.80%+ 4.97% 5.51%+
</TABLE>
See notes to financial statements
29
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Florida Fund
- -----------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended -------------------------------------
September 30,
1997 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.64 $ 9.82 $ 9.60 $ 9.64
--------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.21 $ 0.43 $ 0.43 $ 0.43
Net realized and unrealized gain (loss) on
investments 0.35 (0.18) 0.22 0.04
--------- ------- --------- ---------
Total from investment operations $ 0.56 $ 0.25 $ 0.65 $ 0.47
--------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.21) $ (0.43) $ (0.43) $ (0.44)
From net realized gain on investments -- -- -- (0.04)
In excess of net investment income[dbldag][dbldag] (0.00) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.03)
--------- ------- --------- ---------
Total distributions declared to shareholders $ (0.21) $ (0.43) $ (0.43) $ (0.51)
--------- ------- --------- ---------
Net asset value - end of period $ 9.99 $ 9.64 $ 9.82 $ 9.60
--------- ------- --------- ---------
Total return 5.88++ 2.56% 6.88% 5.06%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.60%+ 1.72% 1.74% 1.68%
Net investment income 4.25%+ 4.40% 4.36% 4.63%
Portfolio turnover 9% 24% 56% 131%
Net assets at end of period (000 omitted) $15,743 $14,701 $ 14,448 $ 12,667
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.0003 and $0.0012, respectively.
[sec]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 $ 0.21 $ -- $ 0.43 $ 0.41
Ratios (to average net assets):
Expenses## 1.63%+ -- 1.78% 1.91%
Net investment income 4.22%+ -- 4.33% 4.40%
<CAPTION>
- --------------------------------------------------------------------------------------------
Two Months Period
Ended Ended
March 31, January 31,
1994 1994**
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.62 $ 10.69
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on
investments (0.98) 0.03
----------- ---------
Total from investment operations $ (0.91) $ 0.21
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.06) $ (0.17)
From net realized gain on investments -- (0.10)
In excess of net investment income[dbldag][dbldag] (0.01) (0.01)
In excess of net realized gain on investments -- --
----------- ---------
Total distributions declared to shareholders $ (0.07) $ (0.28)
----------- ---------
Net asset value - end of period $ 9.64 $ 10.62
----------- ---------
Total return (8.55)%++ 4.87%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.82%+ 1.64%+
Net investment income 4.08%+ 3.82%+
Portfolio turnover 19% 53%
Net assets at end of period (000 omitted) $ 7,995 $ 7,244
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.0003 and $0.0012, respectively.
[sec]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 $ 0.06 $ 0.16
Ratios (to average net assets):
Expenses## 2.17%+ 2.09%+
Net investment income 3.72%+ 3.38%+
</TABLE>
See notes to financial statements
30
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Georgia Fund
- ---------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended -----------------------------------
September 30,
1997 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
Class A
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.38 $ 10.47 $ 10.35 $ 10.38
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.28 $ 0.56 $ 0.54 $ 0.57
Net realized and unrealized gain (loss) on investments 0.48 (0.10) 0.12 --
---------- ------- --------- ---------
Total from investment operations $ 0.76 $ 0.46 $ 0.66 $ 0.57
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.28) $ (0.55) $ (0.54) $ (0.56)
From net realized gain on investments -- -- -- (0.01)
In excess of net investment income[dbldag][dbldag] (0.00) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.03)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.28) $ (0.55) $ (0.54) $ (0.60)
---------- ------- --------- ---------
Net asset value - end of period $ 10.86 $ 10.38 $ 10.47 $ 10.35
---------- ------- --------- ---------
Total return[dbldag] 7.38%++ 4.47% 6.48% 5.65%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.05%+ 1.03% 1.17% 1.14%
Net investment income 5.20%+ 5.34% 5.11% 5.50%
Portfolio turnover 11% 27% 65% 56%
Net assets at end of period (000 omitted) $ 60,641 $59,843 $ 68,183 $ 74,432
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without fees paid indirectly.
[dbldag]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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.0004 and $0.003, respectively.
[sec]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 $ 0.27 $ 0.55 $ 0.53 $ 0.56
Ratios (to average net assets):
Expenses## 1.15%+ 1.10% 1.27% 1.24%
Net investment income 5.10%+ 5.27% 5.01% 5.40%
<CAPTION>
- ------------------------------------------------------------------------------
Two Months
Ended
March 31,
1994
- ------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.30
-----------
Income from investment operations# -
Net investment income[sec] $ 0.09
Net realized and unrealized gain (loss) on investments (0.92)
-----------
Total from investment operations $ (0.83)
-----------
Less distributions declared to shareholders -
From net investment income $ (0.06)
From net realized gain on investments --
In excess of net investment income[dbldag][dbldag] (0.03)
In excess of net realized gain on investments --
-----------
Total distributions declared to shareholders $ (0.09)
-----------
Net asset value - end of period $ 10.38
-----------
Total return[dbldag] (7.34)%++
Ratios (to average net assets)/Supplemental
data[sec]:
Expenses## 1.18%+
Net investment income 5.05%+
Portfolio turnover 5%
Net assets at end of period (000 omitted) $ 85,878
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without fees paid indirectly.
