MFS MUNICIPAL INCOME TRUST N-CSRS
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-04841

MFS MUNICIPAL INCOME TRUST

(Exact name of registrant as specified in charter)

111 Huntington Avenue, Boston, Massachusetts 02199

(Address of principal executive offices) (Zip code)

Susan S. Newton

Massachusetts Financial Services Company

111 Huntington Avenue

Boston, Massachusetts 02199

(Name and address of agents for service)

Registrant’s telephone number, including area code: (617) 954-5000

Date of fiscal year end: October 31

Date of reporting period: April 30, 2013


Table of Contents
ITEM 1. REPORTS TO STOCKHOLDERS.


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SEMIANNUAL REPORT

April 30, 2013

 

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MFS® MUNICIPAL INCOME TRUST

 

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MFM-SEM

 


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MFS® MUNICIPAL INCOME TRUST

New York Stock Exchange Symbol: MFM

 

Letter from the Chairman and CEO     1   
Portfolio composition     2   
Portfolio managers’ profiles     4   
Other notes     4   
Portfolio of investments     5   
Statement of assets and liabilities     34   
Statement of operations     35   
Statements of changes in net assets     36   
Statement of cash flows     37   
Financial highlights     38   
Notes to financial statements     40   
Report of independent registered public accounting firm     53   
Board review of investment advisory agreement     54   
Proxy voting policies and information     54   
Quarterly portfolio disclosure     54   
Further information     54   
Contact information    back cover   

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK GUARANTEE


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LOGO

 

LETTER FROM THE CHAIRMAN AND CEO

 

Dear Shareholders:

As 2013 has unfolded, we have seen global growth prospects decline, while U.S. and global equities march forward. Meanwhile, historically very low yields and a broadly

sideways market have produced slim bond market returns. The big stories thus far this year are Japan’s aggressive stimulus, which appears to be eliciting its desired response among consumers and businesses, and the eurozone’s debt-driven doldrums. Meanwhile, the two economic giants, China and the United States, keep chugging along deliberately, albeit at historically moderate rates of growth.

The U.S. housing recovery has coincided with a pickup in auto sales and a lift in job creation, but the U.S. sequestration’s cuts are having the effect of a driver applying the brakes at the same time as the accelerator. The result is slower than desirable

growth. China, similarly, keeps moving forward, but at a slower than normal pace, held back by the eurozone recession, slower global growth, and by the new government’s efforts to shift its enormous economy to more of a consumer focus. The eurozone continues to struggle with persistent record-high unemployment and 21 straight months of manufacturing contraction. The European Central Bank’s recent interest rate cut could help, but this region will require much needed, though politically difficult, structural reforms to climb out of its deep funk.

As always, managing risk in the face of uncertainty remains a top priority for investors. At MFS®, our uniquely collaborative investment process employs integrated, global research and active risk management. Our global team of investment professionals shares ideas and evaluates opportunities across continents, investment disciplines and asset classes — all with a goal of building better insights, and ultimately better results, for our clients.

We are mindful of the many economic challenges investors face, and believe it is more important than ever to maintain a long-term view and employ time-tested principles, such as asset allocation and diversification. We remain confident that our unique approach can serve investors well as they work with their financial advisors to identify and pursue the most suitable opportunities.

Respectfully,

 

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

June 17, 2013

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

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PORTFOLIO COMPOSITION

 

Portfolio structure (i)

 

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Top five industries (i)  
Healthcare Revenue - Hospitals     28.5%   
Universities - Colleges     14.5%   
Healthcare Revenue - Long Term Care     13.8%   
Water & Sewer Utility Revenue     9.2%   
Industrial Revenue - Airlines     7.6%   
Composition including fixed income credit quality (a)(i)    
AAA     11.8%   
AA     16.7%   
A     24.2%   
BBB     38.8%   
BB     9.0%   
B     9.9%   
C     0.3%   
Not Rated     23.3%   
Cash & Other     (34.0)%   
Portfolio facts (i)  
Average Duration (d)     12.0   
Average Effective Maturity (m)     20.1 yrs.   
 

 

(a) For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). Securities rated BBB or higher are considered investment grade. All ratings are subject to change. Not Rated includes fixed income securities, including fixed income futures contracts, which have not been rated by any rating agency. Cash & Other includes cash, other assets less liabilities, offsets to derivative positions, and short-term securities. The fund may not hold all of these instruments. The fund is not rated by these agencies.
(d) Duration is a measure of how much a bond’s price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value due to the interest rate move.

 

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Portfolio Composition – continued

 

(i) For purposes of this presentation, the components include the market value of securities, and reflect the impact of the equivalent exposure of derivative positions, if any. These amounts may be negative from time to time. The bond component will include any accrued interest amounts. Equivalent exposure is a calculated amount that translates the derivative position
  into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent
  exposure is a more representative measure of the potential impact of a position on portfolio performance than market value. Where the fund holds convertible bonds, these are treated as part of the equity portion of the portfolio.
(m) In determining an instrument’s effective maturity for purposes of calculating the fund’s dollar-weighted average effective maturity, MFS uses the instrument’s stated maturity or, if applicable, an earlier date on which MFS believes it is probable that a maturity-shortening device (such as a put, pre-refunding or prepayment) will cause the instrument to be repaid. Such an earlier date can be substantially shorter than the instrument’s stated maturity.
(o) Less than 0.1%.

From time to time “Cash & Other Net Assets” may be negative due to the aggregate liquidation value of variable rate municipal term preferred shares, timing of cash receipts, and/or equivalent exposure from any derivative holdings.

Percentages are based on net assets, including the value of auction rate preferred shares, as of 4/30/13.

The portfolio is actively managed and current holdings may be different.

 

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PORTFOLIO MANAGERS’ PROFILES

 

Gary Lasman     Investment Officer of MFS; employed in the investment management area of MFS since 2002. Portfolio Manager of the Fund since April 2006.
Geoffrey Schechter     Investment Officer of MFS; employed in the investment management area of MFS since 1993. Portfolio Manager of the Fund since July 2004.

OTHER NOTES

The fund’s shares may trade at a discount or premium to net asset value. Shareholders do not have the right to cause the fund to repurchase their shares at net asset value. When fund shares trade at a premium, buyers pay more than the net asset value of underlying fund shares, and shares purchased at a premium would receive less than the amount paid for them in the event of the fund’s liquidation. As a result, the total return that is calculated based on the net asset value and New York Stock Exchange price can be different.

The fund’s monthly distributions may include a return of capital to shareholders to the extent that distributions are in excess of the fund’s net investment income and net capital gains, determined in accordance with federal income tax regulations. Distributions that are treated for federal income tax purposes as a return of capital will reduce each shareholder’s basis in his or her shares and, to the extent the return of capital exceeds such basis, will be treated as gain to the shareholder from a sale of shares. Returns of shareholder capital have the effect of reducing the fund’s assets and increasing the fund’s expense ratio.

 

In accordance with Section 23(c) of the Investment Company Act of 1940, the fund hereby gives notice that it may from time to time repurchase common and/or preferred shares of the fund in the open market at the option of the Board of Trustees and on such terms as the Trustees shall determine.

 

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PORTFOLIO OF INVESTMENTS

4/30/13 (unaudited)

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

 

Municipal Bonds - 138.6%                 
Issuer    Shares/Par     Value ($)  
Airport Revenue - 3.6%                 
Burlington, VT, Airport Rev., “A”, 4%, 2028    $ 235,000      $ 229,994   
Chicago, IL, O’Hare International Airport Rev. (Third Lien Passenger Facility), “B”, AGM, 5.75%, 2022      3,000,000        3,098,490   
Dallas Fort Worth, TX, International Airport Rev., “D”, 5%, 2038      1,560,000        1,657,547   
Denver, CO, City & County Airport Systems Rev., “A”, 5%, 2027      270,000        311,337   
Denver, CO, City & County Airport Systems Rev., “A”, 5%, 2028      260,000        297,960   
Denver, CO, City & County Airport Systems Rev., “B”, 5%, 2032      525,000        603,509   
Houston, TX, Airport System Rev., “B”, 5%, 2026      265,000        311,274   
Houston, TX, Airport System Rev., Subordinate Lien, “A”, 5%, 2031      255,000        283,478   
Massachusetts Port Authority Rev., “A”, 5%, 2037      65,000        73,016   
Miami-Dade County, FL, Aviation Rev., “A”, 5%, 2031      285,000        316,604   
Miami-Dade County, FL, Aviation Rev., “B”, AGM, 5%, 2035      1,365,000        1,539,365   
Port Authority of NY & NJ, Special Obligation Rev. (JFK International Air Terminal LLC), 6%, 2036      485,000        575,724   
Port Authority of NY & NJ, Special Obligation Rev. (JFK International Air Terminal LLC), 6%, 2042      550,000        646,008   
San Jose, CA, Airport Rev., “A-2”, 5.25%, 2034      1,215,000        1,343,656   
    

 

 

 
             $ 11,287,962   
General Obligations - General Purpose - 3.4%                 
Allegheny County, PA, “C-70”, 5%, 2037    $ 435,000      $ 480,244   
Bellwood, IL, 5.875%, 2027      300,000        298,968   
Bellwood, IL, 6.15%, 2032      700,000        695,233   
Chicago, IL, Metropolitan Water Reclamation District-Greater Chicago, “C”, 5%, 2030      1,260,000        1,478,446   
Commonwealth of Puerto Rico, Public Improvement, “A”, 5%, 2029      445,000        435,797   
Commonwealth of Puerto Rico, Public Improvement, “B”,
6.5%, 2037
     495,000        524,497   
Guam Government, “A”, 7%, 2039      170,000        193,720   
Luzerne County, PA, AGM, 6.75%, 2023      860,000        1,010,741   
New Orleans, LA, 5%, 2030      85,000        96,408   
New Orleans, LA, 5%, 2031      155,000        173,510   
State of California, 5.25%, 2028      660,000        787,505   
State of California, 5.25%, 2030      1,560,000        1,847,180   
State of California, 5.25%, 2035      1,285,000        1,491,050   
State of California, 5%, 2041      455,000        505,746   
State of Hawaii, “DZ”, 5%, 2031      335,000        398,724   
    

 

 

 
             $ 10,417,769   

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
General Obligations - Schools - 0.6%                 
Beverly Hills, CA, Unified School District (Election of 2008), Capital Appreciation, 0%, 2031    $ 525,000      $ 277,268   
Frisco, TX, Independent School District, School Building, “B”, PSF, 3%, 2042      350,000        332,903   
Los Angeles, CA, Unified School District, “D”, 5%, 2034      180,000        207,205   
Merced, CA, Union High School District, Capital Appreciation, “A”, ASSD GTY, 0%, 2030      145,000        66,635   
Royse City, TX, Independent School District, School Building, Capital Appreciation, PSF, 0%, 2027      955,000        498,835   
Royse City, TX, Independent School District, School Building, Capital Appreciation, PSF, 0%, 2029      965,000        451,302   
    

 

 

 
             $ 1,834,148   
Healthcare Revenue - Hospitals - 28.7%                 
Alexander City, AL, Special Care Facilities Financing Authority Medical Facilities Rev., “A” (Russell Hospital Corp.), 5.75%, 2036    $ 600,000      $ 618,708   
Athens County, OH, Hospital Facilities Rev. (O’Bleness Memorial Hospital), “A”, 7.125%, 2033      1,500,000        1,510,080   
Butler County, OH, Hospital Facilities Rev. (UC Health), 5.75%, 2040      260,000        292,796   
California Health Facilities Financing Authority Rev. (St. Joseph Health System), “A”, 5.75%, 2039      650,000        761,807   
California Health Facilities Financing Authority Rev. (Sutter Health), “B”, 5.875%, 2031      1,295,000        1,555,658   
Chautauqua County, NY, Capital Resource Corp. Rev. (Women’s Christian Assn.), “A”, 8%, 2030      1,060,000        1,146,485   
Citrus County, FL, Hospital Rev. (Citrus Memorial Hospital),
6.25%, 2023
     700,000        701,421   
Cullman County, AL, Health Care Authority (Cullman Regional Medical Center), “A”, 6.75%, 2029      865,000        941,042   
Dauphin County, PA, General Authority Health System Rev. (Pinnacle Health System), “A”, 5%, 2042      670,000        724,806   
DeKalb County, GA, Hospital Authority Rev. (DeKalb Medical Center, Inc.), 6.125%, 2040      1,150,000        1,345,190   
Duluth, MN, Economic Development Authority Health Care Facilities Rev. (St. Luke’s Hospital Authority Obligated Group), 5.75%, 2027      365,000        390,211   
Duluth, MN, Economic Development Authority Health Care Facilities Rev. (St. Luke’s Hospital Authority Obligated Group), 5.75%, 2032      795,000        853,226   
Duluth, MN, Economic Development Authority Health Care Facilities Rev. (St. Luke’s Hospital Authority Obligated Group), 6%, 2039      910,000        987,013   
Escambia County, FL, Health Facilities Authority (Baptist Hospital, Inc.), “A”, 6%, 2036      615,000        710,915   
Fruita, CO, Rev. (Family Health West Project), 7%, 2018      210,000        241,053   
Fruita, CO, Rev. (Family Health West Project), 8%, 2043      1,310,000        1,516,377   

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Healthcare Revenue - Hospitals - continued                 
Gallia County, OH, Hospital Facilities Rev. (Holzer Health Systems), “A”, 8%, 2042    $ 1,860,000      $ 2,157,470   
Glasgow, KY, Healthcare Rev. (TJ Samson Community Hospital), 6.375%, 2035      570,000        661,194   
Harris County, TX, Cultural Education Facilities Finance Corp. Medical Facilities Rev. (Baylor College of Medicine), “A”, 5%, 2037      925,000        1,032,661   
Harris County, TX, Cultural Education Facilities Finance Corp. Medical Facilities Rev. (Baylor College of Medicine), “D”, 5.625%, 2032      510,000        586,194   
Harris County, TX, Health Facilities Development Corp., Hospital Rev. (Memorial Hermann Healthcare Systems), “B”, 7.25%, 2018 (c)      610,000        816,717   
Illinois Finance Authority Rev. (Advocate Healthcare), 4%, 2047      495,000        491,342   
Illinois Finance Authority Rev. (Ascension Healthcare), “A”, 5%, 2042      230,000        257,057   
Illinois Finance Authority Rev. (Centegra Health System), 5%, 2038      665,000        715,773   
Illinois Finance Authority Rev. (Kewanee Hospital), 5.1%, 2031      630,000        664,984   
Illinois Finance Authority Rev. (Provena Health), “A”, 7.75%, 2034      945,000        1,187,307   
Illinois Finance Authority Rev. (Silver Cross Hospital & Medical Centers), 6.875%, 2038      940,000        1,122,755   
Indiana Health & Educational Facilities Finance Authority, Hospital Rev. (Clarian Health), “A”, 5%, 2039      1,000,000        1,074,880   
Indiana Health & Educational Facilities Finance Authority, Hospital Rev. (Community Foundation of Northwest Indiana), 5.5%, 2037      1,860,000        2,028,293   
Jefferson Parish, LA, Hospital Service District No. 2 (East Jefferson General Hospital), 6.25%, 2031      595,000        693,705   
Jefferson Parish, LA, Hospital Service District No. 2 (East Jefferson General Hospital), 6.375%, 2041      375,000        438,746   
Johnson City, TN, Health & Educational Facilities Board, Hospital Rev. (Mountain States Health Alliance), 6%, 2038      365,000        427,127   
Kentucky Economic Development Finance Authority, Hospital Facilities Rev. (Owensboro Medical Health System), “A”,
6.375%, 2040
     1,095,000        1,311,306   
Knox County, IN, Economic Development Rev. (Good Samaritan Hospital), “A”, 5%, 2037      85,000        93,118   
Knox County, IN, Economic Development Rev. (Good Samaritan Hospital), “A”, 5%, 2042      170,000        185,025   
Laramie County, WY, Hospital Rev. (Cheyenne Regional Medical Center Project), 5%, 2032      65,000        72,467   
Laramie County, WY, Hospital Rev. (Cheyenne Regional Medical Center Project), 5%, 2037      210,000        229,352   
Laramie County, WY, Hospital Rev. (Cheyenne Regional Medical Center Project), 5%, 2042      325,000        351,670   
Louisiana Public Facilities Authority Hospital Rev. (Lake Charles Memorial Hospital), 6.375%, 2034      1,615,000        1,756,684   
Lufkin, TX, Health Facilities Development Corp. Rev. (Memorial Health System), 5.5%, 2037      110,000        114,128   

