Due to printer's error an incorrect version of the DEF 14A was filed with the
SEC on August 21, 2008. The correct version is being filed on August 22, 2008.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER
THAN THE REGISTRANT [ ]
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CHECK THE APPROPRIATE BOX:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
MFS(R) High Income Municipal Trust
MFS(R) High Yield Municipal Trust
MFS(R) Intermarket Income Trust I
MFS(R) Intermediate High Income Fund
MFS(R) Investment Grade Municipal Trust
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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M F S(R)
INVESTMENT MANAGEMENT
MFS High Income Municipal Trust
MFS High Yield Municipal Trust
MFS Investment Grade Municipal Trust
MFS Intermarket Income Trust
MFS Intermediate High Income Fund
500 Boylston Street
Boston, MA 02116
August 21, 2008
Dear Shareholder,
Enclosed with this letter are materials related to the Annual Meeting
of Shareholders of your Fund which will be held on October 9th, 2008.
I want to be certain you know that this year's annual shareholder
meeting includes matters that each shareowner must personally vote upon. That
means if you do not return your proxy, your vote will not be counted on certain
matters being considered at the meeting.
Approval of one of the proposals being considered at this year's
meeting requires a vote by 66 2/3% of the Fund's shares -- a higher number
than required for routine proposals. Therefore, it is very important that you
take the time to review the enclosed materials and to promptly return the
proxy/voting form in the enclosed postage-paid envelope or follow the
instructions on your proxy card to vote by telephone or internet.
Please keep in my mind that you will receive additional proxy material
from the Fund and/or phone calls from the proxy solicitor or other agents,
until you return your proxy. Those shareholders who promptly return their
proxy/voting form will NOT receive follow-up materials or calls; shareholders
who do not return their voting form WILL receive additional mailings and/or
phone calls.
We apologize in advance for any inconvenience resulting from these
solicitation efforts. Nonetheless we must seek approval of our shareholders for
certain actions that your Trustees have recommended and we need your vote.
You can help your fund by promptly returning your vote. Your action
will help to keep solicitation expenses to a minimum. If you have any questions
about this matter, please call 1-888-605-8354.
Thank you for your continued support and prompt action.
Sincerely,
/s/ Robert J. Manning
Robert J. Manning, President
MFS(R) HIGH INCOME MUNICIPAL TRUST
MFS(R) HIGH YIELD MUNICIPAL TRUST
MFS(R) INTERMARKET INCOME TRUST I
MFS(R) INTERMEDIATE HIGH INCOME FUND
MFS(R) INVESTMENT GRADE MUNICIPAL TRUST
500 Boylston Street, Boston, Massachusetts 02116
Notice of the 2008 Annual Meeting of Shareholders
To be held on October 9, 2008
The 2008 Annual Meeting of Shareholders of each of the above referenced trusts
(each, a "Trust" or "Fund" and collectively, the "Trusts" or "Funds") will be
held at 500 Boylston Street, Boston, Massachusetts 02116, at 9:30 a.m. on
Thursday, October 9, 2008, for the following purposes:
ITEM 1. To elect Trustees to the Board of Trustees of each Trust as
outlined below:
a. for each of MFS InterMarket Income Trust I and MFS Intermediate High Income
Trust:
i) four Trustees, J. Atwood Ives, William R. Gutow, Michael Hegarty and
Robert W. Uek, to be elected by shareholders of each Trust;
b. for MFS High Income Municipal Trust, MFS High Yield Municipal Trust and MFS
Investment Grade Municipal Trust:
i) three Trustees, William R. Gutow, Michael Hegarty and Robert W. Uek, to
be elected by the holders of common shares and preferred shares of the
Trust, voting together as a single class; and
ii) two Trustees, J. Atwood Ives and Laurie J. Thomsen, to be elected by
the holders of preferred shares only, voting as a separate class.
ITEM 2. To approve an Amended and Restated Declaration of Trust for each
Trust; and
ITEM 3. To amend or remove certain fundamental investment policies of the
Trusts; and
ITEM 4. For MFS Intermarket Income Trust I only, to approve a proposal to
make non-fundamental an investment policy of the Trust; and
ITEM 5. To transact such other business as may properly come before the
Meeting and any adjournment(s) or postponement(s) thereof.
It is anticipated that each Trust will hold its meeting simultaneously with
each other trust. Shareholders of each Trust will vote separately on each item.
THE TRUSTEES OF YOUR TRUST RECOMMEND THAT YOU VOTE
IN FAVOR OF ITEMS 1, 2, 3 AND 4.
Only a Trust's shareholders of record on August 4, 2008 will be entitled to
vote at that Trust's Meeting of Shareholders or any adjournment(s) or
postponement(s) thereof.
By order of the Board of Trustees
SUSAN S. NEWTON
Assistant Secretary and Assistant Clerk
August 21, 2008
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND
RETURNING THE ENCLOSED PROXY, SO THAT IT IS RECEIVED BY THE DATE OF THE MEETING
OR RECORDING YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE INTERNET BY 9:29
A.M., EASTERN TIME, ON THE DATE OF THE MEETING, WHICH WILL HELP AVOID THE
ADDITIONAL EXPENSE OF A SECOND SOLICITATION FOR YOUR TRUST. THE ENCLOSED
ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS PROVIDED FOR YOUR CONVENIENCE.
MFS(R) HIGH INCOME MUNICIPAL TRUST
MFS(R) HIGH YIELD MUNICIPAL TRUST
MFS(R) INTERMARKET INCOME TRUST I
MFS(R) INTERMEDIATE HIGH INCOME FUND
MFS(R) INVESTMENT GRADE MUNICIPAL TRUST
Proxy Statement
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Trustees of MFS High Income Municipal
Trust, MFS High Yield Municipal Trust, MFS InterMarket Income Trust I, MFS
Intermediate High Income Fund, and MFS Investment Grade Municipal Trust (each,
a "Trust" or "Fund" and collectively, the "Trusts" or "Funds") to be used at
the Meeting of Shareholders of each Trust (each, a "Meeting") to be held at
9:30 a.m. on October 9, 2008 at 500 Boylston Street, Boston, Massachusetts
02116, for the purposes set forth in the accompanying Notice. Information
regarding the Board of Trustees can be found in the section of this Proxy
Statement entitled "Election of Trustees." If the enclosed form of proxy is
executed and returned, it may nevertheless be revoked prior to its exercise by
a signed writing filed with the proxy tabulation agent, Computershare Trust
Company, N.A., ("Computershare") 250 Royall Street, Canton, Massachusetts,
02021, or delivered at a Meeting. On August 4, 2008, the following number of
shares were outstanding for each Trust:
# OF COMMON # OF PREFERRED
TRUST SHARES OUTSTANDING SHARES OUTSTANDING
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MFS High Income Municipal Trust 31,267,528 4,800
MFS High Yield Municipal Trust 27,849,945 3,600
MFS InterMarket Income Trust I 11,009,000 N/A
MFS Intermediate High Income Fund 21,003,495 N/A
MFS Investment Grade Municipal Trust 11,509,000 2,400
Shareholders of record at the close of business on August 4, 2008 will be
entitled to one vote for each share held, and each fractional share will be
entitled to a proportionate fractional vote. Each Trust will vote separately on
each item; votes of multiple Trusts will not be aggregated.
The mailing address of each Trust is 500 Boylston Street, Boston, Massachusetts
02116. Solicitation of proxies is being made by the mailing of this Notice and
Proxy Statement with its enclosures on or about August 21, 2008. In addition to
soliciting proxies by mail, the Trustees of your Trust and employees of
Massachusetts Financial Services Company ("MFS"), the Trust's investment
adviser and administrator, may solicit proxies in person or by telephone. The
expenses of the preparation of proxy statements and related materials,
including printing and delivery costs and role solicitation, are borne by each
Trust.
The Trust has engaged Computershare to provide shareholder meeting services
including the distribution of this Proxy Statement and related materials to
shareholders, as well as vote solicitation and tracking. It is anticipated that
the cost of these services will be $44,232 and may increase substantially in
the event that any vote is contested or increased solicitation effects are
required.
A copy of each Trust's most recent annual report and semi-annual report may be
obtained without charge by contacting Computershare, each Trust's transfer and
shareholder servicing agent, 250 Royall Street, Canton, Massachusetts, 02021,
or by telephoning toll-free (800) 637-2304.
SUMMARY OF ITEMS
----------------
Item No. Item Description Trust
--------------------------------------------------------------------------------
1.a.(i) Election of J. Atwood Ives, MFS Intermarket Income Trust I
William R. Gutow, Michael Hegarty, MFS Intermediate High Income
and Robert W. Uek as Trustees Fund
of the Trust
1.b.(i) Election of William R. Gutow, Common and Preferred
Michael Hegarty, and Robert W. Uek Shareholders of
as Trustees of the Trust MFS High Income Municipal Trust
MFS High Yield Municipal Trust
MFS Investment Grade Municipal
Trust
1.b.(ii) Election of J. Atwood Ives and Preferred Shareholders of
Laurie J. Thomsen as Trustees of MFS High Income Municipal Trust
the Trust MFS High Yield Municipal Trust
MFS Investment Grade Municipal
Trust
2. Approval of an Amended and MFS Intermarket Income Trust I
Restated Declaration of Trust MFS Intermediate High Income Fund
MFS High Income Municipal Trust
MFS High Yield Municipal Trust
MFS Investment Grade Municipal
Trust
3. Amendment or removal of certain MFS Intermarket Income Trust I
fundamental investment policies MFS Intermediate High Income Fund
of the Trust MFS High Income Municipal Trust
MFS High Yield Municipal Trust
MFS Investment Grade Municipal
Trust
4. Approval of a proposal to make MFS Intermarket Income Trust I
non-fundamental an investment
policy of the Trust
ITEM 1 -- ELECTION OF TRUSTEES
The Board of Trustees, which oversees each Trust, provides broad supervision
over the affairs of each Trust. Those Trustees who are not "interested persons"
(as defined in the Investment Company Act of 1940, as amended (the "1940 Act"))
of your Trust or of MFS are referred to as "Independent Trustees" throughout
this Proxy Statement. MFS is responsible for the investment management of each
Trust's assets and for providing a variety of other administrative services to
each Trust. The officers of each Trust are responsible for its operations.
The Board has fixed the number of Trustees of each Trust at twelve. Under the
provisions of each Trust's Declaration of Trust, the Trustees are divided into
three classes, each having a term of three years.
For each of MFS InterMarket Income Trust I and MFS Intermediate High Income
Trust, the Nominating and Compensation Committee has selected and nominated,
and recommended that the Board nominate, for election by shareholders J. Atwood
Ives, William R. Gutow, Michael Hegarty and Robert W. Uek as Trustees of the
class whose term will expire at the 2011 Annual Meeting of Shareholders (or
special meeting in lieu thereof) of such Trust, to hold office until his
successor is elected and qualified. Each nominee is presently a Trustee of MFS
InterMarket Income Trust I and MFS Intermediate High Income Trust and has
agreed to serve as a Trustee of each Trust if elected. The Board of Trustees
recommends that you vote in favor of their election.
For each of MFS High Income Municipal Trust, MFS High Yield Municipal Trust and
MFS Investment Grade Municipal Trust, the Nomination and Compensation Committee
has selected and nominated, and recommended that the Board nominate, for
election by holders of common shares and preferred shares, voting together as a
single class, William R. Gutow, Michael Hegarty and Robert W. Uek as Trustees
of the class whose term will expire at the 2011 Annual Meeting of Shareholders
(or special meeting in lieu thereof) to hold office until his successor is
elected and qualified. The Nomination and Compensation Committee has also
selected and nominated, and recommended that the Board nominate, for election
by holders of preferred shares only, voting as a separate class, J. Atwood Ives
and Laurie J. Thomsen, for a term that will expire at the next annual meeting
of shareholders (or special meeting in lieu thereof) of each Trust to hold
office until his or her successor is elected and qualified. The Board of
Trustees has nominated such individuals. Each nominee is presently a Trustee of
each of MFS High Income Municipal Trust, MFS High Yield Municipal Trust and MFS
Investment Grade Municipal Trust and has agreed to serve as a Trustee of each
Trust if elected. The Board of Trustees recommends that you vote in favor of
their election.
It is intended that, absent contrary instructions, proxies will be voted in
favor of electing Messrs. Ives, Gutow, Hegarty and Uek and Ms. Thomsen. If,
before the Meeting, any nominee refuses or is unable to serve, or if any of the
nominees is unavailable at the time of the Meeting, and such refusal or
inability to serve or unavailability is not anticipated, the Trustees may vote
for other nominees at their discretion, or the Trustees may fix the number of
Trustees at fewer than twelve for a Trust. Under the terms of each Trust's
retirement policy, the Trustees have a mandatory retirement age of 73 years.
The following table presents certain information regarding the current Trustees
of each Trust, including their principal occupations, which, unless specific
dates are shown, are of more than five years duration, although the titles may
not have been the same throughout.
PRINCIPAL OCCUPATIONS
POSITION(s) HELD TERM DURING THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH TRUST TRUSTEE SINCE(1) EXPIRING OTHER DIRECTORSHIPS(2)
-------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
Robert J. Manning(3); Trustee June 2007 2010 Massachusetts Financial
(born 10/20/63) Services Company, Chief
Executive Officer, President,
Chief Investment Officer and
Director
-------------------------------------------------------------------------------------------------------------------
Robert C. Pozen(3) Trustee June 2007 2009 Massachusetts Financial
(born 08/08/46) Services Company, Chairman
(since February 2004); MIT
Sloan School (education),
Senior Lecturer (since 2006);
Secretary of Economic Affairs,
The Commonwealth of
Massachusetts (January 2002 to
December 2002); Fidelity
Investments, Vice Chairman
(June 2000 to December 2001);
Fidelity Management & Research
Company (investment adviser),
President (March 1997 to July
2001); Bell Canada Enterprises
(telecommunications),
Director; Medtronic, Inc.
(medical technology),
Director; Telesat (satellite
communications), Director
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INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair June 2007 2009(4) and Private investor; Eastern
(born 05/01/36) of Trustees 2011(5) Enterprises (diversified
services company), Chairman,
Trustee and Chief Executive
Officer (until November 2000)
-------------------------------------------------------------------------------------------------------------------
Robert E. Butler(6) Trustee June 2007 2009 Consultant - regulatory and
(born 11/29/41) compliance matters (since July
2002); PricewaterhouseCoopers
LLP (professional services
firm), Partner (until 2002)
-------------------------------------------------------------------------------------------------------------------
Lawrence H. Cohn, M.D. Trustee June 2007 2010 Brigham and Women's Hospital,
(born 03/11/37) Chief of Cardiac Surgery
(until 2005); Harvard Medical
School, Professor of Cardiac
Surgery; Physician Director of
Medical Device Technology for
Partners Health Care
-------------------------------------------------------------------------------------------------------------------
David H. Gunning Trustee June 2007 2009 Retired; Cleveland-Cliffs Inc.
(born 05/30/42) (mining products and service
provider), Vice Chairman/
Director (until May 2007);
Portman Limited (mining),
Director (since 2005);
Encinitos Ventures (private
investment company), Principal
(1997 to April 2001); Lincoln
Electric Holdings, Inc.
(welding equipment
manufacturer), Director
-------------------------------------------------------------------------------------------------------------------
William R. Gutow Trustee June 2007 2011 Private investor and real
(born 09/27/41) estate consultant; Capitol
Entertainment Management
Company (video franchise),
Vice Chairman; Atlantic Coast
Tan (tanning salons), Vice
Chairman (since 2002)
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Michael Hegarty Trustee June 2007 2011 Retired; AXA Financial
(born 12/21/44) (financial services and
insurance), Vice Chairman and
Chief Operating Officer (until
May 2001); The Equitable Life
Assurance Society (insurance),
President and Chief Operating
Officer (until May 2001)
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Lawrence T. Perera Trustee June 2007 2010 Hemenway & Barnes (attorneys),
(born 06/23/35) Partner
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J. Dale Sherratt Trustee June 2007 2009 Insight Resources, Inc.
(born 09/23/38) (acquisition planning
specialists), President;
Wellfleet Investments
(investor in health care
companies), Managing General
Partner (since 1993);
Cambridge Nutraceuticals
(professional nutritional
products), Chief Executive
Officer (until May 2001)
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Laurie J. Thomsen Trustee June 2007 2009(4) and New Profit, Inc. (venture
(born 08/05/57) 2011(5) philanthropy), Partner (since
2006); Private investor; Prism
Venture Partners (venture
capital), Co-founder and
General Partner (until June
2004); The Travelers Companies
(commercial property liability
insurance), Director
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Robert W. Uek Trustee June 2007 2011 Retired (since 1999);
(born 05/18/41) PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 1999);
Consultant to investment
company industry (since 2000);
TT International Funds (mutual
fund complex), Trustee (2000
until 2005); Hillview
Investment Trust II Funds
(mutual fund complex), Trustee
(2000 until 2005)
----------
(1) Each Trustee has served continuously since appointment unless indicated otherwise.
(2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e.,
"public companies").
(3) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the
1940 Act), which is the principal federal law governing investment companies like the fund, as a result of
position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
(4) For MFS High Income Municipal Trust, MFS High Yield Municipal Trust and MFS Investment Grade Municipal Trust.
(5) For MFS InterMarket Income Trust I and MFS Intermediate High Income Fund.
(6) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant retained by
MFS pursuant to its settlement with the SEC concerning market timing and related matters. The terms of that
settlement required that compensation and expenses related to the independent compliance consultant be borne
exclusively by MFS and, therefore, MFS paid Mr. Butler for the services he rendered to the independent
compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total of $351,119.29.
Each current Trustee listed above served as a board member of 98 funds within
the MFS Family of Funds (the MFS Funds) as of December 31, 2007. The address of
each Trustee is c/o MFS, 500 Boylston Street, Boston, Massachusetts 02116.
Information about each Trust, including information about its investment
adviser and administrator, independent registered public accounting firm,
executive officers, and the interests of certain persons appears under "Trust
Information" beginning on page 26.
REQUIRED VOTE. For MFS InterMarket Income Trust I and MFS Intermediate High
Income Fund, approval of this matter as to any nominee will require the
affirmative vote of a plurality of each Trust's outstanding common shares
voting at the Meeting in person or by proxy. For MFS High Income Municipal
Trust, MFS High Yield Municipal Trust, and MFS Investment Grade Municipal
Trust, approval of this proposal as to Messrs. Gutow, Hegarty and Uek will
require the affirmative vote of a plurality of each Trust's outstanding
preferred and common shares, voting together as a single class, at the meeting
in person or by proxy, and approval of this proposal as to Mr. Ives and Ms.
Thomsen will require the affirmative vote of a plurality of each Trust's
outstanding preferred shares, voting as a separate class, at the meeting in
person or by proxy.