[dbldag]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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.0004 and $0.003, respectively.
[sec]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 $ 0.09
Ratios (to average net assets):
Expenses## 1.28%+
Net investment income 4.95%+
</TABLE>
See notes to financial statements
31
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Georgia Fund
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended January 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.57 $ 10.22 $ 9.83 $ 9.73 $ 9.73
------- --------- --------- --------- ---------
Income from investment operations -
Net investment income[sec] $ 0.57 $ 0.58 $ 0.61 $ 0.63 $ 0.66
Net realized and unrealized gain (loss) on investments 0.75 0.38 0.46 0.12 0.02
------- --------- --------- --------- ---------
Total from investment operations $ 1.32 $ 0.96 $ 1.07 $ 0.75 $ 0.68
------- --------- --------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.60) $ (0.66) $ (0.63) $ (0.66)
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)
------- --------- --------- --------- ---------
Net asset value - end of period $ 11.30 $ 10.57 $ 10.22 $ 9.83 $ 9.73
------- --------- --------- --------- ---------
Total return[dbldag] 12.71% 9.56% 11.29% 8.06% 7.19%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 1.21% 1.08% 0.99% 0.74% 0.42%
Net investment income 5.10% 5.75% 6.08% 6.46% 6.72%
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
*For the period from the commencement of the Fund's investment operations, June 6, 1988, through January 31, 1989.
+Annualized.
[dbldag]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.
[sec]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
Ratios (to average net assets):
Expenses 1.31% 1.18% 1.09% 1.11% 1.31%
Net investment income 5.00% 5.65% 5.98% 6.09% 5.83%
<CAPTION>
- ---------------------------------------------------------------------------
Period Ended
January 31,
1989*
- ---------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.53
---------
Income from investment operations -
Net investment income[sec] $ 0.32
Net realized and unrealized gain (loss) on investments 0.14
---------
Total from investment operations $ 0.46
---------
Less distributions declared to shareholders -
From net investment income $ (0.26)
From net realized gain on investments --
In excess of net investment income --
---------
Total distributions declared to shareholders $ (0.26)
---------
Net asset value - end of period $ 9.73
---------
Total return[dbldag] 7.57%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 0.40%+
Net investment income 6.18%+
Portfolio turnover --
Net assets at end of period (000 omitted) $ 4,383
*For the period from the commencement of the Fund's investment operations, June 6, 1988, through January 31, 1989.
+Annualized.
[dbldag]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.
[sec]The investment adviser and/or the distributor voluntarily waived a portion of their management and/or distribution fee,
respectively, for the periods indicated. If these fees had been incurred by the Fund, the net investment income per share and the
ratios would have been:
Net investment income $ 0.29
Ratios (to average net assets):
Expenses 1.07%+
Net investment income 5.51%+
</TABLE>
See notes to financial statements
32
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Georgia Fund
- -----------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended -------------------------------------
September 30,
1997 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.38 $ 10.47 $ 10.36 $ 10.38
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.24 $ 0.47 $ 0.45 $ 0.47
Net realized and unrealized gain (loss) on investments 0.48 (0.09) 0.12 0.02
---------- ------- --------- ---------
Total from investment operations $ 0.72 $ 0.38 $ 0.57 $ 0.49
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.24) $ (0.47) $ (0.46) $ (0.47)
From net realized gain on investments -- -- -- (0.01)
In excess of net investment income[dbldag][dbldag] (0.00) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.03)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.24) $ (0.47) $ (0.46) $ (0.51)
---------- ------- --------- ---------
Net asset value - end of period $ 10.86 $ 10.38 $ 10.47 $ 10.36
---------- ------- --------- ---------
Total return 6.98%++ 3.63% 5.52% 4.88%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.80%+ 1.83% 2.00% 1.96%
Net investment income 4.45%+ 4.53% 4.27% 4.66%
Portfolio turnover 11% 27% 65% 56%
Net assets at end of period (000 omitted) $ 10,731 $ 9,995 $ 10,205 $ 8,695
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.0004 and $0.002, respectively.