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Healthcare Revenue - Hospitals - continued                 
Macomb County, MI, Hospital Finance Authority Rev. (Mount Clemens General Hospital), 5.875%, 2013 (c)    $ 435,000      $ 448,011   
Martin County, FL, Health Facilities Authority Rev. (Martin Memorial Medical Center), 5.5%, 2042      495,000        553,920   
Miami Beach, FL, Health Facilities Authority Rev. (Mount Sinai Medical Center), 6.75%, 2014 (c)      110,000        120,792   
Miami Beach, FL, Health Facilities Authority Rev. (Mount Sinai Medical Center), 6.75%, 2029      700,000        750,176   
Michigan Hospital Finance Authority Rev. (Henry Ford Health System), 5.75%, 2039      2,000,000        2,278,280   
Monroe County, MI, Hospital Finance Authority, Hospital Rev. (Mercy Memorial Hospital Corp.), 5.5%, 2035      1,020,000        1,088,524   
Monroe County, PA, Hospital Authority Rev. (Pocono Medical Center), “A”, 5%, 2032      85,000        93,055   
Monroe County, PA, Hospital Authority Rev. (Pocono Medical Center), “A”, 5%, 2041      60,000        64,216   
Montgomery, AL, Medical Clinic Board Health Care Facility Rev. (Jackson Hospital & Clinic), 5.25%, 2031      225,000        233,107   
Montgomery, AL, Medical Clinic Board Health Care Facility Rev. (Jackson Hospital & Clinic), 5.25%, 2036      1,135,000        1,165,781   
Muskingum County OH, Hospital Facilities Rev. (Genesis Health System Obligated Group), 5%, 2033      450,000        457,983   
Muskingum County OH, Hospital Facilities Rev. (Genesis Health System Obligated Group), 5%, 2044      1,100,000        1,103,300   
Muskingum County OH, Hospital Facilities Rev. (Genesis Health System Obligated Group), 5%, 2048      450,000        444,843   
Nassau County, NY, Local Economic Assistance Corp. Rev. (Winthrop-University Hospital Association Project), 5%, 2032      140,000        155,519   
Nassau County, NY, Local Economic Assistance Corp. Rev. (Winthrop-University Hospital Association Project), 5%, 2037      260,000        281,632   
New Hampshire Business Finance Authority Rev. (Elliot Hospital Obligated Group), “A”, 6%, 2027      1,110,000        1,291,618   
New Mexico Hospital Equipment Loan Council, Hospital Rev. (Rehoboth McKinley Christian Hospital), “A”, 5%, 2017      100,000        101,299   
New Mexico Hospital Equipment Loan Council, Hospital Rev. (Rehoboth McKinley Christian Hospital), “A”, 5.25%, 2026      440,000        417,366   
Norfolk, VA, Economic Development Authority Health Care Facilities Rev. (Sentara Healthcare), “B”, 5%, 2043      350,000        394,814   
Norman, OK, Regional Hospital Authority Rev., 5%, 2027      300,000        314,715   
Norman, OK, Regional Hospital Authority Rev., 5.375%, 2029      175,000        182,639   
Norman, OK, Regional Hospital Authority Rev., 5.375%, 2036      1,395,000        1,442,695   
Ohio Higher Educational Facility Commission Rev. (University Hospital Health System), 6.75%, 2015 (c)      1,610,000        1,785,071   

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Healthcare Revenue - Hospitals - continued                 
Olympia, WA, Healthcare Facilities Authority Rev. (Catholic Health Initiatives), “D”, 6.375%, 2036    $ 1,500,000      $ 1,840,125   
Palomar Pomerado Health Care District, CA, COP, 6.75%, 2039      1,735,000        1,954,807   
Royal Oak, MI, Hospital Finance Authority Rev. (William Beaumont Hospital), 8.25%, 2039      1,595,000        2,034,167   
Rutherford County, TN, Health & Educational Facilities Board Rev. (Ascension Health), 5%, 2040 (u)      12,500,000        13,871,375   
Salida, CO, Hospital District Rev., 5.25%, 2036      1,578,000        1,611,469   
Salt Lake City, UT, Hospital Authority Rev. (Intermountain Health Care), ETM, FRN, AMBAC, 13.095%, 2020 (c)(p)      600,000        603,660   
Skagit County, WA, Public Hospital District No. 001 Rev. (Skagit Valley Hospital), 6%, 2023      205,000        209,049   
South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031      835,000        845,154   
South Dakota Health & Educational Facilities Authority Rev. (Avera Health), “A”, 5%, 2042      175,000        190,377   
South Dakota Health & Educational Facilities Authority Rev. (Sanford), “E”, 5%, 2037      145,000        162,317   
South Dakota Health & Educational Facilities Authority Rev. (Sanford), “E”, 5%, 2042      475,000        527,269   
South Lake County, FL, Hospital District Rev. (South Lake Hospital), “A”, 6%, 2029      255,000        292,429   
South Lake County, FL, Hospital District Rev. (South Lake Hospital), “A”, 6.25%, 2039      385,000        441,079   
Southeastern Ohio Port Authority, Hospital Facilities Rev. (Memorial Health System), 5.75%, 2032      595,000        658,189   
Southeastern Ohio Port Authority, Hospital Facilities Rev. (Memorial Health System), 6%, 2042      620,000        687,109   
Sullivan County, TN, Health, Educational & Housing Facilities Board Hospital Rev. (Wellmont Health Systems Project), “C”, 5.25%, 2036      1,115,000        1,185,468   
Sumner County, TN, Health, Educational & Housing Facilities Board Rev. (Sumner Regional Health Systems, Inc.), “A”, 5.5%, 2046 (a)(d)      735,000        1,830   
Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Healthcare, Inc.), 6.25%, 2020      3,085,000        3,092,250   
Tyler, TX, Health Facilities Development Corp. (East Texas Medical Center), “A”, 5.25%, 2032      985,000        1,055,684   
Tyler, TX, Health Facilities Development Corp. (East Texas Medical Center), “A”, 5.375%, 2037      810,000        857,110   
Upland, CA, COP (San Antonio Community Hospital), 6.375%, 2032      1,750,000        2,078,965   
Washington Health Care Facilities Authority Rev. (Virginia Mason Medical Center), “A”, 6.25%, 2042      1,400,000        1,540,700   
West Contra Costa, CA, Healthcare District, AMBAC, 5.5%, 2029      195,000        199,547   

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Healthcare Revenue - Hospitals - continued                 
West Virginia Hospital Finance Authority, Hospital Rev. (Thomas Health System), 6.5%, 2038    $ 905,000      $ 943,797   
Wisconsin Health & Educational Facilities Authority Rev. (Aurora Health Care, Inc.), 6.875%, 2030      1,000,000        1,003,840   
Wisconsin Health & Educational Facilities Authority Rev. (Aurora Health Care, Inc.), “A”, 5%, 2026      320,000        365,206   
Wisconsin Health & Educational Facilities Authority Rev. (Aurora Health Care, Inc.), “A”, 5%, 2028      95,000        105,793   
Wisconsin Health & Educational Facilities Authority Rev. (Wheaton Franciscan Services), 5.25%, 2034      1,135,000        1,214,598   
Wisconsin Health & Educational Facilities Authority Rev. (Wheaton Franciscan Services), “A”, 5.25%, 2025      745,000        753,620   
Wood County, OH, Hospital Facilities Rev. (Wood County Hospital Project), 5%, 2037      230,000        242,894   
Wood County, OH, Hospital Facilities Rev. (Wood County Hospital Project), 5%, 2042      230,000        242,153   
    

 

 

 
             $ 88,748,129   
Healthcare Revenue - Long Term Care - 13.8%                 
Abilene, TX, Health Facilities Development Corp., Retirement Facilities Rev. (Sears Methodist Centers, Inc.), “A”, 7%, 2013 (c)    $ 44,000      $ 46,030   
Abilene, TX, Health Facilities Development Corp., Retirement Facilities Rev. (Sears Methodist Centers, Inc.), “A”, 7%, 2033      301,000        281,736   
Arizona Health Facilities Authority Rev. (The Terraces Project),
7.75%, 2013 (c)
     750,000        787,200   
Bell County, TX, Health Facility Development Corp. (Advanced Living Technologies, Inc.), 8%, 2036 (a)(d)      3,400,000        2,209,762   
Bucks County, PA, Industrial Development Authority Retirement Community Rev. (Ann’s Choice, Inc.), “A”, 6.125%, 2025      430,000        436,472   
Bucks County, PA, Industrial Development Authority Retirement Community Rev. (Ann’s Choice, Inc.), “A”, 6.25%, 2035      290,000        294,362   
Bucks County, PA, Industrial Development Authority Rev. (Lutheran Community Telford Center), 5.75%, 2027      170,000        174,605   
Bucks County, PA, Industrial Development Authority Rev. (Lutheran Community Telford Center), 5.75%, 2037      225,000        227,790   
California Statewide Communities Development Authority Rev. (American Baptist Homes of the West), “A”, 5%, 2043      155,000        164,305   
California Statewide Communities Development Authority Rev. (Episcopal Communities & Services for Seniors Obligated Group),
5%, 2027
     25,000        28,089   
California Statewide Communities Development Authority Rev. (Episcopal Communities & Services for Seniors Obligated Group),
5%, 2032
     35,000        38,750   

 

10


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Healthcare Revenue - Long Term Care - continued                 
California Statewide Communities Development Authority Rev. (Episcopal Communities & Services for Seniors Obligated Group),
5%, 2042
   $ 85,000      $ 92,601   
Chartiers Valley, PA, Industrial & Commercial Development Authority (Asbury Health Center Project), 5.75%, 2022      150,000        154,976   
Chester County, PA, Industrial Development Authority Rev. (RHA Nursing Home), 8.5%, 2032      530,000        516,162   
Colorado Health Facilities Authority Rev. (American Baptist Homes), “A”, 5.9%, 2037      755,000        764,792   
Colorado Health Facilities Authority Rev. (Christian Living Communities Project), 5.125%, 2030      80,000        85,862   
Colorado Health Facilities Authority Rev. (Christian Living Communities Project), 5.25%, 2037      115,000        122,738   
Colorado Health Facilities Authority Rev. (Christian Living Communities Project), “A”, 5.75%, 2037      375,000        399,619   
Colorado Health Facilities Authority Rev. (Covenant Retirement Communities, Inc.), “A”, 5%, 2033      655,000        694,359   
Colorado Health Facilities Authority Rev. (Evangelical Lutheran Good Samaritan Society Project), 5%, 2042      1,055,000        1,119,756   
Cumberland County, PA, Municipal Authority Rev. (Asbury Atlantic, Inc.), 5.25%, 2041      740,000        759,625   
Cumberland County, PA, Municipal Authority Rev. (Diakon Lutheran Social Ministries), 6.125%, 2029      1,360,000        1,524,764   
Fulton County, GA, Residential Care Facilities, Elderly Authority Rev. (Canterbury Court), “A”, 6.125%, 2034      330,000        336,065   
Georgia Medical Center Hospital Authority Rev. (Spring Harbor Green Island Project), 5.25%, 2027      1,000,000        1,023,160   
Georgia Medical Center Hospital Authority Rev. (Spring Harbor Green Island Project), 5.25%, 2037      215,000        215,303   
Hawaii Department of Budget & Finance, Special Purpose Rev. (15 Craigside Project), “A”, 8.75%, 2029      105,000        124,909   
Hawaii Department of Budget & Finance, Special Purpose Rev. (15 Craigside Project), “A”, 9%, 2044      275,000        328,386   
Hawaii Department of Budget & Finance, Special Purpose Rev. (Kahala Nui Senior Living Community), 8%, 2013 (c)      500,000        530,455   
Huntsville-Redstone Village, AL, Special Care Facilities Financing Authority (Redstone Village Project), 5.5%, 2028      410,000        413,071   
Huntsville-Redstone Village, AL, Special Care Facilities Financing Authority (Redstone Village Project), 5.5%, 2043      440,000        434,887   
Illinois Finance Authority Rev. (Christian Homes, Inc.), 6.125%, 2027      850,000        957,551   
Illinois Finance Authority Rev. (Evangelical Retirement Homes of Greater Chicago, Inc.), 7.25%, 2045      500,000        553,995   
Illinois Finance Authority Rev. (Franciscan Communities, Inc.), “A”, 4.75%, 2033      390,000        390,920   

 

11


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Healthcare Revenue - Long Term Care - continued                 
Illinois Finance Authority Rev. (Franciscan Communities, Inc.), “A”, 5.5%, 2037    $ 800,000      $ 836,088   
Illinois Finance Authority Rev. (Franciscan Communities, Inc.), “A”, 5.125%, 2043      485,000        497,814   
Illinois Finance Authority Rev. (Friendship Village), “A”,
5.375%, 2025
     1,270,000        1,286,574   
Illinois Finance Authority Rev. (Lutheran Home & Services),
5.625%, 2042
     475,000        497,415   
Illinois Finance Authority Rev. (Montgomery Place), “A”,
5.75%, 2038
     520,000        539,261   
Illinois Finance Authority Rev. (The Clare at Water Tower), “A-6”,
6%, 2028 (a)(d)
     343,000        34   
Illinois Finance Authority Rev., Capital Appreciation, (The Clare at Water Tower), “B”, 0%, 2050 (a)      147,000        15   
Indiana Finance Authority Rev. (Marquette Project), 4.75%, 2032      740,000        775,846   
Indiana Finance Authority Rev. (Marquette Project), 5%, 2039      185,000        195,952   
Iowa Finance Authority, Health Care Facilities Rev. (Care Initiatives), “A”, 5.5%, 2025      800,000        843,280   
Iowa Finance Authority, Health Care Facilities Rev. (Care Initiatives), “B”, 5.75%, 2018      595,000        596,267   
James City County, VA, Economic Development (WindsorMeade Project), “A”, 5.4%, 2027 (a)      195,000        107,250   
James City County, VA, Economic Development (WindsorMeade Project), “A”, 5.5%, 2037 (a)      785,000        431,750   
Kentucky Economic Development Finance Authority Health Care Rev. (Masonic Homes of Kentucky, Inc.), 5.375%, 2042      355,000        365,806   
Kentucky Economic Development Finance Authority Health Care Rev. (Masonic Homes of Kentucky, Inc.), 5.5%, 2045      200,000        205,824   
Kentucky Economic Development Finance Authority Rev. (Masonic Home Independent Living II), 7.25%, 2041      250,000        292,423   
Kentucky Economic Development Finance Authority Rev. (Masonic Home Independent Living II), 7.375%, 2046      200,000        234,572   
Lenexa, KS, Health Care Facilities Rev. (Lakeview Village, Inc.), 5.375%, 2027      315,000        327,294   
Lenexa, KS, Health Care Facilities Rev. (Lakeview Village, Inc.), 7.125%, 2029      345,000        392,769   
Maryland Health & Higher Educational Facilities Authority Rev. (Charlestown Community), 6.25%, 2041      475,000        545,234   
Massachusetts Development Finance Agency Rev. (Adventcare), “A”, 6.75%, 2037      1,270,000        1,340,561   
Massachusetts Development Finance Agency Rev. (Linden Ponds, Inc.), “A-1”, 6.25%, 2031      239,410        220,686   
Massachusetts Development Finance Agency Rev. (Linden Ponds, Inc.), “A-1”, 6.25%, 2039      59,939        54,151   