THE BOARD, INCLUDING INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH TRUST VOTE TO ELECT EACH OF THE NOMINEES AS TRUSTEES OF
EACH TRUST.
COMMITTEES
Each Trust's Board of Trustees meets regularly throughout the year to discuss matters and take certain
actions relating to the Trust. Each Trust's Board has several standing committees, which are described
below.
NUMBER OF
MEETINGS
IN LAST CURRENT
NAME OF COMMITTEE FISCAL YEAR(1) FUNCTIONS MEMBERS(2)
------------------------------------------------------------------------------------------------------------
AUDIT COMMITTEE 3 Oversees the accounting and Butler*(3), Gutow*,
auditing procedures of each Trust Sherratt*, Thomsen*(3)
and, among other things, considers and Uek*(3)
the selection of the independent
accountants for each Trust and the
scope of the audit, and considers
the effect on the independence of
those accountants of any non-audit
services such accountants provide
to each Trust and any audit or non-
audit services such accountants
provide to other MFS Trusts, MFS
and/or certain affiliates. The
Committee is also responsible for
establishing procedures for the
receipt, retention and treatment of
complaints received by each Trust
regarding accounting, internal
accounting controls, or auditing
matters and the confidential,
anonymous submission of concerns
regarding questionable Trust
accounting matters by officers of
the Trust and employees of each
Trust's investment adviser,
administrator, principal
underwriter or any other provider
of accounting-related services to
each Trust.
COMPLIANCE AND GOVERNANCE 3 Oversees the development and Butler*, Cohn*,
COMMITTEE implementation of each Trust's Gunning*, Gutow* and
regulatory and fiduciary compliance Sherratt*
policies, procedures and practices
under the 1940 Act and other applicable
laws as well as oversight of compliance
policies of each Trust's investment
adviser and certain other service
providers as they relate to Trust
activities. Each Trust's Independent
Chief Compliance Officer, assists the
Committee in carrying out its
responsibilities. In addition, the
Committee advises and makes
recommendations to the Board on matters
concerning Trustee practices and
recommendations concerning the
functions and duties of the committees
of the Board.
CONTRACTS REVIEW 2 Requests, reviews and considers the All Independent Trustees
COMMITTEE information deemed reasonably necessary of the Board (Butler,
to evaluate the terms of the investment Cohn, Gunning, Gutow,
advisory and principal underwriting Hegarty, Ives, Perera,
agreements and the Plan of Distribution Sherratt, Thomsen and
under Rule 12b-1 that each Trust Uek)
proposes to renew or continue, and to
make its recommendations to the full
Board of Trustees on these matters.
NOMINATION AND 0 Recommends qualified candidates to All Independent Trustees
COMPENSATION COMMITTEE the Board in the event that a of the Board (Butler,
position is vacated or created. The Cohn, Gunning, Gutow,
Committee will consider recommendations Hegarty, Ives, Perera,
by shareholders when a vacancy exists. Sherratt, Thomsen and
Shareholders Uek) wishing to recommend Uek)
candidates for Trustee for
consideration by the Committee may do
so by writing to the Trust's Secretary
at the principal executive office of
each Trust. Such recommendations must be
accompanied by biographical and
occupational data on the candidate
(including whether the candidate would
be an "interested person" of each
Trust), a written consent of the
candidate to be named as a nominee and
to serve as Trustee if elected, record
and ownership information for the
recommending shareholder with respect
to each Trust, and a description of any
arrangements or understandings
regarding recommendation of the
candidate for consideration. The
Committee is also responsible for
making recommendations to the Board
regarding any necessary standards or
qualifications for service on the
Board. The Committee also reviews and
makes recommendations to the Board
regarding compensation for the
non-interested Trustees.
PORTFOLIO TRADING AND 3 Oversees the policies, procedures, Cohn*, Gunning*,
MARKETING REVIEW and practices of each Trust with Hegarty* and Perera*
COMMITTEE respect to brokerage transactions
involving portfolio securities as those
policies, procedures, and practices are
carried out by MFS and its affiliates.
The Committee also oversees the lending
of portfolio securities and the
administration of each Trust's proxy
voting policies and procedures by MFS.
In addition, the Committee receives
reports from MFS regarding the
policies, procedures, and practices of
MFS and its affiliates in connection
with their marketing and distribution
of shares of each Trust.
PRICING COMMITTEE 3 Oversees the determination of the Hegarty*, Perera*,
value of the portfolio securities Thomsen* and Uek*
and other assets held by each Trust
and determines or causes to be
determined the fair value of
securities and assets for which
market quotations are not "readily
available" in accordance with the
1940 Act. The Committee delegates
primary responsibility for carrying
out these functions to MFS and MFS'
internal valuation committee
pursuant to pricing policies and
procedures approved by the
Committee and adopted by the full
Board, which include methodologies
to be followed by MFS to determine
the fair values of portfolio
securities and other assets held by
each Trust for which market
quotations are not readily
available. The Committee meets
periodically with the members of
MFS' internal valuation committee
to review and assess the quality of
fair valuation and other pricing
determinations made pursuant to each
Trust's pricing policies and
procedures, and to review and
assess the policies and procedures
themselves. The Committee also
exercises the responsibilities of
the Board under the Amortized Cost
Valuation Procedures approved by
the Board on behalf of each Trust
which holds itself out as a "money
market fund" in accordance with
Rule 2a-7 under the 1940 Act.
SERVICES CONTRACTS 3 Reviews and evaluates the Butler, Gunning*,
COMMITTEE contractual arrangements of each Sherratt*, Thomsen* and
Trust relating to transfer agency, Uek*
administrative services, custody,
pricing and bookkeeping services and
makes recommendations to the full Board
of Trustees on these matters.
----------
(1) Number of meetings held during the period beginning June 30, 2007, the effective date of the investment
advisory agreement between each Trust and MFS, through the Trusts' fiscal year end, November 30, 2007.
Prior to June 30, 2007, each Trust was overseen by a different board.
(2) Information about each committee member is set forth above on pages 3, 4 and 5. Although Mr. Ives is not a
member of all Committees of the Board, he is invited to and attends many of the Committees' meetings in his
capacity as Chair of the Trustees.
(3) Audit Committee Financial Expert
* Independent Trustees.
The Trustees generally hold at least eight regular meetings each calendar
year. These regular meetings take place over a two-day period. The performance
and operations of each of the Trusts is reviewed by the Trustees at each
meeting and more in-depth reviews of particular Trusts are conducted by the
Trustees throughout the year. The current Board of the Trusts held 4 Board
meetings during the fiscal year ended November 30, 2007. Each Trustee attended
at least 75% of the Board and applicable committee meetings for which he/she
was eligible for each Trust.
AUDIT COMMITTEE
Each Trust's Audit Committee consists only of Independent Trustees each of whom
is also independent of the Trust as defined by New York Stock Exchange Listing
Standards. Each Trust's Audit Committee's report on the Trust's most recent
audited financials is included below under the heading "Independent Registered
Public Accounting Firm". Each Trust's Board has adopted a written charter for
the Audit Committee. A copy of the Committee's charter is available on MFS.com.
NOMINATION AND COMPENSATION COMMITTEE
The Trustees have adopted a written charter for the Nomination and Compensation
Committee. A copy of the Committee's charter is available on MFS.com.
Each Trust's Nomination and Compensation Committee consists only of Independent
Trustees each of whom is also independent of the Trust as defined by New York
Stock Exchange Listing Standards.
The Nomination and Compensation Committee requires that Trustee candidates have
a college degree or equivalent business experience, but has not otherwise
established specific, minimum qualifications that must be met by an individual
to be considered by the Committee for nomination as a Trustee. The Nomination
and Compensation Committee may take into account a wide variety of factors in
considering Trustee candidates, including, but not limited to: (i) availability
and commitment of a candidate to attend meetings and perform his or her
responsibilities to the Board; (ii) relevant industry and related experience;
(iii) educational background; (iv) financial expertise; (v) an assessment of
the candidate's ability, judgment and expertise; (vi) overall diversity of the
composition of the Board; and (vii) such other factors as the Committee deems
appropriate. The Nomination and Compensation Committee may consider candidates
for Trustee recommended by each Trust's current Trustees, officers or
shareholders or by MFS or any other source deemed appropriate by the Nomination
and Compensation Committee. The Nomination and Compensation Committee may, but
is not required to, retain a third-party search firm at the applicable Trust's
expense to identify potential candidates.
The Nomination and Compensation Committee will review and consider nominees
recommended by shareholders to serve as Trustee, provided that the recommending
shareholder follows the Procedures for Shareholders to Submit Nominee
Candidates, which are set forth as Appendix B to the Trusts' Nomination and
Compensation Committee Charter (which is available on MFS.com). Among other
requirements, these procedures provide that the recommending shareholder must
submit any recommendation in writing to the Trust, to the attention of the
Trust's Secretary, at the address of the principal executive offices of the
Trust. Any recommendation must include certain biographical information and
other information regarding the candidate and the recommending shareholder, and
must include a written and signed consent of the candidate to be named as a
nominee and to serve as a Trustee if elected. The foregoing description is only
a summary.
The Nomination and Compensation Committee has full discretion to reject
nominees recommended by shareholders, and there is no assurance that any such
person properly recommended and considered by the Committee will be nominated
for election to the Board of a Trust.
SHARE OWNERSHIP
As of August 4, 2008, the Trustees and officers of each Trust as a whole owned
less than 1% of the outstanding shares of any class of any Trust.
The following table shows the dollar range of equity securities beneficially
owned by each nominee or Trustee (a) of each Trust and (b) on an aggregate
basis, in all MFS funds overseen by the nominee or Trustee, as of August 4,
2008.
The following dollar ranges apply:
N. None
A. $1 - $10,000
B. $10,001 - $50,000
C. $50,001 - $100,000
D. $100,001 - $225,000
E. Over $225,000
AGGREGATE DOLLAR
RANGE OF
AGGREGATE SECURITIES IN
DOLLAR RANGE ALL MFS FUNDS
OF EQUITY OVERSEEN OR
SECURITIES IN TO BE OVERSEEN BY
NAME OF TRUSTEE INDIVIDUAL TRUST NAME THE TRUST THE NOMINEE
--------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
-------------------
Robert J. Manning MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
Robert C. Pozen MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
INDEPENDENT TRUSTEES
--------------------
Robert E. Butler MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
Lawrence H. Cohn, M.D. MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
David H. Gunning MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
William R. Gutow MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
Michael Hegarty MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
J. Atwood Ives MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
Lawrence T. Perera MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
J. Dale Sherratt MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
Laurie J. Thomsen MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
Robert W. Uek MFS High Income Municipal Trust N E
MFS High Yield Municipal Trust N
MFS InterMarket Income Trust I N
MFS Intermediate High Income Fund N
MFS Investment Grade Municipal Trust N
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF TRUSTEES
The Board of Trustees of each Trust has adopted procedures by which
shareholders may send communications to the Board. Shareholders may mail
written communications to the Board of Trustees, [Name of Trust], c/o
Massachusetts Financial Services Company, 500 Boylston Street, Boston,
Massachusetts 02116, Attention: Frank Tarantino, Independent Chief Compliance
Officer. Shareholder communications must (i) be in writing and be signed by the
shareholder, (ii) identify the MFS Trust to which they relate and (iii)
identify the class and number of shares held by the shareholder. Each Trust's
Independent Chief Compliance Officer ("ICCO") is responsible for reviewing all
properly submitted shareholder communications. The ICCO shall either (i)
provide a copy of each properly submitted shareholder communication to the
Board at its next regularly scheduled meeting or (ii) if the ICCO determines
that the communication requires more immediate attention, forward the
communication to the Chair of the Trustees promptly after receipt. The ICCO
may, in good faith, determine that a shareholder communication should not be
provided to the Board because it is ministerial in nature (such as a request
for Trust literature, share data or financial information). The ICCO may in
such cases forward the communication to the appropriate party or parties at
MFS. These procedures do not apply to (i) any communication from an officer or
Trustee of the Trust, (ii) any communication from an employee or agent of the
Trust, unless such communication is made solely in such employee's or agent's
capacity as a shareholder or (iii) any shareholder proposal submitted pursuant
to Rule l4a-8 under the Securities Exchange Act of 1934, as amended, or any
communication made in connection with such a proposal. Each Trust's Trustees
are not required to attend the Trust's shareholder meetings or to otherwise
make themselves available to shareholders for communications, other than
pursuant to the aforementioned procedures. No Board members attended the 2007
Annual Meeting of Shareholders.
Each Trust's Declaration of Trust currently provides that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred
in connection with litigation in which they may be involved because of their
offices with the Trust, unless it is finally adjudicated or, in case of a
settlement, it has been determined by Trustees not involved in the matter or
independent legal counsel, that they have not acted in good faith in the
reasonable belief that their actions were in the best interests of the Trust
or that they engaged in willful misfeasance or acted with bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
their offices.
TRUSTEE COMPENSATION TABLE
The table below shows the cash compensation paid to the Trustees by each Trust
for the fiscal year ended November 30, 2007. Interested Trustees receive no
compensation from a Trust for their services as Trustees.
RETIREMENT TOTAL CASH
BENEFITS COMPENSATION
ACCRUED AS FROM TRUST
TRUSTEE FEES PART OF AND FUND
NAME OF TRUSTEE INDIVIDUAL TRUST NAME FROM TRUST(1) FUND EXPENSE COMPLEX(2)
---------------------------------------------------------------------------------------------------
Robert E. Butler MFS High Income Municipal
Trust $1,200 N/A $229,619
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
Lawrence H. Cohn, M.D. MFS High Income Municipal
Trust $1,200 N/A $228,509
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
David H. Gunning MFS High Income Municipal
Trust $1,200 N/A $248,508
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
William R. Gutow MFS High Income Municipal
Trust $1,200 N/A $228,509
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
Michael J. Hegarty MFS High Income Municipal
Trust $1,200 N/A $226,509
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
J. Atwood Ives MFS High Income Municipal
Trust $1,200 N/A $302,509
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
Lawrence T. Perera MFS High Income Municipal
Trust $1,200 N/A $226,953
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
J. Dale Sherratt MFS High Income Municipal
Trust $1,200 N/A $268,507
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
Laurie J. Thomsen MFS High Income Municipal
Trust $1,200 N/A $248,508
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
Robert W. Uek MFS High Income Municipal
Trust $1,200 N/A $254,142
MFS High Yield Municipal
Trust $ 938 N/A
MFS InterMarket Income
Trust I $ 600 N/A
MFS Intermediate High Income
Fund $ 525 N/A
MFS Investment Grade
Municipal Trust $ 713 N/A
----------
(1) For the period beginning June 30, 2007, the effective date of the investment advisory agreement
between the Trust and MFS, through each Trust's fiscal year end. Prior to June 30, 2007, each
Trust was overseen by a different board.
(2) For calendar year 2007. MFS Trustees receiving compensation from each Trust served as Trustee of
98 funds within the MFS Fund Complex (having aggregate net assets at December 31, 2007 of
approximately $106 billion).
ITEM 2 -- TO APPROVE AN AMENDED AND RESTATED DECLARATION OF TRUST
Each Trust, like other investment companies, is subject to comprehensive
federal laws and regulations (in particular to the 1940 Act) and to state laws.
The Trusts are subject to Massachusetts law because each Trust is a
Massachusetts business trust. Under Massachusetts law, a business trust
generally operates under an organizational document, usually called a
declaration of trust, which sets forth various provisions relating primarily to
the authority and governance of the business trust. Each Trust currently
operates under its own agreement and declaration of trust (each, a "Current
Declaration").
The Board recommends that shareholders of each Trust vote to approve an Amended
and Restated Declaration of Trust for their Trust (each a "Revised
Declaration"). In June 2007, each Trust became part of the MFS family of funds
and the Board believes that, in order to increase the efficiency of
administration of the Funds by MFS, it is in the best interests of shareholders
to conform the Current Declaration of each Fund to the form of declaration of
trust used for other closed-end funds advised by MFS.
Adoption of a Revised Declaration for each Trust will not alter any Trust's
current investments or investment policies.
A description of the material differences between each Current Declaration and
the form of proposed Revised Declaration is set forth in Schedule D.
If this Proposal 2 is approved by the shareholders of a Trust, the Revised
Declaration will become effective when a majority of the trustees of that Trust
has signed the Revised Declaration. Each Trust currently anticipates that, if
the requisite shareholder approvals are obtained, the Revised Declaration for
such Trust will become effective on November 1, 2008.
The foregoing discussion and the summary set forth in Schedule D hereto are
qualified in their entireties by reference to the form of Revised Declaration
which is attached hereto in Schedule E.
MFS intends to propose to the Trustees of each Trust that the bylaws of the
Trust be amended to conform them more closely to the bylaws of the other
closed-end funds advised by MFS. Unlike the Current Declarations, the proposed
form of Revised Declaration does not address quorum requirements for
shareholder meetings. MFS has advised the Board that the amended bylaws of the
Trusts will address quorum requirements for shareholder meetings. MFS has also
advised the Board that each Trust's quorum for shareholder meetings will not
change upon the adoption of amended by-laws.
REQUIRED VOTE AND BOARD RECOMMENDATION
For each of the MFS High Income Municipal Trust, MFS Investment Grade Municipal
Trust and MFS High Yield Municipal Trust, approval of a Revised Declaration for
each Trust requires the affirmative vote of at least 66 2/3% of the
common shares and preferred shares of each Trust entitled to vote, voting
together as a single class.
For each of MFS InterMarket Income Trust I and MFS Intermediate High Income
Fund, approval of a Revised Declaration for each Trust requires the affirmative
vote of at least 66 2/3% of the outstanding common shares of such Trust
entitled to vote.
If the shareholders of a Trust fail to approve a Revised Declaration for such
Trust, the Trust's Current Declaration will remain in effect.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR PROPOSAL 2.
ITEM 3 -- TO AMEND OR REMOVE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF THE
TRUSTS
Each Trust has certain investment restrictions or policies that are
"fundamental," meaning that as a matter of law they cannot be changed without
shareholder approval. Some of the fundamental polices adopted by the Trusts
reflect certain regulatory business or industry conditions applicable at the
time of the policies' adoption.
Each Trust's Board of Trustees, together with the Trust's officers and MFS,
have reviewed the Trust's current fundamental policies, and have concluded that
certain policies should be revised or eliminated based on the development of
new practices and changes in applicable law and to facilitate administration of
the Trust. At the Meeting, shareholders will be asked to approve the revision
or elimination of these policies.
