[LOGO MFS
INVESTMENT MANAGEMENT
We invented the mutual fund]
MFS[RegTM] Municipal
Series Trust
Annual Report o March 31, 2000
For the States of: Mississippi,
New York, North Carolina,
Pennsylvania, South Carolina,
Tennessee, Virginia, and West Virginia
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter from the Chairman .............. 1
Management Review and Outlook ......... 3
Performance Summary ................... 5
Portfolio of Investments .............. 14
Financial Statements .................. 30
Notes to Financial Statements ......... 56
Independent Auditors' Report .......... 63
Trustees and Officers ................. 65
</TABLE>
MFS Original Research[RegTM]
Research has been central to investment management at MFS
since 1932, when we created one of the first in-house
research departments in the mutual fund
industry. Original Research[SM] at MFS is more
than just crunching numbers and creating
economic models: it's getting to know
each security and each company personally.
[MFS LOGO]
--------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
--------------------------------------------------------------------------------
<PAGE>
Letter from the Chairman
[PHOTO Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
This spring, the U.S. stock market experienced
record point drops and volatility that have
given many investors cause for concern. While
the recent market correction has rattled a lot
of nerves, it's important to put the current
market environment into perspective. Throughout
the history of the market, investors have
experienced numerous corrections (declines of more than 20%) and periods of
extreme volatility. Of course, past performance is no guarantee of future
results, however, over the long-term, stock and bond investors have enjoyed
returns that have solidly outpaced inflation.
From our perspective, as we look at the global investment climate at the
beginning of the new millennium, we see many reasons for optimism, as well as
the need to voice some words of caution. Our reasons for being optimistic about
both stock and bond markets include:
o Strong corporate earnings growth: We believe that, over time, the most
important driver of stock prices is corporate earnings. Our research
indicates that the average earnings growth for U.S. companies could
approach 15% in 2000, which would bode very well for U.S. equities. We are
also seeing encouraging signs that companies worldwide, and particularly in
Europe, are beginning to focus more on earnings and shareholder value --
that is, delivering stock price performance that will reward investors. As
we research companies around the globe, we are finding that specific areas
of opportunity include technology companies, especially those involved in
wireless telecommunications and in supplying infrastructure and services
for the Internet.
o Low inflation worldwide: We believe accelerating inflation is one of the
chief factors that could end the current economic boom. While the U.S.
economy continues to grow rapidly, we have not experienced significant
signs of inflation. In our opinion, perhaps the major force keeping
inflation at bay is worldwide productivity increases, fueled by advancing
technology. A technological revolution based on computerization and the
Internet appears to be making it possible for companies to produce more
products with less employees, thereby enabling companies to increase
earnings without raising prices. A related factor keeping inflation down is
the heightened competition of an increasingly global marketplace, where,
for example, businesses are beginning to use computer networks and the
Internet to shop worldwide for the lowest prices from suppliers.
o Strong global economies: Our outlook is that a majority of national
economies will continue to experience healthy growth with low inflation. In
late January, the current economic boom in the United States became the
longest in the nation's history. It appears to us that the U.S. Federal
Reserve Board's (the Fed's) program of gradual interest-rate increases will
eventually be successful in cooling the somewhat-overheated U.S. economy
while prolonging the boom. In Europe, we see strong evidence that most
countries will continue on a moderate growth path with low inflation. A
major reason for this is that European companies have begun to adopt the
practices of downsizing, outsourcing, and consolidation that have helped
revitalize U.S. industry over the past decade. We are witnessing a similar
situation in Japan, as more firms merge, restructure, and invest in
technology. In the Pacific Rim, most economies have recovered from the
economic turmoil of late summer 1998 and are surging ahead. We believe
progress toward restructuring Asia's banking systems and other ailing
industries bodes well for stronger investor confidence in the region. While
business conditions have been less favorable in Latin America due to
relatively high inflation, increased exports and industrial production
suggest to us that the region's recession has ended.
Amid this positive global outlook, however, we believe investors should also
heed some cautionary notes:
o It is highly unlikely that U.S. equity markets will continue to perform at
the pace of the last several years. Although our outlook for U.S. markets
this year is quite positive, we believe it is unrealistic for investors to
expect stock market returns, as measured by the Standard & Poor's 500
Composite Index,(1) to routinely exceed 20%, as they did for the past four
years.
o High valuations, especially of technology stocks, have made U.S. markets
increasingly volatile. Investor excitement over the past year has pushed
many technology-related stocks to very high relative prices, as expressed
by their price/earnings (P/E) ratios. In general, we believe these higher
valuations are largely supported by the strong earnings growth mentioned
earlier. However, as we've recently experienced, this backdrop has led to a
highly volatile environment, where the market is swift to punish companies
whose earnings are less than expected and where fear can rapidly overcome
the desire to invest for long-term goals.
o Rising interest rates may dampen markets in the short term, particularly in
the United States and Europe. The Fed's current program of raising interest
rates could potentially cool both stock and bond markets, and the European
Central Bank has tended to follow the lead of the Fed in adjusting its own
interest rates. It is our expectation, however, that in the long term
interest rates will trend down again, perhaps by the end of this year. We
believe that could be favorable for both equity and fixed-income
investments.
1
<PAGE>
Letter from the Chairman - continued
On balance, it appears to us that the current global investment climate is well
matched to MFS' research-oriented style of investing. In the equity markets,
where we believe earnings growth is the most reliable indicator of long-term
performance, we feel our research team is second to none in determining the
real value of a company and its long-term earnings potential. To do that, our
portfolio managers and our worldwide team of research analysts spend extensive
time visiting with companies, talking to their customers, and investigating
their competition. In fixed-income investing, we believe the quality of our
research gives us an advantage by helping us determine which types of
securities can add the most value to a fund, and by helping us reduce the
credit risk which is the biggest danger to some higher-income bond funds. In
sum, MFS Original Research[RegTM] is one of the most important factors in our
ongoing effort to deliver competitive performance to you, our investors.
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]
April 18, 2000
--------------------
(1)The Standard & Poor's 500 Composite Index (the S&P 500) is a popular,
unmanaged index of common stock total return performance. It is not possible to
invest directly in an index.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
2
<PAGE>
Management Review and Outlook
Dear Shareholders,
The past 12 months proved difficult for fixed-income investments. Strong
economic growth in the United States, combined with the lowest unemployment
rate in 30 years, kindled fears of inflation. These concerns, in turn, resulted
in higher interest rates and falling bond prices (interest rates and bond
prices move in opposite directions). Further fueling the rise in interest rates
was a pickup in global economic activity, as foreign economies recovered from
the emerging market crisis of 1998. This backdrop helped convince the Federal
Reserve Board (the Fed) to raise the federal funds rate -- the rate banks
charge each other for overnight loans -- five times during the past nine
months. By doing so, the Fed was trying to dampen economic growth to a more
sustainable level and thereby moderate inflationary pressures. As a result,
yields on 30-year "AAA"-rated general obligation municipal bonds stood at 5.62%
on March 31, 2000, up from 4.97% a year ago.
More recently, the municipal market enjoyed a positive first quarter of 2000.
Rates on 30-year "AAA"-rated general obligation municipal bonds peaked at 5.92%
in mid-January before declining by 30 basis points (0.30%). That's because
investors became more confident that Fed actions would indeed curb economic
activity and contain inflation. Another benefit was a dramatic reduction in
new-issue supply thus far in 2000, which was down more than 40% compared to the
same period in 1999. This decline followed the 25% drop for all of 1999, down
from the near-record levels of new issuance achieved in 1998, when very low
interest rates encouraged municipalities to come to market for new funding.
Looking more closely at the portfolios, we benefited from keeping their
durations slightly shorter than those of our Lipper peer groups. Duration is an
indication of a portfolio's sensitivity to changes in interest rates; with
shorter durations, the portfolios were less susceptible to price declines
resulting from increases in interest rates. Given the continued strength of the
U.S. economy and its long-running expansion, the fiscal health of many
municipal issuers has been sustained or improved, resulting in overall high
credit quality in the market. At the same time, we felt that most lower-quality
bonds did not offer enough of a reward for taking on the additional credit
risk. Indeed, lower-quality bonds underperformed higher-rated securities during
the 12-month period, so our underweighting in lower-rated credits proved to be
helpful to performance. Nevertheless, we were able to selectively add
lower-rated bonds to the portfolios when we felt we were being paid to take on
the added risk. By doing so, we helped provide the portfolios with higher
yields and, therefore, more stability in the rising interest-rate environment.
In addition, as interest rates moved higher, we were able to purchase new
issues that offered higher yields and better protection from being called, or
redeemed, before maturity if interest rates were to fall once again.
We believe that active management can add value to fixed-income mutual funds.
Our investment process relies heavily on fundamental analysis, and less on
making major interest-rate projections. While we do generally have an outlook
on the direction of interest rates, we tend to adjust the portfolios' durations
only when we have a strong opinion one way or the other. Instead, we aim to
differentiate ourselves with MFS Original Research[RegTM], through which we
implement an issuer-oriented, bottom-up approach to selecting securities for
the portfolios. We have a strong team of research analysts who examine the
fundamental strengths and weaknesses of each issuer. We attempt to overweight
sectors that we believe have positive risk/reward profiles. Our goal is to
provide the highest sustainable income, while managing risk for the benefit of
our shareholders.
While each state was unique in terms of the types of securities it had
available, its issuance patterns, and its cash flows, no one region stood out
either as a leader or a laggard. The U.S. economy on the whole has performed
very well for several years. Instead of the cycles we used to experience, in
which one region would perform better than the others, we've seen an
environment in which every state has prospered. In terms of sectors, we've
gravitated toward those that have benefited from the current economic
expansion, and we believe their high credit quality should help provide the
portfolios with a reasonable amount of stability. This strategy would include
general obligation bonds, tax-backed bonds, essential-service credits such as
water and sewer, port authorities, higher education, and, in particular, public
utilities such as electric and gas. In this last category, our analysts have,
on a selective basis, recommended issuers that have generated consistent cash
flows due to steady revenue streams and sizable market shares. In some areas,
the utilities sector has been slow to experience the effects of competitive
price pressures predicted to emerge as a result of deregulation, while offering
opportunities because of restructuring that has occurred over the past few
years. At the same time, we've moved very cautiously on health care bonds.
Managed care competition and concerns about declines in Medicare and Medicaid
reimbursements resulting from the Balanced Budget Act of 1997 have caused
significant difficulties in this industry nationwide. Our reduced exposure to
this sector paid off in terms of the portfolios' relative performance.
Looking ahead, we believe that tax-equivalent yields offered by municipal bonds
in today's markets are extremely compelling. In some cases, municipal bond
yields are equal to or higher than yields on comparable-maturity, taxable U.S.
Treasuries. (Principal value and interest on Treasury securities are guaranteed
by the U.S. government if held to maturity.) Therefore, we feel that municipal
bonds are a relatively stable, attractive alternative to other fixed-income
asset classes, and that they offer investors an opportunity to reallocate their
current holdings after the tremendous runup in the equity markets.
3
<PAGE>
Management Review and Outlook - continued
As always, we will use our research-driven, bottom-up MFS Original Research to
search for opportunities in the municipal marketplace.
Respectfully,
/s/ Michael L. Dawson /s/ Geoffrey L. Schechter
Michael L. Dawson Geoffrey L. Schechter
Portfolio Manager Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are current only through the end of the period of the report as stated on the
cover. Their views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
The portfolios are actively managed, and current holdings may be different.
--------------------------------------------------------------------------------
PORTFOLIO MANAGERS' PROFILES
--------------------------------------------------------------------------------
Michael L. Dawson is Assistant Vice President and a portfolio manager of all
state municipal bond funds at MFS Investment Management[RegTM]. He is also a
portfolio manager of MFS[RegTM] Municipal Bond Fund, MFS[RegTM] Municipal
Limited Maturity Fund, and MFS[RegTM] Municipal Income Fund. He joined MFS
in 1998 and was named Assistant Vice President and portfolio manager in
1999. Prior to joining MFS, Mr. Dawson worked in institutional sales --
fixed income for Fidelity Capital Markets and Goldman Sachs. Prior to that,
he was a research analyst in the municipal bond group at Franklin Templeton.
He is a graduate of Santa Clara University and received an M.B.A. degree
from Babson College in May 1999.
Geoffrey L. Schechter is Vice President of MFS Investment Management[RegTM]
and a portfolio manager of MFS[RegTM] Municipal Bond Fund, MFS[RegTM]
Municipal Limited Maturity Fund, and MFS[RegTM] Municipal Income Fund. He is
also a portfolio manager of all state municipal bond funds. Mr. Schechter
joined MFS as Investment Officer in 1993 after working as a municipal credit
analyst with a major insurance company. He was named portfolio manager in
1993, Assistant Vice President in 1994, and Vice President in 1995. Mr.
Schechter is a graduate of the University of Texas and has an M.B.A. degree
from Boston University. He is a Chartered Financial Analyst and a Certified
Public Accountant.
All portfolio managers at MFS Investment Management[RegTM] are supported by
an investment staff of over 100 professionals utilizing MFS Original
Research[RegTM], a global, issuer-oriented, bottom-up process of selecting
securities.
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 investment professional, or by calling MFS
at 1-800-225-2606. Please read it carefully before investing or sending money.
4
<PAGE>
Performance Summary
--------------------------------------------------------------------------------
FUND FACTS
--------------------------------------------------------------------------------
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>
Mississippi August 6, 1992
New York June 6, 1988
North Carolina October 31, 1984
Pennsylvania February 1, 1993
South Carolina October 31, 1984
Tennessee August 12, 1988
Virginia October 31, 1984
West Virginia October 31, 1984
</TABLE>
<TABLE>
<CAPTION>
Net assets as of March 31, 2000:
<S> <C>
Mississippi $ 77.0 million
New York $121.6 million
North Carolina $373.6 million
Pennsylvania $ 43.0 million
South Carolina $152.6 million
Tennessee $121.6 million
Virginia $346.4 million
West Virginia $131.9 million
</TABLE>
<TABLE>
<CAPTION>
Class inception:
<S> <C> <C>
Mississippi Class A August 6, 1992
Class B September 7, 1993
New York Class A June 6, 1988
Class B September 7, 1993
North Carolina Class A October 31, 1984
Class B September 7, 1993
Class C January 3, 1994
Pennsylvania Class A February 1, 1993
Class B September 7, 1993
South Carolina Class A October 31, 1984
Class B September 7, 1993
Tennessee Class A August 12, 1988
Class B September 7, 1993
Virginia Class A October 31, 1984
Class B September 7, 1993
Class C January 3, 1994
West Virginia Class A October 31, 1984
Class B September 7, 1993
</TABLE>
5
<PAGE>
Performance Summary - continued
The following information illustrates the historical performance of each Fund's
original share class in comparison to various market indicators. Performance
results include the deduction of the maximum applicable sales charge and
reflect the percentage change in net asset value, including reinvestment of
dividends. Each Fund's results have been compared to the relevant state
municipal debt fund tracked by Lipper Inc., an independent firm that reports
mutual fund performance. For those states where Lipper does not track state-
specific fund performance, we have provided the average "other state" municipal
debt fund returns. Each Fund's results have also been compared to the Lehman
Brothers Municipal Bond Index, an unmanaged index of municipal bond investments
rated "Baa" or higher. However, while this index is considered the benchmark
for the performance of municipal bond funds, it is comprised of municipal bonds
issues nationwide, while each of the Funds in the Trust is limited to investing
in the bonds of a particular state. Benchmark comparisons are unmanaged and do
not reflect any fees or expenses. The performance of other share classes will
be greater than or less than the line shown. (See Notes to Performance
Summary.) It is not possible to invest directly in an index.
MFS[RegTM] MISSISSIPPI MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment
(For the period from the commencement of the Fund's investment operations,
August 6, 1992, through March 31, 2000. Index information is from August 1,
1992.)
[BEGIN PLOT POINTS]
<TABLE>
<CAPTION>
MFS Lehman
Mississippi Brothers
Municipal Municipal
Bond Fund - Bond
Class A Index
<S> <C> <C>
8/92 9525 10000
3/94 10085 10770
3/96 11553 12540
3/98 13496 14640
3/00 14170 15535
</TABLE>
[END PLOT POINTS]
Average Annual and Cumulative Total Rates of Return through March 31, 2000
<TABLE>
<CAPTION>
Class A
-------------------------------------------------
1 Year 3 Years 5 Years Life*
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -0.58% +16.57% +32.45% +48.77%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -0.58% +5.24% +5.78% +5.33%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.31% +3.55% +4.76% +4.66%
------------------------------------------------------------------------------------------------------
<CAPTION>
Comparative Indices++
-------------------------------------------------
1 Year 3 Years 5 Years Life*
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average other state municipal debt fund+ -2.05% +4.04% +4.81% +4.88%
------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index# -0.08% +5.52% +6.07% +5.91%
------------------------------------------------------------------------------------------------------
<CAPTION>
Class B
-------------------------------------------------
1 Year 3 Years 5 Years Life*
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.37% +13.86% +27.23% +40.84%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.37% +4.42% +4.93% +4.58%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.15% +3.49% +4.60% +4.58%
------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
August 6, 1992, through March 31, 2000. Index information is from August 1,
1992.
++Average annual rates of return.
+Source: Lipper Inc.
#Source: Standard & Poor's Micropal, Inc.
Notes to Performance Summary
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%.
Class B share performance includes the performance of the Fund's Class A shares
for periods prior to its inception (blended performance). Class B performance
has been adjusted to take into account the CDSC applicable to Class B shares
rather than the initial sales charge (load) applicable to Class A shares. This
blended performance has not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B shares
are higher than those of Class A, the blended Class B share performance is
higher than it would have been had Class B shares been offered for the entire
period.
All 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 capital gains.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. More recent
returns may be more or less than those shown. 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 a capital gains tax. See the
prospectus for details.
6
<PAGE>
Performance Summary - continued
MFS[RegTM] NEW YORK MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment
(For the 10-year period ended March 31, 2000)
[BEGIN PLOT POINTS]
<TABLE>
<CAPTION>
MFS Lehman
New York Brothers
Municipal Municipal
Bond Fund - Bond
Class A Index
<S> <C> <C>
3/90 9525 10000
3/92 11559 12013
3/94 13566 13832
3/96 15388 16105
3/98 17976 18802
3/00 18699 19951
</TABLE>
[END PLOT POINTS]
Average Annual and Cumulative Total Rates of Return through March 31, 2000
<TABLE>
<CAPTION>
Class A
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.06% +16.08% +29.99% +96.32%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.06% +5.10% +5.39% +6.98%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.76% +3.41% +4.37% +6.46%
--------------------------------------------------------------------------------------------------
<CAPTION>
Comparative Indices++
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average New York municipal debt fund+ -2.43% +4.28% +4.91% +6.47%
--------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index# -0.08% +5.52% +6.07% +7.15%
--------------------------------------------------------------------------------------------------
<CAPTION>
Class B
-------------------------------------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.89% +13.52% +24.99% +86.32%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.89% +4.32% +4.56% +6.42%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.65% +3.39% +4.23% +6.42%
------------------------------------------------------------------------------------------------------
</TABLE>
++Average annual rates of return.
+Source: Lipper Inc.
#Source: Standard & Poor's Micropal, Inc.
Notes to Performance Summary
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%.
Class B share performance includes the performance of the Fund's Class A shares
for periods prior to its inception (blended performance). Class B performance
has been adjusted to take into account the CDSC applicable to Class B shares
rather than the initial sales charge (load) applicable to Class A shares. This
blended performance has not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B shares
are higher than those of Class A, the blended Class B share performance is
higher than it would have been had Class B shares been offered for the entire
period.
All 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 capital gains.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. More recent
returns may be more or less than those shown. 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 a capital gains tax. See the
prospectus for details.
7
<PAGE>
Performance Summary - continued
MFS[RegTM] NORTH CAROLINA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment
(For the 10-year period ended March 31, 2000)
[BEGIN PLOT POINTS]
<TABLE>
<CAPTION>
MFS Lehman
North Carolina Brothers
Municipal Municipal
Bond Fund - Bond
Class A Index
<S> <C> <C>
3/90 9525 10000
3/92 11129 12013
3/94 12567 13832
3/96 14176 16105
3/98 16441 18802
3/00 16936 19951
</TABLE>
[END PLOT POINTS]
Average Annual and Cumulative Total Rates of Return through March 31, 2000
<TABLE>
<CAPTION>
Class A
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.67% +13.68% +27.30% +77.80%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.67% +4.37% +4.95% +5.92%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -6.34% +2.69% +3.93% +5.41%
--------------------------------------------------------------------------------------------------
<CAPTION>
Class C
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -2.22% +11.60% +23.36% +70.54%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -2.22% +3.73% +4.29% +5.48%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -3.16% +3.73% +4.29% +5.48%
--------------------------------------------------------------------------------------------------
<CAPTION>
Comparative Indices++
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average North Carolina municipal debt fund+ -2.17% +4.28% +4.85% +6.03%
--------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index# -0.08% +5.52% +6.07% +7.15%
--------------------------------------------------------------------------------------------------
<CAPTION>
Class B
-------------------------------------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -2.22% +11.60% +23.10% +69.97%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -2.22% +3.73% +4.24% +5.45%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.97% +2.80% +3.91% +5.45%
------------------------------------------------------------------------------------------------------
</TABLE>
++Average annual rates of return.
+Source: Lipper Inc.
#Source: Standard & Poor's Micropal, Inc.
Notes to Performance Summary
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%. Class C Share Performance Including Sales Charge takes into account the
deduction of the 1% CDSC applicable to Class C shares redeemed within 12
months.
Class B and C share performance include the performance of the Fund's Class A
shares for periods prior to their inception (blended performance). Class B and
C blended performance has been adjusted to take into account the CDSC
applicable to Class B and C shares rather than the initial sales charge (load)
applicable to Class A shares. These blended performance figures have not been
adjusted to take into account differences in class-specific operating expenses.
Because operating expenses of Class B and C shares are higher than those of
Class A, the blended Class B and C share performance is higher than it would
have been had Class B and C shares been offered for the entire period.
All 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 capital gains.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. More recent
returns may be more or less than those shown. 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 a capital gains tax. See the
prospectus for details.
8
<PAGE>
Performance Summary - continued
MFS[RegTM] PENNSYLVANIA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment
(For the period from the commencement of the Fund's investment operations,
February 1, 1993, through March 31, 2000.)
[BEGIN PLOT POINTS]
<TABLE>
<CAPTION>
MFS Lehman
Pennsylvania Brothers
Municipal Municipal
Bond Fund - Bond
Class A Index
<S> <C> <C>
2/93 9525 10000
3/94 9722 10490
3/96 11234 12214
3/98 13128 14259
3/00 13834 15131
</TABLE>
[END PLOT POINTS]
Average Annual and Cumulative Total Rates of Return through March 31, 2000
<TABLE>
<CAPTION>
Class A
-------------------------------------------------
1 Year 3 Years 5 Years Life*
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -0.45% +17.65% +31.58% +45.24%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -0.45% +5.57% +5.64% +5.35%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.18% +3.87% +4.62% +4.64%
------------------------------------------------------------------------------------------------------
<CAPTION>
Comparative Indices++
-------------------------------------------------
1 Year 3 Years 5 Years Life*
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Pennsylvania municipal debt fund+ -2.72% +3.91% +4.87% +5.10%
------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index# -0.08% +5.52% +6.07% +5.95%
------------------------------------------------------------------------------------------------------
<CAPTION>
Class B
-------------------------------------------------
1 Year 3 Years 5 Years Life*
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.25% +14.86% +26.69% +37.66%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.25% +4.73% +4.84% +4.57%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.03% +3.81% +4.51% +4.57%
------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
February 1, 1993, through March 31, 2000.
++Average annual rates of return.
+Source: Lipper Inc.
#Source: Standard & Poor's Micropal, Inc.
Notes to Performance Summary
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%.
Class B share performance includes the performance of the Fund's Class A shares
for periods prior to its inception (blended performance). Class B performance
has been adjusted to take into account the CDSC applicable to Class B shares
rather than the initial sales charge (load) applicable to Class A shares. This
blended performance has not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B shares
are higher than those of Class A, the blended Class B share performance is
higher than it would have been had Class B shares been offered for the entire
period.
All 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 capital gains.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. More recent
returns may be more or less than those shown. 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 a capital gains tax. See the
prospectus for details.
9
<PAGE>
Performance Summary - continued
MFS[RegTM] SOUTH CAROLINA MUNICIPAL BOND FUND
[BEGIN PLOT POINTS]
<TABLE>
<CAPTION>
MFS Lehman
South Carolina Brothers
Municipal Municipal
Bond Fund - Bond
Class A Index
<S> <C> <C>
3/90 9525 10000
3/92 11229 12013
3/94 12742 13832
3/96 14469 16105
3/98 16719 18802
3/00 17047 19951
</TABLE>
[END PLOT POINTS]
Growth of a Hypothetical $10,000 Investment
(For the 10-year period ended March 31, 2000)
Average Annual and Cumulative Total Rates of Return through March 31, 2000
<TABLE>
<CAPTION>
Class A
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -2.27% +12.79% +25.11% +78.97%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -2.27% +4.09% +4.58% +5.99%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -6.91% +2.42% +3.57% +5.48%
--------------------------------------------------------------------------------------------------
<CAPTION>
Comparative Indices++
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average South Carolina municipal debt fund+ -2.02% +4.12% +4.94% +6.19%
--------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index# -0.08% +5.52% +6.07% +7.15%
--------------------------------------------------------------------------------------------------
<CAPTION>
Class B
-------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -2.82% +10.62% +20.98% +71.09%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -2.82% +3.42% +3.88% +5.52%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -6.53% +2.50% +3.55% +5.52%
------------------------------------------------------------------------------------------------------
</TABLE>
++Average annual rates of return.
+Source: Lipper Inc.
#Source: Standard & Poor's Micropal, Inc.
Notes to Performance Summary
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%.
Class B share performance includes the performance of the Fund's Class A shares
for periods prior to its inception (blended performance). Class B performance
has been adjusted to take into account the CDSC applicable to Class B shares
rather than the initial sales charge (load) applicable to Class A shares. This
blended performance has not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B shares
are higher than those of Class A, the blended Class B share performance is
higher than it would have been had Class B shares been offered for the entire
period.
All 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 capital gains.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. More recent
returns may be more or less than those shown. 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 a capital gains tax. See the
prospectus for details.
10
<PAGE>
Performance Summary - continued
MFS[RegTM] TENNESSEE MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment
(For the 10-year period ended March 31, 2000)
[BEGIN PLOT POINTS]
<TABLE>
<CAPTION>
MFS Lehman
Tennessee Brothers
Municipal Municipal
Bond Fund - Bond
Class A Index
<S> <C> <C>
3/90 9525 10000
3/92 11192 12013
3/94 12768 13832
3/96 14415 16105
3/98 16735 18802
3/00 17231 19951
</TABLE>
[END PLOT POINTS]
Average Annual and Cumulative Total Rates of Return through March 31, 2000
<TABLE>
<CAPTION>
Class A
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.75% +14.41% +27.49% +80.90%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.75% +4.59% +4.98% +6.11%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -6.42% +2.91% +3.96% +5.59%
--------------------------------------------------------------------------------------------------
<CAPTION>
Comparative Indices++
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Tennessee municipal debt fund+ -2.02% +4.35% +5.06% +6.14%
--------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index# -0.08% +5.52% +6.07% +7.15%
--------------------------------------------------------------------------------------------------
<CAPTION>
Class B
-------------------------------------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -2.39% +12.22% +23.30% +72.75%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -2.39% +3.92% +4.28% +5.62%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -6.11% +3.00% +3.94% +5.62%
------------------------------------------------------------------------------------------------------
</TABLE>
++Average annual rates of return.