 

12


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Healthcare Revenue - Long Term Care - continued                 
Massachusetts Development Finance Agency Rev. (Linden Ponds, Inc.), “A-2”, 5.5%, 2046    $ 15,996      $ 12,637   
Massachusetts Development Finance Agency Rev. (Linden Ponds, Inc.), Capital Appreciation, “B”, 0%, 2056      79,566        590   
Massachusetts Development Finance Agency Rev. (The Groves in Lincoln), “A”, 7.75%, 2039      150,000        70,728   
Massachusetts Development Finance Agency Rev. (The Groves in Lincoln), “A”, 7.875%, 2044      225,000        106,061   
Medford OR, Hospital Facilities Authority Rev. (Rogue Valley Manor) , 5%, 2042      295,000        313,703   
Michigan Strategic Fund Ltd. Obligation Rev. (Evangelical Homes), 5.25%, 2032      190,000        191,630   
Michigan Strategic Fund Ltd. Obligation Rev. (Evangelical Homes), 5.5%, 2047      350,000        352,968   
Montgomery County, PA, Higher Education & Health Authority Rev. (AHF/Montgomery), 6.875%, 2036      1,130,000        1,183,336   
Montgomery County, PA, Industrial Development Authority Retirement Community Rev. (ACTS Retirement - Life Communities, Inc.), 5%, 2028      565,000        636,670   
Montgomery County, PA, Industrial Development Authority Retirement Community Rev. (ACTS Retirement - Life Communities, Inc.), 5%, 2029      255,000        283,568   
Montgomery County, PA, Industrial Development Authority Rev. (Whitemarsh Continuing Care), 6.125%, 2028      250,000        254,368   
Montgomery County, PA, Industrial Development Authority Rev. (Whitemarsh Continuing Care), 6.25%, 2035      510,000        518,262   
New Jersey Economic Development Authority Rev. (Lions Gate), “A”, 5.875%, 2037      530,000        534,070   
New Jersey Economic Development Authority Rev. (Seabrook Village, Inc.), 5.25%, 2036      715,000        735,857   
Norfolk, VA, Redevelopment & Housing Authority Rev. (Fort Norfolk Retirement Community), “A”, 6%, 2025      215,000        216,114   
Norfolk, VA, Redevelopment & Housing Authority Rev. (Fort Norfolk Retirement Community), “A”, 6.125%, 2035      330,000        331,610   
Oklahoma County, OK, Finance Authority Rev. (Epworth Villa Project), “A”, 5.125%, 2042      565,000        573,249   
Pell City, AL, Special Care Facilities, Financing Authority Rev. (Noland Health Services, Inc.), 5%, 2039      290,000        317,483   
Sarasota County, FL, Health Facility Authority Rev. (Sarasota Manatee), 5.75%, 2037      490,000        461,355   
Sarasota County, FL, Health Facility Authority Rev. (Sarasota Manatee), 5.75%, 2045      105,000        96,531   
Shelby County, TN, Health, Educational & Housing Facilities Board Rev. (Germantown Village), “A”, 7.25%, 2034      665,000        691,141   

 

13


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Healthcare Revenue - Long Term Care - continued                 
South Carolina Jobs & Economic Development Authority Rev. (Woodlands at Furman), “A”, 6%, 2032    $ 367,169      $ 256,574   
South Carolina Jobs & Economic Development Authority Rev. (Woodlands at Furman), “A”, 6%, 2047      335,086        221,800   
South Carolina Jobs & Economic Development Authority Rev. (Woodlands at Furman), Capital Appreciation, “B”, 0%, 2047      157,358        3,198   
South Carolina Jobs & Economic Development Authority Rev. (Woodlands at Furman), Capital Appreciation, “B”, 0%, 2047      143,608        2,918   
St. John’s County, FL, Industrial Development Authority Rev. (Presbyterian Retirement), “A”, 6%, 2045      1,565,000        1,779,029   
Suffolk County, NY, Industrial Development Agency (Medford Hamlet Assisted Living), 6.375%, 2039      470,000        464,976   
Tarrant County, TX, Cultural Education Facilities Finance Corp. Retirement Facility (Air Force Village Foundation, Inc.), 6.125%, 2029      115,000        128,927   
Tarrant County, TX, Cultural Education Facilities Finance Corp. Retirement Facility (Air Force Village Foundation, Inc.), 5.125%, 2037      100,000        101,653   
Tarrant County, TX, Cultural Education Facilities Finance Corp. Retirement Facility (Air Force Village Foundation, Inc.), 6.375%, 2044      780,000        861,978   
Tarrant County, TX, Cultural Education Facilities Finance Corp. Retirement Facility (Stayton at Museum Way), 8.25%, 2044      1,500,000        1,714,950   
Tempe, AZ, Industrial Development Authority Rev. (Friendship Village), “A”, 6.25%, 2042      225,000        246,384   
Tempe, AZ, Industrial Development Authority Rev. (Friendship Village), “A”, 6.25%, 2046      170,000        185,907   
Travis County, TX, Health Facilities Development Corp. Rev. (Westminster Manor Health), 7%, 2030      245,000        293,593   
Travis County, TX, Health Facilities Development Corp. Rev. (Westminster Manor Health), 7.125%, 2040      370,000        440,803   
Travis County, TX, Health Facilities Development Corp., Retirement Facilities Rev. (Querencia Barton Creek), 5.5%, 2025      460,000        478,823   
Ulster County, NY, Industrial Development Agency (Woodland Pond), “A”, 6%, 2037      1,075,000        755,919   
Westchester County, NY, Local Development Corp. Rev. (Kendal on Hudson), 5%, 2028      140,000        154,545   
Westchester County, NY, Local Development Corp. Rev. (Kendal on Hudson), 5%, 2034      95,000        103,901   
    

 

 

 
             $ 42,897,732   
Healthcare Revenue - Other - 0.3%                 
Koyukuk, AK, Tanana Chiefs Conference, Healthcare Facilities Project, 7.75%, 2041    $ 705,000      $ 801,493   

 

14


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Human Services - 1.5%                 
Louisiana Local Government, Environmental Facilities & Community Development Authority Rev. (CDF Healthcare), “A”, 7%, 2036    $ 480,000      $ 490,502   
Louisiana Local Government, Environmental Facilities & Community Development Authority Rev. (CDF Healthcare), “C”, 7%, 2036      375,000        381,379   
Louisiana Local Government, Environmental Facilities & Community Development Authority Rev. (Westside Rehab Center Project), “A”, 6.85%, 2036      1,100,000        1,160,665   
Massachusetts Development Finance Agency Rev. (Evergreen Center, Inc.), 5.5%, 2035      620,000        628,885   
New York, NY, Industrial Development Agency, Civic Facility Rev. (Special Needs Facilities), 6.5%, 2017      905,000        914,376   
Orange County, FL, Health Facilities Authority Rev. (GF/Orlando Healthcare Facilities), 9%, 2031      890,000        890,160   
Osceola County, FL, Industrial Development Authority Rev. (Community Provider), 7.75%, 2017      165,000        165,960   
    

 

 

 
             $ 4,631,927   
Industrial Revenue - Airlines - 7.7%                 
Clayton County, GA, Development Authority Special Facilities Rev. (Delta Airlines, Inc.), “A”, 8.75%, 2029    $ 555,000      $ 701,592   
Clayton County, GA, Development Authority Special Facilities Rev. (Delta Airlines, Inc.), “B”, 9%, 2035      285,000        315,774   
Denver, CO, City & County Airport Rev. (United Airlines),
5.25%, 2032
     3,735,000        3,820,307   
Denver, CO, City & County Airport Rev. (United Airlines),
5.75%, 2032
     1,600,000        1,674,576   
Houston, TX, Airport Systems Rev., Special Facilities (Continental Airlines, Inc. Terminal E project), 6.75%, 2029      2,940,000        2,951,936   
Houston, TX, Airport Systems Rev., Special Facilities (Continental Airlines, Inc. Terminal E project), 7%, 2029      385,000        387,191   
Houston, TX, Airport Systems Rev., Special Facilities (Continental Airlines, Inc.), 6.625%, 2038      470,000        530,254   
Los Angeles, CA, Regional Airport Lease Rev. (American Airlines, Inc.), “C”, 7.5%, 2024 (d)      850,000        867,893   
New Jersey Economic Development Authority, Special Facilities Rev. (Continental Airlines, Inc.), 4.875%, 2019      1,595,000        1,639,261   
New Jersey Economic Development Authority, Special Facilities Rev. (Continental Airlines, Inc.), 5.125%, 2023      910,000        943,670   
New Jersey Economic Development Authority, Special Facilities Rev. (Continental Airlines, Inc.), 5.25%, 2029 (b)      910,000        955,300   
New Jersey Economic Development Authority, Special Facilities Rev. (Continental Airlines, Inc.), 7.2%, 2030      1,595,000        1,602,704   
New York, NY, City Industrial Development Agencies Rev. (American Airlines, Inc.), 7.625%, 2025 (d)      5,485,000        6,191,160   

 

15


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Industrial Revenue - Airlines - continued                 
New York, NY, City Industrial Development Agencies Rev. (American Airlines, Inc.), 7.75%, 2031 (d)    $ 1,025,000      $ 1,159,013   
    

 

 

 
             $ 23,740,631   
Industrial Revenue - Chemicals - 2.0%                 
Brazos River, TX, Harbor Navigation District (Dow Chemical Co.), “A”, 5.95%, 2033    $ 2,000,000      $ 2,307,120   
Brazos River, TX, Harbor Navigation District (Dow Chemical Co.), “B-2”, 4.95%, 2033      75,000        81,189   
Louisiana Environmental Facilities & Community Development Authority Rev. (Westlake Chemical), 6.75%, 2032      1,000,000        1,141,670   
Louisiana Environmental Facilities & Community Development Authority Rev. (Westlake Chemical), “A”, 6.5%, 2029      610,000        728,755   
Red River Authority, TX, Pollution Control Rev. (Celanese Project) “B”, 6.7%, 2030      1,920,000        1,937,338   
    

 

 

 
             $ 6,196,072   
Industrial Revenue - Environmental Services - 2.7%                 
California Pollution Control Financing Authority, Solid Waste Disposal Rev. (Waste Management, Inc.), “A”, 5%, 2022    $ 695,000      $ 764,813   
Gulf Coast Waste Disposal Authority (Waste Management, Inc.), 5.2%, 2028      440,000        476,159   
Henrico County, VA, Industrial Development Authority Rev. (Browning Ferris, Inc.), 5.45%, 2014      1,750,000        1,788,115   
Maine Finance Authority Solid Waste Disposal Rev. (Casella Waste Systems, Inc.), 6.25%, 2025 (b)      705,000        732,495   
Massachusetts Development Finance Agency, Resource Recovery Rev. (Covanta Energy Project), “A”, 4.875%, 2027      540,000        556,794   
Massachusetts Development Finance Agency, Resource Recovery Rev. (Covanta Energy Project), “C”, 5.25%, 2042      1,785,000        1,848,475   
Niagara County, NY, Industrial Development Agency, Solid Waste Disposal Rev. (Covanta Energy Project), “A”, 5.25%, 2042      1,825,000        1,895,920   
Vermont Economic Development Authority, Solid Waste Disposal Rev. (Casella Waste Systems, Inc.), 4.75%, 2036 (b)      335,000        335,861   
    

 

 

 
             $ 8,398,632   
Industrial Revenue - Other - 2.6%                 
California Statewide Communities Development Authority Facilities (Microgy Holdings Project), 9%, 2038 (a)(d)    $ 12,624      $ 126   
Gulf Coast, TX, Industrial Development Authority Rev. (CITGO Petroleum Corp.), 4.875%, 2025      735,000        758,777   
Gulf Coast, TX, Industrial Development Authority Rev. (Microgy Holdings Project), 7%, 2036 (a)(d)      224,775        2,248   

 

16


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Industrial Revenue - Other - continued                 
Houston, TX, Industrial Development Corp. (United Parcel Service, Inc.), 6%, 2023    $ 90,000      $ 90,150   
New Jersey Economic Development Authority Rev. (GMT Realty LLC), “B”, 6.875%, 2037      430,000        435,504   
New Jersey Economic Development Authority Rev. (GMT Realty LLC), “C”, 6.5%, 2015      500,000        502,265   
New York, NY, City Industrial Development Agency Rev., Liberty Bonds (IAC/InterActiveCorp), 5%, 2035      620,000        646,232   
Park Creek Metropolitan District, CO, Rev. (Custodial Receipts), “CR-1”, 7.875%, 2032 (b)(n)      1,270,000        1,273,772   
Park Creek Metropolitan District, CO, Rev. (Custodial Receipts), “CR-2”, 7.875%, 2032 (b)(n)      580,000        581,723   
Philadelphia, PA, Industrial Development Authority Rev. (Host Marriott LP), 7.75%, 2017      3,255,000        3,263,235   
St. Charles Parish, LA, Gulf Zone Opportunity Zone Rev. (Valero Energy Corp.), 4%, 2040 (b)      600,000        661,398   
    

 

 

 
             $ 8,215,430   
Industrial Revenue - Paper - 2.2%                 
Butler, AL, Industrial Development Board, Solid Waste Disposal Rev. (Georgia-Pacific Corp.), 5.75%, 2028    $ 155,000      $ 164,153   
Cass County, TX, Industrial Development Corp. (International Paper Co.), “A”, 4.625%, 2027      2,150,000        2,203,277   
Escambia County, FL, Environmental Improvement Rev. (International Paper Co.), “A”, 4.75%, 2030      525,000        525,394   
Lowndes County, MS, Solid Waste Disposal & Pollution Control Rev. (Weyerhaeuser Co.), 6.8%, 2022      2,000,000        2,409,560   
Phenix City, AL, Industrial Development Board Environmental Improvement Rev. (MeadWestvaco Coated Board Project), “A”, 4.125%, 2035      260,000        250,331   
Rockdale County, GA, Development Authority Project Rev. (Visy Paper Project), “A”, 6.125%, 2034      640,000        668,333   
Selma, AL, Industrial Development Board Rev., Gulf Opportunity Zone (International Paper Co.), “A”, 5.375%, 2035      565,000        626,545   
West Point, VA, Industrial Development Authority, Solid Waste Disposal Rev. (Chesapeake Corp.), 6.25%, 2019 (a)(d)      1,870,000        187   
West Point, VA, Industrial Development Authority, Solid Waste Disposal Rev. (Chesapeake Corp.), “A”, 6.375%, 2019 (a)(d)      700,000        70   
    

 

 

 
             $ 6,847,850   
Miscellaneous Revenue - Entertainment & Tourism - 1.2%           
Brooklyn, NY, Arena Local Development Corp. (Barclays Center Project), 6%, 2030    $ 230,000      $ 274,204   

 

17


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Miscellaneous Revenue - Entertainment & Tourism - continued   
Brooklyn, NY, Arena Local Development Corp. (Barclays Center Project), 6.25%, 2040    $ 150,000      $ 178,181   
Fort Sill Apache Tribe, OK, Economic Development Authority, Gaming Enterprise., “A”, 8.5%, 2026 (n)      520,000        578,479   
Harris County, Houston, TX, Sports Authority Rev., Capital Appreciation, “A”, 0%, 2038      1,205,000        298,105   
Harris County, Houston, TX, Sports Authority, Special Rev., “A”, NATL, 5%, 2025      885,000        893,646   
Louisiana Stadium & Exposition District Rev., “A”, 5%, 2030      375,000        429,641   
Louisiana Stadium & Exposition District Rev., “A”, 5%, 2031      80,000        91,286   
Louisiana Stadium & Exposition District Rev., “A”, 5%, 2036      240,000        269,676   
Seminole Tribe, FL, Special Obligation Rev., “A”, 5.25%, 2027 (n)      515,000        556,777   
Seneca Nation of Indians, NY, Capital Improvements Authority, Special Obligation, 5%, 2023 (n)      275,000        290,329   
    

 

 