The revised policies maintain important investor protections while providing
flexibility to respond to changing markets, new investment opportunities and
changes in applicable law. In some cases, only technical changes are being
made. The Trustees believe that implementing the revised policies will
facilitate MFS's management of the Trusts' assets and simplify the process of
monitoring compliance with investment policies. The revised policies (with
variations required by the specific investment focus of a Trust) are the
standard form for other funds in the MFS fund complex.
The revised policies do not affect the investment objectives of the Trusts,
which remain unchanged. The Trusts will continue to be managed in accordance
with the investment polices described in their registration statements and
annual reports and in accordance with federal law. As described below, some of
the revised policies would give the Trusts increased ability to engage in
certain activities. The Trustees and MFS do not anticipate that the revised
policies, individually or in the aggregate, will change to a material degree
the level of investment risk associated with an investment in any Trust.
Each investment policy proposed to be revised or eliminated is discussed below.
The Trusts affected by the proposed changes are listed in italics at the
beginning of each section. In addition, Schedule C lists each Trust's current
fundamental investment policies and the proposed fundamental policies that will
apply to the Trust if shareholders of the Trust approve this proposal. Please
consult the proxy card included with this proxy statement to determine which
Trust you own.
A. BORROWING AND ISSUANCE OF SENIOR SECURITIES
Changes proposed for all Trusts
It is proposed that each Trust's policy concerning borrowing money and issuing
senior securities be changed so that the policy is consistent with that of
other funds within the MFS funds complex. MFS and the Trustees believe that the
technical changes being made to this policy will not result in any material
changes to the policy. The proposed policy reads as follows:
The Trust may not:
(a) borrow money except to the extent not prohibited by the 1940 Act and
exemptive orders granted under such Act.
(b) issue any senior securities except to the extent not prohibited by
the 1940 Act and exemptive orders granted under such Act; for purposes of
this restriction, collateral arrangements with respect to any type of
swap, option, Forward Contracts and Futures Contracts and collateral
arrangements with respect to initial and variation margin are not deemed
to be the issuance of a senior security;
Both the current and proposed policies allow the Trusts to borrow money and
issue senior securities in accordance with the Investment Company Act of 1940
(the "1940 Act"). In addition, the proposed policy would allow the Trusts to
borrow money and issue senior securities in accordance with any exemptive
orders granted to the Trusts by the Securities and Exchange Commission ("SEC").
Further, the revised policy would specifically state that collateral
arrangements with respect to swaps, options, futures, forwards, and variation
margin are not deemed to be the issuance of a senior security. This does not
represent a change in how MFS currently views these collateral arrangements,
but will ensure that the current practice is clearly described in a manner
consistent with that of the other MFS funds.
B. UNDERWRITING SECURITIES
Changes proposed for all Trusts
It is proposed that each Trust's policy concerning underwriting securities be
changed so that the policy is consistent with that of other funds within the
MFS funds complex. The proposed policy reads as follows:
The Trust may not:
underwrite securities issued by other persons, except that all or any
portion of the assets of the Trust may be invested in one or more
investment companies, to the extent not prohibited by the 1940 Act and
exemptive orders granted under such Act, and except insofar as the Trust
may technically be deemed an underwriter under the Securities Act of
1933, as amended, in selling a portfolio security.
Both the current and proposed policies allow the Trusts to underwrite
securities to the extent that the Trusts are deemed to be underwriters in
connection with the sales of portfolio securities held by the Trusts. In
addition, the proposed policy provides that all or any portion of the assets of
a Trust may be invested in one or more investment companies, to the extent not
prohibited by the 1940 Act and exemptive orders granted under such Act. Under
the Trusts' proposed Declarations of Trust (see proposal in Item 2), the
Trustees have the power to implement a master/feeder, fund of funds or other
similar structure without seeking shareholder approval. While the Trustees have
no current intention of implementing a master/feeder, fund of funds or other
similar structure at this time, the proposed policy would specifically permit
the use of these structures were the Trustees to determine that their
implementation would be in the best interest of a Trust at a future date.
C. LENDING OF MONEY OR SECURITIES
Changes proposed for all Trusts
It is proposed that each Trust's policy concerning lending money or securities
be changed so that the policy is consistent with that of other funds within the
MFS funds complex. The proposed policy reads as follows:
The Trust may not:
make loans except to the extent not prohibited by the 1940 Act and
exemptive orders granted under such Act.
Both the current and proposed policies allow the Trusts to lend securities and
to make loans through the purchase of debt instruments or similar evidences of
indebtedness typically sold to financial institutions (e.g., money market
instruments, loans, or other direct indebtedness) and through repurchase
agreements.
The proposed policy also would permit the Trusts to make any other types of
loans, whether of money or securities, so long as the transactions are
permitted by the 1940 Act or an exemptive order granted to the Trusts by the
SEC. MFS has no current intention to cause the Trust to make loans other than
as permitted under the Trust's current policy, as described above. Any changes
to a Trust's strategy that would result in it making loans in addition to those
currently permitted would be subject to approval by the Trustees and, in the
case of certain types of loans (e.g., loans to other funds advised by MFS),
receipt of an exemptive order from the SEC.
D. INDUSTRY CONCENTRATION
Changes proposed for all Trusts
It is proposed that each Trust's policy concerning industry concentration be
changed so that the policy is consistent with that of other funds within the
MFS funds complex. MFS and the Trustees believe that the technical changes
being made to this policy will not result in any material changes to the
policy. The proposed policy reads as follows:
The Trust may not:
purchase any securities of an issuer in a particular industry if as a
result 25% or more of its total assets (taken at market value at the time
of purchase) would be invested in securities of issuers whose principal
business activities are in the same industry.
The 1940 Act limits an investment company's ability to concentrate its
investments in securities of any particular industry. The staff of the SEC
takes the position that a mutual fund "concentrates" its investments in a
particular industry if, in general, more than 25% of the fund's assets are
invested in the securities of issuers in that industry.
Both the current and proposed policies do not allow the Trusts to concentrate
more than 25% of their total assets in investments in a single industry. For
MFS High Income Municipal Trust, MFS High Yield Municipal Trust, and MFS
Investment Grade Municipal Trust, the current policy specifically states that
certain related industries within the utilities category (e.g., gas, electric,
water and telephone) are treated as separate industries. The Trustees and MFS
do not believe that it is necessary to specifically state that these industries
should be treated as separate industries and have proposed that this provision
be removed. For MFS Intermarket Income Trust I, the current policy specifically
excludes U.S. Government obligations. Based on interpretations by the SEC, MFS
does not consider an investment in securities issued or guaranteed by the U.S.
Government to be an investment in any particular industry. As such, the
Trustees and MFS do not believe it is necessary to specifically exclude
investments in U.S. Government obligations from the Trusts' proposed policy and
have proposed that this provision be removed. The Trustees and MFS do not
believe that these changes represent material changes to the current policies
for these Trusts.
E. REAL ESTATE, COMMODITIES, FUTURES, OPTIONS, FORWARD CONTRACTS
Changes proposed for all Trusts
It is proposed that each Fund's policy concerning real estate and, in the case
of some of the Trusts, commodities and commodity contracts, futures, forwards,
and related options be changed so that the policy is substantially consistent
with that of other funds within the MFS funds complex. The proposed policy
reads as follows:
The Trust may not:
purchase or sell real estate (excluding securities secured by real estate
or interests therein and securities of companies, such as real estate
investments trusts, which deal in real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity
contracts (excluding currencies and any type of option, Futures Contracts
and Forward Contracts or other derivative instruments whose value is
related to commodities or other commodity contracts) in the ordinary
course of its business; the Trust reserves the freedom of action to hold
and to sell real estate, mineral leases, commodities or commodity
contracts (including currencies and any type of option, Futures Contracts
and Forward Contracts) acquired as a result of the ownership of
securities.
The proposed policy provides that each Trust may not purchase or sell real
estate, interests in oil, gas or mineral leases, or commodities or commodity
contracts in the ordinary course of its business. Under the proposed policy,
each Trust will be able to invest in securities secured by real estate and
securities of companies that deal in real estate and or interests therein
(e.g., real estate investment trusts), currencies, and any type of option,
futures contracts, forwards, and other derivative instruments whose value is
related to commodities or other commodity contracts. While some of these
clarifications are included in the current policies for some Trusts, the
revised policy will apply to each Trust on a consistent basis.
In addition, both the current policy and the proposed policy allow the Trusts
to hold and sell real estate acquired as a result of a Trust's ownership of
securities. The proposed policy has a similar provision with respect to
commodities and oil, gas and mineral leases, which allows the Trusts to hold
and sell commodities or commodity contracts and oil, gas and mineral leases
acquired as a result of a Trust's ownership of securities.
The Trustees and MFS believe that the revised policy will simplify the process
of monitoring compliance. While the revised policy does have material changes
from the current policy - both in terms of specifically precluding certain
types of investments and specifically providing flexibility to make other types
of investment - the changes do not affect the Funds' current investment
objectives or strategies. MFS has informed the Trustees that is does not intend
to change the way it manages the Trusts as a result of the changes to the
policy, and the Trustees and MFS do not anticipate that the revised policy will
materially change the level of investment risk associated with an investment in
any of the Funds.
F. INVESTMENTS IN A SINGLE ISSUER -- REMOVAL OF POLICY
Removal of policy proposed for all Trusts
It is proposed that each Trust's policy concerning investments in a single
issuer be removed. Currently, each Trust, with respect to 75% of its total
assets, is prohibited from purchasing securities of any issuer if, as a result,
more than 5% of its assets would be invested in the securities of that issuer.
Investments in U.S. Government obligations and cash items are not subject to
this limitation. Each Trust also is prohibited, with respect to 75% of its
total assets, from purchasing the securities of any issuer if, as a result, the
Fund would hold more than 10% of the voting securities of the issuer.
Each of the Trusts is classified as "diversified" under the 1940 Act, which
means that each such Trust is subject to statutory restrictions containing the
same limitations as the Trust's current fundamental policy. In addition, each
Trust is subject to diversification tests under the Internal Revenue Code of
1986, as amended (the "Code"). The investment restrictions contained in the
1940 Act and the Code need not be fundamental policies and, as such, the
Trustees believe it is appropriate to remove these policies.
Should a Trust desire to become non-diversified in the future, the Trust would
need to obtain a shareholder vote approving its reclassification from
diversified to non-diversified. Until a Fund receives such a shareholder vote,
the Trust must continue to comply with the diversification requirements of the
1940 Act. MFS has no current intention to propose that these Trusts be changed
from "diversified" funds to non-diversified funds.
To the extent that a Trust invests its assets in a small number of issuers, the
Trust is more susceptible to any single economic, political or regulatory event
affecting those issuers.
REQUIRED VOTE
Approval of this matter will require the vote of
MFS High Income Municipal Trust (i) 67% or more of the preferred
MFS High Yield Municipal Trust shares of the Trust present at the Meeting, if
MFS Investment Grade Municipal Trust the holders of more than 50% of such shares are
present or represented by proxy or (ii) more than
50% of the outstanding preferred shares, whichever
is less; AND
(a) 67% or more of the common and
preferred shares of the Trust, voting together as a
single class, present at the Meeting, if the holders
of more than 50% of the outstanding common and
preferred shares of the Trust are present or
represented by proxy or (b) more than 50% of the
outstanding common and preferred shares of the Trust,
voting together as a single class, whichever is less.
MFS Intermediate High income Fund (i) 67% or more of the common shares
MFS InterMarket Income Trust I of the Trust present at the Meeting, if the
holders of more than 50% of the outstanding
common shares of the Trust are present or
represented by proxy or (ii) more than 50% of the
outstanding common shares of the Trust, whichever
is less.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, HAS CONCLUDED THAT PROPOSAL 3
IS IN THE BEST INTEREST OF SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR PROPOSAL 3.
ITEM 4 -- PROPOSAL TO MAKE NON-FUNDAMENTAL AN INVESTMENT POLICY OF MFS
INTERMARKET INCOME TRUST I
MFS Intermarket Income Trust I ("CMK") currently has a fundamental investment
policy that requires CMK to invest at least 80% of its net assets in U.S. and
foreign government securities and high income debt instruments. Any change to
this policy requires shareholder approval. Your Trustees have approved, and are
recommending that shareholders approve, a proposal to make this a "non-
fundamental" investment policy that could be revised in the future by the
Trustees without the requirement of a shareholder vote. If the proposal is
approved by shareholders, the Trustees intend to revise the policy at MFS'
recommendation to permit CMK to invest more flexibly among its principal
investment types which MFS believes will offer better diversification of income
producing securities. CMK's investment objective and other investment policies
will not be affected.
The current investment policy is fundamental and is stated as follows:
MFS normally invests at least 80% of the Fund's net assets in U.S. and
foreign government securities, and high income debt instruments.
If this proposal is approved by shareholders (thereby making the policy non-
fundamental), the Trustees intend to revise the policy, at MFS' recommendation,
to be stated as follows:
MFS normally invests the fund's assets in U.S. Government securities,
foreign government securities, mortgage backed and other asset-backed
securities of U.S. and foreign issuers, corporate bonds of U.S. and
foreign issuers, and debt instruments of issuers located in emerging
market countries. MFS allocates the fund's assets across these categories
with a view toward broad diversification across and within these
categories.
MFS believes that the proposed revised investment policy would allow CMK's
portfolio managers greater flexibility in pursuing the Fund's investment
objective by making available a broader array of income producing securities.
MFS believes that, over time, this flexibility has the potential to better
serve shareholder interests. MFS does not anticipate that the proposed revised
investment policy would materially change the level of investment risk
associated with an investment in CMK. Making the policy non-fundamental would
also give the Trustees the flexibility to further revise the policy without the
time and expense associated with additional proxy solicitations, although the
Trustees have no current intention to do so.
REQUIRED VOTE
Approval of this matter will require the vote of (i) 67% or more of the common
shares of CMK present at CMK's Meeting, if the holders of more than 50% of the
outstanding common shares of CMK are present or represented by proxy or (ii)
more than 50% of the outstanding common shares of CMK, whichever is less.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, HAS CONCLUDED THAT PROPOSAL 4 IS
IN THE BEST INTEREST OF SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF CMK VOTE FOR PROPOSAL 4.
TRUST INFORMATION
This section provides certain information about each Trust, including
information about its investment adviser and administrator, independent
registered public accounting firm, executive officers and the identity of
persons holding more than 5% of the outstanding shares of any class of any
Trust.
INVESTMENT ADVISER AND ADMINISTRATOR
Each Trust engages as its investment adviser and administrator MFS, a Delaware
corporation with offices at 500 Boylston Street, Boston, Massachusetts 02116.
MFS is a majority owned subsidiary of Sun Life of Canada (U.S.) Financial
Services Holdings, Inc., which is a majority-owned subsidiary of Sun Life
Financial (U.S.) Holdings, Inc., 500 Boylston Street, Boston, Massachusetts
02116, which in turn is a wholly-owned subsidiary of Sun Life Assurance Company
of Canada--U.S. Operations Holdings, Inc., One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481 ("Sun Life U.S. Operations"). Sun Life
U.S. Operations is a wholly-owned subsidiary of Sun Life Financial Corp., 150
King Street West, Toronto, Canada MSH 1J9, which in turn is a wholly-owned
subsidiary of Sun Life Financial Inc.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Independent Registered Public Accounting Firm and fiscal year end for each
Trust are listed below:
INDEPENDENT
REGISTERED
PUBLIC FISCAL YEAR
TRUST ACCOUNTING FIRM END
----------------------------------------------------------------------------
MFS High Income Municipal Trust Ernst & Young LLP
("Ernst & Young") November 30
MFS High Yield Municipal Trust Ernst & Young November 30
MFS InterMarket Income Trust I Ernst & Young November 30
MFS Intermediate High Income Fund Ernst & Young November 30
MFS Investment Grade Municipal Trust Ernst & Young November 30
Prior to June 30, 2007, each Trust's Independent Registered Public Accounting
Firm was PricewaterhouseCoopers ("PWC").
No Independent Registered Public Accounting Firm has a direct or material
indirect interest in a Trust.
Representatives of Ernst & Young are expected to be present at the Meeting and
will have an opportunity to make a statement if they desire to do so. Such
representatives also are expected to be available to respond to appropriate
questions.
The Audit Committee of the Board of Trustees of each Trust issued the following
report concerning the financial statements for each Trust's most recent fiscal
year.
The Audit Committee reviewed and discussed the audited financial
statements with Trust management. The Audit Committee also discussed with
the Auditor the matters required to be discussed by SAS 61 (Codification
of Statements on Auditing Standards). The Audit Committee received the
written disclosures and the letter from the Auditor required by
Independence Standards Board Standard No. 1 (Independence Discussions
with Audit Committees), and discussed with the Auditor its independence.
Based on this review and the review of other information and these and
other discussions, the Audit Committee recommended to the Board of
Trustees that the audited financial statements be included in the Trust's
annual report to shareholders for the Trust's 2007 fiscal year for filing
with the Securities and Exchange Commission.
Respectfully submitted for MFS High Income Municipal Trust, MFS High
Yield Municipal Trust, MFS InterMarket Income Trust I, MFS Intermediate
High Income Fund, and MFS Investment Grade Municipal Trust, by the Audit
Committee as of January 22, 2008.
Robert E. Butler
William R. Gutow
J. Dale Sherratt
Laurie J. Thomsen
Robert W. Uek
To the extent required by applicable regulations, pre-approval by the Audit
Committee of the Board is needed for all audit and permissible non-audit
services rendered by the Independent Registered Public Accounting Firm to each
Trust and all permissible non-audit services rendered by the Independent
Registered Public Accounting Firm to MFS and any entity controlling, controlled
by or under common control with MFS that provides ongoing services to a Trust
(including MFS Service Center, Inc.) (each, a "MFS Service Affiliate") if the
services relate directly to the operations and financial reporting of such
Trust. Pre-approval is currently on an engagement-by- engagement basis. In the
event pre-approval of such services is necessary between regular meetings of
the Audit Committee and it is not practical to wait to seek pre-approval at the
next regular meeting of the Audit Committee, pre-approval of such services may
be referred to the Chair of the Audit Committee; provided that the Chair may
not pre-approve any individual engagement for such services exceeding $50,000
or multiple engagements for such services in the aggregate exceeding $100,000
between such regular meetings of the Audit Committee. Any engagement
pre-approved by the Chair between regular meetings of the Audit Committee shall
be presented for ratification by the entire Audit Committee at its next
regularly scheduled meeting.
Schedule A attached hereto includes tables that set forth for each Trust's two
most recent fiscal years, the fees billed by Ernst & Young and PWC, as
applicable, for (a) all audit and non-audit services provided directly to the
Trust and (b) those non-audit services provided to MFS Service Affiliates that
relate directly to the Trust's operations and financial reporting after June
30, 2007, as well as those non-audit services provided to Columbia Management
Advisors, LLC ("Columbia") and to any entity controlling, controlled by or
under common control with Columbia that provided services to each Trust
("Columbia Service Affiliates") prior to June 30, 2007, under the following
captions:
(i) Audit Fees - fees related to the audit and review of the financial
statements included in annual reports and registration statements,
and other services that are normally provided in connection with
statutory and regulatory filings or engagements.
