[MFS INVESTMENT MANAGEMENT logo] Semiannual Report
September 30, 1997
MFS(R) Municipal Series Trust
For the States of Mississippi, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, and West Virginia
[Graphic of eyeglasses and bonds]
<PAGE>
Table of Contents
<TABLE>
<S> <C>
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 .................. 20
Notes to Financial Statements ......... 50
The MFS Family of Funds[RegTM] ........ 56
Trustees and Officers ................. 57
</TABLE>
Highlights
o 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%.
o 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.
o 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."
o 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
[PICTURE 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 been
favorable. 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.
Respectively,
[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,
[Signature of Geoffrey L. Schechter] [Signature of David B. Smith]
George 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 Mississippi, New York, North Carolina, and Pennsylvania
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 C.F.A. and currently has portfolio
management responsibilities for the South Carolina, Tennessee, Virginia, and
West Virginia 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:
Mississippi August 6, 1992
New York June 6, 1988
North Carolina October 31, 1984
Pennsylvania February 1, 1993
South Carolina October 31, 1984
Tennessee August 12, 1988
Virginia October 31, 1984
West Virginia October 31, 1984
Net assets as of September 30, 1997:
Mississippi $ 76.6 million
New York $146.7 million
North Carolina $429.5 million
Pennsylvania $ 38.8 million
South Carolina $175.2 million
Tennessee $125.7 million
Virginia $412.3 million
West Virginia $144.8 million
Class inception:
Mississippi Class A August 6, 1992
Class B September 7, 1993
New York Class A June 6, 1988
Class B September 7, 1993
North Carolina Class A October 31, 1984
Class B September 7, 1993
Class C January 3, 1994
Pennsylvania Class A February 1, 1993
Class B September 7, 1993
South Carolina Class A October 31, 1984
Class B September 7, 1993
Tennessee Class A August 12, 1988
Class B September 7, 1993
Virginia Class A October 31, 1984
Class B September 7, 1993
Class C January 3, 1994
West Virginia Class A October 31, 1984
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[RM] Mississippi Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.78% +8.43% +39.54% +36.28%
- --------------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.43% +6.89% +6.19%
- --------------------------------------------------------------------------------------------------
SEC Results -- +3.29% +5.86% +5.19%
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------
MFS[RM] Mississippi Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.37% +7.68% +34.71% +31.58%
- --------------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.68% +6.14% +5.47%
- --------------------------------------------------------------------------------------------------
SEC Results -- +3.68% +5.82% +5.31%
- --------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
August 6, 1992, through September 30, 1997.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------
MFS[RM] New York Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +7.46% +9.21% +39.41% +106.53%
- --------------------------------------------------------------------------------------------------
Average Annual Total Return -- +9.21% +6.87% +8.09%
- --------------------------------------------------------------------------------------------------
SEC Results -- +4.05% +5.83% +7.53%
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------
MFS[RM] New York Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +7.06% +8.30% +34.77% +99.69%
- --------------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.30% +6.15% +7.70%
- --------------------------------------------------------------------------------------------------
SEC Results -- +4.30% +5.83% +7.70%
- --------------------------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the Fund's investment operations,
June 6, 1988, through September 30, 1997.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------
MFS[RegTM] North Carolina Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.51% +8.21% +34.58% +109.00%
- --------------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.21% +6.12% +7.65%
- --------------------------------------------------------------------------------------------------
SEC Results -- +3.08% +5.10% +7.12%
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------
MFS[RegTM] North Carolina Municipal Bond Fund 6 Months 1 Year 5 Years Life of Fund*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.26% +7.49% +30.76% +102.87%
- --------------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.49% +5.51% +7.33%
- --------------------------------------------------------------------------------------------------
SEC Results -- +3.49% +5.18% +7.33%
- --------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Performance Summary - continued
<TABLE>
<CAPTION>
Class C
-----------------------------------------------
MFS North Carolina Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.26% +7.51% +31.13% +103.62%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.51% +5.57% +7.37%
- --------------------------------------------------------------------------------------------
SEC Results -- +6.51% +5.57% +7.37%
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class A
---------------------------------------------
MFS[RM] Pennsylvania Municipal Bond Fund 6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +7.10% +8.43% +32.26%
- -------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.43% +6.18%
- -------------------------------------------------------------------------------------------
SEC Results -- +3.28% +5.08%
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------------------
MFS[RM] Pennsylvania Municipal Bond Fund 6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +6.78% +7.68% +28.02%
- -------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.68% +5.44%
- -------------------------------------------------------------------------------------------
SEC Results -- +3.68% +5.09%
- -------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
February 1, 1993, through September 30, 1997.
<TABLE>
<CAPTION>
Class A
-----------------------------------------------
MFS[RM] South Carolina Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.50% +8.18% +35.28% +113.51%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.18% +6.23% +7.88%
- --------------------------------------------------------------------------------------------
SEC Results -- +3.02% +5.20% +7.36%
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------
MFS[RM] South Carolina Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.07% +7.37% +31.25% +107.26%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.37% +5.59% +7.56%
- --------------------------------------------------------------------------------------------
SEC Results -- +3.37% +5.27% +7.56%
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class A
-----------------------------------------------
MFS[RM] Tennessee Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.95% +9.22% +35.73% +91.87%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +9.22% +6.30% +7.39%
- --------------------------------------------------------------------------------------------
SEC Results -- +4.01% +5.26% +6.82%
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------
MFS[RM] Tennessee Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.61% +8.51% +31.69% +86.23%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.51% +5.66% +7.04%
- --------------------------------------------------------------------------------------------
SEC Results -- +4.51% +5.34% +7.04%
- --------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
August 12, 1988, through September 30, 1997.
<TABLE>
<CAPTION>
Class A
-----------------------------------------------
MFS[RM] Virginia Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.66% +8.13% +32.82% +109.97%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.13% +5.84% +7.70%
- --------------------------------------------------------------------------------------------
SEC Results -- +2.99% +4.81% +7.17%
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------
MFS[RM] Virginia Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.32% +7.52% +29.03% +104.00%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.52% +5.23% +7.39%
- --------------------------------------------------------------------------------------------
SEC Results -- +3.52% +4.91% +7.39%
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C
-----------------------------------------------
MFS[RM] Virginia Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.32% +7.44% +29.34% +104.38%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.44% +5.28% +7.41%
- --------------------------------------------------------------------------------------------
SEC Results -- +6.44% +5.28% +7.41%
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class A
-----------------------------------------------
MFS[RM] West Virginia Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.04% +8.38% +35.79% +113.90%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.38% +6.31% +7.90%
- --------------------------------------------------------------------------------------------
SEC Results -- +3.20% +5.28% +7.38%
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------
MFS[RM] West Virginia Municipal Bond Fund 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +5.61% +7.57% +31.81% +107.64%
- --------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.57% +5.68% +7.58%
- --------------------------------------------------------------------------------------------
SEC Results -- +3.57% +5.35% +7.58%
- --------------------------------------------------------------------------------------------
</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 Funds' 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 MISSISSIPPI MUNICIPAL BOND FUND
Municipal Bonds - 98.6%
<TABLE>
- ------------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 9.1%
Commonwealth of Puerto Rico, MBIA, 7.584s, 2008[dbldag][dbldag] $2,000 $2,221,940
Hinds County, MS, MBIA, 6.25s, 2010 1,660 1,874,306
Hinds County, MS, MBIA, 6.25s, 2011 1,285 1,452,384
Jackson County, MS, Road Improvement, 6.5s, 2008 425 441,201
State of Mississippi, 5.125s, 2014 1,000 1,009,750
----------
$6,999,581
- ------------------------------------------------------------------------------------------------
State and Local Appropriation - 12.8%
Hinds Community College, MS, Conference and
Training Center, 6.5s, 2014 $1,320 $1,374,067
Medical Center Educational Building Corp., MS
(University of Mississippi Medical Center), MBIA, 5.65s, 2009 2,000 2,154,500
Medical Center Educational Building Corp., MS
(University of Mississippi Medical Center), MBIA, 5.9s, 2023 2,250 2,312,708
Puerto Rico Public Buildings Authority, 5.25s, 2021 1,000 970,900
Puerto Rico Public Buildings Authority, 5s, 2027 1,000 954,000
State of Mississippi, Certificates of Participation
(Rehabilitation Services), 6.1s, 2014 2,000 2,057,580
----------
$9,823,755
- ------------------------------------------------------------------------------------------------
Refunded and Special Obligations - 8.1%
Adams County, MS, Hospital Rev. (Jefferson Davis
Memorial Hospital), 8s, 2001 $1,000 $1,156,540
Mississippi Home Corp., 0s, 2013 2,000 863,360
Puerto Rico Highway & Transportation Authority
Rev., 6.625s, 2018 1,900 2,122,186
State of Mississippi, 6.75s, 2014 1,800 2,048,994
----------
$6,191,080
- ------------------------------------------------------------------------------------------------
Airport and Port Revenue - 2.8%
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 $2,000 $2,123,740
- ------------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 6.7%
Claiborne County, MS, Pollution Control Rev.
(System Energy Resources, Inc.), 7.3s, 2025 $1,000 $1,061,530
Claiborne County, MS, Pollution Control Rev.
(System Energy Resources, Inc.), 6.2s, 2026 500 508,605
Puerto Rico Electric Power Authority Power, FSA,
8.208s, 2023[dbldag][dbldag] 1,000 1,084,560
Warren, MS, Pollution Control Rev. (Mississippi
Power & Light), 7s, 2022 1,000 1,097,250
Washington County, MS, Pollution Control Rev.
(Mississippi Power & Light), 7s, 2022 1,230 1,349,618
----------
$5,101,563
- ------------------------------------------------------------------------------------------------
Health Care Revenue - 4.1%
Mississippi Hospital Equipment & Facilities
Authority Rev., 6s, 2016 $1,500 $1,517,535
Mississippi Hospital Equipment & Facilities
Authority Rev. (Magnolia Regional Health
Center), 7.375s, 2021 1,500 1,593,225
----------
$3,110,760
- ------------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 7.9%
Lowndes County, MS, Solid Waste Disposal &
Pollution Control Rev. (Weyerhauser), 6.8s, 2022 $3,250 $3,855,085
Mississippi Business Finance Corp. (Jackson
Municipal Airport/Airborne Freight), 7.15s, 2007 985 1,085,391
Municipal Bonds - continued
- ------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------- ----------------- -------------
Industrial Revenue (Corporate Guarantee) - continued
Warren County, MS, Pollution Control Rev.
(International Paper), 6.6s, 2019 $1,000 $ 1,084,660
-----------
$ 6,025,136
- ------------------------------------------------------------------------------------------------
Insured Health Care Revenue - 18.3%
Alcorn County, Corinth (Magnolia Regional Health
Center), AMBAC, 5.75s, 2013 $2,000 $ 2,080,800
Gulfport, MS, Hospital Facilities (Memorial
Hospital), MBIA, 6.125s, 2015 2,250 2,406,398
Gulfport, MS, Hospital Facilities (Memorial
Hospital), MBIA, 6.2s, 2018 1,000 1,071,100
Hinds County, MS, Rev. (Methodist Hospital &
Rehabilitation Center), AMBAC, 5.6s, 2012 3,055 3,193,972
Mississippi Development Bank, Special Obligation
(Adams County Hospital), FSA, 5.75s, 2016 1,000 1,022,800
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist), MBIA, 6.5s, 2010 1,190 1,317,056
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist), MBIA, 6s, 2013 750 797,910
Mississippi Hospital Equipment & Facilities
Authority Rev. (Rush Medical Foundation),
Connie Lee, 6.7s, 2018 2,000 2,163,920
-----------
$14,053,956
- ------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.2%
Gulfport, MS, Community Development (Oakview
Apartments), FNMA, 7.4s, 2025 $1,755 $ 1,912,388
Jackson, MS, Elderly Housing Corp., Mortgage Rev.
(Delhaven Manor), "C", FHA, 7.375s, 2024 1,960 2,098,063
-----------
$ 4,010,451
- ------------------------------------------------------------------------------------------------
Single Family Housing Revenue - 7.3%
Mississippi Home Corp., GNMA, 6.5s, 2024 $2,650 $ 2,788,754
Mississippi Home Corp., GNMA, 6s, 2027 1,225 1,386,761
Mississippi Home Corp., GNMA, 6.625s, 2027 1,350 1,442,313
-----------
$ 5,617,828
- ------------------------------------------------------------------------------------------------
Universities - 2.2%
University of Mississippi, Educational Building
Corp. (Athletic Facilities), 6.2s, 2016 $1,000 $ 1,054,550
University of Mississippi, Educational Building
Corp., MBIA, 5s, 2016 680 654,983
-----------
$ 1,709,533
- ------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 14.1%
Clarksdale, MS, Sewer & Wastewater Treatment
System Rev., MBIA, 6.1s, 2012 $1,885 $1,998,043
Columbus, MS, Water & Sewer Rev., MBIA, 6.5s, 2013 1,000 1,103,480
Gautier, MS, Utility District, Utility Systems Rev.,
FGIC, 6.375s, 2019 1,300 1,401,543
Harrison County, MS, Wastewater Management
District, Wastewater Treatment, FGIC, 6.5s, 2006 1,375 1,483,157
Harrison County, MS, Wastewater Management
District, Wastewater Treatment, FGIC, 5.875s, 2025 2,000 2,064,740
Meridian, MS, Water & Sewer Rev., AMBAC, 6s, 2010 1,500 1,613,430
Meridian, MS, Water & Sewer Rev., AMBAC, 6.2s, 2012 650 702,241
Meridian, MS, Water & Sewer Rev., AMBAC, 6.2s, 2013 400 432,148
-----------
$10,798,782
-----------
Total Municipal Bonds (Identified Cost, $70,315,713) $75,566,165
- ------------------------------------------------------------------------------------------------
</TABLE>
5 - MMP
<PAGE>
Portfolio of Investments (Unaudited) - continued
Floating Rate Demand Note - 0.5%
<TABLE>
- ----------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Jackson County, MS (Chevron USA, Inc.), due
6/01/23, at Identified Cost $400 $ 400,000
- ----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $70,715,713) $75,966,165
Other Assets, Less Liabilities - 0.9% 660,268
- ----------------------------------------------------------------------------------------
Net Assets - 100.0% $76,626,433
- ----------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS NEW YORK MUNICIPAL BOND FUND
Municipal Bonds - 99.2%
<TABLE>
- --------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 12.1%
Nassau County, NY, "A", 6s, 2012 $1,000 $ 1,102,090
New York City, NY, 7.2s, 2008 1,000 1,140,460
New York City, NY, 7.3s, 2010 840 988,092
New York City, NY, 7.3s, 2010 40 45,548
New York City, NY, 7.3s, 2011 970 1,137,868
New York City, NY, 7.3s, 2011 4,030 4,588,961
New York City, NY, 7.375s, 2013 145 171,202
New York City, NY, 7.375s, 2013 1,455 1,663,094
New York City, NY, 8.25s, 2016 160 182,546
New York City, NY, 5.25s, 2020 1,310 1,243,910
Oswego County, NY, 6.7s, 2009 1,000 1,161,380
Port Byron, NY, Central School District, AMBAC,
7.4s, 2012 500 630,415
Port Byron, NY, Central School District, AMBAC,
7.4s, 2013 500 633,210
Port Byron, NY, Central School District, AMBAC,
7.4s, 2014 500 638,755
Port Byron, NY, Central School District, AMBAC,
7.4s, 2015 500 640,565
Territory of Virgin Islands, 7.75s, 2006 365 401,489
Washingtonville, NY, Central School District,
FGIC, 7.35s, 2008 550 674,371
Washingtonville, NY, Central School District,
FGIC, 7.35s, 2009 550 677,600
-----------
$17,721,556
- --------------------------------------------------------------------------------------
State and Local Appropriation - 19.8%
Metropolitan Transportation Authority, NY, Service
Contract, 7.375s, 2008 $2,000 $ 2,381,080
Metropolitan Transportation Authority, NY, Service
Contract, 0s, 2012 1,655 758,851
Metropolitan Transportation Authority, NY, Service
Contract, 5.75s, 2013 1,825 1,974,650
Metropolitan Transportation Authority, NY, Service
Contract, 0s, 2014 4,750 1,949,875
Metropolitan Transportation Authority, NY, Service
Contract, 0s, 2014 3,500 1,436,750
New York Dormitory Authority Rev.
(City University), 5.625s, 2016 1,450 1,494,877
New York Dormitory Authority Rev.
(City University), AMBAC, 5.75s, 2018 1,000 1,070,600
New York Dormitory Authority Rev.
(City University), AMBAC, 5.75s, 2018 800 856,480
New York Dormitory Authority Rev.
(City University), FSA, 5.75s, 2013 4,250 4,598,500
New York Dormitory Authority Rev.
(State University), 5.875s, 2017 1,130 1,202,874
Municipal Bonds - continued
- --------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------
State and Local Appropriation - continued
New York Dormitory Authority Rev. (State
University), FSA, 5.875s, 2017 $1,435 $ 1,564,351
New York Dormitory Authority Rev. (University),
MBIA, 0s, 2007 2,500 1,575,225
New York Medical Care Facilities Finance Agency,
MBIA, 6s, 2025 1,300 1,362,816
New York Medical Care Facilities Finance Agency,
Mental Health Services, 6.375s, 2014 1,000 1,068,830
New York Urban Development Corp. (Correctional
Facilities), AMBAC, 0s, 2009 5,000 2,850,650
New York Urban Development Corp. (State
Facilities) AMBAC, 5.6s, 2015 2,750 2,910,985
-----------
$29,057,394
- --------------------------------------------------------------------------------------
Refunded and Special Obligations - 13.9%
New York City, NY, 8s, 2001 $ 490 $ 561,996
New York City, NY, 8.25s, 2001 1,840 2,144,428
New York City, NY, Municipal Water & Sewer
Finance Authority, 7s, 2001 530 584,479
New York City, NY, Municipal Water & Sewer
Finance Authority, 7s, 2001 225 248,128
New York City, NY, Municipal Water & Sewer
Finance Authority, Systems Rev., 7.375s, 2001 2,000 2,243,240
New York Local Government Assistance Corp., 7.25s, 2001 2,500 2,791,250
New York Medical Care Facilities Finance Agency
(Montefiore Medical), FHA, 7.25s, 2009 3,170 3,366,413
New York Medical Care Facilities Finance Agency
(Montefiore Medical), FHA, 7.25s, 2024 1,750 1,858,430
New York Medical Care Facilities Finance Agency
(St. Luke's Hospital), FHA, 7.45s, 2000 2,600 2,846,558
New York Medical Care Facilities Finance Agency,
Mental Health Services, 7.875s, 2000 340 380,701
New York Medical Care Facilities Finance Agency,
Mental Health Services, 7.3s, 2001 750 845,760
New York Urban Development Corp., State
Facilities Rev., 7.5s, 2001 1,000 1,124,550
Puerto Rico Aqueduct & Sewer Authority Rev., 9s, 2005 250 318,580
Triborough Bridge & Tunnel Authority, NY,
7.375s, 2000 1,000 1,084,940
-----------
$20,399,453
- --------------------------------------------------------------------------------------
Airport and Port Revenue - 1.5%
New York, NY, Industrial Development Agency, Special
Facilities Rev. (American Airlines), 6.9s, 2024 $1,000 $ 1,106,340
Port Authority, NY & NJ, Special Obligation (JFK
International), 6.25s, 2015 1,000 1,123,620
-----------
$ 2,229,960
- --------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 8.1%
New York Energy Research and Development
Authority, Electrical Facilities Rev. (Long Island
Lighting), 7.15s, 2022 $2,700 $ 2,915,892
New York Power Authority, FGIC, 6.5s, 2008 2,500 2,890,075
Port Authority NY & NJ, Special Obligation,
6.75s, 2019 1,750 1,884,505
Puerto Rico Electric Power Authority, FSA, 8.208s,
2023[dbldag][dbldag] 1,500 1,626,840
Virgin Islands Water & Power Authority, Electric
Systems Rev., 7.4s, 2011 2,355 2,531,931
-----------
$11,849,243
- --------------------------------------------------------------------------------------
</TABLE>
6 - MNY
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - 3.0%
Albany, NY, Industrial Development Authority,
Civic Facilities Rev., 8.25s, 2004 $1,785 $ 1,921,945
Dutchess, NY, Industrial Development Agency,
Civic Facilities Rev., 8.625s, 2016 1,105 1,182,516
New York Medical Care Facilities Finance Agency, Mental
Health Services (Huntington Mortgage), 6.5s, 2014 1,250 1,343,200
------------
$ 4,447,661
- -----------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 4.2%
Allegany County, NY, Industrial Development
Authority, Solid Waste Rev. (Atlantic Richfield),
6.625s, 2016 $1,000 $ 1,080,730
Essex County, NY, Industrial Development Agency
(International Paper), 5.55s, 2014 750 762,682
Essex County, NY, Industrial Development Agency
(Solid Waste International Paper), 6.15s, 2021 1,000 1,044,040
Fulton County, NY, Industrial Development Agency
(Crossroads Incubator), 8.75s, 2009 1,075 1,144,660
Monroe County, NY, Industrial Development
Agency (Weyerhauser), 9s, 2006 1,000 1,016,200
Onondaga County, NY, Industrial Development
Agency (Bristol-Meyers Squibb), 5.75s, 2024 1,000 1,057,850
------------
$ 6,106,162
- -----------------------------------------------------------------------------------------
Insured Health Care Revenue - 7.2%
New York City, NY, Health & Hospital Corp.,
AMBAC, 7.24s, 2023[dbldag][dbldag] $3,200 $ 3,247,264
New York Dormitory Authority Rev. (Champlain
Valley), Connie Lee, 6s, 2010 250 273,265
New York Dormitory Authority Rev., United Health
Services (FHA Mortgage Hospital), 5.5s, 2017 1,500 1,507,335
New York Dormitory Authority Rev. (St. Vincent's
Hospital), FHA, 7.375s, 2011 2,500 2,775,275
New York Medical Care Facilities Finance Agency
(Montefiore Medical), AMBAC, 6.5s, 2029 2,550 2,810,355
------------
$ 10,613,494
- -----------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.4%
New York City, NY, Housing Development Corp.
(South Bronx Cooperatives), 8.1s, 2023 $ 575 $ 605,561
- -----------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.7%
Municipal Assistance Corp., City of Troy, MBIA, 0s,
2019 $1,935 $ 594,819
Municipal Assistance Corp., City of Troy, MBIA, 0s,
2020 1,370 409,877
------------
$ 1,004,696
- -----------------------------------------------------------------------------------------
Single Family Housing Revenue - 3.9%
New York Mortgage Agency Rev., 7.375s, 2011 $1,295 $ 1,381,195
New York Mortgage Agency Rev., 8.05s, 2011 105 109,533
New York Mortgage Agency Rev., 6.45s, 2017 2,355 2,516,882
New York Mortgage Agency Rev., 8.05s, 2021 70 74,028
New York Mortgage Agency Rev., 8.05s, 2022 555 593,012
New York Mortgage Agency Rev., 7.75s, 2023 995 1,062,093
------------
$ 5,736,743
- -----------------------------------------------------------------------------------------
Turnpike Revenue - 6.2%
Triborough Bridge & Tunnel Authority, NY, 5.5s, 2017 $8,000 $ 8,249,360
Virgin Islands Public Finance Authority, Highway
Rev., 7.7s, 2004 800 856,752
------------
$ 9,106,112
------------
Municipal Bonds - continued
- -----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
Universities - 4.4%
Hempstead Town, NY, Civic Facilities Rev. (Hofstra
University), MBIA, 5.8s, 2015 $1,500 $ 1,563,825
Islip, NY, Community Development Agency Rev.