 
             $ 3,860,324   
Miscellaneous Revenue - Other - 5.8%                 
Austin, TX, Convention Center (Convention Enterprises, Inc.), “A”, 5.25%, 2015    $ 500,000      $ 526,320   
Austin, TX, Convention Center (Convention Enterprises, Inc.), “A”, SYNCORA, 5.25%, 2017      215,000        238,100   
Austin, TX, Convention Center (Convention Enterprises, Inc.), “A”, SYNCORA, 5.25%, 2020      170,000        186,816   
Austin, TX, Convention Center (Convention Enterprises, Inc.), “A”, SYNCORA, 5.25%, 2024      330,000        358,175   
Austin, TX, Convention Center (Convention Enterprises, Inc.), “A”, SYNCORA, 5%, 2034      290,000        305,425   
Baker, FL, Correctional Development Corp. (Baker County Detention Center), 7.5%, 2030      440,000        438,266   
Cleveland-Cuyahoga County, OH, Port Authority Rev., 7%, 2040      235,000        262,573   
Cleveland-Cuyahoga County, OH, Port Authority Rev. (Cleveland City), “B”, 4.5%, 2030      25,000        22,561   
Cleveland-Cuyahoga County, OH, Port Authority Rev. (Fairmount), “B”, 5.125%, 2025      135,000        136,939   
Columbus, OH, Franklin County Finance Authority Development Rev., 6%, 2035      700,000        729,505   
Dayton Montgomery County, OH, Port Authority Rev. (Parking Garage), 6.125%, 2024      1,130,000        1,141,063   
District of Columbia Rev. (American Society Hematology), 5%, 2036      85,000        93,793   
District of Columbia Rev. (American Society Hematology), 5%, 2042      65,000        71,300   
Hardeman County, TN, Correctional Facilities Rev., 7.75%, 2017      1,165,000        1,168,996   
Florida Citizens Property Insurance Corp., “A-1”, 5%, 2019      245,000        293,530   
Florida Citizens Property Insurance Corp., “A-1”, 5%, 2020      1,285,000        1,553,295   

 

18


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Miscellaneous Revenue - Other - continued                 
Indiana Finance Authority Rev., Ohio River Bridges Crossing Project (WVB East End Partners LLC), “A”, 5%, 2035    $ 300,000      $ 323,532   
Indiana Finance Authority Rev., Ohio River Bridges Crossing Project (WVB East End Partners LLC), “A”, 5%, 2040      455,000        484,830   
Massachusetts Port Authority Facilities Rev. (Conrac Project), “A”, 5.125%, 2041      65,000        73,176   
Miami-Dade County, FL, Special Obligation, “B”, 5%, 2035      325,000        358,582   
Miami-Dade County, FL, Special Obligation, “B”, 5%, 2037      935,000        1,029,267   
New Orleans, LA, Aviation Board Gulf Opportunity Zone CFC Rev. (Consolidated Rental Car), “A”, 6.25%, 2030      455,000        536,895   
New York Liberty Development Corp., Liberty Rev. (One Bryant Park LLC), 6.375%, 2049      1,065,000        1,279,491   
New York Liberty Development Corp., Liberty Rev. (World Trade Center Project), 5%, 2044      895,000        986,344   
Riversouth, OH, Authority Rev. (Lazarus Building), “A”, 5.75%, 2027      1,125,000        1,151,708   
Summit County, OH, Port Authority Building Rev. (Flats East Development Recovery Zone Facility Bonds), 6.875%, 2040      85,000        94,968   
Summit County, OH, Port Authority Building Rev. (Seville Project), “A”, 5.1%, 2025      150,000        150,609   
Summit County, OH, Port Authority Building Rev. (Workforce Policy Board), “F”, 4.875%, 2025      915,000        920,408   
Texas Midwest Public Facilities Corp. Rev. (Secure Treatment Facilities Project), 9%, 2030 (a)(d)      395,000        217,250   
Wisconsin Public Finance Authority, Airport Facilities Rev. (Transportation Infrastructure Properties LLC), “B”, 5.25%, 2028      325,000        356,931   
Wisconsin Public Finance Authority, Airport Facilities Rev. (Transportation Infrastructure Properties LLC), “B”, 5%, 2042      2,245,000        2,352,423   
    

 

 

 
             $ 17,843,071   
Multi-Family Housing Revenue - 1.6%                 
Bay County, FL, Housing Finance Authority, Multi-Family Rev. (Andrews Place II Apartments), AGM, 5%, 2035    $ 210,000      $ 212,877   
Charter Mac Equity Issuer Trust, FHLMC, 6%, 2052 (n)      2,000,000        2,330,060   
Indianapolis, IN, Multi-Family Rev. (Cambridge Station Apartments II), FNMA, 5.25%, 2039 (b)      435,000        441,760   
Mississippi Home Corp., Rev. (Kirkwood Apartments),
6.8%, 2037 (d)(q)
     1,095,000        714,236   
MuniMae TE Bond Subsidiary LLC, 5.4%, 2049 (z)      1,000,000        870,100   
North Charleston, SC, Housing Authority Rev. (Horizon Village), “A”, GNMA, 5.15%, 2048      445,000        454,367   
    

 

 

 
             $ 5,023,400   

 

19


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Parking - 0.2%                 
Boston, MA, Metropolitan Transit Parking Corp., Systemwide Parking Rev., 5.25%, 2036    $ 460,000      $ 530,095   
Port Revenue - 0.2%                 
Alameda Corridor Transportation Authority, California Rev., “A”, AGM, 5%, 2028    $ 125,000      $ 147,701   
Maryland Economic Development Corp. Rev. (Port America Chesapeake Terminal Project), “B”, 5.375%, 2025      195,000        223,527   
Maryland Economic Development Corp. Rev. (Port America Chesapeake Terminal Project), “B”, 5.75%, 2035      375,000        425,996   
    

 

 

 
             $ 797,224   
Sales & Excise Tax Revenue - 3.5%                 
Chicago, IL, Transit Authority Sales Tax Receipts Rev., 5.25%, 2029    $ 275,000      $ 323,760   
Chicago, IL, Transit Authority Sales Tax Receipts Rev., 5.25%, 2030      550,000        644,782   
Chicago, IL, Transit Authority Sales Tax Receipts Rev., 5.25%, 2031      105,000        122,576   
Chicago, IL, Transit Authority Sales Tax Receipts Rev., 5.25%, 2040      990,000        1,132,382   
Colorado Regional Transportation District, Private Activity Rev. (Denver Transportation Partners), 6%, 2034      1,180,000        1,376,871   
Colorado Regional Transportation District, Private Activity Rev. (Denver Transportation Partners), 6%, 2041      590,000        682,719   
Colorado Regional Transportation District, Sales Tax Rev. (Fastracks Project), “A”, 5%, 2027      1,490,000        1,807,310   
Massachusetts Bay Transportation Authority, Sales Tax Rev., “A”, 5%, 2024      2,150,000        2,772,382   
Miami-Dade County, FL, Transit Sales Surtax Rev., 5%, 2037      460,000        518,655   
Poplar Bluff, MO, Regional Transportation Development District, Sales Tax Rev., 4%, 2036      150,000        147,743   
Poplar Bluff, MO, Regional Transportation Development District, Sales Tax Rev., 4.75%, 2042      120,000        122,123   
Puerto Rico Sales Tax Financing Corp., Sales Tax Rev., “A”,
5.5%, 2042
     350,000        368,270   
Puerto Rico Sales Tax Financing Corp., Sales Tax Rev., Capital Appreciation, “A”, AMBAC, 0%, 2054      4,455,000        384,333   
Utah Transit Authority Sales Tax Rev., Capital Appreciation, “A”, NATL, 0%, 2028      950,000        489,079   
    

 

 

 
             $ 10,892,985   
Single Family Housing - Local - 0.1%                 
Nortex, TX, Housing Finance Corp., Single Family Mortgage Rev., “B”, 5.5%, 2038    $ 5,000      $ 4,814   
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., “A”, GNMA, 5.9%, 2035      110,000        116,170   

 

20


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Single Family Housing - Local - continued                 
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., “A”, GNMA, 6.25%, 2035    $ 35,000      $ 37,065   
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., “A-1”, GNMA, 5.75%, 2037      40,000        42,792   
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., “A-2”, GNMA, 5.75%, 2037      125,000        132,924   
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev., “A-5”, GNMA, 5.9%, 2037      50,000        51,926   
    

 

 

 
             $ 385,691   
Single Family Housing - State - 0.8%                 
California Housing Finance Agency Rev. (Home Mortgage), “E”, 4.75%, 2030    $ 365,000      $ 366,778   
California Housing Finance Agency Rev. (Home Mortgage), “G”, 4.95%, 2023      1,180,000        1,209,878   
Colorado Housing & Finance Authority Rev., “C-2”, 5.9%, 2023      75,000        78,845   
Colorado Housing & Finance Authority Rev., “C-2”, FHA, 6.6%, 2032      60,000        62,422   
Colorado Housing & Finance Authority Rev., “C-3”, FHA,
6.375%, 2033
     25,000        25,796   
Colorado Housing & Finance Authority Rev., “D-2”, 6.9%, 2029      105,000        106,965   
Texas Affordable Housing Corp. (Single Family Mortgage), “B”, GNMA, 5.25%, 2039      580,000        606,500   
    

 

 

 
             $ 2,457,184   
Solid Waste Revenue - 0.1%                 
Pennsylvania Economic Development Financing Authority, Sewer Sludge Disposal Rev. (Philadelphia Biosolids Facility), 6.25%, 2032    $ 145,000      $ 167,384   
State & Agency - Other - 0.3%                 
Commonwealth of Puerto Rico (Mepsi Campus), “A”, 6.5%, 2037    $ 900,000      $ 934,056   
Tift County, GA, Hospital Authority Rev. Anticipation Certificates,
5%, 2038
     55,000        61,237   
    

 

 

 
             $ 995,293   
State & Local Agencies - 0.9%                 
Alabama Incentives Financing Authority Special Obligation, “A”,
5%, 2037
   $ 230,000      $ 261,361   
Commonwealth of Pennsylvania, State Public School Building Authority Lease Rev. (School District of Philadelphia Project),
5%, 2028
     250,000        276,470   
Commonwealth of Pennsylvania, State Public School Building Authority Lease Rev. (School District of Philadelphia Project),
5%, 2030
     125,000        136,839   

 

21


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Portfolio of Investments (unaudited) – continued

 

Issuer   Shares/Par     Value ($)  
Municipal Bonds - continued                
State & Local Agencies - continued                
Commonwealth of Pennsylvania, State Public School Building Authority Lease Rev. (School District of Philadelphia Project), 5%, 2031   $ 95,000      $ 103,546   
Commonwealth of Pennsylvania, State Public School Building Authority Lease Rev. (School District of Philadelphia Project), 5%, 2032     30,000        32,581   
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, “A”, 5%, 2030     160,000        180,374   
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, “A”, FGIC, 5%, 2035     220,000        230,608   
Guam Government Department of Education (John F. Kennedy High School), “A”, COP, 6.875%, 2040     620,000        682,291   
Mississippi Development Bank Special Obligation (Marshall County Industrial Development Authority Mississippi Highway Construction Project), 5%, 2028     195,000        230,747   
Philadelphia, PA, Municipal Authority Rev., 6.5%, 2034     260,000        300,430   
Puerto Rico Public Finance Corp., Commonwealth Appropriations, “B”, 6%, 2026     370,000        388,089   
   

 

 

 
            $ 2,823,336   
Student Loan Revenue - 0.8%                
Iowa Student Loan Liquidity Corp., “A-2”, 5.5%, 2025   $ 335,000      $ 382,580   
Iowa Student Loan Liquidity Corp., “A-2”, 5.6%, 2026     335,000        381,763   
Iowa Student Loan Liquidity Corp., “A-2”, 5.7%, 2027     40,000        44,761   
Iowa Student Loan Liquidity Corp., “A-2”, 5.75%, 2028     675,000        767,462   
Massachusetts Educational Financing Authority, Education Loan Rev., “H”, ASSD GTY, 6.35%, 2030     725,000        800,966   
   

 

 

 
            $ 2,377,532   
Tax - Other - 1.7%                
Allentown, PA, Neighborhood Improvement Zone Development Authority Tax Rev., “A”, 5%, 2035   $ 160,000      $ 173,118   
Allentown, PA, Neighborhood Improvement Zone Development Authority Tax Rev., “A”, 5%, 2042     685,000        731,518   
Hudson Yards, NY, Infrastructure Corp. Rev., “A”, 5%, 2047     710,000        755,163   
Hudson Yards, NY, Infrastructure Corp. Rev., “A”, 5.75%, 2047     620,000        728,134   
New Jersey Economic Development Authority Rev., 5%, 2025     220,000        254,291   
New Jersey Economic Development Authority Rev., 5%, 2026     110,000        126,202   
New Jersey Economic Development Authority Rev., 5%, 2028     45,000        50,752   
New Jersey Economic Development Authority Rev., 5%, 2029     45,000        50,564   
New York Dormitory Authority, State Personal Income Tax Rev., “C”, 5%, 2034     1,670,000        1,907,474   
Virgin Islands Public Finance Authority Rev. (Diageo Project), “A”, 6.75%, 2037     395,000        457,086   
   

 

 

 
            $ 5,234,302   

 

22


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Portfolio of Investments (unaudited) – continued

 

Issuer   Shares/Par     Value ($)  
Municipal Bonds - continued                
Tax Assessment - 4.1%                
Anne Arundel County, MD, Special Obligation (National Business Park-North Project), 6.1%, 2040   $ 265,000      $ 289,041   
Arborwood Community Development District, FL, Capital Improvement Rev. (Master Infrastructure Projects), “A”, 5.35%, 2036 (a)     120,000        44,400   
Arborwood Community Development District, FL, Capital Improvement Rev. (Master Infrastructure Projects), “A-2”, 5.35%, 2036     460,000        450,469   
Arborwood Community Development District, FL, Capital Improvement Rev. (Master Infrastructure Projects), “B-2”, 5.1%, 2014     145,000        152,650   
Arborwood Community Development District, FL, Special Assessment (Master Infrastructure Projects), “B”, 5.1%, 2014 (a)     50,000        18,500   
Arvada, CO, Cimarron Metropolitan District, Rev., 6%, 2022     500,000        504,295   
Atlanta, GA, Tax Allocation (Eastside Project), “B”, 5.6%, 2030     815,000        874,218   
Atlanta, GA, Tax Allocation (Princeton Lakes Project), 5.5%, 2031     470,000        494,153   
Baltimore, MD, Special Obligation, (East Baltimore Research Park Project), “A”, 7%, 2038     715,000        781,095   
Capital Region Community Development District, FL, Capital Improvement Rev., “A”, 7%, 2039     615,000        614,410   
Concord Station Community Development District, FL, Special Assessment, 5%, 2015     75,000        74,915   
Du Page County, IL, Special Service Area No. 31 Special Tax (Monarch Landing Project), 5.625%, 2036     305,000        309,865   
Heritage Harbour North Community Development District, FL, Capital Improvement Rev., 6.375%, 2038     560,000        561,462   
Homestead, Community Development District, FL, Special Assessment, “A”, 6%, 2037     660,000        495,442   
Homestead, Community Development District, FL, Special Assessment, “B”, 5.9%, 2013     105,000        86,100   
Killarney Community Development District, FL, Special Assessment, “B”, 5.125%, 2009 (a)(d)     170,000        76,500   
Lancaster County, SC, Assessment Rev. (Sun City Carolina Lakes), 5.45%, 2037     100,000        100,281   
Legends Bay Community Development District, FL, “A”, 5.5%, 2014     415,000        376,135   
Legends Bay Community Development District, FL, “A”, 5.875%, 2038     355,000        273,975   
Main Street Community Development District, FL, “A”, 6.8%, 2038     535,000        527,975   
Naturewalk Community Development District, FL, Capital Improvement Rev., “B”, 5.3%, 2016 (d)(q)     650,000        338,000   
Ohio County, WV, Commission Tax Increment Rev. (Fort Henry Centre), “A”, 5.85%, 2034     235,000        246,510   
Old Palm Community Development District, FL, Special Assessment (Palm Beach Gardens), “B”, 5.375%, 2014     185,000        183,999   
OTC Community Development District, FL, Special Assessment, “A”, 5.3%, 2038     915,000        921,863   
Overland Park, KS, Special Assessment (Tallgrass Creek), 4.85%, 2016     169,000        167,151   