(ii) Audit-Related Fees - fees related to assurance and related services
that are reasonably related to the performance of the audit or review
of financial statements, but not reported under "Audit Fees",
including accounting consultations, agreed-upon procedure reports
(inclusive of annual review of basic maintenance testing associated
with the Preferred Shares), attestation reports, comfort letters and
internal control reviews.
(iii) Tax Fees - fees associated with tax compliance, tax advice and tax
planning, including services relating to the filing or amendment of
federal, state or local income tax returns, regulated investment
company qualification reviews and tax distribution and analysis
reviews.
(iv) All Other Fees - fees for products and services provided to a Trust
by the Independent Registered Public Accounting Firm other than those
reported under "Audit Fees", "Audit- Related Fees" and "Tax Fees."
Schedule A attached hereto also sets forth the aggregate fees billed by Ernst &
Young and PWC, as applicable, for each Trust's two most recent fiscal years for
non-audit services rendered to each Trust, MFS Service Affiliates and Columbia
Service Affiliates.
The Audit Committee has considered whether the provision by Ernst & Young of
non-audit services to MFS Service Affiliates that were not pre-approved by the
Audit Committee because such services did not relate directly to the operations
and financial reporting of the Trust was compatible with maintaining the
independence of Ernst & Young as the Trust's principal auditor.
EXECUTIVE OFFICERS
The following table provides information about the current executive officers
of each Trust including their principal occupations, which, unless specific
dates are shown, are of more than five years duration, although the titles may
not have been the same throughout. Each officer will hold office until his or
her successor is chosen and qualified, or until he or she retires, resigns or
is removed from office.
PRINCIPAL OCCUPATIONS
POSITION(s) HELD OFFICER DURING THE PAST FIVE YEARS
NAME, DATE OF BIRTH WITH TRUST SINCE & DIRECTORSHIPS(1)
----------------------------------------------------------------------------------------------------------
OFFICERS
Robert J. Manning(2) President March 2008 Massachusetts Financial Services
(born 10/20/63) Company, Chief Executive Officer,
President
Maria F. Dwyer(2) Treasurer June 2007 Massachusetts Financial Services
(born 12/1/58) Company, Executive Vice President and
Chief Regulatory Officer (since March
2004), Chief Compliance Officer
(since November 2006); President of
the Trust (2005-2008); Fidelity
Management & Research Company, Vice
President (prior to March 2004);
Fidelity Group of Funds, President and
Treasurer (prior to March 2004)
Christopher R. Bohane(2) Assistant Secretary June 2007 Massachusetts Financial Services
(born 01/18/74) and Assistant Clerk Company, Vice President and Senior
Counsel (since April 2003);
Kirkpatrick & Lockhart LLP (law firm),
Associate (prior to April 2003);
Ethan D. Corey(2) Assistant Secretary June 2007 Massachusetts Financial Services
(born 11/21/63) and Assistant Clerk Company, Special Counsel (since
December 2004); Dechert LLP (law
firm), Counsel (prior to December
2004)
David L. DiLorenzo(2) Assistant Treasurer June 2007 Massachusetts Financial Services
(born 08/10/68) Company, Vice President (since June
2005); JP Morgan Investor Services,
Vice President (prior to June 2005)
Timothy M. Fagan(2) Assistant Secretary October 2007 Massachusetts Financial Services
(born 07/10/68) and Assistant Clerk Company, Vice President and Senior
Counsel (since September 2005);
John Hancock Advisers, LLC, Vice
President and Chief Compliance Officer
(September 2004 to August 2005),
Senior Attorney (prior to September
2004); John Hancock Group of Funds,
Vice President and Chief Compliance
Officer (September 2004 to December
2004)
Mark D. Fischer(2) Assistant Treasurer June 2007 Massachusetts Financial Services
(born 10/27/70) Company, Vice President (since
May 2005); JP Morgan Investment
Management Company, Vice President
(prior to May 2005)
Brian E. Langenfeld(2) Assistant Secretary June 2007 Massachusetts Financial Services
(born 03/7/73) and Assistant Clerk Company, Vice President (since
May 2006); John Hancock Advisers, LLC,
Assistant, Vice President and Counsel
(May 2005 to April 2006); John Hancock
Advisers, LLC, Attorney and Assistant
Secretary (prior to May 2005)
Ellen Moynihan(2) Assistant Treasurer June 2007 Massachusetts Financial Services
(born 11/13/57) Company, Senior Vice President
Susan S. Newton(2) Assistant Secretary June 2007 Massachusetts Financial Services
(born 03/7/50) and Assistant Clerk Company, Senior Vice President and
Associate General Counsel (since
April 2005); John Hancock Advisers,
LLC, Senior Vice President, Secretary
and Chief Legal Officer (prior to
April 2005); John Hancock Group of
Funds, Senior Vice President,
Secretary and Chief Legal Officer
(prior to April 2005)
Susan A. Pereira(2) Assistant Secretary June 2007 Massachusetts Financial Services
(born 11/5/70) and Assistant Clerk Company, Vice President and Senior
Counsel (since June 2004);
Bingham McCutchen LLP (law firm),
Associate (prior to June 2004)
Mark N. Polebaum(2) Secretary and Clerk June 2007 Massachusetts Financial Services
(born 05/01/52) Company, Executive Vice President,
General Counsel and Secretary (since
January 2006); Wilmer Cutler Pickering
Hale and Dorr LLP (law firm), Partner
(prior to January 2006)
Frank L. Tarantino Independent Chief June 2007 Tarantino LLC (provider of compliance
(born 03/07/44) Compliance Officer services), Principal (since June
2004); CRA Business Strategies Group
(consulting services), Executive Vice
President (April 2003 to June 2004);
David L. Babson & Co. (investment
adviser), Managing Director, Chief
Administrative Officer and Director
(prior to March 2003)
Richard S. Weitzel(2) Assistant Secretary October 2007 Massachusetts Financial Services
(born 07/16/70) and Assistant Clerk Company, Vice President and Assistant
General Counsel (since 2007); Vice
President and Senior Counsel (since
May 2004); Massachusetts Department of
Business and Technology, General
Counsel (February 2003 to April 2004);
Massachusetts Office of the Attorney
General, Assistant Attorney General
(April 2001 to February 2003)
James O. Yost(2) Assistant Treasurer June 2007 Massachusetts Financial Services
(born 06/12/60) Company, Senior Vice President
----------
(1) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission
(i.e., "public companies").
(2) "Interested person" of the Trust within the meaning of the 1940 Act, as a result of position with MFS. The
address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
Each Trust's officers hold comparable positions with the 98 funds in the MFS
Family of Funds as of December 31, 2007, and with certain affiliates of MFS.
The address of each officer is MFS, 500 Boylston Street, Boston, Massachusetts
02116.
INTERESTS OF CERTAIN PERSONS
Schedule B attached hereto sets forth, as of August 4, 2008, to the best
knowledge of each Trust, the shareholders who beneficially owned more than 5%
of the outstanding shares of any class of such Trust.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Trustees,
directors and certain officers of each Trust and MFS, and persons who own more
than ten percent of any class of a Trust's shares, to file reports of ownership
and changes in ownership with the SEC and the New York Stock Exchange. Such
persons are required by SEC regulation to furnish each Trust with copies of all
Section 16(a) forms they file in relation to that Trust.
Based solely on a review of the copies of Forms 3, 4 and 5 and amendments
thereto furnished to each Trust with respect to its most recent fiscal year for
Trustees, directors and certain officers of each Trust and MFS and greater than
ten percent beneficial owners, each Trust believes all Section 16(a)
transactions were reported on a timely basis. No individuals reported any
transactions.
LITIGATION
Since December 2003, MFS, MFS Fund Distributors, Inc., MFS Service Center,
Inc., Sun Life Financial Inc., various MFS funds, certain current and/or former
Trustees of these MFS funds, and certain officers of MFS have been named as
defendants in multiple lawsuits filed in federal and state courts. The various
lawsuits that are still pending generally allege that some or all of the
defendants permitted or acquiesced in market timing and/or late trading in some
of the MFS funds, and inadequately disclosed MFS' internal policies concerning
market timing and such matters. The pending lawsuits assert that some or all of
the defendants violated the federal securities laws, including the Securities
Act of 1933 and the Securities Exchange Act of 1934, the Investment Company Act
of 1940 and the Investment Advisers Act of 1940, as well as fiduciary duties
and other violations of common law. The pending lawsuits variously have been
commenced as class actions or individual actions on behalf of investors who
purchased, held or redeemed shares of the MFS funds during specified periods,
or as derivative actions on behalf of the MFS funds.
The lawsuits relating to market timing and related matters have been
transferred to, and consolidated before, the United States District Court for
the District of Maryland, as part of a multi-district litigation of market
timing and related claims involving several other fund complexes (In re Mutual
Funds Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam,
Allianz Dresdner), No. 1:04-md-15863 (transfer began March 19, 2004)). The
pending market timing cases related to the MFS funds include Riggs v. MFS et
al., Case No. 04-CV-01162-JFM (consolidated class action complaint filed
September 30, 2004), Hammerslough v. MFS et al., Case No. 04-MD-01620
(consolidated derivative complaint filed September 30, 2004), and Reaves v. MFS
Series Trust I, et al., Case No. 1:05-CV-02220-JFM (complaint related to Class
B shares filed March 21, 2005). The plaintiffs in these consolidated lawsuits
generally seek injunctive relief including removal of the named Trustees,
adviser and distributor, rescission of contracts and 12b-1 Plans, disgorgement
of fees and profits, monetary damages, punitive damages, attorney's fees and
costs and other equitable and declaratory relief. Insofar as any of the actions
is appropriately brought derivatively on behalf of any of the MFS funds, any
recovery will inure to the benefit of the MFS funds. Several claims of the
various lawsuits have been dismissed; MFS and other named defendants continue
to defend the various lawsuits.
FURTHER INFORMATION ABOUT VOTING AND THE MEETING
MANNER OF VOTING PROXIES
All proxies received by management will be voted on all matters presented at
the Meeting, and if not limited to the contrary, will be voted FOR the election
of J. Atwood Ives, William R. Gutow, Michael Hegarty, Robert W. Uek and Laurie
J. Thomsen, as Trustees of each Trust (if still available for election) and FOR
Proposals 2, 3, and 4.
All proxies received, including proxies that reflect (i) broker non-votes
(i.e., shares held by brokers or nominees as to which (a) instructions have not
been received from the beneficial owners or the persons entitled to vote, and
(b) the broker or nominee does not have discretionary voting power on a
particular matter), (ii) abstentions or (iii) in the case of Proposal 1, the
withholding of authority to vote for a nominee for election as Trustee, will be
counted as shares that are present on a particular matter for purposes of
determining the presence of a quorum for that matter. A majority of the
outstanding shares of MFS High Income Municipal Trust, MFS Intermarket Income
Trust I, MFS Intermediate High Income Trust and MFS Investment Grade Municipal
Trust entitled to vote at the Meeting that are present in person or represented
by proxy constitutes a quorum and thirty percent (30%) of the outstanding
shares of MFS High Yield Municipal Trust, entitled to vote at the Meeting that
are present in person or represented by proxy constitutes a quorum. With
respect to the election of Mr. Ives and Ms. Thomsen as Trustees of MFS High
Income Municipal Trust and MFS Investment Grade Municipal Trust, a quorum also
requires a majority of that Trust's outstanding preferred shares entitled to
vote at the Meeting present in person or represented by proxy, voting as a
separate class, and with respect to the election of Mr. Ives and Ms. Thomsen as
Trustees of MFS High Yield Municipal Trust, a quorum also requires thirty
percent 30% of that Trust's outstanding preferred shares entitled to vote at
the Meeting in person or be represented by proxy, voting as a separate class.
With respect to the election of Trustees, neither broker non-votes nor
abstentions nor withholding authority to vote have any effect on the outcome of
the voting. With respect to Proposals 2, 3 and 4, broker non- votes,
abstentions and withholding authority to vote will each have the effect of a
vote AGAINST each such proposal.
Each shareholder of a Trust is entitled to one vote for each share of the Trust
that such shareholder owns at the close of business on August 4, 2008, on each
matter on which the shareholder is entitled to vote. Each fractional share is
entitled to a proportionate fractional vote.
Each Trust will reimburse the record holders of its shares for their reasonable
expenses incurred in sending proxy material to and obtaining voting
instructions from beneficial owners.
Each Trust knows of no other matters to be brought before the Meeting. If,
however, because of any unexpected occurrence, any nominee is not available for
election or if any other matters properly come before the Meeting, it is each
Trust's intention that proxies not limited to the contrary will be voted in
accordance with the judgment of the persons named in the enclosed form of
proxy.
INSTRUCTIONS FOR VOTING PROXIES
The giving of a proxy will not affect a shareholder's right to vote in person
should the shareholder decide to attend the Meeting. To vote by mail, please
mark, sign, date and return the enclosed proxy card following the instructions
printed on the card. Please refer to your proxy card for instructions for
voting by telephone or internet.
SUBMISSION OF PROPOSALS
Proposals of shareholders which are intended to be presented at the 2009 Annual
Meeting of Shareholders must be received by the Trust on or prior to April 23,
2009. The submission by a shareholder of a proposal for inclusion in the proxy
materials does not guarantee that it will be included. Shareholder proposals
are subject to certain requirements under the federal securities laws.
A shareholder who wishes to make a proposal at the 2009 Annual Meeting of
Shareholders without including the proposal in the Trust's proxy statement must
ensure that the proposal is received by the Trust in good order and in
compliance with all applicable legal requirements and requirements set forth in
the Trust's By-Laws and Declaration of Trust by May 1, 2009 at the Trust's
principal office at 500 Boylston Street, Boston, Massachusetts 02116. The
persons named as proxies for the 2008 Annual Meeting of Shareholders will have
discretionary authority to vote on all matters presented at the meeting
consistent with the SEC's proxy rules.
ADJOURNMENT
In the absence of a quorum at the Meeting, or (even if a quorum is so present)
if sufficient votes in favor of a proposal set forth in the Notice of Annual
Meeting are not received by the time scheduled for the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting after the
date set forth for the original Meeting, with no other notice than announcement
at the Meeting, to permit further solicitation of proxies with respect to such
proposal. In addition, if, in the judgment of the persons named as proxies, it
is advisable to defer action on a proposal, the persons named as proxies may
propose one or more adjournments of the Meeting with respect to such proposal.
Any adjournment(s) with respect to a proposal will require the affirmative vote
of a majority of the Shares of the Fund entitled to vote thereon present in
person or represented by proxy at the session of the Meeting to be adjourned.
The persons named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of the proposal in question.
They will vote against any such adjournment those proxies required to be voted
against such proposal. The costs of any additional solicitation and of any
adjourned session will be borne by the Fund. Any proposals for which sufficient
favorable votes have been received by the time of the Meeting may be acted upon
and, if so, such action will be final regardless of whether the Meeting is
adjourned to permit additional solicitation with respect to any other proposal.
At any such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally
called.
ADDITIONAL INFORMATION
The Meeting of shareholders of each Trust is called to be held at the same time
as the Meetings of shareholders of each of the other Trusts. It is anticipated
that all Meetings will be held simultaneously.
If any shareholder at the Meeting objects to the holding of a simultaneous
Meeting and moves for an adjournment of the Meeting to a time promptly after
the simultaneous Meetings, the persons named as proxies will vote in favor of
such adjournment.
The expense of the preparation, printing and mailing of the enclosed form of
proxy, the Notice and this Proxy Statement, and any tabulation costs, will be
borne on a proportional basis by the Trusts.
Only one copy of this Proxy Statement may be mailed to a household, even if
more than one person in a household is a Trust shareholder of record, unless
the Trust has received contrary instructions from one or more of the
shareholders in such household. If you need additional copies of this Proxy
Statement and you are the holder of record of your shares, please contact
Computershare at 1-800-637-2304. If your shares are held in broker street name
please contact your financial intermediary to obtain additional copies of this
Proxy Statement. If in the future you do not want the mailing of proxy
statements to be combined with those for other members of your household or if
you are receiving multiple copies of this Proxy Statement and do want the
mailings to be combined with those for other members of your household, contact
Computershare, in writing, at 250 Royall Street, Canton, Massachusetts, 02021,
or by telephone at 1-800-637-2304, or contact your financial intermediary.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
August 21, 2008 MFS HIGH INCOME MUNICIPAL TRUST
MFS HIGH YIELD MUNICIPAL TRUST
MFS INTERMARKET INCOME TRUST I
MFS INTERMEDIATE HIGH INCOME FUND
MFS INVESTMENT GRADE MUNICIPAL TRUST
SCHEDULE A
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
Prior to June 30, 2007, the previous board of trustees had appointed
Pricewaterhouse-Coopers ("PWC") to serve as independent accountants to the
Trusts. The tables below set forth the audit fees billed to the Trusts as well
as fees for non-audit services provided to the Trusts and/or to the Trusts'
former investment adviser, Columbia Management Advisors, LLC ("Columbia"), and
to any entity controlling, controlled by, or under common control with Columbia
that provided ongoing services to the Trusts ("Columbia Service Affiliates").
On June 30, 2007, the current Board of Trustees appointed Ernst & Young LLP
("Ernst & Young") to serve as independent accountants to the Trusts. The tables
below set forth the audit fees billed to the Trusts as well as fees for
non-audit services provided to the Trusts and/or to MFS from June 30, 2007, and
to any entity controlling, controlled by, or under common control with MFS that
provides ongoing services to the Funds ("MFS Service Affliates").