(New York Institute of Technology), 7.5s, 2026 2,000 2,141,280
New York Dormitory Authority Rev. (Colgate
University), 6s, 2016 1,000 1,102,620
New York Dormitory Authority Rev. (Cornell
University), 7.375s, 2020 1,500 1,639,830
------------
$ 6,447,555
- -----------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 13.8%
Buffalo, NY, Municipal Water Authority, FGIC, 5s, 2025 $1,000 $ 952,530
New York City, NY, Municipal Water & Sewer
Finance Authority, 6s, 2010 620 683,085
New York City, NY, Municipal Water & Sewer
Finance Authority, 7.1s, 2012 2,000 2,189,320
New York City, NY, Municipal Water & Sewer
Finance Authority, 7s, 2015 745 811,685
New York City, NY, Municipal Water & Sewer
Finance Authority, 7.6s, 2020 470 502,317
New York City, NY, Municipal Water & Sewer
Finance Authority, 5.5s, 2023 1,500 1,485,135
New York Environmental Facilities Corp., Pollution
Control Rev., 5.75s, 2010 3,235 3,497,941
New York Environmental Facilities Corp., Pollution
Control Rev., 6.875s, 2010 2,000 2,188,960
New York Environmental Facilities Corp., Pollution
Control Rev., 5.75s, 2012 1,100 1,174,206
New York Environmental Facilities Corp., Water
Facilities Rev., 8.85s, 2015 2,500 2,855,450
Suffolk County, NY, Water Authority, MBIA, 5.1s, 2012 1,895 1,925,832
Suffolk County, NY, Water Authority, MBIA, 5.1s, 2013 2,000 2,023,240
------------
$ 20,289,701
------------
Total Municipal Bonds (Identified Cost, $132,514,472) $145,615,291
- -----------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
- -----------------------------------------------------------------------------------------
New York City Municipal Water Finance Authority,
due 6/15/23 $ 400 $ 400,000
New York City Municipal Water Finance Authority,
due 6/15/24 600 600,000
New York City, Municipal Water & Sewer Finance
Authority, due 6/15/22 100 100,000
- -----------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,100,000
- -----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $133,614,472) $146,715,291
- -----------------------------------------------------------------------------------------
Other Assets, Less Liabilities 27,254
- -----------------------------------------------------------------------------------------
Net Assets - 100.0% $146,742,545
- -----------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS NORTH CAROLINA MUNICIPAL BOND FUND
Municipal Bonds - 98.7%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 5.7%
Charlotte, NC, Water and Sewer, 5.8s, 2013 $1,780 $1,884,094
Charlotte, NC, Water and Sewer, 5.8s, 2014 5,050 5,331,184
Charlotte, NC, Water and Sewer, 5.9s, 2019 2,820 2,960,690
Durham, NC, 5.9s, 2013 2,400 2,567,520
</TABLE>
7 - MNC
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- ------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - continued
Durham, NC, 5.9s, 2014 $ 2,400 $ 2,559,864
Hertford County, NC, 9.5s, 2000 100 103,425
Hertford County, NC, 9.5s, 2001 100 103,914
Hertford County, NC, 9.5s, 2002 100 104,404
North Carolina Capital Improvement, 5.1s, 2015 8,875 8,914,671
-----------
$24,529,766
- ------------------------------------------------------------------------------------------
State and Local Appropriation - 8.9%
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC, 0s, 2004 $ 3,435 $ 2,477,631
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC, 0s, 2005 4,810 3,301,969
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC, 0s, 2006 1,075 701,663
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC, 0s, 2008 3,000 1,755,420
Cumberland County, NC, Certificates of Participation
(Civic Center), AMBAC, 6.375s, 2010 1,100 1,219,559
Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC, 0s, 2011 425 206,609
Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC, 0s, 2013 1,000 431,530
Dare County, NC, MBIA, 6.6s, 2006 2,100 2,276,316
Durham, NC, Certificates of Participation
(Hospital and Office Facilities), 5.875s, 2009 1,460 1,565,281
Durham, NC, Certificates of Participation
(New Durham Corp.), 6.875s, 2009 1,750 1,911,175
Franklin County, NC, Certificates of Participation
(Jail and School), FGIC, 6.625s, 2014 2,000 2,210,720
Greensboro, NC, Certificates of Participation
(Coliseum Arena Project), 6.25s, 2011 2,180 2,311,280
Harnett County, NC, Certificates of Participation,
AMBAC, 6.2s, 2006 1,000 1,110,440
Harnett County, NC, Certificates of Participation,
AMBAC, 6.2s, 2009 1,500 1,646,310
Pasquotank County, NC, Certificates of
Participation, MBIA, 5s, 2020 5,000 4,758,850
Puerto Rico Housing, Bank and Finance Agency,
7.5s, 2006 7,000 8,171,170
Scotland County, NC, Certificates of Participation
(Jail and Courthouse Project), FSA, 6.75s, 2011 1,000 1,084,560
Union County, NC, Certificates of Participation,
AMBAC, 6.375s, 2012 1,000 1,084,880
-----------
$38,225,363
- ------------------------------------------------------------------------------------------
Refunded and Special Obligations - 9.5%
Chapel Hill, NC, Parking Facilities Rev.
(Rosemary Street Project), 8.125s, 2000 $ 1,630 $ 1,850,148
Chapel Hill, NC, Parking Facilities Rev.
(Rosemary Street Project), 8.25s, 2000 3,305 3,763,502
Charlotte, NC, Certificates of Participation
(Convention Facilities Project), AMBAC, 6.75s, 2021 4,250 4,736,158
Craven, NC, Regional Medical Authority, MBIA,
7.2s, 2000 1,500 1,657,680
Fayetteville, NC, Public Works Rev., FGIC, 7s, 2000 2,000 2,171,900
North Carolina Eastern Municipal Power Agency,
7.5s, 2010 2,595 3,188,269
North Carolina Eastern Municipal Power Agency,
5s, 2017 9,010 8,801,869
North Carolina Eastern Municipal Power Agency,
4.5s, 2024 1,365 1,232,363
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Health Care), 0s, 2007 500 274,240
Municipal Bonds - continued
- ------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------
Refunded and Special Obligations - continued
North Carolina Medical Care Commission, Hospital
Rev. (Mercy Hospital), 6.5s, 2015 $ 1,000 $ 1,092,500
North Carolina Medical Care Commission, Hospital
Rev. (Presbyterian Health), 7.3s, 2000 1,000 1,107,920
North Carolina Medical Care Commission, Hospital
Rev. (Presbyterian Health), 7.375s, 2000 4,000 4,440,040
Pender County, NC, Certificates of Participation
(Pender County Prison), 7.6s, 2001 1,900 2,148,197
Pender County, NC, Certificates of Participation
(Pender County Prison), 7.7s, 2001 1,000 1,133,990
Pitt County, NC, Hospital Rev. (Pitt Memorial
Hospital), MBIA, 6.75s, 2001 2,800 3,126,004
-----------
$40,724,780
- ------------------------------------------------------------------------------------------
Airport and Port Revenue - 1.2%
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 $ 5,075 $ 5,388,990
- ------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 18.1%
New Hanover County, NC, Industrial Facilities Rev.
(Carolina Power and Light Co.), 6.9s, 2009 $ 1,000 $ 1,071,960
North Carolina Eastern Municipal Power Agency,
AMBAC, 6s, 2018 14,245 15,585,597
North Carolina Eastern Municipal Power Agency,
MBIA, 7s, 2007 5,000 5,913,450
North Carolina Eastern Municipal Power Agency,
MBIA, 7.25s, 2007 5,000 6,006,950
North Carolina Eastern Municipal Power Agency,
MBIA, 7.5s, 2010 3,005 3,732,871
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., AMBAC, 7.625s, 2014 180 185,247
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., FSA, 6.2s, 2018 4,300 4,556,323
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 0s, 2008 10,150 6,205,913
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 0s, 2009 16,000 9,222,880
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 6s, 2011 8,000 8,806,400
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 6.82s, 2012[dbldag][dbldag] 9,000 9,219,600
Puerto Rico Electric Power Authority Rev., FSA, 6s,
2016 5,000 5,293,100
Wake County, NC, Industrial Facilities Rev.
(Carolina Power and Light), 6.9s, 2009 2,000 2,143,920
-----------
$77,944,211
- ------------------------------------------------------------------------------------------
Health Care Revenue - 17.9%
North Carolina Medical Care (Well Spring
Retirement), 6.25s, 2021 $ 2,000 $ 2,038,200
North Carolina Medical Care Commission, Hospital
Rev. (Carolina Medicorp), 6s, 2021 19,000 19,533,140
North Carolina Medical Care Commission, Hospital
Rev. (Duke University), 5.25s, 2021 9,475 9,311,083
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Health Care), 5.5s, 2015 8,040 8,098,853
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Health Care), 5.5s, 2019 7,750 7,745,737
North Carolina Medical Care Commission, Hospital
Rev. (Halifax Memorial), 6.75s, 2014 1,355 1,455,690
North Carolina Medical Care Commission, Hospital
Rev. (Halifax Memorial), 6.75s, 2024 4,500 4,824,360
North Carolina Medical Care Commission, Hospital
Rev. (Moore Memorial Hospital), 9.1s, 1999 800 827,896
</TABLE>
8 - MNC
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- ---------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - continued
North Carolina Medical Care Commission, Hospital
Rev. (Valdese General), 8.75s, 2016 $ 5,365 $ 6,093,889
North Carolina Medical Care Commission, Hospital
Rev. (Well Spring Retirement), 6.25s, 2017 2,500 2,554,325
North Carolina Medical Care Commission, Hospital
Rev. (Well Spring Retirement), 6.25s, 2017 2,500 2,668,975
Northern Hospital District, Surry County, NC,
Heath Care Facilities Rev., 7.875s, 2021 4,530 4,897,564
Pitt County, NC, Hospital Rev. (Memorial
Hospital), 5.25s, 2021 7,050 6,908,154
------------
$ 76,957,866
------------
Industrial Revenue (Corporate Guarantee) - 11.5%
Chatham County, NC, Industrial Facilities and
Pollution Control (Weyerhaeuser), 9s, 2006 $ 1,260 $ 1,280,412
Columbus County, NC, Industrial Facilities and
Pollution Control (International Paper), 5.8s, 2016 4,000 4,089,320
Columbus County, NC, Industrial Facilities and
Pollution Control (International Paper), 6.15s, 2021 5,000 5,220,200
Gaston County, NC, Industrial Facilities &
Pollution Control Finance Authority (Combustion
Engineering, Inc.), 8.85s, 2015 1,000 1,127,800
Halifax County, NC, Industrial Facilities &
Pollution Control Finance Authority (Champion
International Corp.), 8.15s, 2019 1,500 1,630,320
Haywood County, NC, Industrial Facilities &
Pollution Control Finance Authority (Champion
International Corp.), 8.1s, 2009 2,500 2,714,750
Haywood County, NC, Industrial Facilities &
Pollution Control Finance Authority (Champion
International Corp.), 5.75s, 2025 11,500 11,625,695
Martin County, NC, Industrial Facilities &
Pollution Control Finance Authority
(Weyerhaeuser Co.), 7.25s, 2014 7,000 7,760,340
Martin County, NC, Industrial Facilities &
Pollution Control Finance Authority
(Weyerhaeuser Co.), 6.8s, 2024 7,500 8,271,750
Mecklenburg County, NC, Industrial Facilities and
Pollution Control Finance Authority (Precision
Steel), 7.75s, 2014 2,600 2,802,332
Surry County, NC, Industrial Facilities & Pollution
Control Finance Authority (Weyerhaeuser), 9.25s,
2002 1,500 1,756,740
Wake County, NC, Industrial Facilities & Pollution
Control Finance Authority (Mallinkcodt), 6.75s, 2012 1,100 1,166,726
------------
$ 49,446,385
- ---------------------------------------------------------------------------------------
Insured Health Care Revenue - 5.6%
Charlotte Mecklenberg Hospital, NC, 5.125s, 2022 $ 3,000 $ 2,881,170
Cumberland County, NC, Hospital Facilities Rev.
(Cumberland County Hospital), MBIA, 0s, 2009 1,800 994,356
Cumberland County, NC, Hospital Facilities Rev.
(Cumberland Hospital), MBIA, 6s, 2021 4,000 4,119,880
New Hanover County, NC, Hospital Rev. (New
Hanover Regional Medical Center), AMBAC, 5.75s, 2026 4,625 4,744,371
North Carolina Medical Care Commission (Wake
County Hospital), AMBAC, 5.375s, 2026 6,860 6,816,439
North Carolina Medical Care Commission (Wilson
Memorial Hospital), AMBAC, 0s, 2013 1,000 430,690
North Carolina Medical Care Commission (Wilson
Memorial Hospital), AMBAC, 0s, 2014 3,055 1,238,253
Municipal Bonds - continued
- ---------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------
Insured Health Care Revenue - continued
North Carolina Medical Care Commission (Wilson
Memorial Hospital), AMBAC, 0s, 2015 $ 1,140 $ 430,601
North Carolina Medical Care Commission (Wilson
Memorial Hospital), AMBAC, 5.25s, 2020 2,250 2,217,442
------------
$ 23,873,202
- ---------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.2%
Asheville, NC, Housing Authority (Asheville
Terrace Apartments), 7.1s, 2011 $ 5,000 $ 5,346,000
North Carolina Housing Finance Agency, FHA,
6.9s, 2024 4,880 5,250,099
North Carolina Housing Finance Agency, FHA,
6.05s, 2028 5,000 5,248,200
Salisbury, NC, Housing Corp. (Yadkin Senior
Citizens), FNMA, 6.75s, 2022 2,080 2,148,557
------------
$ 17,992,856
- ---------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.8%
Centennial Authority, NC, Hotel Tax (Arena
Project), FSA, 5.125s, 2019 $ 3,500 $ 3,412,185
- ---------------------------------------------------------------------------------------
Single Family Housing Revenue - 4.1%
North Carolina Housing Finance Agency, 6.15s, 2017 $ 2,000 $ 2,112,680
North Carolina Housing Finance Agency, 6.7s, 2018 1,785 1,904,434
North Carolina Housing Finance Agency, 8.125s, 2019 1,200 1,238,424
North Carolina Housing Finance Agency, 7.7s, 2021 2,085 2,161,853
North Carolina Housing Finance Agency, 7.8s, 2021 1,960 2,010,039
North Carolina Housing Finance Agency, 7.85s, 2028 5,250 5,500,110
North Carolina Housing Finance Agency, 7.6s, 2032 2,590 2,714,527
------------
$ 17,642,067
- ---------------------------------------------------------------------------------------
Solid Waste Revenue - 0.3%
Iredell, NC, Solid Waste Systems Rev., 6.25s, 2012 $ 1,250 $ 1,321,425
- ---------------------------------------------------------------------------------------
Turnpike Revenue - 1.2%
Puerto Rico Highway and Transportation Authority
Rev., 6.398s, 2007[dbldag][dbldag] $ 2,750 $ 2,962,053
Puerto Rico Highway and Transportation Authority
Rev., 5.5s, 2036 2,000 2,016,000
------------
$ 4,978,053
- ---------------------------------------------------------------------------------------
Universities - 5.6%
Appalachian State University, NC, MBIA, 6.1s, 2014 $ 1,140 $ 1,217,999
Appalachian State University, NC, MBIA, 6.125s, 2019 4,370 4,635,871
North Carolina Education Facilities Finance Agency
(Duke University), 6.75s, 2021 11,500 12,580,195
University of North Carolina (Chapel Hill), 0s, 2012 9,105 3,783,947
University of North Carolina (Chapel Hill), 0s, 2013 4,285 1,655,724
------------
$ 23,873,736
- ---------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 4.1%
Asheville, NC, Water System Rev., FGIC, 5.7s, 2025 $ 2,000 $ 2,054,300
Charlotte, NC, Water and Sewer Systems Rev., 5.25s, 2021 4,000 3,998,360
Kanapolis, NC, Certificates of Participation, MBIA,
7.375s, 2010 5,000 5,419,100
Raleigh, NC, Water and Sewer Systems Rev.,
5.125s, 2022 2,000 1,960,520
Winston-Salem, NC, Water and Sewer Systems
Rev., 6.25s, 2012 4,000 4,238,040
------------
$ 17,670,320
------------
Total Municipal Bonds (Identified Cost, $390,230,824) $423,981,205
- ---------------------------------------------------------------------------------------
</TABLE>
9 - MNC
<PAGE>
Portfolio of Investments (Unaudited) - continued
Floating Rate Demand Notes - 0.6%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------
<S> <C> <C>
Heard County, GA, Development Authority,
Pollution Control Rev. (Georgia Power Co.), due
9/01/29 $1,600 $ 1,600,000
Hillsborough County, FL, Pollution Control Rev.,
due 5/15/18 400 400,000
Perry County, MS, Pollution Control Rev., due
3/01/02 400 400,000
- ---------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,400,000
- ---------------------------------------------------------------------------------
Total Investments (Identified Cost, $392,630,824) $426,381,205
Other Assets, Less Liabilities - 0.7% 3,145,686
- ---------------------------------------------------------------------------------
Net Assets - 100.0% $429,526,891
- ---------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS PENNSYLVANIA MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 13.2%
Beaver County, PA, MBIA, "A", 5.75s, 2015 $ 250 $ 259,827
Chester County, PA, 5.65s, 2011 500 517,820
Commonwealth of Puerto Rico, 6.35s, 2010 1,350 1,475,698
Dauphin County, PA, General Authority Rev.,
MBIA, 0s, 2020 240 67,858
Delaware County, PA, 5.125s, 2016 500 498,435
Greene County, PA, MBIA, 6s, 2010 100 102,612
Lycoming County, PA, MBIA, 5.55s, 2012 1,000 1,038,720
Northeastern York County, PA, School District,
FGIC, 0s, 2012 415 195,585
Oley Valley, PA, School District, AMBAC, 0s, 2011 810 403,753
Southeastern Area, PA, Special Schools Authority
Rev., 0s, 2007 360 218,452
State of Pennsylvania, 6.25s, 2010 300 337,953
----------
$5,116,713
- ------------------------------------------------------------------------------------
State and Local Appropriation - 2.3%
Philadelphia, PA, Municipal Authority Rev. (Justice
Lease), 8.625s, 2016 $ 345 $ 384,254
State of Pennsylvania, Certificates of Participation,
AMBAC, 5.4s, 2009 500 509,790
----------
$ 894,044
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 15.1%
Allegheny County, PA, Sanitation Authority, FGIC, 0s, 2014 $2,835 $1,171,195
Bethlehem, PA, Authority, Water Rev., MBIA, 6.1s, 2002 500 540,435
Northumberland County, PA, Lease,
Commonwealth Correctional Facility, 0s, 2012 1,000 458,250
Philadelphia, PA, Gas Works Rev., 6s, 2013 1,645 1,790,615
Philadelphia, PA, Hospital & Higher Educational
Facilities Authority, 7.25s, 2031 500 560,095
Puerto Rico Highways & Transportation Authority
Rev., 6.5s, 2002 250 277,903
Schuylkill County, PA, Redevelopment Authority
Rev. FGIC, 7s, 2007 300 331,308
Westmoreland County, PA, FGIC, ETM, 0s, 2018 1,000 334,450
Westmoreland County, PA, MBIA, ETM, 5.25s, 2009 400 413,744
----------
$5,877,995
- -------------------------------------------------------------------------------------
Municipal Bonds - continued
- -------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------
Airport and Port Revenue - 2.7%
Allegheny County, PA, Airport Rev., Pittsburgh
International Airport, "A", MBIA, 5.75s, 2014 $1,000 $1,061,880
- -------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 4.3%
Luzerne County, PA, Industrial Development
Authority, 6.05s, 2019 $ 300 $ 306,819
Luzerne County, PA, Industrial Development
Authority, AMBAC, 7.2s, 2017 500 559,755
Philadelphia, PA, Gas Works Rev., 6.375s, 2014 750 788,468
----------
$1,655,042
- -------------------------------------------------------------------------------------
Health Care Revenue - 11.6%
Butler County, PA, Industrial Development
Authority (Sherwood Oaks), 5.75s, 2011 $ 400 $ 406,396
Chester County, PA, Health & Education (Main
Line), 5.5s, 2015 335 337,070
Cumberland County, PA, Municipal Refunding
(Carlisle Hospital), 6.8s, 2023 500 535,920
Pennsylvania Higher Education Rev., 5.7s, 2011 550 574,877
Philadelphia, PA, Health & Educational Facilities
(Jeanes Health), 6.6s, 2010 500 541,905
Philadelphia, PA, Health & Educational Facilities
Authority (Temple University), 6.625s, 2023 250 266,870
Philadelphia, PA, Hospital & Higher Educational
Facilities Authority (Graduate Health), 6.25s, 2018 300 303,807
Philadelphia, PA, Hospital & Higher Educational
Facilities Authority (Temple University), 5.5s, 2027 500 482,930
Philadelphia, PA, Hospital & Higher Educational
Facilities Authority (The Phil. Protestant Home
Project A), 6.5s, 2027 500 500,905
Scranton Lackawanna, PA, Health & Welfare (Allied
Health), 7.125s, 2005 500 545,405
----------
$4,496,085
- ------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 5.0%
Erie County, PA, Industrial Development Authority,
Environmental Improvement (International Paper),
7.625s, 2018 $ 250 $ 289,960
New Morgan, PA, Industrial Development
Authority (Browning Ferris Co.), 6.5s, 2019 500 537,665
Northampton County, PA, Industrial Development
Authority (Bethlehem Steel), 7.55s, 2017 750 821,212
Pennsylvania Economic Development Authority
(MacMillan Bloedel), 7.6s, 2020 250 287,378
----------
$1,936,215
- ------------------------------------------------------------------------------------
Insured Health Care Revenue - 8.3%
Allegheny County, PA, Hospital Authority (South
Hills Health System), MBIA, 5.8s, 2016 $ 500 $ 516,525
Butler County, PA, Hospital Authority (Altoona),
AMBAC, 5.5s, 2008 470 499,991
Dauphin County, PA, General Authority Hospital
Rev. (Hapsco Project), MBIA, 5.8s, 2002 355 376,850
Lancaster County, PA, Hospital Rev. (Masonic),
AMBAC, 5s, 2020 400 377,480
Lehigh County, PA, Hospital Rev. (Lehigh Valley),
MBIA, 7s, 2016 250 297,108
Lycoming County, PA, Authority Hospital Rev.
(Williamsport Hospital Obligation Group), Connie
Lee, 5.375s, 2010 750 765,750
</TABLE>
10 - MPA
<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
Montgomery County, PA, Industrial Development
Authority, Health Facilities Rev. (AHF/Ambler), 8.5s, 2023 $ 210 $ 218,833
Sayre, PA, Health Care Facilities (VHA, PA),
AMBAC, 6.375s, 2022 160 169,758
-----------
$ 3,222,295
- ------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.6%
Montgomery County, PA, Redevelopment Authority
(KBF Associates), 6.5s, 2025 $ 250 $ 251,305
- ------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.0%
Puerto Rico Highway & Transportation Authority, 5.5s, 2008 $ 500 $ 517,195
Puerto Rico Highway & Transportation Authority, 5.5s, 2013 500 523,010
Puerto Rico Highway & Transportation Authority,
MBIA, 5.5s, 2015 500 525,495
-----------
$ 1,565,700
- ------------------------------------------------------------------------------------------
Single Family Housing Revenue - 9.0%
Pennsylvania Housing Finance Agency, 6.75s, 2014 $ 500 $ 538,745
Pennsylvania Housing Finance Agency, 6.4s, 2016 500 531,050
Pennsylvania Housing Finance Agency, 6.65s, 2021 250 267,740
Pennsylvania Housing Finance Agency, 6.125s, 2024 480 499,267
Pennsylvania Housing Finance Agency, FHA-VA
MTGS, 5.75s, 2013 1,000 1,038,940
Philadelphia, PA, Redevelopment Authority, 6.1s, 2010 200 206,522
Pittsburgh, PA, Urban Development Corp., 5.5s, 2010 400 403,896
-----------
$ 3,486,160
- ------------------------------------------------------------------------------------------
Solid Waste Revenue - 2.6%
Harrisburg, PA, 5.875s, 2021 $1,000 $ 1,010,970
- ------------------------------------------------------------------------------------------
Turnpike Revenue - 2.7%
Delaware River Junction, Toll Bridge (Pennsylvania
Bridge), FGIC, 6.25s, 2012 $1,000 $ 1,056,050
- ------------------------------------------------------------------------------------------
Universities - 5.9%
Cumberland County, PA, Municipal Authority
(Messiah College), AMBAC, 5.125s, 2015 $ 300 $ 293,580
Pennsylvania Higher Education Facilities Authority
Rev. (Thomas Jefferson University), 6s, 2019 625 641,537
Pennsylvania Higher Education Facilities Authority
Rev. (University of Pennsylvania), 7s, 2008 400 457,780
Philadephia, PA, Authority for Industrial
Development (Girard Estate Facilities Leasing
Project), 5.5s, 2014 880 893,429
-----------
$ 2,286,326
- ------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 4.1%
Lancaster, PA, Sewer Authority, FGIC, 6.85s, 2011 $ 250 $ 254,765
Philadelphia, PA, Water Rev., FSA, 5.75s, 2013 300 309,381
Philadelphia, PA, Water Rev., MBIA, 5.5s, 2014 1,000 1,011,540
-----------
$ 1,575,686
- ------------------------------------------------------------------------------------------
Other - 6.5%
Pennsylvania, Convention Center Rev., 6.75s, 2019 $ 250 $ 272,070
Pennsylvania Finance Authority Rev., 6.6s, 2009 900 976,842
Pennsylvania Industrial Development Authority,
AMBAC, 7s, 2007 300 353,565
Municipal Bonds - continued
- -------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------------
Other - continued
Pennsylvania Industrial Development Authority,
AMBAC, 5.8s, 2009 $ 400 $ 436,092
Philadelphia, PA, Industrial Development
Authority, MBIA, 5.35s, 2012 500 505,715
-----------
$ 2,544,284
-----------
Total Municipal Bonds (Identified Cost, $36,136,003) $38,036,750
- ------------------------------------------------------------------------------------------
Floating Rate Demand Note - 2.3%
- ------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Rev.