 

23


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Tax Assessment - continued                 
Overland Park, KS, Special Assessment (Tallgrass Creek), 5.125%, 2028    $ 592,000      $ 534,452   
Panther Trace II, Community Development District, FL, Special Assessment, 5.125%, 2013      110,000        105,779   
Parkway Center Community Development District, FL, Special Assessment, “B”, 5.625%, 2014      655,000        623,436   
Paseo Community Development District, FL, “B”, 4.875%, 2010 (a)(d)      210,000        2   
Paseo Community Development District, FL, Capital Improvement Rev., Capital Appreciation, “A-2”, 0%, 2036      445,000        168,433   
Paseo Community Development District, FL, Special Assessment, “A-1”, 5.4%, 2036      40,000        42,529   
Prince George’s County, MD, Special Obligation (National Harbor Project), 5.2%, 2034      245,000        252,759   
San Francisco, CA, City & County Redevelopment Successor Agency, Community Facilities District No. 6 (Mission Bay South Public Improvements), “A”, 5%, 2031      145,000        155,179   
San Francisco, CA, City & County Redevelopment Successor Agency, Community Facilities District No. 6 (Mission Bay South Public Improvements), Capital Appreciation, “A”, 0%, 2043      1,275,000        228,773   
Sterling Hill Community Development District, FL, Special Assessment, 5.5%, 2010 (d)      165,000        107,262   
Stone Ridge, CO, Metropolitan District No. 2, 7.25%, 2031      500,000        131,510   
Tuscany Reserve Community Development District, FL, Special Assessment, “B”, 5.25%, 2016      780,000        765,843   
Villa Vizcaya Community Development District, FL, “A”,
5.55%, 2039 (a)(d)
     210,000        90,300   
Watergrass Community Development District, FL, “A”, 5.375%, 2039      400,000        229,148   
Watergrass Community Development District, FL, Special Assessment, “B”, 6.96%, 2017      260,000        254,116   
    

 

 

 
             $ 12,652,925   
Tobacco - 6.0%                 
Buckeye, OH, Tobacco Settlement Financing Authority, “A-2”,
5.125%, 2024
   $ 2,905,000      $ 2,683,581   
Buckeye, OH, Tobacco Settlement Financing Authority, “A-2”,
5.875%, 2030
     1,935,000        1,728,768   
Buckeye, OH, Tobacco Settlement Financing Authority, “A-2”,
5.875%, 2047
     825,000        731,123   
California Statewide Financing Authority, Tobacco Settlement,
5.625%, 2029
     1,220,000        1,220,598   
District of Columbia, Tobacco Settlement, 6.25%, 2024      735,000        751,876   
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., “A-1”, 4.5%, 2027      345,000        335,516   

 

24


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Tobacco - continued                 
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., “A-1”, 5.75%, 2047    $ 1,035,000      $ 977,568   
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., “A-4”, 7.8%, 2013 (c)      1,000,000        1,005,950   
Illinois Railsplitter Tobacco Settlement Authority, 5.5%, 2023      880,000        1,072,720   
Illinois Railsplitter Tobacco Settlement Authority, 6%, 2028      2,645,000        3,206,163   
Iowa Tobacco Settlement Authority, Tobacco Settlement Rev., Asset Backed, “B”, 5.6%, 2034      1,635,000        1,628,901   
Louisiana Tobacco Settlement Authority Rev., “2001-B”, 5.5%, 2030      830,000        843,886   
New Jersey Tobacco Settlement Financing Corp., 7%, 2013 (c)      15,000        15,080   
New Jersey Tobacco Settlement Financing Corp., “1-A”, 4.5%, 2023      345,000        344,434   
New Jersey Tobacco Settlement Financing Corp., “1-A”, 5%, 2041      2,095,000        1,856,044   
Suffolk, NY, Tobacco Asset Securitization Corp., Tobacco Settlement, “B”, 5.25%, 2037      155,000        166,809   
Washington Tobacco Settlement Authority Rev., 6.5%, 2026      120,000        124,015   
    

 

 

 
             $ 18,693,032   
Toll Roads - 3.6%                 
Chesapeake, VA, Toll Road Rev. (Transportation System), “A”,
5%, 2047
   $ 170,000      $ 179,350   
Chesapeake, VA, Toll Road Rev. (Transportation System), Convertible Capital Appreciation, “B”, 0%, 2032      245,000        155,087   
Chesapeake, VA, Toll Road Rev. (Transportation System), Convertible Capital Appreciation, “B”, 0%, 2040      230,000        143,269   
E-470 Public Highway Authority Rev., CO, Capital Appreciation, “B”, NATL, 0%, 2027      4,115,000        2,017,626   
Mid-Bay Bridge Authority, FL, Springing Lien Rev., “A”, 7.25%, 2040      1,580,000        2,019,019   
North Texas Tollway Authority Rev., 6%, 2038      1,505,000        1,785,863   
North Texas Tollway Authority Rev. (Special Projects System), “D”, 5%, 2031      1,110,000        1,290,231   
Virginia Small Business Financing Authority Rev. (95 Express Lanes LLC), 5%, 2034      335,000        349,328   
Virginia Small Business Financing Authority Rev. (95 Express Lanes LLC), 5%, 2040      540,000        555,255   
Virginia Small Business Financing Authority Rev. (Elizabeth River Crossings Opco LLC Project), 5.25%, 2032      460,000        502,242   
Virginia Small Business Financing Authority Rev. (Elizabeth River Crossings Opco LLC Project), 6%, 2037      765,000        880,079   
Virginia Small Business Financing Authority Rev. (Elizabeth River Crossings Opco LLC Project), 5.5%, 2042      1,225,000        1,332,359   
    

 

 

 
             $ 11,209,708   

 

25


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Transportation - Special Tax - 0.5%                 
Arizona Transportation Board Highway Rev., “A”, 5%, 2036    $ 1,290,000      $ 1,475,489   
Universities - Colleges - 14.6%                 
Allegheny County, PA, Higher Education Building Authority Rev. (Chatham University), “A”, 5%, 2030    $ 155,000      $ 173,098   
Brevard County, FL, Industrial Development Rev. (TUFF Florida Tech LLC Project), 6.75%, 2039      1,055,000        1,181,727   
California Educational Facilities Authority Rev. (Chapman University), 5%, 2031      240,000        265,555   
California Municipal Finance Authority Rev. (University of La Verne), “A”, 6.25%, 2040      530,000        614,895   
California State University Rev., “A”, 5%, 2037      1,950,000        2,209,272   
California Statewide Communities Development Authority Rev. (California Baptist University), “A”, 5.4%, 2027      370,000        397,942   
California Statewide Communities Development Authority Rev. (California Baptist University), “A”, 5.5%, 2038      420,000        450,194   
California Statewide Communities Development Authority Rev. (Lancer Plaza Project), 5.625%, 2033      145,000        145,170   
California Statewide Communities Development Authority Rev. (Lancer Plaza Project), 5.125%, 2023      105,000        105,126   
Florida Higher Educational Facilities, Financial Authority Rev. (University of Tampa Project), “A”, 5%, 2032      40,000        43,757   
Florida Higher Educational Facilities, Financial Authority Rev. (University of Tampa Project), “A”, 5.25%, 2042      355,000        391,615   
Illinois Finance Authority Rev. (Illinois Institute of Technology), “A”, 5%, 2031      795,000        796,455   
Illinois Finance Authority Rev. (Illinois Institute of Technology), “A”, 5%, 2036      1,380,000        1,374,342   
Illinois Finance Authority Rev. (Roosevelt University Project),
6.25%, 2029
     905,000        1,029,519   
Illinois Finance Authority Rev. (Roosevelt University Project),
6.5%, 2039
     300,000        340,941   
Illinois Finance Authority Rev. (University of Chicago), “A”, 5%, 2051      270,000        300,737   
Lakeland, FL, Educational Facilities Rev. (Florida Southern College), “A”, 5%, 2032      145,000        158,075   
Lakeland, FL, Educational Facilities Rev. (Florida Southern College), “A”, 5%, 2037      210,000        226,714   
Lakeland, FL, Educational Facilities Rev. (Florida Southern College), “A”, 5%, 2042      110,000        118,311   
Louisiana State University (Health Sciences Center Project), NATL, 6.375%, 2031      2,500,000        2,504,575   
Massachusetts Development Finance Agency Rev. (Simmons College), “H”, SYNCORA, 5.25%, 2033      110,000        122,980   

 

26


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Universities - Colleges - continued                 
Massachusetts Health & Educational Facilities Authority Rev. (Massachusetts Institute of Technology), 5%, 2038 (u)    $ 20,000,000      $ 22,709,200   
Massachusetts Health & Educational Facilities Authority Rev. (Simmons College), “I”, 8%, 2029      535,000        609,633   
Massachusetts Health & Educational Facilities Authority Rev. (Suffolk University), “A”, 6.25%, 2030      1,370,000        1,605,243   
Massachusetts Health & Educational Facilities Authority Rev. (Suffolk University), “A”, 5.75%, 2039      885,000        1,004,422   
New Jersey Educational Facilities Authority Rev. (University of Medicine & Dentistry), “B”, 6%, 2017      590,000        695,852   
New Jersey Educational Facilities Authority Rev. (University of Medicine & Dentistry), “B”, 7.5%, 2032      1,065,000        1,325,403   
Onondaga, NY, Civic Development Corp. (Le Moyne College),
5%, 2042
     185,000        200,986   
Pennsylvania Higher Educational Facilities Authority Rev. (La Salle University), “A”, 5.25%, 2027      105,000        114,541   
Pennsylvania Higher Educational Facilities Authority Rev. (Saint Francis University Project), “JJ2”, 6.25%, 2041      295,000        336,023   
Portage County, OH, Port Authority Rev. (Northeast Ohio Medical University Project), 5%, 2037      320,000        342,138   
Puerto Rico Industrial, Tourist, Medical, & Environmental Central Facilities (University of Sacred Heart), 4.375%, 2031      70,000        68,396   
Puerto Rico Industrial, Tourist, Medical, & Environmental Central Facilities (University of Sacred Heart), 5%, 2042      35,000        35,286   
University of California Rev., “G”, 4%, 2029      2,325,000        2,479,287   
Washington Higher Education Facilities Authority Rev. (Whitworth University), 5.875%, 2034      540,000        604,832   
    

 

 

 
             $ 45,082,242   
Universities - Dormitories - 1.5%                 
Bowling Green, OH, Student Housing Rev. (State University Project), 5.75%, 2031    $ 350,000      $ 388,101   
California Statewide Communities Development Authority Rev. (Lancer Educational Student Housing Project), 5.625%, 2033      380,000        407,835   
Chester County, PA, Industrial Development Authority Student Housing Rev. (University Student Housing LLC Project), 5%, 2030      115,000        125,288   
Chester County, PA, Industrial Development Authority Student Housing Rev. (University Student Housing LLC Project), 5%, 2045      145,000        152,470   
Illinois Finance Authority Student Housing Rev. (Illinois State University), 6.75%, 2031      415,000        488,953   
Illinois Finance Authority Student Housing Rev. (Northern Illinois University Project), 6.625%, 2031      1,215,000        1,451,390   

 

27


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Universities - Dormitories - continued                 
Oregon Facilities Authority, Student Housing Rev. (Southern Oregon University), ASSD GTY, 4.7%, 2033    $ 85,000      $ 91,550   
Oregon Facilities Authority, Student Housing Rev. (Southern Oregon University), ASSD GTY, 5%, 2044      105,000        116,380   
Pennsylvania Higher Educational Facilities Authority Rev. (Edinboro University Foundation), 5.8%, 2030      155,000        176,979   
Pennsylvania Higher Educational Facilities Authority Rev. (Edinboro University Foundation), 6%, 2043      215,000        242,675   
Pennsylvania Higher Educational Facilities Authority Rev. (Shippensburg University Student Services), 5%, 2030      170,000        187,850   
Pennsylvania Higher Educational Facilities Authority Rev. (Shippensburg University Student Services), 5%, 2044      175,000        188,606   
Platteville, WI, Redevelopment Authority, Redevelopment Rev. (Platteville Real Estate), 5%, 2032      160,000        169,392   
Platteville, WI, Redevelopment Authority, Redevelopment Rev. (Platteville Real Estate), 5%, 2042      345,000        355,202   
    

 

 

 
             $ 4,542,671   
Universities - Secondary Schools - 4.2%                 
California Municipal Finance Authority Rev. (Partnerships to Uplift Communities Project), “A”, 5%, 2032    $ 250,000      $ 253,308   
California Statewide Communities Development Authority School Facility Rev. (Aspire Public Schools), 6.375%, 2045      1,000,000        1,082,850   
Clifton, TX, Higher Education Finance Corp. Rev. (Idea Public Schools), 5.5%, 2031      160,000        179,526   
Clifton, TX, Higher Education Finance Corp. Rev. (Idea Public Schools), 5.75%, 2041      130,000        147,763   
Clifton, TX, Higher Education Finance Corp. Rev. (Idea Public Schools), 5%, 2042      365,000        391,879   
Clifton, TX, Higher Education Finance Corp. Rev. (Uplift Education), “A”, 6.125%, 2040      570,000        652,496   
Clifton, TX, Higher Education Finance Corp. Rev. (Uplift Education), “A”, 4.35%, 2042      180,000        180,554   
Clifton, TX, Higher Education Finance Corp. Rev. (Uplift Education), “A”, 6.25%, 2045      350,000        402,262   
Clifton, TX, Higher Education Finance Corp. Rev. (Uplift Education), “A”, 4.4%, 2047      160,000        160,491   
Colorado Educational & Cultural Facilities Authority Rev. (Montessori Charter School Project), 4%, 2027      60,000        62,149   
Colorado Educational & Cultural Facilities Authority Rev. (Montessori Charter School Project), 5%, 2037      75,000        79,889   
Delaware Economic Development Authority Rev. (Newark Charter School, Inc. Project), 5%, 2042      180,000        193,129   

 

28


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Universities - Secondary Schools - continued                 
Florida Development Finance Corp. Educational Facilities Rev. (Renaissance Charter School), “A”, 6%, 2032    $ 295,000      $ 296,829   
Florida Development Finance Corp. Educational Facilities Rev. (Renaissance Charter School), “A”, 6.125%, 2043      615,000        612,017   
Florida Development Finance Corp. Educational Facilities Rev. (Renaissance Charter School), “A”, 6%, 2040      380,000        399,806   
Florida Development Finance Corp. Educational Facilities Rev. (Renaissance Charter School), “A”, 7.625%, 2041      875,000        1,030,470   
La Vernia, TX, Higher Education Finance Corp. Rev. (KIPP, Inc.), “A”, 6.25%, 2039      365,000        420,064   
Lee County, FL, Industrial Development Authority Rev. (Lee Charter Foundation), “A”, 5.25%, 2027      430,000        438,428   
Lee County, FL, Industrial Development Authority Rev. (Lee Charter Foundation), “A”, 5.375%, 2037      945,000        952,040   
Maryland Health & Higher Educational Facilities Authority Rev. (Washington Christian Academy), 5.5%, 2038 (a)(d)      140,000        40,600   
Maryland Industrial Development Financing Authority, Economic Development Authority Rev. (Our Lady of Good Council), “A”,
6%, 2035
     150,000        156,164   
North Texas Education Finance Corp., Education Rev. (Uplift Education), “A”, 4.875%, 2032      110,000        119,004   
North Texas Education Finance Corp., Education Rev. (Uplift Education), “A”, 5.125%, 2042      275,000        300,099   
Phoenix, AZ, Industrial Development Authority Education Rev. (Choice Academies, Inc. Project), 5.625%, 2042      345,000        352,883   
St. Paul, MN, Housing & Redevelopment Authority Charter School Lease Rev. (Nova Classical Academy), “A”, 6.375%, 2031      120,000        133,099   
St. Paul, MN, Housing & Redevelopment Authority Charter School Lease Rev. (Nova Classical Academy), “A”, 6.625%, 2042      240,000        266,796   
Utah County, UT, Charter School Finance Authority, Charter School Rev. (Early Light Academy Project), 8.25%, 2035      770,000        891,752   
Utah County, UT, Charter School Finance Authority, Charter School Rev. (Hawthorne Academy Project), 8.25%, 2035      830,000        924,105   
Utah County, UT, Charter School Rev. (Renaissance Academy), “A”, 5.625%, 2037      495,000        496,143   
Utah County, UT, Charter School Rev. (Ronald Wilson Reagan Academy), “A”, 6%, 2038      1,255,000        1,292,110   
    