+Source: Lipper Inc.
#Source: Standard & Poor's Micropal, Inc.
Notes to Performance Summary
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%.
Class B share performance includes the performance of the Fund's Class A shares
for periods prior to its inception (blended performance). Class B performance
has been adjusted to take into account the CDSC applicable to Class B shares
rather than the initial sales charge (load) applicable to Class A shares. This
blended performance has not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B shares
are higher than those of Class A, the blended Class B share performance is
higher than it would have been had Class B shares been offered for the entire
period.
All 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 capital gains.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. More recent
returns may be more or less than those shown. 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 a capital gains tax. See the
prospectus for details.
11
<PAGE>
Performance Summary - continued
MFS[RegTM] VIRGINIA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment
(For the 10-year period ended March 31, 2000)
[BEGIN PLOT POINTS]
<TABLE>
<CAPTION>
MFS Lehman
Virginia Brothers
Municipal Municipal
Bond Fund - Bond
Class A Index
<S> <C> <C>
3/90 9525 10000
3/92 11241 12013
3/94 12640 13832
3/96 14227 16105
3/98 16317 18802
3/00 16900 19951
</TABLE>
[END PLOT POINTS]
Average Annual and Cumulative Total Rates of Return through March 31, 2000
<TABLE>
<CAPTION>
Class A
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.09% +14.26% +26.54% +77.43%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.09% +4.54% +4.82% +5.90%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.79% +2.86% +3.81% +5.39%
--------------------------------------------------------------------------------------------------
<CAPTION>
Class C
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.73% +12.06% +22.73% +70.12%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.73% +3.87% +4.18% +5.46%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -2.67% +3.87% +4.18% +5.46%
--------------------------------------------------------------------------------------------------
<CAPTION>
Comparative Indices++
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Virginia municipal debt fund+ -1.68% +4.49% +5.22% +6.20%
--------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index# -0.08% +5.52% +6.07% +7.15%
--------------------------------------------------------------------------------------------------
<CAPTION>
Class B
------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.73% +12.07% +22.48% +69.63%
-----------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.73% +3.87% +4.14% +5.43%
-----------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -5.49% +2.95% +3.80% +5.43%
-----------------------------------------------------------------------------------------------------
</TABLE>
++Average annual rates of return.
+Source: Lipper Inc.
#Source: Standard & Poor's Micropal, Inc.
Notes to Performance Summary
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%. Class C Share Performance Including Sales Charge takes into account the
deduction of the 1% CDSC applicable to Class C shares redeemed within 12
months.
Class B and C share performance include the performance of the Fund's Class A
shares for periods prior to their inception (blended performance). Class B and
C blended performance has been adjusted to take into account the CDSC
applicable to Class B and C shares rather than the initial sales charge (load)
applicable to Class A shares. These blended performance figures have not been
adjusted to take into account differences in class-specific operating expenses.
Because operating expenses of Class B and C shares are higher than those of
Class A, the blended Class B and C share performance is higher than it would
have been had Class B and C shares been offered for the entire period.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. More recent
returns may be more or less than those shown. 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 a capital gains tax. See the
prospectus for details.
12
<PAGE>
Performance Summary - continued
MFS[RegTM] WEST VIRGINIA MUNICIPAL BOND FUND
Growth of a Hypothetical $10,000 Investment
(For the 10-year period ended March 31, 2000)
[BEGIN PLOT POINTS]
<TABLE>
<CAPTION>
MFS Lehman
West Virginia Brothers
Municipal Municipal
Bond Fund - Bond
Class A Index
<S> <C> <C>
3/90 9525 10000
3/92 11305 12013
3/94 12884 13832
3/96 14565 16105
3/98 16767 18802
3/00 17228 19951
</TABLE>
[END PLOT POINTS]
Average Annual and Cumulative Total Rates of Return through March 31, 2000
<TABLE>
<CAPTION>
Class A
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -1.89% +12.43% +26.07% +80.87%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -1.89% +3.98% +4.74% +6.11%
--------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -6.55% +2.31% +3.73% +5.59%
--------------------------------------------------------------------------------------------------
<CAPTION>
Comparative Indices++
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average other state municipal debt fund+ -2.05% +4.04% +4.81% +5.76%
--------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index# -0.08% +5.52% +6.07% +7.15%
--------------------------------------------------------------------------------------------------
<CAPTION>
Class B
-------------------------------------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -2.53% +10.18% +21.80% +72.75%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -2.53% +3.28% +4.02% +5.62%
------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -6.25% +2.37% +3.69% +5.62%
------------------------------------------------------------------------------------------------------
</TABLE>
++Average annual rates of return.
+Source: Lipper Inc.
#Source: Standard & Poor's Micropal, Inc.
Notes to Performance Summary
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%.
Class B share performance includes the performance of the Fund's Class A shares
for periods prior to its inception (blended performance). Class B performance
has been adjusted to take into account the CDSC applicable to Class B shares
rather than the initial sales charge (load) applicable to Class A shares. This
blended performance has not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B shares
are higher than those of Class A, the blended Class B share performance is
higher than it would have been had Class B shares been offered for the entire
period.
All 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 capital gains.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. More recent
returns may be more or less than those shown. 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 a capital gains tax. See the
prospectus for details.
13
<PAGE>
Portfolio of Investments - March 31, 2000
MFS MISSISSIPPI MUNICIPAL BOND FUND
Municipal Bonds - 98.2%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 13.1%
Commonwealth of Puerto Rico, MBIA, 7.882s, 2008++++ $2,000 $ 2,116,640
Commonwealth of Puerto Rico, FSA, 5.75s, 2017 1,000 1,024,580
Gulfport, MS, School District, AMBAC, 5s, 2016 580 536,372
Gulfport, MS, Water & Sewer Rev., FSA, 5.625s, 2024 500 477,990
Hinds County, MS, MBIA, 6.25s, 2010 1,660 1,782,126
Hinds County, MS, MBIA, 6.25s, 2011 1,285 1,380,142
Puerto Rico Municipal Finance Agency, RITES,
FSA, 6.857s, 2017 +++++ 750 755,535
State of Mississippi, 6s, 2018 1,000 1,026,540
Tupelo, MS, Public School District, MBIA, 5.375s, 2015 1,000 983,690
-----------
$10,083,615
------------------------------------------------------------------------------------------
State and Local Appropriation - 8.5%
Medical Center Educational
Building Corp., MS (University of Mississippi
Medical Center), MBIA, 5.65s, 2009 $1,000 $ 1,028,670
Mississippi Development Bank (Natchez
Mississippi Convention Center), AMBAC, 6s, 2021 750 764,025
Puerto Rico Public Finance Corp., RITES, AMBAC,
6.857s, 2013 +++++ 500 519,990
Southhaven, MI, Mississippi Development Bank,
Special Obligation (Recreation Facilities), 6.2s, 2020 400 406,308
State of Mississippi, Certificates of Participation
(Rehabilitation Services), 6.1s, 2014 2,000 2,027,940
Walnut Grove, MS, Correctional Authority,
AMBAC, 6s, 2019 1,750 1,779,873
-----------
$ 6,526,806
------------------------------------------------------------------------------------------
Refunded and Special Obligations - 13.3%
Columbus, MS, Water & Sewer Rev., MBIA, 6.5s, 2004 $1,000 $ 1,076,720
Hinds Community College, MS, Conference and
Training Center, 6.5s, 2014 1,320 1,340,922
Mississippi Home Corp., 0s, 2013 4,920 2,304,036
Mississippi Hospital Equipment & Facilities
Authority Rev. (Magnolia Regional Health
Center), 7.375s, 2001 1,500 1,586,145
Puerto Rico Highway & Transportation Authority,
6.625s, 2002 1,900 2,012,385
State of Mississippi, 6.75s, 2004 1,800 1,936,980
-----------
$10,257,188
------------------------------------------------------------------------------------------
Airport and Port Revenue - 2.6%
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 $2,000 $ 1,969,420
------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 5.7%
Guam Power Authority
Rev., RITES, AMBAC, 5.956s, 2013 +++++ $1,000 $ 986,040
Puerto Rico Electric Power Authority, FSA, 8.078s,
2023 ++++ 1,000 1,077,650
Warren County, MS, Pollution Control Rev.
(Mississippi Power & Light), 7s, 2022 1,000 1,038,260
Washington County, MS, Pollution Control Rev.
(Mississippi Power & Light), 7s, 2022 1,230 1,277,060
-----------
$ 4,379,010
------------------------------------------------------------------------------------------
Health Care Revenue - 2.9%
Corinth Alcorn County, MS, Hospital Rev.
(Magnolia Regional Health Center), 5.5s, 2021 $ 670 $ 520,617
Jones County, MS, Hospital Rev. (South Central
Regional Medical Center), 5.5s, 2017 1,000 834,920
Mississippi Hospital Equipment & Facilities
Authority Rev., 6s, 2016 1,000 878,010
-----------
$ 2,233,547
------------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Revenue (Corporate Guarantee) - 8.4%
Jones County, MS, Solid Waste Disposal Rev.
(International Paper Co.), 5.8s, 2021 $1,000 $ 916,470
Lowndes County, MS, Solid Waste Disposal &
Pollution Control Rev. (Weyerhauser Co.),
6.8s, 2022 3,250 3,478,280
Mississippi Business Finance Corp. (Jackson
Municipal Airport/Airborne Freight), 7.15s, 2007 985 1,050,325
Warren County, MS, Pollution Control Rev.
(International Paper Co.), 6.6s, 2019 1,000 1,010,250
-----------
$ 6,455,325
------------------------------------------------------------------------------------------
Insured Health Care Revenue - 16.7%
Alcorn County, MS, Corinth Hospital Rev.
(Magnolia Regional Health Center),
AMBAC, 5.75s, 2013 $2,000 $ 2,021,720
Gulfport, MS, Hospital Facilities (Memorial
Hospital), MBIA, 6.125s, 2015 2,250 2,306,048
Gulfport, MS, Hospital Facilities (Memorial
Hospital), MBIA, 6.2s, 2018 1,000 1,021,950
Hinds County, MS, Rev. (Methodist Hospital &
Rehabilitation Center), AMBAC, 5.6s, 2012 2,335 2,400,170
Mississippi Development Bank, Special Obligation
(Adams County Hospital), FSA, 5.75s, 2016 1,000 1,000,600
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist), MBIA, 6.5s, 2010 1,190 1,270,587
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist), MBIA, 6s, 2013 750 768,547
Mississippi Hospital Equipment & Facilities
Authority Rev. (Rush Medical Foundation),
Connie Lee, 6.7s, 2018 2,000 2,084,280
-----------
$12,873,902
------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.3%
Gulfport, MS, Community Development (Oakview
Apartments), FNMA, 7.4s, 2025 $1,755 $ 1,821,865
Jackson, MS, Elderly Housing Corp., Mortgage
Rev. (Delhaven Manor), FHA, 7.375s, 2024 1,930 1,996,373
Ridgeland, MS, Urban Renewal, Multifamily
Housing Rev. (Northbrook I & III Apartments),
6.15s, 2019 ### 300 273,399
-----------
$ 4,091,637
------------------------------------------------------------------------------------------
Single Family Housing Revenue - 7.6%
Mississippi Home Corp., GNMA, 6.5s, 2024 $2,650 $ 2,695,686
Mississippi Home Corp., GNMA, 6.625s, 2027 1,350 1,381,833
Mississippi Home Corp., GNMA, 7.55s, 2027 1,215 1,300,803
Mississippi Home Corp., GNMA, 6.3s, 2031 500 505,085
-----------
$ 5,883,407
------------------------------------------------------------------------------------------
Turnpike Revenue - 1.9%
Puerto Rico Highway & Transportation Authority,
FSA, 5s, 2016 $1,500 $ 1,427,430
------------------------------------------------------------------------------------------
Universities - 3.0%
Southhaven, MI, Mississippi Development Bank,
Special Obligation (Recreation Facilities),
5.875s, 2014 $ 375 $ 381,135
University of Mississippi, Educational Building
Corp. (Athletic Facilities), 6.2s, 2016 ### 1,000 1,015,910
University of Mississippi Educational Building
Corp. (Performing Arts Center), AMBAC,
5.25s, 2018 1,000 945,730
-----------
$ 2,342,775
------------------------------------------------------------------------------------------
</TABLE>
14 - MMS
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------------------------------------------------------------
<S> <C> <C>
Water and Sewer Utility Revenue - 6.7%
Gautier, MS, Utility District, Utility Systems Rev.,
FGIC, 6.375s, 2019 $1,300 $ 1,330,706
Jackson, MS, Water & Sewer Systems Rev., FGIC,
5.25s, 2017 1,170 1,114,554
Meridian, MS, Water & Sewer Rev., AMBAC,
6s, 2010 1,500 1,579,185
Meridian, MS, Water & Sewer Rev., AMBAC,
6.2s, 2012 650 689,903
Meridian, MS, Water & Sewer Rev., AMBAC,
6.2s, 2013 400 415,148
-----------
$ 5,129,496
------------------------------------------------------------------------------------
Other - 2.5%
Mississippi Development Bank (Diamond Lakes
Utilities), 6.25s, 2017 $1,250 $ 1,189,012
Mississippi Development Bank (Tupelo
Fairgrounds), AMBAC, 5s, 2017 785 718,236
-----------
$ 1,907,248
------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $74,477,922) $75,560,806
------------------------------------------------------------------------------------
Floating Rate Demand Note - 0.2%
------------------------------------------------------------------------------------
Perry County, MS, Pollution Control Rev., due
04/03/00, at Identified Cost $ 200 $ 200,000
------------------------------------------------------------------------------------
Total Investments (Identified Cost, $74,677,922) $75,760,806
Other Assets, Less Liabilities - 1.6% 1,198,256
------------------------------------------------------------------------------------
Net assets - 100.0% $76,959,062
------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements.
</TABLE>
MFS NEW YORK MUNICIPAL BOND FUND
Municipal Bonds - 95.6%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-----------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 3.0%
Port Byron, NY, Central School District, AMBAC,
7.4s, 2012 $ 500 $ 598,245
Port Byron, NY, Central School District, AMBAC,
7.4s, 2013 500 600,735
Port Byron, NY, Central School District, AMBAC,
7.4s, 2014 500 605,390
Port Byron, NY, Central School District, AMBAC,
7.4s, 2015 500 606,185
Washingtonville, NY, Central School District, FGIC,
7.35s, 2008 550 630,900
Washingtonville, NY, Central School District, FGIC,
7.35s, 2009 550 636,553
-----------
$ 3,678,008
-----------------------------------------------------------------------------------
State and Local Appropriation - 22.4%
Metropolitan Transportation Authority, NY,
Dedicated Tax Fund, FGIC, 5.25s, 2014 $1,500 $ 1,476,225
Metropolitan Transportation Authority, NY, Service
Contract, 7.375s, 2008 2,000 2,204,520
Metropolitan Transportation Authority, NY, Service
Contract, 5.5s, 2017 750 727,852
Metropolitan Transportation Authority, NY, Service
Contract, AMBAC, 5.75s, 2013 1,825 1,905,282
New York Dormitory Authority Rev. (City
University), 5.625s, 2016 1,450 1,453,422
New York Dormitory Authority Rev. (City
University), AMBAC, 5.75s, 2018 1,800 1,846,890
New York Dormitory Authority Rev. (City
University), FSA, 5.75s, 2013 4,250 4,436,958
New York Dormitory Authority Rev. (State
University), 5s, 2013 1,000 949,730
New York Dormitory Authority Rev. (State
University), 5.875s, 2017 1,130 1,163,696
New York Dormitory Authority Rev. (State
University), FSA, 5.875s, 2017 1,435 1,498,786
New York Medical Care Facilities Financing
Agency Rev., 6.375s, 2014 15 15,449
New York Medical Care Facilities Financing
Agency Rev., MBIA, 6s, 2025 20 20,209
New York Urban Development Corp. Rev.
(Correctional Facilities), AMBAC, 0s, 2009 5,000 3,175,450
New York Urban Development Corp. Rev.
(Correctional Facilities), AMBAC, 5.25s, 2015 1,600 1,553,104
New York Urban Development Corp. Rev.
(Correctional Facilities), FSA, 5.25s, 2014 2,000 1,974,220
New York Urban Development Corp. Rev. (State
Facilities), AMBAC, 5.6s, 2015 2,750 2,794,055
-----------
$27,195,848
-----------------------------------------------------------------------------------
Refunded and Special Obligations - 15.9%
New York City, NY, 8s, 2001 $ 490 $ 518,660
New York City, NY, 8.25s, 2001 2,000 2,141,460
New York City, NY, 7.2s, 2004 1,000 1,099,410
New York City, NY, 7.3s, 2004 880 972,726
New York City, NY, 7.3s, 2004 5,000 5,516,500
New York City, NY, 7.375s, 2004 1,600 1,773,264
New York City, NY, Municipal Water & Sewer
Finance Authority, 7s, 2001 745 773,861
New York Energy Research & Development
Authority, Electric Facilities Rev., 7.15s, 2002 1,975 2,104,698
New York Medical Care Facilities Financing
Agency Rev. (Mental Health Services),
7.875s, 2000 340 351,339
</TABLE>
15 - MNY
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - continued
New York Medical Care Facilities Financing
Agency Rev. (Mental Health Services),
6.375s, 2004 $ 965 $ 1,037,809
New York Medical Care Facilities Financing
Agency Rev. (Montefiore Medical), AMBAC,
6.5s, 2005 2,550 2,771,646
Puerto Rico Aqueduct & Sewer Authority Rev.,
FSA, 9s, 2005 250 289,155
-----------
$19,350,528
------------------------------------------------------------------------------------
Airport and Port Revenue - 1.7%
New York City, NY, Industrial Development
Agency, Special Facilities Rev. (American
Airlines), 6.9s, 2024 $1,000 $ 1,029,520
Port Authority NY & NJ, Special Obligation
(JFK International), MBIA, 6.25s, 2015 1,000 1,078,900
-----------
$ 2,108,420
------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 3.3%
Guam Power Authority Rev., RITES, AMBAC,
5.956s, 2013 +++++ $1,060 $ 1,045,202
Guam Power Authority Rev., RITES, AMBAC,
5.956s, 2014 +++++ 500 488,750
New York Energy Research & Development
Authority, Electric Facilities Rev., 7.15s, 2022 725 752,347
Port Authority NY & NJ, Special Obligation,
6.75s, 2019 1,750 1,779,418
-----------
$ 4,065,717
------------------------------------------------------------------------------------
Health Care Revenue - 4.9%
Albany, NY, Industrial Development Authority,
Civic Facilities Rev., 8.25s, 2004 $1,375 $ 1,424,775
Chautauqua County, NY, Industrial Development
Agency, Civic Facility Rev. (Womans Christian
Assn.), 6.35s, 2017 200 183,222
Chautauqua County, NY, Industrial Development
Agency, Civic Facility Rev. (Womans Christian
Assn.), 6.4s, 2029 ### 500 417,765
Dutchess, NY, Industrial Development Agency,
Civic Facilities Rev., 8.625s, 2016 1,035 1,080,995
Fulton County, NY, Industrial Development Agency,
Civic Facilities Rev. (Nathan Littauer Hospital
Assn.), 5.75s, 2009 750 673,778
New York City, NY, Industrial Development
Agency, Civic Facilities Rev. (A Very Special
Place, Inc.), 5.75s, 2029 1,000 873,840
New York Medical Care Facilities Finance Agency
Rev., Mental Health Services (Huntington
Mortgage), 6.5s, 2014 1,250 1,269,025
-----------
$ 5,923,400
------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 4.7%
Allegany County, NY, Industrial Development
Agency, Solid Waste Rev. (Atlantic Richfield),
6.625s, 2016 $1,000 $ 1,043,890
Essex County, NY, Industrial Development Agency
(International Paper Co.), 5.55s, 2014 750 730,013
Essex County, NY, Industrial Development Agency
(International Paper Co.), 6.15s, 2021 1,000 976,860
Fulton County, NY, Industrial Development Agency
(Crossroads Incubator), 8.75s, 2009 920 948,851
Monroe County, NY, Industrial Development
Agency (Weyerhaeuser Co.), 9s, 2006 1,000 1,002,970
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Revenue (Corporate Guarantee) - continued
Onondaga County, NY, Industrial Development
Agency (Bristol-Meyers Squibb), 5.75s, 2024 $1,000 $ 974,590
-----------
$ 5,677,174
------------------------------------------------------------------------------------
Insured Health Care Revenue - 2.8%
Nassua County, NY (Nassua Health Care Corp.),
FSA, 6s, 2014 $1,000 $ 1,042,960
New York Dormitory Authority Rev. (St. Vincent's
Hospital), FHA, 7.375s, 2011 2,215 2,319,858
-----------
$ 3,362,818
------------------------------------------------------------------------------------
Multi-Family Housing Revenue -0.8%
New York City, NY, Housing Development Corp.,
5.6s, 2019 $ 400 $ 387,868
New York City, NY, Housing Development Corp.
(South Bronx Cooperatives), 8.1s, 2023 555 567,266
-----------
$ 955,134
------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.3%
New York City, NY, Transitional Finance Authority
Rev., 5.75s, 2018 $2,730 $ 2,758,174
------------------------------------------------------------------------------------
Single Family Housing Revenue - 2.0%
New York Mortgage Agency Rev., 7.375s, 2011 $ 475 $ 482,296
New York Mortgage Agency Rev., 5.85s, 2018 2,000 1,970,540
-----------
$ 2,452,836
------------------------------------------------------------------------------------
Turnpike Revenue - 17.0%
Metropolitan Transportation Authority, NY, FGIC,
5.875s, 2018 $1,980 $ 2,017,224
New York Thruway Authority Rev., Highway &
Bridges, FGIC, 5.125s, 2015 2,400 2,292,192
New York Thruway Authority Rev., Highway &
Bridges, MBIA, 5.75s, 2015 1,000 1,024,130
New York Thruway Authority Rev., Highway &
Bridges, MBIA, 5.375s, 2016 2,000 1,962,780
Niagara Falls, NY, Bridge Commission Toll Rev.,
RITES, FGIC, 5.726s, 2015 +++++ 3,500 3,396,400
Triborough Bridge & Tunnel Authority, NY,
5.5s, 2017 10,000 10,030,100
-----------
$20,722,826
------------------------------------------------------------------------------------
Universities - 4.9%
Hempstead Town, NY, Civic Facilities Rev. (Hofstra
University), MBIA, 5.8s, 2015 $1,500 $ 1,528,470
Islip, NY, Community Development Agency Rev.
(New York Institute of Technology), 7.5s, 2026 1,990 2,045,680
Monroe County, NY, Industrial Development
Agency (Student Housing-Collegiate),
5.375s, 2029 1,000 862,240
Tompkins County, NY, Industrial Development
Agency (Cornell University), 5.625s, 2020 1,000 996,860
Utica, NY, Industrial Development Agency (Utica
College), 5.3s, 2008 500 481,465
-----------
$ 5,914,715
------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 9.5%
New York City, NY, Municipal Water & Sewer
Finance Authority, 6s, 2010 $ 620 $ 660,058
New York City, NY, Municipal Water & Sewer
Finance Authority, 7.1s, 2012 675 697,930
New York Environmental Facilities Corp., Pollution
Control Rev., 5.75s, 2010 2,235 2,344,582
New York Environmental Facilities Corp., Pollution
Control Rev., 6.875s, 2010 220 228,512
</TABLE>
16 - MNY
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-----------------------------------------------------------------------------------
<S> <C> <C>
Water and Sewer Utility Revenue - continued
New York Environmental Facilities Corp., Pollution
Control Rev., 5.75s, 2012 $1,080 $ 1,132,704
New York Environmental Facilities Corp., Water
Facilities Rev., 8.85s, 2015 2,500 2,684,575
Suffolk County, NY, Water Authority, MBIA,
5.1s, 2012 1,895 1,882,322
Suffolk County, NY, Water Authority, MBIA,
5.1s, 2013 2,000 1,965,380
------------
$ 11,596,063
-----------------------------------------------------------------------------------
Other - 0.4%
Suffolk County, NY, Judicial Facilities Rev.
(John P. Cohalan Complex), AMBAC, 5.75s, 2012 $ 500 $ 519,465
-----------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $112,175,517) $116,281,126
-----------------------------------------------------------------------------------
Floating Rate Demand Note - 0.7%
-----------------------------------------------------------------------------------
Long Island, NY, Power Authority, Electric
Systems Rev., due 04/03/00, at Identified Cost $ 800 $ 800,000
-----------------------------------------------------------------------------------
Total Investments (Identified Cost, $112,975,517) $117,081,126
Other Assets, Less Liabilities - 3.7% 4,546,191
-----------------------------------------------------------------------------------
Net assets - 100.0% $121,627,317
-----------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements.