(Aces Presbyterian Hospital), due 3/01/18, at
Identified Cost $ 900 $ 900,000
- ------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $37,036,003) $38,936,750
Other Assets, Less Liabilities - (0.2)% (92,170)
- ------------------------------------------------------------------------------------------
Net Assets - 100.0% $38,844,580
- ------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997 MFS SOUTH CAROLINA
MUNICIPAL BOND FUND
Municipal Bonds - 96.7%
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 7.6%
Charleston County, SC, 5.5s, 2014 $1,250 $ 1,285,637
Commonwealth of Puerto Rico, 6.5s, 2013 3,300 3,834,534
Commonwealth of Puerto Rico, 6.5s, 2023 2,000 2,203,280
Commonwealth of Puerto Rico, 5.4s, 2025 1,500 1,483,080
Puerto Rico Aqueduct & Sewer Authority Rev., 5s,
2019 1,500 1,421,760
Puerto Rico Public Buildings Authority, 5.7s, 2009 1,000 1,065,770
Richland County, SC, School District No. 1, 5s, 2016 1,975 1,939,766
-----------
$13,233,827
- ---------------------------------------------------------------------------------------
State and Local Appropriation - 6.5%
Berkeley County, SC, School District, AMBAC,
6.3s, 2016 $1,800 $ 1,940,346
Greenville County, SC, Certificates of Participation
(Greenville Technical College), 5.9s, 2019 850 876,988
Hilton Head Island, SC, Public Finance Corp.,
Certificates of Participation, AMBAC, 5.75s, 2014 1,750 1,823,920
Lexington County, SC, School District No. 1,
Certificates of Participation (Gilbert Middle
School), MBIA, 6.65s, 2012 1,000 1,072,540
Myrtle Beach, SC, Public Finance Corp., Certificates
of Participation (Convention Center), 6.875s, 2017 2,500 2,656,550
Puerto Rico Public Buildings Authority, AMBAC,
5.5s, 2021 1,000 1,014,640
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of Participation, 7.5s,
2006 175 181,331
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of Participation, 7.5s,
2007 190 196,874
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of Participation, 7.5s,
2008 205 212,417
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of Participation, 7.5s,
2009 220 227,434
</TABLE>
11 - MSC
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- ---------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
State and Local Appropriation - continued
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of Participation, 7.5s, 2012 $ 270 $ 277,841
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of Participation, 7.5s, 2014 315 324,148
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of Participation, 7.5s, 2018 635 653,440
-----------
$11,458,469
- ---------------------------------------------------------------------------------------------
Refunded and Special Obligations - 16.0%
Calhoun, SC, Solid Waste Disposal Rev. (Eastman
Kodak), 6.75s, 2017 $1,000 $ 1,174,020
Charleston County, SC (Alumax Project), 6.5s, 2001 1,315 1,438,202
Charleston County, SC, Certificates of Participation
(Charlestown Public Facilities Corp.), MBIA, 7.1s,
2001 2,000 2,231,300
Columbia, SC, Waterworks & Sewer Rev., 0s, 2004 1,500 1,131,420
Columbia, SC, Waterworks & Sewer Rev., 0s, 2006 2,045 1,398,494
Commonwealth of Puerto Rico, Public
Improvement Rev., 6.8s, 2002 425 477,870
Lexington County, SC, School District No. 1,
Certificates of Participation (White Knoll Middle
School), CGIC, 7.65s, 1999 1,400 1,497,230
Myrtle Beach, SC, Water & Sewer Rev., MBIA, 6s,
2000 1,780 1,860,136
Myrtle Beach, SC, Water & Sewer Rev., MBIA, 6s,
2000 1,750 1,828,785
North Charleston, SC, Sewer Rev., MBIA, 7.75s,
1998 1,250 1,315,050
Puerto Rico Aqueduct & Sewer Authority Rev., 9s,
2005 750 955,740
Puerto Rico Highway & Transportation Authority,
Highway Rev., 6.625s, 2002 300 335,082
Richland County, SC, 6.25s, 2000 1,260 1,345,277
Richland County, SC, Certificates of Participation,
FGIC, 0s, 2005 1,160 826,813
Richland County, SC, Certificates of Participation,
FGIC, 0s, 2006 1,160 789,601
Richland County, SC, Certificates of Participation,
FGIC, 0s, 2007 1,160 750,624
South Carolina Jobs Economic Development
Authority (Carolina Hospital System Project),
7.55s, 2002 2,000 2,315,420
South Carolina Public Service Authority (Santee
Cooper), 6.625s, 2002 4,000 4,465,800
South Carolina Public Service Authority, "C"
(Santee Cooper), 7.1s, 2001 1,220 1,363,533
York County, SC, School District No. 3, MBIA,
7.5s, 1998 575 600,317
-----------
$28,100,714
- ---------------------------------------------------------------------------------------------
Airport and Port Revenue - 1.9%
Horry County, SC, Airport Revenue, "A", FSA,
5.7s, 2027 $2,250 $ 2,283,570
Richland Lexington, SC, Airport Rev. (Columbia
Airport), "A", AMBAC, 5.7s, 2026 1,000 1,012,270
-----------
$ 3,295,840
- ---------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 14.1%
Camden, SC, Public Utility Rev., Refunding &
Improvement, MBIA, 5.5s, 2017 $1,500 $ 1,520,910
Colleton & Dorchester Counties, SC, Pollution
Control Rev., 6.6s, 2014 3,000 3,252,810
Municipal Bonds - continued
- ---------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - continued
Fairfield County, SC, Pollution Control Rev. (South
Carolina Electric Co.), 6.5s, 2014 $1,250 $ 1,357,400
Oconee County, SC, Pollution Control Rev. (Duke
Power Co.), 7.5s, 2017 1,000 1,069,540
Piedmont, SC, Municipal Power Agency, Electric
Rev., FGIC, 6.25s, 2021 4,600 5,167,226
Piedmont, SC, Municipal Power Agency, Electric
Rev., FGIC, 5s, 2022 2,300 2,170,395
Puerto Rico Electric Power Authority Rev., MBIA,
6.125s, 2008 1,025 1,149,425
South Carolina Public Service Authority, FGIC,
5.875s, 2023 2,000 2,079,280
South Carolina Public Service Authority, MBIA,
6.939s, 2013[dbldag][dbldag] 3,000 3,104,790
South Carolina Public Service Authority, "B",
AMBAC, 5.5s, 2023 1,000 1,006,440
South Carolina Public Service Authority, "C"
(Santee Copper), FGIC, 5s, 2025 3,000 2,805,510
-----------
$24,683,726
- ---------------------------------------------------------------------------------------------
Health Care Revenue - 8.7%
Greenville County, SC, First Mortgage Rev.
(Chestnut Hill), 10.125s, 2016 $1,860 $ 1,873,950
Greenville Hospital System, SC, Hospital Facilities
Rev., 6s, 2020 5,400 5,849,820
Greenville Hospital System, SC, Hospital Facilities
Rev., "A", 5.25s, 2017 2,785 2,754,504
Horry County, SC, Hospital Facilities Rev. (Conway
Hospital), 6.75s, 2012 4,500 4,838,580
-----------
$15,316,854
- ---------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 11.0%
Chester County, SC, Industrial Development Rev.
(Springs Industries, Inc), 7.35s, 2014 $1,000 $ 1,091,320
Chester County, SC, Industrial Development Rev.
(Springs Industries, Inc.), 7.8s, 2014 1,025 1,117,045
Darlington County, SC, Industrial Development
Rev. (Nucor Corp.), 5.75s, 2023 2,000 2,044,080
Darlington County, SC, Industrial Development
Rev. (Sonoco Products Co.), 6.125s, 2025 1,500 1,597,620
Fairfield County, SC, Industrial Development Rev.
(Rite Aid, Inc.), 7.9s, 2016 2,950 3,009,206
Florence County, SC, Industrial Development Rev.
(Stone Container Corp.), 7.375s, 2007 945 1,003,269
Greenville County, SC, Industrial Development Rev.
(Kroger Co.), 7.85s, 2015 500 568,570
Lexington County, SC, Industrial Rev. (J. B. White
& Co.), 8s, 2005 570 621,790
Richland County, SC, Pollution Control Rev.
(Union Camp Corp.), 6.55s, 2020 1,800 1,942,686
Richland County, SC, Solid Waste Facilities Rev.
(Union Camp Corp.), 6.75s, 2022 2,000 2,166,640
York City, SC, Industrial Development Rev.
(Hoechst Celanese), 5.7s, 2024 4,000 4,039,120
-----------
$19,201,346
- ---------------------------------------------------------------------------------------------
Insured Health Care Revenue - 4.3% Charleston County, SC, Hospital Facilities
Rev. (Medical Society Health Project), MBIA, 5s, 2022 $2,450 $ 2,291,044
South Carolina Jobs Economic Development
Authority, Hospital Facilities Rev. (Anderson Area
Medical Center), MBIA, 5.25s, 2015 1,750 1,735,877
</TABLE>
12 - MSC
<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
Spartanburg County, SC, Health Service, Rev.,
AMBAC, 5.3s, 2025 $1,000 $ 970,520
Spartanburg County, SC, Hospital Facilities Rev.,
Health Services District Inc., AMBAC, 5.3s, 2020 2,500 2,448,475
------------
$ 7,445,916
- -----------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.5%
South Carolina Housing, Finance & Development
Authority (Fairway Apartments), FHA, 7.625s, 2033 $1,945 $ 2,064,190
South Carolina Housing, Finance & Development
Authority (Hunting Ridge Apartments), 6.75s, 2025 1,000 1,052,530
South Carolina Housing, Finance & Development
Authority (Runaway Bay Apartments), 6.125s, 2015 1,300 1,337,778
------------
$ 4,454,498
- -----------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 1.7%
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2013 $1,000 $ 1,046,020
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2026 2,000 1,997,300
------------
$ 3,043,320
- -----------------------------------------------------------------------------------------
Single Family Housing Revenue - 0.4%
South Carolina Housing, Finance & Development
Authority Rev., 8.6s, 2019 $ 620 $ 638,420
- -----------------------------------------------------------------------------------------
Solid Waste Revenue - 1.0%
Charleston County, SC, Resource Recovery Rev.
(Foster Wheeler), 9.25s, 2010 $1,750 $ 1,822,117
- -----------------------------------------------------------------------------------------
Universities - 0.9%
Coastal Carolina University, SC, MBIA, 6.875s, 2026 $1,000 $ 1,131,580
University of South Carolina, University Rev.,
MBIA, 5.75s, 2026 515 529,302
------------
$ 1,660,882
- -----------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 20.1%
Charleston, SC, Waterworks & Sewer Rev., 6s, 2018 $1,500 $ 1,566,960
Charleston, SC, Waterworks & Sewer Rev., MBIA,
5s, 2022 3,150 2,988,815
Charleston County, SC, Waterworks & Sewer Rev.,
6s, 2012 2,000 2,090,360
Clinton, SC, Utility Systems Rev., Refunding &
Improvement, MBIA, 5.25s, 2026 1,000 975,500
Columbia, SC, Waterworks & Sewer Rev., 0s, 2005 2,245 1,608,228
Columbia, SC, Waterworks & Sewer Rev., 0s, 2006 9,330 6,361,194
Columbia, SC, Waterworks & Sewer Rev., 5.375s,
2012 3,500 3,665,060
Greenville, SC, Waterworks Rev., 5.5s, 2022 1,000 1,006,210
Laurens County, SC, Water & Sewer Commission,
Sewer System Rev., 5.5s, 2014 1,080 1,072,818
Myrtle Beach, SC, Water & Sewer Rev., MBIA,
5.5s, 2013 1,000 1,020,030
South Carolina Water Resources Authority Rev.
(Local Government Program), 7.25s, 2020 3,000 3,212,250
Spartenburg, SC, Waterworks Rev., FGIC, 5s, 2013 1,000 985,860
Spartanburg, SC, Waterworks Rev., FGIC, 5s, 2014 1,000 979,840
Spartanburg, SC, Waterworks Rev., FGIC, 6.05s,
2018 2,750 3,048,595
Western Carolina Regional Sewer Authority Rev.,
AMBAC, 0s, 2007 4,000 2,568,840
York County, SC, Water & Sewer Rev., 6.5s, 2025 2,000 2,037,820
------------
$ 35,188,380
------------
Total Municipal Bonds (Identified Cost, $156,250,637) $169,544,309
- -----------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.7%
- -----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
Charleston County, SC, Industrial Rev.
(Massey Coal), due 1/01/07 $2,450 $ 2,450,000
Putnam County, GA, Development Authority
(Georgia Power Company Plant Project),
due 9/01/29 500 500,000
- -----------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,950,000
- -----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $159,200,637) $172,494,309
- -----------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.6% 2,720,617
- -----------------------------------------------------------------------------------------
Net Assets - 100.0% $175,214,926
- -----------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS TENNESSEE MUNICIPAL BOND FUND
Municipal Bonds - 98.5%
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 14.8%
Commonwealth of Puerto Rico, 5.375s, 2025 $1,640 $ 1,613,383
Commonwealth of Puerto Rico, 5.4s, 2025 3,000 2,966,160
Huntington, TN, School District, AMBAC, 5.35s,
2021 1,050 1,049,360
Johnson City, TN, FGIC, 0s, 2012 1,690 806,637
Knoxville, TN, Public Improvement, 5.25s, 2015 1,000 1,009,960
McKenzie, TN, High School District, FSA, 5.625s,
2017 500 513,135
Metropolitan Government of Nashville & Davidson
County, TN, 6.125s, 2014 1,000 1,091,170
Metropolitan Government of Nashville & Davidson
County, TN, 6.125s, 2019 1,255 1,369,418
Metropolitan Government of Nashville & Davidson
County, TN, 5.125s, 2025 2,000 1,929,740
Rutherford County, TN, 0s, 2015 1,500 564,615
Shelby County, TN, 0s, 2009 1,000 559,060
Shelby County, TN, 5.125s, 2015 1,000 1,002,670
Shelby County, TN, Capital Appreciation
Refunding, "B", 0s, 2013 3,960 1,700,780
Shelby County, TN, Public Improvement, "B",
5.75s, 2021 1,000 1,026,440
State of Tennessee, "A", 5s, 2016 1,000 991,530
Territory of Virgin Islands, 7.75s, 2006 365 401,489
------------
$18,595,547
- -------------------------------------------------------------------------------------
State and Local Appropriation - 3.2%
Gatlinburg, TN, Public Building Authority
(Gatlinburg Convention Center), AMBAC, 6.9s,
2012 $1,000 $ 1,105,030
Puerto Rico Public Buildings Authority, 5.5s, 2021 1,000 1,014,640
Puerto Rico Public Buildings Authority, 5s, 2027 2,000 1,908,000
------------
$ 4,027,670
- -------------------------------------------------------------------------------------
Refunded and Special Obligations - 16.2%
Bristol, TN, Health & Educational Facilities Board
(Bristol Memorial), FGIC, 7s, 2001 $ 500 $ 553,220
Gladeville, TN, Utility District, Waterworks Rev.,
FGIC, 7.4s, 2000 500 546,490
Knox County, TN, Health, Education & Housing
Facilities Board (Baptist East), 8.5s, 2004 1,180 1,278,353
Knox County, TN, Health, Education & Housing
Facilities Board (Mercy Health), AMBAC, 7.6s, 1999 2,500 2,708,775
</TABLE>
13 - MTN
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - continued
Knox County, TN, Industrial Development Board,
0s, 2016 $5,825 $ 2,101,951
Memphis, TN, Electric Systems Rev., 6.75s, 2000 1,500 1,612,665
Metropolitan Government of Nashville & Davidson
County, TN, Health & Education Facility Board
Rev., 0s, 2021 5,995 1,607,739
Mt. Juliet, TN, Public Building Authority
(Madison), MBIA, 7.7s, 2004 1,100 1,384,174
Mt. Juliet, TN, Public Building Authority
(Madison), MBIA, 7.8s, 2004 3,500 4,423,335
Mt. Juliet, TN, Public Building Authority (Popular
Grove), 8.375s, 1999 1,430 1,537,508
New Tazewell, TN, Health, Educational & Housing
Facilities Board (Lincoln), 7.25s, 1997 2,000 2,053,600
Wilson County, TN, Water & Wastewater
Authority, 8s, 1999 500 536,745
------------
$20,344,555
- -------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 4.6%
Bolivar, TN, Electric Systems Rev., MBIA, 5.25s,
2016 $ 730 $ 725,569
Jackson, TN, Electric Systems Rev., MBIA, 5s,
2018 1,000 966,010
Lawrenceburg, TN, Electric Rev., MBIA, 5.5s, 2026 1,255 1,261,952
Metropolitan Government of Nashville & Davidson
County, TN, MBIA, 0s, 2010 2,480 1,315,491
Metropolitan Government of Nashville & Davidson
County, TN, MBIA, 0s, 2012 3,305 1,543,204
------------
$ 5,812,226
- -------------------------------------------------------------------------------------------
Health Care Revenue - 3.3%
Cookeville, TN, Industrial Development Board Rev.
(General Hospital), 5.625s, 2016 $1,000 $ 1,008,130
Cookeville, TN, Industrial Development Board,
Hospital Rev. (Cookeville General), 5.75s, 2010 2,000 2,048,340
Knox County, TN, Health, Education & Housing
Facilities Board (East Tennessee Children's), 6.5s, 2012 1,000 1,062,570
------------
$ 4,119,040
- -------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 11.6%
Bristol, TN, Industrial Development Authority
(Kmart Corp.), 7.5s, 2008 $1,105 $ 1,208,207
Hardeman County, TN (Correctional Facilities
Corp.), 7.75s, 2017 1,000 1,085,560
Humphreys County, TN, Certificates of
Participation (DuPont), 6.7s, 2024 1,750 1,918,367
Knox County, TN, Industrial Development Board
(Kroger Co.), 8.1s, 2003 2,000 2,259,480
Lawrenceburg, TN, Industrial Development Board
(Tridon, Inc.), 9.625s, 2006 1,000 1,069,200
McMinn County, TN, Industrial Development
Board, Pollution Control Rev. (Bowater), 7.625s,
2016 1,000 1,092,280
Memphis-Shelby County, TN, Airport Authority
(Federal Express Corp.), 7.875s, 2009 2,755 3,095,904
Memphis-Shelby County, TN, Airport Authority
(Federal Express Corp.), 6.2s, 2014 1,000 1,039,110
Metropolitan Government of Nashville & Davidson
County, TN (Wilson Sporting), 7.75s, 2014 1,000 1,078,970
Puerto Rico Industrial, Medical & Environmental
Pollution Control Facilities, Finance Authority
Rev. (Baxter Travenol Laboratories), 8s, 2012 750 797,460
------------
$14,644,538
- -------------------------------------------------------------------------------------------
Municipal Bonds - continued
- --------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------ ----------------- -------------
Insured Health Care Revenue - 9.0%
Bristol, TN, Health & Educational Facilities Board
(Bristol Memorial), FGIC, 7s, 2021 $2,825 $ 2,903,027
Johnson City, TN, Health & Education Financing
Authority (Johnson City Medical Center Hospital),
MBIA, 5.25s, 2016 1,375 1,352,216
Knox County, TN, Health, Education & Housing
Facilities Board (Fort Sanders), MBIA, 5.75s, 2014 3,250 3,462,192
Metropolitan Government of Nashville & Davidson
County, TN, Health & Education (Meharry
Medical College), AMBAC, 5s, 2024 3,750 3,578,850
------------
$11,296,285
- -------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.7%
Franklin, TN, Industrial Development Rev.
(Landings Apartments), FSA, 6s, 2026 $1,000 $ 1,031,660
Franklin, TN, Industrial Development Rev. (Sussex
Downs), FHA, 6.75s, 2027 1,000 1,078,430
Jackson, TN, Health, Education & Housing
Facilities Board (Posthouse Apartments), FHA,
7.1s, 2028 1,610 1,722,603
Metropolitan Government of Nashville & Davidson
County, TN, Health & Education Facility Board
Rev. (Herman Street), 7.25s, 2032 495 529,814
Metropolitan Government of Nashville & Davidson
County, TN, Industrial Development Board, FHA,
6.95s, 2026 1,000 1,070,810
Metropolitan Government of Nashville & Davidson
County, TN, Industrial Development Board, FHA,
7.5s, 2029 695 732,794
Metropolitan Government of Nashville & Davidson
County, TN, Industrial Development Board, FHA,
7.7s, 2029 1,000 1,051,530
------------
$ 7,217,641
- -------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.9%
Tennessee Local Development Authority Rev.,
Community Provider Loan, 7s, 2021 $1,000 $ 1,093,800
- -------------------------------------------------------------------------------------------
Single Family Housing Revenue - 3.9%
Shelby County, TN, Single Family Mortgage Rev.,
FHA, 0s, 2015 $7,425 $ 1,249,331
Tennessee Housing Development Agency, 0s, 2016 5,000 1,737,700
Tennessee Housing Development Agency, 7.375s,
2023 1,000 1,056,910
Tennessee Housing Development Agency, 7.125s,
2026 750 817,447
------------
$ 4,861,388
- -------------------------------------------------------------------------------------------
Universities - 5.7%
Jackson, TN, Health, Educational & Housing
Facilities Board (Lambuth University), Asset
Guaranty, 5.9s, 2015 $1,000 $ 1,028,170
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University), 5.25s,
2012 1,000 1,018,000
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University), 5.3s,
2013 1,875 1,908,638
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University), 5.375s,
2014 1,000 1,020,960
</TABLE>
14 - MTN
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- ---------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Universities - continued
Metropolitian Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University), 7.625s,
2016 $1,000 $ 1,041,470
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University), 5.375s,
2018 1,100 1,099,945
------------
$ 7,117,183
- -------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 19.6%
Clarksville, TN, Water, Sewer & Gas, MBIA, 5.25s,
2018 $1,000 $ 990,030
Madison, TN, Utility Waterworks Refunding,
MBIA, 5s, 2019 2,750 2,648,498
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., FGIC, 5.1s,
2016 2,565 2,481,637
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., RIBS, AMBAC,
6.075s, 2022 2,000 2,100,600
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., Linked RIBS,
AMBAC, 8.317s, 2022[dbldag][dbldag] 1,000 1,114,800
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., RIBS, FGIC,
5.2s, 2013 2,000 2,016,220
Mt. Juliet, TN, Public Building Authority
(Cumberland), 7.55s, 2024 1,205 1,269,154
Mt. Juliet, TN, Public Building Authority
(Hermitage), MBIA, 7.5s, 2009 300 318,105
Mt. Juliet, TN, Public Building Authority
(Milcroft), 7.55s, 2024 2,030 2,138,077
Mt. Juliet, TN, Public Building Authority (New
Market), 8.375s, 2024 560 595,683
Mt. Juliet, TN, Public Building Authority (Tipton),
7.5s, 2004 330 347,362
Poplar Grove, TN, Utility District, Waterworks
Rev., 6.375s, 2011 500 530,795
Puerto Rico Aqueduct & Sewer Rev., 6.25s, 2012 1,000 1,125,710
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2002 1,315 1,046,727
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2003 1,045 793,448
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2004 1,920 1,384,358
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2005 1,920 1,317,293
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2006 1,920 1,252,243
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2007 1,920 1,189,248
------------
$ 24,659,988
- -------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $114,673,881) $123,789,861
- -------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.6%
- ---------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Heard County, GA, Development Authority, Pollution
Control Rev. (Georgia Power Co.), due 9/01/29 $1,300 $ 1,300,000
Uinta County, WY, Pollution Control Rev.