 

 

 
             $ 12,908,705   
Utilities - Cogeneration - 0.8%                 
California Pollution Control Financing Authority, Water Furnishing Rev. (Poseidon Resources Desalination Project), 5%, 2045    $ 2,005,000      $ 2,049,230   

 

29


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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Utilities - Cogeneration - continued                 
New Jersey Economic Development Authority Energy Facility Rev. (UMM Energy Partners LLC Project), “A”, 5%, 2037    $ 130,000      $ 139,433   
New Jersey Economic Development Authority Energy Facility Rev. (UMM Energy Partners LLC Project), “A”, 5.125%, 2043      135,000        145,538   
Pennsylvania Economic Development Financing Authority Rev., Resource Recovery Rev. (Colver), “G”, 5.125%, 2015      250,000        257,495   
    

 

 

 
             $ 2,591,696   
Utilities - Investor Owned - 3.6%                 
Apache County, AZ, Industrial Development Authority, Pollution Control Rev. (Tucson Electric Power Co.), “A”, 4.5%, 2030    $ 1,055,000      $ 1,095,449   
Brazos River Authority, TX, Pollution Control Rev. (TXU Energy Co. LLC), 5%, 2041      835,000        62,625   
Chula Vista, CA, Industrial Development Rev. (San Diego Gas & Electric Co.), “E”, 5.875%, 2034      470,000        565,377   
Farmington, NM, Pollution Control Rev. (Public Service New Mexico), “D”, 5.9%, 2040      1,840,000        2,057,194   
Fort Bend County, TX, Industrial Development Corp. (NRG Energy, Inc.), “A”, 4.75%, 2038      540,000        549,499   
Hawaii Department of Budget & Finance Special Purpose Rev. (Hawaiian Electric Co. & Subsidiary), 6.5%, 2039      750,000        876,398   
Maricopa County, AZ, Pollution Control Rev. (El Paso Electric Co. Palo Verde Project), “A”, 4.5%, 2042      250,000        257,810   
Massachusetts Development Finance Agency, Solid Waste Disposal Rev. (Dominion Energy Brayton), 5.75%, 2042 (b)      165,000        201,249   
Matagorda County, TX (CenterPoint Energy), 5.6%, 2027      1,500,000        1,540,350   
Matagorda County, TX, Pollution Control Rev. (Central Power & Light Co.), “A”, 6.3%, 2029      525,000        611,415   
Owen County, KY, Waterworks System Rev. (American Water Co. Project), “A”, 6.25%, 2039      400,000        446,748   
Pennsylvania Economic Development Financing Authority (Allegheny Energy Supply Co. LLC), 7%, 2039      1,165,000        1,391,127   
Pima County, AZ, Industrial Development Authority Rev. (Tucson Electric Power Co.), 5.75%, 2029      1,315,000        1,383,512   
    

 

 

 
             $ 11,038,753   
Utilities - Municipal Owned - 0.6%                 
Guam Power Authority Rev., “A”, AGM, 5%, 2025    $ 150,000      $ 176,724   
Guam Power Authority Rev., “A”, AGM, 5%, 2026      130,000        152,809   
Guam Power Authority Rev., “A”, AGM, 5%, 2027      50,000        58,279   
Guam Power Authority Rev., “A”, 5%, 2034      150,000        166,508   
Los Angeles, CA, Department of Water & Power Rev. (Power System), “B”, 5%, 2038      695,000        791,258   

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Utilities - Municipal Owned - continued                 
Sacramento, CA, Municipal Utility District, “X”, 5%, 2028    $ 565,000      $ 660,400   
    

 

 

 
             $ 2,005,978   
Utilities - Other - 3.5%                 
California M-S-R Energy Authority Gas Rev., “A”, 7%, 2034    $ 210,000      $ 294,945   
California M-S-R Energy Authority Gas Rev., “A”, 6.5%, 2039      465,000        635,906   
Georgia Main Street Natural Gas, Inc., Gas Project Rev., “A”,
5%, 2022
     500,000        583,685   
Georgia Main Street Natural Gas, Inc., Gas Project Rev., “A”,
5.5%, 2026
     285,000        349,193   
Indiana Bond Bank Special Program, Gas Rev., “A”, 5.25%, 2018      440,000        514,474   
Public Authority for Colorado Energy Natural Gas Purchase Rev., 6.25%, 2028      240,000        304,918   
Public Authority for Colorado Energy Natural Gas Purchase Rev.,
6.5%, 2038
     1,035,000        1,399,662   
Salt Verde Financial Corp., AZ, Senior Gas Rev., 5%, 2037      2,395,000        2,675,047   
Tennessee Energy Acquisition Corp., Gas Rev., “A”, 5%, 2014      455,000        479,747   
Tennessee Energy Acquisition Corp., Gas Rev., “A”, 5.25%, 2022      510,000        601,831   
Tennessee Energy Acquisition Corp., Gas Rev., “A”, 5.25%, 2023      80,000        94,787   
Tennessee Energy Acquisition Corp., Gas Rev., “A”, 5.25%, 2024      560,000        660,162   
Tennessee Energy Acquisition Corp., Gas Rev., “A”, 5.25%, 2026      905,000        1,060,877   
Tennessee Energy Acquisition Corp., Gas Rev., “C”, 5%, 2025      450,000        511,268   
Texas Gas Acquisition & Supply Corp III., Gas Supply Rev., 5%, 2031      240,000        258,000   
Texas Gas Acquisition & Supply Corp III., Gas Supply Rev., 5%, 2032      390,000        418,610   
    

 

 

 
             $ 10,843,112   
Water & Sewer Utility Revenue - 9.3%                 
Atlanta, GA, Water & Wastewater Rev., “A”, 6%, 2022    $ 710,000      $ 895,473   
California Department of Water Resources, Center Valley Project Rev., “AJ”, 5%, 2035      1,990,000        2,325,056   
Cary, NC, Combined Enterprise Systems Rev., 4%, 2037      2,000,000        2,179,300   
Clairton, PA, Municipal Authority, “B”, 5%, 2037      265,000        278,579   
DeKalb County, GA, Water & Sewer Rev., “A”, 5.25%, 2028      1,100,000        1,324,455   
DeKalb County, GA, Water & Sewer Rev., “A”, 5.25%, 2029      270,000        321,489   
DeKalb County, GA, Water & Sewer Rev., “A”, 5.25%, 2030      910,000        1,076,030   
DeKalb County, GA, Water & Sewer Rev., “A”, 5.25%, 2031      40,000        47,134   
DeKalb County, GA, Water & Sewer Rev., “A”, 5.25%, 2041      1,965,000        2,255,250   
East Bay, CA, Municipal Utility District, Water System Rev., “A”,
5%, 2028
     3,200,000        3,846,976   
Houston, TX, Utility System Rev., “D”, 5%, 2036      855,000        975,974   
King County, WA, Sewer Rev., 5%, 2040      2,750,000        3,100,075   
Madera, CA, Irrigation Financing Authority Rev., 6.5%, 2040      1,280,000        1,440,730   

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
Municipal Bonds - continued                 
Water & Sewer Utility Revenue - continued                 
New York Environmental Facilities Corp., Clean Drinking Water Revolving Funds, 5%, 2041    $ 1,345,000      $ 1,539,554   
New York Environmental Facilities, “C”, 5%, 2041      1,860,000        2,126,650   
New York, NY, Municipal Water Finance Authority, Water & Sewer System Rev., “AA”, 5%, 2034 (f)      3,900,000        4,500,600   
North Hudson, NJ, Sewerage Authority, Gross Rev. Lease Certificates, “A”, 5%, 2042      350,000        391,384   
St. Johns County, FL, Water & Sewer Rev., Capital Appreciation, “B”, 0%, 2030      125,000        65,833   
St. Johns County, FL, Water & Sewer Rev., Capital Appreciation, “B”, 0%, 2033      125,000        56,995   
St. Johns County, FL, Water & Sewer Rev., Capital Appreciation, “B”, 0%, 2034      135,000        58,464   
    

 

 

 
             $ 28,806,001   
Total Municipal Bonds (Identified Cost, $401,399,363)            $ 429,255,908   
Loans - 0.0%                 
Medical & Health Technology & Services - 0.0%                 
Advanced Living Technologies, Inc., DIP, 8%, 2013
(Identified Cost, $130,000)
   $ 130,000      $ 130,000   
Money Market Funds - 1.4%                 
MFS Institutional Money Market Portfolio, 0.13%,
at Cost and Net Asset Value (v)
     4,323,651      $ 4,323,651   
Total Investments (Identified Cost, $405,853,014)            $ 433,709,559   
Other Assets, Less Liabilities - (3.3)%              (10,294,836
ARPS, at liquidation value (issued by the fund) - (2.3)%        (7,275,000
VMTPS, at liquidation value (issued by the fund) - (34.4)%        (106,475,000
Net assets applicable to common shares - 100.0%            $ 309,664,723   

 

(a) Non-income producing security.
(b) Mandatory tender date is earlier than stated maturity date.
(c) Refunded bond.
(d) In default. Interest and/or scheduled principal payment(s) have been missed.
(f) All or a portion of the security has been segregated as collateral for open futures contracts.
(n) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $5,611,140 representing 1.8% of net assets applicable to common shares.
(p) Primary inverse floater.
(q) Interest received was less than stated coupon rate.

 

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Portfolio of Investments (unaudited) – continued

 

(u) Underlying security deposited into special purpose trust (“the trust”) by investment banker upon creation of self-deposited inverse floaters.
(v) Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end.
(z) Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:

 

Restricted Securities    Acquisition
Date
   Cost      Value  
MuniMae TE Bond Subsidiary LLC, 5.4%, 2049    10/14/04      $1,000,000         $870,100   
% of Net assets applicable to common shares            0.3%   

The following abbreviations are used in this report and are defined:

 

ARPS   Auction Rate Preferred Shares
COP   Certificate of Participation
DIP   Debtor-in-Possession
ETM   Escrowed to Maturity
FRN   Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end.
VMTPS   Variable Rate Municipal Term Preferred Shares

 

Insurers      
AGM    Assured Guaranty Municipal      
AMBAC    AMBAC Indemnity Corp.      
ASSD GTY    Assured Guaranty Insurance Co.      
FGIC    Financial Guaranty Insurance Co.      
FHA    Federal Housing Administration      
FHLMC    Federal Home Loan Mortgage Corp.      
FNMA    Federal National Mortgage Assn.      
GNMA    Government National Mortgage Assn.      
NATL    National Public Finance Guarantee Corp.
PSF    Permanent School Fund      
SYNCORA    Syncora Guarantee Inc.      

Derivative Contracts at 4/30/13

Futures Contracts Outstanding at 4/30/13

 

Description   Currency     Contracts     Value   Expiration
Date
   

Unrealized

Appreciation
(Depreciation)

 
Liability Derivative           
Interest Rate Futures           
U.S. Treasury Bond 30 yr (Short)     USD        80      $11,870,000     June - 2013        $(335,997

At April 30, 2013, the fund had liquid securities with an aggregate value of $256,188 to cover any commitments for certain derivative contracts.

See Notes to Financial Statements

 

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Financial Statements

 

STATEMENT OF ASSETS AND LIABILITIES

At 4/30/13 (unaudited)

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

Assets         

Investments-

  

Non-affiliated issuers, at value (identified cost, $401,529,363)

     $429,385,908   

Underlying affiliated funds, at cost and value

     4,323,651   

Total investments, at value (identified cost, $405,853,014)

     $433,709,559   

Receivables for

  

Daily variation margin on open futures contracts

     17,500   

Investments sold

     1,649,047   

Interest

     7,283,359   

Deferred VMTPS offering costs

     218,282   

Other assets

     26,682   

Total assets

     $442,904,429   
Liabilities         

Payables for

  

Distributions on ARPS

     $457   

Investments purchased

     2,840,219   

Interest expense and fees

     163,940   

Payable to the holders of the floating rate certificates from trust assets

     16,324,962   

Payable to affiliates

  

Investment adviser

     17,035   

Transfer agent and dividend disbursing costs

     8,360   

Payable for independent Trustees’ compensation

     43,268   

Accrued expenses and other liabilities

     91,465   

VMTPS, at liquidation value

     106,475,000   

Total liabilities

     $125,964,706   

ARPS, at liquidation value

     $7,275,000   

Net assets applicable to common shares

     $309,664,723   
Net assets consist of         

Paid-in capital – common shares

     $310,507,218   

Unrealized appreciation (depreciation) on investments

     27,520,548   

Accumulated net realized gain (loss) on investments

     (30,772,490

Undistributed net investment income

     2,409,447   

Net assets applicable to common shares

     $309,664,723   

ARPS, at liquidation value (157 shares of Series T and 134 shares of Series TH issued and outstanding at $25,000 per share)

     $7,275,000   

VMTPS, at liquidation value (4,259 shares of Series 2016/9 issued and outstanding at $25,000 per share)

     106,475,000   

Total preferred shares

     $113,750,000   

Net assets including preferred shares

     $423,414,723   

Common shares of beneficial interest issued and outstanding

     41,187,631   

Net asset value per common share (net assets of $309,664,723 / 41,187,631 shares of beneficial interest outstanding)

     $7.52   

See Notes to Financial Statements

 

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Financial Statements

 

STATEMENT OF OPERATIONS

Six months ended 4/30/13 (unaudited)

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Net investment income         

Income

  

Interest

     $11,404,790   

Dividends from underlying affiliated funds

     6,294   

Total investment income

     $11,411,084   

Expenses

  

Management fee

     $1,538,271   

Transfer agent and dividend disbursing costs

     33,506   

Administrative services fee

     32,038   

Independent Trustees’ compensation

     21,008   

Stock exchange fee

     18,270   

ARPS service fee

     4,518   

Custodian fee

     21,527   

Shareholder communications

     21,408   

Audit and tax fees

     37,695   

Legal fees

     11,778   

Amortization of VMTPS offering costs

     30,700   

Interest expense and fees

     784,735   

Miscellaneous

     74,196   

Total expenses

     $2,629,650   

Fees paid indirectly

     (60

Reduction of expenses by investment adviser

     (400

Net expenses

     $2,629,190   

Net investment income

     $8,781,894   
Realized and unrealized gain (loss) on investments         

Realized gain (loss) (identified cost basis)

  

Investments

     $728,418   

Futures contracts

     190,847   

Net realized gain (loss) on investments

     $919,265   

Change in unrealized appreciation (depreciation)

  

Investments

     $816,605   

Futures contracts

     (343,217

Net unrealized gain (loss) on investments

     $473,388   

Net realized and unrealized gain (loss) on investments

     $1,392,653   

Distributions declared to shareholders of ARPS

     $(8,080

Change in net assets from operations

     $10,166,467   

See Notes to Financial Statements

 

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Financial Statements

 

STATEMENTS OF CHANGES IN NET ASSETS

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

Change in net assets   

Six months ended

4/30/13

(unaudited)

    

Year ended

10/31/12

 
From operations                  

Net investment income

     $8,781,894         $19,457,984   

Net realized gain (loss) on investments

     919,265         (1,203,548

Net unrealized gain (loss) on investments

     473,388         32,383,596   

Distributions declared to shareholders of ARPS

     (8,080      (242,865

Change in net assets from operations

     $10,166,467         $50,395,167   
Distributions declared to common shareholders                  

From net investment income

     $(9,132,956      $(20,132,520
Share transactions applicable to common and preferred shares                  

Net asset value of shares issued to common shareholders in reinvestment of distributions

     $620,030         $1,390,497   

Net increase resulting from the tender and repurchase of ARPS

             5,323,750   

Change in net assets from fund share transactions

     $620,030         $6,714,247   

Total change in net assets

     $1,653,541         $36,976,894   
Net assets applicable to common shares                  

At beginning of period

     308,011,182         271,034,288   

At end of period (including undistributed net investment income of $2,409,447 and $2,768,589, respectively)

     $309,664,723         $308,011,182   

See Notes to Financial Statements

 

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Financial Statements

 

STATEMENT OF CASH FLOWS

Six months ended 4/30/13 (unaudited)

This statement provides a summary of cash flows from investment activity for the fund.