</TABLE>
MFS NORTH CAROLINA MUNICIPAL BOND FUND
Municipal Bonds - 97.9%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-----------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 6.7%
Cumberland County, NC, 5.8s, 2019 $ 4,400 $ 4,490,904
Durham, NC, 5.9s, 2013 2,400 2,508,264
Durham, NC, 5.9s, 2014 2,400 2,501,976
Hertford County, NC, 9.5s, 2000 100 100,000
Hertford County, NC, 9.5s, 2001 100 102,854
Hertford County, NC, 9.5s, 2002 100 101,775
Johnston County, NC, FGIC, 5.6s, 2018 2,000 2,006,380
New Hanover County, NC, Public Improvement,
5.75s, 2017 1,000 1,022,530
New Hanover County, NC, Public Improvement,
5.8s, 2019 4,200 4,277,448
State of North Carolina, RITES, 4.669s, 2015 +++++ 5,000 4,187,300
State of North Carolina, RITES, 4.669s, 2017 +++++ 5,000 3,824,100
-----------
$25,123,531
-----------------------------------------------------------------------------------
State and Local Appropriation - 9.0%
Charlotte, NC, Certificates of Participation
(Convention Facilities), AMBAC, 0s, 2004 $ 3,435 $ 2,716,501
Charlotte, NC, Certificates of Participation
(Convention Facilities), AMBAC, 0s, 2005 4,810 3,605,865
Charlotte, NC, Certificates of Participation
(Convention Facilities), AMBAC, 0s, 2006 1,075 764,024
Charlotte, NC, Certificates of Participation
(Convention Facilities), AMBAC, 0s, 2008 3,000 1,908,660
Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC, 0s, 2011 425 228,115
Cumberland County, NC, Certificates of
Participation (Civic Center), AMBAC, 0s, 2013 1,000 469,140
Dare County, NC, MBIA, 6.6s, 2006, 2,100 2,188,998
Durham, NC, Certificates of Participation (New
Durham Corp.), 6.875s, 2009 1,750 1,816,832
Franklin County, NC, Certificates of Participation
(Jail and School), FGIC, 6.625s, 2014, 2,000 2,135,700
Harnett County, NC, Certificates of Participation,
AMBAC, 6.2s, 2006, 1,000 1,064,720
Harnett County, NC, Certificates of Participation,
AMBAC, 6.2s, 2009, 1,500 1,586,670
Puerto Rico Housing, Bank and Finance Agency,
7.5s, 2006 7,000 7,708,750
Puerto Rico Public Finance Corp., RITES, AMBAC,
6.857s, 2016 +++++ 1,500 1,513,770
Randolph County, NC, FSA, 5.6s, 2018 3,000 2,985,840
Sampson Area Development Corp., NC,
Installment Payment Rev., MBIA, 4.75s, 2019 1,000 867,100
Scotland County, NC, Certificates of Participation
(Jail and Courthouse), CAP GTY, 6.75s, 2011 1,000 1,034,550
Union County, NC, Certificates of Participation,
AMBAC, 6.375s, 2012, 1,000 1,056,700
-----------
$33,651,935
-----------------------------------------------------------------------------------
Refunded and Special Obligations - 16.3%
Greensboro, NC, Certificates of Participation
(Coliseum Arena), 6.25s, 2001 $ 2,180 $ 2,280,563
Iredell, NC, Solid Waste Systems Rev., 6.25s, 2002 1,250 1,312,325
North Carolina Eastern Municipal Power Agency,
7.5s, 2009 2,595 3,079,072
North Carolina Eastern Municipal Power Agency,
5s, 2017 9,870 9,300,797
North Carolina Medical Care Commission,
Hospital Rev. (Carolina Medicorp), 6s, 2001 10,500 10,679,130
North Carolina Medical Care Commission,
Hospital Rev. (Halifax Memorial Hospital),
6.75s, 2002 1,355 1,439,633
</TABLE>
17 - MNC
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
---------------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - continued
North Carolina Medical Care Commission,
Hospital Rev. (Halifax Memorial Hospital),
6.75s, 2002 $4,500 $ 4,786,290
North Carolina Medical Care Commission,
Hospital Rev. (Valdese General Hospital),
8.75s, 2001 5,115 5,508,804
Pender County, NC, Certificates of Participation
(Pender County Prison), 7.6s, 2001 1,455 1,532,755
Pender County, NC, Certificates of Participation
(Pender County Prison), 7.7s, 2001 1,000 1,054,550
Pitt County, NC, Hospital Rev. (Memorial Hospital),
5.25s, 2021 10,135 9,546,258
University of North Carolina (Chapel Hill), 0s, 2002 9,105 4,327,698
University of North Carolina (Chapel Hill), 0s, 2002 4,285 1,898,512
Winston-Salem, NC, Water and Sewer Systems
Rev., 6.25s, 2002 4,000 4,199,440
-----------
$60,945,827
---------------------------------------------------------------------------------------
Airport and Port Revenue - 2.6%
Charlotte, NC, Airport Rev., MBIA, 5.875s, 2019 $1,000 $ 1,000,680
Charlotte, NC, Airport Rev., MBIA, 5.875s, 2020 3,775 3,763,222
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 5,075 4,997,403
-----------
$ 9,761,305
---------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 15.8%
New Hanover County, NC, Industrial Facilities Rev.
(Carolina Power and Light Co.), 6.9s, 2009 $1,000 $ 1,021,850
North Carolina Eastern Municipal Power Agency,
AMBAC, 6s, 2018, 14,245 14,779,757
North Carolina Eastern Municipal Power Agency,
MBIA, 7s, 2007 5,000 5,535,300
North Carolina Eastern Municipal Power Agency,
MBIA, 7.25s, 2007 5,000 5,590,700
North Carolina Eastern Municipal Power Agency,
MBIA, 7.5s, 2010 3,005 3,531,386
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 6s, 2011, 5,000 5,289,700
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 6.22s, 2012++++ 9,000 8,990,370
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., 6.375s, 2013 1,000 1,009,860
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., MBIA, 5.5s, 2014 3,500 3,491,950
North Carolina Municipal Power Agency, No. 1,
Catawba Electric Rev., FSA, 6.2s, 2018, 4,300 4,382,345
Puerto Rico Electric Power Authority, FSA,
6s, 2016 5,000 5,153,050
-----------
$58,776,268
---------------------------------------------------------------------------------------
Health Care Revenue - 8.5%
Charlotte-Mecklenberg Hospital Authority, "A",
5.75s, 2021 $1,500 $ 1,443,435
Mocksville, NC (Housing Foundation, Inc.),
7.25s, 2029 1,000 927,070
North Carolina Medical Care Commission,
Hospital Rev. (Duke University), 5.25s, 2021 5,975 5,407,435
North Carolina Medical Care Commission,
Hospital Rev. (Gaston Health Care), 5.5s, 2015 5,790 5,505,653
North Carolina Medical Care Commission,
Hospital Rev. (Gaston Health Care), 5.5s, 2019 7,500 6,918,750
North Carolina Medical Care Commission,
Hospital Rev., (Pitt County Memorial Hospital),
5s, 2018 3,000 2,621,760
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
---------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - continued
Northern Hospital District, Surry County, NC,
Heath Care Facilities Rev., 7.875s, 2021 $4,530 $ 4,684,382
University of North Carolina, Chapel Hill,
University Hospital Rev., 5.25s, 2019 4,800 4,352,592
-----------
$31,861,077
---------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 9.7%
Columbus County, NC, Industrial Facilities &
Pollution Control (International Paper Co.),
5.8s, 2016 $4,000 $ 3,802,280
Columbus County, NC, Industrial Facilities &
Pollution Control (International Paper Co.),
6.15s, 2021 5,000 4,856,050
Haywood County, NC, Industrial Facilities &
Pollution Control Finance Authority (Champion
International), 5.75s, 2025 8,900 7,872,228
Martin County, NC, Industrial Facilities &
Pollution Control Finance Authority
(Weyerhaeuser Co.), 7.25s, 2014 7,000 7,368,340
Martin County, NC, Industrial Facilities &
Pollution Control Finance Authority
(Weyerhaeuser Co.), 6.8s, 2024 7,500 7,620,300
Mecklenburg County, NC, Industrial Facilities &
Pollution Control Finance Authority (Precision
Steel), 7.75s, 2014 2,600 2,664,636
Surry County, NC, Industrial Facilities & Pollution
Control Finance Authority (Weyerhaeuser Co.),
9.25s, 2002 900 948,618
Wake County, NC, Industrial Facilities & Pollution
Control Finance Authority (Mallinkcodt),
6.75s, 2012 1,100 1,124,574
-----------
$36,257,026
---------------------------------------------------------------------------------------
Insured Health Care Revenue - 8.0%
Catawba County, NC, Hospital Rev. (Catawba
Memorial Hospital), AMBAC, 5s, 2017 $1,200 $ 1,099,860
Cumberland County, NC, Hospital Facilities Rev.
(Cumberland County Hospital), MBIA, 0s, 2009 1,800 1,090,440
New Hanover County, NC, Hospital Rev. (New
Hanover Regional Medical Center), AMBAC,
5.75s, 2026 3,625 3,538,544
New Hanover County, NC, Hospital Rev. (New
Hanover Regional Medical Center), MBIA,
5s, 2019 6,225 5,525,247
North Carolina Medical Commission, Health Care
Facilities Rev. (Novant Health), MBIA, 5s, 2018 1,975 1,785,756
North Carolina Medical Care Commission, Health
Systems Rev. (Catholic Health East), AMBAC,
5s, 2018 2,000 1,806,960
North Carolina Medical Care Commission,
Hospital Rev. (Alamance Regional Medical
Center, Inc.), FSA, 5s, 2016 3,180 2,927,285
North Carolina Medical Care Commission,
Hospital Rev. (Mission-St. Joseph Health
System), MBIA, 5.1s, 2018 3,000 2,716,740
North Carolina Medical Care Commission,
Hospital Rev. (Northeast Medical Center),
AMBAC, 4.75s, 2013 1,330 1,210,367
North Carolina Medical Care Commission,
Hospital Rev. (Rex Healthcare), AMBAC, 5s, 2017 5,000 4,535,150
North Carolina Medical Care Commission,
Hospital Rev. (Wake County Hospital), MBIA,
5.375s, 2026 1,610 1,491,359
</TABLE>
18 - MNC
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
---------------------------------------------------------------------------------------
<S> <C> <C>
Insured Health Care Revenue - continued
North Carolina Medical Care Commission,
Hospital Rev. (Wilson Memorial Hospital),
AMBAC, 0s, 2013 $ 1,000 $ 470,060
North Carolina Medical Care Commission,
Hospital Rev. (Wilson Memorial Hospital),
AMBAC, 0s, 2015 1,140 473,704
Northern Hospital District Surry County, NC,
Health Care Facilities Rev., ASST GTY, 5.5s, 2019 1,250 1,153,775
------------
$ 29,825,247
--------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.6%
Asheville, NC, Housing Authority (Asheville
Terrace Apartments), 7.1s, 2011 ### $ 5,000 $ 5,211,650
North Carolina Housing Finance Agency, FHA,
6.9s, 2024 4,880 5,104,773
North Carolina Housing Finance Agency, FHA,
6.05s, 2028 5,000 4,999,150
Salisbury, NC, Housing Corp. (Yadkin Senior
Citizens), FNMA, 6.75s, 2022 1,965 1,984,414
------------
$ 17,299,987
--------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.6%
Territory of Virgin Islands, Public Finance
Authority, 5.5s, 2018 $ 1,000 $ 906,710
Territory of Virgin Islands, Public Finance
Authority, 5.5s, 2022 1,600 1,417,984
------------
$ 2,324,694
--------------------------------------------------------------------------------------
Single Family Housing Revenue - 3.7%
North Carolina Housing Finance Agency,
6.7s, 2018 $ 1,600 $ 1,652,416
North Carolina Housing Finance Agency,
5.55s, 2019 4,000 3,845,280
North Carolina Housing Finance Agency,
6.15s, 2020 1,000 1,010,740
North Carolina Housing Finance Agency,
5.85s, 2028 4,060 3,886,963
North Carolina Housing Finance Agency,
7.6s, 2032 1,405 1,433,760
North Carolina Housing Finance Agency, FHA,
6.15s, 2017 2,000 2,034,660
------------
$ 13,863,819
--------------------------------------------------------------------------------------
Turnpike Revenue - 2.4%
Puerto Rico Highway & Transportation Authority
Rev., RITES, 6.054s, 2007+++++ $ 2,750 $ 2,829,090
Puerto Rico Highway & Transportation Authority
Rev., RITES, FSA, 7.857s, 2018 +++++ 5,425 6,199,039
------------
$ 9,028,129
--------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Universities - 5.7%
North Carolina Education Facilities Finance
Agency (Duke University), 6.75s, 2021 $11,500 $ 11,951,720
University of North Carolina, Student Facilities
Systems, AMBAC, 5.125s, 2018 2,000 1,847,460
University of North Carolina, University
Rev., 0s, 2013 6,415 3,065,600
University of North Carolina, University
Rev., 0s, 2015 4,415 1,866,176
University of North Carolina, University
Rev., 0s, 2016 3,500 1,387,505
University of North Carolina, University Rev.,
(Chapel Hill), 5.4s, 2017 1,140 1,117,303
------------
$ 21,235,764
--------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 4.3%
Asheville, NC, Water System Rev., FGIC,
5.7s, 2025 ### $ 2,000 $ 1,952,780
Charlotte, NC, Water & Sewer, 5s, 2020 3,350 3,065,920
Charlotte, NC, Water & Sewer Systems Rev.,
5.75s, 2016 2,000 2,045,320
Charlotte, NC, Water & Sewer Systems Rev.,
5.25s, 2021 4,000 3,781,920
Raleigh, NC, Combined Enterprise Systems Rev.,
4.75s, 2016 3,520 3,155,504
Raleigh, NC, Combined Enterprise Systems Rev.,
5.125s, 2022 2,000 1,868,780
------------
$ 15,870,224
--------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $362,697,292) $365,824,833
--------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.4%
--------------------------------------------------------------------------------------
East Baton Rouge Parish, LA, Pollution Control
Rev. (Exxon Corp.), due 04/03/00 $ 100 $ 100,000
Harris County, TX, Hospital Rev. (Methodist
Hospital), due 04/03/00 5,100 5,100,000
Knoxville, TN, Utilities Board Rev., due 04/05/00 100 100,000
--------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 5,300,000
--------------------------------------------------------------------------------------
Total Investments (Identified Cost, $367,997,292) $371,124,833
Other Assets, Less Liabilities - 0.7% 2,499,179
--------------------------------------------------------------------------------------
Net assets - 100.0% $373,624,012
--------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements.
</TABLE>
19 - MNC
<PAGE>
Portfolio of Investments - March 31, 2000
MFS PENNSYLVANIA MUNICIPAL BOND FUND
Municipal Bonds - 97.7%
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
---------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 11.2%
Butler, PA, School District, FGIC, 5.375s, 2018 $ 500 $ 482,055
Chester County, PA, 5.65s, 2011 500 507,935
Greene County, PA, 6s, 2010 100 101,653
Northeastern York County, PA, School District,
FGIC, 0s, 2012 415 217,257
Oley Valley, PA, School District, AMBAC, 0s, 2011 810 446,107
Philadelphia, PA, FGIC, 5.125s, 2015 1,000 948,910
Philadelphia, PA, School District, MBIA, 6s, 2016 500 515,160
Southeastern Area, PA, Special Schools Authority
Rev., 0s, 2007 360 240,923
State of Pennsylvania, 6.25s, 2010 300 327,099
State of Pennsylvania, 6s, 2019 1,000 1,029,320
----------
$4,816,419
---------------------------------------------------------------------------------------
State and Local Appropriation - 2.7%
Delaware Valley, PA, Regional Finance Authority,
AMBAC, 6.567s, 2018 ++++ $ 500 $ 492,960
Philadelphia, PA, Municipal Authority Rev.
(Justice Lease), 8.625s, 2016 150 157,500
Puerto Rico Public Finance Corp., RITES, AMBAC,
7.587s, 2013 +++++ 500 519,990
----------
$1,170,450
---------------------------------------------------------------------------------------
Refunded and Special Obligations - 12.5%
Allegheny County, PA, Sanitation Authority, FGIC,
0s, 2014 $2,835 $1,252,957
Beaver County, PA, "A", MBIA, 5.75s, 2006 250 261,125
Harrisburg, PA, 5.875s, 2003 1,000 1,049,400
Philadelphia, PA, 6.375s, 2003 240 255,084
Philadelphia, PA, Gas Works Rev., 6s, 2013 1,645 1,759,327
Philadelphia, PA, Hospital & Higher Educational
Facilities Authority, FHA, 7.25s, 2001 500 527,330
Puerto Rico Highway & Transportation Authority,
6.5s, 2002 250 264,128
----------
$5,369,351
---------------------------------------------------------------------------------------
Airport and Port Revenue - 7.0%
Allegheny County, PA, Airport Rev. (Pittsburgh
International Airport), MBIA, 5.75s, 2014 $1,000 $1,019,630
Allegheny County, PA, Airport Rev. (Pittsburgh
International Airport), FGIC, 6.125s, 2017 500 512,980
Philadelphia, PA, Industrial Development Authority
(Philadelphia Airport Systems), FGIC, 5s, 2016 500 452,100
Philadelphia, PA, Parking Authority Rev., FSA,
5.625s, 2015 1,000 1,006,650
----------
$2,991,360
---------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 11.5%
Guam Power Authority Rev., RITES, AMBAC,
6.743s, 2014 +++++ $2,170 $2,121,175
Luzerne County, PA, Industrial Development
Authority, AMBAC, 7.2s, 2017 500 535,500
Luzerne County, PA, Industrial Development
Authority, 6.05s, 2019 300 296,610
Philadelphia, PA, Gas Works Rev., , 6.375s, 2014 510 518,022
Philadelphia, PA, Gas Works Rev., FSA, 5.5s, 2016 1,000 990,180
Virgin Islands Water & Power Authority Rev.,
ASST GTY, 5.3s, 2018 500 477,375
----------
$4,938,862
---------------------------------------------------------------------------------------
Health Care Revenue - 5.6%
Butler County, PA, Industrial Development
Authority (Sherwood Oaks), 5.75s, 2011 $ 400 $ 388,884
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
---------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - continued
Chester County, PA, Health & Education (Main
Line), 5.5s, 2015 $ 335 $ 317,429
Cumberland County, PA, Municipal Refunding
(Carlisle Hospital), 6.8s, 2023 500 460,750
Philadelphia, PA, Health & Educational Facilities
(Jeanes Health), 6.6s, 2010 500 491,750
Philadelphia, PA, Health & Educational Facilities
(Temple University), 6.625s, 2023 250 234,260
Scranton Lackawanna, PA, Health & Welfare
(Allied Health), 7.125s, 2005 500 508,215
----------
$2,401,288
---------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 5.7%
Erie County, PA, Industrial Development Authority
(International Paper Co.), 5.3s, 2012 $ 500 $ 478,860
Erie County, PA, Industrial Development Authority
(International Paper Co.), 7.625s, 2018 250 268,483
New Morgan, PA, Industrial Development
Authority (Browning Ferris Co.), 6.5s, 2019 500 468,715
Northampton County, PA, Industrial Development
Authority (Bethlehem Steel), 7.55s, 2017 750 780,517
Westmoreland County, PA, Industrial Development
Corp. (Valley Landfill), LOC, 5.1s, 2018 500 436,015
----------
$2,432,590
---------------------------------------------------------------------------------------
Insured Health Care Revenue - 8.0%
Allegheny County, PA, Hospital Authority, MBIA,
5s, 2018 $ 500 $ 446,735
Allegheny County, PA, Hospital Authority (South
Hills Health System), MBIA, 5.8s, 2016 500 502,230
Blair County, PA, Hospital Authority (Altoona),
AMBAC, 5.5s, 2008 470 479,353
Dauphin County, PA, General Authority Hospital
Rev. (Hapsco), MBIA, 5.8s, 2002 355 362,420
Lehigh County, PA, Hospital Rev. (Lehigh Valley),
MBIA, 7s, 2016 250 285,510
Lycoming County, PA, Authority Hospital Rev.
(Williamsport Hospital Obligation Group), Connie
Lee, 5.375s, 2010 750 752,040
Sayre, PA, Health Care Facilities (VHA, PA),
AMBAC, 6.375s, 2022 160 163,195
Sharon, PA, Health Systems Authority Rev., MBIA,
5s, 2018 500 446,885
----------
$3,438,368
---------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.6%
Montgomery County, PA, Redevelopment Authority
(KBF Associates), 6.5s, 2025 $ 250 $ 246,593
---------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.3%
Puerto Rico Highway & Transportation Authority,
5.5s, 2008 $ 500 $ 508,425
Puerto Rico Highway & Transportation Authority,
5.5s, 2013 500 504,960
----------
$1,013,385
---------------------------------------------------------------------------------------
Single Family Housing Revenue - 7.4%
Pennsylvania Housing Finance Agency, FHA-VA,
5.75s, 2013 $1,000 $1,008,860
Pennsylvania Housing Finance Agency,
6.75s, 2014 500 519,745
Pennsylvania Housing Finance Agency, 6.4s, 2016 500 514,505
Pennsylvania Housing Finance Agency,
6.65s, 2021 250 256,830
</TABLE>
20 - MPA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
----------------------------------------------------------------------------------
<S> <C> <C>
Single Family Housing Revenue - continued
Pennsylvania Housing Finance Agency,
6.125s, 2024 $ 350 $ 352,695
Philadelphia, PA, Redevelopment Authority,
6.1s, 2010 120 121,076
Pittsburgh, PA, Urban Development Corp.,
5.5s, 2010 400 398,052
-----------
$ 3,171,763
----------------------------------------------------------------------------------
Special Assesment District - 2.2%
Pennsylvania Intergovernmental Cooperative
Authority, Special Tax Rev., FGIC, 5.25s, 2016 $1,000 $ 960,690
----------------------------------------------------------------------------------
Turnpike Revenue - 4.7%
Allegheny County, PA, Port Authority Special Rev.,
MBIA, 6.25s, 2017 $ 500 $ 524,570
Puerto Rico Highway & Transportation Authority,
MBIA, 5.5s, 2015 500 510,220
Southeastern Pennsylvania Transportation
Authority, Special Rev., FGIC, 5.25s, 2013 1,000 986,710
-----------
$ 2,021,500
----------------------------------------------------------------------------------
Universities - 2.2%
Pennsylvania Higher Education Facilities (Temple
University), MBIA, 5.25s, 2014 $ 500 $ 489,190
Pennsylvania Higher Education Facilities (Thomas
Jefferson University), AMBAC, 5s, 2019 500 451,410
-----------
$ 940,600
----------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 4.4%
Philadelphia, PA, Water Rev., MBIA, 6.25s, 2012 $ 550 $ 597,140
Philadelphia, PA, Water Rev., FSA, 5.75s, 2013 300 304,434
Philadelphia, PA, Water Rev., MBIA, 5.5s, 2014 1,000 1,001,050
-----------
$ 1,902,624
----------------------------------------------------------------------------------
Other - 9.7%
Lehigh County, PA, General Purpose Authority
(Kidspeace Obligation Group), 6s, 2018 $ 250 $ 224,795
Pennsylvania Convention Center Rev., 6.75s, 2019 250 255,475
Pennsylvania Finance Authority Rev., 6.6s, 2009 900 956,448
Pennsylvania Industrial Development Authority,
AMBAC, 7s, 2007 300 331,575
Pennsylvania Industrial Development Authority,
AMBAC, 5.8s, 2009 400 417,288
Philadelphia, PA, Industrial Development
Authority, MBIA, 5.35s, 2012 500 498,905
Pittsburgh & Allegheny County, PA, Public
Auditorium Hotel Room, AMBAC, 5.25s, 2013 1,000 986,740
Pittsburgh, PA, Public Parking Authority Rev.,
AMBAC, 6s, 2020 500 512,325
-----------
$ 4,183,551
----------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $41,988,536) $41,999,394
----------------------------------------------------------------------------------
Floating Rate Demand Note - 0.7%
----------------------------------------------------------------------------------
New Castle, PA, Area Hospital Authority
(Jameson Memorial Hospital), due 04/05/00, at
Identified Cost $ 300 $ 300,000
----------------------------------------------------------------------------------
Total Investments (Identified Cost, $42,288,536) $42,299,394
Other Assets, Less Liabilities - 1.6% 690,897
----------------------------------------------------------------------------------
Net assets - 100.0% $42,990,291
----------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements.
</TABLE>
MFS SOUTH CAROLINA MUNICIPAL BOND FUND
Municipal Bonds - 98.3%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 8.6%
Berkeley County, SC, School District, 5s, 2020 $2,000 $ 1,847,460
Berkeley County, SC, School District (Berkeley
School Facilities Group, Inc.), AMBAC, 5s, 2016 1,500 1,388,025
Commonwealth of Puerto Rico, RITES, MBIA,
5.75s, 2020 +++++ 2,000 2,050,200
Commonwealth of Puerto Rico, FSA, 6.5s, 2013 1,000 1,111,780
Puerto Rico Municipal Finance Agency, RITES,
FSA, 7.857s, 2016 +++++ 850 926,925
Richland County, SC, School District No. 1,
5s, 2016 1,975 1,872,655
State of South Carolina, RITES, 4.369s, 2016 +++++ 5,000 3,855,300
-----------
$13,052,345
------------------------------------------------------------------------------------
State and Local Appropriation - 6.9%
Greenville County, SC (University Center),
AMBAC, 5.25s, 2019 $1,000 $ 946,950
Greenville, SC, Memorial Auditorium District,
Public Facilities Corp. (Bi-Lo Center), AMBAC,
4.75s, 2014 1,210 1,104,294
Hilton Head Island, SC, Public Finance Corp.,
Certificates of Participation, AMBAC, 5.75s, 2014 1,750 1,781,622
North Charleston, SC (Coliseum & Convention),
MBIA, 5.125s, 2015 3,000 2,874,210
Puerto Rico Public Buildings Authority, 5.7s, 2009 1,000 1,039,440
Puerto Rico Public Finance Corp., RITES, AMBAC,
6.857s, 2013 +++++ 1,375 1,429,973
Puerto Rico Public Finance Corp., RITES, AMBAC,
6.857s, 2019 +++++ 1,300 1,276,600
$10,453,089
------------------------------------------------------------------------------------
Refunded and Special Obligations - 16.5%
Berkeley County, SC, School District, AMBAC,
6.3s, 2004 $1,800 $ 1,919,880
Calhoun, SC, Solid Waste Disposal Rev. (Eastman
Kodak), 6.75s, 2017 1,000 1,133,570
Charleston County, SC, 5.5s 1,250 1,290,025
Coastal Carolina University, SC, MBIA,
6.875s, 2004 1,000 1,093,670
Columbia, SC, Waterworks & Sewer Systems
Rev., 0s, 2004 1,500 1,242,555
Commonwealth of Puerto Rico, 6.5s, 2004 2,000 2,166,980
Commonwealth of Puerto Rico, Public
Improvement, 6.8s, 2002 425 451,703
Greenville County, SC, Certificates of Participation
(Greenville Technical College), AMBAC,
5.9s, 2005 850 902,895
Myrtle Beach, SC, Public Finance Corp.,
Certificates of Participation (Convention Center),
6.875s, 2002 2,500 2,660,200
Puerto Rico Aqueduct & Sewer Authority Rev.,
9s, 2005 750 867,465
Puerto Rico Highway & Transportation Authority
Rev., 6.625s, 2002 300 317,745
Richland County, SC, Certificates of Participation,
FGIC, 0s, 2005 1,160 908,187
Richland County, SC, Certificates of Participation,
FGIC, 0s, 2006 1,160 860,790
South Carolina Jobs Economic Development
Authority (Carolina Hospital System), 7.55s, 2002 2,000 2,162,440
South Carolina Public Service Authority (Santee
Cooper), 6.625s, 2002 2,000 2,119,860
Spartanburg, SC, Waterworks Rev., FGIC,
6.05s, 2006 2,750 2,917,585
</TABLE>
21 - MSC
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - continued
Williamsburg County, SC, School District Public
Facilities Corp., Certificates of Participation,
7.5s, 2003 $2,010 $ 2,196,146
-----------
$25,211,696
--------------------------------------------------------------------------------------
Airport and Port Revenue - 2.6%
Horry County, SC, "A", FSA, 5.7s, 2027 $2,250 $ 2,162,768
Richland Lexington, SC, Airport Rev. (Columbia
Airport), AMBAC, 5.7s, 2026 1,000 969,760
South Carolina Ports Authority Rev., FSA, 5s, 2016 1,000 909,540
-----------
$ 4,042,068
--------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 11.0%
Camden, SC, Public Utility Rev., Refunding &
Improvement, MBIA, 5.5s, 2017 ### $1,500 $ 1,488,255
Colleton & Dorchester Counties, SC, Pollution
Control Rev., 6.6s, 2014 3,000 3,165,480
Fairfield County, SC, Pollution Control Rev. (South
Carolina Electric Co.), 6.5s, 2014 1,250 1,320,250
Piedmont, SC, Municipal Power Agency, FGIC,
6.25s, 2021 4,600 4,916,710
Puerto Rico Electric Power Authority, MBIA,
6.125s, 2008 1,025 1,104,304
Puerto Rico Electric Power Authority, RITES, FSA,
6.357s, 2015 +++++ 1,000 968,480
South Carolina Public Service Authority, FGIC,
5.875s, 2023 500 500,710
South Carolina Public Service Authority, "B",
AMBAC, 5.5s, 2023 1,000 965,920
South Carolina Public Service Authority (South
Carolina Electric & Gas), MBIA, 5s, 2019 2,600 2,355,704
-----------
$16,785,813
--------------------------------------------------------------------------------------
Health Care Revenue - 7.8%
Greenville County, SC, First Mortgage Rev.
