[Front Cover]
[MFS Logo]
INVESTMENT MANAGEMENT
We invented the mutual fund[RegTM]
MFS[RegTM] MUNICIPAL
SERIES TRUST
Semiannual Report [bullet] September 30, 1998
For the States of: Alabama, Arkansas,
California, Florida, Georgia, Maryland,
and Massachusetts
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter from the Chairman .............. 1
Management Review and Outlook ......... 3
Performance Summary ................... 4
Portfolio of Investments .............. 7
Financial Statements .................. 21
Notes to Financial Statements ......... 48
Trustees and Officers ................. 57
</TABLE>
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HIGHLIGHTS
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[bullet] We are in the process of upgrading the overall credit qualities of the
portfolios based on our diminished expectations for domestic economic
growth. We are focusing on "A"-, "AA"-, and "AAA"-rated securities
when doing so will not severely impact the sustainability of the
Funds' income streams.
[bullet] A prime sector in which we are finding value is bonds backed by
revenue streams that finance essential services, such as water and
sewer projects.
[bullet] Our use of a systematic, quantitative research process helps us
identify opportunities and risks in the municipal bond marketplace and
enables bottom-up, fundamental credit-risk analysis of all current and
prospective holdings.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
Letter from the Chairman
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
In the coming year, MFS will celebrate its 75th anniversary. In 1924, our
Massachusetts Investors Trust, the nation's first mutual fund, opened to the
public and helped launch a revolution in investing that continues today. In the
75 years since, MFS has grown with its investors not only through bear markets,
economic and political turmoil, wars, and oil shortages, but also through long
periods of growth and prosperity. We are very proud of our record of investment
management and service to shareholders throughout our history.
One of the best ways for us to serve our shareholders is to help them understand
some of the reasons behind developments in the investment markets and, when
necessary, to take a more cautious outlook. This is particularly important
during periods of market volatility such as we are experiencing this year, when
equity prices do not follow a straight course. In light of this volatility, it
is clear that equity valuations have risen to a point at which stock prices have
become vulnerable to changes in the investment environment such as a slowing
economy, earnings disappointments, and global economic and political turmoil.
While we continue to hold a favorable long-term outlook for the equity markets,
we also believe that the recent market correction was overdue and was a healthy
near-term event that should rid the financial system of some excesses that have
developed.
Currently, equity investors seem to be focused on the slowdown in corporate
earnings and, more recently, on the continuing uncertainty overseas,
particularly in Russia and some of the emerging markets. In the second quarter,
for example, average earnings growth for companies in the Standard & Poor's 500
Composite Index (the S&P 500), a popular, unmanaged index of common stock total
return performance, was about 3%, well below what people were expecting a year
ago. As a result of this and continuing concerns about Asia and emerging
markets, the stock markets pulled back from the record-high levels set in
mid-July. Although the U.S. stock market has responded positively to reductions
in interest rates by the Federal Reserve Board, the market's retreat helped
correct some -- but not all -- of the overvaluations that had been building for
some time. Prior to July, equity prices had been rising without a corresponding
increase in corporate earnings. As a result, price-to-earnings (P/E) ratios, or
the amount investors paid for stocks in relation to companies' earnings per
share, also went up. If this year's downturn helps create more reasonable
valuations, we believe it could provide a sounder long-term foundation for the
equity markets. On another positive note, interest rates have begun to decline
as inflation has remained low. In an environment of low interest rates, stocks
become more attractive than most fixed-income investments, while low inflation
helps control companies' costs.
Internationally, the economic turmoil in Asia continues to be a concern to us,
while Russia is facing political and economic uncertainty and Latin American
economies are feeling substantial pressure. We believe the United States has yet
to see the full impact of this crisis. There have been brief periods of
improvement in a few places and countries such as Japan and Brazil have taken
positive steps toward economic reform but, for the most part, these economies
are still very weak. At the same time, the Asian turmoil has had the beneficial
effect of moderating U.S. growth and keeping inflation in check, which has
helped establish a favorable interest-rate environment.
Countering the situation in Asia has been the growing strength of European
economies, although European equity markets have also seen some volatility this
year. But as these countries move toward economic union, they are benefiting
from a convergence of interest rates to lower levels, a rapid expansion of
manufacturing and service businesses, and an increasingly strong consumer
sector. This has helped American exporters offset some of their Asian losses
while providing investment opportunities in developed and emerging European
markets.
Given the uncertainty arising from these conflicting developments, we believe
that it is prudent to remind investors of the need to take a long-term view and
to diversify their investments across a range of asset classes. This includes
portfolios that focus on bond and international investments as well as on the
U.S. stock market. At MFS, we also believe our decades-long commitment to
original, company-by-company research gives us an advantage by helping us find
companies that we think can keep growing or gain market share during periods of
turmoil. To help fulfill this commitment and to provide the broadest possible
coverage of industry sectors and individual companies, MFS continues to increase
its number of full-time research analysts, who thoroughly investigate each
company's earnings potential and position in its industry as well as the overall
prospects for that industry.
We also use active portfolio management on the fixed-income side, using our
extensive research and credit analysis to help reduce the potential for price
declines and enhance the opportunity for appreciation. Every year, both
fixed-income and equity managers meet with thousands of credit issuers and
companies. They also attend many presentations, closely follow sources of
industry research, and keep track of competitors.
As we have for 75 years, we will continue to apply this discipline of thorough,
bottom-up research to both the equity and fixed-income markets because we
believe it offers the best potential for
1
<PAGE>
Letter from the Chairman - continued
providing favorable long-term performance for our shareholders -- regardless of
changes in the overall market environment.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
-----------------
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management[RegTM]
October 14, 1998
2
<PAGE>
Management Review and Outlook
Dear Shareholders,
In much the same way volatility has affected the equity markets, it has had an
impact on the climate for fixed-income investing during the past six months.
However, it has been a positive time for fixed-income investors in several
high-quality bond asset classes. The impact of low inflation and a flight to
high-quality U.S. Treasury securities spurred by the Asian economic crisis have
increased the demand for Treasuries, driving 30-year Treasury bond interest
rates to 31-year lows and causing an uptick in bond prices. One effect of low
Treasury yields has been a widening of yield spreads between these securities
and other types of taxable fixed-income investments.
However, in the municipal bond market yield spreads have not widened appreciably
in the past year, so the difference in yields between bonds of varying credit
qualities is much narrower than on the taxable side of the fixed-income market.
We don't expect these spreads to stay as narrow in the future, and we are
preparing for the day when spreads do widen by upgrading the credit quality of
the individual portfolios. While this may cost us a small amount of additional
yield, we don't consider it prudent to reach for yield today when to do so may
adversely impact the credit quality and subsequent performance of the portfolios
tomorrow. We believe that this approach will better position the portfolios in
the event that a national economic slowdown begins to impact consumer confidence
and spending and, by extension, municipal economies. If these recessionary signs
develop, they could result in reduced tax revenues and a boost in the need for
- -- and cost of -- social services, which may affect municipal economies and
pressure bond credit ratings.
We are focusing much of our investment activity on higher-quality bonds rated
"A," "AA," and "AAA" when we can do so without significantly negatively
impacting the sustainability of the portfolios' income streams. Among the
sectors in which we are finding value are bonds backed by steady revenue streams
that finance essential services yet to face deregulation, such as water and
sewer projects.
We feel that MFS[RegTM] Original Research(SM) will continue to differentiate our
approach to municipal investing. Our focus on research consists of both a
systematic, quantitative process through which we identify opportunities and
risks in the municipal bond marketplace and an intensive, bottom-up, fundamental
credit-risk analysis of all current and prospective holdings.
Respectfully,
/s/ John P. Kihn /s/ Geoffrey L. Schechter
------------ ---------------------
John P. Kihn Geoffrey L. Schechter
Portfolio Manager Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are only through the end of the period of the report as stated on the cover. The
managers' views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
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PORTFOLIO MANAGERS' PROFILES
- --------------------------------------------------------------------------------
Note to Shareholders: Effective May 29, 1998, Geoffrey L. Schechter joined
John P. Kihn as portfolio manager of the Funds, succeeding David B. Smith.
John P. Kihn is a Vice President of MFS Investment Management[RegTM] and
portfolio manager of MFS[RegTM] Municipal Income Fund, MFS[RegTM] Municipal
Limited Maturity Fund and MFS[RegTM] Alabama, Arkansas, California, Florida,
Georgia, Maryland, Massachusetts, Mississippi, New York, North Carolina,
Pennsylvania, South Carolina, Tennessee and Virginia Municipal Bond funds. Mr.
Kihn joined MFS as a quantitative analyst in October 1997 and was named
portfolio manager later that year. He previously had worked as a senior
quantitative analyst with a major investment management firm. Mr. Kihn earned
a bachelor's degree in economics from the University of California, Berkeley,
a master's degree in business economics from the University of California,
Santa Barbara, and a doctorate degree in accounting and finance from the
London School of Economics.
Geoffrey L. Schechter is a Vice President of MFS Investment Management[RegTM]
and portfolio manager of MFS Municipal Bond Fund and MFS Alabama, Arkansas,
California, Georgia, Maryland, Massachusetts, Mississippi, North Carolina,
Pennsylvania, South Carolina, Virginia and West Virginia Municipal Bond funds.
Mr. Schechter joined MFS as an Investment Officer in 1993 after working as a
municipal credit analyst with a major insurance company. He was named an
Assistant Vice President in 1994 and a Vice President in 1995. He became
manager of MFS Municipal Bond Fund in 1998. Mr. Schechter is a graduate of the
University of Texas and has an M.B.A. from Boston University. He is a
Chartered Financial Analyst and a Certified Public Accountant.
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. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
3
<PAGE>
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FUND FACTS
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Objective: Each Fund seeks current income exempt from federal income taxes
and from the personal income taxes, if any, of the state to which its name
refers.
<TABLE>
<CAPTION>
Commencement of investment operations:
<S> <C>
Alabama February 1, 1990
Arkansas February 3, 1992
California June 18, 1985
Florida February 3, 1992
Georgia June 6, 1988
Maryland October 31, 1984
Massachusetts April 9, 1985
<CAPTION>
Net assets as of September 30, 1998:
<S> <C>
Alabama $ 84.6 million
Arkansas $138.0 million
California $286.1 million
Florida $ 94.3 million
Georgia $ 74.3 million
Maryland $157.5 million
Massachusetts $266.4 million
</TABLE>
<TABLE>
<CAPTION>
Class inception:
<S> <C> <C>
Alabama Class A February 1, 1990
Class B September 7, 1993
Arkansas Class A February 3, 1992
Class B September 7, 1993
California Class A June 18, 1985
Class B September 7, 1993
Class C January 3, 1994
Florida Class A February 3, 1992
Class B September 7, 1993
Georgia Class A June 6, 1988
Class B September 7, 1993
Maryland Class A October 31, 1984
Class B September 7, 1993
Massachusetts Class A April 9, 1985
Class B September 7, 1993
</TABLE>
Performance Summary
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for the
applicable time periods. Investment results reflect the percentage change in net
asset value, including reinvestment of dividends.
Average Annual and Cumulative Total Rates of Return through September 30, 1998
MFS[RegTM] Alabama Municipal Bond Fund
<TABLE>
<CAPTION>
Class A Investment Results
-----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +3.69% +7.28% +23.36% +32.75% +90.80%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.28% + 7.25% + 5.83% + 7.74%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.19% + 5.53% + 4.80% + 7.13%
- -----------------------------------------------------------------------------------------------
<CAPTION>
Class B Investment Results
----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +3.30% +6.48% +20.52% +27.51% +83.11%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +6.48% + 6.42% + 4.98% + 7.23%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.48% + 5.53% + 4.65% + 7.23%
- -----------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
February 1, 1990, through September 30, 1998.
MFS[RegTM] Arkansas Municipal Bond Fund
<TABLE>
<CAPTION>
Class A Investment Results
-----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +3.69% +7.43% +22.68% +28.66% +54.99%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.43% + 7.05% + 5.17% + 6.80%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.32% + 5.33% + 4.15% + 6.02%
- -----------------------------------------------------------------------------------------------
<CAPTION>
Class B Investment Results
----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +3.25% +6.49% +19.71% +23.13% +48.07%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +6.49% + 6.18% + 4.25% + 6.07%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.49% + 5.28% + 3.91% + 6.07%
- -----------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through September 30, 1998.
4
<PAGE>
Performance Summary - continued
MFS[RegTM] California Municipal Bond Fund
<TABLE>
<CAPTION>
Class A Investment Results
----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +5.33% +9.29% +26.85% +31.57% +116.29%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +9.29% + 8.25% + 5.64% + 8.02%
- -----------------------------------------------------------------------------------------------
SEC Results -- +4.10% + 6.51% + 4.62% + 7.50%
- -----------------------------------------------------------------------------------------------
<CAPTION>
Class B Investment Results
---------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.90% +8.42% +23.68% +25.70% +106.49%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.42% + 7.34% + 4.68% + 7.52%
- -----------------------------------------------------------------------------------------------
SEC Results -- +4.42% + 6.46% + 4.35% + 7.52%
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Investment Results
---------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.80% +8.20% +23.09% +25.52% +106.29%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.20% + 7.17% + 4.65% + 7.51%
- -----------------------------------------------------------------------------------------------
SEC Results -- +7.20% + 7.17% + 4.65% + 7.51%
- -----------------------------------------------------------------------------------------------
</TABLE>
MFS[RegTM] Florida Municipal Bond Fund
<TABLE>
<CAPTION>
Class A Investment Results
-----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.34% +8.02% +22.47% +27.39% +57.52%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.02% + 6.99% + 4.96% + 7.06%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.89% + 5.27% + 3.94% + 6.28%
- -----------------------------------------------------------------------------------------------
<CAPTION>
Class B Investment Results
----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.04% +7.28% +19.47% +21.84% +50.41%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.28% + 6.11% + 4.03% + 6.32%
- -----------------------------------------------------------------------------------------------
SEC Results -- +3.28% + 5.22% + 3.70% + 6.32%
- -----------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through September 30, 1998.
MFS[RegTM] Georgia Municipal Bond Fund
<TABLE>
<CAPTION>
Class A Investment Results
----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.16% +7.69% +23.40% +28.85% +107.45%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.69% + 7.26% + 5.20% + 7.57%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.58% + 5.54% + 4.18% + 7.05%
- -----------------------------------------------------------------------------------------------
<CAPTION>
Class B Investment Results
---------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +3.87% +6.99% +20.56% +23.90% +99.49%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +6.99% + 6.43% + 4.38% + 7.15%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.99% + 5.54% + 4.05% + 7.15%
- -----------------------------------------------------------------------------------------------
</TABLE>
MFS[RegTM] Maryland Municipal Bond Fund
<TABLE>
<CAPTION>
Class A Investment Results
---------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Year/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.44% +8.00% +23.23% +28.18% +97.45%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +8.00% + 7.21% + 5.09% + 7.04%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.87% + 5.48% + 4.08% + 6.52%
- -----------------------------------------------------------------------------------------------
<CAPTION>
Class B Investment Results
---------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.02% +7.31% +20.76% +23.84% +90.55%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.31% + 6.49% + 4.37% + 6.66%
- -----------------------------------------------------------------------------------------------
SEC Results -- +3.31% + 5.60% + 4.04% + 6.66%
- -----------------------------------------------------------------------------------------------
</TABLE>
MFS[RegTM] Massachusetts Municipal Bond Fund
<TABLE>
<CAPTION>
Class A Investment Results
----------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.06% +7.32% +22.40% +29.83% +104.19%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +7.32% + 6.97% + 5.36% + 7.40%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.22% + 5.25% + 4.34% + 6.88%
- -----------------------------------------------------------------------------------------------
<CAPTION>
Class B Investment Results
---------------------------------------------------------------
6 Months 1 Year 3 Years 5 Years 10 Years/Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +3.72% +6.59% +20.01% +25.46% +97.27%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return -- +6.59% + 6.27% + 4.64% + 7.03%
- -----------------------------------------------------------------------------------------------
SEC Results -- +2.59% + 5.38% + 4.32% + 7.03%
- -----------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Notes to Performance Summary
Class A share ("A") SEC results include the maximum 4.75% sales charge. Class B
share ("B") SEC results reflect the applicable contingent deferred sales charge
(CDSC), which declines over six years from 4% to 0%. Class C shares ("C") have
no initial sales charge but, like B, have higher annual fees and expenses than
A. C SEC results reflect the 1% CDSC applicable to shares redeemed within 12
months.
B and C results include the performance and the operating expenses (e.g., Rule
12b-1 fees) of A for periods prior to the inception of B and C. Because
operating expenses of B and C are higher than those of A, B and C performance
generally would have been lower than A performance. The A performance included
in the B and C SEC performance has been adjusted to reflect the CDSC generally
applicable to B and C rather than the initial sales charge generally applicable
to A.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details. 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.
A small portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to capital gains tax.
6
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1998
MFS ALABAMA MUNICIPAL BOND FUND
Municipal Bonds - 95.7%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 13.1%
Commonwealth of Puerto Rico, Aqueduct &
Sewer Authority Rev., 5s, 2015 $1,300 $ 1,315,288
Huntsville, AL, 5.5s, 2020 1,000 1,047,760
Puerto Rico Public Buildings Authority,
Government Facilities, AMBAC, 6.25s, 2013 2,000 2,388,240
Shelby County, AL, 7.4s, 2007 1,000 1,114,940
Shelby County, AL, MBIA, 0s, 2011 3,000 1,442,160
Shelby County, AL, 7.7s, 2017 800 895,336
State of Alabama, 0s, 2004 2,500 1,863,125
State of Alabama, 0s, 2006 1,165 749,701
State of Alabama, 7.1s, 2010 250 269,735
-----------
$11,086,285
- --------------------------------------------------------------------------------------
State and Local Appropriation - 3.8%
Lawrence County, AL, Public Building Authority
(County Jail), AMBAC, 5s, 2027 $1,000 $ 1,016,260
Puerto Rico Public Buildings Authority, Education
& Health, AMBAC, 5.6s, 2008 500 548,110
Puerto Rico Public Buildings Authority, Education
& Health, AMBAC, 5.5s, 2021 500 548,920
Puerto Rico Public Finance Corp., 5.375s, 2016 1,000 1,094,230
-----------
$ 3,207,520
- --------------------------------------------------------------------------------------
Refunded and Special Obligations - 14.4%
Alabama Building Renovation Finance Authority
Rev. (Fitch Light), 7.45s, 2000 $1,500 $ 1,631,355
Alabama Water Pollution Control Authority,
Revolving Fund Loan, AMBAC, 7.75s, 2001 860 928,482
Alexander City, AL, 0s, 2001 1,000 369,650
Alexander City, AL, 0s, 2001 1,000 343,740
Alexander City, AL, 0s, 2001 1,250 399,562
Baldwin County, AL, Eastern Shore Health Care
Authority (Thomas), 8.5s, 2001 1,000 1,130,100
Birmingham, AL, Historical Preservation Authority
Rev. (Kelly Ingram/Civil Rights), 7.2s, 2001 1,000 1,096,590
Gadsden East, AL, Medical Clinic Board Rev.
(Baptist Hospital), 7.8s, 2001 2,000 2,265,460
Hoover, AL, Board of Education, AMBAC,
6.625s, 2001 1,000 1,082,820
Montgomery County, AL, Department of Human
Resources Rev., 7s, 2001 1,000 1,094,770
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), AMBAC, 7s, 2001 695 746,465
Puerto Rico Highway & Transportation Authority,
6.5s, 2002 1,000 1,111,800
-----------
$12,200,794
- --------------------------------------------------------------------------------------
Airport and Port Revenue - 5.0%
Alabama Docks Department, Docks Facilities Rev.,
Refunding, MBIA, 5.375s, 2017 $1,000 $ 1,047,400
Alabama Docks Department, Docks Facilities Rev.,
Refunding, MBIA, 5.5s, 2022 ### 1,000 1,061,990
Mobile, AL, Airport Authority, Rev., 7.375s, 2012 1,000 1,074,880
Mobile, AL, Airport Authority Rev., 8.875s, 2015 952 1,029,969
-----------
$ 4,214,239
- --------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 3.1%
DeKalb & Cherokee County, AL, Gas Rev.,
AMBAC, 5.4s, 2016 $2,000 $ 2,105,960
Puerto Rico Electric Power Authority Rev.,
5s, 2028 500 497,035
-----------
$ 2,602,995
- --------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - 6.0%
Baldwin County, AL, Eastern Shore Health Care
(Thomas Hospital), 6.75s, 2015 $1,000 $ 1,108,810
Cullman, AL, Medical Park South Clinic, "A",
6.5s, 2023 1,000 1,067,200
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), 7s, 2015 2,030 2,140,107
Valley, AL, Special Care Facilities Financing
Authority (Lanier Memorial Hospital), 5.65s, 2022 735 748,598
-----------
$ 5,064,715
- --------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 9.9%
Butler, AL, Industrial Development Board, Solid
Waste Rev. (James River Corp.), 8s, 2028 $1,000 $ 1,150,800
Camden, AL, Industrial Development Board
Pollution Control Rev.(Macmillian Bloedel),
7.75s, 2009 500 537,595
Courtland, AL, Industrial Development Board,
Solid Waste Disposal Rev. (Champion
International Corp.), 5.9s, 2017 1,000 1,050,160
Courtland, AL, Industrial Development Board,
Solid Waste Disposal Rev. (Champion
International Corp.), 7.75s, 2020 1,485 1,571,397
Mobile, AL, Industrial Development Board, Dock
& Wharf Rev. (Ideal Basic Industries, Inc.),
6.75s, 2004 270 272,111
Mobile, AL, Industrial Development Board, Dock
& Wharf Rev. (Ideal Basic Industries, Inc.),
6.875s, 2009 1,075 1,083,826
Piedmont, AL, Industrial Development Board Rev.