[sec]The investment adviser voluntarily waived a portion of its management fee for certain of the periods 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 $ 0.24 $ 0.47 $ -- $ --
Ratios (to average net assets):
Expenses## 1.90%+ 1.90% -- --
Net investment income 4.35%+ 4.46% -- --
<CAPTION>
- ---------------------------------------------------------------------------------------------
Two Months
Ended Period Ended
March 31, January 31,
1994 1994**
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.30 $ 11.26
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.07 $ 0.19
Net realized and unrealized gain (loss) on investments (0.91) 0.05
----------- ---------
Total from investment operations $ (0.84) $ 0.24
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.07) $ (0.18)
From net realized gain on investments -- (0.01)
In excess of net investment income[dbldag][dbldag] (0.01) (0.01)
In excess of net realized gain on investments -- --
----------- ---------
Total distributions declared to shareholders $ (0.08) $ (0.20)
----------- ---------
Net asset value - end of period $ 10.38 $ 11.30
----------- ---------
Total return (7.47)%++ 5.34%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.99%+ 1.97%+
Net investment income 4.17%+ 3.83%+
Portfolio turnover 5% 14%
Net assets at end of period (000 omitted) $ 6,631 $ 5,766
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.0004 and $0.002, respectively.
[sec]The investment adviser voluntarily waived a portion of its management fee for certain of the periods 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 $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
33
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Maryland Fund
- ----------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended ------------------------------------------
September 30,
1997 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.89 $ 11.04 $ 10.94 $ 10.89
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.28 $ 0.57 $ 0.57 $ 0.59
Net realized and unrealized gain (loss) on investments 0.47 (0.16) 0.09 0.09
--------- -------- -------- --------
Total from investment operations $ 0.75 $ 0.41 $ 0.66 $ 0.68
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.28) $ (0.56) $ (0.56) $ (0.59)
From net realized gain on investments -- -- -- --
In excess of net investment income[dbldag][dbldag] -- -- -- (0.00)
In excess of net realized gain on investments -- -- -- (0.04)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.28) $ (0.56) $ (0.56) $ (0.63)
--------- -------- -------- --------
Net asset value - end of period $ 11.36 $ 10.89 $ 11.04 $ 10.94
--------- -------- -------- --------
Total return[dbldag] 6.93%++ 3.75% 6.17% 6.51%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.06%+ 1.12% 1.19% 1.21%
Net investment income 4.97%+ 5.21% 5.10% 5.46%
Portfolio turnover 10% 22% 15% 31%
Net assets at end of period (000 omitted) $127,052 $126,405 $139,297 $145,361
+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.
[dbldag]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.
[dbldag][dbldag]For the year ended March 31, 1995, the per share distribution in excess of net investment income was $0.003.
[sec]The investment adviser voluntarily waived a portion of its management fee for certain of the periods 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 $ 0.27 $ 0.57 $ -- $ --
Ratios (to average net assets):
Expenses## 1.16%+ 1.19% -- --
Net investment income 4.87%+ 5.14% -- --
<CAPTION>
- ---------------------------------------------------------------------------------------------
Two Months
Ended Year Ended
March 31, January 31,
1994 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.81 $ 11.40
----------- --------
Income from investment operations# -
Net investment income[sec] $ 0.10 $ 0.62
Net realized and unrealized gain (loss) on investments (0.92) 0.53
----------- --------
Total from investment operations $ (0.82) $ 1.15
----------- --------
Less distributions declared to shareholders -
From net investment income $ (0.06) $ (0.61)
From net realized gain on investments -- (0.07)
In excess of net investment income[dbldag][dbldag] (0.04) (0.04)
In excess of net realized gain on investments -- (0.02)
----------- --------
Total distributions declared to shareholders $ (0.10) $ (0.74)
----------- --------
Net asset value - end of period $ 10.89 $ 11.81
----------- --------
Total return[dbldag] (6.96)%++ 10.27%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.23%+ 1.25%
Net investment income 4.97%+ 5.42%
Portfolio turnover 1% 25%
Net assets at end of period (000 omitted) $ 161,290 $173,419
+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.
[dbldag]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.
[dbldag][dbldag]For the year ended March 31, 1995, the per share distribution in excess of net investment income was $0.003.
[sec]The investment adviser voluntarily waived a portion of its management fee for certain of the periods 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 $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
34
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Maryland Fund
- -------------------------------------------------------------------------------
Year Ended January 31, 1993
- -------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.20
--------
Income from investment operations -
Net investment income $ 0.67
Net realized and unrealized gain (loss) on investments 0.24
--------
Total from investment operations $ 0.91
--------
Less distributions declared to shareholders -
From net investment income $ (0.69)
From net realized gain on investments (0.02)
Paid in capital --
--------
Total distributions declared to shareholders $ (0.71)
--------
Net asset value - end of period $ 11.40
--------
Total return[dbldag] 8.34%
Ratios (to average net assets)/Supplemental data:
Expenses 1.14%
Net investment income 6.13%
Portfolio turnover 5%
Net assets at end of period (000 omitted) $145,794
[dbldag]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.