For each Fund's last two fiscal years, fees billed by each Trust's Independent
Registered Public Accounting Firm for services provided directly to each Trust:
INDEPENDENT
REGISTERED AUDIT RELATED
PUBLIC AUDIT FEES FEES
ACCOUNTING ------------------ -----------------
TRUST FIRM 2007 2006 2007 2006
-----------------------------------------------------------------------------------------------
MFS High Income Municipal Trust Ernst & Young $45,200 N/A $0 N/A
PWC N/A $32,000 $5,600 $13,730
MFS High Yield Municipal Trust Ernst & Young $45,200 N/A $0 N/A
PWC N/A $32,000 $5,600 $13,730
MFS InterMarket Income Trust I Ernst & Young $40,300 N/A $0 N/A
PWC N/A $33,900 $5,600 $4,100
MFS Intermediate High Income Fund Ernst & Young $45,200 N/A $0 N/A
PWC N/A $39,000 $5,600 $4,100
MFS Investment Grade Municipal Trust Ernst & Young $45,200 N/A $0 N/A
PWC N/A $27,800 $5,600 $13,730
INDEPENDENT
REGISTERED
PUBLIC TAX FEES OTHER FEES
ACCOUNTING ------------------ -----------------
TRUST FIRM 2007 2006 2007 2006
-----------------------------------------------------------------------------------------------
MFS High Income Municipal Trust Ernst & Young $8,550 N/A $0 $0
PWC $3,500 $3,800 $0 $0
MFS High Yield Municipal Trust Ernst & Young $8,550 N/A $0 N/A
PWC $3,500 $3,904 $0 $0
MFS InterMarket Income Trust I Ernst & Young $7,450 N/A $0 N/A
PWC $3,050 $2,805 $0 $0
MFS Intermediate High Income Fund Ernst & Young $8,550 N/A $0 N/A
PWC $3,250 $2,805 $0 $0
MFS Investment Grade Municipal Trust Ernst & Young $8,550 N/A $0 N/A
PWC $3,500 $3,800 $0 $0
For each Trust's last two fiscal years, no fees were billed by any
Independent Registered Public Accounting Firm that would be disclosed under the
captain "All Other Fees" to any Trust.
For each Trust's last two fiscal years, fees billed by each Trust's
Independent Registered Public Accounting Firm for services provided to Columbia
Service Affiliates or MFS Service Affiliates (together, the "Service
Affiliates") that relate directly to such Trust's operations and financial
reporting:
INDEPENDENT
REGISTERED AUDIT RELATED
PUBLIC FEES(1) TAX FEES(1) ALL OTHER FEES(1)
ACCOUNTING ------------- ------------ --------------------
TRUST FIRM 2007 2006 2007 2006 2007 2006
-----------------------------------------------------------------------------------------------
Service Affiliates Ernst & Young $0 N/A $0 N/A $0 N/A
of MFS High Income
Municipal Trust
PWC $0 $0 $0 $0 $357,970 $505,490
Service Affiliates Ernst & Young $0 N/A $0 N/A $0 N/A
of MFS High Yield
Municipal Trust
PWC $0 $0 $0 $0 $357,970 $505,490
Service Affiliates Ernst & Young $0 N/A $0 N/A $0 N/A
of MFS InterMarket
Income Trust I
PWC $0 $0 $0 $0 $357,970 $505,490
Service Affiliates Ernst & Young $0 N/A $0 N/A $0 N/A
of MFS Intermediate
High Income Fund
PWC $0 $0 $0 $0 $357,970 $505,490
Service Affiliates Ernst & Young $0 N/A $0 N/A $0 N/A
of MFS Investment
Grade Municipal
Trust
PWC $0 $0 $0 $0 $357,970 $505,490
----------
(1) This amount reflects the fees billed to Columbia Service Affiliates or MFS Service
Affiliates for non-audit services relating directly to the operations and financial
reporting of the Fund (portions of which services also related to the operations and
financial reporting of all funds within the applicable fund complex).
During the periods indicated in the tables above, no services described
under "Audit-Related Fees," "Tax Fees" or "All Other Fees" were approved
pursuant to the de minimis exception set forth in paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.
Aggregate fees billed by each Independent Registered Public Accounting
Firm, for each Trust's two most recent fiscal years, for non-audit services
rendered to each Trust and Columbia Service Affiliates or MFS Service
Affiliates (together, the "Service Affiliates"):
INDEPENDENT REGISTERED
TRUST PUBLIC ACCOUNTING FIRM 2007 2006
----------------------------------------------------------------------------------------------------
MFS High Income Municipal Trust and its Service Ernst & Young $123,959 N/A
Affiliates
PWC $367,070 $523,020
MFS High Yield Municipal Trust and its Service Ernst & Young $123,959 N/A
Affiliates
PWC $367,070 $523,124
MFS InterMarket Income Trust I and its Service Ernst & Young $122,859 N/A
Affiliates
PWC $366,620 $512,395
MFS Intermediate High Income Fund and its Service Ernst & Young $123,959 N/A
Affiliates
PWC $366,820 $512,395
MFS Investment Grade Municipal Trust and its Service Ernst & Young $123,959 N/A
Affiliates
PWC $367,070 $523,020
SCHEDULE B
INTERESTS OF CERTAIN PERSONS
As of August 4, 2008, to the best knowledge of each Trust, the shareholders
who beneficially owned more than 5% of the outstanding shares of any class of
such Trust are as follows:
NUMBER OF PERCENT OF
OUTSTANDING OUTSTANDING
NAME AND ADDRESS SHARES SHARES OF
OF BENEFICIAL TITLE OF BENEFICIALLY NOTED CLASS
TRUST OWNER CLASS OWNED OWNED
---------------------------------------------------------------------------------------------------------------
MFS High Income Municipal Trust Cede & Co. Common 29,113,248 93.11%
PO Box 20
Bowling Green Station
New York, NY
Citigroup Global Markets Inc. Preferred, 1,132 47.17%
390 Greenwhich St, 5th Floor Series W
New York, NY 10013
Oppenheimer & Co. Preferred, 980 40.83%
125 Broad Street, 15th Floor Series W
New York, NY 10013
Morgan Stanley GWM Preferred, 271 11.29%
1221 Avenue of the Americas Series W
27th Floor
New York, NY 10020
Citigroup Global Markets Inc. Preferred, 1,021 42.54%
390 Greenwhich St, 5th Floor Series T
New York, NY 10013
Oppenheimer & Co. Preferred, 815 33.96%
125 Broad Street, 15th Floor Series T
New York, NY 10013
Morgan Stanley GWM Preferred, 547 22.79%
1221 Avenue of the Americas Series T
27th Floor
New York, NY 10020
MFS High Yield Municipal Trust Cede & Co. Common 24,881,472 89.31%
PO Box 20
Bowling Green Station
New York, NY
Citigroup Global Markets Inc. Preferred 1,816 50.44%
390 Greenwich St, 5th Floor
New York, NY 10013
Oppenheimer & Co. Preferred 1,385 38.47%
125 Broad Street, 15th Floor
New York, NY 10013
Morgan Stanley GWM Preferred 312 8.67%
1221 Avenue of the Americas
27th Floor
New York, NY 10020
MFS Intermarket Income Cede & Co. Common 10,328,293 93.82%
Trust I PO Box 20
Bowling Green Station
New York, NY
MFS Intermediate High Income Fund Cede & Co. Common 19,865,246 94.58%
PO Box 20
Bowling Green Station
New York, NY
MFS Investment Grade Municipal Cede & Co. Common 10,682,118 92.82%
Trust PO Box 20
Bowling Green Station
New York, NY
Citigroup Global Markets Inc. Preferred 1,107 46.13%
390 Greenwhich St, 5th Floor
New York, NY 10013
Oppenheimer & Co. Preferred 850 35.42%
125 Broad Street, 15th Floor
New York, NY 10013
Morgan Stanley GWM Preferred 416 17.33%
1221 Avenue of the Americas
27th Floor
New York, NY 10020
SCHEDULE C
CURRENT FUNDAMENTAL INVESTMENT POLICIES AND
PROPOSED ACTION TO BE TAKEN
MFS HIGH INCOME MUNICIPAL TRUST
CURRENT FUNDAMENTAL POLICY PROPOSED FUNDAMENTAL POLICY
-------------------------- ---------------------------
The Fund may: The Fund may not:
---------------------------------------------------------------------------------------------------------
(1) issue senior securities or borrow money to (1) (a) borrow money except to the extent not
the extent permitted by the Investment Company prohibited by the 1940 Act and exemptive orders granted
Act of 1940, as amended; under such Act.
(1) (b) issue any senior securities except to the
extent not prohibited by the 1940 Act and exemptive
orders granted under such Act; for purposes of this
restriction, collateral arrangements with respect to
any type of swap, option, Forward Contracts and Futures
Contracts and collateral arrangements with respect to
initial and variation margin are not deemed to be the
issuance of a senior security;
---------------------------------------------------------------------------------------------------------
(2) underwrite securities issued by others (2) underwrite securities issued by other persons,
only when disposing of portfolio securities; except that all or any portion of the assets of the
Fund may be invested in one or more investment
companies, to the extent not prohibited by the 1940 Act
and exemptive orders granted under such Act, and except
insofar as the Fund may technically be deemed an
underwriter under the Securities Act of 1933, as
amended, in selling a portfolio security;
---------------------------------------------------------------------------------------------------------
(3) make loans through the lending of (3) make loans except to the extent not prohibited by
securities, through the purchase of debt the 1940 Act and exemptive orders granted under such
instruments or similar evidences of Act;
indebtedness typically sold to financial
institutions and through repurchase
agreements;
---------------------------------------------------------------------------------------------------------
(4) (a) not concentrate more than 25% of its (4) (a) purchase any securities of an issuer in a
total assets in any one industry. In the particular industry if as a result 25% or more of its
utilities category, gas, electric, water, and total assets (taken at market value at the time of
telephone companies will be treated as purchase) would be invested in securities of issuers
separate industries; whose principal business activities are in the same
industry.
(b) not, with respect to 75% of total assets
purchase any security (other than obligations (b) It is proposed that this fundamental policy be
of the U.S. Government and cash items removed.
including receivables) if as a result more
than 5% of its total assets would then be
invested in securities of a single issuer or
purchase the voting securities of an issuer
if, as a result of such purchase, the fund
would own more than 10% of the outstanding
voting securities of such issuer.
The Trust will treat each state and each
separate political subdivision, agency,
authority or instrumentality of such state,
each multistate agency or authority, and each
guarantor, if any, as separate issuers.
---------------------------------------------------------------------------------------------------------
(5) (a) only own real estate acquired as a (5) purchase or sell real estate (excluding securities
result of owning securities; secured by real estate or interests therein and
securities of companies, such as real estate
(b) purchase and sell futures contracts and investments trusts, which deal in real estate or
related options. interests therein), interests in oil, gas or mineral
leases, commodities or commodity contracts (excluding
currencies and any type of option, Futures Contracts
and Forward Contracts or other derivative instruments
whose value is related to commodities or other
commodity contracts) in the ordinary course of its
business; the Fund reserves the freedom of action to
hold and to sell real estate, mineral leases,
commodities or commodity contracts (including
currencies and any type of option, Futures Contracts
and Forward Contracts) acquired as a result of the
ownership of securities.
---------------------------------------------------------------------------------------------------------
MFS HIGH YIELD MUNICIPAL TRUST
CURRENT FUNDAMENTAL POLICY PROPOSED FUNDAMENTAL POLICY
-------------------------- ---------------------------
The Fund may: The Fund may not:
---------------------------------------------------------------------------------------------------------
(1) issue senior securities or borrow money to (1) (a) borrow money except to the extent not
the extent permitted by the Investment Company prohibited by the 1940 Act and exemptive orders granted
Act of 1940, as amended; under such Act.
(1) (b) issue any senior securities except to the
extent not prohibited by the 1940 Act and exemptive
orders granted under such Act; for purposes of this
restriction, collateral arrangements with respect to
any type of swap, option, Forward Contracts and Futures
Contracts and collateral arrangements with respect to
initial and variation margin are not deemed to be the
issuance of a senior security;
---------------------------------------------------------------------------------------------------------
(2) underwrite securities issued by others (2) underwrite securities issued by other persons,
only when disposing of portfolio securities; except that all or any portion of the assets of the
Fund may be invested in one or more investment
companies, to the extent not prohibited by the 1940 Act
and exemptive orders granted under such Act, and except
insofar as the Fund may technically be deemed an
underwriter under the Securities Act of 1933, as
amended, in selling a portfolio security;
---------------------------------------------------------------------------------------------------------
(3) make loans through the lending of (3) make loans except to the extent not prohibited by
securities, through the purchase of debt the 1940 Act and exemptive orders granted under such
instruments or similar evidences of Act;
indebtedness typically sold to financial
institutions and through repurchase
agreements;
---------------------------------------------------------------------------------------------------------
(4) (a) not concentrate more than 25% of its (4) (a) purchase any securities of an issuer in a
total assets in any one industry. In the particular industry if as a result 25% or more of its
utilities category, gas, electric, water, and total assets (taken at market value at the time of
telephone companies will be treated as purchase) would be invested in securities of issuers
separate industries; whose principal business activities are in the same
industry.
(b) not, with respect to 75% of total assets
purchase any security (other than obligations (b) It is proposed that this fundamental policy be
of the U.S. Government and cash items removed.
including receivables) if as a result more
than 5% of its total assets would then be
invested in securities of a single issuer or
purchase the voting securities of an issuer
if, as a result of such purchase, the fund
would own more than 10% of the outstanding
voting securities of such issuer.
The Trust will treat each state and each
separate political subdivision, agency,
authority or instrumentality of such state,
each multistate agency or authority, and each
guarantor, if any, as separate issuers.
---------------------------------------------------------------------------------------------------------
(5) (a) only own real estate acquired as a (5) purchase or sell real estate (excluding securities
result of owning securities; secured by real estate or interests therein and
securities of companies, such as real estate
(b) purchase and sell futures contracts and investments trusts, which deal in real estate or
related options; interests therein), interests in oil, gas or mineral
leases, commodities or commodity contracts (excluding
currencies and any type of option, Futures Contracts
and Forward Contracts or other derivative instruments
whose value is related to commodities or other
commodity contracts) in the ordinary course of its
business; the Fund reserves the freedom of action to
hold and to sell real estate, mineral leases,
commodities or commodity contracts (including
currencies and any type of option, futures Contracts
and Forward Contracts) acquired as a result of the
ownership of securities.
---------------------------------------------------------------------------------------------------------
MFS INTERMARKET INCOME TRUST I
CURRENT FUNDAMENTAL POLICY PROPOSED FUNDAMENTAL POLICY
-------------------------- ---------------------------
The Fund may: The Fund may not:
---------------------------------------------------------------------------------------------------------
(1) issue senior securities or borrow money to (1) (a) borrow money except to the extent not
the extent permitted by the Investment Company prohibited by the 1940 Act and exemptive orders granted
Act of 1940, as amended; under such Act.
(1) (b) issue any senior securities except to the
extent not prohibited by the 1940 Act and exemptive
orders granted under such Act; for purposes of this
restriction, collateral arrangements with respect to
any type of swap, option, Forward Contracts and Futures
Contracts and collateral arrangements with respect to
initial and variation margin are not deemed to be the
issuance of a senior security;
---------------------------------------------------------------------------------------------------------
(2) not act as underwriter except to the (2) underwrite securities issued by other persons,
extent that, in connection with the except that all or any portion of the assets of the
disposition of portfolio securities, it may be Fund may be invested in one or more investment
deemed to be an underwriter under the Federal companies, to the extent not prohibited by the 1940 Act
securities laws; and exemptive orders granted under such Act, and except
insofar as the Fund may technically be deemed an
underwriter under the Securities Act of 1933, as
amended, in selling a portfolio security;
---------------------------------------------------------------------------------------------------------
(3) not make loans, except through (i) the (3) make loans except to the extent not prohibited by
purchase of bonds, debentures, commercial the 1940 Act and exemptive orders granted under such
paper, notes and similar evidences of Act;
indebtedness of a type commonly sold privately
to financial institutions, (ii) repurchase
agreements and (iii) securities loans. (The
purchase of a portion of an issue of
securities described under clause (i) above
that is distributed publicly, whether or not
the purchase is made on the original issuance,
is not considered the make of a loan.)
---------------------------------------------------------------------------------------------------------
(4) not purchase any security (other than (4) purchase any securities of an issuer in a
obligations of the U.S. Government) if as a particular industry if as a result 25% or more of its
result more than 25% of its total assets total assets (taken at market value at the time of
(taken at current value) would be invested in purchase) would be invested in securities of issuers
securities of issuers in any one industry whose principal business activities are in the same
(except U.S. Government securities); industry.
---------------------------------------------------------------------------------------------------------
(5) not buy or sell commodities or commodity (5) purchase or sell real estate (excluding securities
contracts, or real estate or interests in real secured by real estate or interests therein and
estate, although it may purchase and sell (a) securities of companies, such as real estate
securities which are secured by real estate, investments trusts, which deal in real estate or
(b) securities of companies which invest or interests therein), interests in oil, gas or mineral
deal in real estate and (c) futures contracts leases, commodities or commodity contracts (excluding
based on debt securities or indices of debt currencies and any type of option, Futures Contracts
securities, foreign currency forward or and Forward Contracts or other derivative instruments
futures contracts and options relating to any whose value is related to commodities or other
of the foregoing, and it may acquire real commodity contracts) in the ordinary course of its
estate or interests through the exercise of business; the Fund reserves the freedom of action to
its rights as a holder of debt obligations hold and to sell real estate, mineral leases,
secured by real estate or interests therein. commodities or commodity contracts (including
currencies and any type of option, Futures Contracts
and Forward Contracts) acquired as a result of the
ownership of securities.
---------------------------------------------------------------------------------------------------------
MFS INTERMEDIATE HIGH INCOME FUND
CURRENT FUNDAMENTAL POLICY PROPOSED FUNDAMENTAL POLICY
-------------------------- ---------------------------
The Fund may: The Fund may not:
---------------------------------------------------------------------------------------------------------
(1) issue senior securities or borrow money to (1) (a) borrow money except to the extent not
the extent permitted by the Investment Company prohibited by the 1940 Act and exemptive orders granted
Act of 1940, as amended; under such Act.
(1) (b) issue any senior securities except to the
extent not prohibited by the 1940 Act and exemptive
orders granted under such Act; for purposes of this
restriction, collateral arrangements with respect to
any type of swap, option, Forward Contracts and Futures
Contracts and collateral arrangements with respect to
initial and variation margin are not deemed to be the
issuance of a senior security;
---------------------------------------------------------------------------------------------------------
(2) underwrite securities issued by others (2) underwrite securities issued by other persons,
only when disposing of portfolio securities; except that all or any portion of the assets of the
Fund may be invested in one or more investment
companies, to the extent not prohibited by the 1940 Act
and exemptive orders granted under such Act, and except
insofar as the Fund may technically be deemed an
underwriter under the Securities Act of 1933, as
amended, in selling a portfolio security;
---------------------------------------------------------------------------------------------------------
(3) make loans through the lending of (3) make loans except to the extent not prohibited by
securities, through the purchase of debt the 1940 Act and exemptive orders granted under such
instruments or similar evidences of Act;
indebtedness typically sold to financial
institutions and through repurchase
agreements;
---------------------------------------------------------------------------------------------------------
(4) (a) not concentrate more than 25% of its (4) (a) purchase any securities of an issuer in a
total assets in any one industry; particular industry if as a result 25% or more of its
total assets (taken at market value at the time of
(4) (b) not, with respect to 75% of total purchase) would be invested in securities of issuers
assets purchase any security (other than whose principal business activities are in the same
obligations of the U.S. Government and cash industry.
items including receivables) if as a result
more than 5% of its total assets would then be (4) (b) It is proposed that this fundamental policy be
invested in securities of a single issuer or removed.
purchase the voting securities of an issuer
if, as a result of such purchase, the fund
would own more than 10% of the outstanding
voting securities of such issuer.