(Chestnut Hill), 10.125s, 2016 ** $1,860 $ 930,000
Greenville, SC, Hospital System, Hospital Facilities
Rev., 6s, 2020 3,400 3,372,052
Greenville, SC, Hospital System, Hospital Facilities
Rev., "A", 5.25s, 2017 2,785 2,540,700
Horry County, SC, Hospital Facilities Rev. (Conway
Hospital), 6.75s, 2012 4,125 4,258,526
Puerto Rico Industrial Tourist Educational,
Medical & Environmental Control Facilities,
5.75s, 2019 1,000 865,490
-----------
$11,966,768
--------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 9.9%
Charleston County, SC, Industrial Rev. (Zeigler
Coal Holdings), 6.95s, 2028 $ 600 $ 517,488
Chester County, SC, Industrial Development Rev.
(Springs Industries, Inc), 7.35s, 2014 1,000 1,038,000
Chester County, SC, Industrial Development Rev.
(Springs Industries, Inc.), 7.8s, 2014 1,025 1,057,646
Darlington County, SC, Industrial Development
Rev. (Nucor Corp.), 5.75s, 2023 2,000 1,944,740
Darlington County, SC, Industrial Development
Rev. (Sonoco Products Co.), 6.125s, 2025 1,500 1,459,530
Florence County, SC, Industrial Development Rev.
(Stone Container Corp.), 7.375s, 2007 695 715,141
Greenville County, SC, Industrial Development
Rev. (Kroger Co.), 7.85s, 2015 500 537,115
Lexington County, SC, Industrial Rev. (J. B. White
& Co.), 8s, 2005 415 427,210
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Revenue (Corporate Guarantee) - continued
Richland County, SC, Pollution Control Rev. (Union
Camp Corp.), 6.55s, 2020 $1,800 $ 1,810,314
Richland County, SC, Pollution Control Rev. (Union
Camp Corp.), 6.75s, 2022 2,000 2,035,720
York City, SC, Industrial Development Rev.
(Hoechst Celanese), 5.7s, 2024 4,000 3,504,000
-----------
$15,046,904
--------------------------------------------------------------------------------------
Insured Health Care Revenue - 9.9%
Charleston County, SC (Care Alliance Health
Services), FSA, 5.125s, 2014 $1,000 $ 946,650
Charleston County, SC (Care Alliance Health
Services), FSA, 5s, 2019 1,000 889,960
Charleston County, SC, Hospital Facilities Rev.
(Medical Society Health), MBIA, 5s, 2022 2,450 2,152,129
Charlestown County, SC, Rev. (Care Alliance
Health Services), FSA, 5s, 2012 1,545 1,461,833
Lexington County, SC, Hospital Rev., FSA,
5.125s, 2021 1,500 1,353,840
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Anderson Area
Medical Center), FSA, 5.2s, 2012 1,500 1,469,475
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Anderson Area
Medical Center), MBIA, 5.25s, 2015 1,750 1,667,890
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Anderson Area
Medical Center), FSA, 5.3s, 2015 1,000 966,770
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Georgetown
Memorial Hospital), AMBAC, 6s, 2014 1,000 1,025,570
Spartanburg County, SC, Health Service Rev.,
AMBAC, 5.3s, 2025 1,000 912,250
Spartanburg County, SC, Hospital Facilities Rev.
(Health Services District, Inc.), AMBAC,
5.3s, 2020 2,500 2,327,475
-----------
$15,173,842
--------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.8%
South Carolina Housing, Finance & Development
Authority (Fairway Apartments), FHA,
7.625s, 2033 $1,885 $ 1,931,861
South Carolina Housing, Finance & Development
Authority (Hunting Ridge Apartments), 6.75s, 2025 1,000 1,025,890
South Carolina Housing, Finance & Development
Authority (Runaway Bay Apartments),
6.125s, 2015 1,300 1,309,659
-----------
$ 4,267,410
--------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.6%
Territory of Virgin Islands, Public Finance
Authority, 5.5s, 2018 $1,000 $ 906,710
--------------------------------------------------------------------------------------
Solid Waste Revenue - 1.3%
Orangeburg County, SC, Solid Waste Disposal
Facilities Rev., AMBAC, 5.7s, 2024 $2,000 $ 1,943,320
--------------------------------------------------------------------------------------
</TABLE>
22 - MSC
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
----------------------------------------------------------------------------------
<S> <C> <C>
Universities - 0.9%
Greenville County, SC (Greenville Technical
College), AMBAC, 5s, 2017 $1,000 $ 915,560
University of South Carolina, University Rev.,
MBIA, 5.75s, 2026 515 512,930
------------
$ 1,428,490
----------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 18.6%
Cayce, SC, Waterworks & Sewage Rev., FSA,
5s, 2017 $1,000 $ 917,780
Charleston County, SC, Waterworks & Sewer
Rev., 6s, 2012 2,000 2,072,500
Charleston, SC, Waterworks & Sewer Rev.,
6s, 2018 1,500 1,522,110
Charleston, SC, Waterworks & Sewer Rev., MBIA,
5s, 2022 1,000 886,970
Columbia, SC, Waterworks & Sewer Systems
Rev., 0s, 2005 2,245 1,751,527
Columbia, SC, Waterworks & Sewer Systems
Rev., 0s, 2006 9,330 6,900,001
Columbia, SC, Waterworks & Sewer Systems
Rev., 5.375s, 2012 500 503,910
Columbia, SC, Waterworks & Sewer Systems
Rev., 6s, 2015 2,000 2,075,500
Greenville, SC, Waterworks Rev., 5.5s, 2022 1,000 978,760
Myrtle Beach, SC, Water & Sewer Rev., MBIA,
5.5s, 2013 1,000 1,002,950
South Carolina Water Resources Authority Rev.
(Local Government Program), 7.25s, 2020 3,000 3,067,050
Spartanburg, SC, Waterworks Rev., FGIC, 5s, 2013 1,000 963,180
Spartanburg, SC, Waterworks Rev., FGIC, 5s, 2014 1,000 955,630
Western Carolina Regional Sewer Authority Rev.,
AMBAC, 0s, 2007 4,000 2,795,440
York County, SC, Water & Sewer Rev., 6.5s, 2025 2,000 1,984,920
------------
$ 28,378,228
----------------------------------------------------------------------------------
Other - 0.9%
North Charleston, SC, Municipal Golf Course
Mortgage Rev., 5s, 2009 $ 500 $ 468,925
North Charleston, SC, Municipal Golf Course
Mortgage Rev., 5.5s, 2019 1,000 893,550
------------
$ 1,362,475
----------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $149,035,735) $150,019,158
----------------------------------------------------------------------------------
Floating Rate Demand Note - 0.1%
----------------------------------------------------------------------------------
Piedmont, SC, Municipal Power Agency, due
04/05/00, at Identified Cost $ 200 $ 200,000
----------------------------------------------------------------------------------
Total Investments (Identified Cost, $149,235,735) $150,219,158
Other Assets, Less Liabilities - 1.6% 2,376,759
----------------------------------------------------------------------------------
Net assets - 100.0% $152,595,917
----------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements.
</TABLE>
MFS TENNESSEE MUNICIPAL BOND FUND
Municipal Bonds - 98.0%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-----------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 20.4%
Commonwealth of Puerto Rico, 5.375s, 2025 $1,640 $ 1,529,562
Commonwealth of Puerto Rico, 5.4s, 2025 3,000 2,830,350
Gibson County, TN, MBIA, 5.75s, 2016 645 652,766
Giles County, TN, FGIC, 5.75s, 2020 1,980 1,995,087
Johnson City, TN, FGIC, 0s, 2012 1,690 875,741
Knoxville, TN, 5.25s, 2015 1,000 976,320
Lincoln County, TN, FGIC, 5.8s, 2019 1,000 1,012,010
Lincoln County, TN, FGIC, 5.8s, 2020 1,000 1,009,900
Memphis, TN, 5s, 2015 3,000 2,816,340
Rutherford County, TN, 0s, 2015 1,500 636,330
Rutherford County, TN, School District,
5.875s, 2019 2,000 2,034,540
Rutherford County, TN, School District,
5.875s, 2020 1,100 1,116,478
Shelby County, TN, 0s, 2013 3,960 1,860,250
State of Tennessee, 5s, 2016 4,000 3,807,840
Williamson County, TN, Rural School, 6.125s, 2015 1,575 1,649,797
-----------
$24,803,311
-----------------------------------------------------------------------------------
State and Local Appropriation - 2.5%
Gatlinburg, TN, Public Building Authority
(Gatlinburg Convention Center), AMBAC,
6.9s, 2012 $1,000 $ 1,048,010
Puerto Rico Public Buildings Authority, 5.5s, 2021 1,000 964,650
Tennessee Local Development Authority Rev.,
7s, 2021 1,000 1,050,010
-----------
$ 3,062,670
-----------------------------------------------------------------------------------
Refunded and Special Obligations - 16.4%
Franklin, TN, Industrial Development Rev. (Sussex
Downs), FHA, 6.75s, 2004 $1,000 $ 1,095,230
Johnson City, TN, Health & Education Financing
Authority (Johnson City Medical Center
Hospital), MBIA, 5s, 2009 3,000 2,743,830
Knox County, TN, Industrial Development Board,
0s, 2016 5,575 2,076,018
Metropolitan Government of Nashville & Davidson
County, TN, AMBAC, 6.075s, 2002 2,000 2,086,620
Mt. Juliet, TN, Public Building Authority
(Madison), MBIA, 7.7s, 2004 1,100 1,299,661
Mt. Juliet, TN, Public Building Authority
(Madison), MBIA, 7.8s, 2004 3,500 4,147,360
Territory of Virgin Islands, 7.75s, 2001 305 319,106
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2002 1,315 1,152,479
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2003 1,045 869,911
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2004 1,920 1,515,283
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2006 1,920 1,360,781
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, 0s, 2007 1,920 1,288,339
-----------
$19,954,618
-----------------------------------------------------------------------------------
Airport and Port Revenue - 0.8%
Memphis-Shelby County, TN, Airport Authority
(North West Link & Parent Co.), 6.125s, 2016 $1,000 $ 954,690
-----------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 6.2%
Harpeth Valley, TN, Utilities Improvement, MBIA,
4.75s, 2013 $1,000 $ 921,500
Jackson, TN, Electric Systems Rev., MBIA,
5s, 2018 1,000 909,120
</TABLE>
23 - MTN
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
----------------------------------------------------------------------------------------
<S> <C> <C>
Electric and Gas Utility Revenue - continued
Lawrenceburg, TN, Electric Rev., MBIA, 5.5s, 2026 $1,255 $ 1,199,617
Metropolitan Government of Nashville & Davidson
County, TN, MBIA, 0s, 2012 3,305 1,708,982
Metropolitan Government of Nashville & Davidson
County, TN, 5.125s, 2015 2,000 1,907,260
Tennessee Gas Rev. (Tennergy Corp.), MBIA,
5s, 2009 1,000 929,560
-----------
$ 7,576,039
----------------------------------------------------------------------------------------
Health Care Revenue - 6.0%
Cookeville, TN, Industrial Development Board,
Hospital Rev. (Cookeville General), 5.75s, 2010 $2,000 $ 1,972,720
Knox County, TN, Health, Education & Housing
Facilities Board (East Tennessee Children's),
6.5s, 2012 1,000 1,013,070
Metropolitan Government of Nashville & Davidson
County, TN, Health & Education Facility Board
Rev. (Adventist Health System), 5.25s, 2020 1,000 791,210
Puerto Rico Industrial Tourist Educational,
Medical & Environmental Control Facilities (San
Lucas & Cristo), 5.75s, 2019 1,000 865,490
Shelby County, TN, Health Educational & Housing
(St. Judes Childrens Research), 5.5s, 2020 1,750 1,641,990
Springfield, TN, Health & Higher Educational
Facilities (Northcrest Medical Center),
5.25s, 2013 1,290 1,067,385
-----------
$ 7,351,865
----------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 7.2%
Bristol, TN, Industrial Development Authority
(Kmart Corp.), 7.5s, 2008 ### $1,105 $ 1,173,168
Hardeman County, TN (Correctional Facilities
Corp.), 7.375s, 2017 500 508,280
Hardeman County, TN (Correctional Facilities
Corp.), 7.75s, 2017 1,000 1,045,290
Humphreys County, TN, Certificates of
Participation (DuPont), 6.7s, 2024 1,750 1,866,690
Knox County, TN, Industrial Development Board
(Kroger Co.), 8.1s, 2003 2,000 2,116,440
McMinn County, TN, Industrial Development
Board, Pollution Control Rev. (Bowater),
7.625s, 2016 1,000 1,029,950
Memphis-Shelby County, TN, Airport Authority
(Federal Express Corp.), 6.2s, 2014 1,000 999,520
-----------
$ 8,739,338
----------------------------------------------------------------------------------------
Insured Health Care Revenue - 9.5%
Bristol, TN, Health & Educational Facilities Board
(Bristol Memorial), FGIC, 5.45s, 2021 $2,825 $ 2,751,635
Jackson, TN, Hospital Rev. (Jackson-Madison
County General Hospital), AMBAC, 5s, 2018 1,000 897,630
Johnson City, TN, Health & Education Financing
Authority (Johnson City Medical Center
Hospital), MBIA, 5.25s, 2016 1,375 1,310,980
Knox County, TN, Health, Education & Housing
Facilities Board (Fort Sanders), MBIA,
5.75s, 2014 3,250 3,329,560
Metropolitan Government of Nashville & Davidson
County, TN, Health & Education (Meharry
Medical College), AMBAC, 5s, 2024 3,750 3,291,750
-----------
$11,581,555
----------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
----------------------------------------------------------------------------------------
<S> <C> <C>
Multi-Family Housing Revenue - 4.5%
Chattanooga, TN, Health, Educational & Housing
Facilities Board Rev. (Rainbow Creek), GNMA,
6.125s, 2019 $ 500 $ 501,805
Franklin, TN, Industrial Development Rev.
(Landings Apartments), FSA, 6s, 2026 1,000 998,810
Jackson, TN, Health, Education & Housing
Facilities Board (Posthouse Apartments), FHA,
7.1s, 2028 1,610 1,680,566
Metropolitan Government of Nashville & Davidson
County, TN, Health & Education Facility Board
Rev. (Herman Street), FHA, 7.25s, 2032 495 516,632
Metropolitan Government of Nashville & Davidson
County, TN, Industrial Development Board, FHA,
6.95s, 2026 1,000 1,041,370
Metropolitan Government of Nashville & Davidson
County, TN, Industrial Development Board, FHA,
7.5s, 2029 695 711,951
-----------
$ 5,451,134
----------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.6%
Territory of Virgin Islands, Public Finance
Authority, 5.875s, 2018 $ 730 $ 667,935
----------------------------------------------------------------------------------------
Single Family Housing Revenue - 7.3%
Shelby County, TN, Single Family Mortgage Rev.,
FHA, 0s, 2015 $3,185 $ 708,726
Tennessee Housing Development Agency,
5.45s, 2014 2,535 2,469,597
Tennessee Housing Development Agency, 0s, 2016 5,000 1,860,900
Tennessee Housing Development Agency,
7.4s, 2016 1,075 1,078,795
Tennessee Housing Development Agency, 6s, 2020 1,500 1,494,360
Tennessee Housing Development Agency, MBIA,
6.125s, 2020 1,000 1,009,130
Tennessee Housing Development Agency,
7.125s, 2026 220 222,994
-----------
$ 8,844,502
----------------------------------------------------------------------------------------
Turnpike Revenue - 2.0%
Puerto Rico Highway & Transportation Authority,
FSA, 5s, 2016 $2,500 $ 2,379,050
----------------------------------------------------------------------------------------
Universities - 4.7%
Jackson, TN, Health, Education & Housing
Facilities Board (Lambuth University), Asset
Guaranty, 5.9s, 2015 $1,000 $ 1,016,670
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (McKendree Village, Inc.),
5.125s, 2020 1,000 897,570
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University),
5.25s, 2012 1,000 985,270
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University), 5.3s, 2013 1,875 1,860,169
Metropolitan Government of Nashville & Davidson
County, TN, Health, Educational & Housing
Facilities Board (Vanderbilt University),
5.375s, 2014 1,000 990,320
-----------
$ 5,749,999
----------------------------------------------------------------------------------------
</TABLE>
24 - MTN
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------------------------------------------------------------
<S> <C> <C>
Water and Sewer Utility Revenue - 9.9%
Clarksville, TN, Water, Sewer & Gas, MBIA,
5.25s, 2018 $1,000 $ 956,260
Hallsdale Powell Utility District, AMBAC, 5s, 2019 1,000 902,270
Madison, TN, Utility Waterworks, MBIA, 5s, 2019 2,750 2,505,140
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., FGIC,
5.2s, 2013 2,000 1,986,300
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., FGIC,
5.1s, 2016 2,565 2,418,308
Metropolitan Government of Nashville & Davidson
County, TN, Water & Sewer Rev., AMBAC,
8.105s, 2022 ++++ 1,000 1,076,900
Poplar Grove, TN, Utility District, Waterworks
Rev., 6.375s, 2011 500 514,935
White House Utility District, TN, Robertson &
Sumner Counties Waterworks, FGIC, 0s, 2014 3,590 1,665,257
------------
$ 12,025,370
------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $118,507,926) $119,142,076
------------------------------------------------------------------------------------
Floating Rate Demand Note - 0.8%
------------------------------------------------------------------------------------
Sevier County, TN, Public Building Authority, due
04/06/00, at Identified Cost $1,000 $ 1,000,000
------------------------------------------------------------------------------------
Total Investments (Identified Cost, $119,507,926) $120,142,076
Other Assets, Less Liabilities - 1.2% 1,429,671
------------------------------------------------------------------------------------
Net assets - 100.0% $121,571,747
------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements.
</TABLE>
MFS VIRGINIA MUNICIPAL BOND FUND
Municipal Bonds - 98.4%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 16.4%
Bristol, VA, MBIA, 5.3s, 2018 $1,250 $ 1,211,775
Chesapeake, VA, Public Improvement, 5.375s, 2013 3,500 3,510,255
Chesterfield County, VA, 6s, 2020 1,900 1,952,611
Fairfax County, VA, RITES, 4.669s, 2016 +++++ 3,855 3,154,084
Fairfax County, VA, RITES, 4.669s, 2017 +++++ 3,845 3,078,769
Fairfax County, VA, Redevelopment & Housing
Authority, 5.5s, 2017 2,225 2,197,343
Hampton, VA, Public Improvement, 6s, 2018 3,280 3,399,425
Hampton, VA, Public Improvement, 6s, 2019 3,480 3,600,617
Lebanon, VA, 6.375s, 2011 1,625 1,702,594
Loudoun County, VA, 5s, 2016 1,000 947,320
Newport News, VA, 5s, 2017 3,340 3,106,768
Newport News, VA, 5s, 2018 4,170 3,840,611
Norfolk, VA, Parking System Rev., MBIA, 5s, 2020 1,630 1,482,045
Puerto Rico Municipal Finance Agency, RITES,
FSA, 7.857s, 2016 +++++ 1,105 1,205,002
Puerto Rico Municipal Finance Agency, RITES,
FSA, 6.857s, 2017 +++++ 615 619,539
Richmond, VA, 0s, 2006 1,000 737,080
Richmond, VA, 0s, 2006 2,500 1,842,700
Richmond, VA, 0s, 2007 5,280 3,677,784
Richmond, VA, 0s, 2008 2,000 1,316,940
Richmond, VA, 0s, 2008 5,270 3,470,137
Richmond, VA, 0s, 2009 5,175 3,218,746
Spotsylvania County, VA, FGIC, 6s, 2009 4,270 4,558,396
Virginia Public School Authority, School
Financing, 5.125s, 2016 2,000 1,921,380
Virginia Public School Authority, School
Financing, 5.125s, 2017 1,000 945,740
-----------
$56,697,661
------------------------------------------------------------------------------------
State and Local Appropriation - 8.9%
Blue Ridge, VA, Regional Jail Authority, MBIA,
5.2s, 2017 ### $1,500 $ 1,437,765
Blue Ridge, VA, Regional Jail Authority, MBIA,
5.2s, 2021 1,830 1,710,263
Chesapeake, VA, Industrial Development Authority
(Chesapeake Court House), MBIA, 6.25s, 2011 3,985 4,302,166
Chesapeake, VA, Industrial Development Authority
(Chesapeake Court House), MBIA, 5.25s, 2017 2,000 1,940,120
Chesterfield County, VA, Industrial Development
Authority, Public Facilities, 7.5s, 2008 1,720 1,805,742
Portsmouth, VA, Industrial Development Authority
Rev., Hotel Coference Center & Parking, FSA,
5.125s, 2015 1,000 964,750
Portsmouth, VA, Industrial Development Authority
Rev., Hotel Coference Center & Parking, FSA,
5.125s, 2016 1,295 1,230,367
Portsmouth, VA, Industrial Development Authority
Rev., Hotel Coference Center & Parking, FSA,
5.125s, 2017 1,360 1,281,868
Puerto Rico Public Buildings Authority, 5.25s, 2021 3,075 2,823,649
Puerto Rico Public Finance Corp., RITES, AMBAC,
6.857s, 2013 +++++ 2,000 2,079,960
Puerto Rico Public Finance Corp., RITES, AMBAC,
6.857s, 2016 +++++ 500 504,590
Virginia Biotechnology Research Park (Biotech
Two), 5.25s, 2018 8,800 8,388,952
Virginia Public Building Authority, MBIA, 0s, 2007 3,750 2,555,700
-----------
$31,025,892
------------------------------------------------------------------------------------
</TABLE>
25 - MVA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - 10.2%
Albemarle County, VA, Industrial Development
Authority, Health Services Rev., 6.5s, 2002 $1,000 $ 1,057,200
Arlington County, VA, Industrial Development
Authority (Arlington Hospital), 7.125s, 2001 1,000 1,053,810
Carroll County, VA, Solid Waste Authority Rev.,
7.5s, 2001 2,265 2,396,733
Fairfax, Fauquier & Loudoun Counties, VA, Health
Center Commission, Nursing Home Rev., 9s, 2000 1,810 1,863,033
Hampton Roads, VA, Medical College General
Rev., 6.875s, 2001 1,500 1,579,710
Henrico County, VA, Industrial Development
Authority Rev., 6.5s, 2010 5,000 5,445,200
New Kent County, VA, Industrial Development
Authority, Public Facilities, 7.5s, 2001 700 738,318
Newport News, VA, 6.5s, 2000 875 904,225
Portsmouth, VA, 6.375s, 2001 1,555 1,621,834
Puerto Rico Aqueduct & Sewer Authority Rev.,
9s, 2005 4,150 4,799,973
Puerto Rico Aqueduct & Sewer Authority Rev.,
10.25s, 2009 390 491,388
Richmond, VA, 6.5s, 2001 2,000 2,073,880
Virginia Beach, VA, Certificates of Participation
(Judical Center), FGIC, 7.25s, 2000 4,955 5,115,839
Virginia Beach, VA, Water & Sewer Rev.,
6.625s, 2002 1,400 1,472,142
Virginia College Building Authority, Educational
Facilities Rev. (Marymount), 7s, 2022 2,500 2,662,900
Virginia Public School Authority, 6.5s, 2004 1,875 2,023,125
-----------
$35,299,310
--------------------------------------------------------------------------------------
Airport and Port Revenue - 8.8%
Metropolitan Washington, DC, Airport Rev.,
7.6s, 2014 $5,030 $ 5,193,223
Metropolitan Washington, DC, Airport Rev.,
5.5s, 2016 2,465 2,401,921
Metropolitan Washington, DC, Airport Rev., MBIA,
5s, 2018 2,000 1,811,180
Metropolitan Washington, DC, Airport Rev.,
5.75s, 2020 11,000 10,804,310
Peninsula Airport Commission, VA, 7.3s, 2021 2,400 2,502,264
Puerto Rico Ports Authority (American Airlines),
6.3s, 2023 2,000 1,978,060
Puerto Rico Ports Authority (American Airlines),
6.25s, 2026 6,000 5,908,260
-----------
$30,599,218
--------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 3.2%
Guam Power Authority Rev., RITES, AMBAC,
5.956s, 2015 +++++ $1,010 $ 973,842
Halifax County, VA, Industrial Authority Rev. (Old
Dominion Electric), 6s, 2022 5,000 4,878,350
Pittsylvania County, VA, Industrial Development
Authority Rev., 7.5s, 2014 2,000 2,063,920
Puerto Rico Electric Power Authority, 6s, 2015 3,000 3,066,570
-----------
$10,982,682
--------------------------------------------------------------------------------------
Health Care Revenue - 4.2%
Lynchburg, VA, Industrial Development Authority,
5.2s, 2018 $1,000 $ 902,850
Martinsville, VA, Industrial Development Authority
(Beverley Enterprises), 6.75s, 2004 1,075 1,069,281
Peninsula Ports, VA, Health Care Rev. (Riverside
Health System), 6.625s, 2010 1,500 1,587,585
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Health Care Revenue - continued
Peninsula Ports, VA, Health Care Rev. (Riverside
Health System), 5s, 2018 $3,580 $ 3,147,787
Virginia Beach, VA, Development Authority
(Beverly Enterprises), 10s, 2010 1,150 1,200,082
Virginia Beach, VA, Development Authority
(Sentara Health System), 5.25s, 2014 3,740 3,535,085
Virginia Beach, VA, Development Authority
(Sentara Health System), 4.75s, 2018 3,750 3,186,938
-----------
$14,629,608
--------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 6.8%
Bedford County, VA, Industrial Development
Authority Rev. (Georgia Pacific Corp.), 5.6s, 2025 $6,000 $ 5,244,780
Isle Wight County, VA, Industrial Development
(Union Camp Corp.), 6.55s, 2024 8,000 8,037,040
Isle Wight County, VA, Industrial Development
(Union Camp Corp.), 6.1s, 2027 3,500 3,472,490
Loudoun, VA, Industrial Development Authority
Rev. (Dulles Airport Marriott Hotel), 7.125s, 2015 2,000 1,996,600
Lynchburg, VA, Industrial Development Authority
(Kroger Co.), 7.9s, 2011 1,000 1,057,090
Virginia Peninsula Ports Authority Rev. (Zeigler
Coal), 6.9s, 2022 1,500 1,301,385
West Point, VA, Industrial Development Authority,
Solid Waste Disposal Rev. (Chesapeake Corp.),
6.375s, 2019 2,600 2,463,448
-----------
$23,572,833
--------------------------------------------------------------------------------------
Insured Health Care Revenue - 10.4%
Albemarle County, VA, Industrial Development
Authority, First Mortgage Rev., FHA, 8.9s, 2026 $2,150 $ 2,249,932
Danville, VA, Industrial Development Authority,
Hospital Rev. (Danville Regional Medical Center),
AMBAC, 5.2s, 2018 2,500 2,344,550
Fredericksburg, VA, Industrial Development
(Medicorp Health Systems), AMBAC, 5.25s, 2023 11,000 10,219,110
Front Royal-Warren County, VA, Industrial
Development Authority, FHA, 9.45s, 2024 1,000 1,063,620
Hanover County, VA, Industrial Development
Authority, MBIA, 6s, 2009 1,550 1,638,924
Henrico County, VA, Industrial Development
Authority Rev. (Bon Secours Health), MBIA,
6.25s, 2020 1,500 1,591,035
Medical College of Virginia, Hospital Authority
Rev., MBIA, 5.125s, 2018 3,000 2,796,450
Peninsula Ports Authority, VA (Whittaker
Memorial), FHA, 8.7s, 2023, 2,100 2,294,439
Roanoke, VA, Industrial Development Authority,
Hospital Rev. (Roanoke Memorial), MBIA,
6.125s, 2017 6,000 6,330,480
Winchester, VA, Industrial Development Authority,
AMBAC, 8.997s, 2014 ++++ 4,900 5,475,799
-----------
$36,004,339
--------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.7%
Alexandria, VA, Redevelopment & Housing
Finance Authority (Jefferson Village
Apartments), 9s, 2018 $4,000 $ 4,095,960
Norfolk, VA, Redevelopment & Housing Authority
(Dockside Apartments), FHA, 7.375s, 2028 2,000 2,070,560
Virginia Housing Development Authority, 6.5s, 2013 2,300 2,390,091
Virginia Housing Development Authority, 5.1s, 2015 1,550 1,456,985
Virginia Housing Development Authority, 5.95s, 2016 1,905 1,930,698
</TABLE>
26 - MVA
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Multi-Family Housing Revenue - continued
Virginia Housing Development Authority, 6.6s, 2022 $ 965 $ 984,454
------------
$ 12,928,748
--------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.3%
Virgin Islands Public Finance Authority,
5.625s, 2025 $1,000 $ 891,650
--------------------------------------------------------------------------------------
Single Family Housing Revenue - 9.0%
Virginia Housing Development Authority, 7.13s,
2019 ++++ $7,500 $ 7,442,175
Virginia Housing Development Authority, 6.2s, 2021 15,000 15,057,600
Virginia Housing Development Authority, 6.3s, 2025 8,500 8,571,060
------------
$ 31,070,835
--------------------------------------------------------------------------------------
Turnpike Revenue - 4.6%
Chesapeake Bay, VA, Bridge & Tunnel Authority,
FGIC, 0s, 2005 $4,535 $ 3,463,470
Pocahontas Parkway Assn., VA, Toll Road Rev.,
0s, 2012 1,500 645,870
Pocahontas Parkway Assn., VA, Toll Road Rev.,
0s, 2013 1,500 599,430
Pocahontas Parkway Assn., VA, Toll Road Rev.,
0s, 2014 1,500 555,780
Pocahontas Parkway Assn., VA, Toll Road Rev.,
0s, 2015 1,500 514,800
Pocahontas Parkway Assn., VA, Toll Road Rev.,
0s, 2016 1,500 476,385
Puerto Rico Highway & Transportation Authority
Rev., 5.5s, 2018 1,450 1,415,418
Virginia Transportation Board, Transportation
Contract Rev., 6.5s, 2018 3,500 3,633,280
Virginia Transportation Board, US Route 58,
5.125s, 2021 5,000 4,608,450
------------
$ 15,912,883
--------------------------------------------------------------------------------------
Universities - 2.9%
Hampton Roads, VA, Medical College General
Rev., 6.875s, 2016 $2,000 $ 2,079,280
Loudoun County, VA, Industrial Development
Authority (George Washington University),
6.25s, 2012 2,710 2,807,506
Roanoke County, VA, Industrial Development
Authority (Hollins College), 5.25s, 2023 1,000 906,900
Virginia College Building Authority, Educational
Facilities Rev. (Hampden Syndey College),
5s, 2016 1,730 1,631,476
Virginia College Building Authority, Educational
Facilities Rev. (Hampton University), 5s, 2018 1,655 1,473,910
Virginia College Building Authority, Educational
Facilities Rev. (Hampton University), 6s, 2020 1,000 1,020,180
------------
$ 9,919,252
--------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 3.7%
Hanover County, VA, Water & Sewer Systems,
MBIA, 5.25s, 2026 $2,000 $ 1,871,300
Norfolk, VA, Water Rev., FSA, 5s, 2013 1,905 1,842,364
Prince William County, VA, Water & Sewer
Systems Rev., FGIC, 5.5s, 2019 2,000 1,971,620
Virgina Beach, VA, Water Rev., 6s, 2020 1,000 1,022,780
Virginia Resources Authority, 6s, 2017 2,750 2,855,023
Virginia Resources Authority, 5.5s, 2019 1,600 1,581,168
Virginia Resources Authority, MBIA, 5.5s, 2020 1,690 1,663,585
------------
$ 12,807,840
--------------------------------------------------------------------------------------
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Other - 5.3%
Danville, VA, Industrial Development Authority,
Industrial Development Rev. (Piedmont Mall),
8s, 2013 $2,780 $ 2,846,025
Fairfax County, VA, Economic Development
Authority, Parking Rev. (Vienna II Metrorail),
6s, 2016 1,650 1,705,737
Fairfax County, VA, Economic Development
Authority, Parking Rev. (Vienna II Metrorail),
6s, 2017 1,750 1,801,660
Greater Richmond Convertible Center Authority,
Hotel Tax Rev. (Convention Center Expansion),
6.125s, 2020 3,500 3,578,330
New River Valley, VA, Regional Jail Authority,
MBIA, 5.125s, 2019 6,405 5,995,528
Pamunkey, VA, Regional Jail Authority, MBIA,
5.75s, 2018 2,500 2,527,675
------------
$ 18,454,955
--------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $341,006,410) $340,797,706
--------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.6%
--------------------------------------------------------------------------------------
Harris County, TX, Hospital Rev. (Methodist
Hospital), due 04/03/00 $1,900 $ 1,900,000
Peninsula Ports Authority, VA (Shell Oil Co.),
due 04/03/00 200 200,000
Sevier County, TN, Public Building Authority,
due 04/06/00 100 100,000
--------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,200,000
--------------------------------------------------------------------------------------
Total Investments (Identified Cost, $343,206,410) $342,997,706
Other Assets, Less Liabilities - 1.0% 3,423,045
--------------------------------------------------------------------------------------
Net assets - 100.0% $346,420,751
--------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements.