(Springs Industries Project), 8.25s, 2010 1,000 1,085,290
Tarrant City, AL, Industrial Development Board
Rev. (Vulcan Materials Co.), 7.5s, 2011 1,500 1,627,200
-----------
$ 8,378,379
- --------------------------------------------------------------------------------------
Insured Health Care Revenue - 9.3%
Alabama Special Care Facilities Financing
Authority (Daughters of Charity), AMBAC,
5s, 2025 $1,500 $ 1,508,955
Alabama Special Care Facilities Financing
Authority (Daughters of Charity), AMBAC, 5s,
2025 1,000 991,380
Huntsville, AL, Health Care Facilities Rev., MBIA,
6.375s, 2022 850 924,766
Huntsville, AL, Health Care Facilities Rev., MBIA,
5s, 2023 1,000 1,004,430
Lauderdale County & Florence, AL (Eliza Coffee
Memorial Hospital), MBIA, 5.75s, 2014 1,000 1,086,910
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), AMBAC,
5.875s, 2016 1,000 1,090,260
Montgomery, AL, Special Care Facilities (Baptist
Medical), FSA, 5.375s, 2019 1,150 1,204,142
-----------
$ 7,810,843
- --------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.2%
Alabama Housing Finance Authority, Multi-Family
Residential Development Rev. (St. Jude),
7.25s, 2023 $1,375 $ 1,485,234
Puerto Rico Housing Finance Corp., Multi-Family
Mortgage Rev., FHA, 7.5s, 2015 355 371,252
-----------
$ 1,856,486
- --------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 1.2%
Virgin Islands Public Finance Authority, 5.5s, 2018 $1,000 $ 1,024,360
- --------------------------------------------------------------------------------------
</TABLE>
7 - MAL
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Single Family Housing Revenue - 5.2%
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GMNA, 6.55s, 2014 $ 985 $ 1,069,552
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 7.4s, 2022 625 651,494
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 7.5s, 2022 400 420,308
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 7.6s, 2022 150 158,414
Alabama Housing Finance Authority, Single Family
Mortgage Rev., GNMA, 7.75s, 2022 310 324,368
Alabama Housing Finance Authority, Single Family
Mortgage Rev., Collateral Home Mortgage
Program, 5.7s, 2015 1,680 1,792,107
-----------
$ 4,416,243
- ------------------------------------------------------------------------------------
Universities - 6.4%
Alabama Agriculture & Mechanics University,
MBIA, 5.75s, 2013 $ 500 $ 546,070
Alabama Agriculture & Mechanics University,
MBIA, 5.5s, 2020 2,545 2,679,172
Alabama Board of Education Rev. (Shelton State
Community College), MBIA, 6s, 2014 1,000 1,102,610
Homewood, AL, Educational Building Authority,
Educational Facilities Rev. (Samford University),
6.5s, 2016 1,000 1,087,270
-----------
$ 5,415,122
- ------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 12.7%
Alabama Water Pollution Control Authority,
AMBAC, 5.5s, 2020 $1,500 $ 1,568,115
Arab, AL, Waterworks Board, Water Rev., MBIA,
7.05s, 2016 1,000 1,098,440
Bessemer, AL, Water Rev., AMBAC, 5.75s, 2026 1,000 1,080,770
Birmingham, AL, Waterworks & Sewer Board
Rev., 5.375s, 2020 2,000 2,083,860
Fairview, AL, Water Rev. (East Cullman), AMBAC,
8s, 2020 1,000 1,040,250
Limestone County, AL, Water Authority Rev., FGIC,
5.5s, 2026 2,650 2,815,757
Madison, AL, Water & Waste Board, MBIA,
5.5s, 2019 1,000 1,056,080
-----------
$10,743,272
- ------------------------------------------------------------------------------------
Other - 3.4%
Birmingham, AL, Downtown Redevelopment
Authority, Social Security Administration Building
Rev., 0s, 2010 $2,435 $ 2,904,760
- ------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $73,336,079) $80,926,013
- ------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
- ------------------------------------------------------------------------------------
Harris County, TX, Industrial Development Corp.,
Pollution Control Rev. (Exxon Corp.), due 03/01/24 $ 200 $ 200,000
New Castle, PA, Area Hospital Authority
(Jameson Memorial Hospital), due 07/01/26 500 500,000
- ------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 700,000
- ------------------------------------------------------------------------------------
Total Investments (Identified Cost, $74,036,079) $81,626,013
Other Assets, Less Liabilities - 3.5% 2,961,421
- ------------------------------------------------------------------------------------
Net assets - 100.0% $84,587,434
- ------------------------------------------------------------------------------------
</TABLE>
See portfolio footnotes and notes to financial statements
MFS ARKANSAS MUNICIPAL BOND FUND
Municipal Bonds - 99.1%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 7.3%
Arkansas College Savings, "A", 0s, 2009 $1,146 $ 723,069
Arkansas College Savings, "A", 0s, 2015 2,575 1,144,690
Arkansas College Savings, "A", 0s, 2017 2,590 1,040,792
Arkansas College Savings, "B", 0s, 2012 1,200 638,220
Arkansas College Savings, "B", 0s, 2013 1,000 502,770
Arkansas College Savings, "B", 0s, 2014 1,150 545,824
Arkansas College Savings, "B", 0s, 2015 1,600 711,264
Arkansas College Savings, "B", 0s, 2016 1,000 420,510
Arkansas College Savings, "C", 0s, 2014 1,000 474,630
Arkansas College Savings, "C", 0s, 2015 1,000 444,540
Arkansas Water Resources Development
Authority, 6.375s, 2021 1,000 1,066,970
Commonwealth of Puerto Rico, 5.5s, 2013 1,210 1,309,160
Commonwealth of Puerto Rico, 5.4s, 2025 1,000 1,040,960
-----------
$10,063,399
- ------------------------------------------------------------------------------------
State and Local Appropriation - 4.2%
Arkansas Development Finance Authority, Local
Government Rev., 7.1s, 2008 $2,440 $ 2,656,086
Arkansas Development Finance Authority, Single
Family Mortgage Rev., 0s, 2011 5,000 1,989,300
Puerto Rico Public Finance Corp., AMBAC,
5.375s, 2016 1,000 1,094,230
-----------
$ 5,739,616
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 15.4%
Arkansas Development Finance Authority, Water
& Sewer Rev., MBIA, 7s, 2014 $2,900 $ 3,173,789
Arkansas Development Finance Authority, Water
& Sewer Rev., MBIA, 6.4s, 2015 2,000 2,200,420
Arkansas Housing Development Agency, Single
Family Mortgage Rev., ETM, 8.375s, 2011 ### 1,000 1,353,680
Arkansas Waste Disposal & Pollution Control
Rev., 6.25s, 2022 4,000 4,352,840
Arkansas Water Resources Development
Authority, 6.375s, 2002 1,000 1,074,100
Harrison, AR, Residential Housing Facilities Board,
Single Family Mortgage Rev., FGIC, ETM,
7.4s, 2011 4,000 5,089,240
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2010 1,000 1,114,300
Sherwood, AR, Residential Housing Facilities
Board, Single Family Mortgage Rev., MBIA,
7.5s, 2011 1,250 1,590,300
West Memphis, AR, Public Utility Systems Rev.,
MBIA, 6.6s, 2009 1,250 1,381,800
-----------
$21,330,469
- ------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 12.7%
Jefferson County, AR, Pollution Control Rev.
(Arkansas Power & Light), 6.3s, 2018 $1,050 $ 1,143,503
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2010 2,000 2,385,280
North Little Rock, AR, Electric Rev., MBIA,
6.5s, 2015 6,000 7,457,280
Pope County, AR, Solid Waste Disposal Rev.
(Arkansas Power & Light), 8s, 2020 1,780 1,943,991
Pope County, AR, Solid Waste Disposal Rev.
(Arkansas Power & Light), FSA, 8s, 2021 3,000 3,293,520
Virgin Islands Water & Power Authority, 5.3s, 2018 1,250 1,273,537
-----------
$17,497,111
- ------------------------------------------------------------------------------------
</TABLE>
8 - MAR
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - 7.1%
Baxter County, AR, Hospital Rev., 7.5s, 2021 $3,145 $ 3,490,258
Little Rock, AR, Health Facilities Board (Baptist
Medical Center), 6.9s, 2009 1,400 1,683,234
Little Rock, AR, Health Facilities Board (Baptist
Medical Center), 7s, 2017 3,250 3,561,968
Pulaski County, AR, Hospital Rev. (Children's
Hospital), 6.15s, 2017 1,000 1,058,620
------------
$ 9,794,080
- ------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 7.6%
Blytheville, AR, Solid Waste Recycling & Sewage
Treatment Rev. (Nucor), 6.375s, 2023 $3,565 $ 3,858,792
Camden, AR, Environmental Improvement Rev.
(International Paper), 7.625s, 2018 1,000 1,181,330
Jonesboro, AR, Industrial Development Rev.
(Anheuser-Busch), 6.5s, 2012 3,500 3,883,600
Little River County, AR (Georgia Pacific Corp.),
5.6s, 2026 1,000 1,013,500
Pine Bluff, AR, Environmental Improvement Rev.
(International Paper Co.), 5.55s, 2022 500 510,240
------------
$ 10,447,462
- ------------------------------------------------------------------------------------
Insured Health Care Revenue - 9.7%
Arkansas Development Finance Authority, Health
Facilities Rev. (Sisters of Mercy), MBIA, 5s, 2013 $6,340 $ 6,690,158
Arkansas Development Finance Authority, Health
Facilities Rev. (Sisters of Mercy), MBIA, 5s, 2019 5,500 5,582,995
Pulaski County, AR, Health Facilities Board Rev.
(Sisters of Charity), MBIA, 6s, 2012 1,000 1,082,720
------------
$ 13,355,873
- ------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.1%
Pope County, AR, Residential Housing Facilities
Board (Arkansas Tech University), 6s, 2027 $1,000 $ 1,006,310
West Memphis, AR, Public Facilities Board
Mortgage Rev., AMBAC, 0s, 2011 1,090 522,710
------------
$ 1,529,020
- ------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 5.2%
Little Rock, AR, Hotel & Restaurant Gross
Receipts Tax Rev., 7.375s, 2015 $4,790 $ 6,228,916
Virgin Islands Public Finance Authority, 5.5s, 2022 1,000 1,021,670
------------
$ 7,250,586
- ------------------------------------------------------------------------------------
Single Family Housing Revenue - 15.2%
Arkansas Development Finance Authority, Single
Family Mortgage Rev., GNMA, 7.4s, 2023 $1,160 $ 1,227,257
Arkansas Development Finance Authority, Single
Family Mortgage Rev., GNMA, 7.45s, 2027 1,695 1,899,298
Arkansas Development Finance Authority, Single
Family Mortgage Rev., GNMA, FNMA, 6.7s, 2027 2,765 3,003,758
Arkansas Housing Development Agency,
Residential Mortgage Rev., 0s, 2015 12,950 2,198,392
Jefferson County, AR, Health Care & Residential
Facilities Board, 7.25s, 2011 815 868,309
Lonoke County, AR, Residential Housing Facilities
Board, 7.375s, 2011 190 206,114
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Single Family Housing Revenue - continued
Lonoke County, AR, Residential Housing Facilities
Board, FNMA, 7.9s, 2011 $ 752 $ 839,163
Mississippi County, AR, Public Facilities Board,
Mortgage Rev., 7.2s, 2010 900 1,007,298
North Little Rock, AR, Residential Housing
Facilities Board, 0s, 2010 17,256 7,681,163
Pulaski County, AR, Public Facilities Board Rev.,
FNMA, 0s, 2014 2,750 1,239,425
Saline County, AR, Residential Housing Facilities
Board, 7.875s, 2011 770 832,547
------------
$ 21,002,724
- ------------------------------------------------------------------------------------
Student Loan Revenue - 2.6%
Arkansas Student Loan Authority Rev., 7.15s, 2002 $ 390 $ 417,124
Arkansas Student Loan Authority Rev., 6.75s, 2006 905 951,861
Arkansas Student Loan Authority Rev., "B",
6.25s, 2010 2,000 2,168,220
------------
$ 3,537,205
- ------------------------------------------------------------------------------------
Universities - 0.8%
Conway, AR, Public Facilities Rev. (Hendrix
College), 5.85s, 2016 $1,000 $ 1,058,890
- ------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 10.2%
Arkansas Development Finance Authority,
Revolving Loan Fund, 5.85s, 2019 $2,130 $ 2,283,871
Arkansas Development Finance Authority, Water
& Sewer Rev., MBIA, 5s, 2012 1,000 1,032,710
Beaver, AR, Water District, Benton & Washington
Counties, Water & Sewer Rev., MBIA,
5.85s, 2008 2,000 2,182,660
Fort Smith, AR, Water & Sewer Rev., MBIA,
6s, 2012 2,250 2,476,890
Russellville, AR, Water Systems Rev., AMBAC,
6.25s, 2012 1,365 1,476,821
South Sebastian County, AR, Water Users Assn.,
5.95s, 2016 2,425 2,536,914
South Sebastian County, AR, Water Users Assn.,
6.15s, 2023 1,000 1,049,720
Texarkana, AR, Waterworks Facilities Rev., FGIC,
5.2s, 2010 1,000 1,061,670
------------
$ 14,101,256
- ------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $123,602,032) $136,707,691
- ------------------------------------------------------------------------------------
Floating Rate Demand Note - 0.2%
- ------------------------------------------------------------------------------------
Heard County, GA, Development Authority,
Pollution Control Rev. (Georgia Power Co.),
due 09/01/29, at Identified Cost $ 300 $ 300,000
- ------------------------------------------------------------------------------------
Total Investments (Identified Cost, $123,902,032) $137,007,691
Other Assets, Less Liabilities - 0.7% 980,803
- ------------------------------------------------------------------------------------
Net assets - 100.0% $137,988,494
- ------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
9 - MAR
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1998
MFS CALIFORNIA MUNICIPAL BOND FUND
Municipal Bonds - 96.2%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 8.8%
Commonwealth of Puerto Rico, 5.5s, 2009 $2,500 $ 2,739,025
Commonwealth of Puerto Rico, Highway &
Transportation Authority Rev., FSA, 5.5s, 2015 1,000 1,114,140
Corona, CA, Unified School District, "A", FSA,
5.375s, 2018 1,350 1,417,311
Lucia Mar, CA, Unified School District, FGIC,
0s, 2013 1,350 680,332
Lucia Mar, CA, Unified School District, FGIC,
0s, 2014 1,200 568,572
Paramount, CA, Unified School District, "A", FSA,
5.125s, 2019 2,000 2,044,900
State of California, 10s, 2007 1,055 1,526,680
State of California, 6.5s, 2010 1,235 1,498,685
State of California, AMBAC, 7.2s, 2008 1,600 1,990,368
State of California, AMBAC, 6.3s, 2010 ### 6,000 7,156,980
State of California, AMBAC, 7s, 2010 2,000 2,507,820
Walnut Valley, CA, AMBAC, 6s, 2011 1,600 1,870,752
-----------
$25,115,565
- ------------------------------------------------------------------------------------
State and Local Appropriation - 15.9%
Banning, CA, Certificates of Participation, Water
System Improvement, AMBAC, 8s, 2019 $1,000 $ 1,410,030
California Public Works Board, Lease Rev.,
5.55s, 2010 4,000 4,472,760
California Public Works Board, Lease Rev., MBIA,
5.5s, 2015 4,500 4,978,395
California Public Works Board,
(California State University Trustees), 5.25s, 2013 1,500 1,586,265
California Public Works Board, Lease Rev
(Department of Corrections), 7.4s, 2010 5,000 6,404,300
Fortuna, Parlier & Susanville, CA, Certificates of
Participation, "B", 7.375s, 2017 930 993,565
Grossmont, CA, Union High School District,
Certificates of Participation, MBIA, 0s, 2006 6,000 4,333,620
Los Angeles, CA, Building Authority, MBIA,
5.625s, 2011 3,375 3,815,505
Los Angeles, CA, Convention & Exhibition Center
Authority, Certificates of Participation, AMBAC,
0s, 2005 2,400 1,828,392
Pasadena, CA, Certificates of Participation
(Pasadena Parking Facilities), 6.25s, 2018 3,460 4,080,932
Pomona, CA, Public Financing Authority Rev.,
6.25s, 2010 4,020 4,747,459
San Joaquin County, CA, Certificates of
Participation (General Hospital), 6.625s, 2020 2,000 2,194,320
Tulare County, CA, Certificates of Participation
(Capital Improvements Program), MBIA,
6s, 2016 1,000 1,116,240
Visalia, CA, Utility Systems Department,
Certificates of Participation, MBIA, 0s, 2005 4,655 3,505,355
-----------
$45,467,138
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 21.3%
Apple Valley, CA, Hospital Rev., Certificates of
Participation (St. Mary's Hospital), CHFC,
6.75s, 2002 $4,880 $ 5,395,230
California Educational Facilities Authority Rev
(St. Mary's College), 7.5s, 2000 1,000 1,095,270
California Health Facilities Financing Authority
Rev. (AIDS Hospice Foundation), 7.15s, 2000 2,875 3,056,729
California Health Facilities Financing Authority
Rev. (St. Joseph's Hospital), CHFC, 6.75s, 2001 2,710 2,977,477
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - continued
California Statewide Community Development
Authority, Certificates of Participation, CHFC,
0s, 2007 $3,645 $ 2,541,403
California Statewide Community Development
Authority, Certificates of Participation, CHFC,
0s, 2008 6,345 4,226,341
California Statewide Community Development
Authority (St. Joseph's Hospital), 6.625s, 2004 4,205 4,896,428
Central Valley, CA, 6.2s, 2003 3,000 3,369,300
Corona, CA, Certificates of Participation (Corona
Community Hospital), 8s, 2005 585 724,253
Desert Hospital District, CA, Hospital Rev. (Desert
Hospital Corp.), 8.874s, 2002 ++++ 3,000 3,664,980
Emeryville, CA, Public Financing Authority,
Redevelopment Project, 6.5s, 2002 770 855,555
Los Angeles, CA, Convention & Exhibition Center
Authority, Certificates of Participation, 9s, 2005 1,900 2,509,577
M-S-R Public Power Agency (San Juan), MBIA,
6.75s, 2020 3,000 3,682,500
Mojave, CA, Water Agency Rev. (Morongo Basin),
6.6s, 2002 1,400 1,574,412
Palos Verdes, CA, Library District, 6.7s, 2016 1,250 1,342,713
Pomona, CA, Public Financing Authority Rev.,
5.75s, 2004 855 949,478
Pomona, CA, Single Family Mortgage Rev.,
FHLMC, GNMA, 7.5s, 2000 2,000 2,677,500
Pomona, CA, Single Family Mortgage Rev., FNMA,
GNMA, 7.375s, 2010 2,000 2,442,380
Southern California Public Power Transmission
Rev., "A", 0s, 2005 3,795 2,909,892
Thousand Oaks, CA, Redevelopment Agency
(Shadow Hills Project), 7s, 2021 8,900 10,181,422
-----------
$61,072,840
- ------------------------------------------------------------------------------------
Airport and Port Revenue - 5.8%
Los Angeles, CA, Department of Airport Rev.
(Ontario International Airport), FGIC, 6s, 2017 $4,100 $ 4,544,481
Los Angeles, CA, Harbor Department Rev.,
6.625s, 2025 2,000 2,195,380
Port Oakland, CA, Port Rev., MBIA, 0s, 2009 7,000 4,380,600
Port Oakland, CA, Port Rev., MBIA, 6.5s, 2016 1,000 1,106,830
San Francisco, CA, City & County Airports
Commission, International Airport Rev., 6.5s, 2019 4,000 4,509,040
-----------
$16,736,331
- ------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 3.0%
California Pollution Control Financing Authority
Rev. (Pacific Gas & Electric Co.), 6.625s, 2009 $1,000 $ 1,093,500
Los Angeles, CA, Department of Water & Power,
Electric Plant Rev., 7.25s, 2030 1,000 1,082,440
Los Angeles, CA, Department of Water & Power,
Electric Plant Rev., 7.1s, 2031 1,050 1,141,455
Northern California Public Power Authority
(Geothermal Project), 5.85s, 2010 1,750 1,980,108
Southern California Public Power Authority Rev
(Southern Transmission Project), 0s, 2005 4,205 3,229,650
-----------
$ 8,527,153
- ------------------------------------------------------------------------------------
Health Care Revenue - 3.4%
California Health Facilities Financing Authority
(Downey Community Hospital), 5.625s, 2008 $3,000 $ 3,185,400
</TABLE>
10 - MCA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - continued
California Health Facilities Financing Authority
(Kaiser Permanente), 7s, 2018 $1,000 $ 1,048,830
California Hospital Rev., Refunding &
Improvement Project (Valley Health Systems),
6.5s, 2015 2,760 3,011,574
Upland, CA (San Antonio Community Hospital),
5s, 2018 2,500 2,466,250
-----------
$ 9,712,054
- ------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 1.4%
California Pollution Control Financing Authority
Rev., 6.7s, 2007 $2,750 $ 2,912,553
California Pollution Control Financing Authority
Rev. (Frito-Lay, Inc.), 6.375s, 2004 1,025 1,104,304
-----------
$ 4,016,857
- ------------------------------------------------------------------------------------
Insured Health Care Revenue - 1.9%
Abag, CA, Finance Authority (Rhoda Haas
Goldman Plaza), CHFC, 5.125s, 2015 $2,250 $ 2,281,522
California Health Facilities Financing Authority,
CMI, 5.25s, 2018 1,000 1,023,170
California Health Facilities Financing Authority
(Sutter Health), MBIA, 7s, 2009 1,000 1,028,000
California Statewide Community Development
Authority, MBIA, 6s, 2011 1,015 1,174,264
-----------
$ 5,506,956
- ------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.1%
California Housing Finance Agency (Multi-Unit
Rental Housing), 6.7s, 2015 $2,750 $ 2,949,155
California Statewide Community Development
Authority (Irvine Apartments), 5.25s, 2025 3,000 3,074,550
Palmdale, CA, Multi-Family Housing Rev., FNMA,
7.375s, 2024 1,000 1,091,310
Yolo County, CA, Housing Authority Mortgage Rev
(Walnut Park Apartments), FHA, 7.2s, 2033 4,150 4,518,064
-----------
$11,633,079
- ------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 3.0%
Commonwealth of Puerto Rico, Highway &
Transportation Authority Rev., MBIA, 5.5s, 2013 $3,000 $ 3,340,770
Virgin Islands Public Finance Authority,
5.875s, 2018 3,000 3,131,580
Virgin Islands Public Finance Authority, 5.5s, 2022 2,000 2,043,340
-----------
$ 8,515,690
- ------------------------------------------------------------------------------------
Single Family Housing Revenue - 1.4%
California Housing Finance Agency, 7.75s, 2010 $ 400 $ 416,984
California Housing Finance Agency, MBIA,
6s, 2010 1,400 1,504,062
California Rural Home Mortgage Finance
Authority, GNMA, 0s to 1999, 5.75s to 2029 1,500 1,672,320
San Bernardino County, CA, Single Family
Mortgage Rev., GNMA, 7.65s, 2023 140 158,157
Southern California Home Finance Authority,
Single Family Mortgage Rev., GNMA,
7.625s, 2023 165 173,596
-----------
$ 3,925,119
- ------------------------------------------------------------------------------------
Special Assessment District - 7.8%
Anaheim, CA, Public Finance Authority Rev.,
MBIA, 0s, 2006 $5,000 $ 3,619,400
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Special Assessment District - continued
Anaheim, CA, Public Finance Authority Rev
(Redevelopment Project), MBIA, 0s, 2005 $3,210 $ 2,425,733
Brea, CA, Public Finance Authority Rev., MBIA,
0s, 2005 2,235 1,711,027
Brea, CA, Public Finance Authority Rev., MBIA,
0s, 2006 3,415 2,504,800
Commerce, CA, Community Development
Commission, MBIA, 5.5s, 2010 3,545 3,943,032
Concord, CA, Redevelopment Agency, Tax
Allocation, BIGI, 8s, 2018 40 41,213
Emeryville, CA, Public Financing Authority,
Unrefunded Balance Redevelopment Project,
6.5s, 2021 1,230 1,333,234
Pomona, CA, Public Financing Authority Rev.,
5.75s, 2020 1,645 1,737,301
San Jose, CA, Redevelopment Agency, MBIA,
6s, 2010 1,000 1,166,080
Santa Cruz County, CA, Redevelopment Agency
(Oak/Soquel Community), 5.6s, 2017 1,455 1,557,432
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2007 1,150 804,643
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2008 1,125 746,809
Walnut Valley, CA, Public Finance Authority
(Walnut Improvement), MBIA, 0s, 2009 1,175 740,509
-----------
$22,331,213
- ------------------------------------------------------------------------------------
Turnpike Revenue - 2.6%
Foothill/Eastern Transportation Corridor Agency,
CA, 0s, 2011 $5,000 $ 4,119,550
Foothill/Eastern Transportation Corridor Agency,
CA, 0s, 2020 10,000 3,307,100
-----------
$ 7,426,650
- ------------------------------------------------------------------------------------
Universities - 3.8%
California Educational Facilities Authority Rev
(College & University), 6s, 2012 $1,400 $ 1,538,530
California Educational Facilities Authority Rev
(College & University), 6.3s, 2021 1,000 1,123,170
California Educational Facilities Authority Rev
(L.A. College of Chiropractic), 5.6s, 2017 500 522,460
California State University Housing System Rev.,
6.75s, 2010 1,705 1,824,469
California State University Housing System Rev.,
6.75s, 2011 3,570 3,820,150
Los Angeles, CA, Certificates of Participation,
5.7s, 2018 1,900 1,955,024
-----------
$10,783,803
- ------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 10.0%
California Department of Water Resources Rev.,
Central Valley Project, 7s, 2012 $1,495 $ 1,912,165
Fairfield-Suisun, CA, Sewer District Rev., MBIA,
0s, 2006 2,080 1,540,739
Metropolitan Water District, Linked Savers, RIBS,
5.75s, 2018 10,000 11,376,100
Metropolitan Water District, South California, "A",
5s, 2026 2,000 2,004,180
Metropolitan Water District, Waterworks, 5s, 2020 9,000 9,011,430
San Diego, CA, Water & Utility Systems Rev.,
FGIC, 5.375s, 2014 2,540 2,713,304
-----------
$28,557,918
- ------------------------------------------------------------------------------------
</TABLE>
11 - MCA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Other - 2.0%
Anaheim, CA, Public Finance Authority Rev., FSA,
6s, 2024 $1,000 $ 1,183,860
California Public Capital Improvements Financing
Authority Rev., MBIA, 8.1s, 2018 1,820 1,854,907
South Coast Air Quality Management District Rev.,
AMBAC, 0s, 2005 3,480 2,664,149
-----------
$ 5,702,916
- ------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $243,625,956) $275,031,282
- ------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.6%
- ------------------------------------------------------------------------------------
California Health Facilities Financing Authority
Rev. (St. Joseph's Hospital), due 7/01/13 $ 100 $ 100,000
California Pollution Control Financing Authority
Rev. (Shell Oil), due 11/01/00 2,400 2,400,000
California Pollution Control Financing Authority
Rev. (Shell Oil), due 10/01/09 800 800,000
California Pollution Control Financing Authority
Rev. (Shell Oil), due 10/01/10 200 200,000
California Pollution Control Financing Authority
Rev. (Shell Oil), due 10/01/11 2,850 2,850,000
California Statewide Community Development
(Sutter Health), due 07/01/15 500 500,000
Orange County, CA, Sanitation District,
due 08/01/16 700 700,000
- ------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $7,550,000
- ------------------------------------------------------------------------------------
Total Investments (Identified Cost, $251,175,956) $282,581,282
Other Assets, Less Liabilities - 1.2% 3,486,649
- ------------------------------------------------------------------------------------
Net assets - 100.0% $286,067,931
- ------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
MFS FLORIDA MUNICIPAL BOND FUND
Municipal Bonds - 97.8%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 9.9%
Dade County, FL, 7.125s, 2016 $2,380 $ 3,080,125
Florida Board of Education, Capital Outlay,
9.125s, 2014 2,600 3,794,908
Palm Beach County, FL, 6.5s, 2010 2,000 2,422,280
-----------
$ 9,297,313
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 19.9%
Altamonte Springs, FL, Health Facilities Rev.,
5.7s, 2012 ### $1,175 $ 1,314,825
Bay County, FL, School Board, Certificates of
Participation, AMBAC, 6.75s, 2004 1,000 1,161,230
Brevard County, FL, Health Facilities Authority
Rev. (Wuesthoff Memorial), MBIA, IBC,
7.2s, 2002 1,000 1,129,410
Charlotte County, FL, Utility Rev, FGIC, 6.875s, 2003 500 578,800
Dade County, FL, Housing Finance Authority,
Mortgage Rev., "D", FSA, 6.95s, 2012 490 523,055
Escambia County, FL, Health Facility Rev. (Baptist
Hospital), 6.75s, 2003 785 895,575
Escambia County, FL, Health Facility Rev. (Baptist
Hospital), 6.75s, 2003 215 241,531
Florida Board of Education, Capital Outlay,
9.125s, 2014 400 573,720
Florida Turnpike Authority Rev. (Fitch Light), "A",
AMBAC, 7.125s, 2001 1,250 1,383,050
Hillsborough County, FL, Capital Improvement Rev
(County Center), 6.75s, 2002 1,500 1,678,830
Jacksonville, FL, Hospital Rev. (Baptist Medical
Center), "A", MBIA, 7.3s, 1999 1,900 1,987,248
Palm Beach County, FL, School Board,
Certification of Participation, AMBAC,
6.375s, 2004 2,000 2,277,040
Port St. Lucie, FL, Utility Rev., Capital
Appreciation, FGIC, 0s, 2006 2,405 712,986
Puerto Rico Electric Power Authority Rev.,
7s, 2001 240 265,438
Puerto Rico Highway & Transportation Authority,
Highway Rev., 6.625s, 2002 1,100 1,227,743
Puerto Rico Public Buildings Authority Rev.,
6.875s, 2002 740 832,345
State of Florida, Jacksonville Transportation,
6.4s, 2002 750 825,210
Tampa, FL, Allegheny Health System (St
Joseph's), MBIA, 6.5s, 2004 1,000 1,159,760
-----------
$18,767,796
- ------------------------------------------------------------------------------------
Airport and Port Revenue - 6.6%
Hillsborough County, FL, Aviation Authority Rev.