---------------------------------------------------------------------------------------------------------
(5) (a) only own real estate acquired as a (5) purchase or sell real estate (excluding securities
result of owning securities; secured by real estate or interests therein and
securities of companies, such as real estate
(b) purchase and sell interest rate futures investments trusts, which deal in real estate or
contracts; foreign currency forward or futures interests therein), interests in oil, gas or mineral
contracts, futures contracts or indexes of leases, commodities or commodity contracts (excluding
securities, and options relating to the currencies and any type of option, Futures Contracts
foregoing; and Forward Contracts or other derivative instruments
whose value is related to commodities or other
commodity contracts) in the ordinary course of its
business; the Fund reserves the freedom of action to
hold and to sell real estate, mineral leases,
commodities or commodity contracts (including
currencies and any type of option, Futures Contracts
and Forward Contracts) acquired as a result of the
ownership of securities.
---------------------------------------------------------------------------------------------------------
MFS INVESTMENT GRADE MUNICIPAL FUND
CURRENT FUNDAMENTAL POLICY PROPOSED FUNDAMENTAL POLICY
-------------------------- ---------------------------
The Fund may: The Fund may not:
---------------------------------------------------------------------------------------------------------
(1) issue senior securities or borrow money to (1) (a) borrow money except to the extent not
the extent permitted by the Investment Company prohibited by the 1940 Act and exemptive orders granted
Act of 1940, as amended; under such Act.
(1) (b) issue any senior securities except to the
extent not prohibited by the 1940 Act and exemptive
orders granted under such Act; for purposes of this
restriction, collateral arrangements with respect to
any type of swap, option, Forward Contracts and Futures
Contracts and collateral arrangements with respect to
initial and variation margin are not deemed to be the
issuance of a senior security;
---------------------------------------------------------------------------------------------------------
(2) underwrite securities issued by others (2) underwrite securities issued by other persons,
only when disposing of portfolio securities; except that all or any portion of the assets of the
Fund may be invested in one or more investment
companies, to the extent not prohibited by the 1940 Act
and exemptive orders granted under such Act, and except
insofar as the Fund may technically be deemed an
underwriter under the Securities Act of 1933, as
amended, in selling a portfolio security;
---------------------------------------------------------------------------------------------------------
(3) make loans through the lending of (3) make loans except to the extent not prohibited by
securities, through the purchase of debt the 1940 Act and exemptive orders granted under such
instruments or similar evidences of Act;
indebtedness typically sold to financial
institutions and through repurchase
agreements;
---------------------------------------------------------------------------------------------------------
(4) (a) not concentrate more than 25% of its (4) (a) purchase any securities of an issuer in a
total assets in any one industry. In the particular industry if as a result 25% or more of its
utilities category, gas, electric, water, and total assets (taken at market value at the time of
telephone companies will be treated as purchase) would be invested in securities of issuers
separate industries; whose principal business activities are in the same
industry.
(b) not, with respect to 75% of total assets
purchase any security (other than obligations (b) It is proposed that this fundamental policy be
of the U.S. Government and cash items removed.
including receivables) if as a result more
than 5% of its total assets would then be
invested in securities of a single issuer or
purchase the voting securities of an issuer
if, as a result of such purchase, the fund
would own more than 10% of the outstanding
voting securities of such issuer.
The Trust will treat each state and each
separate political subdivision, agency,
authority or instrumentality of such state,
each multistate agency or authority, and each
guarantor, if any, as separate issuers.
---------------------------------------------------------------------------------------------------------
(5) (a) only own real estate acquired as a (5) purchase or sell real estate (excluding securities
result of owning securities; secured by real estate or interests therein and
securities of companies, such as real estate
(b) purchase and sell futures contracts and investments trusts, which deal in real estate or
related options. interests therein), interests in oil, gas or mineral
leases, commodities or commodity contracts (excluding
currencies and any type of option, Futures Contracts
and Forward Contracts or other derivative instruments
whose value is related to commodities or other
commodity contracts) in the ordinary course of its
business; the Fund reserves the freedom of action to
hold and to sell real estate, mineral leases,
commodities or commodity contracts (including
currencies and any type of option, Futures Contracts
and Forward Contracts) acquired as a result of the
ownership of securities.
---------------------------------------------------------------------------------------------------------
MFS CALIFORNIA INSURED MUNICIPAL FUND
CURRENT FUNDAMENTAL POLICY PROPOSED FUNDAMENTAL POLICY
-------------------------- ---------------------------
The Fund may: The Fund may not:
---------------------------------------------------------------------------------------------------------
(1) issue senior securities or borrow money to (1) (a) borrow money except to the extent not
the extent permitted by the Investment Company prohibited by the 1940 Act and exemptive orders granted
Act of 1940, as amended; under such Act.
(1) (b) issue any senior securities except to the
extent not prohibited by the 1940 Act and exemptive
orders granted under such Act; for purposes of this
restriction, collateral arrangements with respect to
any type of swap, option, Forward Contracts and Futures
Contracts and collateral arrangements with respect to
initial and variation margin are not deemed to be the
issuance of a senior security;
---------------------------------------------------------------------------------------------------------
(2) underwrite securities issued by others (2) underwrite securities issued by other persons,
only when disposing of portfolio securities; except that all or any portion of the assets of the
Fund may be invested in one or more investment
companies, to the extent not prohibited by the 1940 Act
and exemptive orders granted under such Act, and except
insofar as the Fund may technically be deemed an
underwriter under the Securities Act of 1933, as
amended, in selling a portfolio security;
---------------------------------------------------------------------------------------------------------
(3) make loans through the lending of (3) make loans except to the extent not prohibited by
securities, through the purchase of debt the 1940 Act and exemptive orders granted under such
instruments or similar evidences of Act;
indebtedness typically sold to financial
institutions and through repurchase
agreements;
---------------------------------------------------------------------------------------------------------
(4) not concentrate more than 25% of its total (4) purchase any securities of an issuer in a
assets in any one industry. (In the utilities particular industry if as a result 25% or more of its
category, gas, electric, water, and telephone total assets (taken at market value at the time of
companies will be treated as separate purchase) would be invested in securities of issuers
industries.) whose principal business activities are in the same
industry.
---------------------------------------------------------------------------------------------------------
(5) (a) only own real estate acquired as a (5) purchase or sell real estate (excluding securities
result of owning securities; secured by real estate or interests therein and
securities of companies, such as real estate
(b) purchase and sell futures contracts and investments trusts, which deal in real estate or
related options; interests therein), interests in oil, gas or mineral
leases, commodities or commodity contracts (excluding
(c) not purchase or sell commodities or currencies and any type of option, Futures Contracts
commodity contracts, except that, consistent and Forward Contracts or other derivative instruments
with its investment policies, the Trust may whose value is related to commodities or other
purchase and sell financial futures contracts commodity contracts) in the ordinary course of its
and options and may enter into swap business; the Fund reserves the freedom of action to
agreements, foreign exchange contracts and hold and to sell real estate, mineral leases,
other financial transactions not requiring the commodities or commodity contracts (including
delivery of physical commodities currencies and any type of option, Futures Contracts
and Forward Contracts) acquired as a result of the
ownership of securities.
SCHEDULE D
COMPARISON OF MATERIAL TERMS OF CURRENT
DECLARATION AND FORM OF REVISED DECLARATION
CURRENT DECLARATIONS
-----------------------------
MFS HIGH INCOME
MUNICIPAL TRUST,
MFS HIGH YIELD MFS INTERMEDIATE HIGH
MUNICIPAL TRUST AND INCOME FUND AND
MFS INVESTMENT GRADE MFS INTERMARKET
REVISED DECLARATION MUNICIPAL TRUST INCOME TRUST I
-------------------------------------------------------------------------------------------
Shareholder The Trust shall indemnify and A shareholder or former A shareholder or former
Liability: hold each shareholder or shareholder held to be shareholder held to be
former shareholder harmless personally liable solely by personally liable solely by
against all claims in reason of his or her being or reason of his or her being or
connection with Trust having been a shareholder is having been a shareholder is
property or the acts, entitled to be held harmless entitled to be held harmless
obligations or affairs of the from and indemnified against from and indemnified against
Trust to which such all loss and expense arising all loss and expense arising
shareholder may become from such liability. from such liability.
subject solely by reason of
his or her being or having Every note, bond, contract, Every note, bond, contract,
been a shareholder. instrument, certificate or instrument, certificate or
undertaking made or issued by undertaking made or issued by
Every written obligation, the Trustees or by any the Trustees or by any
contract, instrument, officers or officer must officers or officer must
certificate, share, other recite that the same was recite that the same was
security of the Trust or executed or made by or on executed or made by or on
undertaking made or issued by behalf of the Trust or by behalf of the Trust or by
the Trustees or officers them as Trustees or as them as Trustees or as
shall recite that the same is officers and that obligations officers and that obligations
executed or made by or on of such instrument are not of such instrument are not
behalf of Trustees and that binding upon any of them or binding upon any of them or
the obligations of such shareholders individually. shareholders individually.
instrument are not binding on
any of the Trustees, officers
or shareholders individually.
Shareholder Subject to the voting power Subject to the voting powers Shareholders have the power
Voting of one or more Classes of of one or more classes or to vote only (i) for the
Rights: Shares as set forth in the series of shares as set forth election or removal of
Declaration, and in the By- in the bylaws, shareholders Trustees; (ii) with respect
Laws or in any Statement, have the power to vote only to any investment advisory or
Shareholders have the power (i) for the election or management contract; (iii)
to vote only (i) for the removal of Trustees; (ii) with respect to any
election, when submitted to with respect to any termination, by the
shareholders, or removal of investment advisory or shareholders, of the Trust;
Trustees; (ii) with respect management contract; (iii) (iv) with respect to any
to any investment advisory or with respect to any amendment of the Declaration
management contract for which termination, by the of Trust that requires
a shareholder vote is shareholders, of the Trust; shareholder authorization;
required by the 1940 Act; (iv) with respect to any (v) with respect to
(iii) with respect to amendment of the Declaration derivative actions similar to
termination, by the of Trust that requires a Massachusetts corporation;
shareholders, of the Trust or shareholder authorization; and (vi) with respect to any
any Class; (iv) with respect (v) with respect to other matters required by
to any amendment of the derivative actions similar to law, the organizational
Declaration of Trust that a Massachusetts corporation; documents, registration with
requires shareholder and (vi) with respect to any the Commission or other
approval; (v) with respect to other matters required by regulators or deemed
any merger, consolidation or law, the organizational desirable by the Board.
sale of assets where documents, registration with
shareholder authorization is the Commission or other Each whole share or
required; (vi) with respect regulators or deemed fractional share is entitled
to any conversion of the desirable by the Board. to one vote or a
Trust to an "open-end proportionate fractional
company"; (vii) with respect Except as provided in the by- vote, respectively.
to derivative actions similar laws, each whole share or
to a Massachusetts fractional share is entitled Except when a larger vote is
corporation; and (viii) with to one vote or a required by the provisions of
respect to certain proportionate fractional the Declaration of Trust or
transactions with principal vote, respectively. the bylaws, a majority of the
shareholders; and (ix) with shares voted shall decide any
respect to any other matters On any matter submitted to a questions and a plurality
required by the vote of shareholders, all shall elect a Trustee.
organizational documents, shares of the Trust then
registration with the entitled to vote shall,
Commission or other except as otherwise provided
regulators or deemed in the by-laws or required by
desirable by the Board. law, be voted in the
aggregate as a single class
without regard to classes or
series of shares.
Shareholder A shareholder is entitled to Except when a larger vote is
Voting one vote for each share owned required by the provisions of
Rights by such shareholder on each the Declaration of Trust or
(continued) matter on which such the bylaws, a majority of the
shareholder is entitled to shares voted shall decide any
vote, and each fractional questions and a plurality
share is entitled to a shall elect a Trustee,
proportionate fractional provided that where the
vote, except as otherwise bylaws require that the
provided in the By-Laws or holders of any class or
any Statement. series shall vote as an
individual class or series, a
Except as otherwise required majority of the shares of
by law or the organizational that class or series voted on
documents, shares the matter (or a plurality
representing a majority of with respect to the election
the shares voted in person or of a Trustee) shall decide
by proxy shall decide any that matter insofar as that
questions and a plurality class or series is concerned.
shall elect a Trustee,
provided that where any
provision of law, the
Declaration, the By-Laws, or
a Statement requires that
holders of any Class or
Series shall vote as a class,
then Shares representing a
majority of that Class or
Series vote on the matter (or
a plurality with respect to
the election of a Trustee)
shall decide that matter
insofar as that Class or
Series is concerned.
Shareholders Issue not addressed in the If the Trustees shall fail to If the Trustees shall fail to
Meetings: Declaration of Trust. call or give notice of any call or give notice of any
meeting of shareholders for meeting of shareholders for
30 days after written 30 days after written
application requesting a application requesting a
meeting by shareholders meeting by shareholders
holding at least 10% of the holding at least 10% of the
shares then outstanding of shares then outstanding, then
all classes and series shareholders holding at least
entitled to vote at such 10% of the shares then
meeting, then shareholders outstanding may call and give
holding at least 10% of the notice of such meeting.
shares then outstanding may
call and give notice of such
meeting.
Shareholder Issue not addressed in the A majority* of the shares A majority of the shares
Quorum: Declaration of Trust, but entitled to vote on a entitled to vote shall be a
intended to be addressed in particular matter shall be a quorum.
the Bylaws as described in quorum, except where the
Proposal 2. bylaws require that holders
of any class or series shall
vote as an individual class
or series, in which case a
majority* of the aggregate
number of shares of that
class or series is necessary
to constitute a quorum.
* MFS High Yield Municipal
Trust provides that 30% of
the shares entitled to vote
shall be a quorum.
Shareholder Consent of two-thirds of the Majority consent (or such Majority consent (or such
Consent: shares outstanding and larger proportion as required larger proportion as required
entitled to vote required for by any express provision of by any express provision of
shareholder action taken the Declaration of Trust or the Declaration of Trust or
without a meeting, as relates bylaws) required for bylaws) required for
to approval of merger/ shareholder action taken shareholder action taken
consolidation, unless such without a meeting. without a meeting.
merger/consolidation is
recommended by the Trustees,
in which case consent of a
majority of the shares
outstanding and entitled to
vote is sufficient.
Majority consent required for
shareholder action taken
without a meeting, as relates
to amendments to the
Declaration of Trust.
Notice to Any notices to which a Notice of shareholder Notice of shareholder
Shareholders: shareholder may be entitled meetings is to be mailed, meetings is to be mailed,
and any and all postage prepaid, not less postage prepaid, not less
communications shall be than seven days in advance. than seven days in advance.
deemed duly served (i) if
mailed, postage prepaid, (ii) Notice must state the time, Notice must state the time,
if sent by electronic place and purpose of the place and purpose of the
transmission to shareholder, meeting. meeting.
(iii) if mailed or sent by
electronic delivery to one or
more members of shareholder's
household, or (iv) if
otherwise sent in accordance
with applicable law or
regulation.
Power to Except where shareholder Except to the extent the The Declaration of Trust may
Amend Declaration authorization is required, bylaws or applicable law be amended at any time by an
of Trust: the Declaration of Trust may require a higher vote or a instrument in writing signed
be amended by the Trustees, separate vote of one or more by a majority of the then
to change the name or classes or series of shares, Trustees when authorized so
principal office of the the Declaration of Trust may to do by vote of a majority
Trust, to supply any be amended at any time by an of the shares entitled to
omission, to cure, correct or instrument in writing signed vote with respect to such
supplement any ambiguous, by a majority of the then amendment, except that
defective or inconsistent Trustees when authorized so shareholder authorization is
provision or if the Trustees to do by vote of a majority not required for amendments
deem it necessary or of the shares entitled to to change the name of the
advisable, to conform the vote with respect to such Trust, supply any omission,
Declaration of Trust to the amendment, except that cure any ambiguity or cure,
requirements of applicable shareholder authorization is correct or supplement any
law. not required for amendments defective or inconsistent
to authorize one or more provision.
Shareholders have the right classes or series of shares,
to vote on any amendment that to change the name of the No amendment may be made
would affect their right to Trust, supply any omission, which repeals certain
vote, any amendment that cure any ambiguity or cure, provisions relating to the
requires a shareholder correct or supplement any number and term of Trustees,
approval under law or the defective or inconsistent the conversion to an open-end
trust's registration provision. Except to the fund or this provision*,
statement, any amendment to extent the bylaws or unless such amendment shall
the declaration of trust applicable law require a receive the affirmative vote
provision regarding amendment higher vote or a separate of 66 2/3% of the shares
and any other amendment vote, no amendment may be entitled to vote.
submitted to them by the made which repeals certain
trustees. Except to the provisions relating to the * Colonial Intermarket Income
extent a higher vote is number and term of Trustees, Trust I also requires a
required by the By-Laws or the conversion to an open-end 66 2/3% vote to
any Statement, or as fund or this provision, amend the provision
otherwise provided below, unless such amendment shall relating to the duration
any amendment on which the receive the affirmative vote and termination of Trust.
shareholders have the right of 66 2/3% of the
to vote shall require a shares entitled to vote.
majority shareholder vote.
Power to No amendment may be made
Amend Declaration which shall impair the
of Trust exemption from personal
(continued) liability of the
Shareholders, former
Shareholders, Trustees,
Advisory Trustees, officers,
employees and agents of the
Trust, permit assessments
upon Shareholders or former
Shareholders, or limit the
rights to indemnification or
insurance with respect to
actions or omissions of
persons entitled to
indemnification under the
provisions of the Declaration
prior to such amendment. No
amendment may be made which
shall amend, alter, change or
repeal any of the provisions
relating to term of trustees,
termination of the Trust or
any Class, amendments to the
declaration of trust, merger,
consolidation or sale of
assets; conversion and
certain transactions unless
the amendment effecting such
amendment, alteration, change
or repeal shall receive the
affirmative vote or consent
of sixty-six and two-thirds
percent (66 2/3%) of
the shares outstanding and
entitled to vote.
Termination of Trust: Subject to the voting powers Subject to the voting powers The Trust may be terminated
of one or more Classes of of one or more classes or at any time by vote of
Shares, Shareholders have the series of shares as set forth shareholders holding at least
right to terminate the Trust in the bylaws, the Trust may 66 2/3% of the shares
or any Class upon a vote of be terminated at any time by entitled to vote.
not less than two-thirds of vote of shareholders holding
the outstanding shares of at least 66 2/3% of the Trustees may terminate the
the Trust or such Class. shares entitled to vote. Trust by written notice to
the shareholders.