 

Cash flows from operating activities:         
Change in net assets from operations      $10,166,467   
Adjustments to reconcile change in net assets from operations to net cash provided by operating activities:         

Purchase of investment securities

     (34,581,654

Proceeds from disposition of investment securities

     28,393,579   

Proceeds from futures contracts

     190,847   

Proceeds from disposition of short-term investments, net

     6,725,113   

Realized gain/loss on investments

     (728,418

Realized gain/loss on futures contracts

     (190,847

Unrealized appreciation/depreciation on investments

     (816,605

Net amortization/accretion of income

     (173,465

Increase in interest receivable

     (214,641

Increase in accrued expenses and other liabilities

     13,680   

Increase in receivable for daily variation margin on open futures contracts

     (17,500

Decrease in payable for daily variation margin on open futures contracts

     (55,000

Decrease in payable to custodian

     (1,790

Increase in other assets

     (20,533

Net cash provided by operating activities

     $8,689,233   
Cash flows from financing activities:         

Decrease in deferred VMTPS offering costs

     13,495   

Cash distributions paid on common shares

     (8,513,072

Increase in payable for distributions on ARPS

     246   

Decrease in payable for VMTPS offering costs

     (105,762

Decrease in payable for ARPS tender and repurchase costs

     (72,583

Decrease in payable for interest expense and fees

     (11,557

Net cash used by financing activities

     $(8,689,233
Cash:         

Beginning of period

     $—   

End of period

     $—   

Supplemental disclosure of cash flow information:

Non-cash financing activities not included herein consist of reinvestment of dividends and distributions of $620,030.

Cash paid during the six months ended April 30, 2013 for interest $796,292.

See Notes to Financial Statements

 

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Financial Statements

 

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years (or life of a particular share class, if shorter). Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

   

Six months

ended

4/30/13

(unaudited)

    Years ended 10/31  
Common Shares     2012     2011     2010     2009     2008  
                                 

Net asset value, beginning of period

    $7.49        $6.62        $6.89        $6.54        $5.71        $7.69   
Income (loss) from investment operations                                           

Net investment income (d)

    $0.21        $0.47        $0.52        $0.53        $0.53        $0.55   

Net realized and unrealized gain (loss)
on investments

    0.04        0.77        (0.28     0.33        0.81        (1.94

Distributions declared to shareholders
of ARPS

    (0.00 )(w)      (0.01     (0.01     (0.01     (0.02     (0.13

Total from investment operations

    $0.25        $1.23        $0.23        $0.85        $1.32        $(1.52
Less distributions declared to common
shareholders
                                           

From net investment income

    $(0.22     $(0.49     $(0.50     $(0.50     $(0.49     $(0.46

Net increase resulting from tender and
repurchase of ARPS

    $—        $0.13        $—        $—        $—        $—   

Net asset value, end of period (x)

    $7.52        $7.49        $6.62        $6.89        $6.54        $5.71   

Market value, end of period

    $7.70        $7.81        $6.88        $7.23        $6.44        $4.91   

Total return at market value (%) (p)

    1.53 (n)      21.52        2.85        21.01        43.37        (28.13

Total return at net asset
value (%) (j)(r)(s)(x)

    3.40 (n)      20.94 (y)      3.84        13.56        25.19        (20.55
Ratios (%) (to average net assets applicable
to common shares) and Supplemental data:
                                           

Expenses before expense reductions (f)(p)

    1.71 (a)      1.42        1.44        1.43        1.66        1.57   

Expenses after expense reductions (f)(p)

    1.71 (a)      1.42        1.42        1.43        1.66        1.57   

Net investment income (p)

    5.72 (a)      6.70        7.97        7.87        9.39        7.82   

Portfolio turnover

    7 (n)      22        22        13        10        25   

Net assets at end of period
(000 omitted)

    $309,665        $308,011        $271,034        $280,211        $264,542        $230,444   
Supplemental Ratios (%):                                           

Ratio of expenses to average net assets
applicable to common shares after
expense reductions and excluding
interest expense and fees (f)(l)(p)

    1.19 (a)      1.25        1.38        1.39        1.61        1.49   

Ratio of expenses to average net assets
applicable to common shares, ARPS,
and VMTPS after expense reductions
and excluding interest expense and
fees (f)(l)(p)

    0.87 (a)      0.89        0.97        0.98        1.08        1.01   

Net investment income available to
common shares

    5.71        6.62        7.83        7.70        8.99        6.01   

 

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Financial Highlights – continued

 

   

Six months

ended

4/30/13

(unaudited)

    Years ended 10/31  
      2012     2011     2010     2009     2008  
                                 
Senior Securities:                                           

ARPS

    291        291        4,550        4,550        4,550        4,550   

VMTPS

    4,259        4,259                               

Total preferred shares outstanding

    4,550        4,550        4,550        4,550        4,550        4,550   

Asset coverage per preferred share (k)

    $93,058        $92,695        $84,568        $86,585        $83,141        $75,647   

Involuntary liquidation preference per
preferred share (m)

    $25,000        $25,000        $25,000        $25,000        $25,000        $25,000   

Average market value per preferred
share (m)(u)

    $25,000        $25,000        $25,000        $25,000        $25,000        $25,000   

 

(a) Annualized.
(d) Per share data is based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.
(j) Total return at net asset value is calculated using the net asset value of the fund, not the publicly traded price and therefore may be different than the total return at market value.
(k) Calculated by subtracting the fund’s total liabilities (not including liquidation preference of ARPS and VMTPS) from the fund’s total assets and dividing this number by the total number of preferred shares outstanding.
(l) Interest expense and fees relate to payments made to the holders of the floating rate certificates from trust assets and interest expense paid to shareholders of VMTPS. For the year ended October 31, 2012, the expense ratio also excludes fees and expenses related to the tender and repurchase of a portion of the fund’s ARPS.
(m) Amount excludes accrued unpaid distributions on ARPS and accrued interest on VMTPS.
(n) Not annualized.
(p) Ratio excludes dividend payment on ARPS.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(u) Average market value represents the approximate fair value of each of the fund’s ARPS and VMTPS.
(w) Per share amount was less than $0.01.
(x) The net asset values per share and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes.
(y) Included in the total return at net asset value for the year ended October 31, 2012 is the impact of the tender and repurchase by the fund of a portion of its ARPS at 95% of the ARPS’ per share liquidation preference. Had this transaction not occurred, the total return at net asset value for the year ended October 31, 2012 would have been lower by 1.70%.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS

(unaudited)

(1) Business and Organization

MFS Municipal Income Trust (the fund) is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a closed-end management investment company.

(2) Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests primarily in municipal instruments. The value of municipal instruments can be affected by changes in their actual or perceived credit quality. The credit quality of municipal instruments can be affected by, among other things, the financial condition of the issuer or guarantor, the issuer’s future borrowing plans and sources of revenue, the economic feasibility of the revenue bond project or general borrowing purpose, political or economic developments in the region where the instrument is issued and the liquidity of the security. Municipal instruments generally trade in the over-the-counter market. Municipal instruments backed by current and anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the projects or assets or the inability to collect revenues for the project or from the assets. If the Internal Revenue Service determines an issuer of a municipal instrument has not complied with the applicable tax requirements, the security could decline in value, interest from the security could become taxable and the funds may be required to issue Forms 1099-DIV. The fund invests in high-yield securities rated below investment grade. Investments in high-yield securities involve greater degrees of credit and market risk than investments in higher-rated securities and tend to be more sensitive to economic conditions.

In January 2013, the Financial Accounting Standards Board issued Accounting Standards Update 2013-01 (“ASU 2013-01”) entitled Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities which is intended to clarify the scope of Accounting Standards Update 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities. Consistent with the effective date for ASU 2011-11, ASU 2013-01 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2013-01 limits the scope of ASU 2011-11’s disclosure requirements on offsetting to financial assets and financial liabilities related to derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions. Although still evaluating the potential impact of these two ASUs to the fund, management expects that the impact of the fund’s adoption will be limited to additional financial statement disclosures.

 

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Notes to Financial Statements (unaudited) – continued

 

Investment Valuations – Debt instruments and floating rate loans (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Futures contracts are generally valued at last posted settlement price as provided by a third-party pricing service on the market on which they are primarily traded. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation as provided by a third-party pricing service on the market on which such futures contracts are primarily traded. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of

 

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Notes to Financial Statements (unaudited) – continued

 

input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments not reflected in total investments, such as futures contracts. The following is a summary of the levels used as of April 30, 2013 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Municipal Bonds      $—         $429,255,908         $—         $429,255,908   
Loans              130,000                 130,000   
Mutual Funds      4,323,651                         4,323,651   
Total Investments      $4,323,651         $429,385,908         $—         $433,709,559   
Other Financial Instruments                            
Futures Contracts      $(335,997      $—         $—         $(335,997

For further information regarding security characteristics, see the Portfolio of Investments.

Derivatives – The fund uses derivatives for different purposes, primarily to increase or decrease exposure to a particular market or segment of the market, or security, to increase or decrease interest rate exposure, or as alternatives to direct investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund were futures contracts. The fund’s period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract tables, generally are indicative of the volume of its derivative activity during the period.

The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at April 30, 2013 as reported in the Statement of Assets and Liabilities:

 

        Fair Value (a)  
Risk   Derivative Contracts   Liability Derivatives  
Interest Rate   Interest Rate Futures     $(335,997)   

 

(a) The value of futures contracts outstanding includes cumulative appreciation (depreciation) as reported in the fund’s Portfolio of Investments. Only the current day variation margin for futures contracts is separately reported within the fund’s Statement of Assets and Liabilities

 

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The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the six months ended April 30, 2013 as reported in the Statement of Operations:

 

Risk    Futures Contracts  
Interest Rate      $190,847   

The following table presents, by major type of derivative contract, the change in unrealized appreciation (depreciation) on derivatives held by the fund for the six months ended April 30, 2013 as reported in the Statement of Operations:

 

Risk    Futures Contracts  
Interest Rate      $(343,217

Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain over-the-counter derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a certain deterioration in the credit quality of the other party. The ISDA Master Agreement gives the fund the right, upon an event of default by the applicable counterparty or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any. However, absent an event of default by the counterparty or a termination of the agreement, the ISDA Master Agreement does not result in an offset of reported amounts of assets and liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty.

Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearing house for exchange traded derivatives (i.e., futures contracts and exchange-traded options) while collateral terms are contract specific for over-the-counter traded derivatives (i.e., forward foreign currency exchange contracts, swap agreements and over-the-counter options). For derivatives traded under an ISDA Master Agreement, the collateral requirements are netted across all transactions traded under such agreement and one amount is posted from one party to the other to collateralize such obligations. Cash collateral that has been segregated to cover obligations of the fund under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities as restricted cash. Securities collateral pledged for the same purpose, if any, is noted in the Portfolio of Investments.

Futures Contracts – The fund entered into futures contracts which may be used to hedge against or obtain broad market exposure, interest rate exposure, or to manage duration. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

 

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Upon entering into a futures contract, the fund is required to deposit with the broker, either in cash or securities, an initial margin in an amount equal to a certain percentage of the notional amount of the contract. Subsequent payments (variation margin) 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 gain or loss by the fund until the contract is closed or expires at which point the gain or loss on futures contracts is realized.

The fund bears the risk of interest rates or securities prices moving unexpectedly, in which case, the fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. While futures contracts may present less counterparty risk to the fund since the contracts are exchange traded and the exchange’s clearinghouse guarantees payments to the broker, there is still counterparty credit risk due to the insolvency of the broker. The fund’s maximum risk of loss due to counterparty credit risk is equal to the margin posted by the fund to the broker plus any gains or minus any losses on the outstanding futures contracts.

Inverse Floaters – The fund invests in municipal inverse floating rate securities which are structured by the issuer (known as primary market inverse floating rate securities) or by an investment banker utilizing municipal bonds which have already been issued (known as secondary market inverse floating rate securities) to have variable rates of interest which typically move in the opposite direction of short term interest rates. A secondary market inverse floating rate security is created when an investment banker transfers a fixed rate municipal bond to a special purpose trust, and causes the trust to (a) issue floating rate certificates to third parties, in an amount equal to a fraction of the par amount of the deposited bonds (these certificates usually pay tax-exempt interest at short-term interest rates that typically reset weekly; and the certificate holders typically, on seven days notice, have the option to tender their certificates to the investment banker or another party for redemption at par plus accrued interest), and (b) issue inverse floating rate certificates (sometimes referred to as “inverse floaters”). If the holders of the inverse floaters transfer the municipal bonds to an investment banker for the purpose of depositing the municipal bonds into the special purpose trust, the inverse floating rate certificates that are issued by the trust are referred to as “self-deposited inverse floaters.” If the bonds held by the trust are purchased by the investment banker for deposit into the trust from someone other than the purchasers of the inverse floaters, the inverse floating rate certificates that are issued by the trust are referred to as “externally deposited inverse floaters.” Such self-deposited inverse floaters held by the fund are accounted for as secured borrowings, with the municipal bonds reflected in the investments of the fund and amounts owed to the holders of the floating rate certificates under the provisions of the trust, which amounts are paid solely from the assets of the trust, reflected as liabilities of the fund in the Statement of Assets and Liabilities under the caption, “Payable to the holders of the floating rate certificates from trust assets”. The carrying value of the fund’s payable to the holders of the floating rate certificates from trust assets as reported in the fund’s Statement of Assets and Liabilities approximates its fair value. The value of the payable to the holders of the floating rate certificates from trust assets as of the reporting date is considered level 2 under the fair value hierarchy disclosure. At April 30, 2013, the fund’s payable to the holders of the floating rate

 

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Notes to Financial Statements (unaudited) – continued

 

certificates from trust assets was $16,324,962 and the interest rate on the floating rate certificates issued by the trust was 0.24%. For the six months ended April 30, 2013, the average payable to the holders of the floating rate certificates from trust assets was $16,325,275 at a weighted average interest rate of 0.17%. Interest expense and fees relate to interest payments made to the holders of certain floating rate certificates and associated fees, both of which are made from trust assets. Interest expense and fees are recorded as incurred. For the six months ended April 30, 2013, interest expense and fees in connection with self-deposited inverse floaters were $53,118. Primary and externally deposited inverse floaters held by the fund are not accounted for as secured borrowings.

Statement of Cash Flows – Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows is the amount included within the fund’s Statement of Assets and Liabilities and includes cash on hand at its custodian bank and does not include any short term investments.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Interest payments received in additional securities are recorded on the ex-interest date in an amount equal to the value of the security on such date. Debt obligations may be placed on non-accrual status or set to accrue at a rate of interest less than the contractual coupon when the collection of all or a portion of interest has become doubtful. Interest income for those debt obligations may be further reduced by the write-off of the related interest receivables when deemed uncollectible.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

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

 

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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 fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended April 30, 2013, is shown as a reduction of total expenses in the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable and tax-exempt income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to expiration of capital loss carryforwards, amortization and accretion of debt securities, defaulted bonds, non-deductible expenses, secured borrowings and the treatment of VMTPS as equity for tax purposes.