(Chevron), due 8/15/20 700 700,000
- -------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,000,000
- -------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $116,673,881) $125,789,861
Other Assets, Less Liabilities - (0.1)% (82,065)
- -------------------------------------------------------------------------------------------
Net Assets - 100.0% $125,707,796
- -------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS VIRGINIA MUNICIPAL BOND FUND
<TABLE>
Municipal Bonds - 96.6%
- ---------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 12.0%
Chesapeake, VA, Public Improvement, 5.375s, 2013 $ 3,500 $ 3,584,910
Lebanon, VA, 6.375s, 2011 1,625 1,713,839
Norfolk, VA, 5.25s, 2013 1,000 1,010,760
Norfolk, VA, 5.25s, 2014 2,750 2,769,168
Norfolk, VA, 5.25s, 2015 3,000 3,009,570
Portsmouth, VA, 6.375s, 2012 1,555 1,657,614
Richmond, VA, 0s, 2006 1,000 673,840
Richmond, VA, 0s, 2006 2,500 1,684,600
Richmond, VA, 6.5s, 2006 4,000 4,305,320
Richmond, VA, 0s, 2007 5,280 3,377,352
Richmond, VA, 0s, 2008 2,000 1,213,220
Richmond, VA, 0s, 2008 5,270 3,196,835
Richmond, VA, 0s, 2009 5,175 2,957,719
Richmond, VA, 5.5s, 2009 5,000 5,273,200
Spotsylvania County, VA, FGIC, 6s, 2009 4,270 4,778,215
State of Virginia (Higher Educational Institute), 0s, 1998 1,295 1,263,001
State of Virginia (Higher Educational Institute), 0s, 1999 1,300 1,215,630
Suffolk, VA, 6.5s, 2006 1,250 1,299,325
Virginia Public School Authority, 6.5s, 2013 1,875 2,059,106
Virginia Public School Authority, "A", 5.375s, 2017 2,295 2,313,521
------------
$49,356,745
- --------------------------------------------------------------------------------------------
State and Local Appropriation - 9.8%
Chesapeake, VA, Industrial Development Authority
(Chesapeake Court House), 5.25s, 2017 $ 2,000 $ 1,980,400
Chesapeake, VA, Industrial Development Authority
(Chesapeake Court House), MBIA, 6.25s, 2011 3,985 4,449,571
Chesterfield County, VA, Industrial Development
Authority, Public Facilities, 7.5s, 2008 1,720 1,905,829
Henrico County, VA, Industrial Development
Authority, Lease Rev., 6.5s, 2010 5,000 5,597,550
New Kent County, VA, Industrial Development
Authority, Public Facilities, 7.5s, 2011 700 753,963
Puerto Rico Public Buildings Authority Rev.,
5.25s, 2021 2,075 2,014,618
Virginia Biotechnology Research Park (Biotech
Two), 5.25s, 2018 8,800 8,777,472
Virginia Public Building Authority, MBIA, 0s,
2007 13,305 8,403,438
Virginia Public Building Authority, MBIA, 0s,
2008 10,650 6,352,192
------------
$40,235,033
- --------------------------------------------------------------------------------------------
</TABLE>
15 - MVA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - 9.5%
Arlington County, VA, Industrial Development
Authority (Arlington Hospital), 7.125s, 2001 $ 4,450 $ 4,995,526
Carroll County, VA, Solid Waste Authority Rev.,
7.5s, 2001 2,265 2,568,623
Fairfax County, VA, Redevelopment & Housing
Authority (Little River Glen), 8.95s, 2020 3,780 4,146,093
Henrico County, Industrial Development Authority
(St. Mary's Hospital), 7.5s, 2007 750 829,253
Newport News, VA, 6.5s, 2000 875 951,344
Newport News, VA, 6.5s, 2000 2,205 2,397,386
Newport News, VA, 6.5s, 2000 2,325 2,527,856
Portsmouth, VA, 6.9s, 2000 1,500 1,636,845
Puerto Rico Aqueduct & Sewer Authority Rev., 9s,
2005 4,150 5,288,428
Puerto Rico Aqueduct & Sewer Authority Rev.,
10.25s, 2009 400 563,944
Roanoke, VA, Industrial Development Authority,
Hospital Rev. (Memorial), 7.25s, 2000 1,750 1,924,300
Roanoke, VA, Industrial Development Authority,
Hospital Rev. (Roanoke Memorial), 7.5s, 2000 1,245 1,375,289
Virginia Beach, VA, Certificates of Participation
(Judicial Center Project), FGIC, 7.25s, 2000 4,955 5,471,311
Virginia Beach, VA, Water & Sewer Rev., 6.625s,
2002 1,400 1,549,296
Virginia College Building Authority (Hampton
University), 7.75s, 2014 750 804,765
Virginia Resources Authority, Water & Sewer
System Rev., 7.875s, 1998 800 847,328
Virginia Resources Authority, Water & Sewer
System Rev., 7.5s, 1999 1,180 1,265,031
------------
$39,142,618
- -----------------------------------------------------------------------------------
Airport and Port Revenue - 5.8%
Metropolitan Washington, DC, Airport Rev., 7.6s,
2014 $ 5,030 $ 5,501,311
Metropolitan Washington, DC, Airport Rev., 5.5s,
2016 2,465 2,466,183
Metropolitan Washington, DC, Airport Rev., "A",
6.625s, 2019 1,000 1,086,800
Metropolitan Washington, DC, Airport Rev., BIGI,
8.2s, 2018 3,500 3,707,060
Peninsula Airport Commission, VA, 7.3s, 2021 2,400 2,622,456
Puerto Rico Ports Authority (American Airlines),
6.3s, 2023 2,000 2,114,160
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 6,000 6,371,220
------------
$23,869,190
- -----------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 5.6%
Halifax County, VA, Industrial Authority Rev. (Old
Dominion Electric), 6s, 2022 $ 5,000 $ 5,117,800
Pittsylvania County, VA, Industrial Development
Authority Rev., 7.5s, 2014 4,000 4,360,240
Puerto Rico Electric Power Authority, 5s, 2012 2,020 1,971,984
Puerto Rico Electric Power Authority, 6s, 2015 3,000 3,170,550
Puerto Rico Electric Power Authority, 5.5s, 2016 5,000 5,030,750
Puerto Rico Electric Power Authority, "X", 5.5s,
2025 3,520 3,510,285
------------
$23,161,609
- -----------------------------------------------------------------------------------
Municipal Bonds - continued
- --------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - 4.0%
Chesapeake, VA, Industrial Development Authority
(Sentara Life Care Corp.), 7.875s, 2008 $ 1,000 $ 1,057,950
Chesapeake, VA, Industrial Development Authority
(Sentara Life Care Corp.), 8s, 2018 4,000 4,234,800
Fairfax, Fauquier & Loudoun Counties, VA, Health
Center Commission, Nursing Home Rev., 9s, 2020 1,865 2,016,289
Lynchburg, VA, Industrial Development Authority
(Central Health, Inc.), 8.125s, 2016 1,400 1,465,688
Martinsville, VA, Industrial Development
Authority, 6.75s, 2004 1,230 1,267,921
Norfolk, VA, Industrial Development Authority
(Sentara Life Care Corp.), "A", 7.875s, 2008 1,000 1,057,950
Norfolk, VA, Industrial Development Authority
(Sentara Life Care Corp.), "A", 7.9s, 2018 2,000 2,114,880
Peninsula Ports, VA, Health Care Rev. (Riverside
Health System), 6.625s, 2010 1,500 1,638,195
Suffolk, VA, Industrial Development Authority
(Louise Obici Memorial Hospital), 7.875s, 2005 1,740 1,820,701
------------
$16,674,374
- -----------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 5.2%
Halifax, VA, Industrial Development Authority
(Tandy Corp.), 8.25s, 2008 $ 3,500 $ 3,730,580
Isle Wight County, VA, Industrial Development
(Union Camp), 6.55s, 2024 8,000 8,739,760
Isle Wight County, VA, Industrial Development
(Union Camp), 6.1s, 2027 3,500 3,586,030
Lynchburg, VA, Industrial Development Authority
(Kroger Co.), 7.9s, 2011 1,000 1,123,920
Virginia Beach, VA, Development Authority
(Beverly Enterprises), 10s, 2010 1,315 1,449,511
West Point, VA, Industrial Development Authority,
Solid Waste Disposal Rev. (Chesapeake Corp.
Project), 6.375s, 2019 2,600 2,782,468
------------
$21,412,269
- -----------------------------------------------------------------------------------
Insured Health Care Revenue - 9.0%
Albemarle County, VA, Industrial Development
Authority, First Mortgage Rev., FHA, 8.9s, 2026 $ 2,150 $ 2,397,744
Fredericksburg, VA, Industrial Development
(Medicorp Health Systems), AMBAC, 5.25s, 2023 12,900 12,580,467
Front Royal-Warren County, VA, Industrial
Development Authority, FHA, 9.45s, 2024 1,000 1,089,040
Hanover County, VA, Industrial Development
Authority, MBIA, 6s, 2009 1,550 1,728,142
Hanover County, VA, Industrial Development
Authority (Memorial Regional Medical Center),
MBIA, 6.5s, 2008 1,000 1,158,810
Hanover County, VA, Industrial Development
Authority (Memorial Regional Medical Center),
MBIA, 6.5s, 2009 1,510 1,751,570
Henrico County, VA, Industrial Development
Authority Rev. (Bon Secours), MBIA, 6.25s, 2020 1,500 1,681,290
Peninsula Ports Authority, VA, Hospital Facilities
Rev. (Wittaker Memorial), FHA, 8.7s, 2023 2,100 2,167,998
Roanoke, VA, Industrial Development Authority,
Hospital Rev. (Roanoke Memorial), MBIA, 6.125s,
2017 6,000 6,624,600
Winchester, VA, Industrial Development Authority,
RIBS, AMBAC, 9.045s, 2014[dbldag][dbldag] 4,900 5,973,149
------------
$37,152,810
- -----------------------------------------------------------------------------------
</TABLE>
16 - MVA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- ------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Multi-Family Housing Revenue - 3.3%
Alexandria, VA, Redevelopment & Housing Finance
Authority (Jefferson Village Apartments), 9s, 2018 $ 4,000 $ 4,137,000
Norfolk, VA, Redevelopment & Housing Authority
(Dockside Apartments), FHA, 7.375s, 2028 2,000 2,129,080
Virginia Housing Development Authority, 6.5s,
2013 2,300 2,466,359
Virginia Housing Development Authority, 6.6s,
2022 4,635 4,915,649
-------------
$ 13,648,088
- ------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 6.7%
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2015 $ 2,000 $ 2,101,980
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2026 12,200 12,183,530
Virginia Port Authority, 8.2s, 2008 4,500 4,719,375
Virginia Transportation Board, Transportation
Contract Rev., 6.5s, 2018 3,500 3,775,380
Virginia Transportation Board, US Route 58,
5.125s, 2021 5,000 4,837,050
-------------
$ 27,617,315
- ------------------------------------------------------------------------------------------
Single Family Housing Revenue - 8.3%
Puerto Rico Housing Finance Corp., GNMA, 7.8s,
2021 $ 5 $ 5,179
Virginia Housing Development Authority, 7.45s,
2019[dbldag][dbldag] 7,500 7,708,425
Virginia Housing Development Authority, 6.2s,
2021 15,000 15,501,450
Virginia Housing Development Authority, 7.1s,
2022 2,000 2,132,060
Virginia Housing Development Authority, 6.3s,
2025 8,500 8,919,985
-------------
$ 34,267,099
- ------------------------------------------------------------------------------------------
Turnpike Revenue - 3.3%
Chesapeake Bay, VA, Bridge & Tunnel Authority,
FGIC, 0s, 2005 $ 4,535 $ 3,168,559
Chesapeake Bay, VA, Bridge & Tunnel Authority,
FGIC, 6s, 2007 5,700 6,291,432
North Virginia Transportation District Commuter
Rail (Virginia Railway Express Project), 6s, 2010 1,240 1,381,484
Virginia Transportation Board Rev., Northern
Virginia Transportation District, "A", 5.125s,
2016 2,600 2,555,228
-------------
$ 13,396,703
- ------------------------------------------------------------------------------------------
Universities - 4.5%
Albemarle County, VA, Industrial Development
Authority Health Services Rev., 6.5s, 2022 $ 1,000 $ 1,064,380
Hampton Roads, VA, Medical College General Rev.,
6.875s, 2016 2,000 2,168,740
Hampton Roads, VA, Medical College General Rev.,
6.875s, 2016 1,500 1,626,555
Loudoun County, VA, Industrial Development
Authority, University Facilities, 6.25s, 2012 2,710 2,877,288
Rockingham County, VA, Industrial Development
Authority Rev. (Bridgewater), 6s, 2023 3,000 3,040,860
University of Virginia, University Rev., 5.375s,
2014 5,190 5,233,337
Virginia College Building Authority, Educational
Facilities Rev. (Marymount), 7s, 2022 2,500 2,718,425
-------------
$ 18,729,585
- ------------------------------------------------------------------------------------------
Municipal Bonds - continued
- ------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Water and Sewer Utility Revenue - 7.1%
Chesterfield County, VA, Water & Sewer Rev., 0s,
2004 $ 5,025 $ 3,640,763
Chesterfield County, VA, Water & Sewer Rev., 0s,
2005 4,815 3,320,713
Chesterfield County, VA, Water & Sewer Rev., 0s,
2006 4,000 2,621,000
Chesterfield County, VA, Water & Sewer Rev., 0s,
2007 6,000 3,738,240
Chesterfield County, VA, Water & Sewer Rev., 0s,
2008 6,135 3,619,834
Chesterfield County, VA, Water & Sewer Rev., 0s,
2009 6,135 3,399,158
Chesterfield County, VA, Water & Sewer Rev., 0s,
2010 9,005 4,691,245
Fairfax County, VA, Water Authority Rev., 5s, 2021 2,000 1,933,060
Hanover County, Water & Sewer Systems, 5.25s,
2026 2,250 2,195,123
-------------
$ 29,159,136
- ------------------------------------------------------------------------------------------
Other - 2.5%
Danville, VA, Industrial Development Authority,
Industrial Development Rev., 8s, 2013 $ 3,040 $ 3,141,019
Loudoun, VA, Industrial Development Authority,
Industrial Development Rev., 7.125s, 2015 2,000 2,166,080
Pamunkey, VA, Regional Jail Authority, MBIA,
5.75s, 2018 2,500 2,585,825
Washington, DC, Metropolitan Area Transportation
Authority, Gross Rev., FGIC, 5.25s, 2014 2,500 2,503,275
-------------
$ 10,396,199
- ------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $368,436,284) $398,218,773
- ------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.9%
- ------------------------------------------------------------------------------------------
Lynchburg, VA, Industrial Development Authority,
"E", due 12/01/25 $ 1,800 $ 1,800,000
Lynchburg, VA, Industrial Development Authority,
"G", due 12/01/25 2,400 2,400,000
Peninsula Ports Authority, VA, due 7/01/16 1,200 1,200,000
Peninsula Ports Authority, VA (Shell Oil Co.), due
12/01/05 800 800,000
Peninsula Ports Authority, VA (Shell Oil Co.), due
7/01/16 1,700 1,700,000
- ------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 7,900,000
- ------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $376,336,284) $406,118,773
Other Assets, Less Liabilities - 1.5% 6,163,391
- ------------------------------------------------------------------------------------------
Net Assets - 100.0% $412,282,164
- ------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
Portfolio of Investments (Unaudited) - September 30, 1997
MFS WEST VIRGINIA MUNICIPAL BOND FUND
Municipal Bonds - 95.0%
<TABLE>
- ----------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ----------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 16.1%
Cabell, WV, Board of Education, MBIA, 6s, 2006 $ 500 $ 550,245
Charleston, WV, Public Improvement, 7.2s, 2008 1,240 1,491,571
Charleston, WV, Public Improvement, 7.2s, 2009 1,140 1,375,410
Jefferson County, WV, Board of Education, FGIC,
6.85s, 2009 1,680 2,002,577
</TABLE>
17 - MWV
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
- -------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - continued
Monongalia County, WV, Board of Education,
MBIA, 7s, 2005 $ 500 $ 576,085
Ohio County, WV, Board of Education, MBIA,
5.25s, 2018 1,180 1,184,366
State of West Virginia, "A", 5.75s, 2021 1,000 1,033,490
State of West Virginia, FGIC, 5s, 2021 4,000 3,843,160
State of West Virginia, FGIC, 5.25s, 2026 8,000 7,954,160
State of West Virginia, Water Development
Authority Rev., FSA, 6.2s, 2024 3,000 3,258,270
------------
$23,269,334
- ------------------------------------------------------------------------------------
State and Local Appropriation - 8.0%
Puerto Rico Public Building Authority Rev., 5.25s,
2021 $2,115 $ 2,053,454
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s, 2007 3,150 1,974,546
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s, 2008 3,050 1,803,526
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s, 2009 2,500 1,391,800
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 7s, 2015 1,000 1,082,550
West Virginia School Building Authority, 6.75s,
2015 3,000 3,305,880
------------
$11,611,756
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 6.6%
Kanawha County, WV, Building Commission
(St. Francis Hospital), ETM, 7.5s, 2007 $ 250 $ 285,460
Puerto Rico Aqueduct & Sewer Authority Rev.,
9s, 2005 1,500 1,911,480
South Charleston, WV, Hospital Rev. (Herbert J.
Thomas Memorial Hospital), BIGI, 8s, 1998 500 530,185
West Virginia Parkways, Economic Development &
Tourism Authority, FGIC, 0s, 2005 2,250 1,567,305
West Virginia Parkways, Economic Development &
Tourism Authority, FGIC, 0s, 2006 2,500 1,662,250
West Virginia Parkways, Economic Development &
Tourism Authority, FGIC, 0s, 2007 2,000 1,257,280
West Virginia Parkways, Economic Development &
Tourism Authority, FGIC, 0s, 2008 610 361,846
West Virginia Water Development Authority,
8.625s, 1998 750 800,978
West Virginia Water Development Authority,
7.4s, 2001 750 851,107
West Virginia Water Development Authority,
7.1s, 2009 250 290,900
------------
$ 9,518,791
- ------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 11.9%
Marshall County, WV, Pollution Control Rev. (Ohio
Power Co.), 6.85s, 2022 $2,000 $ 2,177,740
Marshall County, WV, Pollution Control Rev. (Ohio
Power Co.), MBIA, 6.85s, 2022 3,150 3,475,647
Mason County, WV, Pollution Control Rev.
(Appalachian Power), MBIA, 6.6s, 2022 7,000 7,717,850
McDowell County, WV, Industrial Development
Rev. (War Telephone Co.), 13.5s, 2001 310 311,690
Putnam County, WV, Pollution Control Rev.
(Appalachian Power Co.), MBIA, 6.6s, 2019 3,200 3,517,280
------------
$17,200,207
- ------------------------------------------------------------------------------------
Municipal Bonds - continued
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - 7.8%
Berkeley County, WV, Building Commission,
Hospital Rev. (City Hospital Project), 6.5s, 2022 $2,500 $ 2,613,350
Hampshire County, WV, First Mortgage Rev.
(Rommey Health Care), 9.5s, 2022 1,280 1,347,597
Monongalia County, WV, Health Facilities Rev.
(Beverly Enterprises, Inc.), 10s, 2007 865 937,599
West Virginia Hospital Finance Authority
(Charleston Area Medical Center), 6.5s, 2023 2,000 2,143,000
West Virginia Hospital Finance Authority
(Fairmont General Hospital), 6.625s, 2019 2,000 2,084,340
West Virginia Hospital Finance Authority (General
Division Medical Building), 7.25s, 2014 2,000 2,233,520
------------
$11,359,406
- ------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 15.8%
Braxton County, WV, Solid Waste Disposal
(Weyerhaeuser), 6.5s, 2025 $2,000 $ 2,148,460
Jackson County, WV, Pollution Control Rev. (Kaiser
Aluminum & Chemical Corp.), 6.5s, 2008 3,330 3,339,024
Kanawha County, WV, Commercial Development
Rev. (Kroger Co.), 8s, 2011 1,000 1,126,150
Kanawha County, WV, Commercial Development
Rev. (May Department Stores Co.), 6.5s, 2003 3,000 3,302,370
Kanawha County, WV, Pollution Control Rev.
(Union Carbide Corp.), 8s, 2020 2,000 2,182,640
Monongalia County, WV, Commercial Development
Rev. (Kroger Co.), 7.7s, 2012 2,000 2,252,900
Ohio County, WV, Industrial Development Rev.
(Kroger Co.), 8.125s, 2011 2,000 2,264,300
Putnam County, WV, Industrial Development Rev.
(Rite Aid Corp.), 10.375s, 2002 590 592,856
South Charleston, WV, Pollution Control Rev.
(Union Carbide Corp.), 7.625s, 2005 2,500 2,910,375
Wierton, WV, Pollution Control Rev. (Weirton
Steel), 8.625s, 2014 2,550 2,708,916
------------
$22,827,991
- ------------------------------------------------------------------------------------
Insured Health Care Revenue - 7.7%
Monongalia County, WV, Building Commission,
Health Rev. (Monongalia General Hospital),
MBIA, 6.625s, 2011 $1,000 $ 1,078,340
West Virginia Hospital Finance Authority (Cabell
Huntington Hospital), AMBAC, 6.25s, 2019 5,000 5,373,250
West Virginia Hospital Finance Authority
(West Virginia University Medical Corp.),
MBIA, 7.875s, 2007 1,500 1,543,860
West Virginia Hospital Finance Authority
(West Virginia University Hospital Corp.),
MBIA, 5s, 2016 2,225 2,120,714
West Virginia Hospital Finance Authority
(West Virginia University Medical Corp.),
MBIA, 7.875s, 2018 1,000 1,029,240
------------
$11,145,404
- ------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.0%
Huntington, WV, Housing Corp., Multi-Family
Rev., FNMA, 7.5s, 2024 $ 800 $ 856,184
Webster County, WV, Housing Development Rev.
(Circlebrook), FHA, 6.35s, 2008 545 573,634
------------
$ 1,429,818
- ------------------------------------------------------------------------------------
</TABLE>
18 - MWV
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Sales and Excise Tax Revenue - 1.4%
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2013 $2,000 $ 2,092,040
- -----------------------------------------------------------------------------------------------
Single Family Housing Revenue - 5.3%
Berkeley County, WV, Residential Mortgage Rev.,
7.875s, 2012 $ 230 $ 240,845
Charles Town, WV, Residential Mortgage Rev.,
6.2s, 2011 715 744,179
Mason County, WV, 0s, 2014 1,700 489,515
West Virginia Housing Development Fund,
7.85s, 2014 840 873,465
West Virginia Housing Development Fund,
7.95s, 2017 430 445,906
West Virginia Housing Development Fund,
7.2s, 2018 2,560 2,735,130
West Virginia Housing Development Fund,
7.2s, 2020 2,000 2,136,820
-------------
$ 7,665,860
- -----------------------------------------------------------------------------------------------
Turnpike Revenue - 3.3%
West Virginia Parkways, Economic Development &
Tourism Authority, FGIC, 0s, 2006 $1,885 $ 1,252,337
West Virginia Parkways, Economic Development &
Tourism Authority, FGIC, RIBS, 7.423s, 2019[dbldag][dbldag] 3,300 3,465,033
-------------
$ 4,717,370
- -----------------------------------------------------------------------------------------------
Universities - 0.7%
West Virginia University Rev. (West Virginia
University Dormitory Project), MBIA, 6.75s, 2017 $1,000 $ 1,083,970
- -----------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 8.2%
Beckley, WV, Industrial Development Rev. (Beckley
Water Co.), 7s, 2017 $2,000 $ 2,179,460
Charleston, WV, Sewer Rev., MBIA, 6.5s, 2017 2,260 2,470,677
West Virginia Water Development Authority,
7.625s, 2009 500 558,195
Municipal Bonds - continued
- -----------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Water and Sewer Utility Revenue - continued
West Virginia Water Development Authority,
CGIC, 7.5s, 2009 $1,100 $ 1,189,793
West Virginia Water Development Authority, FSA,
5s, 2018 1,270 1,211,021
West Virginia Water Development Authority, FSA,
5.625s, 2033 2,300 2,327,899
West Virginia Water Development Authority, FSA,
5.25s, 2035 2,000 1,949,140
-------------
$ 11,886,185
- -----------------------------------------------------------------------------------------------
Other - 1.2%
West Virginia Building Commission, Lottery Rev.,
MBIA, 5.25s, 2010 $1,750 $ 1,789,305
- -----------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $125,599,445) $137,597,437
- -----------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.3%
- -----------------------------------------------------------------------------------------------
Harris County, TX, Hospital Rev. (Methodist
Hospital), due 12/01/25 $ 300 $ 300,000
Uinta County, WY, Pollution Control Rev.
(Chevron), due 8/15/20 500 500,000
Uinta County, WY, Pollution Control Rev.
(Chevron), due 12/01/22 1,100 1,100,000
- -----------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,900,000
- -----------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $127,499,445) $139,497,437
Other Assets, Less Liabilities - 3.7% 5,348,313
- -----------------------------------------------------------------------------------------------
Net Assets - 100.0% $144,845,750
- -----------------------------------------------------------------------------------------------
</TABLE>
See portfolio footnotes and notes to financial statements
Portfolio footnotes:
[dbldag][dbldag]Inverse floating rate security.