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended January 31, 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------
<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)
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[dbldag] 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
[dbldag]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
35
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Maryland Fund
- -------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended ---------------------------------------
September 30,
1997 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.88 $ 11.03 $ 10.93 $ 10.88
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.24 $ 0.50 $ 0.48 $ 0.51
Net realized and unrealized gain (loss) on investments 0.47 (0.17) 0.10 0.09
---------- ------- --------- ---------
Total from investment operations $ 0.71 $ 0.33 $ 0.58 $ 0.60
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.24) $ (0.48) $ (0.48) $ (0.51)
From net realized gain on investments -- -- -- --
In excess of net investment income[dbldag][dbldag] -- -- -- (0.00)
In excess of net realized gain on investments -- -- -- (0.04)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.24) $ (0.48) $ (0.48) $ (0.55)
---------- ------- --------- ---------
Net asset value - end of period $ 11.35 $ 10.88 $ 11.03 $ 10.93
---------- ------- --------- ---------
Total return 6.58%++ 3.03% 5.41% 5.75%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.71%+ 1.82% 1.91% 1.93%
Net investment income 4.32%+ 4.50% 4.36% 4.73%
Portfolio turnover 10% 22% 15% 31%
Net assets at end of period (000 omitted) $ 19,747 $17,379 $ 13,694 $ 11,168
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]For the year ended March 31, 1995, the per share distribution in excess of net investment income was $0.003.
[sec]The investment adviser voluntarily waived a portion of its management fee for certain of the periods 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 $ 0.24 $ 0.49 $ -- $ --
Ratios (to average daily net assets):
Expenses## 1.81%+ 1.89% -- --
Net investment income 4.22%+ 4.43% -- --
<CAPTION>
- ---------------------------------------------------------------------------------------------
Two Months
Ended Period Ended
March 31, January 31,
1994 1994**
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.80 $ 11.88
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.08 $ 0.22
Net realized and unrealized gain (loss) on investments (0.91) (0.01)
----------- ---------
Total from investment operations $ (0.83) $ 0.21
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.21)
From net realized gain on investments -- (0.05)
In excess of net investment income[dbldag][dbldag] (0.01) (0.01)
In excess of net realized gain on investments -- (0.02)
----------- ---------
Total distributions declared to shareholders $ (0.09) $ (0.29)
----------- ---------
Net asset value - end of period $ 10.88 $ 11.80
----------- ---------
Total return (7.08)%++ 4.45%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.95%+ 1.81%+
Net investment income 4.19%+ 4.23%+
Portfolio turnover 1% 25%
Net assets at end of period (000 omitted) $ 6,478 $ 5,345
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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.
[dbldag][dbldag]For the year ended March 31, 1995, the per share distribution in excess of net investment income was $0.003.
[sec]The investment adviser voluntarily waived a portion of its management fee for certain of the periods 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 $ -- $ --
Ratios (to average daily net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
36
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Massachusetts Fund
- ----------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended ------------------------------------------
September 30,
1997 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.86 $ 10.98 $ 10.84 $ 10.90
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.29 $ 0.61 $ 0.60 $ 0.64
Net realized and unrealized gain (loss) on investments 0.43 (0.14) 0.14 (0.03)
--------- -------- -------- --------
Total from investment operations $ 0.72 $ 0.47 $ 0.74 $ 0.61
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.30) $ (0.59) $ (0.60) $ (0.64)
From net realized gain on investments -- -- -- (0.02)
In excess of net investment income[dbldag][dbldag] (0.00) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.01)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.30) $ (0.59) $ (0.60) $ (0.67)
--------- -------- -------- --------
Net asset value - end of period $ 11.28 $ 10.86 $ 10.98 $ 10.84
--------- -------- -------- --------
Total return[dbldag] 6.66%++ 4.39% 6.95% 5.89%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.05%+ 1.12% 1.17% 1.17%
Net investment income 5.30%+ 5.55% 5.44% 6.01%
Portfolio turnover 13% 33% 31% 31%
Net assets at end of period (000 omitted) $237,594 $234,874 $249,497 $262,551
+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.
[dbldag]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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.001 and $0.002, respectively.