(Delta Airlines), 6.8s, 2024 $1,500 $ 1,635,735
Hillsborough County, FL, Aviation Authority Rev
(Tampa International), FGIC, 5.875s, 2015 750 827,602
Hillsborough County, FL, Aviation Authority Rev
(USAir), 8.6s, 2022 2,400 2,708,112
Pensacola FL, Airport Rev., MBIA, 5.625s, 2014 1,000 1,081,000
-----------
$ 6,252,449
- ------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 25.6%
Escambia County, FL, Utility Systems Rev., FGIC,
0s, 2015 $1,000 $ 461,640
</TABLE>
12 - MFL
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Electric and Gas Utility Revenue - continued
Escambia County, FL, Utility Systems Rev., FGIC,
6.25s, 2015 $1,500 $ 1,778,955
Hillsborough County, FL, Industrial Development
Authority, Pollution Control Rev. (Tampa Electric
Co.), 8s, 2022 3,000 3,480,330
Jacksonville, FL, Electric Authority Rev. (St. Johns
River Power), 0s, 2010 4,995 2,968,529
Lakeland, FL, Electricity & Water Rev., Capital
Appreciation, 0s, 2011 5,000 2,763,400
Lakeland, FL, Electricity & Water Rev., Capital
Appreciation, 0s, 2012 3,000 1,566,870
Martin County, FL, Industrial Development
Authority (Indiantown Cogeneration), 7.875s, 2025 3,625 4,248,246
Orlando, FL, Utility Commission, Water and
Electric Rev., 6.75s, 2017 1,500 1,868,535
Puerto Rico Electric Power Authority Rev., MBIA,
6.125s, 2008 2,400 2,792,208
Puerto Rico Electric Power Authority Rev., FSA,
6s, 2016 2,000 2,197,820
-----------
$24,126,533
- ------------------------------------------------------------------------------------
Health Care Revenue - 7.2%
Brevard County, FL, Health Facilities Authority
Rev. (Friendly Village), 9.25s, 2012 $ 365 $ 370,979
Escambia County, FL, Health Facility Rev. (Baptist
Hospital), "B", 6s, 2014 2,500 2,658,825
Jacksonville, FL, Health Facilities Authority,
Industrial Development Rev. (National
Benevolent), 6.4s, 2016 1,825 1,987,498
Jacksonville, FL, Health Facilities Authority,
Industrial Development Rev. (National Cypress),
7s, 2014 1,250 1,386,362
Orange County, FL, Industrial Development Rev
(Friendly Village), 9.25s, 2012 335 340,270
-----------
$ 6,743,934
- ------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 2.4%
Escambia County, FL, Industrial Development Rev
(Champion International), 6.8s, 2012 $1,000 $ 1,110,570
Escambia County, FL, Pollution Control Rev
(Champion International), 6.95s, 2007 1,000 1,109,580
-----------
$ 2,220,150
- ------------------------------------------------------------------------------------
Insured Health Care Revenue - 7.3%
Brevard County, FL, Health Facilities Authority
Rev. (Wuesthoff Memorial), MBIA, 6.5s, 2007 $1,000 $ 1,101,870
Charlotte County, FL, Health Care Facilities Rev
(Bon Secours), FSA, 7.863s, 2027 ++++ 2,500 2,893,750
Hillsborough County, FL, Industrial Development
Rev. (University Community Hospital), MBIA,
6.5s, 2019 1,000 1,225,700
Jacksonville, FL, Hospital Rev. (University Medical
Center), CONNIE LEE, 6.6s, 2013 500 548,635
Tallahassee, FL, Health Facilities Rev. (Tallahassee
Memorial Regional Medical Center), MBIA,
6.625s, 2013 1,000 1,151,580
-----------
$ 6,921,535
- ------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Sales and Excise Tax Revenue - 3.0%
Jacksonville, FL, Excise Taxes Rev., FGIC, 0s, 2010 $1,000 $ 585,290
Jacksonville, FL, Excise Taxes Rev., FGIC, 0s, 2011 1,000 552,680
Puerto Rico Highway & Transportation Authority,
MBIA, 5.5s, 2015 1,500 1,671,210
-----------
$ 2,809,180
- ------------------------------------------------------------------------------------
Single Family Housing Revenue - 0.1%
Dade County, FL, Housing Finance Authority,
Mortgage Rev., "E", GNMA, 7s, 2024 $ 75 $ 79,284
- ------------------------------------------------------------------------------------
Special Assesment District - 2.1%
Arbor Greene, FL, Community Development
District, 5.75s, 2006 $1,000 $ 1,006,050
Heritage Isles, FL, Community Development
District, 5.75s, 2005 1,000 991,520
-----------
$ 1,997,570
- ------------------------------------------------------------------------------------
Turnpike Revenue - 1.9%
Florida Mid Bay Bridge Authority Rev., AMBAC,
0s, 2018 $1,860 $ 703,043
Orlando & Orange County, FL, Expressway Florida,
FGIC, 6.164s, 2004 1,000 1,126,520
-----------
$ 1,829,563
- ------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 6.0%
Lee County, FL, Industrial Development Authority
Rev. (Bonita Springs Utilities), MBIA, 6.05s, 2015 $1,000 $ 1,104,630
Miramar, FL, Wastewater Improvement Rev., FGIC,
6.75s, 2016 955 1,095,576
Seminole, FL, Water & Sewer Improvement Rev.,
MBIA, 6s, 2019 3,000 3,504,180
-----------
$ 5,704,386
- ------------------------------------------------------------------------------------
Other - 5.8%
Dade County, FL, Solid Waste Special Obligation,
AMBAC, 5.125s, 2010 $1,250 $ 1,328,975
Florida Department of Environmental Preservation
Rev., MBIA, 5.5s, 2012 2,295 2,491,314
Palm Beach County, FL, Criminal Justice Facilities,
FGIC, 5.75s, 2013 500 563,580
Palm Beach County, FL, Solid Waste Authority
Rev., Improvement Series "B", AMBAC,
5.375s, 2011 1,000 1,066,660
-----------
$ 5,450,529
- ------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $81,798,830) $92,200,222
- ------------------------------------------------------------------------------------
Floating Rate Demand Note - 0.1%
- ------------------------------------------------------------------------------------
Dade County, FL, Industrial Development
Authority, Pollution Control Rev., due 04/01/20, at
Identified Cost $ 100 $ 100,000
- ------------------------------------------------------------------------------------
Total Investments (Identified Cost, $81,898,830) $92,300,222
Other Assets, Less Liabilities - 2.1% 1,954,577
- ------------------------------------------------------------------------------------
Net assets - 100.0% $94,254,799
- ------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
13 - MFL
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1998
MFS GEORGIA MUNICIPAL BOND FUND
Municipal Bonds - 96.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 9.5%
Dalton, GA, Development Authority Rev., MBIA,
5.5s, 2017 $1,000 $ 1,104,670
Fulton County, GA, School District, 6.375s, 2010 2,000 2,356,020
Fulton County, GA, School District, 6.375s, 2012 1,000 1,198,930
Fulton County, GA, School District, 6.375s, 2016 1,000 1,206,980
State of Georgia, 6.25s, 2011 1,000 1,195,920
-----------
$ 7,062,520
- ------------------------------------------------------------------------------------
State and Local Appropriation - 2.4%
Fulton County, GA, Building Authority Rev.
(Judicial Center), 0s, 2011 $3,000 $ 1,753,140
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 16.2%
Barnesville, GA, Water and Sewer Rev., 6.9s, 2002 $1,715 $ 1,935,806
Columbia County, GA, Water and Sewer Rev.,
AMBAC, 6.9s, 2001 1,000 1,099,650
DeKalb County, GA, GNMA, 7.5s, 2000 780 831,893
Fulton County, GA, Water & Sewage Rev., FGIC,
6.375s, 2014 3,150 3,717,000
George L. Smith II/Georgia World Congress
Center Authority (Domed Stadium Project),
7.875s, 2000 1,475 1,604,033
Hogansville, GA, Combined Public Utility Systems
Rev., 9s, 2000 2,200 2,462,504
Territory of Virgin Islands, 7.75s, 2001 335 367,827
-----------
$12,018,713
- ------------------------------------------------------------------------------------
Airport and Port Revenue - 15.8%
Atlanta, GA, Airport Facilities Rev., 6.25s, 2021 $ 500 $ 528,105
Atlanta, GA, Airport Facilities Rev., AMBAC,
0s, 2010 6,000 3,603,300
Atlanta, GA, Airport Facilities Rev., MBIA, 0s, 2010 5,100 2,950,350
Atlanta, GA, Special Purpose Facilities Rev. (Delta
Airlines), 7.9s, 2018 1,000 1,057,360
Clayton County, GA, Development Authority,
Special Facilities Rev. (Delta Airlines),
7.625s, 2020 500 528,160
Commonwealth of Puerto Rico Ports Authority
(American Airlines), 6.25s, 2026 1,425 1,567,243
Fulton County, GA, Development Authority,
5.3s, 2013 1,500 1,522,725
-----------
$11,757,243
- ------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 12.4%
Appling County, GA, Development Authority
(Ogelthorpe Power Corp.), MBIA, 7.15s, 2021 $1,400 $ 1,607,494
Georgia Municipal Electric Authority, Power Rev.,
AMBAC, 5.5s, 2009 1,225 1,353,723
Georgia Municipal Electric Authority, Power Rev.,
AMBAC, 0s, 2013 1,675 861,151
Georgia Municipal Electric Authority, Power Rev.,
MBIA, 0s, 2008 2,500 1,699,675
Georgia Municipal Electric Authority, Power Rev.,
MBIA, 0s, 2009 1,500 972,330
Georgia Municipal Electric Authority, Power Rev.,
MBIA, 6.5s, 2020 1,250 1,531,275
Monroe County, GA, Development Authority,
Pollution Control Rev. (Oglethorpe Power),
6.8s, 2012 1,000 1,188,600
-----------
$ 9,214,248
- ------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - 4.0%
Richmond County, GA, Development Authority,
Nursing Home Refunding (Beverly Enterprises),
8.75s, 2011 $1,190 $ 1,334,228
Royston, GA, Hospital Authority Rev. (Cobb
Health), 7.375s, 2014 1,565 1,667,101
-----------
$ 3,001,329
- ------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 17.7%
Adel County, GA, Industrial Development
Authority, Pollution Control Rev
(Weyerhaeuser Co.), 9s, 2006 $1,000 $ 1,011,830
Cartersville, GA, Development Authority
Rev., Water & Wastewater Facilities
(Anheuser-Busch Cos., Inc.), 5.625s, 2009 1,500 1,648,080
Cartersville, GA, Development Authority
Rev., Water & Wastewater Facilities
(Anheuser-Busch Cos., Inc.), 7.4s, 2010 500 625,285
Cartersville, GA, Development Authority
Rev., Water & Wastewater Facilities
(Anheuser-Busch Cos., Inc.), 6.75s, 2012 1,000 1,098,870
Effingham County, GA, Development Authority,
Pollution Control Rev. (Fort Howard Corp.),
7.9s, 2005 1,750 1,843,975
Emanuel County, GA, Development Authority
(Figgie Properties), 7.95s, 2004 475 478,947
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Hershey Foods
Corp.), 6.6s, 2012 1,150 1,264,782
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Stone Container
Corp.), 7.4s, 2026 1,750 1,954,715
Savannah, GA, Economic Development Authority,
Industrial Development Rev. (Union Camp Corp.),
6.15s, 2017 1,000 1,143,870
Savannah, GA, Port Authority, Pollution Control
Rev. (Union Carbide Corp.), 7.55s, 2004 1,000 1,002,920
Wayne County, GA, Solid Waste Rev
(ITT-Rayonier, Inc.), 8s, 2015 1,000 1,078,420
-----------
$13,151,694
- ------------------------------------------------------------------------------------
Insured Health Care Revenue - 2.3%
Albany-Dougherty County, GA, Hospital Authority
Rev. (Phoebe Putney Memorial Hospital, Inc.),
AMBAC, 7.37s, 2013 ++++ $1,550 $ 1,752,043
- ------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 6.9%
Cobb County, GA, Housing Authority Rev
(Signature Place), 6.875s, 2017 $1,465 $ 1,562,569
Hinesville, GA, Leased Housing Corp. Rev
(Baytree Apartments), FHA, 6.7s, 2017 900 970,173
Marietta, GA, Development Authority Rev
(Southern Polytech), 6.25s, 2027 1,000 1,022,340
St. Mary's, GA (Cumberland Oaks Apartments),
FNMA, 7.375s, 2022 1,470 1,557,274
-----------
$ 5,112,356
- ------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 1.4%
Virgin Islands Public Finance Authority, 5.5s, 2018 $1,000 $ 1,024,360
- ------------------------------------------------------------------------------------
</TABLE>
14 - MGA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Single Family Housing Revenue - 2.4%
DeKalb County, GA, Housing Authority Rev.,
GNMA, 7.75s, 2022 $ 495 $ 515,825
Georgia Housing & Finance Authority, 0s, 2031 6,460 599,552
Georgia Residential Finance Authority Rev., FHA,
8s, 2020 ### 315 330,177
Georgia Residential Finance Authority Rev., FHA,
7.25s, 2021 320 344,563
-----------
$ 1,790,117
- ------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 5.0%
Brunswick, GA, Water & Sewer Rev., MBIA, 6.1s,
2014 $1,000 $ 1,177,240
Cartersville, GA, Water & Sewer Rev., AMBAC,
7.2s, 2012 2,225 2,411,566
Fulton County, GA, Water & Sewage Rev., FGIC,
6.375s, 2014 100 118,369
-----------
$ 3,707,175
- ------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $63,080,549) $71,344,938
- ------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.4%
- ------------------------------------------------------------------------------------
Burke County, GA, Development Authority
Pollution (Georgia Power Co.), due 09/01/25 $ 400 $ 400,000
Coweta County, GA Development Authority
(Georgia Power Co.), due 03/01/24 200 200,000
Georgia Hospital Financing Authority Rev
(Hospital Loan Program), due 03/01/01 800 800,000
Heard County, GA, Development Authority,
Pollution Control Rev. (Georgia Power Co.),
due 09/01/29 200 200,000
Putnam County, GA, Development Authority
(Georgia Power Co.), due 09/01/29 200 200,000
- ------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost 1,800,000
- ------------------------------------------------------------------------------------
Total Investments (Identified Cost, $64,880,549) $73,144,938
Other Assets, Less Liabilities - 1.6% 1,156,016
- ------------------------------------------------------------------------------------
Net assets - 100.0% $74,300,954
- ------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
MFS MARYLAND MUNICIPAL BOND FUND
Municipal Bonds - 95.3%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 11.6%
Anne Arundel County, MD, 4.9s, 2011 ### $1,005 $ 1,034,849
Baltimore, MD, Consolidated Public Improvement,
FGIC, 5.3s, 2009 700 761,362
Baltimore, MD, Consolidated Public Improvement,
MBIA, 7s, 2009 1,000 1,250,910
Baltimore, MD, Consolidated Public Improvement,
7.15s, 2009 2,120 2,664,819
Baltimore, MD, Consolidated Public Improvement,
FGIC, 5.3s, 2010 815 885,090
Baltimore, MD, Consolidated Public Improvement,
FGIC, 5.375s, 2011 900 981,432
Baltimore, MD, Consolidated Public Improvement,
FGIC, 5.375s, 2013 770 835,881
Howard County, MD, Metropolitan District,
0s, 2008 1,975 1,318,569
Montgomery County, MD, Public Improvement,
0s, 2009 4,000 2,554,800
Prince George's County, MD, 0s, 2007 5,110 3,541,179
State of Maryland, 9s, 1999 350 367,766
Washington, MD, Suburban Sanitation District,
6.1s, 2015 1,070 1,172,816
Washington, MD, Suburban Sanitation District,
5.25s, 2016 865 892,282
-----------
$18,261,755
- ------------------------------------------------------------------------------------
State and Local Appropriation - 12.1%
Calvert County, MD, Community Lease Rev.,
7.2s, 2010 $ 750 $ 805,050
Howard County, MD, Certificates of Participation,
8.15s, 2021 450 659,565
Howard County, MD, Certificates of Participation,
"A", 8s, 2019 805 1,153,308
Howard County, MD, Certificates of Participation,
"B", 8s, 2019 385 551,582
Howard County, MD, Certificates of Participation,
"C", 8s, 2019 680 974,222
Maryland Stadium Authority, Sports Facilities
Leasing Rev., AMBAC, 5.875s, 2012 1,000 1,101,780
Maryland Stadium Authority, Sports Facilities
Leasing Rev., 7.6s, 2019 2,580 2,739,418
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2005 2,495 1,913,965
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2006 2,490 1,822,829
Prince George's County, MD, Certificates of
Participation, MBIA, 0s, 2011 3,675 2,096,073
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2004 980 786,234
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2006 1,800 1,322,730
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2009 1,500 949,125
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2010 2,730 1,655,472
Prince George's County, MD, Industrial
Development Authority, MBIA, 0s, 2011 1,000 570,360
-----------
$19,101,713
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 14.1%
Baltimore, MD, Water Utility Rev., MBIA,
6.5s, 2020 $ 540 $ 566,131
Commonwealth of Puerto Rico, 6.5s, 2004 2,000 2,305,720
</TABLE>
15 - MMD
<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
Commonwealth of Puerto Rico, Public
Improvement Rev., 6.8s, 2021 $1,500 $ 1,683,285
Maryland Health & Higher Education Facilities
Authority Rev. (Good Samaritan Hospital),
5.7s, 2009 1,085 1,224,433
Maryland Health & Higher Educational Facilities
Authority Rev. (Howard County General
Hospital), 5.5s, 2021 4,000 4,249,720
Maryland Health & Higher Education Facilities
Authority Rev. (Kennedy Institute), 6.75s, 2001 500 538,660
Maryland Health & Higher Education Facilities
Authority Rev. (Sinai Hospital/Baltimore),
AMBAC, 7s, 2019 1,500 1,613,295
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland Medical
System), FGIC, 7s, 2017 1,840 2,029,925
Maryland Health & Higher Education Facilities
Authority Rev. (University of Maryland Medical
System), FGIC, 6.5s, 2021 1,000 1,072,220
Morgan, MD, State University Academic &
Auxiliary Facilities & Fees Rev., MBIA, 0s, 2006 1,135 828,278
Morgan, MD, State University Academic &
Auxiliary Facilities & Fees Rev., MBIA, 0s, 2008 1,400 921,578
Prince George's County, MD, Hospital Rev
(Dimensions Health Corp.), 7.25s, 2017 2,000 2,276,740
Puerto Rico Aqueduct & Sewer Authority Rev.,
10.25s, 2009 500 691,565
Puerto Rico Electric Power Authority Rev., 7s, 2011 1,000 1,105,990
Washington, MD, Suburban Sanitation District,
6.9s, 2013 1,045 1,149,134
-----------
$22,256,674
- ------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 1.4%
Prince George's County, MD (Potomac Electric),
5.75s, 2010 $2,000 $ 2,236,260
- ------------------------------------------------------------------------------------
Health Care Revenue - 6.1%
Berlin, MD, Hospital Rev. (Atlantic General
Hospital), 8.375s, 2022 $1,327 $ 1,428,567
Maryland Health & Higher Education Facilities
Authority Rev. (Bradford Oaks Nursing &
Rehabilation Center), 6.375s, 2027 1,500 1,547,925
Maryland Health & Higher Education Facilities
Authority Rev. (Doctors Community Hospital),
5.5s, 2024 2,000 2,014,720
Maryland Health & Higher Education Facilities
Authority Rev. (John Hopkins Hospital), 0s, 2010 2,000 1,175,560
Maryland Health & Higher Education Facilities
Authority Rev. (Medlantic Hospital Care Corp.),
8.375s, 2014 3,440 3,474,572
-----------
$ 9,641,344
- ------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 2.2%
Baltimore, MD, Port Facilities Rev. (duPont (E.I.)