</TABLE>
27 - MVA
<PAGE>
Portfolio of Investments - March 31, 2000
MFS WEST VIRGINIA MUNICIPAL BOND FUND
Municipal Bonds - 98.2%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 19.4%
Charleston, WV, Public Improvement, 7.2s, 2009 $1,140 $ 1,306,714
Commonwealth of Puerto Rico, RITES,
7.75s, 2019 +++++ 3,000 3,103,440
Jefferson County, WV, Board of Education, FGIC,
6.85s, 2009 1,680 1,882,977
Puerto Rico Municipal Finance Agency, RITES,
FSA, 6.857s, 2017 +++++ 900 906,642
State of West Virginia, FGIC, 5s, 2015 1,000 949,690
State of West Virginia, FGIC, 5.5s, 2017 2,565 2,507,980
State of West Virginia, FGIC, 5s, 2021 4,000 3,581,160
State of West Virginia, FGIC, 5.25s, 2026 8,000 7,326,240
State of West Virginia, State Roads, FGIC,
5.75s, 2015 1,000 1,025,180
West Virginia Water Development Authority, FSA,
6.2s, 2024 3,000 3,054,330
-----------
$25,644,353
--------------------------------------------------------------------------------------
State and Local Appropriation - 11.4%
Charlestown, WV, Urban Renewal Authority Lease
Rev., FSA, 5.05s, 2014 $1,000 $ 942,770
Huntington, WV, Municipal Development Authority
Rev., MBIA, 5.1s, 2018 2,740 2,512,525
Puerto Rico Public Buildings Authority, 5.25s, 2021 3,115 2,860,380
West Virginia Building Commission, RITES,
AMBAC, 5.884s, 2018 +++++ 5,770 5,460,151
West Virginia School Building Authority,
Refunding Capital Improvement, "B", FSA,
5.25s, 2021 3,550 3,300,364
-----------
$15,076,190
--------------------------------------------------------------------------------------
Refunded and Special Obligations - 10.0%
Kanawha County, WV, Building Commission
(St. Francis Hospital), 7.5s, 2007 $ 195 $ 210,000
Monongalia County, WV, Board of Education,
MBIA, 7s, 2005 500 546,205
Ohio County, WV, Board of Education, MBIA,
5.25s, 2018 1,180 1,151,444
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s, 2007 3,150 2,160,081
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s, 2008 3,050 1,978,901
West Virginia Building Commission, Lease Rev.
(West Virginia Regional Jail), MBIA, 0s, 2009 2,500 1,533,575
West Virginia Parkways, Economic Development
& Tourism Authority, FGIC, 0s, 2005 2,250 1,720,305
West Virginia Parkways, Economic Development
& Tourism Authority, FGIC, 0s, 2006 2,500 1,810,450
West Virginia Parkways, Economic Development
& Tourism Authority, FGIC, 0s, 2007 2,000 1,371,480
West Virginia Parkways, Economic Development
& Tourism Authority, FGIC, 0s, 2008 610 395,780
West Virginia Water Development Authority,
7.1s, 2009 220 237,140
-----------
$13,115,361
--------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 12.2%
Marshall County, WV, Pollution Control Rev. (Ohio
Power Co.), 6.85s, 2022 $2,000 $ 2,081,260
Marshall County, WV, Pollution Control Rev. (Ohio
Power Co.), MBIA, 6.85s, 2022 3,150 3,312,792
Mason County, WV, Pollution Control Rev.
(Appalachian Power), MBIA, 6.6s, 2022 7,000 7,354,200
</TABLE>
Municipal Bonds - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Putnam County, WV, Pollution Control Rev.
(Applachian Power Co.), MBIA, 6.6s, 2019 $3,200 $ 3,357,888
-----------
$16,106,140
--------------------------------------------------------------------------------------
Health Care Revenue - 7.3%
Berkeley County, WV, Building Commission,
Hospital Rev. (City Hospital), 6.5s, 2022 ### $2,500 $ 2,372,175
Monongalia County, WV, Health Facilities Rev.
(Beverly Enterprises, Inc.), 5.625s, 2003 210 205,720
Monongalia County, WV, Health Facilities Rev.
(Beverly Enterprises, Inc.), 5.875s, 2007 500 476,895
Ohio County, WV, County Commission Health
System (Ohio Valley Medical Center), 5.75s, 2013 750 654,923
West Virginia Hospital Finance Authority
(Charleston Area Medical Center), 6.5s, 2023 2,000 1,971,320
West Virginia Hospital Finance Authority (Fairmont
General Hospital), 6.625s, 2019 2,000 1,879,540
West Virginia Hospital Finance Authority (General
Division Medical Building), 7.25s, 2014 2,000 2,111,640
-----------
$ 9,672,213
--------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 14.4%
Braxton County, WV, Solid Waste Disposal
(Weyerhaeuser Co.), 6.5s, 2025 $2,000 $ 2,005,260
Jackson County, WV, Pollution Control Rev.
(Kaiser Aluminum & Chemical Corp.), 6.5s, 2008 3,185 3,170,954
Kanawha County, WV, Commercial Development
Rev. (Kroger Co.), 8s, 2011 1,000 1,056,660
Kanawha County, WV, Commercial Development
Rev. (May Department Stores Co.), 6.5s, 2003 3,000 3,121,620
Kanawha County, WV, Pollution Control Rev.
(Union Carbide Corp.), 8s, 2020 2,000 2,049,580
Monongalia County, WV, Commercial
Development Rev. (Kroger Co.), 7.7s, 2012 2,000 2,131,040
Ohio County, WV, Industrial Development Rev.
(Kroger Co.), 8.125s, 2011 2,000 2,120,880
Putnam County, WV, Industrial Development Rev.
(Rite Aid Corp.), 10.375s, 2002 590 592,390
South Charleston, WV, Pollution Control Rev.
(Union Carbide Corp.), 7.625s, 2005 2,500 2,719,625
-----------
$18,968,009
--------------------------------------------------------------------------------------
Insured Health Care Revenue - 7.8%
Harrison County, WV, Building Commission Rev.
(Maplewood Retirement), AMBAC, 5.25s, 2021 $2,625 $ 2,388,619
Monongalia County, WV, Building Commission,
Health Rev. (Monongalia General Hospital),
MBIA, 6.625s, 2011 1,000 1,028,370
Randolph County, WV, Community Health System
Rev. (Davis Health System, Inc.), FSA, 5.2s, 2021 1,000 902,210
West Virginia Hospital Finance Authority (Cabell
Huntington Hospital), AMBAC, 6.25s, 2019 5,000 5,104,150
West Virginia Hospital Finance Authority (West
Virginia University Hospital), AMBAC, 5s, 2018 1,000 896,580
-----------
$10,319,929
--------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.0%
Huntington, WV, Housing Corp., Multi-Family Rev.,
FNMA, 7.5s, 2024 $ 800 $ 822,328
Webster County, WV, Housing Development Rev.
(Circlebrook), FHA, 6.35s, 2008 440 451,009
-----------
$ 1,273,337
--------------------------------------------------------------------------------------
</TABLE>
28 - MWV
<PAGE>
Portfolio of Investments - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
-----------------------------------------------------------------------------------------
<S> <C> <C>
Sales and Excise Tax Revenue - 0.3%
Virgin Islands Public Finance Authority,
5.625s, 2025 $ 500 $ 445,825
-----------------------------------------------------------------------------------------
Single Family Housing Revenue - 2.7%
Berkeley County, WV, Residential Mortgage Rev.,
7.875s, 2012 $ 145 $ 148,087
Charles Town, WV, Residential Mortgage Rev.,
6.2s, 2011 380 386,407
Mason County, WV, 0s, 2014 1,700 587,350
West Virginia Housing Development Fund,
7.2s, 2020 1,450 1,500,387
West Virginia Housing Development Fund,
5.3s, 2023 1,000 895,090
------------
$ 3,517,321
-----------------------------------------------------------------------------------------
Turnpike Revenue - 2.3%
West Virginia Parkways Authority, FGIC,
5.689s, 2019 $3,000 $ 2,992,590
-----------------------------------------------------------------------------------------
Universities - 2.0%
West Virgina University Rev. (West Virginia
Dormitory), AMBAC, 5s, 2022 $2,000 $ 1,779,340
West Virginia University Rev. (West Virginia
University Student Union), AMBAC, 5s, 2017 1,000 913,790
------------
$ 2,693,130
-----------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 6.4%
Beckley, WV, Industrial Development Rev.
(Beckley Water Co.), 7s, 2017 ### $2,000 $ 2,094,780
Charleston, WV, Sewer Rev., MBIA, 6.5s, 2017 2,260 2,376,119
West Virginia Water Development Authority, FSA,
5s, 2018 1,270 1,143,203
West Virginia Water Development Authority,
AMBAC, 6.25s, 2020 1,000 1,031,480
West Virginia Water Development Authority, FSA,
5.25s, 2035 2,000 1,783,280
------------
$ 8,428,862
-----------------------------------------------------------------------------------------
Other - 1.0%
West Virginia Economic Development, Auto Lease
Rev. (Capitol Parking Garage), AMBAC,
5.8s, 2020 $1,260 $ 1,258,311
-----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $127,657,364) $129,511,571
Other Assets, Less Liabilities - 1.8% 2,389,487
-----------------------------------------------------------------------------------------
Net assets - 100.0% $131,901,058
-----------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements.
</TABLE>
Portfolio Footnotes:
++++Inverse floating rate security.
+Restricted security.
###Security segregated as collateral for an open futures contract.
**Non income producing security - in default.
29 - MWV
<PAGE>
Financial Statements
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Mississippi New York
March 31, 2000 Fund Fund
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments -
Identified cost $ 74,677,922 $112,975,517
Unrealized appreciation 1,082,884 4,105,609
------------ ------------
Total, at value $ 75,760,806 $117,081,126
Cash 78,409 22,146
Receivable for daily variation margin on open future contracts 7,969 5,500
Receivable for Fund shares sold 34,867 37,446
Receivable for investments sold -- 2,854,883
Interest receivable 1,395,997 2,025,080
Other assets 996 1,904
------------ ------------
Total assets $ 77,279,044 $122,028,085
------------ ------------
Liabilities:
Distributions payable $ 187,336 $ 219,283
Payable for investments purchased -- --
Payable for Fund shares reacquired 58,081 89,671
Payable to affiliates -
Management fee 738 1,167
Shareholder servicing agent fee 211 333
Distribution and service fee 1,392 1,250
Administrative fee 37 58
Accrued expenses and other liabilities 72,187 89,006
------------ ------------
Total liabilities $ 319,982 $ 400,768
------------ ------------
Net assets $ 76,959,062 $121,627,317
------------ ------------
Net assets consist of:
Paid-in capital $ 78,549,436 $118,678,097
Unrealized appreciation on investments 1,143,729 4,143,732
Accumulated net realized loss on investments (2,895,127) (1,210,622)
Accumulated undistributed (distributions in excess of)
net investment income 161,024 16,110
------------ ------------
Total $ 76,959,062 $121,627,317
------------ ------------
Shares of beneficial interest outstanding:
Class A 7,063,148 9,584,324
Class B 1,150,087 1,912,304
Class C -- --
------------ ------------
Total shares of beneficial interest outstanding 8,213,235 11,496,628
------------ ------------
Net assets:
Class A $ 66,173,306 $101,403,295
Class B 10,785,756 20,224,022
Class C -- --
------------ ------------
Total net assets $ 76,959,062 $121,627,317
------------ ------------
Class A shares:
Net asset value per share
(net assets [divided by] shares of beneficial interest outstanding) $ 9.37 $ 10.58
------------ ------------
Offering price per share (100 [divided by] 95.25 of net asset value per share) $ 9.84 $ 11.11
------------ ------------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $ 9.38 $ 10.58
------------ ------------
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) -- --
------------ ------------
<CAPTION>
----------------------------------------------------------------------------------------------------------------
North Carolina Pennsylvania
March 31, 2000 Fund Fund
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments -
Identified cost $367,997,292 $ 42,288,536
Unrealized appreciation 3,127,541 10,858
------------ ------------
Total, at value $371,124,833 $ 42,299,394
Cash 30,295 63,825
Receivable for daily variation margin on open future contracts 16,156 --
Receivable for Fund shares sold 91,774 73,858
Receivable for investments sold 1,041,257 35,000
Interest receivable 6,334,684 705,687
Other assets 5,606 451
------------ ------------
Total assets $378,644,605 $ 43,178,215
------------ ------------
Liabilities:
Distributions payable $ 668,801 $ 77,603
Payable for investments purchased 3,969,105 107,443
Payable for Fund shares reacquired 250,705 --
Payable to affiliates -
Management fee 3,580 412
Shareholder servicing agent fee 1,023 --
Distribution and service fee 4,700 2,466
Administrative fee 179 --
Accrued expenses and other liabilities 122,500 --
------------ ------------
Total liabilities $ 5,020,593 $ 187,924
------------ ------------
Net assets $373,624,012 $ 42,990,291
------------ ------------
Net assets consist of:
Paid-in capital $371,701,424 $ 44,573,541
Unrealized appreciation on investments 3,239,528 10,858
Accumulated net realized loss on investments (1,026,904) (1,638,621)
Accumulated undistributed (distributions in excess of)
net investment income (290,036) 44,513
------------ ------------
Total $373,624,012 $ 42,990,291
------------ ------------
Shares of beneficial interest outstanding:
Class A 27,356,421 2,723,514
Class B 4,299,187 1,864,487
Class C 1,251,887 --
------------ ------------
Total shares of beneficial interest outstanding 32,907,495 4,588,001
------------ ------------
Net assets:
Class A $310,624,263 $ 25,494,333
Class B 48,793,545 17,495,958
Class C 14,206,204 --
------------ ------------
Total net assets $373,624,012 $ 42,990,291
------------ ------------
Class A shares:
Net asset value per share
(net assets [divided by] shares of beneficial interest outstanding) $ 11.35 $ 9.36
------------ ------------
Offering price per share (100 [divided by] 95.25 of net asset value per share) $ 11.92 $ 9.83
------------ ------------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $ 11.35 $ 9.38
------------ ------------
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $ 11.35 --
------------ ------------
</TABLE>
On sales of $100,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A,
Class B, and Class C shares.
See notes to financial statements.
30
<PAGE>
Financial Statements - continued
Statements of Assets and Liabilities - continued
<TABLE>
<CAPTION>
South Carolina Tennessee
March 31, 2000 Fund Fund
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments -
Identified cost $149,235,735 $119,507,926
Unrealized appreciation (depreciation) 983,423 634,150
------------ ------------
Total, at value $150,219,158 $120,142,076
Cash 335,615 42,049
Receivable for daily variation margin on open futures contracts -- 5,156
Receivable for Fund shares sold 34,507 28,556
Receivable for investments sold 8,412,351 132,347
Interest receivable 2,282,906 1,721,963
Other assets 2,319 1,667
------------ ------------
Total assets $161,286,856 $122,073,814
------------ ------------
Liabilities:
Distributions payable $ 295,469 $ 251,482
Payable for daily variation margin on open futures contracts 12,719 --
Payable for investments purchased 8,106,025 --
Payable for Fund shares reacquired 178,184 157,741
Payable to affiliates -
Management fee 1,464 1,166
Shareholder servicing agent fee 418 333
Distribution and service fee 2,025 1,545
Administrative fee 73 58
Accrued expenses and other liabilities 94,562 89,742
------------ ------------
Total liabilities $ 8,690,939 $ 502,067
------------ ------------
Net assets $152,595,917 $121,571,747
------------ ------------
Net assets consist of:
Paid-in capital $152,672,186 $121,481,179
Unrealized appreciation (depreciation) on investments 933,704 669,890
Accumulated net realized loss on investments (1,067,834) (651,331)
Accumulated undistributed (distributions in excess of)
net investment income 57,861 72,009
------------ ------------
Total $152,595,917 $121,571,747
------------ ------------
Shares of beneficial interest outstanding:
Class A 10,451,920 9,920,330
Class B 2,723,989 2,111,191
Class C -- --
------------ ------------
Total shares of beneficial interest outstanding 13,175,909 12,031,521
------------ ------------
Net assets:
Class A $121,063,928 $100,250,539
Class B 31,531,989 21,321,208
Class C -- --
------------ ------------
Total net assets $152,595,917 $121,571,747
------------ ------------
Class A shares:
Net asset value per share
(net assets [divided by] shares of beneficial interest outstanding) $ 11.58 $ 10.11
------------ ------------
Offering price per share (100 [divided by] 95.25 of net asset value per share) $ 12.16 $ 10.61
------------ ------------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $ 11.58 $ 10.10
------------ ------------
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) -- --
------------ ------------
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Virginia West Virginia
March 31, 2000 Fund Fund
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments -
Identified cost $343,206,410 $127,657,364
Unrealized appreciation (depreciation) (208,704) 1,854,207
------------ ------------
Total, at value $342,997,706 $129,511,571
Cash 80,937 69,532
Receivable for daily variation margin on open futures contracts -- --
Receivable for Fund shares sold 154,368 10,244
Receivable for investments sold 60,000 9,656,303
Interest receivable 5,788,116 2,397,609
Other assets 5,338 1,924
------------ ------------
Total assets $349,086,465 $141,647,183
------------ ------------
Liabilities:
Distributions payable $ 740,170 $ 256,273
Payable for daily variation margin on open futures contracts 4,062 10,000
Payable for investments purchased -- 9,160,047
Payable for Fund shares reacquired 1,796,405 224,370
Payable to affiliates -
Management fee 3,322 1,264
Shareholder servicing agent fee 949 360
Distribution and service fee 3,938 1,527
Administrative fee 166 63
Accrued expenses and other liabilities 116,702 92,221
------------ ------------
Total liabilities $ 2,665,714 $ 9,746,125
------------ ------------
Net assets $346,420,751 $131,901,058
------------ ------------
Net assets consist of:
Paid-in capital $348,695,039 $133,412,700
Unrealized appreciation (depreciation) on investments (208,939) 1,807,526
Accumulated net realized loss on investments (1,215,895) (2,806,806)
Accumulated undistributed (distributions in excess of)
net investment income (849,454) (512,362)
------------ ------------
Total $346,420,751 $131,901,058
------------ ------------
Shares of beneficial interest outstanding:
Class A 28,584,962 10,703,833
Class B 2,687,498 1,345,943
Class C 473,736 --
------------ ------------
Total shares of beneficial interest outstanding 31,746,196 12,049,776
------------ ------------
Net assets:
Class A $311,934,258 $117,173,725
Class B 29,315,929 14,727,333
Class C 5,170,564 --
------------ ------------
Total net assets $346,420,751 $131,901,058
------------ ------------
Class A shares:
Net asset value per share
(net assets [divided by] shares of beneficial interest outstanding) $ 10.91 $ 10.95
------------ ------------
Offering price per share (100 [divided by] 95.25 of net asset value per share) $ 11.45 $ 11.50
------------ ------------
Class B shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $ 10.91 $ 10.94
------------ ------------
Class C shares:
Net asset value and offering price per share
(net assets [divided by] shares of beneficial interest outstanding) $ 10.91 --
------------ ------------
</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.
31
<PAGE>
Financial Statements - continued
Statements of Operations
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Mississippi New York North Carolina Pennsylvania
Year Ended March 31, 2000 Fund Fund Fund Fund
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $ 4,569,447 $ 8,019,921 $ 23,866,950 $ 2,507,266
------------- ------------ ------------- ------------
Expenses -
Management fee $ 427,736 $ 737,116 $ 2,193,969 $ 248,288
Trustees' compensation 18,052 18,823 18,775 18,093
Shareholder servicing agent fee 77,789 134,032 398,955 45,174
Distribution and service fee (Class A) -- 268,576 1,166,278 --
Distribution and service fee (Class B) 89,854 266,025 512,180 176,371
Distribution and service fee (Class C) -- -- 145,144 --
Administrative fee 10,032 17,369 51,781 5,857
Custodian fee 31,736 47,091 131,444 20,626
Printing 5,228 9,844 25,257 4,130
Postage 3,057 6,160 15,106 993
Auditing fees 30,770 29,270 30,771 30,370
Legal fees 4,254 1,471 4,295 4,284
Miscellaneous 45,155 47,121 104,593 34,781
------------- ------------ ------------- ------------
Total expenses $ 743,663 $ 1,582,898 $ 4,798,548 $ 588,967
Fees paid indirectly (12,595) (22,734) (53,492) (7,202)
Reduction of expenses by investment adviser (142,465) (244,146) (727,042) (239,564)
------------- ------------ ------------- ------------
Net expenses $ 588,603 $ 1,316,018 $ 4,018,014 $ 342,201
------------- ------------ ------------- ------------
Net investment income $ 3,980,844 $ 6,703,903 $ 19,848,936 $ 2,165,065
------------- ------------ ------------- ------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 385,797 $ (680,959) $ (45,821) $ (208,292)
Futures contracts (13,099) (44,484) (131,188) 40,385
------------- ------------ ------------- ------------
Net realized gain (loss) on investments $ 372,698 $ (725,443) $ (177,009) $ (167,907)
------------- ------------ ------------- ------------
Change in unrealized appreciation (depreciation) -
Investments $ (5,047,499) $ (8,299,610) $ (27,970,361) $ (2,476,896)
Futures contracts 60,845 38,123 111,987 --
------------- ------------ ------------- ------------
Net unrealized loss on investments $ (4,986,654) $ (8,261,487) $ (27,858,374) $ (2,476,896)
------------- ------------ ------------- ------------
Net realized and unrealized loss on investments $ (4,613,956) $ (8,986,930) $ (28,035,383) $ (2,644,803)
------------- ------------ ------------- ------------
Decrease in net assets from operations $ (633,112) $ (2,283,027) $ (8,186,447) $ (479,738)
------------- ------------ ------------- ------------
</TABLE>
See notes to financial statements.