[sec]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 $ 0.29 $ 0.60 $ -- $ --
Ratios (to average net assets):
Expenses## 1.15%+ 1.19% -- --
Net investment income 5.20%+ 5.48% -- --
<CAPTION>
- ---------------------------------------------------------------------------------------------
Two Months
Ended Year Ended
March 31, January 31,
1994 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.75 $ 11.41
----------- --------
Income from investment operations# -
Net investment income[sec] $ 0.11 $ 0.64
Net realized and unrealized gain (loss) on investments (0.85) 0.58
----------- --------
Total from investment operations $ (0.74) $ 1.22
----------- --------
Less distributions declared to shareholders -
From net investment income $ (0.07) $ (0.64)
From net realized gain on investments -- (0.20)
In excess of net investment income[dbldag][dbldag] (0.04) (0.04)
In excess of net realized gain on investments -- --
----------- --------
Total distributions declared to shareholders $ (0.11) $ (0.88)
----------- --------
Net asset value - end of period $ 10.90 $ 11.75
----------- --------
Total return[dbldag] (6.34)%++ 11.02%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.19%+ 1.19%
Net investment income 5.64%+ 5.71%
Portfolio turnover 4% 30%
Net assets at end of period (000 omitted) $ 277,748 $300,894
+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.
[dbldag]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.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment income were $0.001 and $0.002, respectively.
[sec]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 $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
37
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Massachusetts Fund
- -----------------------------------------------------------------------------
Year Ended January 31, 1993
- -----------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.05
--------
Income from investment operations -
Net investment income $ 0.68
Net realized and unrealized gain (loss) on investments 0.39
--------
Total from investment operations $ 1.07
--------
Less distributions declared to shareholders -
From net investment income $ (0.71)
From paid-in capital --
--------
Total distributions declared to shareholders $ (0.71)
--------
Net asset value - end of period $ 11.41
--------
Total return[dbldag] 10.03%
Ratios (to average net assets)/Supplemental data:
Expenses 1.08%
Net investment income 6.33%
Portfolio turnover 32%
Net assets at end of period (000 omitted) $270,778
[dbldag]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.
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended January 31, 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------
<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[dbldag] 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
[dbldag]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
38
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Massachusetts Fund
- -----------------------------------------------------------------------------------------------------------------------
Six Months Year Ended March 31,
Ended -------------------------------------
September 30,
1997 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.87 $ 10.99 $ 10.84 $ 10.90
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.26 $ 0.53 $ 0.52 $ 0.55
Net realized and unrealized gain (loss) on investments 0.42 (0.13) 0.15 (0.02)
---------- ------- --------- ---------
Total from investment operations $ 0.68 $ 0.40 $ 0.67 $ 0.53
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.26) $ (0.52) $ (0.52) $ (0.56)
From net realized gain on investments -- -- -- (0.02)
In excess of net investment income[dbldag][dbldag] (0.00) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.01)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.26) $ (0.52) $ (0.52) $ (0.59)
---------- ------- --------- ---------
Net asset value - end of period $ 11.29 $ 10.87 $ 10.99 $ 10.84
---------- ------- --------- ---------
Total return[dbldag] 6.31%++ 3.66% 6.27% 5.13%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.70%+ 1.81% 1.90% 1.89%
Net investment income 4.64%+ 4.81% 4.71% 5.27%
Portfolio turnover 13% 33% 51% 31%
Net assets at end of period (000 omitted) $ 16,441 $15,204 $ 11,316 $ 8,676
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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 year ending after September 1, 1995, the Fund's expenses are calculated without reduction of fees paid indirectly.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment investment income were $0.001 and $0.0013, respectively.
[sec]The investment adviser voluntarily waived a portion of its management fee for certain of the periods 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 $ 0.26 $ 0.52 $ -- $ --
Ratios (to average net assets):
Expenses## 1.80%+ 1.88% -- --
Net investment income 4.54%+ 4.74% -- --
<CAPTION>
- --------------------------------------------------------------------------------------------
Two Months
Ended Year Ended
March 31, January 31,
1994 1994**
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.75 $ 11.91
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.23
Net realized and unrealized gain (loss) on investments (0.85) 0.04
----------- ---------
Total from investment operations $ (0.76) $ 0.27
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.09) $ (0.22)
From net realized gain on investments -- (0.20)
In excess of net investment income[dbldag][dbldag] -- (0.01)
In excess of net realized gain on investments -- --
----------- ---------
Total distributions declared to shareholders $ (0.09) $ (0.43)
----------- ---------
Net asset value - end of period $ 10.90 $ 11.75
----------- ---------
Total return[dbldag] (6.46)%++ 5.89%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.91%+ 1.81%+
Net investment income 4.89%+ 4.62%+
Portfolio turnover 4% 30%
Net assets at end of period (000 omitted) $ 4,993 $ 4,191
**For the period from the commencement of the Fund's offering of Class B shares, September 7, 1993, through 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 year ending after September 1, 1995, the Fund's expenses are calculated without reduction of fees paid indirectly.