de Nemours), 6.5s, 2011 $1,500 $ 1,653,420
Cecil County, MD, Commissioners Industrial
Development Rev. Board, 5.25s, 2006 1,000 1,072,840
Upper Potomac, MD, River Commission, Pollution
Control Rev. (Westvaco), 10.5s, 2004 150 150,750
Upper Potomac, MD, River Commission, Pollution
Control Rev. (Westvaco), 9.125s, 2015 500 509,350
-----------
$ 3,386,360
- ------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Insured Health Care Revenue - 7.8%
Maryland Health & Higher Education Facilities
Authority Rev. (Frederick Memorial Hospital),
FGIC, 5.25s, 2013 $4,550 $ 4,868,091
Maryland Health & Higher Education Facilities
Authority Rev. (Mercy Medical Center), FSA,
5.625s, 2017 1,800 1,945,530
Maryland Health & Higher Educational Authority
Rev. (Anne Arundel Medical Center), FSA,
5.1s, 2018 1,400 1,430,450
Maryland Health & Higher Educational Authority
Rev. (Upper Chesapeake Hospital), FSA,
5.5s, 2020 2,000 2,096,340
Maryland Industrial Development Finance
Authority, Economic Development Rev. (Bon
Secours Health System), FSA, 7.873s, 2022 ++++ 1,400 1,870,694
-----------
$12,211,105
- ------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.1%
Baltimore, MD, City Housing, FHA, 7.75s, 2009 $ 880 $ 888,800
Baltimore, MD, City Housing, FNMA, 7.25s, 2023 1,205 1,236,643
Maryland Community Development Administration,
7.375s, 2021 330 352,057
Maryland Community Development Administration,
8.4s, 2029 1,320 1,354,650
Maryland Community Development Administration,
0s, 2032 11,605 884,417
Maryland Community Development Administration,
7.8s, 2032 1,190 1,259,044
Montgomery County, MD, Housing Opportunities
Commission, 7.375s, 2032 510 541,396
-----------
$ 6,517,007
------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.7%
Commonwealth of Puerto Rico, Highway &
Transportation Authority, Highway Rev., FSA,
5.5s, 2013 $1,850 $ 2,060,142
Puerto Rico Highway & Transportation Authority
Rev., 6.625s, 2012 1,000 1,098,410
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2013 2,000 2,175,020
Virgin Islands Public Finance Authority,
5.875s, 2018 1,000 1,043,860
Virgin Islands Public Finance Authority, 5.5s, 2022 1,000 1,021,670
-----------
$ 7,399,102
- ------------------------------------------------------------------------------------
Single Family Housing Revenue - 4.5%
Maryland Community Development Administration,
7.7s, 2015 $ 580 $ 607,933
Maryland Community Development Administration,
5.875s, 2016 2,000 2,137,040
Maryland Community Development Administration,
8.25s, 2017 240 244,949
Maryland Community Development Administration,
6.75s, 2026 2,250 2,439,607
Maryland Community Development Administration,
7.625s, 2029 860 883,702
Maryland Community Development Administration,
7.85s, 2029 390 407,780
Montgomery County, MD, Housing Opportunities
Commission, 7.5s, 2017 365 383,297
-----------
$ 7,104,308
- ------------------------------------------------------------------------------------
</TABLE>
16 - MMD
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Solid Waste Revenue - 5.1%
Northeast Maryland, Waste Disposal Authority
(Montgomery County), 6s, 2006 $1,000 $ 1,110,270
Northeast Maryland, Waste Disposal Authority
(Montgomery County), MBIA, 6.3s, 2016 2,000 2,184,520
Northeast Maryland Waste Disposal Authority
(Southwest County Resource Recovery), MBIA,
7.2s, 2005 1,000 1,169,490
Prince George's County, MD (Solid Waste
Management), FSA, 5.25s, 2013 3,500 3,619,070
-----------
$ 8,083,350
- ------------------------------------------------------------------------------------
Universities - 10.4%
Annapolis, MD, Economic Development Rev. (St
John's College), 5.5s, 2018 $ 750 $ 770,535
Maryland Health & Higher Educational Facilities
Authority Rev. (John Hopkins University),
5.125s, 2020 6,000 6,122,220
Maryland Health & Higher Education Facilities
Authority Rev. (John Hopkins University),
5.625s, 2027 1,400 1,484,504
Maryland Health & Higher Education Facilities
Authority Rev. (Loyola College), MBIA, 5.5s, 2016 3,000 3,210,540
Maryland Health & Higher Education Facilities
Authority Rev. (Mt. St. Mary's College), 6.5s, 2009 646 695,702
Morgan, MD, State University, Academic &
Auxiliary Facilities Rev., MBIA, 6.05s, 2015 1,500 1,771,320
University of Maryland, Auxillary Facilities &
Tuition Rev., 0s, 2004 1,000 798,320
University of Maryland, Auxiliary Facilities &
Tuition Rev., 5s, 2009 1,385 1,458,156
-----------
$16,311,297
- ------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 4.6%
Baltimore, MD, Wastewater Rev., FGIC, 6s, 2015 $1,000 $ 1,167,280
Baltimore, MD, Wastewater Rev., MBIA,
5.65s, 2020 ++++ 2,000 2,254,780
Baltimore, MD, Wastewater Rev., MBIA, 7.32s, 2020 3,000 3,838,320
-----------
$ 7,260,380
- ------------------------------------------------------------------------------------
Other - 6.6%
Baltimore County, MD, 5.375s, 2013 $1,600 $ 1,648,448
Baltimore, MD, Convention Center Rev., MBIA,
5.5s, 2014 2,695 2,924,856
Maryland Industrial Development Finance
Authority (American Center for Physics),
6.625s, 2017 1,500 1,636,065
Maryland Industrial Development Finance
Authority (YMCA/Baltimore), 8s, 2012 2,825 3,245,897
Maryland Industrial Development Finance
Authority (YMCA/Baltimore), 8.25s, 2012 835 888,991
-----------
$10,344,257
- ------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $134,169,669) $150,114,912
- ------------------------------------------------------------------------------------
</TABLE>
Floating Rate Demand Notes - 3.4%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian), due 03/01/20 $ 300 $ 300,000
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University Hospital),
due 03/01/18 150 150,000
Bartow County, GA, Development Authority,
Pollution Control Rev. (Georgia Power Co.),
due 03/01/24 1,300 1,300,000
Burke County, GA, Development Authority,
Pollution Control Rev. (Vogtle), due 09/01/26 100 100,000
East Baton Rouge, LA, Pollution Control Rev
(Exxon Corp.), due 11/01/19 1,100 1,100,000
Georgia Hospital Financing Authority Rev
(Hospital Loan Program), due 03/01/01 100 100,000
Harris County, TX, Industrial Development Corp.,
Pollution Control Rev. (Exxon Corp.), due 03/01/24 100 100,000
Heard County, GA, Development Authority,
Pollution Control Rev. (Georgia Power Co.),
due 9/01/29 300 300,000
Hillsborough County, FL, Pollution Control Rev.,
due 05/15/18 100 100,000
Lincoln County, WY, Pollution Control Rev. (Exxon),
due 11/01/14 1,000 1,000,000
New York City, NY, due 08/01/22 100 100,000
Pinellas County, FL, Health Facility Authority,
due 12/01/15 700 700,000
- ------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $5,350,000
- ------------------------------------------------------------------------------------
Total Investments (Identified Cost, $139,519,669) $155,464,912
Other Assets, Less Liabilities - 1.3% 2,026,422
- ------------------------------------------------------------------------------------
Net assets - 100.0% $157,491,334
- ------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
17 - MMD
<PAGE>
Portfolio of Investments (Unaudited) - September 30, 1998
MFS MASSACHUSETTS MUNICIPAL BOND FUND
Municipal Bonds - 98.3%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 13.2%
Belmont, MA, 5s, 2015 $2,165 $ 2,220,359
Commonwealth of Massachusetts, 0s, 2004 10,000 7,847,700
Commonwealth of Massachusetts, 0s, 2005 2,000 1,520,900
Commonwealth of Massachusetts, 0s, 2005 2,000 1,500,780
Commonwealth of Massachusetts, AMBAC,
5.75s, 2010 3,000 3,416,850
Commonwealth of Massachusetts, FGIC, 0s, 2006 4,000 2,942,160
Commonwealth of Massachusetts, FGIC, 7s, 2009 1,250 1,545,912
Commonwealth of Massachusetts, FGIC,
5.75s, 2011 3,000 3,411,840
Commonwealth of Massachusetts, MBIA,
7.5s, 2004 2,850 3,373,573
Gloucester, MA, AMBAC, 7s, 2009 225 241,704
Gloucester, MA, AMBAC, 7s, 2010 215 230,962
Holyoke, MA, 8s, 2001 380 406,912
Lawrence, MA, AMBAC, 9.75s, 2002 600 712,938
Lowell, MA, 8.4s, 2009 1,000 1,119,130
Mashpee MA, MBIA, 6.25s, 2008 1,530 1,774,280
Northbridge, MA, 7.6s, 2001 325 355,813
Norton, MA, FGIC, 5.125s, 2014 1,000 1,029,950
Norton, MA, FGIC, 5.125s, 2015 1,000 1,023,520
Princeton, MA, AMBAC, 7.25s, 2009 490 525,476
-----------
$35,200,759
- ------------------------------------------------------------------------------------
State and Local Appropriation - 7.0%
Massachusetts Bay Transportation Authority,
7s, 2021 $5,000 $ 6,428,100
Massachusetts Bay Transportation Authority
(General Transportation), MBIA, 6.2s, 2016 10,400 12,313,496
-----------
$18,741,596
- ------------------------------------------------------------------------------------
Refunded and Special Obligations - 21.8%
Commonwealth of Massachusetts, AMBAC,
6.75s, 2001 $2,500 $ 2,747,475
Haverhill, MA, FGIC, 7s, 2002 1,250 1,410,638
Holyoke, MA, MBIA, 8s, 2001 1,700 1,888,003
Holyoke, MA, MBIA, 8.1s, 2002 500 587,420
Lowell, MA, 7.625s, 2001 4,875 5,443,522
Massachusetts Federally Assisted Housing,
0s, 2023 4,995 1,205,194
Massachusetts Health & Education Facilities
Authority (Brigham & Women's Hospital), MBIA,
6.75s, 2001 2,900 3,180,604
Massachusetts Health & Education Facilities
Authority (Charlton Memorial Hospital),
7.25s, 2001 1,700 1,884,076
Massachusetts Health & Education Facilities
Authority (Emerson Hospital), 8s, 2000 1,675 1,829,485
Massachusetts Health & Education Facilities
Authority (Fairview Extended Care Facility),
10.25s, 2001 2,000 2,334,040
Massachusetts Health & Education Facilities
Authority (Massachusetts Eye & Ear Infirmary),
7.375s, 2001 3,000 3,334,530
Massachusetts Health & Education Facilities
Authority (New England Deaconess Hospital),
7.2s, 2001 2,500 2,751,850
Massachusetts Health & Education Facilities
Authority (Suffolk University), 8s, 2000 1,750 1,901,638
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - continued
Massachusetts Industrial Finance Agency (Cape
Cod Health System), 8.5s, 2000 $ 500 $ 558,620
Massachusetts Industrial Finance Agency (Dexter
School), 7.5s, 2001 4,485 4,986,827
Massachusetts Industrial Finance Agency, Tunnel
Rev. (Mass. Turnpike), 9s, 2000 7,910 8,853,821
Massachusetts Health & Education Facilities
Authority (New England Deaconess Hospital),
6.875s, 2002 5,600 6,265,672
Massachusetts Industrial Finance Agency (Ogden
Haverhil), 5.6s, 2008 2,000 2,013,980
Massachusetts Port Authority, FGIC, 7.5s, 2000 1,060 1,146,093
Massachusetts Port Authority, 12.75s, 2002 410 484,448
Massachusetts Port Authority Rev., "C", ETM,
13s, 2013 780 1,339,681
Nantucket Island, MA, Land Bank, 7.75s, 2001 1,200 1,345,416
Palmer, MA, AMBAC, 7.7s, 2000 500 548,320
-----------
$58,041,353
- ------------------------------------------------------------------------------------
Airport and Port Revenue - 6.2%
Massachusetts Port Authority, 5.75s, 2010 $ 500 $ 565,125
Massachusetts Port Authority, 5s, 2015 5,600 5,662,832
Massachusetts Port Authority, FGIC, 7.5s, 2020 3,440 3,704,226
Massachusetts Port Authority (USAIR), MBIA,
5.625s, 2011 2,140 2,317,042
Puerto Rico Ports Authority (American Airlines),
6.3s, 2023 2,370 2,558,842
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 1,500 1,649,730
-----------
$16,457,797
- ------------------------------------------------------------------------------------
Health Care Revenue - 10.6%
Boston, MA, Industrial Development Finance
Authority Rev. (Stonehedge Convalescent
Center), 10.75s, 2011 $ 665 $ 690,024
Martha's Vineyard, MA, Land Bank (Land
Acquisition), 8.125s, 2011 3,600 3,887,172
Massachusetts Health & Education Facilities
Authority (Beth Israel Hospital), 7s, 2014 3,000 3,121,560
Massachusetts Health & Education Facilities
Authority (Children's Hospital), 6.125s, 2012 2,285 2,458,317
Massachusetts Health & Education Facilities
Authority (Dana Farber Cancer Institute),
6.25s, 2022 1,000 1,098,580
Massachusetts Health & Educational Facilities
Authority (Jordan Hospital), 5.25s, 2018 2,655 2,645,150
Massachusetts Health & Education Facilities
Authority (North Adams Regional Hospital),
6.625s, 2018 1,000 1,079,350
Massachusetts Industrial Finance Agency
(Beverly Enterprises), 8.375s, 2009 4,040 4,474,017
Massachusetts Industrial Finance Agency
(Evanswood), 7.625s, 2014 1,200 1,289,832
Massachusetts Industrial Finance Agency
(Massachusetts Biomedical Research), 0s, 2004 5,000 3,959,550
Massachusetts Industrial Finance Agency
(Massachusetts Biomedical Research), 0s, 2010 5,300 3,021,954
Massachusetts Industrial Finance Agency
(Needham/Hamilton House), 11s, 2010 400 425,956
-----------
$28,151,462
- ------------------------------------------------------------------------------------
</TABLE>
18 - MMA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Revenue (Corporate Guarantee) - 1.1%
Massachusetts Industrial Finance Agency
(Vinfen Corporation), 7.1s, 2018 $ 675 $ 740,880
Massachusetts Industrial Finance Agency
(Welch Foods Inc.), 5.6s, 2017 1,700 1,790,202
Springfield, MA, Industrial Development Finance
Agency (Terminal Building), 8s, 2001 308 316,420
-----------
$ 2,847,502
- ------------------------------------------------------------------------------------
Insured Health Care Revenue - 3.6%
Boston, MA, Industrial Development Finance
Authority Rev. (Alzheimers Center), FHA,
5.5s, 2012 $ 750 $ 794,483
Massachusetts Health & Education Facility
Authority (Beth Israel Hospital), AMBAC,
8.218s, 2025 ++++ 5,000 5,735,250
Massachusetts Health & Education Facility
Authority (Newton Wellsley Hospital), MBIA,
6.125s, 2015 1,000 1,118,520
Massachusetts Health & Education Facility
Authority (Partners Healthcare), MBIA,
5.375s, 2018 2,000 2,072,540
-----------
$ 9,720,793
- ------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.0%
Massachusetts Housing Finance Agency, FNMA,
6.9s, 2025 $1,700 $ 1,851,640
Somerville, MA, Housing Authority Rev
(Clarendon Hill), GNMA, 7.85s, 2010 910 958,803
-----------
$ 2,810,443
- ------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 3.9%
Commonwealth of Massachusetts, 5s, 2017 $4,000 $ 4,054,800
Virgin Islands Public Finance Authority,
5.875s, 2018 3,020 3,152,457
Virgin Islands Public Finance Authority, 5.5s, 2022 3,000 3,065,010
-----------
$10,272,267
- ------------------------------------------------------------------------------------
Single Family Housing Revenue - 2.3%
Massachusetts Housing Finance Agency,
8.1s, 2021 $1,150 $ 1,177,496
Massachusetts Housing Finance Agency,
7.95s, 2023 790 834,327
Massachusetts Housing Finance Agency,
6.6s, 2026 950 1,021,811
Massachusetts Industrial Finance Agency, MBIA,
6.35s, 2022 3,000 3,240,420
-----------
$ 6,274,054
- ------------------------------------------------------------------------------------
Turnpike Revenue - 3.8%
Massachusetts Turnpike Authority, MBIA, 0s, 2018 $10,000 $ 3,972,400
Massachusetts Turnpike Authority, Metropolitan
Highway System Rev., 5s, 2037 5,000 4,949,050
Massachusetts Turnpike Authority, Metropolitan
Highway System Rev., MBIA, 0s, 2019 3,500 1,317,365
-----------
$10,238,815
- ------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Universities - 13.5%
Massachusetts Health & Education Facility
Authority (Boston College), 5.25s, 2018 $3,500 $ 3,558,275
Massachusetts Health & Education Facility
Authority (Boston College), 5.25s, 2023 4,350 4,405,201
Massachusetts Health & Education Facility
Authority (Wheaton College), 5.25s, 2019 1,000 1,019,050
Massachusetts Industrial Finance Agency
(Babson College), 5.25s, 2027 3,000 3,051,420
Massachusetts Health & Education Facility
Authority (Boston University), MBIA,
9.183s, 2031 ###++++ 5,000 5,931,500
Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2004 1,000 792,240
Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2005 1,000 756,960
Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2009 1,000 623,290
Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2010 1,000 590,120
Massachusetts Industrial Finance Agency
(Brandeis University), MBIA, 0s, 2011 500 278,810
Massachusetts Industrial Finance Agency
(Belmont Hill School), 5.625s, 2020 1,250 1,313,475
Massachusetts Industrial Finance Agency
(College Of The Holy Cross), 5s, 2023 2,500 2,501,200
Massachusetts Industrial Finance Agency
(Concord Academy), 5.5s, 2027 1,000 1,020,920
Massachusetts Industrial Finance Agency
(Curry College), 8s, 2010 545 594,922
Massachusetts Industrial Finance Agency
(Curry College), 8s, 2014 1,850 2,001,978
Massachusetts Industrial Finance Agency
(Emerson College), 8.9s, 2018 1,000 1,090,710
Massachusetts Industrial Finance Agency (Groton
School), 5s, 2018 3,060 3,074,566
Massachusetts Industrial Finance Agency (Lesley
College), CONNIE LEE, 6.3s, 2025 2,000 2,239,220
Massachusetts Industrial Finance Agency (Tabor
Academy), 5.4s, 2018 1,000 1,013,830
-----------
$35,857,687
------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 8.5%
Massachusetts Water Resource Authority, MBIA,
0s, 2006 $2,500 $ 1,841,650
Massachusetts Water Resource Authority, AMBAC,
5.25s, 2015 5,000 5,351,500
Massachusetts Water Resource Authority, 5s, 2016 1,000 1,016,570
Massachusetts Water Resource Authority, 6.5s, 2019 8,470 10,300,791
Massachusetts Water Resource Authority, MBIA,
5.25s, 2020 4,000 4,082,520
-----------
$22,593,031
- ------------------------------------------------------------------------------------
</TABLE>
19 - MMA
<PAGE>
Portfolio of Investments (Unaudited) - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Other - 1.8%
Massachusetts Health & Education Facilities
Authority (Learning Center for Deaf Children),
9.25s, 2014 $2,250 $ 2,366,820
Massachusetts Health & Education Facilities
Authority (Learning Center for Deaf Children),
8s, 2020 1,500 1,564,830
Massachusetts Industrial Finance Agency
(Martha's Vineyard Long-Term Care Facility),
9.25s, 2022 **++ 3,000 792,000
-----------
$ 4,723,650
- ------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $236,955,273) $261,931,209
- ------------------------------------------------------------------------------------
</TABLE>
Floating Rate Demand Notes - 3.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Heard County, GA, Development Authority,
Pollution Control Rev. (Georgia Power Co.),
due 09/01/29 $1,000 $ 1,000,000
Massachusetts St Health & Education Facility,
Variable Rate-Cap Assets Prog-Ser D,
due 01/01/35 7,100 7,100,000
- ------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $8,100,000
- ------------------------------------------------------------------------------------
Total Investments (Identified Cost, $245,055,273) $270,031,209
Other Assets, Less Liabilities - (1.3)% (3,595,650)
- ------------------------------------------------------------------------------------
Net assets -100.0% $266,435,559
- ------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements Portfolio Footnotes:
**Non-income producing security in default.
###Security segregated as collateral for an open futures contract.
++Security valued by or at direction of the Trustees.
++++Inverse floating rate security.