32
<PAGE>
Financial Statements - continued
Statements of Operations - continued
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
South Carolina Tennessee Virginia West Virginia
Year Ended March 31, 2000 Fund Fund Fund Fund
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $ 9,694,276 $ 7,548,102 $ 22,406,823 $ 8,542,468
-------------- ------------ ------------- -------------
Expenses -
Management fee $ 911,399 $ 720,168 $ 2,057,979 $ 771,728
Trustees' compensation 18,268 18,047 18,675 18,595
Shareholder servicing agent fee 165,726 130,957 374,221 140,333
Distribution and service fee (Class A) 460,527 379,153 1,175,288 435,334
Distribution and service fee (Class B) 341,465 226,275 328,446 159,524
Distribution and service fee (Class C) -- -- 55,789 --
Administrative fee 21,540 17,041 48,622 18,204
Custodian fee 58,871 49,761 126,631 50,248
Printing 9,341 6,986 24,251 9,222
Postage 5,987 4,281 15,538 5,385
Auditing fees 30,370 28,870 30,370 30,770
Legal fees 12,179 2,670 5,106 3,770
Miscellaneous 57,560 55,685 99,511 50,080
-------------- ------------ ------------- -------------
Total expenses $ 2,093,233 $ 1,639,894 $ 4,360,427 $ 1,693,193
Fees paid indirectly (32,730) (14,027) (60,992) (15,302)
Reduction of expenses by investment adviser (301,632) (238,450) (681,496) (255,839)
-------------- ------------ ------------- -------------
Net expenses $ 1,758,871 $ 1,387,417 $ 3,617,939 $ 1,422,052
-------------- ------------ ------------- -------------
Net investment income $ 7,935,405 $ 6,160,685 $ 18,788,884 $ 7,120,416
-------------- ------------ ------------- -------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (861,365) $ (607,230) $ (169,771) $ 25,768
Futures contracts (67,875) (44,100) 665,093 (37,911)
-------------- ------------ ------------- -------------
Net realized gain (loss) on investments $ (929,240) $ (651,330) $ 495,322 $ (12,143)
-------------- ------------ ------------- -------------
Change in unrealized appreciation (depreciation) -
Investments $ (11,595,810) $ (8,617,075) $ (25,033,876) $ (10,225,002)
Futures contracts (49,719) 35,740 (235) (46,681)
-------------- ------------ ------------- -------------
Net unrealized loss on investments $ (11,645,529) $ (8,581,335) $ (25,034,111) $ (10,271,683)
-------------- ------------ ------------- -------------
Net realized and unrealized loss on investments $ (12,574,769) $ (9,232,665) $ (24,538,789) $ (10,283,826)
-------------- ------------ ------------- -------------
Decrease in net assets from operations $ (4,639,364) $ (3,071,980) $ (5,749,905) $ (3,163,410)
-------------- ------------ ------------- -------------
</TABLE>
See notes to financial statements.
33
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Mississippi
Year Ended March 31, 2000 Fund
-------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 3,980,844
Net realized gain (loss) on investments 372,698
Net unrealized loss on investments (4,986,654)
-------------
Decrease in net assets from operations $ (633,112)
-------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,475,557)
From net investment income (Class B) (494,824)
From net investment income (Class C) --
-------------
Total distributions declared to shareholders $ (3,970,381)
-------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 13,670,556
Net asset value of shares issued to shareholders
in reinvestment of distributions 1,734,390
Cost of shares reacquired (12,176,663)
-------------
Net increase (decrease) in net assets from Fund
share transactions $ 3,228,283
-------------
Total decrease in net assets $ (1,375,210)
Net assets:
At beginning of period 78,334,272
-------------
At end of period $ 76,959,062
-------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $ 161,024
-------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------
New York North Carolina Pennsylvania
Year Ended March 31, 2000 Fund Fund Fund
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 6,703,903 $ 19,848,936 $ 2,165,065
Net realized gain (loss) on investments (725,443) (177,009) (167,907)
Net unrealized loss on investments (8,261,487) (27,858,374) (2,476,896)
------------- ------------- -------------
Decrease in net assets from operations $ (2,283,027) $ (8,186,447) $ (479,738)
------------- ------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (5,531,891) $ (16,769,203) $ (1,208,852)
From net investment income (Class B) (1,165,668) (2,248,484) (939,344)
From net investment income (Class C) -- (636,441) --
------------- ------------- -------------
Total distributions declared to shareholders $ (6,697,559) $ (19,654,128) $ (2,148,196)
------------- ------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 16,723,976 $ 29,418,303 $ 13,224,784
Net asset value of shares issued to shareholders
in reinvestment of distributions 3,894,825 11,346,137 1,230,667
Cost of shares reacquired (37,185,334) (69,993,273) (14,515,297)
------------- ------------- -------------
Net increase (decrease) in net assets from Fund
share transactions $ (16,566,533) $ (29,228,833) $ (59,846)
------------- ------------- -------------
Total decrease in net assets $ (25,547,119) $ (57,069,408) $ (2,687,780)
Net assets:
At beginning of period 147,174,436 430,693,420 45,678,071
------------- ------------- -------------
At end of period $ 121,627,317 $ 373,624,012 $ 42,990,291
------------- ------------- -------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $ 16,110 $ (290,036) $ 44,513
------------- ------------- -------------
</TABLE>
See notes to financial statements.
34
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets - continued
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
South Carolina
Year Ended March 31, 2000 Fund
-------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 7,935,405
Net realized gain (loss) on investments (929,240)
Net unrealized loss on investments (11,645,529)
-------------
Decrease in net assets from operations $ (4,639,364)
-------------
Distributions declared to shareholders -
From net investment income (Class A) $ (6,408,786)
From net investment income (Class B) (1,442,426)
From net investment income (Class C) --
From net realized gain on investments (Class A) (337,034)
From net realized gain on investments (Class B) (89,517)
In excess of net realized gain on investments (Class A) (49,868)
In excess of net realized gain on investments (Class B) (13,245)
-------------
Total distributions declared to shareholders $ (8,340,876)
-------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 11,474,304
Net asset value of shares issued to shareholders
in reinvestment of distributions 4,441,022
Cost of shares reacquired (32,351,554)
-------------
Net decrease in net assets from Fund
share transactions $ (16,436,228)
-------------
Total decrease in net assets $ (29,416,468)
Net assets:
At beginning of period 182,012,385
-------------
At end of period $ 152,595,917
-------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $ 57,861
-------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Tennessee Virginia West Virginia
Year Ended March 31, 2000 Fund Fund Fund
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 6,160,685 $ 18,788,884 $ 7,120,416
Net realized gain (loss) on investments (651,330) 495,322 (12,143)
Net unrealized loss on investments (8,581,335) (25,034,111) (10,271,683)
------------- ------------- -------------
Decrease in net assets from operations $ (3,071,980) $ (5,749,905) $ (3,163,410)
------------- ------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (5,207,698) $ (16,879,510) $ (6,386,832)
From net investment income (Class B) (942,677) (1,437,665) (715,598)
From net investment income (Class C) -- (243,017) --
From net realized gain on investments (Class A) (675,450) -- --
From net realized gain on investments (Class B) (149,319) -- --
In excess of net realized gain on investments (Class A) (402) -- --
In excess of net realized gain on investments (Class B) (89) -- --
------------- ------------- -------------
Total distributions declared to shareholders $ (6,975,635) $ (18,560,192) $ (7,102,430)
------------- ------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 12,069,955 $ 22,537,475 $ 6,726,050
Net asset value of shares issued to shareholders
in reinvestment of distributions 3,598,094 9,195,654 3,940,144
Cost of shares reacquired (24,109,917) (69,050,206) (19,121,105)
------------- ------------- -------------
Net decrease in net assets from Fund
share transactions $ (8,441,868) $ (37,317,077) $ (8,454,911)
------------- ------------- -------------
Total decrease in net assets $ (18,489,483) $ (61,627,174) $ (18,720,751)
Net assets:
At beginning of period 140,061,230 408,047,925 150,621,809
------------- ------------- -------------
At end of period $ 121,571,747 $ 346,420,751 $ 131,901,058
------------- ------------- -------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $ 72,009 $ (849,454) $ (512,362)
------------- ------------- -------------
</TABLE>
See notes to financial statements.
35
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets - continued
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Mississippi
Year Ended March 31, 1999 Fund
-------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 3,716,756
Net realized gain on investments 94,562
Net unrealized gain (loss) on investments 308,084
------------
Increase in net assets from operations $ 4,119,402
------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,287,679)
From net investment income (Class B) (454,600)
From net investment income (Class C) --
In excess of net investment income (Class A) --
In excess of net investment income (Class B) --
------------
Total distributions declared to shareholders $ (3,742,279)
------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 7,347,508
Net asset value of shares issued to shareholders
in reinvestment of distributions 1,634,892
Cost of shares reacquired (7,804,067)
------------
Net increase (decrease) in net assets from Fund share transactions $ 1,178,333
------------
Total increase (decrease) in net assets $ 1,555,456
Net assets:
At beginning of period 76,778,816
------------
At end of period $ 78,334,272
------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $ 82,991
------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
New York North Carolina Pennsylvania
Year Ended March 31, 1999 Fund Fund Fund
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 6,933,079 $ 20,147,252 $ 1,854,082
Net realized gain on investments 2,321,410 5,141,594 190,272
Net unrealized gain (loss) on investments (2,186,539) (5,778,205) 119,606
------------- -------------- ------------
Increase in net assets from operations $ 7,067,950 $ 19,510,641 $ 2,163,960
------------- -------------- ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (5,734,216) $ (17,636,624) $ (968,779)
From net investment income (Class B) (1,208,410) (1,992,249) (895,842)
From net investment income (Class C) -- (445,446) --
In excess of net investment income (Class A) (3,870) -- --
In excess of net investment income (Class B) (815) -- --
------------- -------------- ------------
Total distributions declared to shareholders $ (6,947,311) $ (20,074,319) $ (1,864,621)
------------- -------------- ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 29,293,927 $ 95,174,583 $ 9,693,546
Net asset value of shares issued to shareholders
in reinvestment of distributions 4,020,370 11,591,211 1,050,475
Cost of shares reacquired (32,254,619) (108,484,241) (4,833,679)
------------- -------------- ------------
Net increase (decrease) in net assets from Fund share transactions $ 1,059,678 $ (1,718,447) $ 5,910,342
------------- -------------- ------------
Total increase (decrease) in net assets $ 1,180,317 $ (2,282,125) $ 6,209,681
Net assets:
At beginning of period 145,994,119 432,975,545 39,468,390
------------- -------------- ------------
At end of period $ 147,174,436 $ 430,693,420 $ 45,678,071
------------- -------------- ------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $ (4,683) $ (449,869) $ 25,907
------------- -------------- ------------
</TABLE>
See notes to financial statements.
36
<PAGE>
Financial Statements - continued
Statements of Changes in Net Assets - continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
South Carolina Tennessee
Year Ended March 31, 1999 Fund Fund
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 7,935,924 $ 6,013,864
Net realized gain on investments 1,589,817 1,051,618
Net unrealized loss on investments (2,199,147) (1,234,421)
------------- -------------
Increase in net assets from operations $ 7,326,594 $ 5,831,061
------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (6,682,276) $ (5,137,762)
From net investment income (Class B) (1,253,648) (821,549)
From net investment income (Class C) -- --
From net realized gain on investments (Class A) -- (337,988)
From net realized gain on investments (Class B) -- (64,567)
In excess of net investment income (Class A) (23,065) --
In excess of net investment income (Class B) (4,327) --
------------- -------------
Total distributions declared to shareholders $ (7,963,316) $ (6,361,866)
------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 21,347,777 $ 23,846,170
Net asset value of shares issued to shareholders
in reinvestment of distributions 4,185,898 3,141,165
Cost of shares reacquired (19,791,022) (13,464,339)
------------- -------------
Net increase (decrease) in net assets from Fund share transactions $ 5,742,653 $ 13,522,996
------------- -------------
Total increase (decrease) in net assets $ 5,105,931 $ 12,992,191
Net assets:
At beginning of period 176,906,454 127,069,039
------------- -------------
At end of period $ 182,012,385 $ 140,061,230
------------- -------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $ (101,813) $ 62,189
------------- -------------
<CAPTION>
-------------------------------------------------------------------------------------------------------
Virginia West Virginia
Year Ended March 31, 1999 Fund Fund
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 19,019,822 $ 6,968,680
Net realized gain on investments 5,086,588 486,002
Net unrealized loss on investments (5,493,034) (796,403)
------------- -------------
Increase in net assets from operations $ 18,613,376 $ 6,658,279
------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (17,358,181) $ (6,282,387)
From net investment income (Class B) (1,394,357) (686,293)
From net investment income (Class C) (179,277) --
From net realized gain on investments (Class A) -- --
From net realized gain on investments (Class B) -- --
In excess of net investment income (Class A) -- (26,990)
In excess of net investment income (Class B) -- (2,948)
------------- -------------
Total distributions declared to shareholders $ (18,931,815) $ (6,998,618)
------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 56,562,932 $ 15,549,189
Net asset value of shares issued to shareholders
in reinvestment of distributions 9,409,188 3,876,569
Cost of shares reacquired (66,614,366) (13,937,487)
------------- -------------
Net increase (decrease) in net assets from Fund share transactions $ (642,246) $ 5,488,271
------------- -------------
Total increase (decrease) in net assets $ (960,685) $ 5,147,932
Net assets:
At beginning of period 409,008,610 145,473,877
------------- -------------
At end of period $ 408,047,925 $ 150,621,809
------------- -------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $ (992,808) $ (508,979)
------------- -------------
</TABLE>
See notes to financial statements.
37
<PAGE>
Financial Statements - continued
Financial Highlights
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Mississippi Fund
-------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------
2000 1999
-------------------------
Class A
-------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.93 $ 9.88
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.50 $ 0.49
Net realized and unrealized gain (loss) on investments (0.56) 0.06
-------- --------
Total from investment operations $ (0.06) $ 0.55
-------- --------
Less distributions declared to shareholders
From net investment income $ (0.50) $ (0.50)
In excess of net investment income -- --
-------- --------
Total distributions declared to shareholders $ (0.50) $ (0.50)
-------- --------
Net asset value - end of period $ 9.37 $ 9.93
-------- --------
Total return++ (0.58)% 5.62%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.66% 0.73%
Net investment income 5.22% 4.94%
Portfolio turnover 18% 6%
Net assets at end of period (000 omitted) $ 66,173 $ 66,869
<CAPTION>
Year Ended March 31,
---------------------------------
1998 1997 1996
---------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.35 $ 9.35 $ 9.15
------- --------- -------
Income from investment operations# -
Net investment income[sec] $ 0.49 $ 0.48 $ 0.52
Net realized and unrealized gain (loss) on investments 0.52 0.00 0.20
------- -------- -------
Total from investment operations $ 1.01 $ 0.48 $ 0.72
------ -------- -------
Less distributions declared to shareholders
From net investment income $ (0.48) $ (0.48) $ (0.52)
In excess of net investment income -- -- (0.00)++++
------- -------- -------
Total distributions declared to shareholders $ (0.48) $ (0.48) $ (.52)
------- --------- ------
Net asset value - end of period $ 9.88 $ 9.35 $ 9.35
------- --------- -------
Total return++ 11.02% 5.22% 7.99%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.78% 0.87% 0.45%
Net investment income 5.04% 5.14% 5.51%
Portfolio turnover 18% 17% 31%
Net assets at end of period (000 omitted) $66,061 $ 66,630 $74,435
</TABLE>
[sec] Subject to reimbursment by the Fund, the investment adviser has
voluntarily agreed under a temporary expense agreement to pay all of the
Fund's operating expenses, exclusive of management, distribution, and
service fees, in excess of 0.40% for certain of the periods indicated. In
addition, the investment adviser voluntarily waived a portion of its fee
for certain of the periods indicated. To the extent actual expenses were
over this limitation and the waivers had not been in place, the net
investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.48 $ 0.48 $ 0.48 -- $ 0.48
Ratios (to average net assets):
Expenses## 0.84% 0.85% 0.85% -- 0.88%
Net investment income 5.04% 4.82% 4.97% -- 5.08%
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++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.
++++Per share amount was less than $0.01.
See notes to financial statements.
38
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Mississippi Fund
-------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------
2000 1999
-------------------------
Class B
-------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.94 $ 9.89
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.42 $ 0.41
Net realized and unrealized gain (loss) on investments (0.56) 0.06
-------- --------
Total from investment operations $ (0.14) $ 0.47
-------- --------
Less distributions declared to shareholders
From net investment income $ (0.42) $ (0.42)
In excess of net investment income -- --
-------- ---------
Total distributions declared to shareholders $ (0.42) $ (0.42)
-------- ---------
Net asset value - end of period $ 9.38 $ 9.94
-------- ---------
Total return (1.37)% 4.80%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.46% 1.51%
Net investment income 4.41% 4.16%
Portfolio turnover 18% 6%
Net assets at end of period (000 omitted) $ 10,786 $ 11,465
<CAPTION>
Year Ended March 31,
----------------------------------------
1998 1997 1996
----------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.36 $ 9.36 $ 9.16
-------- -------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.41 $ 0.40 $ 0.44
Net realized and unrealized gain (loss) on investments 0.53 0.00 0.20
-------- -------- ----------
Total from investment operations $ 0.94 $ 0.40 $ 0.64
-------- -------- ----------
Less distributions declared to shareholders
From net investment income $ (0.41) $ (0.40) $ (0.44)
In excess of net investment income -- -- (0.00)++
-------- -------- ----------
Total distributions declared to shareholders $ (0.41) $ (0.40) $ (0.44)
-------- --------- ----------
Net asset value - end of period $ 9.89 $ 9.36 $ 9.36
-------- -------- ----------
Total return 10.15% 4.33% 7.11%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.56% 1.72% 1.28%
Net investment income 4.26% 4.29% 4.67%
Portfolio turnover 18% 17% 31%
Net assets at end of period (000 omitted) $ 10,717 $ 11,014 $ 11,475
</TABLE>
[sec] Subject to reimbursment by the Fund, the investment adviser has
voluntarily agreed under a temporary expense agreement to pay all of the
Fund's operating expenses, exclusive of management, distribution, and
service fees, in excess of 0.40% for certain of the periods indicated. In
addition, the investment adviser voluntarily waived a portion of its fee
for certain of the periods indicated. To the extent actual expenses were
over this limitation and the waivers had not been in place, the net
investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.40 $ 0.40 $ 0.40 -- $ 0.40
Ratios (to average net assets):
Expenses## 1.64% 1.63% 1.63% -- 1.71%
Net investment income 4.23% 4.04% 4.19% -- 4.24%
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01
See notes to financial statements.
39
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
New York Fund
--------------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------------
2000 1999
--------------------------------
Class A
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.27 $ 11.26
-------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.55 $ 0.56
Net realized and unrealized gain (loss) on investments (0.69) 0.01
-------- ----------
Total from investment operations $ (0.14) $ 0.57
-------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.56)
In excess of net investment income -- (0.00)++++
-------- ----------
Total distributions declared to shareholders $ (0.55) $ (0.56)
-------- ----------
Net asset value - end of period $ 10.58 $ 11.27
-------- ----------
Total return++ (1.06)% 5.14%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.85% 0.93%
Net investment income 5.14% 4.93%
Portfolio turnover 38% 26%
Net assets at end of period (000 omitted) $101,403 $ 116,767
<CAPTION>
Year Ended March 31,
------------------------------------------
1998 1997 1996
------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.60 $ 10.66 $ 10.49
-------- -------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.57 $ 0.55 $ 0.55
Net realized and unrealized gain (loss) on investments 0.64 (0.06) 0.17
-------- -------- ----------
Total from investment operations $ 1.21 $ 0.49 $ 0.72
-------- -------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.55) $ (0.55) $ (0.55)
In excess of net investment income -- -- (0.00)++++
-------- -------- ----------
Total distributions declared to shareholders $ (0.55) $ (0.55) $ (0.55)
-------- -------- ----------
Net asset value - end of period $ 11.26 $ 10.60 $ 10.66
-------- -------- ----------
Total return++ 11.59% 4.68% 6.98%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.03% 1.11% 1.10%
Net investment income 5.14% 5.18% 5.09%
Portfolio turnover 41% 64% 102%
Net assets at end of period (000 omitted) $119,376 $121,588 $ 134,449
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $0.53 $0.55 $0.56 -- $0.54
Ratios (to average net assets):
Expenses## 1.03% 1.05% 1.10% -- 1.20%
Net investment income 4.96% 4.81% 5.07% -- 4.99%
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++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.
++++Per share amount was less than $0.01.
See notes to financial statements.
40
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
New York Fund
--------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------
2000 1999
--------------------------
Class B
--------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.27 $ 11.26
------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.47 $ 0.47
Net realized and unrealized gain (loss) on investments (0.69) 0.01
------- ---------
Total from investment operations $ (0.22) $ 0.48
------- ---------
Less distributions declared to shareholders
From net investment income $ (0.47) $ (0.47)
In excess of net investment income -- (0.00)++
------- ---------
Total distributions declared to shareholders $ (0.47) $ (0.47)
------- ---------
Net asset value - end of period $ 10.58 $ 11.27
------- ---------
Total return (1.89)% 4.46%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.60% 1.68%
Net investment income 4.38% 4.18%
Portfolio turnover 38% 26%
Net assets at end of period (000 omitted) $20,224 $ 30,408
<CAPTION>
Year Ended March 31,
--------------------------------------
1998 1997 1996
--------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.59 $ 10.66 $ 10.49
------- ------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.49 $ 0.47 $ 0.47
Net realized and unrealized gain (loss) on investments 0.64 (0.07) 0.17
------- ------- ---------
Total from investment operations $ 1.13 $ 0.40 $ 0.64
------- ------- ---------
Less distributions declared to shareholders
From net investment income $ (0.46) $ (0.47) $ (0.47)
In excess of net investment income -- -- (0.00)++
-------- -------- ---------
Total distributions declared to shareholders $ (0.46) $ (0.47) $ (0.47)
-------- -------- ---------
Net asset value - end of period $ 11.26 $ 10.59 $ 10.66
-------- -------- ---------
Total return 10.78% 3.77% 6.10%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.78% 1.92% 1.92%
Net investment income 4.39% 4.37% 4.27%
Portfolio turnover 41% 64% 102%
Net assets at end of period (000 omitted) $ 26,618 $ 26,724 $ 28,068
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.45 $ 0.46 $ 0.48 -- --
Ratios (to average net assets):
Expenses## 1.78% 1.80% 1.85% -- --
Net investment income 4.20% 4.06% 4.32% -- --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
41
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
North Carolina Fund
-------------------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------------------
2000 1999 1998
-------------------------------------
Class A
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 12.14 $ 12.15 $ 11.56
-------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.59 $ 0.59 $ 0.59
Net realized and unrealized gain (loss) on investments (0.80) (0.02) 0.59
-------- -------- --------
Total from investment operations $ (0.21) $ 0.57 $ 1.18
-------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.58) $ (0.58) $ (0.59)
In excess of net investment income -- -- --
-------- --------- ---------
Total distributions declared to shareholders $ (0.58) $ (0.58) $ (0.59)
-------- --------- ---------
Net asset value - end of period $ 11.35 $ 12.14 $ 12.15
-------- --------- ---------
Total return++ (1.67)% 4.76% 10.36%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.91% 0.98% 1.03%
Net investment income 5.07% 4.76% 4.92%
Portfolio turnover 9% 30% 24%
Net assets at end of period (000 omitted) $310,624 $ 364,576 $ 380,595
<CAPTION>
Year Ended March 31,
---------------------------------------
1997 1996
---------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.57 $ 11.42
----------- -----------
Income from investment operations# -
Net investment income[sec] $ 0.59 $ 0.59
Net realized and unrealized gain (loss) on investments (0.01) 0.15
----------- -----------
Total from investment operations $ 0.58 $ 0.74
----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.59) $ (0.59)
In excess of net investment income (0.00)++++ (0.00)++++
----------- -----------
Total distributions declared to shareholders $ (0.59) $ (0.59)
----------- -----------
Net asset value - end of period $ 11.56 $ 11.57
----------- -----------
Total return++ 5.09% 6.56%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.08% 1.17%
Net investment income 5.05% 5.04%
Portfolio turnover 33% 30%
Net assets at end of period (000 omitted) $ 377,112 $ 409,347
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net Investment income $ 0.57 $ 0.57 $ 0.58 $ 0.58 --
Ratios (to average net assets):
Expenses## 1.09% 1.10% 1.13% 1.15% --
Net investment income 4.89% 4.64% 4.82% 4.98% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++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.
++++Per share amount was less than $0.01.
See notes to financial statements.