19 - MWV
<PAGE>
Financial Statements
Statements of Assets and Liabilities (Unaudited)
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Mississippi New York North Carolina Pennsylvania
September 30, 1997 Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $70,715,713 $133,614,472 $392,630,824 $37,036,003
Unrealized appreciation 5,250,452 13,100,819 33,750,381 1,900,747
------------ ------------ ------------ ------------
Total investments, at value $75,966,165 $146,715,291 $426,381,205 $38,936,750
Cash 67,673 22,760 98,694 28,440
Receivable for Fund shares sold 72,743 48,266 460,131 57,699
Receivable for investments sold -- 105,000 7,424,007 932,826
Interest receivable 1,334,002 2,182,089 7,103,016 614,844
Deferred organization expenses -- -- -- 597
Other assets 705 1,357 3,878 377
------------ ------------ ------------ ------------
Total assets $77,441,288 $149,074,763 $441,470,931 $40,571,533
------------ ------------ ------------ ------------
Liabilities:
Distributions payable $ 174,930 $ 241,055 $ 719,087 $ 71,042
Payable for Fund shares reacquired 591,720 513,939 726,642 96,620
Payable for investments purchased -- 1,506,875 10,345,692 1,554,227
Payable to affiliates -
Management fee 2,842 5,422 15,818 1,114
Administrative fee 95 180 527 17
Shareholder servicing agent fee 821 1,566 4,570 143
Distribution and service fee 1,604 4,646 14,958 3,609
Accrued expenses and other liabilities 42,843 58,535 116,746 181
------------ ------------ ------------ ------------
Total liabilities $ 814,855 $ 2,332,218 $ 11,944,040 $ 1,726,953
------------ ------------ ------------ ------------
Net assets $76,626,433 $146,742,545 $429,526,891 $38,844,580
------------ ------------ ------------ ------------
Net assets consist of:
Paid-in capital $75,100,811 $136,961,537 $404,096,513 $38,733,861
Unrealized appreciation on investments 5,250,452 13,100,819 33,750,381 1,900,747
Accumulated net realized loss on
investments (3,783,193) (3,184,576) (7,641,032) (1,807,382)
Accumulated undistributed (distributions
in excess of) net investment income 58,363 (135,235) (678,971) 17,354
------------ ------------ ------------ ------------
Total $76,626,433 $146,742,545 $429,526,891 $38,844,580
------------ ------------ ------------ ------------
Shares of beneficial interest outstanding:
Class A 6,756,638 10,815,063 31,594,564 1,792,886
Class B 1,108,790 2,399,154 3,574,593 2,221,495
Class C -- -- 587,070 --
------------ ------------ ------------ ------------
Total shares of beneficial interest
outstanding 7,865,428 13,214,217 35,756,227 4,014,381
------------ ------------ ------------ ------------
Net assets:
Class A $65,815,313 $120,106,504 $379,556,647 $17,327,256
Class B 10,811,120 26,636,041 42,921,865 21,517,324
Class C -- -- 7,048,379 --
------------ ------------ ------------ ------------
Total net assets $76,626,433 $146,742,545 $429,526,891 $38,844,580
------------ ------------ ------------ ------------
Class A shares:
Net asset value per share (net assets [divided by] shares
of beneficial interest outstanding) $ 9.74 $ 11.11 $ 12.01 $ 9.66
------------ ------------ ------------ ------------
Offering price per share (100 / 95.25 of net
asset value per share) $ 10.23 $ 11.66 $ 12.61 $ 10.14
------------ ------------ ------------ ------------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest
outstanding) $ 9.75 $ 11.10 $ 12.01 $ 9.69
------------ ------------ ------------ ------------
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest
outstanding) $ -- $ -- $ 12.01 $ --
------------ ------------ ------------ ------------
</TABLE>
On sales of $100,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
20
<PAGE>
Financial Statements - continued
Statements of Assets and Liabilities (Unaudited) - continued
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Tennessee Virginia West Virginia
September 30, 1997 Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments -
Identified cost $159,200,637 $116,673,881 $376,336,284 $127,499,445
Unrealized appreciation 13,293,672 9,115,980 29,782,489 11,997,992
------------ ------------ ------------ ------------
Total investments, at value $172,494,309 $125,789,861 $406,118,773 $139,497,437
Cash 51,896 21,313 72,772 85,282
Receivable for Fund shares sold 140,497 259,362 363,318 60,525
Receivable for investments sold 555,000 1,944,105 1,013,416 3,023,384
Interest receivable 2,463,958 1,715,709 6,058,760 2,603,283
Other assets 1,558 1,102 3,778 1,289
------------ ------------ ------------ ------------
Total assets $175,707,218 $129,731,452 $413,630,817 $145,271,200
------------ ------------ ------------ ------------
Liabilities:
Distributions payable $ 321,317 $ 256,584 $ 859,361 $ 273,330
Payable for Fund shares reacquired 75,507 20,135 344,974 69,179
Payable for investments purchased -- 3,672,115 -- --
Payable to affiliates -
Management fee 6,459 4,623 15,178 5,341
Administrative fee 215 157 506 178
Shareholder servicing agent fee 1,866 1,336 4,368 1,543
Distribution and service fee 6,391 4,464 13,656 4,939
Accrued expenses and other liabilities 80,537 64,242 110,610 70,940
------------ ------------ ------------ ------------
Total liabilities $ 492,292 $ 4,023,656 $ 1,348,653 $ 425,450
------------ ------------ ------------ ------------
Net assets $175,214,926 $125,707,796 $412,282,164 $144,845,750
------------ ------------ ------------ ------------
Net assets consist of:
Paid-in capital $164,255,156 $116,857,877 $393,676,065 $137,007,226
Unrealized appreciation on investments 13,293,672 9,115,980 29,782,489 11,997,992
Accumulated net realized loss on
investments (2,099,207) (220,373) (9,828,018) (3,613,350)
Accumulated distributions in excess of net
investment income (234,695) (45,688) (1,348,372) (546,118)
------------ ------------ ------------ ------------
Total $175,214,926 $125,707,796 $412,282,164 $144,845,750
------------ ------------ ------------ ------------
Shares of beneficial interest outstanding:
Class A 12,119,824 10,152,825 32,811,670 11,152,750
Class B 2,083,024 1,531,834 2,749,422 1,263,405
Class C -- -- 281,416 --
------------ ------------ ------------ ------------
Total shares of beneficial interest
outstanding 14,202,848 11,684,659 35,842,508 12,416,155
------------ ------------ ------------ ------------
Net assets:
Class A $149,521,330 $109,236,307 $377,429,876 $130,111,463
Class B 25,693,596 16,471,489 31,615,957 14,734,287
Class C -- -- 3,236,331 --
------------ ------------ ------------ ------------
Total net assets $175,214,926 $125,707,796 $412,282,164 $144,845,750
------------ ------------ ------------ ------------
Class A shares:
Net asset value per share (net assets [divided by] shares of
beneficial interest outstanding) $ 12.34 $ 10.76 $ 11.50 $ 11.67
------------ ------------ ------------ ------------
Offering price per share (100 / 95.25 of net
asset value per share) $ 12.96 $ 11.30 $ 12.07 $ 12.25
------------ ------------ ------------ ------------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest
outstanding) $ 12.33 $ 10.75 $ 11.50 $ 11.66
------------ ------------ ------------ ------------
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest
outstanding) $ -- $ -- $ 11.50 $ --
------------ ------------ ------------ ------------
</TABLE>
On sales of $100,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
21
<PAGE>
Financial Statements - continued
Statements of Operations (Unaudited)
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Mississippi New York North Carolina Pennsylvania
Six Months Ended September 30, 1997 Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $ 2,281,873 $ 4,697,046 $ 12,966,176 $ 1,127,027
----------- ------------ ------------ -----------
Expenses -
Management fee $ 212,099 $ 405,413 $ 1,179,332 $ 111,293
Trustees' compensation 8,601 9,646 8,408 8,833
Shareholder servicing agent fee 50,282 96,109 278,483 26,312
Distribution and service fee (Class A) -- 151,991 665,687 --
Distribution and service fee (Class B) 42,450 131,337 205,219 89,869
Distribution and service fee (Class C) -- -- 34,993 --
Administrative fee 5,802 11,090 32,132 3,036
Custodian fee 15,867 30,070 83,693 8,438
Printing 4,102 7,974 20,386 3,421
Postage 2,158 4,618 13,575 2,249
Auditing fees 13,776 14,275 13,926 13,275
Legal fees 2,472 1,404 2,704 1,763
Amortization of organization expenses 1,218 -- -- 881
Miscellaneous 31,275 53,755 68,505 21,480
----------- ------------ ------------ -----------
Total expenses $ 390,102 $ 917,682 $ 2,607,043 $ 290,850
Fees paid indirectly (3,884) (11,162) (23,988) (5,717)
Preliminary reduction of expenses by
investment adviser (12,427) (23,791) (215,353) (134,616)
----------- ------------ ------------ -----------
Net expenses $ 373,791 $ 882,729 $ 2,367,702 $ 150,517
----------- ------------ ------------ -----------
Net investment income $ 1,908,082 $ 3,814,317 $ 10,598,474 $ 976,510
----------- ------------ ------------ -----------
Realized and unrealized gain on investments:
Realized gain (identified cost basis) on
investment transactions $ 558,895 $ 95,727 $ 2,357,873 $ 195,740
Change in unrealized appreciation on
investments 2,587,464 6,637,281 14,213,280 1,506,335
----------- ------------ ------------ -----------
Net realized and unrealized gain
on investments $ 3,146,359 $ 6,733,008 $ 16,571,153 $ 1,702,075
----------- ------------ ------------ -----------
Increase in net assets from
operations $ 5,054,441 $ 10,547,325 $ 27,169,627 $ 2,678,585
----------- ------------ ------------ -----------
</TABLE>
See notes to financial statements
22
<PAGE>
Financial Statements - continued
Statements of Operations (Unaudited) - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
South Carolina Tennessee Virginia West Virginia
Six Months Ended September 30, 1997 Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $ 5,288,571 $3,837,318 $ 12,605,468 $ 4,351,146
------------ ---------- ------------ -----------
Expenses -
Management fee $ 478,887 $ 343,699 $ 1,136,627 $ 389,676
Trustees' compensation 9,477 9,326 9,347 9,482
Shareholder servicing agent fee 113,088 81,164 268,385 92,386
Distribution and service fee (Class A) 262,728 191,351 662,368 223,826
Distribution and service fee (Class B) 119,259 77,620 155,292 71,157
Distribution and service fee (Class C) -- -- 16,733 --
Administrative fee 13,049 9,363 30,968 10,660
Custodian fee 35,907 26,549 78,706 29,233
Printing 7,761 5,236 19,488 7,009
Postage 5,361 3,394 12,924 4,322
Auditing fees 14,276 16,275 14,276 14,276
Legal fees 2,771 2,523 3,158 2,432
Miscellaneous 45,540 32,063 69,640 36,504
------------ ---------- ------------ -----------
Total expenses $ 1,108,104 $ 798,563 $ 2,477,912 $ 890,963
Fees paid indirectly (7,877) (9,595) (207,600) (7,101)
Preliminary reduction of expenses by
investment adviser (87,426) (62,748) (38,112) (23,225)
------------ ---------- ------------ -----------
Net expenses $ 1,012,801 $ 726,220 $ 2,232,200 $ 860,637
------------ ---------- ------------ -----------
Net investment income $ 4,275,770 $3,111,098 $ 10,373,268 $ 3,490,509
------------ ---------- ------------ -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 1,211,462 $ 874,113 $ 3,005,919 $ (13,947)
Futures contracts 9,143 -- -- --
------------ ---------- ------------ -----------
Net realized gain (loss) on
investments $ 1,220,605 $ 874,113 $ 3,005,919 $ (13,947)
------------ ---------- ------------ -----------
Change in unrealized appreciation -
Investments $ 5,296,847 $4,414,401 $ 13,212,979 $ 4,524,053
Futures contracts 40,726 -- -- --
------------ ---------- ------------ -----------
Net unrealized gain on
investments $ 5,337,573 $4,414,401 $ 13,212,979 $ 4,524,053
------------ ---------- ------------ -----------
Net realized and unrealized gain
on investments $ 6,558,178 $5,288,514 $ 16,218,898 $ 4,510,106
------------ ---------- ------------ -----------
Increase in net assets from
operations $ 10,833,948 $8,399,612 $ 26,592,166 $ 8,000,615
------------ ---------- ------------ -----------
</TABLE>
See notes to financial statements
23
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Mississippi
Six Months Ended September 30, 1997 Fund
- ------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,908,082
Net realized gain on investments 558,895
Net unrealized gain on investments 2,587,464
-------------
Increase in net assets from operations $ 5,054,441
-------------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,656,745)
From net investment income (Class B) (229,189)
From net investment income (Class C) --
-------------
Total distributions declared to shareholders $ (1,885,934)
-------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 1,910,493
Net asset value of shares issued to shareholders in
reinvestment of distributions 807,904
Cost of shares reacquired (6,903,797)
-------------
Decrease in net assets from Fund share
transactions $ (4,185,400)
-------------
Total increase (decrease) in net assets $ (1,016,893)
Net assets:
At beginning of period 77,643,326
-------------
At end of period $ 76,626,433
-------------
Accumulated undistributed (distributions in excess of) net
investment income included in net assets at end of period $ 58,363
-------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
New York North Carolina Pennsylvania
Six Months Ended September 30, 1997 Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 3,814,317 $ 10,598,474 $ 976,510
Net realized gain on investments 95,727 2,357,873 195,740
Net unrealized gain on investments 6,637,281 14,213,280 1,506,335
------------- -------------- -------------
Increase in net assets from operations $ 10,547,325 $ 27,169,627 $ 2,678,585
------------- -------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,050,685) $ (9,517,696) $ (459,941)
From net investment income (Class B) (560,777) (892,418) (515,417)
From net investment income (Class C) -- (152,610) --
------------- -------------- -------------
Total distributions declared to shareholders $ (3,611,462) $ (10,562,724) $ (975,358)
------------- -------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 15,617,781 $ 16,082,572 $ 2,868,646
Net asset value of shares issued to shareholders in
reinvestment of distributions 2,068,846 6,127,451 524,573
Cost of shares reacquired (26,191,727) (33,225,375) (8,083,256)
------------- -------------- -------------
Decrease in net assets from Fund share
transactions $ (8,505,100) $ (11,015,352) $ (4,690,037)
------------- -------------- -------------
Total increase (decrease) in net assets $ (1,569,237) $ 5,591,551 $ (2,986,810)
Net assets:
At beginning of period 148,311,782 423,935,340 41,831,390
------------- -------------- -------------
At end of period $ 146,742,545 $ 429,526,891 $ 38,844,580
------------- -------------- -------------
Accumulated undistributed (distributions in excess of) net
investment income included in net assets at end of period $ (135,235) $ (678,971) $ 17,354
------------- -------------- -------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
South Carolina Tennessee Virginia West Virginia
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 $ 4,275,770 $ 3,111,098 $ 10,373,268 $ 3,490,509
Net realized gain (loss) on investments 1,220,605 874,113 3,005,919 (13,947)
Net unrealized gain on investments 5,337,573 4,414,401 13,212,979 4,524,053
------------- ------------- -------------- -------------
Increase in net assets from operations $ 10,833,948 $ 8,399,612 $ 26,592,166 $ 8,000,615
------------- ------------- -------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,757,161) $ (2,768,406) $ (9,611,235) $ (3,181,418)
From net investment income (Class B) (518,609) (342,692) (687,883) (309,091)
From net investment income (Class C) -- -- (74,150) --
In excess of net investment income (Class A) (20,620) (26,197) (84,460) (106,127)
In excess of net investment income (Class B) (2,846) (3,243) (6,045) (10,311)
In excess of net investment income (Class C) -- -- (652) --
------------- ------------- -------------- -------------
Total distributions declared to shareholders $ (4,299,236) $ (3,140,538) $ (10,464,425) $ (3,606,947)
------------- ------------- -------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 9,208,794 $ 7,347,689 $ 19,993,232 $ 5,458,180
Net asset value of shares issued to shareholders in
reinvestment of distributions 2,319,119 1,559,664 5,074,062 1,940,427
Cost of shares reacquired (13,627,084) (10,894,448) (41,847,203) (6,640,232)
------------- ------------- -------------- -------------
Increase (decrease) in net assets from Fund
share transactions $ (2,099,171) $ (1,987,095) $ (16,779,909) $ 758,375
------------- ------------- -------------- -------------
Total increase (decrease) in net assets $ 4,435,541 $ 3,271,979 $ (652,168) $ 5,152,043
Net assets:
At beginning of period 170,779,385 122,435,817 412,934,332 139,693,707
------------- ------------- -------------- -------------
At end of period $ 175,214,926 $ 125,707,796 $ 412,282,164 $ 144,845,750
------------- ------------- -------------- -------------
Accumulated distributions in excess of net investment
income included in net assets at end of period $ (234,695) $ (45,688) $ (1,348,372) $ (546,118)
------------- ------------- -------------- -------------
</TABLE>
See notes to financial statements
24
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Mississippi
Year Ended March 31, 1997 Fund
- ------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,156,402
Net realized gain (loss) on investments (149,786)
Net unrealized gain (loss) on investments 202,478
-------------
Increase in net assets from operations $ 4,209,094
-------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,636,582)
From net investment income (Class B) (488,656)
From net investment income (Class C) --
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 $ (4,125,238)
-------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 5,147,902
Net asset value of shares issued to shareholders in
reinvestment of distributions 1,796,462
Cost of shares reacquired (15,295,259)
-------------
Increase (decrease) in net assets from Fund
share transactions $ (8,350,895)
-------------
Total decrease in net assets $ (8,267,039)
Net assets:
At beginning of period 85,910,365
-------------
At end of period $ 77,643,326
-------------
Accumulated undistributed (distributions in excess of) net
investment income included in net assets at end of period $ 36,215
-------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
New York North Carolina Pennsylvania
Year Ended March 31, 1997 Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 7,847,568 $ 21,946,294 $ 2,229,024
Net realized gain (loss) on investments (484,632) 1,019,630 (571,590)
Net unrealized gain (loss) on investments (536,394) (1,195,086) 150,921
-------------- -------------- -------------
Increase in net assets from operations $ 6,826,542 $ 21,770,838 $ 1,808,355
-------------- -------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (6,608,917) $ (19,960,583) $ (1,021,497)
From net investment income (Class B) (1,193,195) (1,572,775) (1,235,549)
From net investment income (Class C) -- (412,936) --
In excess of net investment income (Class A) -- (57,101) (5,499)
In excess of net investment income (Class B) -- (4,500) (6,652)
In excess of net investment income (Class C) -- (1,180) --
-------------- -------------- -------------
Total distributions declared to shareholders $ (7,802,112) $ (22,009,075) $ (2,269,197)
-------------- -------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 18,795,107 $ 150,297,565 $ 6,941,408
Net asset value of shares issued to shareholders in
reinvestment of distributions 4,479,249 12,769,917 1,339,280
Cost of shares reacquired (36,503,476) (191,439,457) (8,188,392)
-------------- -------------- -------------
Increase (decrease) in net assets from Fund
share transactions $ (13,229,120) $ (28,371,975) $ 92,296
-------------- -------------- -------------
Total decrease in net assets $ (14,204,690) $ (28,610,212) $ (368,546)
Net assets:
At beginning of period 162,516,472 452,545,552 42,199,936
-------------- -------------- -------------
At end of period $ 148,311,782 $ 423,935,340 $ 41,831,390
-------------- -------------- -------------
Accumulated undistributed (distributions in excess of) net
investment income included in net assets at end of period $ (338,090) $ (714,721) $ 16,202
-------------- -------------- -------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
South Carolina Tennessee
Year Ended March 31, 1997 Fund Fund
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 9,088,770 $ 6,429,943
Net realized loss on investments (504,527) (23,124)
Net unrealized gain (loss) on investments (827,860) (1,079,488)
-------------- -------------
Increase in net assets from operations $ 7,756,383 $ 5,327,331
-------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (8,123,664) $ (5,716,145)
From net investment income (Class B) (895,171) (609,095)
From net investment income (Class C) -- --
-------------- -------------
Total distributions declared to shareholders $ (9,018,835) $ (6,325,240)
-------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 14,266,849 $ 12,503,086
Net asset value of shares issued to shareholders in
reinvestment of distributions 4,940,927 3,089,989
Cost of shares reacquired (32,386,589) (14,905,124)
-------------- -------------
Net increase (decrease) in net assets from
Fund share transactions $ (13,178,813) $ 687,951
-------------- -------------
Total decrease in net assets $ (14,441,265) $ (309,958)
Net assets:
At beginning of period 185,220,650 122,745,775
-------------- -------------
At end of period $ 170,779,385 $ 122,435,817
-------------- -------------
Accumulated distributions in excess of net investment income
included in net assets at end of period $ (211,229) $ (16,248)
-------------- -------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
Virginia West Virginia
Year Ended March 31, 1997 Fund Fund
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 22,582,005 $ 7,584,842
Net realized loss on investments (2,270,255) (738,568)
Net unrealized gain (loss) on investments (3,402,113) 451,727
-------------- -------------
Increase in net assets from operations $ 16,909,637 $ 7,298,001
-------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (21,012,643) $ (6,960,660)
From net investment income (Class B) (1,346,865) (608,405)
From net investment income (Class C) (161,724) --
-------------- -------------
Total distributions declared to shareholders $ (22,521,232) $ (7,569,065)
-------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 158,319,115 $ 8,573,897
Net asset value of shares issued to shareholders in
reinvestment of distributions 10,962,194 4,100,851
Cost of shares reacquired (200,929,656) (19,870,458)
-------------- -------------
Net increase (decrease) in net assets from
Fund share transactions $ (31,648,347) $ (7,195,710)
-------------- -------------
Total decrease in net assets $ (37,259,942) $ (7,466,774)
Net assets:
At beginning of period 450,194,274 147,160,481
-------------- -------------
At end of period $ 412,934,332 $ 139,693,707
-------------- -------------
Accumulated distributions in excess of net investment income
included in net assets at end of period $ (1,257,215) $ (429,680)
-------------- -------------
</TABLE>
See notes to financial statements
25
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Mississippi 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 $ 9.35 $ 9.35 $ 9.15 $ 9.19
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.24 $ 0.48 $ 0.52 $ 0.54
Net realized and unrealized gain (loss) on
investments 0.39 0.00 0.20 (0.01)
---------- ------- --------- ---------
Total from investment operations $ 0.63 $ 0.48 $ 0.72 $ 0.53
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.24) $ (0.48) $ (0.52) $ (0.54)
From net realized gain on investments[dbldag][dbldag][dbldag] -- -- -- (0.00)
In excess of net realized gain on investments -- -- -- (0.03)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.24) $ (0.48) $ (0.52) $ (0.57)
---------- ------- --------- ---------
Net asset value - end of period $ 9.74 $ 9.35 $ 9.35 $ 9.15
---------- ------- --------- ---------
Total return[dbldag] 6.78%++ 5.22% 7.99% 6.08%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.87%+ 0.87% 0.45% 0.22%
Net investment income 5.03%+ 5.14% 5.51% 5.99%
Portfolio turnover 7% 17% 31% 47%
Net assets at end of period (000 omitted) $ 65,815 $66,630 $ 74,435 $ 79,033
*For the period from the commencement of the Fund's investment operations, August 6, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, are based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
[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
$0.0013 and $0.0035, respectively.
[dbldag][dbldag][dbldag]For the year ended March 31, 1995, the per share distribution from net realized gain on investments was
$0.0016.
[sec]The Adviser voluntarily agreed to maintain expenses of the Fund, exclusive of management, distribution and services fees,
at not more than 0.40% of average daily net assets. Effective August 1, 1997, the investment adviser voluntarily waived a portion of
its management fee. 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 $ -- $ 0.48 $ 0.48
Ratios (to average net assets):
Expenses## 0.90%+ -- 0.88% 0.93%
Net investment income 5.00%+ -- 5.08% 5.28%
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Two Months
Ended Year Ended Period 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 $ 10.00 $ 9.38 $ 9.53
----------- ------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.55 $ 0.24
Net realized and unrealized gain (loss) on
investments (0.81) 0.62 (0.15)
----------- ------- ----------
Total from investment operations $ (0.72) $ 1.17 $ 0.09
----------- ------- ----------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.09) $ (0.55) $ (0.24)
From net realized gain on investments[dbldag][dbldag][dbldag] -- -- --
In excess of net realized gain on investments -- -- --
----------- ------- ----------
Total distributions declared to shareholders $ (0.09) $ (0.55) $ (0.24)
----------- ------- ----------
Net asset value - end of period $ 9.19 $ 10.00 $ 9.38
----------- ------- ----------
Total return[dbldag] (7.20)%++ 12.80% 5.00%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.10%+ 0.03% 0.00%+
Net investment income 5.69%+ 5.68% 5.59%+
Portfolio turnover 2% 28% 14%
Net assets at end of period (000 omitted) $ 79,541 $84,177 $ 41,212
*For the period from the commencement of the Fund's investment operations, August 6, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, are based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
[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
$0.0013 and $0.0035, respectively.
[dbldag][dbldag][dbldag]For the year ended March 31, 1995, the per share distribution from net realized gain on investments was
$0.0016.