[dbldag][dbldag]For the six months ended September 30, 1997, and the year ended March 31, 1996, the per share distributions in
excess of net investment investment income were $0.001 and $0.0013, respectively.
[sec]The investment adviser voluntarily waived a portion of its management fee for certain of the periods 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 $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
39
<PAGE>
Notes to Financial Statements (Unaudited)
(1) Business and Organization
MFS Municipal Series Trust (the Trust) is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company. The Trust presently consists of
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 reported at market value using
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.
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.
Indexed Securities - Each Fund may invest 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.
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 is amortized or accreted for financial statement and tax
reporting purposes as required by federal income tax regulations. Interest
payments received in additional securities are recorded on the or ex-interest
date in an amount equal to the value of the security on such date. Some
government securities may be purchased on a "when-issued" or "forward delivery"
basis, which means that the securities will be delivered to the Fund at a future
date, usually beyond customary settlement time.
Fees Paid Indirectly - The Trust's custody fee is calculated as a percentage of
each Fund's average daily net assets. The fee is reduced according to an
arrangement which measures the value of cash deposited with the custodian by
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.
40
<PAGE>
Notes to Financial Statements (Unaudited) - continued
Distributions paid by each Fund from net interest received on tax-exempt
municipal bonds are not includable by shareholders as gross income for federal
income tax purposes because each Fund intends to meet certain requirements of
the Code applicable to regulated investment companies, which will enable each
Fund to pay exempt-interest dividends. The portion of such interest, if any,
earned on private activity bonds issued after August 7, 1986, may be considered
a tax-preference item to shareholders.
Distributions to shareholders are recorded on the ex-dividend date. Each Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a tax return of capital.
Differences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
At March 31, 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>
Arkansas California Florida Georgia Maryland Massachusetts
Expiration Date Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31, 2002 $ -- $ 277,504 $ -- $ -- $ -- $ --
March 31, 2003 -- 10,212,078 5,923,777 2,089,918 -- 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 multiple
classes of shares. The 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 has voluntarily
agreed to waive a portion of its fee with respect to each Fund, which is
reflected as a preliminary reduction of expenses in the Statement of Operations.
Administrator - Effective March 1, 1997, the Trust has an administrative
services agreement with MFS to provide the Trust with certain financial, legal,
shareholder servicing, compliance, and other administrative services. As a
partial reimbursement for the cost of providing these services, each Fund pays
MFS an administrative fee at the following annual percentages of each Fund's
average daily net assets, provided that the administrative fee is not assessed
on Fund assets that exceed $3 billion:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
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 period ended September 30, 1997, is a net
periodic pension expense for each Fund, as follows:
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$2,396 $2,136 $1,038 $2,137 $2,770 $2,794 $2,845
</TABLE>
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$6,050, $10,969, $20,093, $4,325, $7,997, $20,523, and $16,823 as its portion of
the sales charge on sales of Class A shares of the Alabama, Arkansas,
California, Florida, Georgia, Maryland, and Massachusetts Funds, respectively,
for the period ended September 30, 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
41
<PAGE>
Notes to Financial Statements (Unaudited) - continued
MFD wholesalers for sales at or above a certain dollar level, and other such
distribution-related expenses that are approved by the Fund, respectively. MFD
retains the service fee for accounts not attributable to a securities dealer,
which amounted to $28,080, $16,325, $9,697, $24,043 and $82,631 for the Alabama,
Arkansas, Georgia, Maryland, and Massachusetts Funds, for the period ended
September 30, 1997. 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, 0.10% 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. Fees
incurred under the distribution plan during the period ended September 30, 1997,
were 0.25%, 0.10%, 0%, 0%, 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, respectively.
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 0.25% per annum first year service
fee, payments by the California and Florida Funds will commence on such date as
the Trustees of the Trust may determine. 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 $2,674, $1,407, $2,954, $2,519, and $9,196 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 $3,901 for the California Fund for Class C shares.
Fees incurred under the distribution plan during the period ended September 30,
1997, were 1.00%, 0.85%, 0.81%, 0.77%, 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 period ended September 30, 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. MFD receives all contingent deferred
sales charges. Contingent deferred sales charges imposed during the period ended
September 30, 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 $ -- $ -- $14,871 $ 12 $ -- $ -- $ --
Class B $13,480 $9,301 $46,367 $16,319 $14,010 $25,868 $20,706
Class C $ -- $ -- $ 703 $ -- $ -- $ -- $ --
</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.