</TABLE>
20 - MMA
<PAGE>
Financial Statements
Statements of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Alabama Arkansas California
September 30, 1998 Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments -
Identified cost $74,036,079 $123,902,032 $251,175,956
Unrealized appreciation 7,589,934 13,105,659 31,405,326
------------ ------------ ------------
Total investments, at value $81,626,013 $137,007,691 $282,581,282
Cash 25,071 47,526 49,925
Receivable for Fund shares sold 152,766 131,636 570,297
Receivable for investments sold 1,775,000 11,230 466,067
Interest receivable 1,268,528 1,888,224 3,355,619
Other assets 553 1,345 1,779
------------ ------------ ------------
Total assets $84,847,931 $139,087,652 $287,024,969
------------ ------------ ------------
Liabilities:
Distributions payable $ 200,888 $ 299,261 $ 623,997
Payable for Fund shares reacquired 3,000 740,934 180,971
Payable for daily variation margin on open futures contracts 2,474 4,875 45,906
Payable to affiliates -
Management fee 1,033 1,683 3,096
Shareholder servicing agent fee 258 421 871
Distribution and service fee 775 -- 10,930
Administrative fee 34 56 116
Accrued expenses and other liabilities 52,035 51,928 91,151
------------ ------------ ------------
Total liabilities $ 260,497 $ 1,099,158 $ 957,038
------------ ------------ ------------
Net assets $84,587,434 $137,988,494 $286,067,931
------------ ------------ ------------
Net assets consist of:
Paid-in capital $76,642,852 $132,529,902 $263,823,170
Unrealized appreciation on investments 7,584,889 13,096,380 31,136,423
Accumulated undistributed net realized
gain (loss) on investments 152,045 (7,491,055) (8,521,624)
Accumulated undistributed (distributions in excess of)
net investment income 207,648 (146,733) (370,038)
------------ ------------ ------------
Total $84,587,434 $137,988,494 $286,067,931
------------ ------------ ------------
Shares of beneficial interest outstanding:
Class A 6,845,893 12,549,181 38,309,306
Class B 903,159 852,215 8,689,485
Class C -- -- 1,022,032
------------ ------------ ------------
Total shares of beneficial interest outstanding 7,749,052 13,401,396 48,020,823
------------ ------------ ------------
Net assets:
Class A $74,726,554 $129,215,377 $228,205,919
Class B 9,860,880 8,773,117 51,763,427
Class C -- -- 6,098,585
------------ ------------ ------------
Total net assets $84,587,434 $137,988,494 $286,067,931
------------ ------------ ------------
Class A shares:
Net asset value per share
(net assets [divided by] shares of beneficial interest outstanding) $10.92 $10.30 $5.96
------ ------ -----
Offering price per share (100 [divided by] 95.25) $11.46 $10.81 $6.26
------ ------ -----
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $10.92 $10.29 $5.96
------ ------ -----
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) -- -- $5.97
------ ------ -----
</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 Assets and Liabilities (Unaudited) -- continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Florida Georgia
September 30, 1998 Fund Fund
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments -
Identified cost $81,898,830 $64,880,549
Unrealized appreciation 10,401,392 8,264,389
------------ ------------
Total investments, at value $92,300,222 $73,144,938
Cash 97,397 40,452
Receivable for Fund shares sold 76,886 140,480
Receivable for investments sold 545,000 45,000
Interest receivable 1,603,111 1,142,648
Other assets 11,511 472
------------ ------------
Total assets $94,634,127 $74,513,990
------------ ------------
Liabilities:
Distributions payable $ 233,137 $ 151,277
Payable for Fund shares reacquired 77,417 1,502
Payable for investments purchased -- --
Payable for daily variation margin on open futures contracts 15,438 2,031
Payable to affiliates -
Management fee 1,151 906
Shareholder servicing agent fee 288 226
Distribution and service fee 168 768
Administrative fee 38 30
Accrued expenses and other liabilities 51,691 56,296
------------ ------------
Total liabilities $ 379,328 $ 213,036
------------ ------------
Net assets $94,254,799 $74,300,954
------------ ------------
Net assets consist of:
Paid-in capital $91,804,983 $68,957,546
Unrealized appreciation on investments 10,311,504 8,260,525
Accumulated net realized loss on investments (7,894,982) (2,890,262)
Accumulated undistributed (distributions in excess of)
net investment income 33,294 (26,855)
------------ ------------
Total $94,254,799 $74,300,954
------------ ------------
Shares of beneficial interest outstanding:
Class A 7,407,809 5,510,704
Class B 1,761,144 1,168,141
------------ ------------
Total shares of beneficial interest outstanding 9,168,953 6,678,845
------------ ------------
Net assets:
Class A $76,153,705 $61,300,463
Class B 18,101,094 13,000,491
------------ ------------
Total net assets $94,254,799 $74,300,954
------------ ------------
Class A shares:
Net asset value per share
(net assets [divided by] shares of beneficial interest outstanding) $10.28 $11.12
------ ------
Offering price per share (100 [divided by] 95.25) $10.79 $11.67
------ ------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $10.28 $11.13
------ ------
<CAPTION>
Maryland Massachusetts
September 30, 1998 Fund Fund
- ----------------------------------------------------------------------- --------------- ----------------
<S> <C> <C>
Assets:
Investments -
Identified cost $139,519,669 $245,055,273
Unrealized appreciation 15,945,243 24,975,936
------------ ------------
Total investments, at value $155,464,912 $270,031,209
Cash 98,833 81,880
Receivable for Fund shares sold 150,898 212,994
Receivable for investments sold 50,000 135,000
Interest receivable 2,073,422 3,855,364
Other assets 974 1,672
------------ ------------
Total assets $157,839,039 $274,318,119
------------ ------------
Liabilities:
Distributions payable $ 275,946 $ 566,079
Payable for Fund shares reacquired 6,591 153,191
Payable for investments purchased -- 7,059,348
Payable for daily variation margin on open futures contracts 5,281 8,937
Payable to affiliates -
Management fee 1,922 3,251
Shareholder servicing agent fee 480 813
Distribution and service fee 1,934 2,930
Administrative fee 64 108
Accrued expenses and other liabilities 55,487 87,903
------------ ------------
Total liabilities $ 347,705 $ 7,882,560
------------ ------------
Net assets $157,491,334 $266,435,559
------------ ------------
Net assets consist of:
Paid-in capital $146,052,720 $245,476,985
Unrealized appreciation on investments 15,935,266 24,958,993
Accumulated net realized loss on investments (4,355,981) (3,514,324)
Accumulated undistributed (distributions in excess of)
net investment income (140,671) (486,095)
------------ ------------
Total $157,491,334 $266,435,559
------------ ------------
Shares of beneficial interest outstanding:
Class A 11,325,697 21,167,306
Class B 2,138,511 1,977,903
------------ ------------
Total shares of beneficial interest outstanding 13,464,208 23,145,209
------------ ------------
Net assets:
Class A $132,489,235 $243,654,788
Class B 25,002,099 22,780,771
------------ ------------
Total net assets $157,491,334 $266,435,559
------------ ------------
Class A shares:
Net asset value per share
(net assets [divided by] shares of beneficial interest outstanding) $11.70 $11.51
------ ------
Offering price per share (100 [divided by] 95.25) $12.28 $12.08
------ ------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $11.69 $11.52
------ ------
</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
22
<PAGE>
Financial Statements - continued
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Alabama Arkansas California
Six Months Ended September 30, 1998 Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net investment income:
Interest income $2,516,570 $3,951,865 $ 7,539,236
---------- ---------- -----------
Expenses -
Management fee $ 228,589 $ 379,876 $ 753,627
Trustees' compensation 10,452 9,293 8,865
Shareholder servicing agent fee 46,664 77,543 153,711
Distribution and service fee (Class A) 92,868 64,998 --
Distribution and service fee (Class B) 43,319 29,947 193,745
Distribution and service fee (Class C) -- -- 25,118
Administrative fee 6,222 10,339 20,425
Custodian fee 13,607 21,236 41,338
Printing 3,541 4,403 8,043
Postage 1,447 3,709 6,966
Auditing fees 16,190 15,691 15,191
Legal fees 821 396 2,330
Miscellaneous 19,549 27,460 37,707
---------- ---------- -----------
Total expenses $ 483,269 $ 644,891 $ 1,267,066
Fees paid indirectly (11,165) (14,945) (29,738)
Preliminary reduction of expenses by investment adviser (41,932) (69,708) (207,092)
---------- ---------- -----------
Net expenses $ 430,172 $ 560,238 $ 1,030,236
---------- ---------- -----------
Net investment income $2,086,398 $3,391,627 $ 6,509,000
---------- ---------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (59,697) $ (198,704) $ 148,539
Futures contracts (14,458) -- (181,937)
---------- ---------- -----------
Net realized loss on investments $ (74,155) $ (198,704) $ (33,398)
---------- ---------- -----------
Change in unrealized appreciation (depreciation) -
Investments $ 944,862 $1,705,079 $ 7,841,811
Futures contracts (7,660) (9,279) (268,903)
---------- ---------- -----------
Net unrealized gain on investments $ 937,202 $1,695,800 $ 7,572,908
---------- ---------- -----------
Net realized and unrealized gain on investments $ 863,047 $1,497,096 $ 7,539,510
---------- ---------- -----------
Increase in net assets from operations $2,949,445 $4,888,723 $14,048,510
---------- ---------- -----------
</TABLE>
See notes to financial statements
23
<PAGE>
Financial Statements - continued
Statements of Operations (Unaudited) -- continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Florida Georgia Maryland Massachusetts
Six Months Ended September 30, 1998 Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $2,672,436 $2,181,316 $4,400,326 $ 7,925,989
---------- ---------- ---------- -----------
Expenses -
Management fee $ 255,611 $ 197,423 $ 413,980 $ 711,904
Trustees' compensation 10,165 9,391 11,115 11,319
Shareholder servicing agent fee 52,178 40,306 84,517 145,335
Distribution and service fee (Class A) -- 74,897 223,513 416,584
Distribution and service fee (Class B) 66,162 58,683 112,660 101,627
Administrative fee 6,957 5,374 11,269 19,378
Custodian fee 15,798 13,274 24,730 41,816
Printing 3,581 3,122 7,314 11,296
Postage 2,074 1,129 5,451 6,583
Auditing fees 16,191 15,491 15,991 16,491
Legal fees -- 1,650 2,066 3,635
Miscellaneous 24,574 20,010 32,172 53,067
---------- ---------- ---------- -----------
Total expenses $ 453,291 $ 440,750 $ 944,778 $ 1,539,035
Fees paid indirectly (8,753) (11,477) (26,548) (24,702)
Preliminary reduction of expenses by investment adviser (46,898) (36,200) (75,907) (130,558)
---------- ---------- ---------- -----------
Net expenses $ 397,640 $ 393,073 $ 842,323 $ 1,383,775
---------- ---------- ---------- -----------
Net investment income $2,274,796 $1,788,243 $3,558,003 $ 6,542,214
---------- ---------- ---------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 161,853 $ (19,166) $ 50,231 $ 64,146
Futures contracts (60,636) -- -- --
---------- ---------- ---------- -----------
Net realized gain (loss) on investments $ 101,217 $ (19,166) $ 50,231 $ 64,146
---------- ---------- ---------- -----------
Change in unrealized appreciation (depreciation) -
Investments $1,641,711 $1,195,160 2,928,189 $ 3,724,088
Futures contracts (89,888) (3,864) (9,977) (16,943)
---------- ---------- ---------- -----------
Net unrealized gain on investments $1,551,823 $1,191,296 $2,918,212 $ 3,707,145
---------- ---------- ---------- -----------
Net realized and unrealized gain on investments $1,653,040 $1,172,130 $2,968,443 $ 3,771,291
---------- ---------- ---------- -----------
Increase in net assets from operations $3,927,836 $2,960,373 $6,526,446 $10,313,505
---------- ---------- ---------- -----------
</TABLE>
See notes to financial statements
24
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Alabama Arkansas California
Six Months Ended September 30, 1998 Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,086,398 $ 3,391,627 $ 6,509,000
Net realized loss on investments (74,155) (198,704) (33,398)
Net unrealized gain on investments 937,202 1,695,800 7,572,908
------------ ------------- -------------
Increase in net assets
from operations $ 2,949,445 $ 4,888,723 $ 14,048,510
------------ ------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $(1,879,789) $ (3,211,263) $ (5,461,562)
From net investment income (Class B) (186,149) (167,767) (949,121)
From net investment income (Class C) -- -- (98,317)
In excess of net investment income (Class A) -- -- (60,233)
In excess of net investment income (Class B) -- -- (10,468)
In excess of net investment income (Class C) -- -- (1,084)
------------ ------------- -------------
Total distributions declared to shareholders $(2,065,938) $ (3,379,030) $ (6,580,785)
------------ ------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 3,510,226 $ 4,252,462 $ 35,967,979
Net asset value of shares issued to shareholders
in reinvestment of distributions 832,690 1,573,275 2,828,830
Cost of shares reacquired (4,250,989) (10,789,261) (30,803,222)
------------ ------------- -------------
Net increase (decrease) in net assets from
Fund share transactions $ 91,927 $ (4,963,524) $ 7,993,587
------------ ------------- -------------
Total increase (decrease) in net assets $ 975,434 $ (3,453,831) $ 15,461,312
Net assets:
At beginning of period 83,612,000 141,442,325 270,606,619
------------ ------------- -------------
At end of period $84,587,434 $137,988,494 $286,067,931
------------ ------------- -------------
Accumulated undistributed (distributions in excess of)
net investment income $ 207,648 $ (146,733) $ (370,038)
------------ ------------- -------------
</TABLE>
See notes to financial statements
25
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets (Unaudited) -- continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Florida Georgia Maryland Massachusetts
Six Months Ended September 30, 1998 Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,274,796 $ 1,788,243 $ 3,558,003 $ 6,542,214
Net realized gain (loss) on investments 101,217 (19,166) 50,231 64,146
Net unrealized gain on investments 1,551,823 1,191,296 2,918,212 3,707,145
------------ ------------ ------------ -------------
Increase in net assets
from operations $ 3,927,836 $ 2,960,373 $ 6,526,446 $ 10,313,505
------------ ------------ ------------ -------------
Distributions declared to shareholders -
From net investment income (Class A) $(1,891,483) $(1,529,560) $ (3,035,123) $ (5,974,776)
From net investment income (Class B) (360,011) (255,156) (461,594) (442,903)
------------ ------------ ------------ -------------
Total distributions declared to shareholders $(2,251,494) $(1,784,716) $ (3,496,717) $ (6,417,679)
------------ ------------ ------------ -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 4,635,451 $ 5,029,569 $ 12,537,004 $ 28,305,128
Net asset value of shares issued to shareholders
in reinvestment of distributions 828,243 913,382 1,832,454 2,999,380
Cost of shares reacquired (7,315,362) (3,234,330) (7,547,468) (25,376,225)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets from
Fund share transactions $(1,851,668) $ 2,708,621 $ 6,821,990 $ 5,928,283
------------ ------------ ------------ -------------
Total increase (decrease) in net assets $ (175,326) $ 3,884,278 9,851,719 $ 9,824,109
Net assets:
At beginning of period 94,430,125 70,416,676 147,639,615 256,611,450
------------ ------------ ------------ -------------
At end of period $94,254,799 $74,300,954 $157,491,334 $266,435,559
------------ ------------ ------------ -------------
Accumulated undistributed (distributions in excess of)
net investment income $ 33,294 $ (26,855) $ (140,671) $ (486,095)
------------ ------------ ------------ -------------
</TABLE>
See notes to financial statements
26
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Alabama Arkansas California
Year Ended March 31, 1998 Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,259,413 $ 7,217,540 $ 13,417,525
Net realized gain on investments 804,239 504,739 3,073,681
Net unrealized gain on investments 2,739,036 6,362,830 12,733,420
------------ ------------ ------------
Increase in net assets
from operations $ 7,802,688 $ 14,085,109 $ 29,224,626
------------ ------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $(3,952,098) $ (6,904,570) $ (11,527,300)
From net investment income (Class B) (328,801) (312,970) (1,703,179)
From net investment income (Class C) -- -- (160,099)
From net realized gain on investments (Class A) (875,615) -- --
From net realized gain on investments (Class B) (85,133) -- --
In excess of net investment income (Class A) -- (21,863) --
In excess of net investment income (Class B) -- (991) --
------------ ------------ ------------
Total distributions declared to shareholders $(5,241,647) $ (7,240,394) $(13,390,578)
------------ ------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 4,086,612 $ 6,514,543 $ 49,807,648
Net asset value of shares issued to shareholders
in reinvestment of distributions 2,192,360 3,290,995 5,602,613
Cost of shares reacquired (9,437,201) (27,018,684) (73,799,364)
------------ ------------ ------------
Net decrease in net assets from
Fund share transactions $(3,158,229) $(17,213,146) $(18,389,103)
------------ ------------ ------------
Total decrease in net assets $ (597,188) $(10,368,431) $ (2,555,055)
Net assets:
At beginning of period 84,209,188 151,810,756 273,161,674
------------ ------------ ------------
At end of period $83,612,000 $141,442,325 $270,606,619
------------ ------------ ------------
Accumulated undistributed (distributions in excess of)
net investment income $ 187,188 $ (159,330) $ (298,253)
------------ ------------ ------------
</TABLE>
See notes to financial statements
27
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Florida Georgia Maryland Massachusetts
Year Ended March 31, 1998 Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,669,170 $ 3,576,730 $ 6,884,027 $ 13,061,948
Net realized gain (loss) on investments (678,935) 557,951 1,097,797 1,678,366
Net unrealized gain on investments 5,126,079 3,175,485 6,667,042 9,433,538
------------ ------------ ------------ ------------
Increase in net assets
from operations $ 9,116,314 $ 7,310,166 $ 14,648,866 $ 24,173,852
------------ ------------ ------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (4,017,401) $ (3,095,247) $ (6,063,937) $(12,306,601)
From net investment income (Class B) (664,633) (470,417) (820,090) (755,347)
In excess of net investment income (Class A) -- -- (111,652) (39,763)
In excess of net investment income (Class B) -- -- (15,100) (2,441)
------------ ------------ ------------ ------------
Total distributions declared to shareholders $ (4,682,034) $ (3,565,664) $ (7,010,779) $(13,104,152)
------------ ------------- ------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 18,201,517 $ 5,558,029 $ 12,014,517 $ 69,075,987
Net asset value of shares issued to shareholders
in reinvestment of distributions 1,719,736 1,841,422 3,703,002 6,284,160
Cost of shares reacquired (24,967,989) (10,564,901) (19,499,553) (79,896,216)
------------ ------------ ------------ ------------
Net decrease in net assets from
Fund share transactions $ (5,046,736) $ (3,165,450) $ (3,782,034) $ (4,536,069)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets $ (612,456) $ 579,052 $ 3,856,053 $ 6,533,631
Net assets:
At beginning of period 95,042,581 69,837,624 143,783,562 250,077,819
------------ ------------ ------------ ------------
At end of period $ 94,430,125 $ 70,416,676 $147,639,615 $256,611,450
------------ ------------ ------------ ------------
Accumulated undistributed (distributions in excess of)
net investment income $ 9,992 $ (30,382) $ (201,957) $ (610,630)
------------ ------------ ------------ ------------
</TABLE>
See notes to financial statements
28
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Alabama Fund
- ----------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
-------------
(Unaudited)
-------------
Class A
- ----------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.80
-------
Income from investment operations# -
Net investment income[sec] $ 0.28
Net realized and unrealized gain (loss) on
investments 0.11
-------
Total from investment operations $ 0.39
-------
Less distributions declared to shareholders -
From net investment income $ (0.27)
From net realized gain on investments --
In excess of net investment income --
In excess of net realized gain on investments --
-------
Total distributions declared to shareholders $ (0.27)
-------
Net asset value - end of period $ 10.92
-------
Total return++ 3.69%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.98%+
Net investment income 5.08%+
Portfolio turnover 5%
Net assets at end of period (000 omitted) $74,727
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge.
If the charge had been included, the results would have been lower.
[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 $ 0.27
Ratios (to average net assets):
Expenses## 1.08%+
Net investment income 4.98%+
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended March 31, Two Months
--------------------------------------------- Ended
March 31,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.48 $ 10.52 $ 10.34 $ 10.27 $ 10.98
------- ------- ------- ------- -------
Income from investment operations# -
Net investment income[sec] $ 0.55 $ 0.56 $ 0.55 $ 0.56 $ 0.09
Net realized and unrealized gain (loss) on
investments 0.45 0.04 0.18 0.09 (0.71)
------- ------- ------- ------- -------
Total from investment operations $ 1.00 $ 0.60 $ 0.73 $ 0.65 $ (0.62)
------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.55) $ (0.55) $ (0.55) $ (0.08)
From net realized gain on investments (0.13) (0.09) -- -- --
In excess of net investment income -- -- -- -- (0.01)
In excess of net realized gain on investments -- -- -- (0.03) --
------- ------- ------- ------- -------
Total distributions declared to shareholders $ (0.68) $ (0.64) $ (0.55) $ (0.58) $ (0.09)
------- ------- ------- ------- -------
Net asset value - end of period $ 10.80 $ 10.48 $ 10.52 $ 10.34 $ 10.27
------- ------- ------- ------- -------
Total return++ 9.72% 5.82% 7.13% 6.51% (5.66)%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.04% 1.10% 1.14% 1.15% 1.18%+
Net investment income 5.12% 5.28% 5.18% 5.47% 5.17%+
Portfolio turnover 21% 22% 37% 30% 4%
Net assets at end of period (000 omitted) $75,538 $76,928 $82,484 $83,805 $81,501
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on average
shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge. If the
charge had been included, the results would have been lower.
[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 $ 0.54 -- $ 0.54 $ 0.55 $ 0.09
Ratios (to average net assets):
Expenses## 1.11% -- 1.24% 1.25% 1.28%+
Net investment income 5.05% -- 5.08% 5.37% 5.07%+
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Year ended January 31,
- ------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.33 $ 9.95 $ 9.65 $ 9.53
------- ------- ------- -------
Income from investment operations# -
Net investment income[sec] $ 0.55 $ 0.56 $ 0.60 $ 0.59
Net realized and unrealized gain (loss) on
investments 0.69 0.41 0.41 0.08
------- ------- ------- -------
Total from investment operations $ 1.24 $ 0.97 $ 1.01 $ 0.67
------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.54) $ (0.58) $ (0.65) (0.55)
From net realized gain on investments (0.04) (0.01) (0.06) --
In excess of net investment income (0.01) -- (0.00)+++ --
In excess of net realized gain on investments -- -- -- --
------- ------- ------- -------
Total distributions declared to shareholders $ (0.59) $ (0.59) $ (0.71) $ (0.55)
------- ------- ------- -------
Net asset value - end of period $ 10.98 $ 10.33 $ 9.95 $ 9.65
------- ------- ------- -------
Total return++ 12.26% 10.08% 10.92% 7.31%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.21% 1.08% 0.95% 0.57%
Net investment income 5.13% 5.79% 6.19% 6.63%
Portfolio turnover 12% 17% 23% 64%
Net assets at end of period (000 omitted) $87,344 $67,678 $48,476 $22,076
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding. ##For fiscal years ending after September 1, 1995,
the Fund's expenses are calculated without reduction for fees paid
indirectly.
++Total returns for Class A shares do not include the applicable sales charge.
If the charge had been included, the results would have been lower.
[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 $ 0.54 $ 0.55 $ 0.59 $ 0.52
Ratios (to average net assets):
Expenses## 1.31% 1.18% 1.08% 1.33
Net investment income 5.03% 5.69% 6.06% 5.87%
</TABLE>
See notes to financial statements
29
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Alabama Fund
- -------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
September 30, -----------------------------------------------
1998 1998 1997 1996 1995
-------------------------------------------------------------
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.80 $10.48 $10.52 $10.34 $10.27
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income[sec] $ 0.24 $ 0.47 $ 0.47 $ 0.46 $ 0.47
Net realized and unrealized gain (loss) on
investments 0.11 0.45 0.04 0.18 0.09
------ ------ ------ ------ ------
Total from investment operations $ 0.35 $ 0.92 $ 0.51 $ 0.64 $ 0.56
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.23) $(0.47) $(0.47) $(0.46) $(0.46)
From net realized gain on investments -- (0.13) (0.08) -- --
In excess of net realized gain on investments -- -- -- -- (0.03)
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.23) $(0.60) $(0.55) $(0.46) $(0.49)
------ ------ ------ ------ ------
Net asset value - end of period $10.92 $10.80 $10.48 $10.52 $10.34
------ ------ ------ ------ ------
Total return 3.30%++ 8.91% 4.98% 6.25% 5.64%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses ## 1.73%+ 1.79% 1.90% 1.96% 1.97%
Net investment income 4.33%+ 4.36% 4.48% 4.34% 4.63%
Portfolio turnover 5% 21% 22% 37% 30%
Net assets at end of period (000 omitted) $9,861 $8,074 $7,281 $6,139 $4,396
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management 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 $ 0.23 $ 0.46 -- -- --
Ratios (to average net assets):
Expenses## 1.83%+ 1.86% -- -- --
Net investment income 4.23%+ 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 $10.98 $10.93
------ ------
Income from investment operations# -
Net investment income[sec] $ 0.08 $ 0.18
Net realized and unrealized gain (loss) on
investments (0.71) 0.07
------ ------
Total from investment operations $(0.63) $ 0.25
------ ------
Less distributions declared to shareholders -
From net investment income $(0.08) $(0.18)
From net realized gain on investments -- (0.02)
In excess of net realized gain on investments -- --
------ ------
Total distributions declared to shareholders $(0.08) $(0.20)
------ ------
Net asset value - end of period $10.27 $10.98
------ ------
Total return (5.79)%++ 2.29%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses ## 2.01%+ 1.98%+
Net investment income 4.30%+ 3.98%+
Portfolio turnover 4% 12%
Net assets at end of period (000 omitted) $2,849 $2,269
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to January 31, 1994, are based
on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management 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
30
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Arkansas Fund
- --------------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
(Unaudited)
--------------
Class A
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.18
--------
Income from investment operations# -
Net investment income[sec] $ 0.26
Net realized and unrealized gain (loss) on
investments 0.11
--------
Total from investment operations $ 0.37
--------
Less distributions declared to shareholders -
From net investment income $ (0.25)
From net realized gain on investments --
In excess of net investment income --
In excess of net realized gain on investments --
--------
Total distributions declared to shareholders $ (0.25)
--------
Net asset value - end of period $ 10.30
--------
Total return++ 3.69%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.79%+
Net investment income 4.93%+
Portfolio turnover 3%
Net assets at end of period (000 omitted) $129,215
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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
Ratios (to average net assets):
Expenses## 0.89%+
Net investment income 4.83%+
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------------------------------------
1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.72 $ 9.75 $ 9.66 $ 9.69
--------- -------- -------- -------
Income from investment operations# -
Net investment income[sec] $ 0.50 $ 0.50 $ 0.50 $ 0.53
Net realized and unrealized gain (loss) on
investments 0.46 (0.03) 0.09 0.02
--------- -------- -------- -------
Total from investment operations $ 0.96 $ 0.47 $ 0.59 $ 0.55
--------- -------- -------- -------
Less distributions declared to shareholders -
From net investment income $ (0.50) $ (0.50) $ (0.50) $ (0.53)
From net realized gain on investments -- -- -- --
In excess of net investment income (0.00)+++ -- -- --
In excess of net realized gain on investments -- -- -- (0.05)
--------- -------- -------- --------
Total distributions declared to shareholders $ (0.50) $ (0.50) $ (0.50) $ (0.58)
--------- -------- -------- --------
Net asset value - end of period $ 10.18 $ 9.72 $ 9.75 $ 9.66
--------- -------- -------- --------
Total return++ 10.06% 4.87% 6.19% 5.90%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.85% 0.92% 0.93% 0.75%
Net investment income 4.97% 5.14% 5.10% 5.51%
Portfolio turnover 15% 9% 6% 24%
Net assets at end of period (000 omitted) $ 134,072 $144,263 $172,907 $187,105
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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 $ 0.49 -- -- $ 0.52
Ratios (to average net assets):
Expenses## 0.92% -- -- 0.82%
Net investment income 4.90% -- -- 5.43%
<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 $ 10.47 $ 9.88 $ 9.53
--------- --------- --------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.56 $ 0.58
Net realized and unrealized gain (loss) on
investments (0.77) 0.60 0.35
--------- --------- --------
Total from investment operations $ (0.68) $ 1.16 $ 0.93
--------- --------- --------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.55) $ (0.58)
From net realized gain on investments -- (0.00)+++ --
In excess of net investment income (0.02) (0.02) --
In excess of net realized gain on investments -- (0.00)+++ --
--------- --------- --------
Total distributions declared to shareholders $ (0.10) $ (0.57) $ (0.58)