42
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
North Carolina Fund
-------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------
2000 1999
-------------------------
Class B
-------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 12.13 $ 12.15
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.51 $ 0.50
Net realized and unrealized gain (loss) on investments (0.78) (0.02)
-------- --------
Total from investment operations $ (0.27) $ 0.48
-------- --------
Less distributions declared to shareholders -
From net investment income $ (0.51) $ (0.50)
In excess of net investment income -- --
-------- ---------
Total distributions declared to shareholders $ (0.51) $ (0.50)
-------- ---------
Net asset value - end of period $ 11.35 $ 12.13
-------- ---------
Total return (2.22)% 4.00%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.56% 1.63%
Net investment income 4.42% 4.11%
Portfolio turnover 9% 30%
Net assets at end of period (000 omitted) $ 48,794 $ 52,033
<CAPTION>
Year Ended March 31,
--------------------------------------------
1998 1997 1996
--------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.55 $ 11.56 $ 11.42
-------- ---------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.51 $ 0.50 $ 0.50
Net realized and unrealized gain (loss) on investments 0.60 0.00 0.14
-------- ---------- ----------
Total from investment operations $ 1.11 $ 0.50 $ 0.64
-------- ---------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.51) $ (0.51) $ (0.50)
In excess of net investment income -- (0.00)++ (0.00)++
--------- ---------- ----------
Total distributions declared to shareholders $ (0.51) $ (0.51) $ (0.50)
--------- ---------- ----------
Net asset value - end of period $ 12.15 $ 11.55 $ 11.56
--------- ---------- ----------
Total return 9.75% 4.36% 5.70%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.68% 1.78% 1.90%
Net investment income 4.27% 4.36% 4.30%
Portfolio turnover 24% 33% 30%
Net assets at end of period (000 omitted) $ 44,238 $ 39,035 $ 33,847
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.49 $ 0.49 $ 0.50 $ 0.49 --
Ratios (to average net assets):
Expenses## 1.74% 1.75% 1.78% 1.85% --
Net investment income 4.24% 3.99% 4.17% 4.29% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
43
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
North Carolina Fund
-------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------
2000 1999
-------------------------
Class C
-------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 12.13 $ 12.15
-------- --------
Income from investment operations# -
Net investment income[sec] $ 0.51 $ 0.50
Net realized and unrealized gain (loss) on investments (0.78) (0.02)
-------- --------
Total from investment operations $ (0.27) $ 0.48
-------- --------
Less distributions declared to shareholders -
From net investment income $ (0.51) $ (0.50)
In excess of net investment income -- --
-------- ---------
Total distributions declared to shareholders $ (0.51) $ (0.50)
-------- ---------
Net asset value - end of period $ 11.35 $ 12.13
-------- ---------
Total return (2.22)% 4.00%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.56% 1.63%
Net investment income 4.42% 4.11%
Portfolio turnover 9% 30%
Net assets at end of period (000 omitted) $ 14,206 $ 14,084
<CAPTION>
Year Ended March 31,
-------------------------------------------
1998 1997 1996
-------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.55 $ 11.56 $ 11.41
-------- ---------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.51 $ 0.52 $ 0.51
Net realized and unrealized gain (loss) on investments 0.60 (0.02) 0.15
-------- ---------- ----------
Total from investment operations $ 1.11 $ 0.50 $ 0.66
-------- ---------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.51) $ (0.51) $ (0.51)
In excess of net investment income -- (0.00)++ (0.00)++
--------- ---------- ----------
Total distributions declared to shareholders $ (0.51) $ (0.51) $ (0.51)
--------- ---------- ----------
Net asset value - end of period $ 12.15 $ 11.55 $ 11.56
--------- ---------- ----------
Total return 9.75% 4.41% 5.87%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.68% 1.73% 1.83%
Net investment income 4.27% 4.40% 4.38%
Portfolio turnover 24% 33% 30%
Net assets at end of period (000 omitted) $ 8,143 $ 7,789 $ 9,352
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.49 $ 0.49 $ 0.50 $ 0.51 --
Ratios (to average net assets):
Expenses## 1.74% 1.75% 1.78% 1.80% --
Net investment income 4.24% 3.99% 4.17% 4.33% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
44
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Fund
---------------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
---------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------
Class A
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.90 $ 9.82 $ 9.26 $ 9.37 $ 9.29
------- ------- ------- --------- -------
Income from investment operations# -
Net investment income[sec] $ 0.50 $ 0.48 $ 0.50 $ 0.53 $ 0.54
Net realized and unrealized gain (loss) on investments (0.55) 0.08 0.56 (0.10) 0.09
------- ------- ------- --------- ------
Total from investment operations $ (0.05) $ 0.56 $ 1.06 $ 0.43 $ 0.63
------- ------- ------- --------- -------
Less distributions declared to shareholders -
From net investment income $ (0.49) $ (0.48) $ (0.50) $ (0.54) $ (0.55)
In excess of net investment income -- -- -- (0.00)++++ --
------- ------- ------- --------- -------
Total distributions declared to shareholders $ (0.49) $ (0.48) $ (0.50) $ (0.54) $ (0.55)
------- ------- ------- --------- -------
Net asset value - end of period $ 9.36 $ 9.90 $ 9.82 $ 9.26 $ 9.37
------- ------- ------- --------- -------
Total return++ (0.45%) 5.85% 11.65% 4.67% 6.85%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.38% 0.45% 0.40% 0.10% 0.10%
Net investment income 5.19% 4.85% 5.15% 5.66% 5.76%
Portfolio turnover 48% 8% 31% 42% 40%
Net assets at end of period (000 omitted) $25,494 $21,695 $18,918 $ 16,933 $18,030
</TABLE>
[sec] Subject to reimbursement by the Fund, the investment adviser voluntarily
agreed under a temporary expense reimbursement agreement to pay all of the
Fund's operating expenses, exclusive of management, distribution, and
service fees. In consideration, the Fund pays a fee not greater than 0.00%
of average daily net assets for certain of the periods indicated. In
addition, the investment adviser voluntarily waived a portion of its fee
for certain of the periods indicated. To the extent actual expenses were
over this limitation and the waiver had not been in place, the net
investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.44 $ 0.43 $ 0.44 $ 0.45 $ 0.45
Ratios (to average net assets):
Expenses## 0.91% 0.93% 0.99% 0.95% 1.00%
Net investment income 4.66% 4.37% 4.56% 4.81% 4.86%
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++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.
++++Per share amount was less than $0.01.
See notes to financial statements.
45
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Pennsylvania Fund
-----------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
-----------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------
Class B
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.92 $ 9.84 $ 9.28 $ 9.39 $ 9.29
------- ------- ------- -------- ------
Income from investment operations# -
Net investment income[sec] $ 0.42 $ 0.41 $ 0.42 $ 0.46 $ 0.50
Net realized and unrealized gain (loss) on investments (0.55) 0.08 0.56 (0.11) 0.07
------- ------- ------- -------- ------
Total from investment operations $ (0.13) $ 0.49 $ 0.98 $ 0.35 $ 0.57
------- ------- ------ -------- ------
Less distributions declared to shareholders -
From net investment income $ (0.41) $ (0.41) $ (0.42) $ (0.46) $ (0.47)
In excess of net investment income -- -- -- (0.00)++ --
------- ------- ------- -------- -------
Total distributions declared to shareholders $ (0.41) $ (0.41) $(0.42) $ (0.46) $ (0.47)
------- ------- ------- -------- -------
Net asset value - end of period $ 9.38 $ 9.92 $ 9.84 $ 9.28 $ 9.39
------- ------- ------- -------- -------
Total return (1.25%) 5.02% 10.76% 3.83% 6.23%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.19% 1.23% 1.19% 0.90% 0.88%
Net investment income 4.38% 4.07% 4.36% 4.86% 4.98%
Portfolio turnover 48% 8% 31% 42% 40%
Net assets at end of period (000 omitted) $17,496 $23,983 $20,551 $ 24,898 $24,170
</TABLE>
[sec] Subject to reimbursement by the Fund, the investment adviser voluntarily
agreed under a temporary expense reimbursement agreement to pay all of the
Fund's operating expenses, exclusive of management, distribution, and
service fees. In consideration, the Fund pays a fee not greater than 0.00%
of average daily net assets for certain of the periods indicated. In
addition, the investment adviser voluntarily waived a portion of its fee
for certain of the periods indicated. To the extent actual expenses were
over this limitation and the waiver had not been in place, the net
investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.37 $ 0.33 $ 0.36 $ 0.38 $ 0.41
Ratios (to average net assets):
Expenses## 1.72% 1.71% 1.78% 1.75% 1.85%
Net investment income 3.85% 3.59% 3.77% 4.01% 4.01%
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
46
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
South Carolina Fund
--------------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------------
2000 1999
--------------------------------
Class A
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 12.48 $ 12.52
------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.58 $ 0.57
Net realized and unrealized gain (loss) on investments (0.86) (0.04)
------- ----------
Total from investment operations $ (0.28) $ 0.53
------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.58) $ (0.57)
From net realized gain on investments (0.03) --
In excess of net investment income -- (0.00)++++
In excess of net realized gain on investments (0.01) --
------- ----------
Total distributions declared to shareholders $ (0.62) $ (0.57)
------- ----------
Net asset value - end of period $ 11.58 $ 12.48
------- ----------
Total return++ (2.27)% 4.33%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.94% 1.02%
Net investment income 4.91% 4.55%
Portfolio turnover 18% 25%
Net assets at end of period (000 omitted) $121,064 $ 145,787
<CAPTION>
Year Ended March 31,
-------------------------------------------------
1998 1997 1996
-------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.88 $ 11.97 $ 11.86
---------- -------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.60 $ 0.62 $ 0.62
Net realized and unrealized gain (loss) on investments 0.64 (0.10) 0.11
---------- -------- ----------
Total from investment operations $ 1.24 $ 0.52 $ 0.73
---------- -------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.60) $ (0.61) $ (0.62)
From net realized gain on investments -- -- --
In excess of net investment income (0.00)++++ -- (0.00)++++
In excess of net realized gain on investments -- -- --
---------- -------- ----------
Total distributions declared to shareholders $ (0.60) $ (0.61) $ (0.62)
---------- -------- ----------
Net asset value - end of period $ 12.52 $ 11.88 $ 11.97
---------- -------- ----------
Total return++ 10.62% 4.46% 6.20%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.06% 1.10% 1.20%
Net investment income 4.86% 5.17% 5.10%
Portfolio turnover 29% 13% 18%
Net assets at end of period (000 omitted) $ 148,820 $148,908 $ 166,801
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.56 $ 0.56 $ 0.59 $ 0.16 --
Ratios (to average net assets):
Expenses## 1.12% 1.14% 1.16% 1.16% --
Net investment income 4.73% 4.43% 4.76% 5.11% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++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.
++++Per share amount was less than $0.01.
See notes to financial statements.
47
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
South Carolina Fund
--------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------
2000 1999
--------------------------
Class B
--------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 12.47 $ 12.52
------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.51 $ 0.48
Net realized and unrealized gain (loss) on investments (0.86) (0.04)
------- ---------
Total from investment operations $ (0.35) $ 0.44
------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.50) $ (0.49)
From net realized gain on investments (0.03) --
In excess of net investment income -- (0.00)++
In excess of net realized gain on investments (0.01) --
------- ---------
Total distributions declared to shareholders $ (0.54) $ (0.49)
------- ---------
Net asset value - end of period $ 11.58 $ 12.47
------- ---------
Total return (2.82)% 3.57%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.59% 1.67%
Net investment income 4.26% 3.90%
Portfolio turnover 18% 25%
Net assets at end of period (000 omitted) $31,532 $ 36,226
<CAPTION>
Year Ended March 31,
-----------------------------------------
1998 1997 1996
-----------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.88 $ 11.97 $ 11.86
--------- -------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.52 $ 0.54 $ 0.52
Net realized and unrealized gain (loss) on investments 0.64 (0.10) 0.12
--------- -------- ---------
Total from investment operations $ 1.16 $ 0.44 $ 0.64
--------- -------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.52) $ (0.53) $ (0.53)
From net realized gain on investments -- -- --
In excess of net investment income (0.00)++ -- (0.00)++
In excess of net realized gain on investments -- -- --
--------- -------- ---------
Total distributions declared to shareholders $ (0.52) $ (0.53) $ (0.53)
--------- -------- ---------
Net asset value - end of period $ 12.52 $ 11.88 $ 11.97
--------- -------- ---------
Total return 9.91% 3.73% 5.43%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.71% 1.79% 1.92%
Net investment income 4.21% 4.48% 4.35%
Portfolio turnover 29% 13% 18%
Net assets at end of period (000 omitted) $ 28,086 $ 21,871 $ 18,420
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.48 $ 0.47 $ 0.51 $ 0.53 --
Ratios (to average net assets): --
Expenses## 1.77% 1.79% 1.81% 1.85% --
Net investment income 4.08% 3.78% 4.11% 4.42% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
48
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Tennessee Fund
<CAPTION>
------------------------------------------------------------------------------------------------
Year Ended March 31,
------------------------------
2000 1999
------------------------------
Class A
------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.87 $ 10.91
---------- --------
Income from investment operations# -
Net investment income[sec] $ 0.50 $ 0.53
Net realized and unrealized gain (loss) on investments (0.69) (0.02)
---------- --------
Total from investment operations $ (0.19) $ 0.51
---------- --------
Less distributions declared to shareholders -
From net investment income $ (0.50) $ (0.52)
From net realized gain on investment (0.07) (0.03)
In excess of net investment income -- --
In excess of net realized gain on investments (0.00)++++ --
---------- --------
Total distributions declared to shareholders $ (0.57) $ (0.55)
---------- --------
Net asset value - end of period $ 10.11 $ 10.87
---------- --------
Total return++ (1.75)% 4.80%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.96% 1.02%
Net investment income 4.80% 4.79%
Portfolio turnover 20% 16%
Net assets at end of period (000 omitted) $ 100,251 $117,296
<CAPTION>
Year Ended March 31,
----------------------------------------
1998 1997 1996
----------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.32 $ 10.40 $ 10.27
-------- -------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.53 $ 0.55 $ 0.54
Net realized and unrealized gain (loss) on investments 0.60 (0.09) 0.13
-------- -------- ----------
Total from investment operations $ 1.13 $ 0.46 $ 0.67
-------- -------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.53) $ (0.54) $ (0.54)
From net realized gain on investment -- -- --
In excess of net investment income (0.01) -- (0.00)++++
In excess of net realized gain on investments -- -- --
-------- -------- ----------
Total distributions declared to shareholders $ (0.54) $ (0.54) $ (0.54)
-------- -------- ----------
Net asset value - end of period $ 10.91 $ 10.32 $ 10.40
-------- -------- ----------
Total return++ 11.11% 4.48% 6.66%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.07% 1.10% 1.21%
Net investment income 4.97% 5.26% 5.18%
Portfolio turnover 26% 20% 20%
Net assets at end of period (000 omitted) $108,871 $108,000 $ 109,811
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.48 $ 0.51 $ 0.52 $ 0.54 --
Ratios (to average net assets):
Expenses## 1.14% 1.14% 1.17% 1.16% --
Net investment income 4.62% 4.67% 4.87% 5.20% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++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.
++++Per share amount was less than $0.01.
See notes to financial statements.
49
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Tennessee Fund
--------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------
2000 1999
--------------------------
Class B
--------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.86 $ 10.91
--------- --------
Income from investment operations# -
Net investment income[sec] $ 0.43 $ 0.45
Net realized and unrealized gain (loss) on investments (0.69) (0.02)
--------- --------
Total from investment operations $ (0.26) $ 0.43
--------- --------
Less distributions declared to shareholders -
From net investment income $ (0.43) $ (0.45)
From net realized gain on investment (0.07) (0.03)
In excess of net investment income -- --
In excess of net realized gain on investments (0.00)++ --
--------- --------
Total distributions declared to shareholders $ (0.50) $ (0.48)
--------- --------
Net asset value - end of period $ 10.10 $ 10.86
--------- --------
Total return (2.39)% 4.04%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.61% 1.67%
Net investment income 4.15% 4.14%
Portfolio turnover 20% 16%
Net assets at end of period (000 omitted) $ 21,321 $ 22,765
<CAPTION>
Year Ended March 31,
--------------------------------------
1998 1997 1996
--------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.31 $ 10.39 $ 10.26
------- ------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.46 $ 0.47 $ 0.46
Net realized and unrealized gain (loss) on investments 0.61 (0.09) 0.14
------- ------- ---------
Total from investment operations $ 1.07 $ 0.38 $ 0.60
------- ------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.46) $ (0.46) $ (0.47)
From net realized gain on investment -- -- --
In excess of net investment income (0.01) -- (0.00)++
In excess of net realized gain on investments -- -- --
-------- -------- ---------
Total distributions declared to shareholders $ (0.47) $ (0.46) $ (0.47)
------- -------- ---------
Net asset value - end of period $ 10.91 $ 10.31 $ 10.39
------- -------- ---------
Total return 10.51% 3.76% 5.89%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.72% 1.79% 1.93%
Net investment income 4.32% 4.57% 4.43%
Portfolio turnover 26% 20% 20%
Net assets at end of period (000 omitted) $18,198 $14,436 $ 12,935
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.41 $ 0.44 $ 0.45 $ 0.46 --
Ratios (to average net assets):
Expenses## 1.79% 1.79% 1.82% 1.85% --
Net investment income 3.97% 4.02% 4.22% 4.51% --
#Per share data are based on average shares outstanding.
</TABLE>
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
50
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Virginia Fund
-------------------------------------------------------------------------------------------
Year Ended March 31,
-------------------------
2000 1999
-------------------------
Class A
-------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.60 $ 11.61
-------- -------
Income from investment operations# -
Net investment income[sec] $ 0.57 $ 0.55
Net realized and unrealized gain (loss) on investments (0.70) (0.01)
-------- --------
Total from investment operations $ (0.13) $ 0.54
-------- --------
Less distributions declared to shareholders -
From net investment income $ (0.56) $ (0.55)
In excess of net investment income -- --
-------- --------
Total distributions declared to shareholders $ (0.56) $ (0.55)
-------- --------
Net asset value - end of period $ 10.91 $ 11.60
------- --------
Total return++ (1.09)% 4.71%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.91% 0.99%
Net investment income 5.07% 4.73%
Portfolio turnover 13% 24%
Net assets at end of period (000 omitted) $311,934 $365,880
<CAPTION>
Year Ended March 31,
-------------------------------------------------
1998 1997 1996
-------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.06 $ 11.21 $ 11.09
---------- -------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.57 $ 0.59 $ 0.59
Net realized and unrealized gain (loss) on investments 0.55 (0.15) 0.13
---------- -------- ----------
Total from investment operations $ 1.12 $ 0.44 $ 0.72
---------- -------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.57) $ (0.59) $ (0.60)
In excess of net investment income (0.00)++++ -- (0.00)++++
---------- -------- ----------
Total distributions declared to shareholders $ (0.57) $ (0.59) $ (0.60)
---------- -------- ----------
Net asset value - end of period $ 11.61 $ 11.06 $ 11.21
---------- -------- ----------
Total return++ 10.32% 3.97% 6.52%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.03% 1.08% 1.18%
Net investment income 4.97% 5.27% 5.20%
Portfolio turnover 39% 42% 42%
Net assets at end of period (000 omitted) $ 373,024 $379,185 $ 418,408
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.54 $ 0.54 $ 0.56 $ 0.58 --
Ratios (to average net assets):
Expenses## 1.09% 1.11% 1.13% 1.14% --
Net investment income 4.89% 4.61% 4.87% 5.21% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++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.
++++Per share amount was less than $0.01.
See notes to financial statements.
51
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Virginia Fund
--------------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------
Class B
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.60 $ 11.61 $ 11.06 $ 11.21 $ 11.08
------- -------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.49 $ 0.47 $ 0.49 $ 0.51 $ 0.51
Net realized and unrealized gain (loss) on investments (0.70) (0.01) 0.56 (0.15) 0.13
------- -------- -------- -------- --------
Total from investment operations $ (0.21) $ 0.46 $ 1.05 $ 0.36 $ 0.64
------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.48) $ (0.47) $ (0.49) $ (0.51) $ (0.51)
In excess of net investment income -- -- (0.01) -- (0.00)++
------- -------- -------- -------- --------
Total distributions declared to shareholders $ (0.48) $ (0.47) $ (0.50) $ (0.51) $ (0.51)
------- -------- -------- -------- --------
Net asset value - end of period $ 10.91 $ 11.60 $ 11.61 $ 11.06 $ 11.21
------- -------- -------- -------- --------
Total return (1.73)% 4.04% 9.61% 3.24% 5.85%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.56% 1.64% 1.68% 1.78% 1.90%
Net investment income 4.42% 4.08% 4.32% 4.57% 4.46%
Portfolio turnover 13% 24% 39% 42% 42%
Net assets at end of period (000 omitted) $29,316 $ 35,644 $ 32,902 $ 30,567 $ 28,420
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.47 $ 0.46 $ 0.48 $ 0.50 --
Ratios (to average net assets):
Expenses## 1.74% 1.76% 1.78% 1.84% --
Net investment income 4.24% 3.96% 4.22% 4.51% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
52
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Virginia Fund
--------------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------
Class C
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.60 $ 11.61 $ 11.06 $ 11.21 $ 11.07
------- -------- -------- -------- --------
Income from investment operations# -
Net investment income[sec] $ 0.49 $ 0.47 $ 0.49 $ 0.52 $ 0.51
Net realized and unrealized gain (loss) on investments (0.70) (0.01) 0.56 (0.16) 0.15
------- -------- -------- -------- --------
Total from investment operations $ (0.21) $ 0.46 $ 1.05 $ 0.36 $ 0.66
------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.48) $ (0.47) $ (0.49) $ (0.51) $ (0.52)
In excess of net investment income -- -- (0.01) -- (0.00)++
------- -------- -------- -------- --------
Total distributions declared to shareholders $ (0.48) $ (0.47) $ (0.50) $ (0.51) $ (0.52)
------- -------- -------- -------- --------
Net asset value - end of period $ 10.91 $ 11.60 $ 11.61 $ 11.06 $ 11.21
------- -------- -------- -------- --------
Total return (1.73)% 4.04% 9.61% 3.30% 6.02%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.56% 1.64% 1.68% 1.72% 1.83%
Net investment income 4.42% 4.08% 4.32% 4.63% 4.53%
Portfolio turnover 13% 24% 39% 42% 42%
Net assets at end of period (000 omitted) $ 5,171 $ 6,523 $ 3,082 $ 3,182 $ 3,366
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.47 $ 0.46 $ 0.48 $ 0.51 --
Ratios (to average net assets):
Expenses## 1.74% 1.76% 1.78% 1.78% --
Net investment income 4.24% 3.96% 4.22% 4.57% --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
53
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
West Virginia Fund
--------------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------------
2000 1999
--------------------------------
Class A
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.75 $ 11.77
------- --------
Income from investment operations# -
Net investment income[sec] $ 0.57 $ 0.56
Net realized and unrealized gain (loss) on investments (0.80) (0.01)
------- --------
Total from investment operations $ (0.23) $ 0.55
------- --------
Less distributions declared to shareholders -
From net investment income $ (0.57) $ (0.57)
In excess of net investment income -- (0.00)++++
------- --------
Total distributions declared to shareholders $ (0.57) $ (0.57)
------- --------
Net asset value - end of period $ 10.95 $ 11.75
------- --------
Total return++ (1.89)% 4.73%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 0.95% 1.02%
Net investment income 5.13% 4.78%
Portfolio turnover 30% 13%
Net assets at end of period (000 omitted) $117,174 $133,456
<CAPTION>
Year Ended March 31,
------------------------------------------
1998 1997 1996
------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.31 $ 11.33 $ 11.21
-------- -------- ----------
Income from investment operations# -
Net investment income[sec] $ 0.58 $ 0.60 $ 0.61
Net realized and unrealized gain (loss) on investments 0.47 (0.02) 0.12
-------- -------- ----------
Total from investment operations $ 1.05 $ 0.58 $ 0.73
-------- -------- ----------
Less distributions declared to shareholders -
From net investment income $ (0.58) $ (0.60) $ (0.61)
In excess of net investment income (0.01) -- (0.00)++++
------- -------- ----------
Total distributions declared to shareholders $ (0.59) $ (0.60) $ (0.61)
-------- -------- ----------
Net asset value - end of period $ 11.77 $ 11.31 $ 11.33
-------- -------- ----------
Total return++ 9.42% 5.20% 6.58%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.10% 1.17% 1.22%
Net investment income 4.98% 5.28% 5.30%
Portfolio turnover 17% 21% 11%
Net assets at end of period (000 omitted) $130,002 $126,107 $ 134,514
</TABLE>
[sec]The investment adviser voluntarily waived a portion of its fee for
certain of the periods indicated. If this fee had been incurred by the Fund,
the net investment
income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.55 $ 0.55 $ 0.57 -- --
Ratios (to average net assets):
Expenses## 1.13% 1.14% 1.17% -- --
Net investment income 4.95% 4.66% 4.91% -- --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++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.
++++Per share amount was less than $0.01.
See notes to financial statements.
54
<PAGE>
Financial Statements - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
West Virginia Fund
--------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------
2000 1999
--------------------------
Class B
--------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.74 $ 11.77
------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.50 $ 0.49
Net realized and unrealized gain (loss) on investments (0.80) (0.03)
------- ---------
Total from investment operations $ (0.30) $ 0.46
------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.50) $ (0.49)
In excess of net investment income -- (0.00)++
------- ---------
Total distributions declared to shareholders $ (0.50) $ (0.49)
------- ---------
Net asset value - end of period $ 10.94 $ 11.74
------- ---------
Total return (2.53)% 3.97%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.60% 1.67%
Net investment income 4.48% 4.13%
Portfolio turnover 30% 13%
Net assets at end of period (000 omitted) $14,727 $ 17,166
<CAPTION>
Year Ended March 31,
-----------------------------------------
1998 1997 1996
-----------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.31 $ 11.33 $ 11.21
--------- -------- ---------
Income from investment operations# -
Net investment income[sec] $ 0.51 $ 0.52 $ 0.52
Net realized and unrealized gain (loss) on investments 0.46 (0.02) 0.12
--------- -------- ---------
Total from investment operations $ 0.97 $ 0.50 $ 0.64
--------- -------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.51) $ (0.52) $ (0.52)
In excess of net investment income (0.00)++ -- (0.00)++
--------- -------- ---------
Total distributions declared to shareholders $ (0.51) $ (0.52) $ (0.52)
--------- -------- ---------
Net asset value - end of period $ 11.77 $ 11.31 $ 11.33
--------- -------- ---------
Total return 8.72% 4.47% 5.81%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## 1.75% 1.87% 1.94%
Net investment income 4.33% 4.57% 4.56%
Portfolio turnover 17% 21% 11%
Net assets at end of period (000 omitted) $ 15,472 $ 13,587 $ 12,647
</TABLE>
[sec] The investment adviser voluntarily waived a portion of its fee for certain
of the periods indicated. If this fee had been incurred by the Fund, the
net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income $ 0.48 $ 0.48 $ 0.50 -- --
Ratios (to average net assets):
Expenses## 1.78% 1.79% 1.82% -- --
Net investment income 4.30% 4.01% 4.26% -- --
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
++Per share amount was less than $0.01.
See notes to financial statements.
55
<PAGE>
Notes to Financial Statements
(1) Business and Organization
MFS Mississippi Municipal Bond Fund (Mississippi Fund), MFS New York Municipal
Bond Fund (New York Fund), MFS North Carolina Municipal Bond Fund (North
Carolina Fund), MFS Pennsylvania Municipal Bond Fund (Pennsylvania Fund), MFS
South Carolina Municipal Bond Fund (South Carolina Fund), MFS Tennessee
Municipal Bond Fund (Tennessee Fund), MFS Virginia Municipal Bond Fund
(Virginia Fund), and MFS West Virginia Fund Municipal Bond Fund (West Virginia
Fund) are each a non-diversified series of MFS Municipal Series Trust (the
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.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Because each Fund invests primarily in the securities of a single state and its
political subdivisions, each Fund is vulnerable to the effects of changes in
the legal and economic environment of the particular state.
Investment Valuations - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues are valued on the
basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
exchange or over-the-counter prices. Short-term obligations, which mature in 60
days or less, are valued at amortized cost, which approximates market value.