42
<PAGE>
Notes to Financial Statements (Unaudited) - continued
(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 $ 9,946 $13,338 $78,381 $ 7,987 $7,546 $14,290 $31,246
Sales 11,748 25,568 86,413 11,421 7,271 16,769 32,887
</TABLE>
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Funds, as computed on a federal income tax basis, are as follows
(000 omitted):
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate cost $76,675 $134,722 $246,412 $85,196 $63,192 $132,892 $233,173
------- -------- -------- -------- ------- -------- --------
Gross unrealized appreciation $ 6,235 $10,503 $ 22,160 $ 7,817 $ 7,055 $ 11,900 $ 22,327
Gross unrealized depreciation (26) (181) (47) (3) (10) (54) (1,335)
------- -------- -------- -------- ------- -------- --------
Net unrealized appreciation $ 6,209 $10,322 $ 22,113 $ 7,814 $ 7,045 $ 11,846 $ 20,992
------- -------- -------- -------- ------- -------- --------
</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>
Alabama Fund Arkansas Fund California Fund
Class A Shares -------------------------- -------------------------- -----------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 109 $ 1,163 327 $ 3,237 2,395 $ 13,388
Shares issued to shareholders in
reinvestment of distributions 73 777 162 1,612 426 2,403
Shares reacquired (396) (4,229) (1,528) (15,128) (5,553) (31,113)
----- -------- ------- --------- -------- ----------
Net decrease (214) $ (2,289) (1,039) $ (10,279) (2,732) $ (15,322)
----- -------- ------- --------- -------- ----------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
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>
Florida Fund Georgia Fund Maryland Fund
-------------------------- -------------------------- ------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 270 $ 2,636 148 $ 1,579 317 $ 3,525
Shares issued to shareholders in
reinvestment of distributions 77 760 78 832 149 1,668
Shares reacquired (820) (8,028) (405) (4,304) (890) (9,901)
------- --------- ------- --------- ------- ---------
Net decrease (473) $ (4,632) (179) $ (1,893) (424) $ (4,708)
------- --------- ------- --------- ------- ---------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
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>
43
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
Massachusetts Fund
Class A Shares ---------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount
- -----------------------------------------------------------------------------
<S> <C> <C>
Shares sold 2,903 $ 32,167
Shares issued to shareholders in
reinvestment of distributions 253 2,816
Shares reacquired (3,730) (41,326)
------- ---------
Net decrease (574) $ (6,343)
------- ---------
Year Ended March 31, 1997 (000 Omitted) Shares Amount
- ---------------------------------------------------------------------------
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>
Alabama Fund Arkansas Fund California Fund
Class B Shares -------------------------- -------------------------- ------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 34 $ 362 40 $ 396 800 $ 4,495
Shares issued to shareholders in
reinvestment of distributions 6 69 8 76 69 391
Shares reacquired (80) (860) (67) (660) (598) (3,370)
----- ------- ----- -------- ------- --------
Net increase (decrease) (40) $ (429) (19) $ (188) 271 $ 1,516
----- ------- ----- -------- ------- --------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
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
----- ------- ----- -------- ------- --------
</TABLE>
<TABLE>
<CAPTION>
Florida Fund Georgia Fund Maryland Fund
-------------------------- -------------------------- ------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 151 $ 1,493 116 $ 1,241 276 $ 3,070
Shares issued to shareholders in
reinvestment of distributions 11 109 10 108 20 226
Shares reacquired (112) (1,107) (100) (1,070) (154) (1,728)
----- -------- ----- -------- ----- --------
Net increase 50 $ 495 26 $ 279 142 $ 1,568
----- -------- ----- -------- ----- --------
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
----- -------- ----- -------- ----- --------
</TABLE>
44
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
Massachusetts Fund
Class B Shares --------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount
- ----------------------------------------------------------------------------
<S> <C> <C>
Shares sold 154 $ 1,702
Shares issued to shareholders in
reinvestment of distributions 20 223
Shares reacquired (117) (1,298)
----- --------
Net increase 57 $ 627
----- --------
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
----- --------
</TABLE>
<TABLE>
<CAPTION>
California Fund
Class C Shares -------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount
- ---------------------------------------------------------------------------
<S> <C> <C>
Shares sold 199 $ 1,124
Shares issued to shareholders in
reinvestment of distributions 8 45
Shares reacquired (211) (1,187)
------ --------
Net decrease (4) $ (18)
------ --------
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 reacquired (411) (2,275)
------ --------
Net decrease (85) $ (468)
------ --------
</TABLE>
(6) Line of Credit
The Trust and other affiliated funds participate in a $400 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Fund
shares. Interest is charged to each fund, based on its borrowings, at a rate
equal to the bank's base rate. In addition, a commitment fee, based on the
average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated to
each of the Funds for the period ended September 30, 1997, ranged from $168 to
$654.