--------- --------- --------
Net asset value - end of period $ 9.69 $ 10.47 $ 9.88
--------- --------- --------
Total return++ (6.61)%++ 11.95% 10.11%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.75%+ 0.63% 0.16%+
Net investment income 5.21%+ 5.30% 6.04%+
Portfolio turnover 1% 3% 10%
Net assets at end of period (000 omitted) $ 195,042 $ 203,542 $124,644
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based
on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.09 $ 0.53 $ 0.52
Ratios (to average net assets):
Expenses## 0.96%+ 0.91% 0.75%+
Net investment income 5.01%+ 5.01% 5.45%+
</TABLE>
See notes to financial statements
31
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Arkansas Fund
- --------------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
---------------
(Unaudited)
- --------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.18
------
Income from investment operations# -
Net investment income[sec] $ 0.22
Net realized and unrealized gain (loss) on
investments 0.11
------
Total from investment operations $ 0.33
------
Less distributions declared to shareholders -
From net investment income $(0.22)
From net realized gain on investments --
In excess of net investment income --
In excess of net realized gain on investments --
------
Total distributions declared to shareholders $(0.22)
------
Net asset value - end of period $10.29
------
Total return 3.25%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.45%+
Net investment income 4.27%+
Portfolio turnover 3%
Net assets at end of period (000 omitted) $8,773
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.22
Ratios (to average net assets)
Expenses## 1.55%+
Net investment income 4.17%+
<CAPTION>
Year Ended March 31,
------------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.72 $ 9.75 $ 9.65 $ 9.69
------ ------ ------ ------
Income from investment operations# -
Net investment income[sec] $ 0.42 $ 0.42 $ 0.42 $ 0.42
Net realized and unrealized gain (loss) on
investments 0.46 (0.03) 0.10 0.01
------ ------ ------ ------
Total from investment operations $ 0.88 $ 0.39 $ 0.52 $ 0.43
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.42) $(0.42) $(0.42) $(0.42)
From net realized gain on investments -- -- -- --
In excess of net investment income (0.00)+++ -- -- --
In excess of net realized gain on investments -- -- -- (0.05)
------ ------ ------ ------
Total distributions declared to shareholders $(0.42) $(0.42) $(0.42) $(0.47)
------ ------ ------ ------
Net asset value - end of period $10.18 $ 9.72 $ 9.75 $ 9.65
------ ------ ------ ------
Total return 9.18% 4.05% 5.43% 4.67%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.65% 1.71% 1.76% 1.84%
Net investment income 4.15% 4.34% 4.27% 4.40%
Portfolio turnover 15% 9% 6% 24%
Net assets at end of period (000 omitted) $7,370 $7,548 $7,950 $7,231
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.41 -- -- $ 0.41
Ratios (to average net assets)
Expenses## 1.72% -- -- 1.91%
Net investment income 4.08% -- -- 4.33%
<CAPTION>
Two Months
Ended Period Ended
March 31, January 31,
1994 1994**
---------- ------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.47 $10.42
------ ------
Income from investment operations# -
Net investment income[sec] $ 0.07 $ 0.23
Net realized and unrealized gain (loss) on
investments (0.78) (0.04)
------ ------
Total from investment operations $(0.71) $ 0.19
------ ------
Less distributions declared to shareholders -
From net investment income $(0.07) $(0.14)
From net realized gain on investments -- (0.00)+++
In excess of net investment income (0.00)+++ (0.00)+++
In excess of net realized gain on investments -- (0.00)+++
------ ------
Total distributions declared to shareholders $(0.07) $(0.14)
------ ------
Net asset value - end of period $ 9.69 $10.47
------ ------
Total return (6.81)%++ 2.18%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.82%+ 1.75%+
Net investment income 4.11%+ 3.87%+
Portfolio turnover 1% 3%
Net assets at end of period (000 omitted) $5,895 $5,179
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.07 $ 0.12
Ratios (to average net assets)
Expenses## 2.02%+ 3.44%+
Net investment income 3.91%+ 2.18%+
</TABLE>
See notes to financial statements
32
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
California Fund
- -------------------------------------------------------------------------------------------
Six Months Year Ended
Ended March 31,
September 30, -----------
1998 1998
------------------------------
(Unaudited)
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.80 $ 5.47
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.14 $ 0.29
Net realized and unrealized gain (loss) on
investments 0.16 0.33
---------- --------
Total from investment operations $ 0.30 $ 0.62
---------- --------
Less distributions declared to shareholders -
From net investment income $ (0.14) $ (0.29)
From net realized gain on investments -- --
In excess of net investment income (0.00)+++ --
In excess of net realized gain on investments -- --
---------- --------
Total distributions declared to shareholders $ (0.14) $ (0.29)
---------- --------
Net asset value - end of period $ 5.96 $ 5.80
---------- --------
Total return++ 5.33%++ 11.51%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.61%+ 0.64%
Net investment income 4.90%+ 5.07%
Portfolio turnover 9% 49%
Net assets at end of period (000 omitted) $228,206 $222,421
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for the
periods indicated. If these fees had been incurred by the Fund, the net
investment income per share and the ratios would have been:
Net investment income $ 0.14 $ 0.28
Ratios (to average net assets):
Expenses## 0.76%+ 0.79%
Net investment income 4.75%+ 4.92%
<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 $ 5.52 $ 5.41 $ 5.47
-------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.30 $ 0.30 $ 0.31
Net realized and unrealized gain (loss) on
investments (0.05) 0.11 (0.05)
-------- -------- --------
Total from investment operations $ 0.25 $ 0.41 $ 0.26
-------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.30) $ (0.30) $ (0.31)
From net realized gain on investments -- -- --
In excess of net investment income -- (0.00)+++ (0.00)+++
In excess of net realized gain on investments -- -- (0.01)
-------- -------- --------
Total distributions declared to shareholders $ (0.30) $ (0.30) $ (0.32)
-------- -------- --------
Net asset value - end of period $ 5.47 $ 5.52 $ 5.41
-------- -------- --------
Total return++ 4.55% 7.86% 4.85%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.66% 0.66% 0.69%
Net investment income 5.36% 5.48% 5.80%
Portfolio turnover 78% 69% 57%
Net assets at end of period (000 omitted) $232,612 $259,817 $272,161
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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 $ 0.29 $ 0.29 $ 0.30
Ratios (to average net assets):
Expenses## 0.81% 0.81% 0.84%
Net investment income 5.21% 5.33% 5.65%
<CAPTION>
- ------------------------------------------------------------------------------------------------
Two Months Eleven Months
Ended Ended
March 31, January 31,
1994 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.95 $ 5.88
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.05 $ 0.30
Net realized and unrealized gain (loss) on
investments (0.48) 0.14
-------- --------
Total from investment operations $ (0.43) $ 0.44
-------- --------
Less distributions declared to shareholders -
From net investment income $ (0.04) $ (0.29)
From net realized gain on investments -- (0.07)
In excess of net investment income (0.01) (0.01)
In excess of net realized gain on investments -- --
-------- --------
Total distributions declared to shareholders $ (0.05) $ (0.37)
-------- --------
Net asset value - end of period $ 5.47 $ 5.95
-------- --------
Total return++ (7.21)%++ 7.64%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.68%+ 0.60%+
Net investment income 5.27%+ 4.99%+
Portfolio turnover 8% 38%
Net assets at end of period (000 omitted) $313,790 $356,419
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for the
periods indicated. If these fees had been incurred by the Fund, the net
investment income per share and the ratios would have been:
Net investment income $ 0.05 $ 0.29
Ratios (to average net assets):
Expenses## 0.83%+ 0.78%+
Net investment income 5.12%+ 4.82%+
</TABLE>
See notes to financial statements
33
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
California Fund
- --------------------------------------------------------------------------------
Year Ended February 28, 1993
- --------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.42
--------
Income from investment operations -
Net investment income[sec] $ 0.34
Net realized and unrealized gain (loss) on investments 0.47
--------
Total from investment operations $ 0.81
--------
Less distributions declared to shareholders -
From net investment income $ (0.34)
From net realized gain on investments (0.01)
--------
Total distributions declared to shareholders $ (0.35)
--------
Net asset value - end of period $ 5.88
--------
Total return++ 15.55%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 0.39%
Net investment income 6.18%
Portfolio turnover 64%
Net assets at end of period (000 omitted) $272,179
++Total returns for Class A shares do not include the applicable sales charge
(except for reinvested dividends prior to October 1, 1989). If the charge
had been included, the results would have been lower.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.32
Ratios (to average net assets):
Expenses 0.77%
Net investment income 5.80%
<CAPTION>
Year Ended February 28, 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 $ 5.26 $ 5.19 $ 5.06 $ 5.08 $ 5.38
-------- ------- ------- ------- -------
Income from investment operations -
Net investment income[sec] $ 0.35 $ 0.33 $ 0.33 $ 0.32 $ 0.31
Net realized and unrealized gain (loss) on investments 0.20 0.07 0.13 (0.02) (0.29)
-------- ------- ------- ------- -------
Total from investment operations $ 0.55 $ 0.40 $ 0.46 $ 0.30 $ 0.02
-------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.37) $ (0.33) $ (0.33) $ (0.32) $ (0.31)
From net realized gain on investments (0.02) -- -- -- (0.01)
-------- ------- ------- ------- -------
Total distributions declared to shareholders $ (0.39) $ (0.33) $ (0.33) $ (0.32) $ (0.32)
-------- ------- ------- ------- -------
Net asset value - end of period $ 5.42 $ 5.26 $ 5.19 $ 5.06 $ 5.08
-------- ------- ------- ------- -------
Total return++ 10.69% 8.03% 9.28% 6.07% 0.83%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 0.40% 0.87% 1.00% 1.28% 1.20%
Net investment income 6.53% 6.39% 6.35% 6.35% 6.33%
Portfolio turnover 73% 102% 243% 188% 240%
Net assets at end of period (000 omitted) $177,291 $84,551 $68,879 $59,212 $59,479
++Total returns for Class A shares do not include the applicable sales charge
(except for reinvested dividends prior to October 1, 1989). If the charge
had been included, the results would have been lower.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.33 -- -- -- --
Ratios (to average net assets):
Expenses 0.79% -- -- -- --
Net investment income 6.14% -- -- -- --
</TABLE>
See notes to financial statements
34
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
California Fund
- --------------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
(Unaudited)
----------------
Class B
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.80
-------
Income from investment operations# -
Net investment income[sec] $ 0.12
Net realized and unrealized gain (loss) on
investments 0.16
-------
Total from investment operations $ 0.28
-------
Less distributions declared to shareholders -
From net investment income $ (0.12)
From net realized gain on investments --
In excess of net investment income (0.00)+++
In excess of net realized gain on investments --
-------
Total distributions declared to shareholders $ (0.12)
-------
Net asset value - end of period $ 5.96
-------
Total return 4.90%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.45%+
Net investment income 4.06%+
Portfolio turnover 9%
Net assets at end of period (000 omitted) $51,763
**For the period from the inception of Class B, September 7, 1993,
through January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding. ##For fiscal years ending after September 1,
1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.12
Ratios (to average net assets):
Expenses## 1.60%+
Net investment income 3.91%+
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
----------------------------------------------------
1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.47 $ 5.52 $ 5.41 $ 5.47
------- ------- ------- -------
Income from investment operations# -
Net investment income[sec] $ 0.24 $ 0.25 $ 0.26 $ 0.25
Net realized and unrealized gain (loss) on
investments 0.33 (0.05) 0.11 (0.05)
------- ------- ------- -------
Total from investment operations $ 0.57 $ 0.20 $ 0.37 $ 0.20
------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income (0.24) $ (0.25) $ (0.26) $ (0.25)
From net realized gain on investments -- -- -- --
In excess of net investment income -- -- (0.00)+++ --
In excess of net realized gain on investments -- -- -- (0.01)
------- ------- ------- -------
Total distributions declared to shareholders $ (0.24) $ (0.25) $ (0.26) $ (0.26)
------- ------- ------- -------
Net asset value - end of period $ 5.80 $ 5.47 $ 5.52 $ 5.41
------- ------- ------- -------
Total return 10.62% 3.64% 6.93% 3.73%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.44% 1.54% 1.54% 1.76%
Net investment income 4.26% 4.48% 4.59% 4.72%
Portfolio turnover 49% 78% 69% 57%
Net assets at end of period (000 omitted) $43,790 $36,694 $34,675 $29,057
**For the period from the inception of Class B, September 7,
1993, through January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31,
1994, are based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.23 $ 0.24 $ 0.24 $ 0.04
Ratios (to average net assets):
Expenses## 1.59% 1.69% 1.91% 1.83%
Net investment income 4.11% 4.33% 4.57% 4.04%
<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 $ 5.95 $ 6.02
------- -------
Income from investment operations# -
Net investment income[sec] $ 0.04 $ 0.10
Net realized and unrealized gain (loss) on
investments (0.48) --
------- -------
Total from investment operations $ (0.44) $ 0.10
------- -------
Less distributions declared to shareholders -
From net investment income $ (0.04) $ (0.10)
From net realized gain on investments -- (0.07)
In excess of net investment income (0.00)+++ (0.00)+++
In excess of net realized gain on investments -- --
------- -------
Total distributions declared to shareholders $ (0.04) $ (0.17)
------- -------
Net asset value - end of period $ 5.47 $ 5.95
------- -------
Total return (7.38)%++ 1.68%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.69%+ 1.60%+
Net investment income 4.18%+ 3.64%+
Portfolio turnover 8% 38%
Net assets at end of period (000 omitted) $21,252 $19,360
**For the period from the inception of Class B, September 7, 1993,
through January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.09 --
Ratios (to average net assets):
Expenses## 1.81%+ --
Net investment income 3.43%+ --
</TABLE>
See notes to financial statements
35
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
California Fund
- --------------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
-------------
(Unaudited)
- --------------------------------------------------------------------------------
Class C
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.81
-------
Income from investment operations# -
Net investment income[sec] $ 0.12
Net realized and unrealized gain (loss) on investments 0.16
-------
Total from investment operations $ 0.28
-------
Less distributions declared to shareholders -
From net investment income $ (0.12)
In excess of net investment income (0.00)+++
In excess of net realized gain on investments --
-------
Total distributions declared to shareholders $ (0.12)
-------
Net asset value - end of period $ 5.97
-------
Total return 4.80%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.61%+
Net investment income 3.90%+
Portfolio turnover 9%
Net assets at end of period (000 omitted) $ 6,099
***For the period from the inception of Class C, January 3, 1994, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for the
periods indicated. If these fees had been incurred by the Fund, the net
investment income per share and the ratios would have been:
Net investment income $ 0.11
Ratios (to average net assets):
Expenses## 1.76%+
Net investment income 3.75%+
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
---------------------------------------------------
1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 5.48 $ 5.53 $ 5.42 $ 5.48
------ ------ ------ ------
Income from investment operations# -
Net investment income[sec] $ 0.23 $ 0.24 $ 0.25 $ 0.26
Net realized and unrealized gain (loss) on investments 0.33 (0.05) 0.11 (0.06)
------ ------ ------ ------
Total from investment operations $ 0.56 $ 0.19 $ 0.36 $ 0.20
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.23) $(0.24) $(0.25) $(0.25)
In excess of net investment income -- -- (0.00)+++ --
In excess of net realized gain on investments -- -- -- (0.01)
------ ------ ------ ------
Total distributions declared to shareholders $(0.23) $(0.24) $(0.25) $(0.26)
------ ------ ------ ------
Net asset value - end of period $ 5.81 $ 5.48 $ 5.53 $ 5.42
------ ------ ------ ------
Total return 10.39% 3.51% 6.77% 3.79%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.64% 1.66% 1.67% 1.69%
Net investment income 4.08% 4.37% 4.47% 4.79%
Portfolio turnover 49% 78% 69% 57%
Net assets at end of period (000 omitted) $4,396 $3,856 $4,353 $3,858
***For the period from the inception of Class C, January 3, 1994, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for 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 $ 0.22 $ 0.23 $ 0.24 $ 0.25
Ratios (to average net assets):
Expenses## 1.79% 1.81% 1.82% 1.84%
Net investment income 3.93% 4.22% 4.32% 4.64%
<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 $ 5.95 $ 5.89
------ ------
Income from investment operations# -
Net investment income[sec] $ 0.03 $ 0.01
Net realized and unrealized gain (loss) on investments (0.46) 0.06
------ ------
Total from investment operations $(0.43) $ 0.07
------ ------
Less distributions declared to shareholders -
From net investment income $(0.04) $(0.01)
In excess of net investment income (0.00)+++ (0.00)+++
In excess of net realized gain on investments -- --
------ ------
Total distributions declared to shareholders $(0.04) $(0.01)
------ ------
Net asset value - end of period $ 5.48 $ 5.95
------ ------
Total return (7.22)%++ 1.25%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.64%+ 2.02%+
Net investment income 3.92%+ 1.78%+
Portfolio turnover 8% 38%
Net assets at end of period (000 omitted) $1,701 $ 917
***For the period from the inception of Class C, January 3, 1994, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for the
periods indicated. If these fees had been incurred by the Fund, the net
investment income per share and the ratios would have been:
Net investment income $ 0.03 --
Ratios (to average net assets):
Expenses## 1.80%+ 3.53%+
Net investment income 3.77%+ 0.27%+
</TABLE>
See notes to financial statements
36
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Florida Fund
- -----------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
-------------
(Unaudited)
- -----------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.10
---------
Income from investment operations# -
Net investment income[sec] $ 0.25
Net realized and unrealized gain (loss) on
investments 0.18
---------
Total from investment operations $ 0.43
---------
Less distributions declared to shareholders -
From net investment income $ (0.25)
From net realized gain on investments --
In excess of net investment income --
In excess of net realized gain on investments --
---------
Total distributions declared to shareholders $ (0.25)
---------
Net asset value - end of period $ 10.28
---------
Total return++ 4.34%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.73%+
Net investment income 5.02%+
Portfolio turnover 3%
Net assets at end of period (000 omitted) $ 76,154
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For the fiscal years ending after September 1, 1995, the Fund's expenses
are calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge.
If the charge had been included, the results would have been lower.
[sec]The investment adviser and/or distributor voluntarily waived a portion of
their management fee and/or distribution fee, respectively, for certain of
the periods indicated. If these fees had been incurred by the Fund, the net
investment income per share and the ratios would have been:
Net investment income $ 0.24
Ratios (to average net assets):
Expenses## 0.83%+
Net investment income 4.92%+
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------------------------------
1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.64 $ 9.82 $ 9.60 $ 9.65
------- ------- ------- -------
Income from investment operations# -
Net investment income[sec] $ 0.50 $ 0.51 $ 0.52 $ 0.54
Net realized and unrealized gain (loss) on
investments 0.46 (0.18) 0.22 0.02
------- ------- ------- -------
Total from investment operations $ 0.96 $ 0.33 $ 0.74 $ 0.56
------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.50) $ (0.51) $ (0.52) $ (0.54)
From net realized gain on investments -- -- -- (0.04)
In excess of net investment income -- -- (0.00)+++ --
In excess of net realized gain on investments -- -- -- (0.03)
------- ------- ------- -------
Total distributions declared to shareholders $ (0.50) $ (0.51) $ (0.52) $ (0.61)
------- ------- ------- -------
Net asset value - end of period $ 10.10 $ 9.64 $ 9.82 $ 9.60
------- ------- ------- -------
Total return++ 10.16% 3.43% 7.81% 6.07%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.78% 0.86% 0.86% 0.60%
Net investment income 5.03% 5.26% 5.26% 5.75%
Portfolio turnover 14% 24% 56% 131%
Net assets at end of period (000 omitted) $77,711 $80,342 $87,553 $89,894
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding. ##For the fiscal years ending after September
1, 1995, the Fund's expenses are calculated without reduction for fees
paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[sec]The investment adviser and/or 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 $ 0.49 -- $ 0.52 $ 0.52
Ratios (to average net assets):
Expenses## 0.85% -- 0.90% 0.83%
Net investment income 4.96% -- 5.22% 5.52%
<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 $ 10.63 $ 9.89 $ 9.53
-------- -------- -------
Income from investment operations# -
Net investment income[sec] $ 0.09 $ 0.57 $ 0.58
Net realized and unrealized gain (loss) on
investments (0.98) 0.86 0.36
-------- -------- -------
Total from investment operations $ (0.89) $ 1.43 $ 0.94
-------- -------- -------
Less distributions declared to shareholders -
From net investment income $ (0.08) $ (0.57) $ (0.58)
From net realized gain on investments -- (0.11) --
In excess of net investment income (0.01) (0.01) --
In excess of net realized gain on investments -- -- --
-------- -------- -------
Total distributions declared to shareholders $ (0.09) $ (0.69) $ (0.58)
-------- -------- -------
Net asset value - end of period $ 9.65 $ 10.63 $ 9.89
-------- -------- -------
Total return++ (8.39)%++ 14.71% 10.28%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.77%+ 0.49% 0.05%+
Net investment income 5.15%+ 5.42% 6.27%+
Portfolio turnover 19% 53% 54%
Net assets at end of period (000 omitted) $108,579 $124,131 $74,329
*For the period from the commencement of the Fund's investment operations,
February 3, 1992, through January 31, 1993.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For the fiscal years ending after September 1, 1995, the Fund's expenses
are calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[sec]The investment adviser and/or distributor voluntarily waived a portion of
their management fee and/or distribution fee, respectively, for certain of
the periods indicated. If these fees had been incurred by the Fund, the net
investment income per share and the ratios would have been:
Net investment income $ 0.08 $ 0.52 $ 0.51
Ratios (to average net assets):
Expenses## 1.12%+ 0.93% 0.81%+
Net investment income 4.80%+ 4.97% 5.51%+
</TABLE>
See notes to financial statements
37
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Florida Fund
- --------------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
-------------
(Unaudited)
- --------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.09
-------
Income from investment operations# -
Net investment income[sec] $ 0.22
Net realized and unrealized gain (loss) on investments 0.18
-------
Total from investment operations $ 0.40
-------
Less distributions declared to shareholders -
From net investment income $ (0.21)
From net realized gain on investments --
In excess of net investment income --
In excess of net realized gain on investments --
-------
Total distributions declared to shareholders $ (0.21)
-------
Net asset value - end of period $ 10.28
-------
Total return 4.04%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.51%+
Net investment income 4.25%+
Portfolio turnover 3%
Net assets at end of period (000 omitted) $18,101
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or 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 $ 0.20
Ratios (to average net assets):
Expenses## 1.60%+
Net investment income 4.15%+
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
---------------------------------------------------
1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.64 $ 9.82 $ 9.60 $ 9.64
------- ------- ------- --------
Income from investment operations# -
Net investment income[sec] $ 0.42 $ 0.43 $ 0.43 $ 0.43
Net realized and unrealized gain (loss) on investments 0.45 (0.18) 0.22 0.04
Total from investment operations $ 0.87 $ 0.25 $ 0.65 $ 0.47
-------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.42) $ (0.43) $ (0.43) $ (0.44)
From net realized gain on investments -- -- -- (0.04)
In excess of net investment income -- -- (0.00)+++ --
In excess of net realized gain on investments -- -- -- (0.03)
-------- -------- -------- --------
Total distributions declared to shareholders $ (0.42) $ (0.43) $ (0.43) $ (0.51)
-------- -------- -------- --------
Net asset value - end of period $ 10.09 $ 9.64 $ 9.82 $ 9.60
-------- -------- -------- --------
Total return 9.18% 2.56% 6.88% 5.06%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.58% 1.72% 1.74% 1.68%
Net investment income 4.22% 4.40% 4.36% 4.63%
Portfolio turnover 14% 24% 56% 131%
Net assets at end of period (000 omitted) $16,719 $14,701 $14,448 $12,667
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or 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 $ 0.41 -- $ 0.43 $ 0.41
Ratios (to average net assets):
Expenses## 1.65% -- 1.78% 1.91%
Net investment income 4.15% -- 4.33% 4.40%
<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 $10.62 $10.69
------ ------
Income from investment operations# -
Net investment income[sec] $ 0.07 $ 0.18
Net realized and unrealized gain (loss) on investments (0.98) 0.03
Total from investment operations $(0.91) $ 0.21
------ ------
Less distributions declared to shareholders -
From net investment income $(0.06) $(0.17)
From net realized gain on investments -- (0.10)
In excess of net investment income (0.01) (0.01)
In excess of net realized gain on investments -- --
Total distributions declared to shareholders $(0.07) $(0.28)
------ ------
Net asset value - end of period $ 9.64 $10.62
------ ------
Total return (8.55)%++ 4.87%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.82%+ 1.64%+
Net investment income 4.08%+ 3.82%+
Portfolio turnover 19% 53%
Net assets at end of period (000 omitted) $7,995 $7,244
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based
on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or distributor voluntarily waived a portion of
their management fee and/or distribution fee, respectively, for certain of
the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.06 $ 0.16
Ratios (to average net assets):
Expenses## 2.17%+ 2.09%+
Net investment income 3.72%+ 3.38%+
</TABLE>
See notes to financial statements
38
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Georgia Fund
- --------------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
-------------
(Unaudited)
- --------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.95
-------
Income from investment operations# -
Net investment income[sec] $ 0.28
Net realized and unrealized gain (loss) on
investments 0.17
-------
Total from investment operations $ 0.45
-------
Less distributions declared to shareholders -
From net investment income $ (0.28)
From net realized gain on investments --
In excess of net investment income --
In excess of net realized gain on investments --
-------
Total distributions declared to shareholders $ (0.28)
-------
Net asset value - end of period $ 11.12
-------
Total return++ 4.16%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.00%+
Net investment income 5.09%+
Portfolio turnover 6%
Net assets at end of period (000 omitted) $61,300
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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 $ 0.27
Ratios (to average net assets):
Expenses## 1.10%+
Net investment income 4.99%+
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
---------------------------------------------------
1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.38 $ 10.47 $ 10.35 $ 10.38
------- ------- ------- -------
Income from investment operations# -
Net investment income[sec] $ 0.56 $ 0.56 $ 0.54 $ 0.57
Net realized and unrealized gain (loss) on
investments 0.56 (0.10) 0.12 --
------- ------- --------- --------
Total from investment operations $ 1.12 $ 0.46 $ 0.66 $ 0.57
------- ------- --------- --------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.55) $ (0.54) $ (0.56)
From net realized gain on investments -- -- -- (0.01)
In excess of net investment income -- -- (0.00)+++ --
In excess of net realized gain on investments -- -- -- (0.03)
-------- -------- --------- ---------
Total distributions declared to shareholders $ (0.55) $ (0.55) $ (0.54) $ (0.60)
-------- -------- --------- ---------
Net asset value - end of period $ 10.95 $ 10.38 $ 10.47 $ 10.35
-------- -------- --------- ---------
Total return++ 11.02% 4.47% 6.48% 5.65%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.03% 1.03% 1.17% 1.14%
Net investment income 5.14% 5.34% 5.11% 5.50%
Portfolio turnover 18% 27% 65% 56%
Net assets at end of period (000 omitted) $59,546 $59,843 $68,183 $74,432
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been
lower.