Trustees may terminate the Trustees may terminate the
Trust or any Class by written Trust by written notice to
notice to shareholders. the shareholders.
Merger or The Declaration of Trust Issue not addressed in the Issue not addressed in the
Consolidation provides that a Declaration of Trust. Declaration of Trust.
of Trust: consolidation, merger or sale
of assets may be authorized
by a two-thirds shareholder
vote at a meeting called for
such purpose, or by written
consent, without a meeting,
of the holders of not less
than two-thirds of such
shares, provided, however,
that if such merger,
consolidation, sale, lease or
exchange is recommended by
the Trustees, the vote or
written consent of the
holders of a majority of
shares outstanding and
entitled to vote, shall be
sufficient authorization.
Conversion: Notwithstanding any other The conversion of the Trust At the first annual meeting
provision of this from a "closed-end company" or special meeting held after
Declaration, the conversion to an "open-end company", November 1, 1993*, the
of the Trust from a "closed- together with any necessary Trustees shall submit to
end company" to an "open-end amendments to the Declaration shareholders a proposal for
company," as those terms are of Trust to permit such a conversion from a "closed-end
defined in the 1940 Act, conversion, require the company" to an "open-end
shall require the affirmative affirmative vote of company," if: (i) shares have
vote or consent of the 66 2/3% of shares of traded on the principal
holders of sixty-six and two- each class entitled to vote. security exchange where
thirds percent (66 2/3%) listed at an average discount
of the shares of each from net asset value of more
Class outstanding and than 10%, determined on the
entitled to vote. basis of the discount as of
the end of the last trading
day in each week during the
period of 12 calendar weeks
preceding November 1, 1993*,
and (ii) during such year the
Trust receives at its
principal executive office
written requests from the
holders of 10% or more of the
outstanding shares that such
proposal be submitted to
shareholders.
The conversion of the Trust
from a "closed-end company"
to an "open-end company"
require the affirmative vote
of 66 2/3% of shares entitled
to vote.
* December 1, 1994 for
Colonial Investment Income
Trust I.
Removal of Subject to the voting powers At any meeting called for At any meeting called for
Trustees: of one or more Classes of such purpose and subject to such purpose, a Trustee may
Shares, a Trustee may be the voting powers of one or be removed, with or without
removed at any meeting of more classes or series of cause, by vote of a majority
shareholders by a vote of shares as set forth in the of the outstanding shares.
shares representing a bylaws, a Trustee may be
majority of the outstanding removed, with or without The Trustees may remove a
shares of the Trust entitled cause, by vote of a majority Trustee, with or without
to vote for the election of of the outstanding shares of cause, by vote of a majority
such trustee. the classes or series of the Trustees then in
entitled to vote for the office.
A Trustee may be removed at election of such Trustee.
any time, with or without
cause, by written instrument The Trustees may remove a
signed by at least three- Trustee, with or without
quarters of the Trustees, cause, by vote of a majority
specifying the date when such of the Trustees then in
removal shall become office.
effective.
Trustee Liability: No Trustee, advisory Trustee, Trustees are not responsible Trustees are not responsible
officer or employee or agent or liable for any neglect or or liable for any neglect or
will be liable whatsoever to wrongdoing of any officer, wrongdoing of any officer,
any person in connection with agent, employee, adviser, or agent, employee, adviser, or
Trust property or the affairs principal underwriter of the principal underwriter of the
of the Trust, and no Trustee Trust. No Trustee is Trust. No Trustee is
or advisory Trustee will be responsible for the act or responsible for the act or
liable or responsible in any omission of any other omission of any other
event for any neglect or Trustee. Trustee is not Trustee. Trustee is not
wrongdoing of any officer, protected against any protected against any
employee or agent of the liability to which he or she liability to which he or she
Trust or for the act or would otherwise be subject by would otherwise be subject by
omission of any other reason of willful reason of willful
Trustee. Trustees, advisory misfeasance, bad faith, gross misfeasance, bad faith, gross
Trustees, officers, employees negligence or reckless negligence or reckless
and agents are not protected disregard of the duties disregard of the duties
against any liability to the involved in the conduct of involved in the conduct of
Trust or its shareholders to his or her office. his or her office.
which he or she would
otherwise be subject by
reason of willful
misfeasance, bad faith, gross
negligence or reckless
disregard of the duties
involved in the conduct of
his or her office or position
with or on behalf of the
Trust.
Trustee The Trust will indemnify each The Trust will indemnify each The Trust will indemnify each
Indemnification: of its Trustees, advisory of its Trustees and officers of its Trustees and officers
Trustees and officers against (including persons who serve (including persons who serve
all liability and all at the Trust's request as at the Trust's request as
expenses reasonably incurred trustees or officers of trustees or officers of
by him or her in connection another organization in which another organization in which
with any proceeding in which the Trust has any interest as the Trust has any interest as
that individual becomes a shareholder, creditor or a shareholder, creditor or
involved as a party or otherwise) against all otherwise) against all
otherwise by virtue of being liabilities and expenses, liabilities and expenses,
or having been a Trustee, including amounts paid in including amounts paid in
advisory Trustee or officer satisfaction of judgments, in satisfaction of judgments, in
and against amount paid or compromise, as fines and compromise, as fines and
incurred by that individual penalties, and as counsel penalties, and as counsel
in settlement thereof. No fees, reasonably incurred by fees, reasonably incurred by
indemnification will be such person while in office such person while in office
provided to a Trustee, or thereafter, by reason of or thereafter, by reason of
advisory Trustee or officer the indemnified person's the indemnified person's
of the Trust: (i) against any service as a Trustee or service as a Trustee or
liability to the Trust or the officer. The Trust will not officer. [The Trust will not
shareholders by reason of a indemnify its Trustees and indemnify its Trustees and
final adjudication by the officers with respect to any officers with respect to any
court that such person matter in which such person matter in which such person
engaged in willful has been finally adjudicated has been finally adjudicated
misfeasance, bad faith, gross in a decision on the merits in a decision on the merits
negligence or reckless not to have acted in good not to have acted in good
disregard of the duties faith in the reasonable faith in the reasonable
involved in the conduct of belief that such person's belief that such person's
that individual's office; or action was in the best action was in the best
(ii) with respect to any interests of the Trust. The interests of the Trust.]* The
matter as to which such Trust will not indemnify its Trust will not indemnify its
person has been finally Trustees and officers against Trustees and officers against
adjudicated not to have acted any liability to the Trust or any liability to the Trust or
in good faith in the to its shareholders to which to its shareholders to which
reasonable belief that the he or she would otherwise be he or she would otherwise be
individual's action was in subject by reason of willful subject by reason of willful
the best interest of the misfeasance, bad faith, gross misfeasance, bad faith, gross
Trust. negligence or reckless negligence or reckless
disregard of the duties disregard of the duties
involved in the conduct of involved in the conduct of
such person's office. such person's office.
In the absence of a final In the absence of a final
adjudication on the merits adjudication on the merits
that such person is liable by that such person is liable by
reason of willful reason of willful
misfeasance, bad faith, gross misfeasance, bad faith, gross
negligence or reckless negligence or reckless
disregard of the duties disregard of the duties
involved in the conduct of
their office [or did not act
Trustee No indemnification will be involved in the conduct of in good faith in the
Indemnification provided in the event of a their office or did not act reasonable belief that his or
(continued) settlement or other in good faith in the her actions were in the best
disposition not involving a reasonable belief that his or interests of the Trust]*,
final adjudication resulting her actions were in the best indemnification will be
in a payment by a Trustee, interests of the Trust, provided if (a) approved as
advisory Trustee or officer, indemnification will be in the best interests of the
unless there has been a provided if (a) approved as Trust, after notice that it
determination that such in the best interests of the involves such
person did not engage in Trust, after notice that it indemnification, by at least
willful misfeasance, bad involves such a majority of the
faith, gross negligence or indemnification, by at least disinterested, non-party
reckless disregard of duties a majority of the Trustees acting on the matter
involved in the conduct of disinterested, non-party (provided that a majority of
that individual's office by Trustees acting on the matter the disinterested Trustees
the court or other body (provided that a majority of then in office act on the
approving the settlement or the disinterested Trustees matter) upon a determination
other disposition or by a then in office act on the that such person [acted in
reasonable determination that matter) upon a determination good faith in the reasonable
the individual did not engage that such person acted in belief that his or her
in such conduct: (i) by vote good faith in the reasonable actions were in the best
of a majority of the belief that his or her interest of the Trust and]*
disinterested, non-party actions were in the best is not liable to the Trust or
Trustees; or (ii) by written interest of the Trust and is its shareholders by reason of
opinion of the then-current not liable to the Trust or willful misfeasance, bad
legal counsel to the its shareholders by reason of faith, gross negligence or
disinterested Trustees or willful misfeasance, bad reckless disregard of the
other legal counsel chosen by faith, gross negligence or duties involved in the
the majority of the reckless disregard of the conduct of his or her office
disinterested, non-party duties involved in the or (b) there has been
Trustees. conduct of his or her office obtained an opinion in
or (b) there has been writing of independent legal
obtained an opinion in counsel to the effect that
writing of independent legal such person [acted in good
counsel to the effect that faith]* and such
such person acted in good indemnification would not
faith and such protect such person against
indemnification would not any liability to the Trust to
protect such person against which such person would
any liability to the Trust to otherwise be subject by
which such person would reason of willful
otherwise be subject by misfeasance, bad faith, gross
reason of willful negligence or reckless
misfeasance, bad faith, gross disregard of the duties
negligence or reckless involved in the conduct of
disregard of the duties his or her office.
involved in the conduct of
his or her office. * Bracketed language does not
apply to Colonial
Intermediate High Income
Fund.
Legal Expenses: Legal expenses associated Legal expenses may be paid Legal expenses may be paid
with authorized from time to time by the from time to time by the
indemnification shall be Trust in advance of the final Trust in advance of the final
advanced by the Trust prior disposition of any such disposition of any such
to final disposition thereof proceeding if the Trust proceeding if the Trust
upon receipt of an receives a written receives an undertaking by
undertaking by or on behalf undertaking by the the indemnified person to
of the indemnified person to indemnified person to reimburse the Trust in the
repay such amount if it is reimburse the Trust in the event it is ultimately
ultimately determined that event it is ultimately determined that the
such person is not entitled determined that the indemnified person is not
to indemnification, provided indemnified person is not entitled to such
that (a) the indemnified entitled to such indemnification and (a) the
person provides security for indemnification and (a) the indemnified person provides
his undertaking or the Trust indemnified person provides security for his undertaking,
is insured against such security for his undertaking, or (b) the Trust is insured
losses, or (b) a majority of or (b) the Trust is insured against losses arising by
the disinterested, non-party against losses arising by reason of such indemnified
Trustees or independent legal reason of such indemnified person's failure to fulfill
counsel, through a written person's failure to fulfill his or her undertaking, or
opinion, determine that there his or her undertaking, or (c) a majority of the
is reason to believe that the (c) a majority of the disinterested, non-party
indemnified person ultimately disinterested, non-party Trustees (provided that a
will be found entitled to Trustees (provided that a majority of such Trustees
indemnification. majority of such Trustees then in office act on the
then in office act on the matter) or independent legal
matter) or independent legal counsel, as expressed in a
counsel, as expressed in a written opinion, determines
written opinion, determines that there is reason to
that there is reason to believe that the indemnified
believe that the indemnified person ultimately will be
person ultimately will be found entitled to
found entitled to indemnification.
indemnification.
Derivative Actions: No shareholder shall have the Issue not addressed. Issue not addressed.
right to bring or maintain
any court action, proceeding
or claim on behalf of the
Trust or any Class without
first making demand on the
Trustees requesting the
Trustees to bring or maintain
such action, proceeding or
claim. Such demand shall be
excused only when the
plaintiff makes a specific
showing that irreparable
injury to the Trust or any
Class would otherwise result,
or if a majority of the
Trustees or a majority of any
committee established to
consider the merits of such
action, has a material
personal financial interest
in the action at issue.
SCHEDULE E
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
--------------------
DATED AS OF , 2008
TABLE OF CONTENTS
PAGE
ARTICLE I -- Name and Definitions 1
Section 1.1 Name 1
Section 1.2 Definitions 1
ARTICLE II -- Trustees 3
Section 2.1 Number of Trustees 3
Section 2.2 Term of Office of Trustees 3
Section 2.3 Resignation and Appointment of Trustees 4
Section 2.4 Vacancies 4
Section 2.5 Delegation of Power to Other Trustees 5
ARTICLE III -- Powers of Trustees 5
Section 3.1 General 5
Section 3.2 Investments 6
Section 3.3 Legal Title 6
Section 3.4 Issuance and Repurchase of Securities 7
Section 3.5 Borrowing Money; Lending Trust Property 7
Section 3.6 Delegation 7
Section 3.7 Collection and Payment 7
Section 3.8 Expenses 7
Section 3.9 Manner of Acting; By-Laws 7
Section 3.10 Miscellaneous Powers 7
ARTICLE IV -- Investment Adviser, Distributor, Custodian and Transfer Agent 8
Section 4.1 Investment Adviser 8
Section 4.2 Distributor 8
Section 4.3 Custodian 9
Section 4.4 Transfer Agent 9
Section 4.5 Parties to Contract 9
ARTICLE V -- Limitations of Liability of Shareholders, Trustees and Others 9
Section 5.1 No Personal Liability of Shareholders 9
Section 5.2 Limitation of Liability of Trustees and Others 10
Section 5.3 Mandatory Indemnification 10
Section 5.4 No Bond Required 12
Section 5.5 No Duty of Investigation; Notice in Trust
Instruments 12
Section 5.6 Good Faith Action; Reliance on Experts 12
Section 5.7 Derivative Actions 13
ARTICLE VI -- Shares of Beneficial Interest 13
Section 6.1 Beneficial Interest 13
Section 6.2 Rights of Shareholders 14
Section 6.3 Trust Only 14
Section 6.4 Issuance of Shares 14
Section 6.5 Register of Shares 15
Section 6.6 Transfer of Shares 15
Section 6.7 Notices 15
Section 6.8 Voting Powers 15
ARTICLE VII -- Determination of Net Asset Value, Net Income and Distributions 17
ARTICLE VIII -- Duration; Termination of Trust; Amendment; Mergers, etc. 17
Section 8.1 Duration 17
Section 8.2 Termination of Trust 17
Section 8.3 Amendment Procedure 18
Section 8.4 Merger, Consolidation and Sale of Assets 19
Section 8.5 Incorporation, Reorganization 19
Section 8.6 Conversion 19
Section 8.7 Certain Transactions 20
ARTICLE IX -- Miscellaneous 21
Section 9.1 Filing 21
Section 9.2 Governing Law 21
Section 9.3 Principal Office 22
Section 9.4 Counterparts 22
Section 9.5 Reliance by Third Parties 22
Section 9.6 Provisions in Conflict with Law or Regulations 22
Signature Page 23
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
--------------------
DATED AS OF , 2008
WHEREAS, was established pursuant to a Declaration of Trust dated ,
as amended (the "Original Declaration"), for the investment and reinvestment of
funds contributed thereto;
WHEREAS, the Trustees desire that the beneficial interest in the Trust
assets continue to be divided into transferable Shares of Beneficial Interest
(without par value) issued in one or more series or classes, as hereinafter
provided;
WHEREAS, the Trustees wish to amend and restate the Original Declaration in
its entirety, and hereby certify that this Amended and Restated Declaration of
Trust has been amended and restated in accordance with the provisions of the
Original Declaration;
NOW THEREFORE, the Trustees hereby confirm that all money and property
contributed to the Trust hereunder shall be held and managed in trust for the
benefit of holders, from time to time, of the Shares of Beneficial Interest
(without par value) issued hereunder and subject to the provisions hereof, and
that the Original Declaration, including all appendices, is amended and
restated in its entirety as follows.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the Trust is .
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Advisory Trustee" means any person, which may include a former
Trustee, appointed by resolution of the Trustees to serve the Board in an
advisory capacity, for such period and in accordance with such terms and
conditions as are determined by the Trustees. An Advisory Trustee shall
serve at the pleasure of the Trustees and may be removed by the Trustees at
any time and for any reason, with or without cause, and may resign at any
time by an instrument in writing signed by that Advisory Trustee and
delivered to the Trust. Advisory Trustees, in their capacity as such, are
not Trustees or officers of the Trust for any purpose and shall have no
legal, voting or other powers or obligations of Trustees or officers
hereunder, and shall not perform the functions of the Trustees or officers
in any manner.
1
(b) "By-Laws" means the By-laws referred to in Section 3.9 hereof, as
from time to time amended.
(c) "Class" and "Class of Shares" refer to the division of Shares into
two or more classes as provided in Section 6.1 hereof.
(d) "Commission" has the meaning given that term in the 1940 Act.
(e) "Declaration" means this Amended and Restated Declaration of Trust,
as amended from time to time. Reference in this Declaration of Trust to
"Declaration," "hereof," "herein" and "hereunder" shall be deemed to refer
to this Declaration rather than the article or section in which such words
appear.
(f) "Distributor" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.2 hereof.
(g) "Interested Person" has the meaning given that term in the 1940
Act.
(h) "Investment Adviser" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.1 hereof.
(i) "Majority Shareholder Vote" has the same meaning as the phrase
"vote of a majority of the outstanding voting securities" as defined in the
1940 Act, except that such term may be used herein with respect to the
Shares of the Trust as a whole or the Shares of any particular Class or
Series thereof, as the context may require.
(j) "1940 Act" means the Investment Company Act of 1940 and the Rules
and Regulations thereunder, as amended from time to time, and as such Act
or the Rules and Regulations thereunder may apply to the Trust or any Class
pursuant to any exemptive order or similar relief or interpretation issued
by the Commission under such Act.
(k) "Person" means and includes individuals, corporations, limited
liability companies, partnerships, trusts, associations, joint ventures and
other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof, whether domestic or foreign.
(l) "Series" and "Series of Shares" refer to the division of Shares
representing any Class into two or more Series as provided in Section 6.1
hereof.
(m) "Shareholder" means a record owner of outstanding Shares.
(n) "Shares" means the Shares of Beneficial Interest into which the
beneficial interest in the Trust shall be divided from time to time or,
when used in relation to any particular Class or Series of Shares
established by the Trustees pursuant to Section 6.1 hereof, transferable
units into which such Class or Series of Shares shall be divided from time
to time in accordance with the terms hereof. The term "Shares" includes
fractions of Shares as well as whole Shares.
(o) "Statement" means a certificate signed by any officer of the Trust
setting forth the resolution or resolutions providing for the issuance of a
Class or Classes of Shares and any Series thereof, as described in Section
6.1 hereof.