The tax character of distributions made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     10/31/12  
Ordinary income (including any
short-term capital gains)
     $139,830   
Tax-exempt income      20,422,994   
Total distributions      $20,562,824   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 4/30/13       
Cost of investments      $387,584,838   
Gross appreciation      38,423,835   
Gross depreciation      (8,624,076
Net unrealized appreciation (depreciation)      $29,799,759   

 

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Notes to Financial Statements (unaudited) – continued

 

As of 10/31/12       
Undistributed ordinary income      323,941   
Undistributed tax-exempt income      3,187,346   
Capital loss carryforwards      (33,856,996
Other temporary differences      (742,698
Net unrealized appreciation (depreciation)      29,212,401   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized for fund fiscal years beginning after October 31, 2011 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses (“post-enactment losses”). Previously, net capital losses were carried forward for eight years and treated as short-term losses (“pre-enactment losses”). As a transition rule, the Act requires that all post-enactment net capital losses be used before pre-enactment net capital losses.

As of October 31, 2012, the fund had capital loss carryforwards available to offset future realized gains as follows:

 

Pre-enactment losses
which expire as follows:
 
10/31/13      $(9,679,589
10/31/16      (3,401,503
10/31/17      (6,820,113
10/31/18      (7,829,561
10/31/19      (5,299,510
Total      $(33,030,276
Post-enactment losses
which are characterized as follows:
 
Long-Term      $(826,720

(3) Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at an annual rate of 0.40% of the fund’s average weekly net assets (including the value of the auction rate preferred shares and variable rate municipal term preferred shares) and 6.32% of gross income. Gross income is calculated based on tax rules that generally include the amortization of premium and exclude the accretion of market discount, which may differ from investment income reported in the Statement of Operations. The management fee, from net assets and gross income, incurred for the six months ended April 30, 2013 was equivalent to an annual effective rate of 0.73% of the fund’s average daily net assets (including the value of the auction rate preferred shares and variable rate municipal term preferred shares).

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, exclusive of interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses other than auction rate preferred shares service fee such that total fund operating expenses do not exceed

 

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Notes to Financial Statements (unaudited) – continued

 

0.90% annually of the fund’s average daily net assets (including the value of auction rate preferred shares and variable rate municipal term preferred shares). This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until October 31, 2013. For the six months ended April 30, 2013, the fund’s actual operating expenses did not exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.

Transfer Agent – The fund engages Computershare Trust Company, N.A. (“Computershare”) as the sole transfer agent for the fund’s common shares. MFS Service Center, Inc. (MFSC) monitors and supervises the activities of Computershare for an agreed upon fee approved by the Board of Trustees. For the six months ended April 30, 2013, these fees paid to MFSC amounted to $12,453.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets (including the value of the auction rate preferred shares and variable rate municipal term preferred shares). The administrative services fee incurred for the six months ended April 30, 2013 was equivalent to an annual effective rate of 0.0153% of the fund’s average daily net assets (including the value of the auction rate preferred shares and variable rate municipal term preferred shares).

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS and MFSC.

Prior to December 31, 2001, the fund had an unfunded defined benefit plan (“DB plan”) for independent Trustees. As of December 31, 2001, the Board took action to terminate the DB plan with respect to then-current and any future independent Trustees, such that the DB plan covers only certain of those former independent Trustees who retired on or before December 31, 2001. The DB plan resulted in a pension expense of $1,350 and is included in independent Trustees’ compensation for the six months ended April 30, 2013. The liability for deferred retirement benefits payable to certain independent Trustees under the DB plan amounted to $37,519 at April 30, 2013, and is included in “Payable for independent Trustees’ compensation” in the Statement of Assets and Liabilities.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any

 

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Notes to Financial Statements (unaudited) – continued

 

time under the terms of the Agreements. For the six months ended April 30, 2013, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $1,048 and are included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $400, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. Income earned on this investment is included in “Dividends from underlying affiliated funds” in the Statement of Operations. This money market fund does not pay a management fee to MFS.

(4) Portfolio Securities

Purchases and sales of investments, other than short-term obligations, aggregated $34,148,621 and $29,129,140, respectively.

(5) Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. The fund reserves the right to repurchase shares of beneficial interest of the fund subject to Trustee approval. During the six months ended April 30, 2013 and the year ended October 31, 2012, the fund did not repurchase any shares. Other transactions in fund shares were as follows:

 

     Six months ended
4/30/13
     Year ended
10/31/12
 
     Shares      Amount      Shares      Amount  
Shares issued to shareholders in
reinvestment of distributions
     82,309         $620,030         193,604         $1,390,497   

(6) Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended April 30, 2013, the fund’s commitment fee and interest expense were $913 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.

 

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Notes to Financial Statements (unaudited) – continued

 

(7) Transactions in Underlying Affiliated Funds-Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be an affiliated issuer:

 

Underlying Affiliated Fund   

Beginning

Shares/Par

Amount

    

Acquisitions

Shares/Par

Amount

    

Dispositions

Shares/Par

Amount

   

Ending

Shares/Par

Amount

 
MFS Institutional Money
Market Portfolio
     11,048,764         27,384,499         (34,109,612     4,323,651   
Underlying Affiliated Fund   

Realized

Gain (Loss)

    

Capital Gain

Distributions

    

Dividend

Income

   

Ending

Value

 
MFS Institutional Money
Market Portfolio
     $—         $—         $6,294        $4,323,651   

(8) Preferred Shares

The fund has 157 shares issued and outstanding of Auction Rate Preferred Shares (ARPS), series T, and 134 shares of ARPS, series TH. Dividends are cumulative at a rate that is reset every seven days for both series through an auction process. If the ARPS are unable to be remarketed on a remarketing date as part of the auction process, the fund would be required to pay the maximum applicable rate on ARPS to holders of such shares for successive dividend periods until such time when the shares are successfully remarketed. The maximum rate on ARPS rated aa3/AA- or better is equal to 110% of the higher of (i) the Taxable Equivalent of the Short-Term Municipal Bond Rate or (ii) the “AA” Composite Commercial Paper Rate.

Since February 2008, regularly scheduled auctions for ARPS issued by closed end funds, including this fund, have consistently failed because of insufficient demand (bids to buy shares) to meet the supply (shares offered for sale) at each auction. In a failed auction, ARPS holders cannot sell their shares tendered for sale. While repeated auction failures have affected the liquidity for ARPS, they do not constitute a default or automatically alter the credit quality of the ARPS, and ARPS holders have continued to receive dividends at the previously defined “maximum rate”. During the six months ended April 30, 2013, the ARPS dividend rates ranged from 0.13% to 0.38% for both series T and series TH. For the six months ended April 30, 2013, the average dividend rate was 0.22% for both series T and series TH. These developments with respect to ARPS do not affect the management or investment policies of the fund. However, one implication of these auction failures for common shareholders is that the fund’s cost of leverage will be higher than it otherwise would have been had the auctions continued to be successful. As a result, the fund’s future common share earnings may be lower than they otherwise would have been.

The fund pays an annual service fee to broker-dealers with customers who are beneficial owners of the ARPS. The service fee is equivalent to 0.25% of the applicable ARPS liquidation value while the ARPS auctions are successful or to 0.15% or less, varying by broker-dealer, while the auctions are failing. The outstanding ARPS are redeemable at the option of the fund in whole or in part at the liquidation preference of $25,000 per share, plus accumulated and unpaid dividends. The ARPS are also

 

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Notes to Financial Statements (unaudited) – continued

 

subject to mandatory redemption if certain requirements relating to its asset maintenance coverage are not satisfied.

On August 9, 2012, the fund announced a tender offer for all of its outstanding ARPS at a price equal to 95% of the ARPS’ per share liquidation preference of $25,000, or $23,750 per share, plus any unpaid dividends accrued through the expiration date of the tender offer. The tender offer expired on September 12, 2012, and the fund accepted for repurchase 2,118 ARPS, series T and 2,141 ARPS, series TH (approximately 93.6% of the fund’s then outstanding ARPS) with an aggregate liquidation preference of $106,475,000 for an aggregate price of $101,151,250. To finance the ARPS tender offer, the fund issued in a private placement 4,259 shares of a new type of preferred shares, Variable Rate Municipal Term Preferred Shares (VMTPS), each with a liquidation preference of $25,000 per share, for an aggregate price of $106,475,000. The outstanding VMTPS are redeemable at the option of the fund in whole or in part at the liquidation preference of $25,000 per share, plus accumulated and unpaid dividends, but generally solely for the purpose of decreasing the leverage of the fund. The VMTPS are subject to a mandatory term redemption date of September 30, 2016 unless extended through negotiation with the private investors. Dividends on the VMTPS are cumulative and are set weekly to a fixed spread against the Securities Industry and Financial Markets Association Municipal Swap Index. The average annualized dividend rate on the fund’s VMTPS for the six months ended April 30, 2013 was 1.39%. The total liquidation preference of the fund’s outstanding preferred shares, comprised of untendered ARPS and VMTPS, remained unchanged as a result of the ARPS tender and VMTPS issuance. The difference between the liquidation preference of the ARPS and the actual purchase price of the tendered ARPS (i.e. the 5% discount on the per share liquidation preference of the tendered ARPS), was recognized by the fund in the Statements of Changes in Net Assets as an increase in net assets applicable to common shares resulting from the tender and the repurchase of the ARPS by the fund.

In the fund’s Statement of Assets and Liabilities, the VMTPS aggregate liquidation preference is shown as a liability since they have a stated mandatory redemption date. Dividends paid to VMTPS are treated as interest expense and recorded as incurred. For the six months ended April 30, 2013, interest expense related to VMTPS amounted to $731,617 and is included in “Interest expense and fees” in the Statement of Operations. Costs directly related to the issuance of the VMTPS are considered debt issuance costs which have been deferred and are being amortized into expense over the life of the VMTPS. The period-end carrying value for the VMTPS in the fund’s Statement of Assets and Liabilities is its liquidation value which approximates its fair value. If the VMTPS were carried at fair value, its fair value would be considered level 2 under the fair value hierarchy disclosure.

Under the terms of a purchase agreement between the fund and the investor in VMTPS, there are investment-related requirements that are in various respects more restrictive than those to which the fund is otherwise subject in accordance with its investment objectives and policies, and may limit the investment flexibility that might otherwise be pursued by the fund if the VMTPS were not outstanding.

The fund is required to maintain certain asset coverage with respect to the ARPS and VMTPS as defined in the fund’s By-Laws and the Investment Company Act of 1940 and, as such, is not permitted to declare common share dividends unless the fund’s

 

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Notes to Financial Statements (unaudited) – continued

 

ARPS and VMTPS have a minimum asset coverage ratio of 200% after declaration of the common share dividends. With respect to the payment of dividends and as to the distribution of assets of the fund, ARPS and VMTPS rank on parity with each other, and are both senior in priority to the fund’s outstanding common shares. To the extent that investments are purchased by the fund with proceeds from the issuance of preferred shares, including ARPS and VMTPS, the fund’s net asset value will increase or decrease at a greater rate than a comparable unleveraged fund.

As of April 30, 2013, the fund had issued and outstanding 157 ARPS, series T, 134 ARPS, series TH, and 4,259 VMTPS, series 2016/9.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of MFS Municipal Income Trust:

We have reviewed the accompanying statement of assets and liabilities of MFS Municipal Income Trust (the “Trust”), including the portfolio of investments, as of April 30, 2013, and the related statement of operations, changes in net assets, and financial highlights for the six-month period ended April 30, 2013. These interim financial statements and financial highlights are the responsibility of the Trust’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements and financial highlights referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the statement of changes in net assets for the year ended October 31, 2012, and the financial highlights for each of the five years in the period ended October 31, 2012, and in our report dated December 14, 2012, we expressed an unqualified opinion on such statement of changes in net assets and financial highlights.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

June 17, 2013

 

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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS is available by clicking on the fund’s name under “Closed-End Funds” in the “Products” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the twelve-month period ended June 30, 2012 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. A shareholder can obtain the quarterly portfolio holdings report at mfs.com. The fund’s Form N-Q is also available on the EDGAR database on the Commission’s Internet Web site at http://www.sec.gov, and may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. Copies of the Fund’s Form N-Q also may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Closed-End Funds” in the “Products” section of mfs.com.

 

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LOGO

 

CONTACT US

TRANSFER AGENT, REGISTRAR, AND

DIVIDEND DISBURSING AGENT

CALL

1-800-637-2304

9 a.m. to 5 p.m. Eastern time

WRITE

Computershare Trust Company, N.A.

P.O. Box 43078

Providence, RI 02940-3078

 

New York Stock Exchange Symbol: MFM


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ITEM 2. CODE OF ETHICS.

During the period covered by this report, the Registrant has not amended any provision in its Code of Ethics (the “Code”) that relates to an element of the Code’s definitions enumerated in paragraph (b) of Item 2 of this Form N-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit waiver, from any provision of the Code.

 

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable for semi-annual reports.

 

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable for semi-annual reports.

 

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable for semi-annual reports.

 

ITEM 6. SCHEDULE OF INVESTMENTS

A schedule of investments for each series of the Registrant is included as part of the report to shareholders of such series under Item 1 of this Form N-CSR.

 

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable for semi-annual reports.

 

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

There were no changes during this period.


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ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

MFS Municipal Income Trust

 

Period

   (a) Total number
of Shares
Purchased
     (b)
Average
Price
Paid per
Share
     (c) Total
Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
     (d) Maximum
Number (or
Approximate
Dollar Value) of
Shares that May
Yet Be Purchased
under the Plans
or Programs
 

11/01/12-11/30/12

     0         N/A         0         4,096,445   

12/01/12-12/31/12

     0         N/A         0         4,096,445   

1/01/13-1/31/13

     0         N/A         0         4,096,445   

2/01/13-2/28/13

     0         N/A         0         4,096,445   

3/01/13-3/31/13

     0         N/A         0         4,114,618   

4/01/13-4/30/13

     0         N/A         0         4,114,618   
  

 

 

       

 

 

    

Total

     0            0      
  

 

 

       

 

 

    

Note: The Board of Trustees approves procedures to repurchase shares annually. The notification to shareholders of the program is part of the semi-annual and annual reports sent to shareholders. These annual programs begin on March 1st of each year. The programs conform to the conditions of Rule 10b-18 of the Securities Exchange Act of 1934 and limit the aggregate number of shares that may be purchased in each annual period (March 1 through the following February 28) to 10% of the Registrant’s outstanding shares as of the first day of the plan year (March 1). The aggregate number of shares available for purchase for the March 1, 2013 plan year is 4,114,618.

 

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant’s Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407 (c)(2)(iv) of Regulation S-K or this Item.

 

ITEM 11. CONTROLS AND PROCEDURES.

 

(a) Based upon their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this Form N-CSR, the registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.


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(b) There were no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter covered by the report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

ITEM 12. EXHIBITS.

 

(a) File the exhibits listed below as part of this form. Letter or number the exhibits in the sequence indicated.

 

  (1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit.

 

  (2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto.

 

(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: Attached hereto.


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Notice

A copy of the Amended and Restated Declaration of Trust of the Registrant is on file with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant MFS MUNICIPAL INCOME TRUST

 

By (Signature and Title)*    JOHN M. CORCORAN
  John M. Corcoran, President

Date: June 17, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*    JOHN M. CORCORAN
  John M. Corcoran, President (Principal Executive Officer)

Date: June 17, 2013

 

By (Signature and Title)*    DAVID L. DILORENZO
  David L. DiLorenzo, Treasurer (Principal Financial Officer and Accounting Officer)

Date: June 17, 2013

 

* Print name and title of each signing officer under his or her signature.