[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 $ 0.55 $ 0.55 $ 0.53 $ 0.56
Ratios (to average net assets):
Expenses## 1.13% 1.10% 1.27% 1.24%
Net investment income 5.04% 5.27% 5.01% 5.40%
<CAPTION>
- --------------------------------------------------------------------------------
Two Months
Ended
March 31,
1994
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.30
-------
Income from investment operations# -
Net investment income[sec] $ 0.09
Net realized and unrealized gain (loss) on
investments (0.92)
-------
Total from investment operations $ (0.83)
-------
Less distributions declared to shareholders -
From net investment income $ (0.06)
From net realized gain on investments --
In excess of net investment income (0.03)
In excess of net realized gain on investments --
-------
Total distributions declared to shareholders $ (0.09)
-------
Net asset value - end of period $ 10.38
-------
Total return++ (7.34)%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.18%+
Net investment income 5.05%+
Portfolio turnover 5%
Net assets at end of period (000 omitted) $85,878
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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 $ 0.09
Ratios (to average net assets):
Expenses## 1.28%+
Net investment income 4.95%+
</TABLE>
See notes to financial statements
39
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Georgia Fund
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended January 31,
---------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.57 $ 10.22 $ 9.83 $ 9.73 $ 9.73
------- ------- ------- ------- -------
Income from investment operations -
Net investment income[sec] $ 0.57 $ 0.58 $ 0.61 $ 0.63 $ 0.66
Net realized gain on investments 0.75 0.38 0.46 0.12 0.02
------- ------- ------- ------- -------
Total from investment operations $ 1.32 $ 0.96 $ 1.07 $ 0.75 $ 0.68
------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.60) $ (0.66) $ (0.63) $ (0.66)
From net realized gain on investments (0.01) (0.01) (0.02) (0.02) (0.02)
In excess of net investment income (0.03) -- -- -- --
------- ------- ------- ------- -------
Total distributions declared to shareholders $ (0.59) $ (0.61) $ (0.68) $ (0.65) $ (0.68)
------- ------- ------- ------- -------
Net asset value - end of period $ 11.30 $ 10.57 $ 10.22 $ 9.83 $ 9.73
------- ------- ------- ------- -------
Total return++ 12.71% 9.56% 11.29% 8.06% 7.19%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 1.21% 1.08% 0.99% 0.74% 0.42%
Net investment income 5.10% 5.75% 6.08% 6.46% 6.72%
Portfolio turnover 14% 27% 36% 71% 99%
Net assets at end of period (000 omitted) $94,407 $64,649 $47,869 $29,214 $12,628
*For the period from the commencement of the Fund's investment operations,
June 6, 1988, through January 31, 1989.
+Annualized.
++Total returns for Class A shares do not include the applicable sales charge
(except for reinvested dividends prior to October 1, 1989). 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 $ 0.57 $ 0.60 $ 0.59 $ 0.57
Ratios (to average net assets):
Expenses 1.31% 1.18% 1.09% 1.11% 1.31%
Net investment income 5.00% 5.65% 5.98% 6.09% 5.83%
<CAPTION>
- --------------------------------------------------------------------------------
Period Ended
January 31,
1989*
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.53
------
Income from investment operations -
Net investment income[sec] $ 0.32
Net realized gain on investments 0.14
------
Total from investment operations $ 0.46
------
Less distributions declared to shareholders -
From net investment income $(0.26)
From net realized gain on investments --
In excess of net investment income --
------
Total distributions declared to shareholders $(0.26)
------
Net asset value - end of period $ 9.73
------
Total return++ 7.57%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses 0.40%+
Net investment income 6.18%+
Portfolio turnover --
Net assets at end of period (000 omitted) $4,383
*For the period from the commencement of the Fund's investment operations,
June 6, 1988, through January 31, 1989.
+Annualized.
++Total returns for Class A shares do not include the applicable sales charge
(except for reinvested dividends prior to October 1, 1989). 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 $ 0.29
Ratios (to average net assets):
Expenses 1.07%+
Net investment income 5.51%+
</TABLE>
See notes to financial statements
40
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
Georgia Fund
- ------------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
-------------
(Unaudited)
-------------
Class B
-------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.95
-------
Income from investment operations# -
Net investment income[sec] $ 0.25
Net realized and unrealized gain (loss) on
investments 0.17
-------
Total from investment operations $ 0.42
-------
Less distributions declared to shareholders -
From net investment income $ (0.24)
From net realized gain on investments --
In excess of net investment income --
In excess of net realized gain on investments --
-------
Total distributions declared to shareholders $ (0.24)
-------
Net asset value - end of period $ 11.13
-------
Total return 3.87%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.75%+
Net investment income 4.34%+
Portfolio turnover 6%
Net assets at end of period (000 omitted) $13,001
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for
certain of the periods indicated. If these fees had been incurred by the
Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.23
Ratios (to average net assets)
Expenses## 1.85%+
Net investment income 4.24%+
<CAPTION>
Year Ended March 31,
------------------------------------------------
1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.38 $ 10.47 $ 10.36 $ 10.38
------- ------- ------- -------
Income from investment operations# -
Net investment income[sec] $ 0.48 $ 0.47 $ 0.45 $ 0.47
Net realized and unrealized gain (loss) on
investments 0.56 (0.09) 0.12 0.02
------- ------- ------- -------
Total from investment operations $ 1.04 $ 0.38 $ 0.57 $ 0.49
------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.47) $ (0.47) $ (0.46) $ (0.47)
From net realized gain on investments -- -- -- (0.01)
In excess of net investment income -- -- (0.00)+++ --
In excess of net realized gain on investments -- -- -- (0.03)
------- ------- ------- -------
Total distributions declared to shareholders $ (0.47) $ (0.47) $ (0.46) $ (0.51)
------- ------- ------- -------
Net asset value - end of period $ 10.95 $ 10.38 $ 10.47 $ 10.36
------- ------- ------- -------
Total return 10.19% 3.63% 5.52% 4.88%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.77% 1.83% 2.00% 1.96%
Net investment income 4.39% 4.53% 4.27% 4.66%
Portfolio turnover 18% 27% 65% 56%
Net assets at end of period (000 omitted) $10,871 $ 9,995 $10,205 $ 8,695
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding. ##For fiscal years ending after September 1,
1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for
certain of the periods indicated. If these fees had been incurred by the
Fund, the net investment income per share and the ratios would have
been:
Net investment income $ 0.47 $ 0.47 -- --
Ratios (to average net assets)
Expenses## 1.87% 1.90% -- --
Net investment income 4.29% 4.46% -- --
<CAPTION>
- ----------------------------------------------------------------------------------------------
Two Months
Ended Period Ended
March 31, January 31,
1994 1994**
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.30 $ 11.26
--------- -------
Income from investment operations# -
Net investment income[sec] $ 0.07 $ 0.19
Net realized and unrealized gain (loss) on
investments (0.91) 0.05
--------- -------
Total from investment operations $ (0.84) $ 0.24
--------- -------
Less distributions declared to shareholders -
From net investment income $ (0.07) $ (0.18)
From net realized gain on investments -- (0.01)
In excess of net investment income (0.01) (0.01)
In excess of net realized gain on investments -- --
--------- -------
Total distributions declared to shareholders $ (0.08) $ (0.20)
--------- -------
Net asset value - end of period $ 10.38 $ 11.30
--------- -------
Total return (7.47)%++ 5.34%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.99%+ 1.97%+
Net investment income 4.17%+ 3.83%+
Portfolio turnover 5% 14%
Net assets at end of period (000 omitted) $ 6,631 $ 5,766
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for
certain of the periods indicated. If these fees had been incurred by the
Fund, the net investment income per share and the ratios would have been
Net investment income -- --
Ratios (to average net assets)
Expenses## -- --
Net investment income -- --
</TABLE>
See notes to financial statements
41
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Maryland Fund
- --------------------------------------------------------------------------------
Six Months
Ended
September 30,
1998
---------------
(Unaudited)
- --------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.47
--------
Income from investment operations# -
Net investment income[sec] $ 0.28
Net realized and unrealized gain (loss) on
investments 0.22
--------
Total from investment operations $ 0.50
--------
Less distributions declared to shareholders -
From net investment income $ (0.27)
From net realized gain on investments --
In excess of net investment income --
In excess of net realized gain on investments --
--------
Total distributions declared to shareholders $ (0.27)
--------
Net asset value - end of period $ 11.70
--------
Total return++ 4.44%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.05%+
Net investment income 4.81%+
Portfolio turnover 4%
Net assets at end of period (000 omitted) $132,489
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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 $ 0.27
Ratios (to average net assets):
Expenses## 1.15%+
Net investment income 4.71%+
<CAPTION>
Year Ended March 31,
- --------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.89 $ 11.04 $ 10.94 $ 10.89
-------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.54 $ 0.57 $ 0.57 $ 0.59
Net realized and unrealized gain (loss) on
investments 0.59 (0.16) 0.09 0.09
-------- -------- -------- --------
Total from investment operations $ 1.13 $ 0.41 $ 0.66 $ 0.68
-------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.54) $ (0.56) $ (0.56) $ (0.59)
From net realized gain on investments -- -- -- --
In excess of net investment income (0.01) -- -- (0.00)+++
In excess of net realized gain on investments -- -- -- (0.04)
-------- -------- -------- --------
Total distributions declared to shareholders $ (0.55) $ (0.56) $ (0.56) $ (0.63)
-------- -------- -------- --------
Net asset value - end of period $ 11.47 $ 10.89 $ 11.04 $ 10.94
-------- -------- -------- --------
Total return++ 10.57% 3.75% 6.17% 6.51%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.09% 1.12% 1.19% 1.21%
Net investment income 4.79% 5.21% 5.10% 5.46%
Portfolio turnover 21% 22% 15% 31%
Net assets at end of period (000 omitted) $126,018 $126,405 $139,297 $145,361
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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 $ 0.53 $ 0.57 -- --
Ratios (to average net assets):
Expenses## 1.19% 1.19% -- --
Net investment income 4.69% 5.14% -- --
<CAPTION>
- ---------------------------------------------------------------------------------------------
Two Months
Ended Year Ended
March 31, January 31,
------------------------
1994 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.81 $ 11.40
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.10 $ 0.62
Net realized and unrealized gain (loss) on
investments (0.92) 0.53
-------- --------
Total from investment operations $ (0.82) $ 1.15
-------- --------
Less distributions declared to shareholders -
From net investment income $ (0.06) $ (0.61)
From net realized gain on investments -- (0.07)
In excess of net investment income (0.04) (0.04)
In excess of net realized gain on investments -- (0.02)
-------- --------
Total distributions declared to shareholders $ (0.10) $ (0.74)
-------- --------
Net asset value - end of period $ 10.89 $ 11.81
-------- --------
Total return++ (6.96)%++ 10.27%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.23%+ 1.25%
Net investment income 4.97%+ 5.42%
Portfolio turnover 1% 25%
Net assets at end of period (000 omitted) $161,290 $173,419
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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
42
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Maryland Fund
- ---------------------------------------------------------------------------------------------------------------------------
Year 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 $ 11.20 $ 10.97 $ 10.79 $ 10.76 $ 10.62
-------- -------- -------- ------- -------
Income from investment operations -
Net investment income $ 0.67 $ 0.70 $ 0.70 $ 0.69 $ 0.69
Net realized and unrealized gain on investments 0.24 0.31 0.19 0.04 0.14
-------- -------- -------- ------- -------
Total from investment operations $ 0.91 $ 1.01 $ 0.89 $ 0.73 $ 0.83
-------- -------- -------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.69) $ (0.76) $ (0.70) $ (0.69) $ (0.69)
From net realized gain on investments (0.02) (0.02) (0.01) (0.01) --
-------- -------- -------- ------- -------
Total distributions declared to shareholders $ (0.71) $ (0.78) $ (0.71) $ (0.70) $ (0.69)
-------- -------- -------- ------- -------
Net asset value - end of period $ 11.40 $ 11.20 $ 10.97 $ 10.79 $ 10.76
-------- -------- -------- ------- -------
Total return++ 8.34% 9.55% 8.51% 6.90% 8.15%
Ratios (to average net assets)/Supplemental data:
Expenses 1.14% 1.16% 1.17% 1.18% 1.14%
Net investment income 6.13% 6.32% 6.45% 6.33% 6.52%
Portfolio turnover 5% 9% 41% 58% 34%
Net assets at end of period (000 omitted) $145,794 $119,120 $101,742 $93,175 $84,380
</TABLE>
++Total returns for Class A shares do not include the applicable sales charge
(except for reinvested dividends prior to October 1, 1989). If the charge
had been included, the results would have been lower.
See notes to financial statements
43
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Maryland Fund
- -------------------------------------------------------------------------------------------
Six Months Year Ended
Ended March 31,
September 30, -----------
1998 1998
---------------------------
(Unaudited)
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.47 $ 10.88
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.24 $ 0.47
Net realized and unrealized gain (loss) on investments 0.22 0.60
-------- --------
Total from investment operations $ 0.46 $ 1.07
-------- --------
Less distributions declared to shareholders -
From net investment income $ (0.24) $ (0.47)
From net realized gain on investments -- --
In excess of net investment income -- (0.01)
In excess of net realized gain on investments -- --
-------- --------
Total distributions declared to shareholders $ (0.24) $ (0.48)
-------- --------
Net asset value - end of period $ 11.69 $ 11.47
-------- --------
Total return 4.02%++ 9.96%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.70%+ 1.74%
Net investment income 4.16%+ 4.12%
Portfolio turnover 4% 21%
Net assets at end of period (000 omitted) $ 25,002 $ 21,622
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.24 $ 0.46
Ratios (to average net assets):
Expenses## 1.80%+ 1.84%
Net investment income 4.06%+ 4.02%
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Two Months
Year Ended March 31, Ended
----------------------------------- March 31,
1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.03 $ 10.93 $ 10.88 $ 11.80
------- ------- --------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.50 $ 0.48 $ 0.51 $ 0.08
Net realized and unrealized gain (loss) on investments (0.17) 0.10 0.09 (0.91)
------- ------- --------- ---------
Total from investment operations $ 0.33 $ 0.58 $ 0.60 $ (0.83)
------- ------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.48) $ (0.48) $ (0.51) $ (0.08)
From net realized gain on investments -- -- -- --
In excess of net investment income -- -- (0.00)+++ (0.01)
In excess of net realized gain on investments -- -- (0.04) --
-------- -------- --------- ---------
Total distributions declared to shareholders $ (0.48) $ (0.48) $ (0.55) $ (0.09)
-------- -------- --------- ---------
Net asset value - end of period $ 10.88 $ 11.03 $ 10.93 $ 10.88
-------- -------- --------- ---------
Total return 3.03% 5.41% 5.75% (7.08)%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.82% 1.91% 1.93% 1.95%+
Net investment income 4.50% 4.36% 4.73% 4.19%+
Portfolio turnover 22% 15% 31% 1%
Net assets at end of period (000 omitted) $ 17,379 $ 13,694 $ 11,168 $ 6,478
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding. ##For fiscal years ending after September 1,
1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.49 -- -- --
Ratios (to average net assets):
Expenses## 1.89% -- -- --
Net investment income 4.43% -- -- --
<CAPTION>
- --------------------------------------------------------------------------------
Period Ended
January 31,
1994**
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.88
-------
Income from investment operations# -
Net investment income[sec] $ 0.22
Net realized and unrealized gain (loss) on investments (0.01)
-------
Total from investment operations $ 0.21
-------
Less distributions declared to shareholders -
From net investment income $ (0.21)
From net realized gain on investments (0.05)
In excess of net investment income (0.01)
In excess of net realized gain on investments (0.02)
-------
Total distributions declared to shareholders $ (0.29)
-------
Net asset value - end of period $ 11.80
-------
Total return 4.45%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.81%+
Net investment income 4.23%+
Portfolio turnover 25%
Net assets at end of period (000 omitted) $ 5,345
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income --
Ratios (to average net assets):
Expenses## --
Net investment income --
</TABLE>
See notes to financial statements
44
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Massachusetts Fund
- ----------------------------------------------------------------------------------------------
Six Months Year Ended
Ended March 31,
September 30, ----------------
1998 1998
----------------------------
(Unaudited)
- ----------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.34 $ 10.86
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.28 $ 0.58
Net realized and unrealized gain (loss) on investments 0.17 0.48
-------- --------
Total from investment operations $ 0.45 $ 1.06
-------- --------
Less distributions declared to shareholders -
From net investment income $ (0.28) $ (0.58)
From net realized gain on investments -- --
In excess of net investment income -- (0.00)+++
In excess of net realized gain on investments -- --
-------- --------
Total distributions declared to shareholders $ (0.28) $ (0.58)
-------- --------
Net asset value - end of period $ 11.51 $ 11.34
-------- --------
Total return++ 4.06%++ 9.99%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses ## 1.03%+ 1.06%
Net investment income 5.09%+ 5.18%
Portfolio turnover 7% 24%
Net assets at end of period (000 omitted) $243,655 $237,861
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales charge.
If the charge had been included, the results would have been lower.
[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 $ 0.28 $ 0.57
Ratios (to average net assets):
Expenses## 1.13%+ 1.16%
Net investment income 4.99%+ 5.08%
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Two Months
Year Ended March 31, Ended
------------------------------------- March 31,
1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.98 $ 10.84 $ 10.90 $ 11.75
-------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.61 $ 0.60 $ 0.64 $ 0.11
Net realized and unrealized gain (loss) on investments (0.14) 0.14 (0.03) (0.85)
-------- -------- -------- --------
Total from investment operations $ 0.47 $ 0.74 $ 0.61 $ (0.74)
-------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.59) $ (0.60) $ (0.64) $ (0.07)
From net realized gain on investments -- -- (0.02) --
In excess of net investment income -- (0.00)+++ -- (0.04)
In excess of net realized gain on investments -- -- (0.01) --
-------- -------- -------- --------
Total distributions declared to shareholders $ (0.59) $ (0.60) $ (0.67) $ (0.11)
-------- -------- -------- --------
Net asset value - end of period $ 10.86 $ 10.98 $ 10.84 $ 10.90
-------- -------- -------- --------
Total return++ 4.39% 6.95% 5.89% (6.34)%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses ## 1.12% 1.17% 1.17% 1.19%+
Net investment income 5.55% 5.44% 6.01% 5.64%+
Portfolio turnover 33% 31% 31% 4%
Net assets at end of period (000 omitted) $234,874 $249,497 $262,551 $277,748
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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 $ 0.60 -- -- --
Ratios (to average net assets):
Expenses## 1.19% -- -- --
Net investment income 5.48% -- -- --
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended
January 31,
1994
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.41
-------
Income from investment operations# -
Net investment income[sec] $ 0.64
Net realized and unrealized gain (loss) on investments 0.58
-------
Total from investment operations $ 1.22
-------
Less distributions declared to shareholders -
From net investment income $ (0.64)
From net realized gain on investments (0.20)
In excess of net investment income (0.04)
In excess of net realized gain on investments --
--------
Total distributions declared to shareholders $ (0.88)
--------
Net asset value - end of period $ 11.75
--------
Total return++ 11.02%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses ## 1.19%
Net investment income 5.71%
Portfolio turnover 30%
Net assets at end of period (000 omitted) $300,894
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
[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
45
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts Fund
- ------------------------------------------------------------------------------------------------------------------------------
Year 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 $ 11.05 $ 10.68 $ 10.58 $ 10.65 $ 10.60
-------- -------- -------- -------- --------
Income from investment operations -
Net investment income $ 0.68 $ 0.73 $ 0.71 $ 0.72 $ 0.72
Net realized and unrealized gain (loss) on investments 0.39 0.43 0.11 (0.07) 0.05
-------- -------- -------- -------- --------
Total from investment operations $ 1.07 $ 1.16 $ 0.82 $ 0.65 $ 0.77
-------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.71) $ (0.78) $ (0.72) $ (0.72) $ (0.72)
From net realized gain on investments -- (0.01) -- -- --
--------- --------- --------- --------- ---------
Total distributions declared to shareholders $ (0.71) $ (0.79) $ (0.72) $ (0.72) $ (0.72)
--------- --------- --------- --------- ---------
Net asset value - end of period $ 11.41 $ 11.05 $ 10.68 $ 10.58 $ 10.65
--------- --------- --------- --------- ---------
Total return++ 10.03% 11.23% 8.12% 6.28% 7.65%
Ratios (to average net assets)/Supplemental data:
Expenses 1.08% 1.06% 1.07% 1.10% 1.07%
Net investment income 6.33% 6.65% 6.74% 6.75% 6.90%
Portfolio turnover 32% 51% 43% 52% 26%
Net assets at end of period (000 omitted) $270,778 $239,311 $213,679 $215,381 $212,763
++Total returns for Class A shares do not include the applicable sales charge
(except for dividends prior to October 1, 1989). If the charge had been
included, the results would have been lower.
</TABLE>
See notes to financial statements
46
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Massachusetts Fund
- ----------------------------------------------------------------------------------------------
Six Months Year Ended
Ended March 31,
September 30, ----------------
1998 1998
----------------------------
(Unaudited)
- ----------------------------------------------------------------------------------------------
Class B
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.35 $ 10.87
------- -------
Income from investment operations# -
Net investment income[sec] $ 0.25 $ 0.51
Net realized and unrealized gain (loss) on investments 0.17 0.48
------- -------
Total from investment operations $ 0.42 $ 0.99
------- -------
Less distributions declared to shareholders -
From net investment income $ (0.25) $ (0.51)
From net realized gain on investments -- --
In excess of net investment income -- (0.00)+++
In excess of net realized gain on investments -- --
------- -------
Total distributions declared to shareholders $ (0.25) $ (0.51)
------- -------
Net asset value - end of period $ 11.52 $ 11.35
------- -------
Total return 3.72%++ 9.25%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.68%+ 1.71%
Net investment income 4.44%+ 4.52%
Portfolio turnover 7% 24%
Net assets at end of period (000 omitted) $22,781 $18,750
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based
on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.25 $ 0.50
Ratios (to average net assets):
Expenses## 1.78%+ 1.81%
Net investment income 4.34%+ 4.42%
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Two Months
Year Ended March 31, Ended
------------------------------------ March 31,
1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.99 $ 10.84 $ 10.90 $ 11.75
------- ------- ------- -------
Income from investment operations# -
Net investment income[sec] $ 0.53 $ 0.52 $ 0.55 $ 0.09
Net realized and unrealized gain (loss) on investments (0.13) 0.15 (0.02) (0.85)
------- ------- ------- -------
Total from investment operations $ 0.40 $ 0.67 $ 0.53 $ (0.76)
------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.52) $ (0.52) $ (0.56) $ (0.09)
From net realized gain on investments -- -- (0.02) --
In excess of net investment income -- (0.00)+++ -- --
In excess of net realized gain on investments -- -- (0.01) --
------- ------- ------- -------
Total distributions declared to shareholders $ (0.52) $ (0.52) $ (0.59) $ (0.09)
------- ------- ------- -------
Net asset value - end of period $ 10.87 $ 10.99 $ 10.84 $ 10.90
------- ------- ------- -------
Total return 3.66% 6.27% 5.13% (6.46)%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.81% 1.90% 1.89% 1.91%+
Net investment income 4.81% 4.71% 5.27% 4.89%+
Portfolio turnover 33% 51% 31% 4%
Net assets at end of period (000 omitted) $15,204 $11,316 $ 8,676 $ 4,993
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income $ 0.52 -- -- --
Ratios (to average net assets):
Expenses## 1.88% -- -- --
Net investment income 4.74% -- -- --
<CAPTION>
- --------------------------------------------------------------------------------
Period Ended
January 31,
1994**
- --------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.91
-------
Income from investment operations# -
Net investment income[sec] $ 0.23
Net realized and unrealized gain (loss) on investments 0.04
-------
Total from investment operations $ 0.27
-------
Less distributions declared to shareholders -
From net investment income $ (0.22)
From net realized gain on investments (0.20)
In excess of net investment income (0.01)
In excess of net realized gain on investments --
-------
Total distributions declared to shareholders $ (0.43)
-------
Net asset value - end of period $ 11.75
-------
Total return 5.89%+
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.81%+
Net investment income 4.62%+
Portfolio turnover 30%
Net assets at end of period (000 omitted) $ 4,191
**For the period from the inception of Class B, September 7, 1993, through
January 31, 1994.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data for the periods subsequent to January 31, 1994, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
[sec]The investment adviser and/or the distributor voluntarily waived a portion
of their management fee and/or distribution fee, respectively, for certain
of the periods indicated. If these fees had been incurred by the Fund, the
net investment income per share and the ratios would have been:
Net investment income --
Ratios (to average net assets):
Expenses## --
Net investment income --
</TABLE>
See notes to financial statements
47
<PAGE>
Notes to Financial Statements (Unaudited)
(1) Business and Organization
MFS Municipal Series Trust (the Trust) is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company. The Trust presently consists of 16
Funds, as follows: MFS Municipal Income Fund, MFS Alabama Municipal Bond Fund*
(Alabama Fund), MFS Arkansas Municipal Bond Fund* (Arkansas Fund), MFS
California Municipal Bond Fund* (California Fund), MFS Florida Municipal Bond
Fund* (Florida Fund), MFS Georgia Municipal Bond Fund* (Georgia Fund), MFS
Maryland Municipal Bond Fund* (Maryland Fund), MFS Massachusetts Municipal Bond
Fund* (Massachusetts Fund), MFS Mississippi Municipal Bond Fund, MFS New York
Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS Pennsylvania
Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS Tennessee
Municipal Bond Fund, MFS Virginia Municipal Bond Fund, and MFS West Virginia
Municipal Bond Fund. Each Fund, except MFS Municipal Income Fund, is
non-diversified.