[sec]The Adviser voluntarily agreed to maintain expenses of the Fund, exclusive of management, distribution and services fees,
at not more than 0.40% of average daily net assets. Effective August 1, 1997, the investment adviser voluntarily waived a portion of
its management fee. If this fee had been incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.08 $ 0.45 $ 0.19
Ratios (to average net assets):
Expenses## 0.88%+ 1.01% 1.17%+
Net investment income 4.91%+ 4.69% 4.42%+
</TABLE>
See notes to financial statements
26
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Mississippi 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 $ 9.36 $ 9.36 $ 9.16 $ 9.19
---------- -------- ---------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.20 $ 0.40 $ 0.44 $ 0.45
Net realized and unrealized gain (loss) on
investments 0.39 -- 0.20 --
---------- -------- ---------- ---------
Total from investment operations $ 0.59 $ 0.40 $ 0.64 $ 0.45
---------- -------- ---------- ---------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.20) $ (0.40) $ (0.44) $ (0.45)
From net realized gain on investments[dbldag][dbldag][dbldag] -- -- -- (0.00)
In excess of net realized gain on investments -- -- -- (0.03)
---------- -------- ---------- ---------
Total distributions declared to shareholders $ (0.20) $ (0.40) $ (0.44) $ (0.48)
---------- -------- ---------- ---------
Net asset value - end of period $ 9.75 $ 9.36 $ 9.36 $ 9.16
---------- -------- ---------- ---------
Total return 6.37%++ 4.33% 7.11% 5.14%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.65%+ 1.72% 1.28% 1.23%
Net investment income 4.25%+ 4.29% 4.67% 4.97%
Portfolio turnover 7% 17% 31% 47%
Net assets at end of period (000 omitted) $ 10,811 $ 11,014 $ 11,475 $ 9,429
**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 years ended March 31, 1996, and 1995, and the two months ended March 31, 1994, the per share distributions
in excess of net investment income were $0.0011, $0.0029, and $0.002, respectively.
[dbldag][dbldag][dbldag]For the year ended March 31, 1995, the per share distribution from net realized gain on investments was
$0.0016.
[sec]The Adviser voluntarily agreed to maintain expenses of the Fund, exclusive of management, distribution and service fees,
at not more than 0.40% of average daily net assets. Effective August 1, 1997, the investment adviser voluntarily waived a portion of
its management fee. If this fee had been incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.20 $ -- $ 0.40 $ 0.38
Ratios (to average net assets):
Expenses## 1.68%+ -- 1.71% 2.01%
Net investment income 4.22%+ -- 4.24% 4.19%
<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 $ 9.99 $ 9.94
----------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on
investments (0.79) 0.05
----------- ----------
Total from investment operations $ (0.72) $ 0.23
----------- ----------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.08) $ (0.18)
From net realized gain on investments[dbldag][dbldag][dbldag] -- --
In excess of net realized gain on investments -- --
----------- ----------
Total distributions declared to shareholders $ (0.08) $ (0.18)
----------- ----------
Net asset value - end of period $ 9.19 $ 9.99
----------- ----------
Total return (7.27)%++ 2.33%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.10%+ 1.06%+
Net investment income 4.67%+ 4.29%+
Portfolio turnover 2% 28%
Net assets at end of period (000 omitted) $ 6,526 $ 6,268
**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 years ended March 31, 1996, and 1995, and the two months ended March 31, 1994, the per share distributions
in excess of net investment income were $0.0011, $0.0029, and $0.002, respectively.
[dbldag][dbldag][dbldag]For the year ended March 31, 1995, the per share distribution from net realized gain on investments was
$0.0016.
[sec]The Adviser voluntarily agreed to maintain expenses of the Fund, exclusive of management, distribution and service fees,
at not more than 0.40% of average daily net assets. Effective August 1, 1997, the investment adviser voluntarily waived a portion of
its management fee. If this fee had been incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.06 $ 0.14
Ratios (to average net assets):
Expenses## 1.95%+ 2.12%+
Net investment income 3.82%+ 3.23%+
</TABLE>
See notes to financial statements
27
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
New York 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 $ 10.60 $ 10.66 $ 10.49 $ 10.50
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.29 $ 0.55 $ 0.55 $ 0.56
Net realized and unrealized gain (loss) on
investments 0.49 (0.06) 0.17 0.05
--------- -------- -------- --------
Total from investment operations $ 0.78 $ 0.49 $ 0.72 $ 0.61
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.27) $ (0.55) $ (0.55) $ (0.56)
In excess of net investment income[dbldag][dbldag] -- -- (0.00) (0.01)
In excess of net realized gain on investments -- -- -- (0.05)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.27) $ (0.55) $ (0.55) $ (0.62)
--------- -------- -------- --------
Net asset value - end of period $ 11.11 $ 10.60 $ 10.66 $ 10.49
--------- -------- -------- --------
Total return[dbldag] 7.46%++ 4.68% 6.98% 6.03%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.09%+ 1.11% 1.10% 1.07%
Net investment income 5.28%+ 5.18% 5.09% 5.43%
Portfolio turnover 26% 64% 102% 147%
Net assets at end of period (000 omitted) $120,107 $121,588 $134,449 $146,597
+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, 1996, the per share distribution in excess of net investment income was $0.0058.
[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 $ 0.29 $ -- $ 0.54 $ 0.55
Ratios (to average net assets):
Expenses## 1.12%+ -- 1.20% 1.18%
Net investment income 5.25%+ -- 4.99% 5.31%
<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 $ 11.34
-----------
Income from investment operations# -
Net investment income[sec] $ 0.09
Net realized and unrealized gain (loss) on
investments (0.84)
-----------
Total from investment operations $ (0.75)
-----------
Less distributions declared to shareholders -
From net investment income $ (0.06)
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 $ 10.50
-----------
Total return[dbldag] (6.58)%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.03%+
Net investment income 5.09%+
Portfolio turnover 15%
Net assets at end of period (000 omitted) $ 162,621
+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, 1996, the per share distribution in excess of net investment income was $0.0058.
[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 $ 0.07
Ratios (to average net assets):
Expenses## 1.23%+
Net investment income 4.88%+
</TABLE>
See notes to financial statements
28
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
New York Fund
- -------------------------------------------------------------------------------
Year Ended January 31, 1994
- -------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.78
---------
Income from investment operations -
Net investment income[sec] $ 0.59
Net realized and unrealized gain on investments 0.74
---------
Total from investment operations $ 1.33
---------
Less distributions declared to shareholders -
From net investment income $ (0.57)
From net realized gain on investments (0.17)
In excess of net investment income (0.03)
From paid-in capital --
---------
Total distributions declared to shareholders $ (0.77)
---------
Net asset value - end of period $ 11.34
---------
Total return[dbldag] 12.69%
Ratios (to average net assets)/Supplemental data:
Expenses 0.93%
Net investment income 5.21%
Portfolio turnover 51%
Net assets at end of period (000 omitted) $ 184,523
*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 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 $ 0.56
Ratios (to average net assets):
Expenses 1.23%
Net investment income 4.91%
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended January 31, 1993 1992 1991 1990 1989*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.25 $ 9.90 $ 9.74 $ 9.79 $ 9.53
-------- --------- --------- -------- ------------
Income from investment operations -
Net investment income[sec] $ 0.63 $ 0.65 $ 0.65 $ 0.68 $ 0.29
Net realized and unrealized gain on investments 0.58 0.44 0.16 0.01 0.21
-------- --------- --------- -------- ------------
Total from investment operations $ 1.21 $ 1.09 $ 0.81 $ 0.69 $ 0.50
-------- --------- --------- -------- ------------
Less distributions declared to shareholders -
From net investment income $ (0.65) $ (0.69) $ (0.65) $ (0.67) $ (0.24)
From net realized gain on investments (0.03) (0.05) -- (0.06) --
In excess of net investment income -- -- -- -- --
From paid-in capital -- -- -- (0.01) --
-------- --------- --------- -------- ------------
Total distributions declared to shareholders $ (0.68) $ (0.74) $ (0.65) $ (0.74) $ (0.24)
-------- --------- --------- -------- ------------
Net asset value - end of period $ 10.78 $ 10.25 $ 9.90 $ 9.74 $ 9.79
-------- --------- --------- -------- ------------
Total return[dbldag] 12.23% 11.42% 8.74% 7.33% 8.16%+
Ratios (to average net assets)/Supplemental data:
Expenses 0.53% 0.65% 0.54% 0.40% 0.40%+
Net investment income 6.16% 6.44% 6.73% 6.88% 5.93%+
Portfolio turnover 61% 80% 188% 236% 32%
Net assets at end of period (000 omitted) $135,749 $ 79,524 $ 37,385 $ 20,156 $ 6,412
*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 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 $ 0.57 $ 0.60 $ 0.61 $ 0.59 $ 0.26
Ratios (to average net assets):
Expenses 1.13% 1.16% 0.95% 1.32% 1.09%+
Net investment income 5.56% 5.93% 6.33% 5.96% 5.24%+
</TABLE>
See notes to financial statements
29
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
New York 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 $ 10.59 $ 10.66 $ 10.49 $ 10.50
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.25 $ 0.47 $ 0.47 $ 0.47
Net realized and unrealized gain (loss) on
investments 0.49 (0.07) 0.17 0.05
---------- ------- --------- ---------
Total from investment operations $ 0.74 $ 0.40 $ 0.64 $ 0.52
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.23) $ (0.47) $ (0.47) $ (0.47)
From net realized gain on investments -- -- -- --
In excess of net investment income[dbldag][dbldag] -- -- (0.00) (0.01)
In excess of net realized gain on investments -- -- -- (0.05)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.23) $ (0.47) $ (0.47) $ (0.53)
---------- ------- --------- ---------
Net asset value - end of period $ 11.10 $ 10.59 $ 10.66 $ 10.49
---------- ------- --------- ---------
Total return 7.06%++ 3.77% 6.10% 5.17%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.84%+ 1.92% 1.92% 1.89%
Net investment income 4.53%+ 4.37% 4.27% 4.58%
Portfolio turnover 26% 64% 102% 147%
Net assets at end of period (000 omitted) $ 26,636 $26,724 $ 28,068 $ 11,885
**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, 1996, the per share distribution in excess of net investment income was $0.0048.
[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 $ -- $ -- $ 0.47
Ratios (to average net assets):
Expenses## 1.87%+ -- -- 1.91%
Net investment income 4.50%+ -- -- 4.57%
<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 $ 11.34 $ 11.46
----------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on
investments (0.83) 0.04
----------- ----------
Total from investment operations $ (0.76) $ 0.22
----------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.07) $ (0.18)
From net realized gain on investments -- (0.15)
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) $ (0.34)
----------- ----------
Net asset value - end of period $ 10.50 $ 11.34
----------- ----------
Total return (6.71)%++ 5.20%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.87%+ 1.79%+
Net investment income 4.21%+ 3.90%+
Portfolio turnover 15% 51%
Net assets at end of period (000 omitted) $ 6,265 $ 4,828
**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, 1996, the per share distribution in excess of net investment income was $0.0048.
[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 $ 0.07 $ 0.17
Ratios (to average net assets):
Expenses## 1.97%+ 2.00%+
Net investment income 4.11%+ 3.69%+
</TABLE>
See notes to financial statements
30
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
North Carolina 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 $ 11.56 $ 11.57 $ 11.42 $ 11.48
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.30 $ 0.59 $ 0.59 $ 0.61
Net realized and unrealized gain (loss) on
investments 0.45 (0.01) 0.15 0.03
--------- -------- -------- --------
Total from investment operations $ 0.75 $ 0.58 $ 0.74 $ 0.64
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.30) $ (0.59) $ (0.59) $ (0.60)
From net realized gain on investments -- -- -- (0.06)
In excess of net investment income[dbldag][dbldag] -- (0.00) (0.00) --
In excess of net realized gain on investments -- -- -- (0.04)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.30) $ (0.59) $ (0.59) $ (0.70)
--------- -------- -------- --------
Net asset value - end of period $ 12.01 $ 11.56 $ 11.57 $ 11.42
--------- -------- -------- --------
Total return[dbldag] 6.51%++ 5.09% 6.56% 5.86%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.04%+ 1.08% 1.17% 1.16%
Net investment income 5.01%+ 5.05% 5.04% 5.38%
Portfolio turnover 12% 33% 30% 58%
Net assets at end of period (000 omitted) $379,557 $377,112 $409,347 $429,131
+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 years ended March 31, 1997, and 1996, the per share distributions in excess of net investment income were
$0.002 and $0.002, 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 $ 0.29 $ 0.58 $ -- $ --
Ratios (to average net assets):
Expenses## 1.14%+ 1.15% -- --
Net investment income 4.91%+ 4.98% -- --
<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 $ 12.37 $ 11.80
----------- --------
Income from investment operations# -
Net investment income[sec] $ 0.10 $ 0.64
Net realized and unrealized gain (loss) on
investments (0.89) 0.58
----------- --------
Total from investment operations $ (0.79) $ 1.22
----------- --------
Less distributions declared to shareholders -
From net investment income $ (0.07) $ (0.61)
From net realized gain on investments -- (0.01)
In excess of net investment income[dbldag][dbldag] (0.03) (0.03)
In excess of net realized gain on investments -- --
----------- --------
Total distributions declared to shareholders $ (0.10) $ (0.65)
----------- --------
Net asset value - end of period $ 11.48 $ 12.37
----------- --------
Total return[dbldag] (6.39)%++ 10.59%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.16%+ 1.19%
Net investment income 4.96%+ 5.21%
Portfolio turnover 2% 12%
Net assets at end of period (000 omitted) $ 460,321 $495,158
+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 years ended March 31, 1997, and 1996, the per share distributions in excess of net investment income were
$0.002 and $0.002, 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 $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
31
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
North Carolina 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 $ 11.45
--------
Income from investment operations -
Net investment income $ 0.65
Net realized and unrealized gain (loss) on
investments 0.37
--------
Total from investment operations $ 1.02
--------
Less distributions declared to shareholders -
From net investment income $ (0.67)
From net realized gain on investments --
From paid-in capital[dbldag][dbldag] --
--------
Total distributions declared to shareholders $ (0.67)
--------
Net asset value - end of period $ 11.80
--------
Total return[dbldag] 9.23%
Ratios (to average net assets)/Supplemental data
Expenses 1.07%
Net investment income 5.80%
Portfolio turnover 2%
Net assets at end of period (000 omitted) $398,352
[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, 1991, the per share distribution from paid-in capital was $0.0005.
<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 $ 11.30 $ 11.18 $ 11.15 $ 11.13 $ 11.82
-------- -------- -------- -------- --------
Income from investment operations -
Net investment income $ 0.70 $ 0.72 $ 0.73 $ 0.74 $ 0.73
Net realized and unrealized gain (loss) on
investments 0.26 0.17 0.03 0.02 (0.69)
-------- -------- -------- -------- --------
Total from investment operations $ 0.96 $ 0.89 $ 0.76 $ 0.76 $ 0.04
-------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.72) $ (0.73) $ (0.74) $ (0.73)
From net realized gain on investments (0.01) (0.05) -- -- --
From paid-in capital[dbldag][dbldag] (0.04) (0.00) -- -- --
-------- -------- -------- -------- --------
Total distributions declared to shareholders $ (0.81) $ (0.77) $ (0.73) $ (0.74) $ (0.73)
-------- -------- -------- -------- --------
Net asset value - end of period $ 11.45 $ 11.30 $ 11.18 $ 11.15 $ 11.13
-------- -------- -------- -------- --------
Total return[dbldag] 8.82% 8.34% 6.97% 7.12% 0.65%
Ratios (to average net assets)/Supplemental data:
Expenses 1.09% 1.09% 1.12% 1.11% 1.08%
Net investment income 6.17% 6.47% 6.48% 6.70% 6.71%
Portfolio turnover 39% 44% 61% 25% 10%
Net assets at end of period (000 omitted) $312,466 $226,806 $175,101 $129,287 $110,462
[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, 1991, the per share distribution from paid-in capital was $0.0005.
</TABLE>
See notes to financial statements
32
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
North Carolina 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 $ 11.55 $ 11.56 $ 11.42 $ 11.47
---------- ------- --------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.26 $ 0.50 $ 0.50 $ 0.52
Net realized and unrealized gain (loss) on
investments 0.46 -- 0.14 0.05
---------- ------- --------- ----------
Total from investment operations $ 0.72 $ 0.50 $ 0.64 $ 0.57
---------- ------- --------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.26) $ (0.51) $ (0.50) $ (0.52)
From net realized gain on investments -- -- -- ( 0.06)
In excess of net investment income[dbldag][dbldag] -- (0.00) (0.00) --
In excess of net realized gain on investments -- -- -- ( 0.04)
---------- ------- --------- ----------
Total distributions declared to shareholders $ (0.26) $ (0.51) $ (0.50) $ (0.62)
---------- ------- --------- ----------
Net asset value - end of period $ 12.01 $ 11.55 $ 11.56 $ 11.42
---------- ------- --------- ----------
Total return 6.26%++ 4.36% 5.70% 5.20%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.69%+ 1.78% 1.90% 1.88%
Net investment income 4.35%+ 4.36% 4.30% 4.64%
Portfolio turnover 12% 33% 30% 58%
Net assets at end of period (000 omitted) $ 42,922 $39,035 $ 33,847 $ 26,260
**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 years ended March 31, 1997, and 1996, and the two months ended March 31, 1994, the per share distributions
in excess of net investment income were $0.001, $0.002, and $0.004, respectively.
[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 $ 0.26 $ 0.49 $ -- $ --
Ratios (to average net assets):
Expenses## 1.79%+ 1.85% -- --
Net investment income 4.25%+ 4.29% -- --
<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 $ 12.36 $ 12.36
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.08 $ 0.22
Net realized and unrealized gain (loss) on
investments (0.89) 0.01
----------- ---------
Total from investment operations $ (0.81) $ 0.23
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.21)
From net realized gain on investments -- (0.01)
In excess of net investment income[dbldag][dbldag] (0.00) (0.01)
In excess of net realized gain on investments -- --
----------- ---------
Total distributions declared to shareholders $ (0.08) $ (0.23)
----------- ---------
Net asset value - end of period $ 11.47 $ 12.36
----------- ---------
Total return (6.51)%++ 4.58%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.88%+ 1.84%+
Net investment income 4.18%+ 4.03%+
Portfolio turnover 2% 12%
Net assets at end of period (000 omitted) $ 15,866 $13,379
**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 years ended March 31, 1997, and 1996, and the two months ended March 31, 1994, the per share distributions
in excess of net investment income were $0.001, $0.002, and $0.004, respectively.
[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 $ -- $ --
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>
- ---------------------------------------------------------------------------------------------------------------------------
North Carolina 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 $ 11.55 $ 11.56 $ 11.41 $ 11.47
---------- -------- ---------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.26 $ 0.52 $ 0.51 $ 0.53
Net realized and unrealized gain (loss) on
investments 0.46 (0.02) 0.15 0.04
---------- -------- ---------- ---------
Total from investment operations $ 0.72 $ 0.50 $ 0.66 $ 0.57
---------- -------- ---------- ---------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.26) $ (0.51) $ (0.51) $ (0.53)
From net realized gain on investments -- -- -- (0.06)
In excess of net realized gain on investments -- -- -- (0.04)
---------- -------- ---------- ---------
Total distributions declared to shareholders $ (0.26) $ (0.51) $ (0.51) $ (0.63)
---------- -------- ---------- ---------
Net asset value - end of period $ 12.01 $ 11.55 $ 11.56 $ 11.41
---------- -------- ---------- ---------
Total return 6.26%++ 4.41% 5.87% 5.18%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.69%+ 1.73% 1.83% 1.81%
Net investment income 4.35%+ 4.40% 4.38% 4.71%
Portfolio turnover 12% 33% 30% 58%
Net assets at end of period (000 omitted) $ 7,048 $ 7,789 $ 9,352 $ 8,149
***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, 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 years ended March 31, 1997, and 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 $0.002, $0.002, $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 $ 0.25 $ 0.51 $ -- $ --
Ratios (to average net assets):
Expenses## 1.79%+ 1.80% -- --
Net investment income 4.25%+ 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 $ 12.36 $ 12.24
----------- -----------
Income from investment operations# -
Net investment income[sec] $ 0.10 $ 0.02
Net realized and unrealized gain (loss) on
investments (0.90) 0.12
----------- -----------
Total from investment operations $ (0.80) $ 0.14
----------- -----------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.09) $ (0.02)
From net realized gain on investments -- --
In excess of net realized gain on investments -- --
----------- -----------
Total distributions declared to shareholders $ (0.09) $ (0.02)
----------- -----------
Net asset value - end of period $ 11.47 $ 12.36
----------- -----------
Total return (6.50)%++ 16.50%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.82%+ 1.44%+
Net investment income 4.25%+ 2.33%+
Portfolio turnover 2% 12%
Net assets at end of period (000 omitted) $ 6,661 $ 4,584
***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, 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 years ended March 31, 1997, and 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 $0.002, $0.002, $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 $ -- $ --
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>
- ----------------------------------------------------------------------------------------------------------------------
Pennsylvania 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 $ 9.26 $ 9.37 $ 9.29 $ 9.15
--------- -------- ---------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.25 $ 0.53 $ 0.54 $ 0.54
Net realized and unrealized gain (loss) on
investments 0.40 (0.10) 0.09 0.18
--------- -------- ---------- ----------
Total from investment operations $ 0.65 $ 0.43 $ 0.63 $ 0.72
--------- -------- ---------- ----------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.25) $ (0.54) $ (0.55) $ (0.54)
From net realized gain on investments -- -- -- ( 0.01)
In excess of net realized gain on investments -- -- -- ( 0.03)
--------- -------- ---------- ----------
Total distributions declared to shareholders $ (0.25) $ (0.54) $ (0.55) $ (0.58)
--------- -------- ---------- ----------
Net asset value - end of period $ 9.66 $ 9.26 $ 9.37 $ 9.29
--------- -------- ---------- ----------
Total return[dbldag] 7.10%++ 4.67% 6.85% 8.14%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 0.30%+ 0.10% 0.10% 0.01%
Net investment income 5.29%+ 5.66% 5.76% 5.97%
Portfolio turnover 17% 42% 40% 49%
Net assets at end of period (000 omitted) $ 17,327 $16,933 $ 18,030 $ 16,411
*For the period from the commencement of the Fund's investment operations, February 1, 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]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, 1997, per share distribution in excess of net investment income was $0.003.
[sec]Subject to reimbursement by the Fund, the Adviser voluntarily agreed to maintain expenses of the Fund, exclusive of
management and service fees, at not more than 0.40% of average daily net assets. To the extent actual expenses were over/under the
limitation, the net investment income per share and the ratios would have been:
Net investment income $ 0.22 $ 0.45 $ 0.45 $ 0.43
Ratios (to average net assets):
Expenses## 0.97%+ 0.95% 1.00% 1.18%
Net investment income 4.62%+ 4.81% 4.86% 4.80%
<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 $ 10.14 $ 9.53
----------- -----------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.50
Net realized and unrealized gain (loss) on
investments (0.99) 0.62
----------- -----------
Total from investment operations $ (0.90) $ 1.12
----------- -----------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.09) $ (0.50)
From net realized gain on investments -- (0.01)
In excess of net realized gain on investments -- --
----------- -----------
Total distributions declared to shareholders $ (0.09) $ (0.51)
----------- -----------
Net asset value - end of period $ 9.15 $ 10.14
----------- -----------
Total return[dbldag] (8.91)%++ 12.12%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 0.00%+ 0.00%+
Net investment income 5.43%+ 5.30%+
Portfolio turnover 1% 10%
Net assets at end of period (000 omitted) $ 13,961 $ 13,987
*For the period from the commencement of the Fund's investment operations, February 1, 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]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, 1997, per share distribution in excess of net investment income was $0.003.
[sec]Subject to reimbursement by the Fund, the Adviser voluntarily agreed to maintain expenses of the Fund, exclusive of
management and service fees, at not more than 0.40% of average daily net assets. To the extent actual expenses were over/under the
limitation, the net investment income per share and the ratios would have been:
Net investment income $ 0.06 $ 0.32
Ratios (to average net assets):
Expenses## 1.84%+ 1.94%+
Net investment income 3.60%+ 3.36%+
</TABLE>
See notes to financial statements
35
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Pennsylvania 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 $ 9.28 $ 9.39 $ 9.29 $ 9.15
---------- -------- ---------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.21 $ 0.46 $ 0.50 $ 0.45
Net realized and unrealized gain (loss) on
investments 0.41 (0.11) 0.07 0.18
---------- -------- ---------- ---------
Total from investment operations $ 0.62 $ 0.35 $ 0.57 $ 0.63
---------- -------- ---------- ---------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.21) $ (0.46) $ (0.47) $ (0.45)
From net realized gain on investments -- -- -- (0.01)
In excess of net realized gain on investments -- -- -- (0.03)
---------- -------- ---------- ---------
Total distributions declared to shareholders $ (0.21) $ (0.46) $ (0.47) $ (0.49)
---------- -------- ---------- ---------
Net asset value - end of period $ 9.69 $ 9.28 $ 9.39 $ 9.29
---------- -------- ---------- ---------
Total return 6.78%++ 3.83% 6.23% 7.07%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 1.09%+ 0.90% 0.88% 1.01%
Net investment income 4.41%+ 4.86% 4.98% 4.96%
Portfolio turnover 17% 42% 40% 49%
Net assets at end of period (000 omitted) $ 21,517 $24,898 $ 24,170 $ 7,699
**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, 1997, and the two months ended March 31, 1994, the per share distributions in excess
of net investment income were $0.002 and $0.001, respectively.