(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. At September 30,
1997, there were no open future contracts.
------------------------------------
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.
45
<PAGE>
MFS Investment Opportunities
Mutual Funds
The MFS Family of Funds(R) falls into the eight general categories below. All
offer full-time professional management, a diversified portfolio, and a wide
array of shareholder services.
Stock funds seek growth of capital rather than income through investments in
stocks.
Stock and bond funds seek current income and growth of capital through
investments in both stocks and bonds.
Bond funds seek current income through investments in debt securities.
Limited-maturity funds seek current income and preservation of capital through
investments in debt securities with remaining maturities of five years or less.
World funds seek stock, balanced, and bond fund objectives through investments
in U.S. and foreign stocks and bonds.
National tax-free bond funds seek current income exempt from federal income tax
through investments in debt securities issued by states and municipalities.(1)
State tax-free bond funds seek current income exempt from federal and state
income taxes through investments in debt securities issued by a single state and
its municipalities.(1)
Money market funds seek preservation of capital and current income through
investments in short-term debt securities.(2)
To determine which MFS fund may be appropriate for you, please contact your
financial adviser, who can help you relate these investment opportunities to
your financial goals. If you prefer, you may call for literature3 on MFS
products and services: 1-800-225-2606, from 8 a.m. to 8 p.m. Eastern time any
business day.
(1) A small portion of the income may be subject to federal, state, and/or
alternative minimum tax.
(2) Investments in money market funds are neither insured nor guaranteed by the
U.S. government and there is no assurance that the fund will be able to
maintain a stable net asset value.
(3) Including a prospectus containing more complete information on charges and
expenses. Please read the prospectus carefully before investing.
46
<PAGE>
The MFS Family of Funds(R)
America's Oldest Mutual Fund Group
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-225-2606
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) Emerging Growth Fund
MFS(R) Equity Income Fund
MFS(R) Growth Opportunities Fund
MFS(R) Large Cap Growth Fund(1)
MFS(R) Managed Sectors Fund
MFS(R) Mid Cap Growth Fund(2)
MFS(R) New Discovery Fund
MFS(R) Research Fund
MFS(R) Research Growth and Income Fund
MFS(R) Strategic Growth Fund
MFS(R) Union Standard(R) Equity 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) International Growth Fund(3)
MFS(R) International Growth and Income Fund(4)
MFS(R) World Asset Allocation Fund(SM)
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
(1)Formerly MFS(R) Capital Growth Fund.
(2)Formerly MFS(R) OTC Fund.
(3)Formerly MFS(R)/Foreign & Colonial
International Growth Fund.
(4)Formerly MFS(R)/Foreign & Colonial
International Growth and Income Fund.
47
<PAGE>
Introducing a quick and easy way to learn some financial basics:
The ABCs of Investing
part of MFS(R) Heritage Planning(SM)
[graphic of juggling couple]
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.
48
<PAGE>
MFS Municipal Series Trust
Trustees
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Marshall N. Cohan - Private Investor
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE - Chief Executive Officer, Edmund Gibbons
Ltd.; Chairman, Bank of N.T. Butterfield & Son Ltd.
Abby M. O'Neill - Private Investor; Director, Rockefeller Financial Services,
Inc. (investment advisers)
Walter E. Robb, III - President and Treasurer, Benchmark Advisors, Inc.
(corporate financial consultants); President, Benchmark Consulting Group, Inc.
(office services); Trustee, Landmark Funds (mutual funds)
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial Services
Company
J. Dale Sherratt - President, Insight Resources, Inc. (acquisition planning
specialists)
Ward Smith - Former Chairman (until 1994), NACCO Industries; Director,
Sundstrand Corporation
Investment Adviser
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
Distributor
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
Portfolio Managers
Geoffrey L. Schechter*
David B. Smith*
Treasurer
W. Thomas London*
Assistant Treasurers
Mark E. Bradley*
Ellen Moynihan*
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
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 graphic] DALBAR
NUMBER
1
MFS
TOP-RATED SERVICE
For the fourth 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 3.42 overall score on a scale of 1 to 4 in the 1997 survey. A total
of 111 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 11 categories, including "knowledge of operations contacts,"
"keeping you informed," and "overall ease of doing business" with the firm.
49
<PAGE>
[back cover]
MFS(R) Municipal
Series Trust
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
[indicia]
Bulk Rate
U.S. Postage
Paid
MFS
[MFS logo] (silhouette) MFS(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
[dalbar graphic] DALBAR
NUMBER
1
MFS
TOP-RATED SERVICE
54/254
55/255
27/227/327
40/240
46/246
56/256
MST-3A-11/97-37M 45/245
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116