*The Funds denoted with an asterisk above are included within these financial
statements.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Because each Fund invests primarily in the securities of a single state and its
political subdivisions, each Fund is vulnerable to the effects of changes in the
legal 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 the commodities exchanges are reported at market value using
closing settlement prices. Securities for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Trustees.
Futures Contracts - Each Fund may enter into futures contracts for the delayed
delivery of securities or contracts based on financial indices at a fixed price
on a future date. In entering such contracts, each Fund is required to deposit
with the broker 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
contract, and are recorded for financial statement purposes as unrealized gains
or losses by the Fund. Each Fund's investment in futures contracts is designed
to hedge against anticipated future changes in interest rates or securities
prices. Investments in interest rate futures for purposes other than hedging may
be made to modify the duration of the portfolio without incurring the additional
transaction costs involved in buying and selling the underlying securities.
Investments in index contracts or contracts on related options for purposes
other than hedging, may be made when a Fund has cash on hand and wishes to
participate in anticipated market appreciation while the cash is being invested.
Should interest rates or securities prices move unexpectedly, the Fund may not
achieve the anticipated benefits of the futures contracts and may realize a
loss.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount is amortized or accreted for financial statement and tax
reporting purposes as required by federal income tax regulations. Interest
payments received in additional securities are recorded on the ex-interest date
in an amount equal to the value of the security on such date. Some securities
may be purchased on a "when-issued" or "forward delivery" basis, which means
that the securities will be delivered to the Fund at a future date, usually
beyond customary settlement time.
Legal fees and other related expenses incurred to preserve and protect the value
of a security owned are added to the cost of the security; other legal fees are
expensed. Capital infusions, which are generally non-recurring, incurred to
protect or enhance the value of high-yield debt securities, are reported as an
addition to the cost basis of the security. Costs that are incurred to negotiate
the terms or conditions of capital infusions or that are expected to result in a
plan of reorganization are reported as realized losses. Ongoing costs incurred
to protect or enhance an investment, or costs incurred to pursue other claims or
legal actions, are expensed.
Fees Paid Indirectly - The Trust's custody fee is calculated as a percentage of
each Fund's month end net assets. The fee is reduced according to an arrangement
that 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
48
<PAGE>
Notes to Financial Statements (Unaudited) - continued
statements may differ from that reported on each Fund's tax return and,
consequently, the character of distributions to shareholders reported in the
financial highlights may differ from that reported to shareholders on Form
1099-DIV.
Distributions paid by each Fund from net interest received on tax-exempt
municipal bonds are not includable by shareholders as gross income for federal
income tax purposes because each Fund intends to meet certain requirements of
the Code applicable to regulated investment companies, which will enable each
Fund to pay exempt-interest dividends. The portion of such interest, if any,
earned on private activity bonds issued after August 7, 1986, may be considered
a tax-preference item to shareholders.
Distributions to shareholders are recorded on the ex-dividend date. 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 net realized gains.
At March 31, 1998, the following Funds, for federal income tax purposes, had
capital loss carryforwards which may be applied against any net taxable realized
gains of each succeeding year until the earlier of their utilization or
expiration.
<TABLE>
<CAPTION>
Arkansas California Florida Georgia Maryland Massachusetts
Expiration Date Fund Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31, 2003 $ -- $7,496,770 $5,923,777 $1,531,967 $ -- $1,413,007
March 31, 2004 7,076,376 403,290 -- 1,339,129 3,351,077 1,732,935
March 31, 2005 215,971 588,165 1,290,661 -- 1,055,172 405,182
March 31, 2006 -- -- 781,761 -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total $7,292,347 $8,488,225 $7,996,199 $2,871,096 $4,406,249 $3,551,124
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
Multiple Classes of Shares of Beneficial Interest - Each Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on the value
of 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. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
each Fund's average daily net assets. The investment adviser has voluntarily
agreed to waive a portion of its fee with respect to each Fund, which is
reflected as a preliminary reduction of expenses in the Statement of Operations.
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 of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation for the six months ending September 30, 1998,
is a net periodic pension expense for each Fund, as follows:
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$2,640 $2,322 $2,731 $2,337 $2,747 $3,184 $3,184
</TABLE>
Administrator - The Trust has an administrative services agreement with MFS to
provide the Trust with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, each Fund pays MFS an administrative fee
at the following annual percentages of each Fund's average daily net assets:
START
<TABLE>
<CAPTION>
<S> <C>
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
</TABLE>
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$8,403, $16,590, $37,193, $14,135, $11,019, $32,955 and $33,602 as its portion
of the sales charge on sales of Class A shares of the Alabama, Arkansas,
California, Florida, Georgia, Maryland and Massachusetts Funds, respectively,
for the six months ended September 30, 1998.
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:
49
<PAGE>
Notes to Financial Statements (Unaudited) - continued
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
paid 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 and 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. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $3,082, $2,081, $3,001,
$8,579 and $39,091 for the Alabama, Arkansas, Georgia, Maryland and
Massachusetts Funds, respectively, for the six months ended September 30, 1998.
Fees incurred under the distribution plan during the six months ended September
30, 1998, were 0.25%, 0.10%, 0.25%, 0.35% and 0.35% of each Fund's average daily
net assets attributable to Class A shares on an annualized basis for the
Alabama, Arkansas, Georgia, Maryland and Massachusetts Funds, respectively.
Payments of the 0.10% per annum Class A distribution fee will be implemented on
such date as the Trustees of the Trust may determine for the Alabama, Arkansas,
California, Florida and Georgia Funds. Payments of the 0.25% per annum Class A
service fee by the California and Florida funds will commence on such date as
the Trustees of the Trust may determine. In the case of the Arkansas Fund, a
portion of the service fee is currently being paid by the Fund; payment of the
remaining portion of the Class A service fee will become payable on such date as
the Trustees of the Trust may determine.
Each Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be 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 $256, $363, $1,140, $1,036 and $445 for the Alabama, Arkansas,
Georgia, Maryland and Massachusetts Funds, respectively for Class B shares. MFS
retained no service fees with respect to California Class C shares. Fees
incurred under the distribution plan during the six months ended September 30,
1998, were 1.00%, 0.76%, 0.84%, 0.78%, 1.00%, 1.00% and 1.00% of each of the
Fund's average daily net assets attributable to Class B shares for the Alabama,
Arkansas, California, Florida, Georgia, Maryland and Massachusetts Funds,
respectively on an annualized basis. Fees incurred under the distribution plan
during the six months ended September 30, 1998, were 1.00% of the Fund's average
daily net assets attributable to Class C shares for the California Fund on an
annualized basis. Except in the case of the 0.25% per annum first year Class B
service fee, payments by the California and Florida Funds will be suspended
until such date as the Trustees of the Trust may determine. In the case of the
Arkansas Fund, except in the case of the 0.25% per annum first year Class B
service fee, the service fee is currently 0.10% per annum on Class B shares held
over one year.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the six months ended September
30, 1998 on Class A, Class B, and Class C shares were as follows:
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
CDSC imposed Fund Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $ -- $ -- $ 961 $ -- $ -- $ 929 $ --
Class B $10,415 $9,132 $60,426 $29,670 $7,668 $28,875 $27,206
Class C $ -- $ -- $ 1,653 $ -- $ -- $ -- $ --
</TABLE>
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of each Fund's average daily net assets at an effective annual rate
of 0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations were as follows (000
omitted):
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases $3,749 $4,773 $27,815 $2,971 $5,792 $12,941 $27,319
Sales 6,479 7,739 22,503 6,089 4,430 6,279 18,201
</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):
50
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
Alabama Arkansas California Florida Georgia Maryland Massachusetts
Fund Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate cost $74,036 $123,902 $251,176 $81,899 $64,881 $139,520 $245,055
------- -------- -------- ------- ------- -------- --------
Gross unrealized appreciation $ 7,590 $ 13,230 $ 31,405 $10,410 $ 8,273 $ 15,946 $ 27,197
Gross unrealized depreciation -- (124) -- (9) (9) (1) (2,221)
------- -------- -------- ------- ------- -------- --------
Net unrealized appreciation $ 7,590 $ 13,106 $ 31,405 $10,401 $ 8,264 $ 15,945 $ 24,976
------- -------- -------- ------- ------- -------- --------
</TABLE>
(5) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Alabama Fund
Class A Shares --------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 134 $ 1,450
Shares issued to shareholders in reinvestment
of distributions 69 746
Shares reacquired (350) (3,790)
---- --------
Net decrease (147) $ (1,594)
==== ========
Year Ended March 31, 1998 (000 Omitted) Shares Amount
- ------------------------------------------------------------------------------
Shares sold 248 $ 2,668
Shares issued to shareholders in reinvestment
of distributions 186 2,008
Shares reacquired (781) (8,405)
----- --------
Net decrease (347) $ (3,729)
==== ========
<CAPTION>
Arkansas Fund California Fund
Class A Shares -------------------- --------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 249 $ 2,531 4,042 $ 23,483
Shares issued to shareholders in reinvestment
of distributions 147 1,495 399 2,332
Shares reacquired (1,012) (10,294) (4,475) (26,032)
------ --------- ------ ---------
Net decrease (616) $ (6,268) (34) $ (217)
====== ========= ====== =========
Year Ended March 31, 1998 (000 Omitted) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------
Shares sold 551 $ 5,518 6,423 $ 36,766
Shares issued to shareholders in reinvestment
of distributions 313 3,146 825 4,716
Shares reacquired (2,535) (25,349) (11,403) (65,027)
------ --------- ------- ---------
Net decrease (1,671) $ (16,685) (4,155) $ (23,545)
====== ========= ====== =========
</TABLE>
<TABLE>
<CAPTION>
Florida Fund
--------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 201 $ 2,041
Shares issued to shareholders in reinvestment
of distributions 71 715
Shares reacquired (561) (5,670)
---- ---------
Net increase (decrease) (289) $ (2,914)
==== =========
Year Ended March 31, 1998 (000 Omitted) Shares Amount
- ------------------------------------------------------------------------------
Shares sold 1,398 $ 14,053
Shares issued to shareholders in reinvestment
of distributions 151 1,503
Shares reacquired (2,188) (21,913)
------ --------
Net decrease (639) $ (6,357)
==== =========
<CAPTION>
Georgia Fund Maryland Fund
-------------------- ------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 238 $ 2,603 728 $ 8,368
Shares issued to shareholders in reinvestment
of distributions 73 804 136 1,569
Shares reacquired (240) (2,625) (524) (6,023)
---- -------- ---- ---------
Net increase (decrease) 71 $ 782 340 $ 3,914
==== ======== ==== =========
Year Ended March 31, 1998 (000 Omitted) Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
Shares sold 285 $ 3,091 557 $ 6,253
Shares issued to shareholders in reinvestment
of distributions 150 1,625 285 3,232
Shares reacquired (761) (8,210) (1,469) (16,503)
----- -------- ------ ---------
Net decrease (326) $ (3,494) (627) $ (7,018)
==== ======== ==== =========
</TABLE>
<TABLE>
<CAPTION>
Massachusetts Fund
Class A Shares -----------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 2,074 $ 23,480
Shares issued to shareholders in reinvestment
of distributions 242 2,751
Shares reacquired (2,119) (24,004)
------ ---------
Net increase 197 $ 2,227
====== =========
Year Ended March 31, 1998 (000 Omitted) Shares Amount
- -------------------------------------------------------------------------------------------------------
Shares sold 5,740 $ 64,430
Shares issued to shareholders in reinvestment
of distributions 519 5,838
Shares reacquired (6,917) (77,656)
------ ---------
Net decrease (658) $ (7,388)
====== =========
</TABLE>
51
<PAGE>
Notes to Financial Statements (Unaudited) - continued
<TABLE>
<CAPTION>
Alabama Fund
Class B Shares --------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 191 $ 2,060
Shares issued to shareholders in reinvestment
of distributions 8 87
Shares reacquired (43) (461)
--- ---------
Net increase (decrease) 156 $ 1,686
=== =========
Year Ended March 31, 1998 (000 Omitted) Shares Amount
- -------------------------------------------------------------------------------
Shares sold 132 $ 1,419
Shares issued to shareholders in reinvestment
of distributions 17 184
Shares reacquired (96) (1,032)
---- ---------
Net increase (decrease) 53 $ 571
=== =========
<CAPTION>
Arkansas Fund California Fund
Class B Shares -------------------- ------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 169 $ 1,721 1,690 $ 9,857
Shares issued to shareholders in reinvestment
of distributions 8 78 76 441
Shares reacquired (49) (495) (625) (3,640)
---- ------- ------ --------
Net increase (decrease) 128 $ 1,304 1,141 $ 6,658
==== ======= ====== ========
Year Ended March 31, 1998 (000 Omitted) Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------
Shares sold 99 $ 997 1,926 $ 11,020
Shares issued to shareholders in reinvestment
of distributions 14 145 139 796
Shares reacquired (165) (1,670) (1,220) (6,978)
---- ------- ------ --------
Net increase (decrease) (52) $ (528) 845 $ 4,838
==== ======= ====== ========
</TABLE>
<TABLE>
<CAPTION>
Florida Fund
--------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 257 $ 2,594
Shares issued to shareholders in reinvestment
of distributions 11 113
Shares reacquired (163) (1,645)
---- -------
Net increase 105 $ 1,062
==== =======
Year Ended March 31, 1998 (000 Omitted) Shares Amount
- -------------------------------------------------------------------------------
Shares sold 413 $ 4,149
Shares issued to shareholders in reinvestment
of distributions 22 217
Shares reacquired (304) (3,055)
---- -------
Net increase 131 $ 1,311
==== =======
<CAPTION>
Georgia Fund Maryland Fund
-------------------- ------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 220 $ 2,427 363 $ 4,168
Shares issued to shareholders in reinvestment
of distributions 10 109 23 264
Shares reacquired (55) (609) (133) (1,524)
--- -------- ---- -------
Net increase 175 $ 1,927 253 $ 2,908
=== ======== ==== =======
Year Ended March 31, 1998 (000 Omitted) Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
Shares sold 228 $ 2,467 512 $ 5,761
Shares issued to shareholders in reinvestment
of distributions 20 216 42 472
Shares reacquired (218) (2,355) (265) (2,997)
---- -------- ---- -------
Net increase 30 $ 328 289 $ 3,236
=== ======== ==== =======
</TABLE>
<TABLE>
<CAPTION>
Massachusetts Fund
-------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 425 $ 4,825
Shares issued to shareholders in
reinvestment of distributions 22 248
Shares reacquired (121) (1,372)
---- --------
Net increase 326 $ 3,701
==== ========
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, 1998 (000 Omitted) Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 413 $ 4,647
Shares issued to shareholders in
reinvestment of distributions 40 446
Shares reacquired (200) (2,240)
---- --------
Net increase 253 $ 2,853
==== ========
</TABLE>
<TABLE>
<CAPTION>
California Fund
Class C Shares -------------------
Six Months Ended September 30, 1998 (000 Omitted) Shares Amount
- ---------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 450 $ 2,628
Shares issued to shareholders in reinvestment
of distributions 9 55
Shares reacquired (193) (1,130)
---- --------
Net increase 266 $ 1,553
==== ========
Year Ended March 31, 1998 (000 Omitted) Shares Amount
- ---------------------------------------------------------------------------------
Shares sold 354 $ 2,022
Shares issued to shareholders in reinvestment
of distributions 16 91
Shares reacquired (317) 1,794)
---- --------
Net increase 53 $ 319
==== ========
</TABLE>
52
<PAGE>
Notes to Financial Statements (Unaudited) - continued
(6) Line of Credi
The Trust and other affiliated funds participate in an $805 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
the Funds for the six months ended September 30, 1998, ranged from $6 to $930.
(7) Financial Instruments
The Trust trades financial instruments with off-balance-sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates. These financial instruments include futures contracts.
The notional or contractual amounts of these instruments represent the
investment a Fund has in particular classes of financial instruments and does
not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
Futures Contracts
<TABLE>
<CAPTION>
Unrealized
Appreciation
Fund Description Expiration Contracts Position (Depreciation)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alabama Fund U.S. Treasury Bonds December 1998 7 Short $ (17,129)
Municipal Bond Index December 1998 22 Long 12,084
----------
$ (5,045)
=========
Arkansas Fund U.S. Treasury Bonds December 1998 12 Short $ (29,218)
Municipal Bond Index December 1998 12 Long 19,939
----------
$ (9,279)
==========
California Fund U.S. Treasury Notes December 1998 113 Short $ (531,077)
Municipal Bond Index December 1998 113 Long 262,174
----------
$ (268,903)
==========
Florida Fund U.S. Treasury Notes December 1998 38 Short $ (177,695)
Municipal Bond Index December 1998 38 Long 87,807
----------
$ (89,888)
==========
Georgia Fund U.S. Treasury Bonds December 1998 5 Short $ (12,089)
Municipal Bond Index December 1998 5 Long 8,225
----------
$ (3,864)
==========
Maryland Fund U.S. Treasury Bonds December 1998 13 Short $ (31,161)
Municipal Bond Index December 1998 13 Long 21,184
----------
$ (9,977)
==========
Massachusetts Fund U.S. Treasury Bonds December 1998 22 Short $ (53,331)
Municipal Bond Index December 1998 22 Long 36,388
----------
$ (16,943)
==========
</TABLE>
At September 30, 1998, the Funds had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
53
<PAGE>
MFS Family of Funds[RegTM]
MFS offers a range of mutual funds to meet investors' varying financial needs
and goals. The funds are placed below in descending order of the level of risk
and reward each one offers in relation to the others in that asset class.(1) The
objective of the fund you choose should correspond to your financial needs and
goals.
HIGHER RISK/HIGHER REWARD POTENTIAL
B O N D F U N D S
MFS[RegTM] Global Governments Fund2
MFS[RegTM] High Yield Opportunities Fund
MFS[RegTM] High Income Fund
MFS[RegTM] Municipal High Income Fund
MFS[RegTM] Strategic Income Fund
MFS[RegTM] Municipal State Funds
AL, AR, CA, FL, GA, MD, MA, MS,
NY, NC, PA, SC, TN, VA, WV
MFS[RegTM] Municipal Income Fund
MFS[RegTM] Bond Fund
MFS[RegTM] Municipal Bond Fund
MFS[RegTM] Government Securities Fund
MFS[RegTM] Government Mortgage Fund
MFS[RegTM] Intermediate Income Fund
MFS[RegTM] Municipal Limited
Maturity Fund
MFS[RegTM] Limited Maturity Fund
MFS[RegTM] Government Limited
Maturity Fund
S T O C K F U N D S
MFS[RegTM]/Foreign & Colonial Emerging
Markets Equity Fund
MFS[RegTM] Managed Sectors Fund
MFS[RegTM] New Discovery Fund
MFS[RegTM] Emerging Growth Fund
MFS[RegTM] Mid Cap Growth Fund
MFS[RegTM] International Growth Fund
MFS[RegTM] Research International Fund
MFS[RegTM] Global Growth Fund(2)
MFS[RegTM] Strategic Growth Fund
MFS[RegTM] Research Fund
MFS[RegTM] International Growth
and Income Fund
MFS[RegTM] Global Equity Fund2
MFS[RegTM] Capital Opportunities Fund
Massachusetts Investors Growth
Stock Fund
MFS[RegTM] Growth Opportunities Fund
MFS[RegTM] Large Cap Growth Fund
MFS[RegTM] Union Standard[RegTM] Equity Fund
MFS[RegTM] Research Growth
and Income Fund
Massachusetts Investors Trust
MFS[RegTM] Equity Income Fund
MFS[RegTM] Utilities Fund
MFS[RegTM] Global Total Return Fund(2)
MFS[RegTM] Total Return Fund
MFS[RegTM] Global Asset
Allocation Fund(2)
LOWER RISK/LOWER REWARD POTENTIAL
(1)For information on the specific risks, charges, and expenses associated with
any MFS fund, refer to the prospectus. Read it carefully before investing or
sending money.
(2)MFS "global" funds were formerly "world" funds. As of August 24, 1998, their
names changed but their objectives remain the same.
54
<PAGE>
Diversifying Your Investment Portfolio
[drawing of woman contemplating diversification of 3 nest eggs]
Most experts agree that it's wise to diversify your investments, no matter what
your age or financial situation. Diversification - spreading your assets among a
variety of investment types - can help spread your risk as well.
No one type of investment performs well all the time. In fact, each type of
investment tends to follow its own cycle, so that when the price of one is
rising, the price of another may be declining. By including a range of
investments in your portfolio, the overall volatility - or change in value - of
that portfolio should be less than if you put everything in one type of
investment.
MFS offers a wide variety of investments to suit a wide range of needs. For more
information, talk to your financial adviser or request our We're MFS kit. For
details about a specific MFS fund, ask for a prospectus including charges and
expenses. Read the prospectus carefully before you invest or send money.
For more information, call MFS at 1-800-225-2606 any business day from 8 a.m. to
8 p.m. Eastern time or visit our Web site at www.mfs.com.
55
<PAGE>
[MFS LOGO]
Heritage Planning(SM)
Helping Yourself[bullet]Helping Your Parents[bullet]Helping Your Children(SM)
[drawing of banker granting a loan to some happy people]
You, Your Adviser, and MFS:
A Powerful Partnership
In today's complex world, financial needs go beyond putting aside money,
choosing investment products, and understanding the markets. What you really
need is an overall plan to address the complex lifestyle issues facing you, your
parents, and your children. And that's where your financial adviser and MFS can
help.
MFS(R) Heritage Planning(SM) is our program to help you and your adviser develop
strategies to meet your long-term financial needs. Your financial adviser can
offer you MFS Heritage Planning educational materials on topics such as:
[bullet] retirement planning
[bullet] college funding
[bullet] estate planning
[bullet] eldercare
Talk with your financial adviser today or order the MFS Heritage Planning kit
from our Web site at www.mfs.com or by calling 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
This material is not intended to replace the advice of a qualified attorney, tax
adviser, financial adviser, or insurance agent. Before making any financial
commitment, consult with the appropriate financial adviser.
56
<PAGE>
MFS[RegTM] Municipal Series Trust
Trustees
Richard B. Bailey* - Private Investor;
Former Chairman and Director (until 1991),
MFS Investment Management
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.
Abby M. O'Neill - Private Investor
Walter E. Robb, III - President and Treasurer, Benchmark
Advisors, Inc. (corporate financial consultants); President,
Benchmark Consulting Group, Inc. (office services)
Arnold D. Scott* - Senior Executive Vice President,
Director, and Secretary, MFS Investment Management
Jeffrey L. Shames* - Chairman, Chief Executive Officer,
and Director, MFS Investment Management
J. Dale Sherratt - President, Insight Resources, Inc.
(acquisition planning specialists)
Ward Smith - Former Chairman (until 1994), NACCO
Industries (holding company)
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
John P. Kihn*
Geoffrey L. Schechter*
Treasurer
W. Thomas London*
Assistant Treasurers
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
Secretary
Stephen E. Cavan*
Assistant Secretary
James R. Bordewick, Jr.*
Custodian
State Street Bank and Trust Company
Investor Information
For MFS stock and bond market outlooks, call toll free:
1-800-637-4458 anytime from a touch-tone telephone.
For information on MFS mutual funds, call your
financial adviser or, for an information kit, call
toll free: 1-800-637-2929 any business day from 9 a.m.
to 5 p.m. Eastern time (or leave a message anytime).
InvestorService
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
*Affiliated with the Investment Adviser
<PAGE>
MFS[RegTM] Municipal
Series Trust
MFS[RegTM] Alabama Municipal Bond Fund
MFS[RegTM] Arkansas Municipal Bond Fund
MFS[RegTM] California Municipal Bond Fund
MFS[RegTM] Florida Municipal Bond Fund
MFS[RegTM] Georgia Municipal Bond Fund
MFS[RegTM] Maryland Municipal Bond Fund
MFS[RegTM] Massachusetts Municipal Bond Fund
------------
Bulk Rate
U.S. Postage
[MFS LOGO] Paid
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
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Boston, MA 02116-3741
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(C) 1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