[sec]Subject to reimbursement by the Fund, the Adviser voluntarily agreed to maintain expenses of the Fund, exclusive of
management, distribution, and service fees, at not more than 0.40% of average daily net assets. To the extent actual expenses were
over/under the limitation, the net investment income per share and the ratios would have been:
Net investment income $ 0.17 $ 0.38 $ 0.41 $ 0.34
Ratios (to average net assets):
Expenses## 1.76%+ 1.75% 1.85% 2.26%
Net investment income 3.74%+ 4.01% 4.01% 3.72%
<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 $ 10.15 $ 10.06
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.06 $ 0.17
Net realized and unrealized gain (loss) on
investments (0.99) 0.10
----------- ---------
Total from investment operations $ (0.93) $ 0.27
----------- ---------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.07) $ (0.17)
From net realized gain on investments -- (0.01)
In excess of net realized gain on investments -- --
----------- ---------
Total distributions declared to shareholders $ (0.07) $ (0.18)
----------- ---------
Net asset value - end of period $ 9.15 $ 10.15
----------- ---------
Total return (9.16)%++ 6.76%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 1.00%+ 1.00%+
Net investment income 4.37%+ 4.22%+
Portfolio turnover 1% 10%
Net assets at end of period (000 omitted) $ 4,304 $ 3,401
**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, 1997, and the two months ended March 31, 1994, the per share distributions in excess
of net investment income were $0.002 and $0.001, respectively.
[sec]Subject to reimbursement by the Fund, the Adviser voluntarily agreed to maintain expenses of the Fund, exclusive of
management, distribution, and service fees, at not more than 0.40% of average daily net assets. To the extent actual expenses were
over/under the limitation, the net investment income per share and the ratios would have been:
Net investment income $ 0.04 $ 0.05
Ratios (to average net assets):
Expenses## 2.91%+ 2.50%+
Net investment income 2.47%+ 1.29%+
</TABLE>
See notes to financial statements
36
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
South Carolina 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 $ 11.88 $ 11.97 $ 11.86 $ 11.79
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.30 $ 0.62 $ 0.62 $ 0.63
Net realized and unrealized gain (loss) on
investments 0.47 (0.10) 0.11 0.15
--------- -------- -------- --------
Total from investment operations $ 0.77 $ 0.52 $ 0.73 $ 0.78
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.30) $ (0.61) $ (0.62) $ (0.62)
From net realized gain on investments -- -- -- (0.06)
In excess of net investment income[dbldag][dbldag] (0.01) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.03)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.31) $ (0.61) $ (0.62) $ (0.71)
--------- -------- -------- --------
Net asset value - end of period $ 12.34 $ 11.88 $ 11.97 $ 11.86
--------- -------- -------- --------
Total return[dbldag] 6.50%++ 4.46% 6.20% 6.93%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.08%+ 1.10% 1.20% 1.19%
Net investment income 4.99%+ 5.17% 5.10% 5.37%
Portfolio turnover 14% 13% 18% 30%
Net assets at end of period (000 omitted) $149,521 $148,908 $166,801 $171,045
+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, 1996, the per share distribution in excess of net investment income was $0.0006.
[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 $ 0.30 $ 0.16 $ -- $ --
Ratios (to average net assets):
Expenses ## 1.18%+ 1.16% -- --
Net investment income 4.89%+ 5.11% -- --
<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 $ 12.74 $ 12.02
----------- --------
Income from investment operations# -
Net investment income[sec] $ 0.08 $ 0.63
Net realized and unrealized gain (loss) on
investments (0.92) 0.74
----------- --------
Total from investment operations $ (0.84) $ 1.37
----------- --------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.61)
From net realized gain on investments -- (0.01)
In excess of net investment income[dbldag][dbldag] (0.03) (0.03)
In excess of net realized gain on investments -- --
----------- --------
Total distributions declared to shareholders $ (0.11) $ (0.65)
----------- --------
Net asset value - end of period $ 11.79 $ 12.74
----------- --------
Total return[dbldag] (6.65)%++ 11.69%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.23%+ 1.22%
Net investment income 5.09%+ 5.06%
Portfolio turnover 4% 10%
Net assets at end of period (000 omitted) $ 173,316 $187,307
+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, 1996, the per share distribution in excess of net investment income was $0.0006.
[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
37
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
South Carolina 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 $ 11.74
---------
Income from investment operations -
Net investment income $ 0.67
Net realized and unrealized gain (loss) on
investments 0.34
---------
Total from investment operations $ 1.01
---------
Less distributions declared to shareholders -
From net investment income $ (0.69)
From net realized gain on investments (0.04)
From paid-in capital --
---------
Total distributions declared to shareholders $ (0.73)
---------
Net asset value - end of period $ 12.02
---------
Total return[dbldag] 8.89%
Ratios (to average net assets)/Supplemental data:
Expenses 1.12%
Net investment income 5.74%
Portfolio turnover 11%
Net assets at end of period (000 omitted) $ 144,539
[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 $ 11.45 $ 11.30 $ 11.24 $ 11.14 $ 11.54
-------- --------- --------- --------- ---------
Income from investment operations -
Net investment income $ 0.70 $ 0.71 $ 0.72 $ 0.76 $ 0.77
Net realized and unrealized gain (loss) on
investments 0.40 0.21 0.06 0.11 (0.36)
-------- --------- --------- --------- ---------
Total from investment operations $ 1.10 $ 0.92 $ 0.78 $ 0.87 $ 0.41
-------- --------- --------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.71) $ (0.72) $ (0.77) $ (0.77)
From net realized gain on investments (0.05) (0.06) -- -- --
From paid-in capital -- -- -- -- (0.04)
-------- --------- --------- --------- ---------
Total distributions declared to shareholders $ (0.81) $ (0.77) $ (0.72) $ (0.77) $ (0.81)
-------- --------- --------- --------- ---------
Net asset value - end of period $ 11.74 $ 11.45 $ 11.30 $ 11.24 $ 11.14
-------- --------- --------- --------- ---------
Total return[dbldag] 9.95% 8.46% 7.13% 8.18% 3.92%
Ratios (to average net assets)/Supplemental data:
Expenses 1.15% 1.18% 1.21% 0.97% 0.81%
Net investment income 6.07% 6.30% 6.35% 6.90% 7.07%
Portfolio turnover 22% 47% 54% 27% 12%
Net assets at end of period (000 omitted) $101,434 $ 75,922 $ 57,675 $ 45,391 $ 34,025
[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>
- ---------------------------------------------------------------------------------------------------------------------------
South Carolina 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 $ 11.88 $ 11.97 $ 11.86 $ 11.78
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.26 $ 0.54 $ 0.52 $ 0.54
Net realized and unrealized gain (loss) on
investments 0.46 (0.10) 0.12 0.17
---------- ------- --------- ---------
Total from investment operations $ 0.72 $ 0.44 $ 0.64 $ 0.71
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.26) $ (0.53) $ (0.53) $ (0.54)
From net realized gain on investments -- -- -- (0.06)
In excess of net investment income[dbldag][dbldag] (0.01) -- (0.00) (0.00)
In excess of net realized gain on investments -- -- -- (0.03)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.27) $ (0.53) $ (0.53) $ (0.63)
---------- ------- --------- ---------
Net asset value - end of period $ 12.33 $ 11.88 $ 11.97 $ 11.86
---------- ------- --------- ---------
Total return 6.07%++ 3.73% 5.43% 6.26%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.73%+ 1.79% 1.92% 1.90%
Net investment income 4.34%+ 4.48% 4.35% 4.63%
Portfolio turnover 14% 13% 18% 30%
Net assets at end of period (000 omitted) $ 25,694 $21,871 $ 18,420 $ 12,964
**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 years ended March 31, 1996, and 1995, the per share distributions in excess of net investment income were
$0.0005 and $0.00436, 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 $ 0.53 $ -- $ --
Ratios (to average net assets):
Expenses ## 1.83%+ 1.85% -- --
Net investment income 4.24%+ 4.42% -- --
<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 $ 12.73 $ 12.67
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.08 $ 0.21
Net realized and unrealized gain (loss) on
investments (0.94) 0.06
----------- ---------
Total from investment operations $ (0.86) $ 0.27
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.20)
From net realized gain on investments -- --
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) $ (0.21)
----------- ---------
Net asset value - end of period $ 11.78 $ 12.73
----------- ---------
Total return (6.77)%++ 5.47%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.96%+ 1.90%+
Net investment income 4.29%+ 3.86%+
Portfolio turnover 4% 10%
Net assets at end of period (000 omitted) $ 10,085 $ 8,217
**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 years ended March 31, 1996, and 1995, the per share distributions in excess of net investment income were
$0.0005 and $0.00436, 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>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Tennessee 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 $ 10.32 $ 10.40 $ 10.27 $ 10.26
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.27 $ 0.55 $ 0.54 $ 0.56
Net realized and unrealized gain (loss) on
investments 0.44 (0.09) 0.13 0.02
--------- -------- -------- --------
Total from investment operations $ 0.71 $ 0.46 $ 0.67 $ 0.58
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.27) $ (0.54) $ (0.54) $ (0.56)
From net realized gain on investments[dbldag][dbldag] -- -- -- (0.00)
In excess of net investment income[dbldag][dbldag][dbldag] (0.00) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.01)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.27) $ (0.54) $ (0.54) $ (0.57)
--------- -------- -------- --------
Net asset value - end of period $ 10.76 $ 10.32 $ 10.40 $ 10.27
--------- -------- -------- --------
Total return[dbldag] 6.95%++ 4.48% 6.66% 5.86%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.10%+ 1.10% 1.21% 1.22%
Net investment income 5.05%+ 5.26% 5.18% 5.52%
Portfolio turnover 18% 20% 20% 27%
Net assets at end of period (000 omitted) $109,236 $108,000 $109,811 $117,572
+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 from net realized gain on investments was $0.0014.
[dbldag][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 $0.0025 and $0.0024, 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 $ 0.54 $ -- $ --
Ratios (to average net assets):
Expenses## 1.20%+ 1.16% -- --
Net investment income 4.95%+ 5.20% -- --
<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 $ 10.94 $ 10.37
----------- --------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.57
Net realized and unrealized gain (loss) on
investments (0.68) 0.57
----------- --------
Total from investment operations $ (0.59) $ 1.14
----------- --------
Less distributions declared to shareholders -
From net investment income $ (0.07) $ (0.54)
From net realized gain on investments[dbldag][dbldag] -- --
In excess of net investment income[dbldag][dbldag][dbldag] (0.02) (0.03)
In excess of net realized gain on investments -- --
----------- --------
Total distributions declared to shareholders $ (0.09) $ (0.57)
----------- --------
Net asset value - end of period $ 10.26 $ 10.94
----------- --------
Total return[dbldag] (5.39)%++ 11.20%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.21%+ 1.29%
Net investment income 5.31%+ 5.25%
Portfolio turnover 4% 12%
Net assets at end of period (000 omitted) $ 117,117 $123,050
+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 from net realized gain on investments was $0.0014.
[dbldag][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 $0.0025 and $0.0024, 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
40
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Tennessee Fund
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended January 31,
-------------------------------------------- Period Ended
January 31,
1993 1992 1991 1990 1989*
- ------------------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.10 $ 9.90 $ 9.80 $ 9.68 $ 9.53
------- -------- -------- -------- ---------
Income from investment operations -
Net investment income[sec] $ 0.57 $ 0.61 $ 0.62 $ 0.67 $ 0.22
Net realized and unrealized gain on investments 0.31 0.30 0.13 0.11 0.10
------- -------- -------- -------- ---------
Total from investment operations $ 0.88 $ 0.91 $ 0.75 $ 0.78 $ 0.32
------- -------- -------- -------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.57) $ (0.66) $ (0.63) $ (0.66) $ (0.17)
From net realized gain on investments (0.01) (0.05) (0.02) -- --
In excess of net investment income (0.03) -- -- -- --
From paid-in capital[dbldag][dbldag] -- -- (0.00) -- --
------- -------- -------- -------- ---------
Total distributions declared to shareholders $ (0.61) $ (0.71) $ (0.65) $ (0.66) $ (0.17)
------- -------- -------- -------- ---------
Net asset value - end of period $ 10.37 $ 10.10 $ 9.90 $ 9.80 $ 9.68
------- -------- -------- -------- ---------
Total return[dbldag] 9.03% 9.50% 7.96% 8.30% 3.43%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 1.14% 1.15% 1.03% 0.53% 0.40%+
Net investment income 5.89% 6.11% 6.37% 6.70% 5.98%+
Portfolio turnover 9% 42% 58% 78% 5%
Net assets at end of period (000 omitted) $99,443 $ 87,898 $ 72,108 $ 56,048 $ 15,832
*For the period from the commencement of the Fund's investment operations, August 12, 1988, through January 31, 1989.
+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 year ended January 31, 1991, the per share distribution from paid-in capital was $0.0013.
[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 $ 0.61 $ -- $ -- $ 0.60 $ 0.20
Ratios (to average net assets):
Expenses 1.17% -- -- 1.24% 0.95%+
Net investment income 6.23% -- -- 5.99% 5.43%+
</TABLE>
See notes to financial statements
41
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Tennessee 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 $ 10.31 $ 10.39 $ 10.26 $ 10.26
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.23 $ 0.47 $ 0.46 $ 0.48
Net realized and unrealized gain (loss) on
investments 0.45 (0.09) 0.14 0.01
---------- ------- --------- ---------
Total from investment operations $ 0.68 $ 0.38 $ 0.60 $ 0.49
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.23) $ (0.46) $ (0.47) $ (0.48)
From net realized gain on investments[dbldag][dbldag] -- -- -- (0.00)
In excess of net investment income[dbldag][dbldag][dbldag] (0.01) -- (0.00) --
In excess of net realized gain on investments -- -- -- (0.01)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.24) $ (0.46) $ (0.47) $ (0.49)
---------- ------- --------- ---------
Net asset value - end of period $ 10.75 $ 10.31 $ 10.39 $ 10.26
---------- ------- --------- ---------
Total return 6.61%++ 3.76% 5.89% 5.00%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.75%+ 1.79% 1.93% 1.94%
Net investment income 4.40%+ 4.57% 4.43% 4.80%
Portfolio turnover 18% 20% 20% 27%
Net assets at end of period (000 omitted) $ 16,471 $14,436 $ 12,935 $ 10,006
**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 from net realized gain on investments was $0.0014.
[dbldag][dbldag][dbldag]For the year ended March 31, 1996, the per share distribution in excess of net investment income was
$0.0021.
[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 $ 0.23 $ 0.46 $ -- $ --
Ratios (to average daily net assets):
Expenses## 1.85%+ 1.85% -- --
Net investment income 4.30%+ 4.51% -- --
<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 $ 10.95 $ 10.87
----------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.08 $ 0.19
Net realized and unrealized gain (loss) on
investments (0.69) 0.08
----------- ----------
Total from investment operations $ (0.61) $ 0.27
----------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.19)
From net realized gain on investments[dbldag][dbldag] -- --
In excess of net investment income[dbldag][dbldag][dbldag] -- --
In excess of net realized gain on investments -- --
----------- ----------
Total distributions declared to shareholders $ (0.08) $ (0.19)
----------- ----------
Net asset value - end of period $ 10.26 $ 10.95
----------- ----------
Total return (5.59)%++ 2.48%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.93%+ 1.93%+
Net investment income 4.49%+ 4.20%+
Portfolio turnover 4% 12%
Net assets at end of period (000 omitted) $ 5,294 $ 3,818
**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 from net realized gain on investments was $0.0014.
[dbldag][dbldag][dbldag]For the year ended March 31, 1996, the per share distribution in excess of net investment income was
$0.0021.
[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
42
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Virginia 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 $ 11.06 $ 11.21 $ 11.09 $ 11.15
--------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.29 $ 0.59 $ 0.59 $ 0.56
Net realized and unrealized gain (loss) on
investments 0.44 (0.15) 0.13 0.04
--------- -------- -------- --------
Total from investment operations $ 0.73 $ 0.44 $ 0.72 $ 0.60
--------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.29) $ (0.59) $ (0.60) $ (0.61)
From net realized gain on investments -- -- -- (0.04)
In excess of net investment income[dbldag][dbldag] (0.00) -- (0.00) (0.00)
In excess of net realized gain on investments -- -- -- (0.01)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.29) $ (0.59) $ (0.60) $ (0.66)
--------- -------- -------- --------
Net asset value - end of period $ 11.50 $ 11.06 $ 11.21 $ 11.09
--------- -------- -------- --------
Total return[dbldag] 6.66%++ 3.97% 6.52% 5.67%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.04%+ 1.08% 1.18% 1.16%
Net investment income 5.06%+ 5.27% 5.20% 4.91%
Portfolio turnover 18% 42% 42% 27%
Net assets at end of period (000 omitted) $377,430 $379,185 $418,408 $430,688
+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 years ended March 31, 1996, and 1995, the per share
distributions in excess of net investment income were $0.003, $0.005, and $0.003, 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 $ 0.28 $ 0.58 $ -- $ --
Ratios (to average net assets):
Expenses## 1.14%+ 1.14% -- --
Net investment income 4.96%+ 5.21% -- --
<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 $ 12.07 $ 11.72
----------- --------
Income from investment operations# -
Net investment income[sec] $ 0.10 $ 0.65
Net realized and unrealized gain (loss) on
investments (0.92) 0.56
----------- --------
Total from investment operations $ (0.82) $ 1.21
----------- --------
Less distributions declared to shareholders -
From net investment income $ (0.06) $ (0.62)
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 $ (0.10) $ (0.86)
----------- --------
Net asset value - end of period $ 11.15 $ 12.07
----------- --------
Total return[dbldag] (6.80)%++ 10.67%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.17%+ 1.18%
Net investment income 5.33%+ 5.37%
Portfolio turnover 5% 22%
Net assets at end of period (000 omitted) $ 443,580 $479,333
+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 years ended March 31, 1996, and 1995, the per share
distributions in excess of net investment income were $0.003, $0.005, and $0.003, 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
43
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Virginia 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 $ 11.44
--------
Income from investment operations -
Net investment income $ 0.68
Net realized and unrealized gain (loss) on
investments 0.30
--------
Total from investment operations $ 0.98
--------
Less distributions declared to shareholders -
From net investment income $ (0.70)
From net realized gain on investments[dbldag][dbldag] (0.00)
From paid-in capital --
--------
Total distributions declared to shareholders $ (0.70)
--------
Net asset value - end of period $ 11.72
--------
Total return[dbldag] 8.88%
Ratios (to average net assets)/Supplemental data:
Expenses 1.08%
Net investment income 6.02%
Portfolio turnover 20%
Net assets at end of period (000 omitted) $399,696
[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, 1993, the per share distribution from net realized gain on investments was $0.00348.
<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 $ 11.16 $ 10.97 $ 10.91 $ 10.75 $ 11.38
-------- -------- -------- -------- ---------
Income from investment operations -
Net investment income $ 0.71 $ 0.73 $ 0.73 $ 0.74 $ 0.72
Net realized and unrealized gain (loss) on
investments 0.34 0.19 0.06 0.16 (0.57)
-------- -------- -------- -------- ---------
Total from investment operations $ 1.05 $ 0.92 $ 0.79 $ 0.90 $ 0.15
-------- -------- -------- -------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.77) $ (0.73) $ (0.73) $ (0.74) $ (0.71)
From net realized gain on investments[dbldag][dbldag] -- -- -- -- (0.05)
From paid-in capital -- -- -- -- (0.02)
-------- -------- -------- -------- ---------
Total distributions declared to shareholders $ (0.77) $ (0.73) $ (0.73) $ (0.74) $ (0.78)
-------- -------- -------- -------- ---------
Net asset value - end of period $ 11.44 $ 11.16 $ 10.97 $ 10.91 $ 10.75
-------- -------- -------- -------- ---------
Total return[dbldag] 9.76% 8.74% 7.46% 8.76% 1.61%
Ratios (to average net assets)/Supplemental data:
Expenses 1.08% 1.11% 1.12% 1.09% 1.04%
Net investment income 6.32% 6.64% 6.67% 6.91% 6.75%
Portfolio turnover 13% 38% 41% 38% 11%
Net assets at end of period (000 omitted) $328,664 $275,202 $240,553 $207,680 $ 192,104
[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, 1993, the per share distribution from net realized gain on investments was $0.00348.
</TABLE>
See notes to financial statements
44
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Virginia 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 $ 11.06 $ 11.21 $ 11.08 $ 11.14
---------- -------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.25 $ 0.51 $ 0.51 $ 0.53
Net realized and unrealized gain (loss) on
investments 0.44 (0.15) 0.13 (0.01)
---------- -------- --------- ---------
Total from investment operations $ 0.69 $ 0.36 $ 0.64 $ 0.52
---------- -------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.25) $ (0.51) $ (0.51) $ (0.53)
From net realized gain on investments -- -- -- (0.04)
In excess of net investment income[dbldag][dbldag] (0.00) -- (0.00) (0.00)
In excess of net realized gain on investments -- -- -- (0.01)
---------- -------- --------- ---------
Total distributions declared to shareholders $ (0.25) $ (0.51) $ (0.51) $ (0.58)
---------- -------- --------- ---------
Net asset value - end of period $ 11.50 $ 11.06 $ 11.21 $ 11.08
---------- -------- --------- ---------
Total return 6.32%++ 3.24% 5.85% 4.91%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.69%+ 1.78% 1.90% 1.88%
Net investment income 4.41%+ 4.57% 4.46% 4.84%
Portfolio turnover 18% 42% 42% 27%
Net assets at end of period (000 omitted) $ 31,616 $ 30,567 $ 28,420 $ 22,007
**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, the years ended March 31, 1996, and 1995, and the two months ended
March31, 1994, the per share distributions in excess of net investment income were $0.002, $0.002, $0.005, 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 and the ratios would have been:
Net investment income $ 0.24 $ 0.50 $ -- $ --
Ratios (to average net assets):
Expenses## 1.79%+ 1.84% -- --
Net investment income 4.31%+ 4.51% -- --
<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 $ 12.06 $ 12.14
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.22
Net realized and unrealized gain (loss) on
investments (0.92) 0.01
----------- ---------
Total from investment operations $ (0.83) $ 0.23
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.09) $ (0.21)
From net realized gain on investments -- (0.09)
In excess of net investment income[dbldag][dbldag] (0.00) (0.01)
In excess of net realized gain on investments -- --
----------- ---------
Total distributions declared to shareholders $ (0.09) $ (0.31)
----------- ---------
Net asset value - end of period $ 11.14 $ 12.06
----------- ---------
Total return (6.92)%++ 4.93%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.88%+ 1.82%+
Net investment income 4.52%+ 4.25%+
Portfolio turnover 5% 22%
Net assets at end of period (000 omitted) $ 13,337 $10,877
**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, the years ended March 31, 1996, and 1995, and the two months ended
March31, 1994, the per share distributions in excess of net investment income were $0.002, $0.002, $0.005, 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 and the ratios would have been:
Net investment income $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
45
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Virginia 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 $ 11.06 $ 11.21 $ 11.07 $ 11.14
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.25 $ 0.52 $ 0.51 $ 0.56
Net realized and unrealized gain (loss) on
investments 0.44 (0.16) 0.15 (0.04)
---------- ------- --------- ---------
Total from investment operations $ 0.69 $ 0.36 $ 0.66 $ 0.52
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.25) $ (0.51) $ (0.52) $ (0.54)
From net realized gain on investment income -- -- -- (0.04)
In excess of net realized gain on investments -- -- -- (0.01)
---------- ------- --------- ---------
Total distributions declared to shareholders $ (0.25) $ (0.51) $ (0.52) $ (0.59)
---------- ------- --------- ---------
Net asset value - end of period $ 11.50 $ 11.06 $ 11.21 $ 11.07
---------- ------- --------- ---------
Total return 6.32%++ 3.30% 6.02% 4.85%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.69%+ 1.72% 1.83% 1.80%
Net investment income 4.41%+ 4.63% 4.53% 4.90%
Portfolio turnover 18% 42% 42% 27%
Net assets at end of period (000 omitted) $ 3,236 $ 3,182 $ 3,366 $ 2,300
***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, 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 years ended March 31, 1996, March 31, 1995, and January 31,
1994, the per share distributions in excess of net investment income were $0.002, $0.005, $0.002, 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 and the ratios would have been:
Net investment income $ 0.24 $ 0.51 $ -- $ --
Ratios (to average net assets):
Expenses## 1.79%+ 1.78% -- --
Net investment income 4.31%+ 4.57% -- --
<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 $ 12.06 $ 11.94
----------- -----------
Income from investment operations# -
Net investment income[sec] $ 0.08 $ 0.02
Net realized and unrealized gain (loss) on
investments (0.91) 0.12
----------- -----------
Total from investment operations $ (0.83) $ 0.14
----------- -----------
Less distributions declared to shareholders -
From net investment income[dbldag][dbldag] $ (0.09) $ (0.02)
From net realized gain on investment income -- --
In excess of net realized gain on investments -- --
----------- -----------
Total distributions declared to shareholders $ (0.09) $ (0.02)
----------- -----------
Net asset value - end of period $ 11.14 $ 12.06
----------- -----------
Total return (6.91)%++ 17.05%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.82%+ 1.18%+
Net investment income 4.48%+ 1.79%+
Portfolio turnover 5% 22%
Net assets at end of period (000 omitted) $ 1,760 $ 833
***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, 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 years ended March 31, 1996, March 31, 1995, and January 31,
1994, the per share distributions in excess of net investment income were $0.002, $0.005, $0.002, 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 and the ratios would have been:
Net investment income $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
46
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
West Virginia Fund
- --------------------------------------------------------------------------------
Six Months
Ended
September 30,
1997
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.31
---------
Income from investment operations# -
Net investment income[sec] $ 0.29
Net realized and unrealized gain (loss) on
investments 0.37
---------
Total from investment operations $ 0.66
---------
Less distributions declared to shareholders -
From net investment income $ (0.29)
From net realized gain on investments --
In excess of net investment income[dbldag][dbldag] (0.01)
In excess of net realized gain on investments --
---------
Total distributions declared to shareholders $ (0.30)
---------
Net asset value - end of period $ 11.67
---------
Total return[dbldag] 6.04%++
Ratios (to average net assets)/Supplemental
data[sec]:
Expenses## 1.15%+
Net investment income 4.97%+
Portfolio turnover 9%
Net assets at end of period (000 omitted) $130,111
+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, 1996, the per share distribution in excess of net investment income was $0.002.