Futures contracts listed on commodities exchanges are reported at market value
using closing settlement prices. Securities for which there are no such
quotations or valuations are valued in good faith, at fair value, by 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. 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-dividend or 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 made directly to the security issuer,
which are generally non-recurring, incurred to protect or enhance the value of
high-yield debt securities, are reported as additions 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 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 total 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
tax-exempt and net taxable income, including any net realized gain on
investments. Accordingly, no provision for federal income or excise tax is
provided. 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.
56
<PAGE>
Notes to Financial Statements - continued
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 distributions from paid-in
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. During
the year ended March 31, 2000, the following amounts were reclassified due to
permanent differences between book and tax accounting:
<TABLE>
<CAPTION>
Mississippi New York North Carolina
Fund Fund Fund
-------------------------------------------
<S> <C> <C> <C>
Increase (decrease):
Paid-in-capital $ -- $ -- $ 34,975
Accumulated undistributed net realized
gain (loss) on investments (67,570) (14,449) --
Accumulated undistributed (distributions in
excess of) net investment income 67,570 14,449 (34,975)
<CAPTION>
Pennsylvania South Carolina Tennessee Virginia West Virginia
Fund Fund Fund Fund Fund
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease):
Paid-in-capital $ -- $ -- $ -- $ 85,338 $ 21,369
Accumulated undistributed net realized
gain (loss) on investments (1,737) (75,481) 490 -- --
Accumulated undistributed (distributions in
excess of) net investment income 1,737 75,481 (490) (85,338) (21,369)
</TABLE>
These changes had no effect on the net assets or net asset value per share of
the Funds.
At March 31, 2000, the following Funds, for federal income tax purposes, had a
capital loss carryforward which may be applied against any net taxable realized
gains of each succeeding year until the earlier of its utilization or
expiration.
<TABLE>
<CAPTION>
Mississippi New York North Carolina
Expiration Date Fund Fund Fund
---------------------------------------------------------------
<S> <C> <C> <C>
March 31, 2003 $ -- $ -- $ (686,899)
March 31, 2004 (2,596,659) -- --
March 31, 2005 (228,833) (446,982) --
March 31, 2008 -- (477,876) (65,023)
------------ ---------- ----------
Total $ (2,825,492) $ (924,858) $ (751,922)
------------ ---------- ----------
<CAPTION>
Pennsylvania South Carolina Tennessee Virginia West Virginia
Expiration Date Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 31, 2003 $ -- $ -- $ -- $ -- $ --
March 31, 2004 (935,505) -- -- -- (2,079,974)
March 31, 2005 (533,472) -- -- (557,561) (714,690)
March 31, 2008 (43,665) (308,852) (546,400) -- (58,823)
------------ ---------- ---------- ---------- ------------
Total $ (1,512,642) $ (308,852) $ (546,400) $ (557,561) $ (2,853,487)
------------ ---------- ---------- ---------- ------------
</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. 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 shown
as a reduction of total expenses in the Statement of Operations.
The Pennsylvania Fund has a temporary expense reimbursement agreement whereby
MFS has voluntarily agreed to pay all of the Pennsylvania Fund's operating
expenses, exclusive of management, distribution and service fees. The
Pennsylvania Fund in turn will pay MFS an expense reimbursement fee not greater
than 0.40% of its average daily net assets. To the extent that the expense
reimbursement fee exceeds the Pennsylvania Fund's actual expenses, the excess
will be applied to amounts paid by MFS in prior years. At March 31, 2000,
aggregate unreimbursed expenses owed to MFS by the Pennsylvania Fund amounted
to $190,758. During the year ended March 31, 2000, MFS did not impose the
reimbursement fee of $180,635.
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 year ended March 31, 2000, is a net
periodic pension expense for each Fund as follows:
<TABLE>
<CAPTION>
Mississippi New York North Carolina Pennsylvania South Carolina Tennessee Virginia West Virginia
Fund Fund Fund Fund Fund Fund Fund Fund
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 5,656 $5,706 $6,065 $5,880 $5,962 $5,635 $6,045 $6,043
</TABLE>
57
<PAGE>
Notes to Financial Statements - continued
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 incurs an administrative fee at
the following annual percentages of each Fund's average daily net assets:
<TABLE>
<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
$24,499, $19,734, $75,154, $18,639, $24,007, $23,888, $64,808, and $35,581 for
the year ended March 31, 2000, as its portion of the sales charge on sales of
Class A shares of the Mississippi, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, Virginia, and West Virginia Funds, respectively.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
Each Fund's distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
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 $13,484,
$26,131, $8,785, $9,160, $24,070, and $10,201 for the, New York, North
Carolina, South Carolina, Tennessee, Virginia, and West Virginia Funds,
respectively, for the year ended March 31, 2000. Fees incurred under the
distribution plan during the year ended March 31, 2000, were, 0.00%, 0.25%,
0.35%, 0.00%, 0.35%, 0.35%, 0.35%, and 0.35% of each Fund's average daily net
assets attributable to Class A shares on an annualized basis for the
Mississippi, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Virginia, and West Virginia Funds, respectively. Payments of the Mississippi
Fund's 0.35% per annum Class A distribution and service fee will commence on
such date as the Trustees of Trust may determine. In the case of the New York
and Pennsylvania Funds, 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 Pennsylvania Fund, payments of the 0.25% per annum Class A
service fee will commence on the date that the net assets of the Fund
attributable to Class A shares first equals or exceed $50 million.
Each Fund's distribution plan provides that the Fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the Fund's average daily net assets attributable to Class B and Class
C shares. MFD will pay to securities dealers that enter into a sales agreement
with MFD all or a portion of the service fee attributable to Class B and Class
C shares, and will pay to such securities dealers all of the distribution fee
attributable to Class C shares. 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 $4,658, $4,939, $3,796, $1,763, $2,786, and $1,815
for the New York, North Carolina, South Carolina, Tennessee, Virginia, and West
Virginia Funds, respectively, for Class B shares, for the year ended March 31,
2000. MFS retained the service fee for accounts not attributable to a
securities dealer, which amounted to $94 and $1 for the North Carolina and
Virginia Funds, respectively, for Class C shares for the year ended March 31,
2000. Fees incurred under the distribution plan during the year ended March 31,
2000, were 0.80%, 1.00%, 1.00%, 0.81%, 1.00%, 1.00%, 1.00%, and 1.00% of each
of the Fund's average daily net assets attributable to Class B shares for the
Mississippi, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Virginia, and West Virginia Funds, respectively, on an annualized basis. Fees
incurred under the distribution plan during the year ended March 31, 2000, were
1.00% and 1.00% of each of the Fund's average daily net assets attributable to
Class C shares for the North Carolina and Virginia Funds, respectively, on an
annualized basis. Except in the case of the 0.25% per annum Class B service fee
paid by the Mississippi Fund upon sale of Class B shares in the first year,
payment of the Class B service fee will be suspended until such date as the
Trustees of the Trust may determine. Except in the case of the 0.25% per annum
Class B service fee paid by the Pennsylvania Fund upon the sale of Class B
shares in the first year, payment of the Class B service fee will be suspended
until on such date as the Class A service fee first becomes payable.
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 year ended March 31, 2000,
for Class A, Class B, and Class C shares, were as follows:
<TABLE>
<CAPTION>
North South West
Mississippi New York Carolina Pennsylvania Carolina Tennessee Virginia Virginia
CDSC Imposed Fund Fund Fund Fund Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $ -- $ -- $ 231 $ -- $ 3,023 $ 9,417 $ -- $ --
Class B $10,638 $73,574 $110,362 $55,487 $99,310 $86,595 $90,561 $65,282
Class C $ -- $ -- $ 6,051 $ -- $ -- $ -- $14,021 $ --
</TABLE>
58
<PAGE>
Notes to Financial Statements - continued
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 annual rate of 0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities, and
short-term obligations, were as follows (000's omitted):
<TABLE>
<CAPTION>
North South West
Mississippi New York Carolina Pennsylvania Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchases $17,079 $49,872 $36,734 $21,499 $30,043 $26,041 $49,595 $41,919
Sales 13,523 67,239 67,079 20,811 44,223 34,432 95,615 49,460
</TABLE>
The cost and unrealized appreciation and depreciation in the value of the
investments owned by each Fund, as computed on a federal income tax basis, are
as follows (000's omitted):
<TABLE>
<CAPTION>
North
Mississippi New York Carolina
Fund Fund Fund
---------------------------------------
<S> <C> <C> <C>
Aggregate cost $74,687 $112,999 $368,160
------- -------- --------
Gross unrealized appreciation $ 2,048 $ 5,447 $ 12,037
Gross unrealized depreciation (974) (1,365) (9,072)
------- -------- --------
Net unrealized appreciation (depreciation) $ 1,074 $ 4,082 $ 2,965
------- -------- --------
<CAPTION>
South West
Pennsylvania Carolina Tennessee Virginia Virginia
Fund Fund Fund Fund Fund
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate cost $42,289 $149,363 $119,508 $343,206 $127,657
------- -------- -------- -------- --------
Gross unrealized appreciation $ 866 $ 5,226 $ 3,333 $ 8,174 $ 4,981
Gross unrealized depreciation (855) (4,370) (2,699) (8,383) (3,127)
------- -------- -------- -------- --------
Net unrealized appreciation (depreciation) $ 11 $ 856 $ 634 $ (209) $ 1,854
------- -------- -------- -------- --------
</TABLE>
(5) Shares of Benef icial Interest
The Trust's Declaration permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest. Transactions in Fund shares
were as follows:
<TABLE>
<CAPTION>
Mississippi Fund New York Fund North Carolina Fund
Class A Shares --------------------------------------------------------------------------------
Year Ended March 31, 2000 (000 Omitted) Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,277 $ 12,166 1,181 $ 12,517 1,421 $ 16,331
Shares issued to shareholders in
reinvestment of distributions 165 1,564 305 3,259 840 9,656
Shares reacquired (1,111) (10,495) (2,263) (24,117) (4,945) (56,638)
------ --------- ------ --------- ------ ----------
Net increase (decrease) 331 $ 3,235 (777) $ (8,341) (2,684) $ (30,651)
====== ========= ====== ========= ====== ==========
<CAPTION>
Year Ended March 31, 1999 (000 Omitted) Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 523 $ 5,207 1,889 $ 21,362 6,127 $ 74,691
Shares issued to shareholders in
reinvestment of distributions 147 1,466 298 3,372 826 10,078
Shares reacquired (623) (6,193) (2,428) (27,459) (8,228) (100,378)
------ --------- ------ --------- ------ ----------
Net increase (decrease) 47 $ 480 (241) $ (2,725) (1,275) $ (15,609)
====== ========= ====== ========= ====== ==========
</TABLE>
<TABLE>
<CAPTION>
Pennsylvania Fund South Carolina Fund Tennessee Fund
-------------------------------------------------------------------------------
Year Ended March 31, 2000 (000 Omitted) Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 990 $ 9,335 428 $ 5,068 740 $ 7,798
Shares issued to shareholders in
reinvestment of distributions 78 738 307 3,608 295 3,021
Shares reacquired (536) (5,036) (1,965) (23,102) (1,904) (19,537)
---- -------- ------ ---------- ------ ---------
Net increase (decrease) 532 $ 5,037 (1,230) $ (14,426) (869) $ (8,718)
==== ======== ====== ========== ====== =========
<CAPTION>
Year Ended March 31, 1999 (000 Omitted) Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 443 $ 4,392 860 $ 10,768 1,562 $ 17,019
Shares issued to shareholders in
reinvestment of distributions 62 614 280 3,515 244 2,671
Shares reacquired (240) (2,376) (1,345) (16,841) (992) (10,839)
----- -------- ------ ---------- ------ ---------
Net increase (decrease) 265 $ 2,630 (205) $ (2,558) 814 $ 8,851
===== ======== ====== ========== ====== =========
</TABLE>
59
<PAGE>
Notes to Financial Statements - continued
<TABLE>
<CAPT
Virginia Fund West Virginia Fund
Class A Shares ------------------------------------------------------
Year Ended March 31, 2000 (000 Omitted) Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,527 $ 17,029 426 $ 4,792
Shares issued to shareholders in
reinvestment of distributions 760 8,371 316 3,515
Shares reacquired (5,238) (57,536) (1,401) (15,503)
------ ---------- ------ ---------
Net decrease (2,951) $ (32,136) (659) $ (7,196)
====== ========== ====== =========
<CAPTION>
Year Ended March 31, 1999 (000 Omitted) Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,914 $ 45,669 1,029 $ 12,137
Shares issued to shareholders in
reinvestment of distributions 742 8,649 292 3,451
Shares reacquired (5,247) (61,190) (1,003) (11,832)
------- ---------- ------ ---------
Net increase (decrease) (591) $ (6,872) 318 $ 3,756
======= ========== ====== =========
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Mississippi Fund New York Fund North Carolina Fund
---------------------------------------------------------------------------------
Year Ended March 31, 2000 (000 Omitted) Shares Amount Shares Amount Shares Amount
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 157 $ 1,505 391 $ 4,207 686 $ 7,992
Shares issued to shareholders in
reinvestment of distributions 18 170 59 636 118 1,355
Shares reacquired (178) (1,682) (1,237) (13,068) (795) (9,055)
--------- -------- ---------- ---------- --------- ---------
Net increase (decrease) (3) $ (7) (787) $ (8,225) 9 $ 292
============ ========= ========== ========== ========= =========
Year Ended March 31, 1999 (000 Omitted) Shares Amount Shares Amount Shares Amount
---------------------------------------------------------------------------------------------------------------------------
Shares sold 215 $ 2,140 701 $ 7,932 1,067 $ 13,003
Shares issued to shareholders in
reinvestment of distributions 17 169 57 649 103 1,259
Shares reacquired (162) (1,611) (424) (4,796) (522) (6,357)
----------- --------- ---------- ---------- --------- ---------
Net increase 70 $ 698 334 $ 3,785 648 $ 7,905
=========== ========= ========== ========== ========= =========
<CAPTION>
Pennsylvania Fund South Carolina Fund Tennessee Fund
--------------------------------------------------------------------------------
Year Ended March 31, 2000 (000 Omitted) Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 408 $ 3,890 541 $ 6,406 410 $ 4,272
Shares issued to shareholders in
reinvestment of distributions 52 492 71 833 56 577
Shares reacquired (1,013) (9,479) (792) (9,250) (450) (4,573)
----------- --------- ---------- ---------- --------- ---------
Net increase (decrease) (553) $(5,097) (180) $ (2,011) 16 $ 276
=========== ========= ========== ========== ========= =========
<CAPTION>
Year Ended March 31, 1999 (000 Omitted) Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 533 $ 5,302 842 $ 10,580 624 $ 6,827
Shares issued to shareholders in
reinvestment of distributions 44 436 53 671 43 470
Shares reacquired (248) (2,458) (235) (2,950) (240) (2,625)
----------- --------- ---------- ---------- --------- ---------
Net increase 329 $ 3,280 660 $ 8,301 427 $ 4,672
=========== ========= ========== ========== ========= =========
<CAPTION>
Virginia Fund West Virginia Fund
-------------------------------------------------------
Year Ended March 31, 2000 (000 Omitted) Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 365 $ 4,069 172 $ 1,934
Shares issued to shareholders in
reinvestment of distributions 58 634 38 425
Shares reacquired (809) (8,888) (326) (3,618)
---------- ---------- --------- ---------
Net decrease (386) $ (4,185) (116) $ (1,259)
========== ========== ========= =========
<CAPTION>
Year Ended March 31, 1999 (000 Omitted) Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 611 $ 7,115 290 $ 3,412
Shares issued to shareholders in
reinvestment of distributions 53 616 36 426
Shares reacquired (425) (4,951) (179) (2,106)
---------- ---------- --------- ---------
Net increase 239 $ 2,780 147 $ 1,732
========== ========== ========= =========
</TABLE>
60
<PAGE>
Notes to Financial Statements - continued
<TABLE>
<CAPTION>
North Carolina Fund Virginia Fund
Class C Shares ---------------------------------------------------
Year Ended March 31, 2000 (000 Omitted) Shares Amount Shares Amount
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 438 $ 5,095 131 $ 1,439
Shares issued to shareholders in
reinvestment of distributions 29 335 17 190
Shares reacquired (376) (4,300) (236) (2,625)
---- -------- ---- --------
Net increase (decrease) 91 $ 1,130 (88) $ (996)
==== ======== ==== ========
<CAPTION>
Year Ended March 31, 1999 (000 Omitted) Shares Amount Shares Amount
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 619 $ 7,481 325 $ 3,779
Shares issued to shareholders in
reinvestment of distributions 21 254 12 144
Shares reacquired (149) (1,749) (41) (473)
------ -------- ----- --------
Net increase 491 $ 5,986 296 $ 3,450
====== ======== ===== ========
</TABLE>
(6) Line of Credit
The Trust and other affiliated funds participate in an $820 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 year ended March 31, 2000, ranged from $317 to $2,764. The
Funds had no significant borrowings during the year.
(7) Financial Instruments
The Trust trades financial instruments with off-balance-sheet risk in the
normal course of its investing activities in order to manage exposure to market
risks such as interest rates. These financial instruments include futures
contracts. The notional or contractual amounts of these instruments represent
the investment a Fund has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
<TABLE>
<CAPTION>
Futures Contracts
Unrealized
Appreciation/
Fund Description Expiration Contracts Position (Depreciation)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mississippi Fund U.S. Treasury Bonds June 2000 4 Short $ (11,618)
Municipal Bond Index June 2000 29 Long 72,463
---------------
$ 60,845
===============
New York Fund Municipal Bond Index June 2000 16 Long $ 38,123
===============
North Carolina Fund Municipal Bond Index June 2000 47 Long $ 111,987
===============
South Carolina Fund Municipal Bond Index June 2000 37 Short $ (49,719)
===============
Tennessee Fund Municipal Bond Index June 2000 15 Long $ 35,740
===============
Virginia Fund U.S. Treasury Bonds June 2000 26 Short $ (75,360)
Municipal Bond Index June 2000 26 Long 75,125
---------------
$ (235)
===============
West Virginia Fund U.S. Treasury Bonds June 2000 9 Short $ (26,368)
Municipal Bond Index June 2000 16 Short (20,313)
---------------
$ (46,681)
===============
</TABLE>
At March 31, 2000, the Mississippi, New York, North Carolina, South Carolina,
Tennessee, Virginia, and West Virginia Funds had sufficient cash and/or
securities to cover margin requirements on open futures contracts.
61
<PAGE>
Notes to Financial Statements - continued
(8) Restricted Securities
Each Fund may invest not more than 15% of its net assets in securities which
are subject to legal or contractual restrictions on resale. At March 31, 2000,
the Mississippi, New York, North Carolina, Pennsylvania, South Carolina,
Virginia, and West Virginia Funds owned the following restricted securities,
excluding securities issued under Rule 144A, constituting 2.9%, 4.1%, 5.0%,
6.1%, 6.9%, 3.4%, and 7.2% of each Fund's net assets, respectively, which may
not be publicly sold without registration under the Securities Act of 1933.
Each Fund does not have the right to demand that such securities be registered.
The value of these securities is determined by valuations furnished by dealers
or by a pricing service, or if not available, in good faith by the Trustees.
<TABLE>
<CAPTION>
Fund Description
------------------------------------------------------------------------------------
<S> <C>
Mississippi Fund Guam Power Authority Rev., RITES, AMBAC, 5.956s, 2013
Puerto Rico Municipal Finance Agency, RITES, FSA, 6.857s, 2017
Puerto Rico Public Finance Corp., RITES, AMBAC, 6.857s, 2013
New York Fund Guam Power Authority Rev., RITES, AMBAC, 5.956s, 2013
Guam Power Authority Rev., RITES, AMBAC, 5.956s, 2014
Niagara Falls, NY, Bridge Commission Toll Rev., RITES, FGIC,
5.726s, 2015
North Carolina Fund Puerto Rico Highway & Transportation Authority, Rev., RITES,
6.054s, 2007
Puerto Rico Highway & Transportation Authority, Rev., RITES,
FSA, 7.857s, 2018
Puerto Rico Public Finance Corp., RITES, AMBAC, 6.857s, 2016
State of North Carolina, RITES, 4.669s, 2015
State of North Carolina, RITES, 4.669s, 2017
Pennsylvania Fund Guam Power Authority Rev., RITES, AMBAC, 6.743s, 2014
Puerto Rico Public Finance Corp., RITES, AMBAC, 7.587s, 2013
South Carolina Fund Commonwealth of Puerto Rico, RITES, MBIA, 5.75s, 2020
Puerto Rico Electric Power Authority, RITES, FSA 6.357s, 2015
Puerto Rico Municipal Finance Agency, RITES, FSA, 7.857s, 2016
Puerto Rico Public Finance Corp., RITES, AMBAC, 6.857s, 2013
Puerto Rico Public Finance Corp., RITES, AMBAC, 6.857s, 2019
State of South Carolina, RITES, 4.369s, 2016
Virginia Fund Fairfax County, VA, RITES, 4.669s, 2016
Fairfax County, VA, RITES, 4.669s, 2017
Guam Power Authority Rev., RITES, AMBAC, 5.956s, 2015
Puerto Rico Municipal Finance Agency, RITES, FSA, 7.857s, 2016
Puerto Rico Municipal Finance Agency, RITES, FSA, 6.857s, 2017
Puerto Rico Public Finance Corp., RITES, AMBAC, 6.857s, 2013
Puerto Rico Public Finance Corp., RITES, AMBAC, 6.857s, 2016
West Virginia Commonwealth of Puerto Rico, RITES, 7.75s, 2019
Puerto Rico Municipal Finance Agency, RITES, FSA, 6.857s 2017
West Virginia Building Commission, RITES, AMBAC, 5.884s, 2018
<CAPTION>
Date of Principal
Fund Acquisition Amount Cost Value
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mississippi Fund 5/20/99 $1,000,000 $1,068,754 $ 986,040
1/6/00 750,000 703,724 755,535
9/30/99 500,000 508,892 519,990
-----------
$ 2,261,565
-----------
New York Fund 5/20/99 1,060,000 $1,132,879 $ 1,045,202
5/20/99 500,000 530,255 488,750
5/21/99 3,500,000 3,746,997 3,396,400
-----------
$ 4,930,352
-----------
North Carolina Fund
11/21/96 2,750,000 $2,736,250 $ 2,829,090
2/26/99 5,425,000 6,989,771 6,199,039
9/30/99 1,500,000 1,471,890 1,513,770
2/26/99 5,000,000 4,999,618 4,187,300
3/24/99 5,000,000 4,722,559 3,824,100
-----------
$18,553,299
-----------
Pennsylvania Fund 5/20/99 2,170,000 $2,301,305 $ 2,121,175
9/30/99 500,000 508,892 519,990
-----------
$ 2,641,165
-----------
South Carolina Fund 3/30/00 2,000,000 $2,044,880 $ 2,050,200
9/30/99 1,000,000 976,500 968,480
1/6/00 850,000 883,152 926,925
9/30/99 1,375,000 1,399,462 1,429,973
3/31/99 1,300,000 1,465,108 1,276,600
3/26/99 5,000,000 4,740,909 3,855,300
-----------
$10,507,478
-----------
Virginia Fund 4/12/99 3,855,000 $3,803,427 $ 3,154,084
4/12/99 3,845,000 3,746,250 3,078,769
5/20/99 1,010,000 1,056,240 973,842
1/6/00 1,105,000 1,148,161 1,205,002
1/6/00 615,000 577,053 619,539
9/30/99 2,000,000 2,035,566 2,079,960
3/31/99 500,000 566,318 504,590
-----------
$11,615,786
-----------
West Virginia 3/30/00 3,000,000 $3,090,720 $ 3,103,440
1/6/00 900,000 844,468 906,642
5/5/99 5,770,000 6,226,689 5,460,151
-----------
$ 9,470,233
-----------
</TABLE>
62
<PAGE>
Independent Auditors' Report
To the Trustees of MFS Municipal Trust and Shareholders of the Portfolios of
MFS Municipal Series Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments, of MFS Mississippi Municipal Bond Fund,
MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS
Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS
Tennessee Municipal Bond Fund, MFS Virginia Municipal Bond Fund, and MFS West
Virginia Municipal Bond Fund (portfolios of MFS Municipal Series Trust) as of
March 31, 2000, the related statements of operations for the year then ended,
the statements of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
five-year period then ended. These financial statements and financial
highlights are the responsibility of each Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of the securities owned at March 31, 2000 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
aforementioned portfolios of MFS Municipal Series Trust as of March 31, 2000,
the results of their operations, the changes in their net assets, and their
financial highlights for the respective stated periods in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 4, 2000
63
<PAGE>
Federal Tax Information
In January 2001, shareholders will be mailed a Tax Form Summary or Form
1099-DIV, if applicable, reporting the federal tax status of all distributions
paid during the calendar year 2000.
The South Carolina Fund has designated $489,664 as a capital gain dividend.
The Tennessee Fund has designated $781,455 as a capital gain dividend.
For federal income tax purposes, approximately 99% of the total dividends paid
by each Fund from net investment income during the year ended March 31, 2000,
is designated as an exempt-interest dividend.
64
<PAGE>
MFS[RegTM] Municipal Series Trust
Trustees
Richard B. Bailey+ Private Investor;
Former Chairman and Director (until 1991),
MFS Investment Management[RegTM]
Marshall N. Cohan+ Private Investor
Lawrence H. Cohn, M.D.+ Chief of Cardiac
Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE+ Chief
Executive Officer, Edmund Gibbons Ltd.;
Chairman, Colonial Insurance Company, 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 and Chief
Executive Officer, MFS Investment
Management
J. Dale Sherratt+ President, Insight
Resources, Inc. (acquisition planning specialist)
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
Chairman and President
Jeffrey L. Shames*
Portfolio Managers
Michael L. Dawson*
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
Auditors
Deloitte & Touche LLP
Investor Information
For information on MFS mutual funds, call
your investment professional or, for an
information kit, call toll free: 1-800-637-2929
any business day from 9 a.m. to 5 p.m.
Eastern time (or leave a message anytime).
Investor Service
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free:
1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time. (To
use this service, your phone must be equipped
with a Telecommunications Device for the Deaf.)
For share prices, account balances, exchanges,
or stock and bond outlooks, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime
from a touch-tone telephone.
World Wide Web
www.mfs.com
<PAGE>
MFS[RegTM] Municipal
Series Trust
MFS[RegTM] Mississippi Municipal Bond Fund
MFS[RegTM] New York Municipal Bond Fund
MFS[RegTM] North Carolina Municipal Bond Fund
MFS[RegTM] Pennsylvania Municipal Bond Fund
MFS[RegTM] South Carolina Municipal Bond Fund
MFS[RegTM] Tennessee Municipal Bond Fund
MFS[RegTM] Virginia Municipal Bond Fund
MFS[RegTM] West Virginia Municipal Bond Fund
[MFS INVESTMENT MANAGEMENT
We invented the mutual fund[RegTM] LOGO]
500 Boylston Street
Boston, MA 02116-3741
Bulk Rate
U.S. Postage
Paid
MFS
(C)2000 MFS Investment Management.[RegTM]
MFS[RegTM] investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
58/258
52/252
41/241/341
30/230
42/242
53/253
43/243/343
44/244
MST-2B-5/00/45.2M