[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 and the ratios would have been:
Net investment income $ 0.29
Ratios (to average net assets):
Expenses## 1.18%+
Net investment income 4.94%+
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.33 $ 11.21 $ 11.19
-------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.60 $ 0.61 $ 0.62
Net realized and unrealized gain (loss) on
investments (0.02) 0.12 0.03
-------- -------- --------
Total from investment operations $ 0.58 $ 0.73 $ 0.65
-------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.60) $ (0.61) $ (0.62)
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 $ (0.60) $ (0.61) $ (0.63)
-------- -------- --------
Net asset value - end of period $ 11.31 $ 11.33 $ 11.21
-------- -------- --------
Total return[dbldag] 5.20% 6.58% 6.07%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.17% 1.22% 1.19%
Net investment income 5.28% 5.30% 5.62%
Portfolio turnover 21% 11% 23%
Net assets at end of period (000 omitted) $126,107 $134,514 $127,616
+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, 1996, the per share distribution in excess of net investment income was $0.002.
[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 and the ratios would have been:
Net investment income $ -- $ -- $ --
Ratios (to average net assets):
Expenses## -- -- --
Net investment income -- -- --
<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 $ 12.06 $ 11.50
----------- --------
Income from investment operations# -
Net investment income[sec] $ 0.01 $ 0.64
Net realized and unrealized gain (loss) on
investments (0.78) 0.69
----------- --------
Total from investment operations $ (0.77) $ 1.33
----------- --------
Less distributions declared to shareholders -
From net investment income $ (0.06) $ (0.61)
From net realized gain on investments -- (0.12)
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 $ (0.10) $ (0.77)
----------- --------
Net asset value - end of period $ 11.19 $ 12.06
----------- --------
Total return[dbldag] (6.37)%++ 11.80%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.30%+ 1.24%
Net investment income 5.36%+ 5.30%
Portfolio turnover 2% 26%
Net assets at end of period (000 omitted) $ 130,726 $141,190
+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, 1996, the per share distribution in excess of net investment income was $0.002.
[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 and the ratios would have been:
Net investment income $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
47
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
West Virginia Fund
- ----------------------------------------------------------------------------
Year Ended March 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 $ 0.66
Net realized and unrealized gain (loss) on
investments 0.34
--------
Total from investment operations $ 1.00
--------
Less distributions declared to shareholders -
From net investment income $ (0.69)
From net realized gain on investments (0.01)
From paid-in capital --
--------
Total distributions declared to shareholders $ (0.70)
--------
Net asset value - end of period $ 11.50
--------
Total return[dbldag] 9.12%
Ratios (to average net assets)/Supplemental data
Expenses 1.15%
Net investment income 5.97%
Portfolio turnover 19%
Net assets at end of period (000 omitted) $115,289
[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 March 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 $ 10.93 $ 10.72 $ 10.68 $ 10.51 $ 11.30
--------- --------- --------- --------- ---------
Income from investment operations -
Net investment income $ 0.70 $ 0.71 $ 0.71 $ 0.77 $ 0.77
Net realized and unrealized gain (loss) on
investments 0.34 0.21 0.04 0.18 (0.72)
--------- --------- --------- --------- ---------
Total from investment operations $ 1.04 $ 0.92 $ 0.75 $ 0.95 $ 0.05
--------- --------- --------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.76) $ (0.71) $ (0.71) $ (0.78) $ (0.76)
From net realized gain on investments (0.01) -- -- -- (0.02)
From paid-in capital -- -- -- -- (0.06)
--------- --------- --------- --------- ---------
Total distributions declared to shareholders $ (0.77) $ (0.71) $ (0.71) $ (0.78) $ (0.84)
--------- --------- --------- --------- ---------
Net asset value - end of period $ 11.20 $ 10.93 $ 10.72 $ 10.68 $ 10.51
--------- --------- --------- --------- ---------
Total return[dbldag] 9.84% 8.91% 7.26% 9.43% 0.76%
Ratios (to average net assets)/Supplemental data:
Expenses 1.17% 1.21% 1.22% 0.86% 0.79%
Net investment income 6.33% 6.59% 6.63% 7.01% 7.32%
Portfolio turnover 14% 37% 34% 9% 11%
Net assets at end of period (000 omitted) $ 80,440 $ 61,984 $ 52,398 $ 43,026 $ 36,276
[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
48
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
West Virginia 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 $ 11.31 $ 11.33 $ 11.21 $ 11.19
---------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.25 $ 0.52 $ 0.52 $ 0.53
Net realized and unrealized gain (loss) on
investments 0.36 (0.02) 0.12 0.04
---------- ------- --------- ---------
Total from investment operations $ 0.61 $ 0.50 $ 0.64 $ 0.57
---------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.25) $ (0.52) $ (0.52) $ (0.54)
From net realized gain on investments -- -- -- --
In excess of net investment income[dbldag][dbldag] (0.01) -- (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) $ (0.55)
---------- ------- --------- ---------
Net asset value - end of period $ 11.66 $ 11.31 $ 11.33 $ 11.21
---------- ------- --------- ---------
Total return 5.61%++ 4.47% 5.81% 5.30%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.80%+ 1.87% 1.94% 1.91%
Net investment income 4.31%+ 4.57% 4.56% 4.87%
Portfolio turnover 9% 21% 11% 23%
Net assets at end of period (000 omitted) $ 14,734 $13,587 $ 12,647 $ 10,046
**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 years ended March 31, 1996, and 1995, the per share distributions in excess of net investment income were
$0.002 and $0.005, 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 and the ratios would have been:
Net investment income $ 0.25 $ -- $ -- $ --
Ratios (to average net assets):
Expenses## 1.83%+ -- -- --
Net investment income 4.28%+ -- -- --
<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 $ 12.06 $ 12.13
----------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.01 $ 0.22
Net realized and unrealized gain (loss) on
investments (0.87) 0.05
----------- ---------
Total from investment operations $ (0.86) $ 0.27
----------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.01) $ (0.21)
From net realized gain on investments -- (0.12)
In excess of net investment income[dbldag][dbldag] -- (0.01)
In excess of net realized gain on investments -- --
----------- ---------
Total distributions declared to shareholders $ (0.01) $ (0.34)
----------- ---------
Net asset value - end of period $ 11.19 $ 12.06
----------- ---------
Total return (6.48)%++ 5.59%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 2.02%+ 1.89%+
Net investment income 4.56%+ 4.14%+
Portfolio turnover 2% 26%
Net assets at end of period (000 omitted) $ 5,456 $ 4,530
**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 years ended March 31, 1996, and 1995, the per share distributions in excess of net investment income were
$0.002 and $0.005, 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 and the ratios would have been:
Net investment income $ -- $ --
Ratios (to average net assets):
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
49
<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, MFS Arkansas Municipal Bond Fund, MFS California Municipal Bond Fund, MFS
Florida Municipal Bond Fund, MFS Georgia Municipal Bond Fund, MFS Maryland
Municipal Bond Fund, MFS Massachusetts Municipal Bond Fund, MFS Mississippi
Municipal Bond Fund* (Mississippi Fund), MFS New York Municipal Bond Fund* (New
York Fund), MFS North Carolina Municipal Bond Fund* (North Carolina Fund), MFS
Pennsylvania Municipal Bond Fund* (Pennsylvania Fund), MFS South Carolina
Municipal Bond Fund* (South Carolina Fund), MFS Tennessee Municipal Bond Fund*
(Tennessee Fund), MFS Virginia Municipal Bond Fund* (Virginia Fund), and MFS
West Virginia Municipal Bond Fund* (West Virginia Fund). Each Fund, except MFS
Municipal Income Fund, is non-diversified.
*These Funds 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 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.
Deferred Organization Expenses - Costs incurred by a Fund in connection with its
organization have been deferred and are being amortized on a straight-line basis
over a five-year period beginning on the date of commencement of Fund
operations.
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.
Should interest rates 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 foreign currencies, 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.
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.
50
<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>
Mississippi New York North Carolina
Expiration Date Fund Fund Fund
- ---------------------------------------------------------------
<S> <C> <C> <C>
March 31, 2003 $ 940,501 $2,754,263 $9,778,287
March 31, 2004 3,163,964 -- --
March 31, 2005 228,833 502,292 --
----------- ---------- -----------
Total $4,333,298 $3,256,555 $9,778,287
----------- ---------- -----------
<CAPTION>
Pennsylvania South Carolina Tennessee Virginia West Virginia
Expiration Date Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 31, 2003 $ 111,447 $ -- $ 381,262 $ 6,639,093 $ 295,369
March 31, 2004 1,259,709 2,709,187 635,012 3,840,742 2,589,345
March 31, 2005 533,472 593,657 78,212 2,350,366 714,690
----------- ----------- ----------- ------------ -----------
Total $1,904,628 $3,302,844 $1,094,486 $12,830,201 $3,599,404
----------- ----------- ----------- ------------ -----------
</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 effective 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.
The Mississippi Fund and Pennsylvania Fund each have a temporary expense
reimbursement agreement whereby MFS has voluntarily agreed to pay all of each
Fund's operating expenses, exclusive of management fees and distribution, and
service fees. Each Fund in turn will pay MFS an expense reimbursement fee not
greater than 0.40% of its average daily net assets. To the extent that the
expense reimbursement fee exceeds each Fund's actual expenses, the excess will
be applied to amounts paid by MFS in prior years. At September 30, 1997, the
aggregate unreimbursed expenses owed to MFS by the Pennsylvania Fund amounted to
$232,075.
Administrator - The Funds have an administrative services agreement with MFS to
provide the Funds with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the 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>
North South West
Mississippi New York Carolina Pennsylvania Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$2,034 $3,079 $2,963 $2,163 $3,083 $2,926 $3,082 $3,082
</TABLE>
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$8,288, $7,461, $42,870, $4,622, $19,041, $21,107, $34,301, and $27,468 as its
portion of the sales charge on sales of Class A shares of the Mississippi, New
York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and
West Virginia Funds, respectively, for the period ended September 30, 1997.
51
<PAGE>
Notes to Financial Statements (Unaudited) - continued
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
Each Fund's distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum of the Fund's average daily net assets attributable to Class A
shares which are attributable to that securities dealer, a distribution fee to
MFD of up to 0.10% per annum of the Fund's average daily net assets attributable
to Class A shares, commissions to dealers and payments to MFD wholesalers for
sales at or above a certain dollar level, and other such distribution-related
expenses that are approved by the Fund. MFD retains the service fee for accounts
not attributable to a securities dealer, which amounted to $21,569, $34,963,
$21,469, $19,896, $48,915, and $13,884 for the New York, North Carolina, South
Carolina, Tennessee, Virginia, and West Virginia Funds respectively for the
period ended September 30, 1997. Payments of the Mississippi Fund's 0.35% per
annum distribution and service fee will commence on such date as the Trustees of
the Trust may determine. In the case of the New York and Pennsylvania Funds,
payments of the 0.10% per annum distribution fee will commence on such date as
the Trustees of the Trust may determine. For the Pennsylvania Fund, payments of
up to 0.25% per annum of the service fee will commence when the value of the net
assets of the Fund attributable to Class A shares first equals or exceeds $50
million. Fees incurred under the distribution plan during the period ended
September 30, 1997 were 0.00%, 0.25%, 0.35%, 0.00%, 0.35%, 0.35%, 0.35% and
0.35%, of each Fund's average daily net assets attributable to Class A shares on
an annualized basis for the Mississippi, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, Virginia and West Virginia Funds 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 Class B service fee
paid by the Mississippi Fund upon sale of Class B shares in the first year,
payment of the 0.25% per annum service fee by the Mississippi Fund will commence
on such date as the Trustees of the Trust may determine. Except in the case of
the 0.25% per annum Class B service fee paid by the Pennsylvania Fund upon sale
of Class B shares in the first year's payments of the 0.25% per annum service
fee will commence on such date as the Class A service fee first becomes payable.
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 $5,054, $3,705, $2,819, $2,528, $10,048, and $1,164 for the New York, North
Carolina, South Carolina, Tennessee, Virginia, and West Virginia Funds,
respectively for Class B shares. MFS retains the service fee for accounts not
attributable to a securities dealer, which amounted to $2,953 and $3 for the
North Carolina and Virginia Funds, respectively, for Class C shares. Fees
incurred under the distribution plan during the period ended September 30, 1997,
were 0.78%, 1.00%, 1.00%, 0.79%, 1.00%, 1.00%, 1.00%, and 1.00%, of each of the
Fund's average daily net assets attributable to Class B shares for the
Mississippi, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Virginia and West Virginia Funds, respectively on an annualized basis. Fees
incurred under the distribution plan during the period ended September 30, 1997
were 1.00% and 1.00% of each of the Fund's average daily net assets attributable
to Class C shares for the North Carolina and Virginia Funds, respectively, on an
annualized basis.
Purchases over $1 million of Class A shares are subject to a contingent deferred
sales charge in the event of a shareholder redemption within 12 months following
such purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. A contingent deferred sales charge is imposed on
shareholder redemptions of Class C shares in the event of a shareholder
redemption within 12 months of purchase. 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>
North South West
Mississippi New York Carolina Pennsylvania Carolina Tennessee Virginia Virginia
CDSC imposed Fund Fund Fund Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ -- $ 50 $ -- $ -- $ 9
Class B $34,565 $38,287 $49,152 $11,167 $15,031 $33,619 $34,862 $18,124
Class C $ -- $ -- $ 4,257 $ -- $ -- $ -- $ 2,812 $ --
</TABLE>
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder serving agent. The fee is calculated as a
percentage of each Fund's average daily net assets at an effective annual rate
of 0.13%.
52
<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>
North South West
Mississippi New York Carolina Pennsylvania Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchases $5,170 $ 38,197 $52,037 $6,534 $23,804 $21,677 $69,668 $11,858
Sales 7,464 44,064 60,534 9,485 27,565 21,762 78,452 13,769
</TABLE>
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Funds, as computed on a federal income tax basis, are as follows
(000 omitted):
<TABLE>
<CAPTION>
North
Mississippi New York Carolina
Fund Fund Fund
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate cost $70,716 $133,614 $392,631
-------- --------- --------
Gross unrealized appreciation $ 5,250 $ 13,102 $ 33,780
Gross unrealized depreciation -- (1) (30)
-------- --------- --------
Net unrealized appreciation $ 5,250 $ 13,101 $ 33,750
-------- --------- --------
<CAPTION>
South West
Pennsylvania Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate cost $37,036 $159,201 $116,674 $379,336 $127,499
-------- -------- -------- -------- ---------
Gross unrealized appreciation $ 1,904 $ 13,319 $ 9,182 $ 29,833 $ 12,007
Gross unrealized depreciation (3) (25) (66) (51) (9)
-------- -------- -------- -------- ---------
Net unrealized appreciation $ 1,901 $ 13,294 $ 9,116 $ 29,782 $ 11,998
-------- -------- -------- -------- ---------
</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>
Mississippi Fund New York Fund North Carolina 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 137 $ 1,296 1,275 $ 13,653 909 $ 10,739
Shares issued to shareholders in
reinvestment of distributions 76 729 161 1,759 461 5,470
Shares reacquired (581) (5,561) (2,096) (22,615) (2,406) (28,527)
------- --------- ------- --------- -------- ----------
Net decrease (368) $ (3,536) (660) $ (7,203) (1,036) $ (12,318)
------- --------- ------- --------- -------- ----------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
Shares sold 420 $ 3,942 1,336 $ 14,245 11,938 $ 138,759
Shares issued to shareholders in
reinvestment of distributions 170 1,601 355 3,792 989 11,523
Shares reacquired (1,427) (13,419) (2,824) (30,108) (15,681) (182,342)
------- --------- ------- --------- -------- ----------
Net decrease (837) $ (7,876) (1,133) $ (12,071) (2,754) $ (32,060)
------- --------- ------- --------- -------- ----------
</TABLE>
<TABLE>
<CAPTION>
Pennsylvania Fund South Carolina Fund Tennessee Fund
-------------------------- -------------------------- ------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 117 $ 1,109 441 $ 5,348 432 $ 4,562
Shares issued to shareholders in
reinvestment of distributions 30 281 166 2,020 131 1,388
Shares reacquired (182) (1,729) (1,021) (12,413) (879) (9,324)
----- -------- ------- --------- ------- ---------
Net decrease (35) $ (339) (414) $ (5,045) (316) $ (3,374)
----- -------- ------- --------- ------- ---------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
Shares sold 379 $ 3,531 747 $ 8,956 819 $ 8,497
Shares issued to shareholders in
reinvestment of distributions 70 653 368 4,404 266 2,759
Shares reacquired (546) (5,091) (2,517) (30,161) (1,175) (12,195)
----- -------- ------- --------- ------- ---------
Net decrease (97) $ (907) (1,402) $ (16,801) (90) $ (939)
----- -------- ------- --------- ------- ---------
</TABLE>
53
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
Virginia Fund West Virginia Fund
Class A Shares ------------------------------ ---------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,536 $ 17,335 355 $ 4,087
Shares issued to shareholders in
reinvestment of distributions 416 4,722 151 1,739
Shares reacquired (3,418) (38,600) (503) (5,776)
-------- ---------- ------- ---------
Net increase (decrease) (1,466) $ (16,543) 3 $ 50
-------- ---------- ------- ---------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------
Shares sold 13,538 $ 151,104 537 $ 6,100
Shares issued to shareholders in
reinvestment of distributions 921 10,293 326 3,704
Shares reacquired (17,500) (195,457) (1,584) (17,969)
-------- ---------- ------- ---------
Net decrease (3,041) $ (34,060) (721) $ (8,165)
-------- ---------- ------- ---------
</TABLE>
<TABLE>
<CAPTION>
Mississippi Fund New York Fund North Carolina 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 64 $ 614 180 $ 1,965 376 $ 4,442
Shares issued to shareholders in
reinvestment of distributions 8 79 28 310 47 549
Shares reacquired (140) (1,342) (332) (3,577) (227) (2,677)
----- -------- ----- -------- ----- --------
Net increase (decrease) (68) $ (649) (124) $ (1,302) 196 $ 2,314
----- -------- ----- -------- ----- --------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
Shares sold 129 $ 1,206 427 $ 4,550 800 $ 9,310
Shares issued to shareholders in
reinvestment of distributions 21 195 64 687 84 973
Shares reacquired (199) (1,876) (600) (6,395) (432) (5,013)
----- -------- ----- -------- ----- --------
Net increase (decrease) (49) $ (475) (109) $ (1,158) 452 $ 5,270
----- -------- ----- -------- ----- --------
</TABLE>
<TABLE>
<CAPTION>
Pennsylvania Fund South Carolina Fund Tennessee Fund
-------------------------- -------------------------- ------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 185 $ 1,760 317 $ 3,861 264 $ 2,786
Shares issued to shareholders in
reinvestment of distributions 25 243 25 299 16 172
Shares reacquired (671) (6,354) (100) (1,214) (148) (1,571)
----- --------- ----- -------- ----- --------
Net increase (decrease) (461) $ (4,351) 242 $ 2,946 132 $ 1,387
----- --------- ----- -------- ----- --------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
Shares sold 364 $ 3,410 443 $ 5,311 385 $ 4,006
Shares issued to shareholders in
reinvestment of distributions 73 686 45 537 32 331
Shares reacquired (330) (3,097) (186) (2,226) (261) (2,710)
----- --------- ----- -------- ----- --------
Net increase 107 $ 999 302 $ 3,622 156 $ 1,627
----- --------- ----- -------- ----- --------
</TABLE>
<TABLE>
<CAPTION>
Virginia Fund West Virginia Fund
------------------------------ ---------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 170 $ 1,914 119 $ 1,371
Shares issued to shareholders in
reinvestment of distributions 26 299 17 201
Shares reacquired (211) (2,376) (75) (864)
----- -------- ----- --------
Net increase (decrease) (15) $ (163) 61 $ 708
----- -------- ----- --------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------
Shares sold 552 $ 6,182 218 $ 2,474
Shares issued to shareholders in
reinvestment of distributions 51 567 35 397
Shares reacquired (375) (4,195) (167) (1,902)
----- -------- ----- --------
Net increase 228 $ 2,554 86 $ 969
----- -------- ----- --------
</TABLE>
54
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
North Carolina Fund Virginia Fund
Class C Shares ------------------------------- -------------------------
Period Ended September 30, 1997 (000 Omitted) Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 77 $ 902 66 $ 744
Shares issued to shareholders in
reinvestment of distributions 10 108 5 53
Shares reacquired (174) (2,021) (78) (871)
----- -------- ------ --------
Net decrease (87) $ (1,011) (7) $ (74)
----- -------- ------ --------
Year Ended March 31, 1997 (000 Omitted) Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------
Shares sold 191 $ 2,228 93 $ 1,033
Shares issued to shareholders in
reinvestment of distributions 24 274 9 102
Shares reacquired (350) (4,084) (114) (1,277)
----- -------- ------ --------
Net decrease (135) $ (1,582) (12) $ (142)
----- -------- ------ --------
</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 31, 1997, ranged from $99 to
$1,378.
(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 futures 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.
55
<PAGE>
The MFS Family of Funds(R)
America's Oldest Mutual Fund Group
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-225-2606
any business day from 8 a.m. to 8 p.m. Eastern time.
This material should be read carefully before investing or sending money.
Stock
- --------------------------------------------------------------------------------
Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
MFS(R) Emerging Growth Fund
MFS(R) Equity Income Fund
MFS(R) Growth Opportunities Fund
MFS(R) Large Cap Growth Fund1
MFS(R) Managed Sectors Fund
MFS(R) Mid Cap Growth Fund2
MFS(R) New Discovery Fund
MFS(R) Research Fund
MFS(R) Research Growth and Income Fund
MFS(R) Strategic Growth Fund
MFS(R) Union StandardAE 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 Fund3
MFS(R) International Growth and Income Fund4
MFS(R) World Asset Allocation FundSM
MFS(R) World Equity Fund
MFS(R) World Governments Fund
MFS(R) World Growth Fund
MFS(R) World Total Return Fund
National Tax-Free Bond
- --------------------------------------------------------------------------------
MFS(R) Municipal Bond Fund
MFS(R) Municipal High Income Fund
MFS(R) Municipal Income Fund
State Tax-Free Bond
- --------------------------------------------------------------------------------
Alabama, Arkansas, California, Florida, Georgia, Maryland, Massachusetts,
Mississippi, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Virginia, West Virginia
Money Market
- --------------------------------------------------------------------------------
MFS(R) Cash Reserve Fund
MFS(R) Government Money Market Fund
MFS(R) Money Market Fund
(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.
56
<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.
57
<PAGE>
[back cover]
MFS(R) Municipal
Series Trust
500 Boylston Street
Boston, MA 02116-3741
MFS(R) Mississippi Municipal Bond Fund
MFS(R) New York Municipal Bond Fund
MFS(R) North Carolina Municipal Bond Fund
MFS(R) Pennsylvania Municipal Bond Fund
MFS(R) South Carolina Municipal Bond Fund
MFS(R) Tennessee Municipal Bond Fund
MFS(R) Virginia Municipal Bond Fund
MFS(R) West Virginia Municipal Bond Fund
[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
58/258
52/252
41/241/341
30/230
42/242
53/253
43/243/343
MST-3B-11/97-53M 44/244
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