(p) "Transfer Agent" means a party furnishing services to the Trust
pursuant to any transfer agency contract described in Section 4.4 hereof.
2
(q) "Trust" means the trust hereunder.
(r) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(s) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in their capacity as trustees hereunder.
For the avoidance of any doubt, an "Advisory Trustee" as defined in Section
1.2(a) is not a Trustee for any purpose hereunder.
ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. Subject to the voting powers of one or
more Classes or Series of Shares as set forth in the Declaration, and in the
By-Laws or in any Statement, the number of Trustees shall be such number as
shall be fixed from time to time by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be less than three (3)
nor more than fifteen (15). No reduction in the number of Trustees shall have
the effect of removing any Trustee from office prior to the expiration of his
or her term unless the Trustee is specifically removed pursuant to Section 2.2
hereof at the time of the decrease.
Section 2.2. Term of Office of Trustees. The Board of Trustees shall be
divided into three classes. Within the limits above specified, the number of
Trustees in each class shall be determined by resolution of the Board of
Trustees. The term of office of the first class shall expire on the date of the
first annual meeting of Shareholders or special meeting in lieu thereof
following January 1, 2008. The term of office of the second class shall expire
on the date of the second annual meeting of Shareholders or special meeting in
lieu thereof. The term of office of the third class shall expire on the date of
the third annual meeting of Shareholders or special meeting in lieu thereof.
Upon expiration of the term of office of each class as set forth above, the
number of Trustees in such class, as determined by the Board of Trustees, shall
be elected for a term expiring on the date of the third annual meeting of
Shareholders or special meeting in lieu thereof following such expiration to
succeed the Trustees whose terms of office expire. The Trustees shall be
elected at an annual meeting of the Shareholders or special meeting in lieu
thereof called for that purpose, except as provided in Section 2.3 hereof;
provided, however, if so provided in the By-Laws or in any Statement relating
to a Class or Classes of Shares and any Series thereof designated by the
Trustees pursuant to Section 6.1 hereof, such Class or Classes of Shares,
voting as a Class at an annual meeting of the Shareholders or special meeting
in lieu thereof called for such purpose, may elect at least two (2) Trustees at
all times, and, provided, further, that under the conditions enumerated in such
By-Laws or Statement, such Class or Classes of Shares voting as a Class shall
be entitled to elect at least a majority of the Trustees pursuant to the
designations and powers, preferences and rights and the qualifications,
limitations and restrictions of such Class or Classes of Shares as determined
in accordance with the By-Laws or the Statement relating to such Class or
Classes of Shares.
3
Each Trustee shall hold office until the earlier of his or her death or the
election and qualification of his or her successor; except that:
(a) any Trustee may resign his or her trust (without need for prior or
subsequent accounting) by an instrument in writing signed by that Trustee
and delivered to the Trust, which shall take effect upon such delivery or
upon such later date as is specified therein;
(b) any Trustee may be removed at any time, with or without cause, by
written instrument signed by at least three-quarters of the Trustees,
specifying the date when such removal shall become effective;
(c) any Trustee who has attained a mandatory retirement age established
pursuant to any written policy adopted from time to time by at least
two-thirds of the Trustees shall, automatically and without action of such
Trustee or the remaining Trustees, be deemed to have retired in accordance
with the terms of such policy, effective as of the date determined in
accordance with such policy; and
(d) subject to the voting powers of one or more Classes or Series of
Shares as set forth in this Declaration, and in the By-Laws or in any
Statement, a Trustee may be removed at any meeting of Shareholders by a
vote of Shares representing a majority of the outstanding Shares of the
Classes or Series entitled to vote for the election of such Trustee.
Upon the resignation, retirement or removal of a Trustee, or his or her
otherwise ceasing to be a Trustee, that individual shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in the
name of the resigning, retiring or removed Trustee. Upon the incapacity or
death of any Trustee, that Trustee's legal representative shall execute and
deliver on his or her behalf such documents as the remaining Trustees shall
require as provided in the preceding sentence.
Except to the extent expressly provided in a written agreement to which the
Trust is a party or in a written policy adopted by the Trustees, no resigning
or removed Trustee shall have any right to any compensation for any period
following his or her resignation or removal, or any right to damages on account
of such removal.
Section 2.3. Resignation and Appointment of Trustees. In case of the
declination, death, resignation, retirement or removal of any of the Trustees,
or in case a vacancy shall, by reason of an increase in number of Trustees, or
for any other reason, exist, a majority of the remaining Trustees may fill such
vacancy by appointing such other individual as they in their discretion shall
see fit. Any such appointment shall not become effective, however, until the
person appointed shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of the Declaration. An appointment of a
Trustee may be made by the Trustees then in office in anticipation of a vacancy
to occur by reason of retirement, resignation, removal or increase in number of
Trustees effective at a later date, provided that said appointment shall become
effective only at or after the effective date of said retirement, resignation,
removal or increase in number of Trustees. The power of appointment is subject
to the voting power of one or more Classes or Series of Shares as set forth in
this Declaration, and in the By-Laws or in any Statement, and is subject to all
applicable provisions of the 1940 Act.
Section 2.4. Vacancies. The death, declination, resignation, retirement,
removal or incapacity of the Trustees, or any of them, shall not operate to
annul the Trust or to revoke any existing agency
4
created pursuant to the terms of the Declaration. Whenever a vacancy in the
number of Trustees shall occur, until such vacancy is filled as provided in
Section 2.3, or while any Trustee is incapacitated, the other Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by the
Declaration, and only such other Trustees shall be counted for the purposes of
the existence of a quorum or the taking of any action to be taken by the
Trustees. A written instrument certifying the existence of such vacancy or
incapacity signed by a majority of the Trustees shall be conclusive evidence of
the existence thereof.
Section 2.5. Delegation of Power to Other Trustees. Subject to requirements
imposed by the 1940 Act and other applicable law, any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees; provided that in no case shall fewer
than two Trustees personally exercise the powers granted to the Trustees under
the Declaration except as otherwise expressly provided herein.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. Subject to the provisions of the Declaration, the
Trustees shall have exclusive and absolute control over the Trust Property and
over the business of the Trust to the same extent as if the Trustees were the
sole owners of the Trust Property and business in their own right, but with
such powers of delegation as may be permitted by the Declaration. The Trustees
shall have power to conduct the business of the Trust and carry on its
operations in any and all of its branches and maintain offices both within and
without The Commonwealth of Massachusetts, in any and all states of the United
States of America, in the District of Columbia, and in any and all
commonwealths, territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign governments,
and to do all such other things and execute all such instruments as the
Trustees deem necessary, proper or desirable in order to promote the interests
of the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of the
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power or any other power of the Trustees hereunder. Such
powers of the Trustees may be exercised without order of or resort to any
court.
Section 3.2. Investments. (a) The Trustees shall have the power:
(i) mto conduct, operate and carry on the business of an investment
company;
(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute,
lend or otherwise deal in or dispose of securities of every nature and
kind, U.S. and foreign currencies, any form of gold or other precious
metal, commodity contracts, any form of option contract, contracts for the
future acquisition or delivery of fixed income or other securities,
derivative instruments of every kind, "when-issued" or standby contracts,
and all types of obligations or financial instruments, including, without
limitation, all types of bonds, debentures, stocks, negotiable or non-
negotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or indebtedness, commercial paper,
5
repurchase agreements, bankers' acceptances, and other securities of any
kind, issued, created, guaranteed or sponsored by any and all Persons,
including, without limitation,
(A) states, territories and possessions of the United States and
the District of Columbia and any political subdivision, agency or
instrumentality of any such Person,
(B) the U.S. Government, any foreign government, or any political
subdivision or any agency or instrumentality of the U.S. Government or
any foreign government,
(C) any international instrumentality,
(D) any bank or savings institution, or by
(E) any corporation or organization organized under the laws of the
United States or of any state, territory or possession thereof, or
under any foreign law;
to retain Trust assets in cash and from time to time to change the
investments in which the assets of the Trust are invested; and to
exercise any and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of every kind and
description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more
Persons to exercise any of said rights, powers and privileges in
respect of any of said investments; and
(iii) to carry on any other business in connection with or incidental
to any of the foregoing powers, to do everything necessary, proper or
desirable for the accomplishment of any purpose or the attainment of any
object or the furtherance of any power hereinbefore set forth, and to do
every other act or thing incidental or appurtenant to or connected with the
aforesaid purposes, objects or powers.
(b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust, nor
shall the Trustees be limited by any law limiting the investments which may
be made by fiduciaries.
(c) Notwithstanding any other provision of the Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by Shareholders to either invest all or a portion
of the Trust Property, or sell all or a portion of such Trust Property and
invest the proceeds of such sales, in one or more other investment
companies to the extent not prohibited by the 1940 Act.
Section 3.3. Legal Title. Legal title to all Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have power to
cause legal title to any Trust Property to be held by or in the name of one or
more of the Trustees, or in the name of the Trust, or in the name of any other
Person or nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each person who may hereafter become a Trustee. Upon the
resignation, retirement, removal or death of a Trustee, such Trustee shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
6
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII and VIII hereof, to apply
to any such repurchase, redemption, retirement, cancellation or acquisition of
Shares any funds of the Trust or other Trust Property, whether capital or
surplus or otherwise.
Section 3.5. Borrowing Money; Lending Trust Property. The Trustees shall
have power to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the Trust Property, to
endorse, guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person and to lend Trust Property.
Section 3.6. Delegation. The Trustees shall have power to delegate from
time to time to such of their number or to officers, employees, any Investment
Adviser, Distributor, custodian, agent or independent contractor of the Trust
the doing of such things and the execution of such instruments either in the
name of the Trust or the names of the Trustees or otherwise as the Trustees may
deem appropriate or expedient.
Section 3.7. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 3.8. Expenses. The Trustees shall have the power to incur and pay
any expenses which in the opinion of the Trustees are necessary or incidental
to carry out any of the purposes of the Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The
Trustees shall fix the compensation of all officers, employees, Trustees and
Advisory Trustees.
Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein, in the 1940 Act or in the By-Laws, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees at which a quorum is present, including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or by
written consents of two-thirds of the Trustees. The Trustees may adopt By-Laws
not inconsistent with the Declaration to provide for the conduct of the
business of the Trust and may amend or repeal such By-Laws to the extent
permitted therein at any time.
Section 3.10. Miscellaneous Powers. Without limiting the foregoing, the
Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust;
(b) enter into joint ventures, partnerships and any other combinations
or associations;
(c) elect and remove such officers and appoint and terminate such
agents or employees as they consider appropriate, in each case with or
without cause, and appoint and terminate any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine;
7
(d) purchase, and pay for out of Trust Property, such insurance as they
may deem necessary or appropriate for the conduct of the business of the
Trust, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring Shareholders, any
administrator, Trustees, Advisory Trustees, officers, employees, agents,
any Investment Adviser, any Distributor, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding
any such position or by reason of any action taken or omitted by any such
Person in such capacity, whether or not constituting negligence, or whether
or not the Trust would have the power to indemnify such Person against such
liability;
(e) establish pension, profit-sharing, Share purchase, deferred
compensation, and other retirement, incentive and benefit plans for any
Trustees, officers, employees or agents of the Trust;
(f) to the extent permitted by law, indemnify any person with whom the
Trust has dealings, including any Investment Adviser, administrator,
custodian, Distributor, Transfer Agent, shareholder servicing agent and any
dealer, to such extent as the Trustees shall determine;
(g) guarantee indebtedness or contractual obligations of others;
(h) determine and change the fiscal year of the Trust and the method by
which its accounts shall be kept; and
(i) adopt a seal for the Trust, provided that the absence of such seal
shall not impair the validity of any instrument executed on behalf of the
Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT
Section 4.1. Investment Adviser. Subject to applicable requirements of the
1940 Act, the Trustees may in their discretion from time to time enter into one
or more investment advisory or management contracts whereby the other party to
each such contract shall undertake to furnish the Trust such management,
investment advisory, statistical and research facilities and services,
promotional activities, and such other facilities and services, if any, as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine. Notwithstanding
any provision of the Declaration, the Trustees may delegate to the Investment
Adviser authority (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales, loans or
exchanges of assets of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of the Investment Adviser (and all
without further action by the Trustees). Any of such purchases, sales, loans or
exchanges shall be deemed to have been authorized by all the Trustees. Such
services may be provided by one or more Persons.
Section 4.2. Distributor. Subject to applicable requirements of the 1940
Act, the Trustees may in their discretion from time to time enter into one or
more exclusive or non-exclusive distribution contracts providing for the sale
of Shares of one or more Classes, whereby the Trust may either agree to sell
the Shares to the other party to any such contract or appoint any such other
party its sales
8
agent for such Shares. In either case, any such contract shall be on such terms
and conditions as the Trustees may in their discretion determine, provided that
such terms and conditions are not inconsistent with the provisions of the
Declaration or the By-Laws; and such contract may also provide for the
repurchase or sale of Shares by such other party as principal or as agent of
the Trust and may provide that such other party may enter into selected dealer
agreements or agency agreements with securities dealers or other Persons to
further the purpose of the distribution or repurchase of the Shares. Such
services may be provided by one or more Persons.
Section 4.3. Custodian. The Trustees may in their discretion from time to
time enter into one or more contracts whereby the other party to each such
contract shall undertake to furnish such custody services to the Trust as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine, provided that
such terms and conditions are not inconsistent with the provisions of the 1940
Act, the Declaration or the By-Laws. The Trustees may authorize any custodian
to employ one or more sub-custodians from time to time to perform such of the
services of the custodian as the Trustees shall from time to time consider
desirable. Services described in this Section may be provided by one or more
Persons.
Section 4.4. Transfer Agent. The Trustees may in their discretion from time
to time enter into one or more transfer agency or sub-transfer agency and
shareholder servicing contracts whereby the other party to each such contract
shall undertake to furnish such transfer agency and/or shareholder services to
the Trust as the Trustees shall from time to time consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine, provided that such terms and conditions are not inconsistent with
the provisions of the Declaration or the By-Laws. Such services may be provided
by one or more Persons.
Section 4.5. Parties to Contract. Any contract of the character described
in any Section of this Article IV may be entered into with any Person, although
one or more of the Trustees or officers of the Trust may be an officer,
partner, director, trustee, shareholder, or member of such other party to the
contract, and no such contract shall be invalidated or rendered voidable by
reason of the existence of any such relationship; nor shall any Person holding
such relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of any such contract or accountable
for any profit realized directly or indirectly therefrom, provided that the
contract when entered into was not inconsistent with the provisions of this
Article IV or the By-Laws. The same Person may be the other party to contracts
entered into pursuant to Sections 4.1, 4.2, 4.3 and 4.4 above, and any
individual may be financially interested or otherwise affiliated with Persons
who are parties to any or all of the contracts mentioned in this Section 4.5.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders. No Shareholder or
former Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs of
the Trust solely by reason of being or having been a Shareholder. The Trust
shall indemnify and hold each Shareholder and former Shareholder harmless from
and against all claims and liabilities to which such Shareholder may become
subject solely by reason of his or her being or having been a Shareholder
(other than taxes payable by virtue of owning Shares), and shall
9
reimburse such Shareholder for all legal and other expenses reasonably incurred
by him in connection with any such claim or liability. The rights accruing to a
Shareholder or former Shareholder under this Section 5.1 shall not exclude any
other right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder or former Shareholder in any appropriate situation even
though not specifically provided herein. The Trust shall, upon request by a
Shareholder or former Shareholder, assume the defense of any claim made against
such Shareholder for any act or obligation of the Trust and satisfy any
judgment thereon from the assets of the Trust.
Section 5.2. Limitation of Liability of Trustees and Others. (a) No
Trustee, Advisory Trustee, officer or employee or agent of the Trust shall be
subject to any liability whatsoever to any Person in connection with Trust
Property or the affairs of the Trust, and no Trustee or Advisory Trustee shall
be responsible or liable in any event for any neglect or wrongdoing of any
officer, employee or agent of the Trust or for the act or omission of any other
Trustee or Advisory Trustee. For the sake of clarification and without limiting
the foregoing, the appointment, designation or identification of a Trustee as
the Chair of the Trustees, the lead or assistant lead independent Trustee, a
member or Chair of a committee of the Trustees, an expert on any topic or in
any area (including an audit committee financial expert) or any other special
appointment, designation or identification given to a Trustee, shall not (a)
impose on that person any duty, obligation or liability that is greater than
the duties, obligations and liabilities imposed on that person as a Trustee in
the absence of the appointment, designation or identification or (b) affect in
any way such Trustee's rights or entitlement to indemnification, and no Trustee
who has special skills or expertise, or is appointed, designated or identified
as aforesaid, shall (x) be held to a higher standard of care by virtue thereof
or (y) be limited with respect to any indemnification to which such Trustee
would otherwise be entitled. Notwithstanding anything to the contrary in this
Section 5.2(a) or otherwise, nothing in the Declaration shall protect any
Trustee, Advisory Trustee, officer, employee or agent of the Trust against any
liability to the Trust or its Shareholders to which he, she or it would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his,
her or its office or position with or on behalf of the Trust.
(b) All persons extending credit to, contracting with or having claim
against the Trust shall look solely to the assets of the Trust for payment
under such credit, contract or claim; and neither any Trustee or Advisory
Trustee, nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor.
Section 5.3. Mandatory Indemnification. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:
(i) every person who is or has been a Trustee, Advisory Trustee or
officer of the Trust (hereinafter referred to as a "Covered Person") shall
be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him or her in connection with any claim,
action, suit or proceeding in which that individual becomes involved as a
party or otherwise by virtue of being or having been a Trustee, Advisory
Trustee or officer and against amounts paid or incurred by that individual
in the settlement thereof;
(ii) the words "claim," "action," "suit" or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, administrative
or other, including appeals), actual or threat-
10
ened; and the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in settlement
or compromise, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) against any liability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding
was brought that the Covered Person engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of that individual's office;
(ii) with respect to any matter as to which the Covered Person shall
have been finally adjudicated not to have acted in good faith in the
reasonable belief that that individual's action was in the best interest of
the Trust; or
(iii) in the event of a settlement involving a payment by a Trustee,
Advisory Trustee or officer or other disposition not involving a final
adjudication as provided in paragraph (b)(i) or (b)(ii) above resulting in
a payment by a Covered Person, unless there has been either a determination
that such Covered Person did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of that individual's office by the court or other body approving
the settlement or other disposition or by a reasonable determination, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry) that that individual did not engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees (as defined
below) acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter); or
(B) by written opinion of (i) the then-current legal counsel to the
Trustees who are not Interested Persons of the Trust or (ii) other
legal counsel chosen by a majority of the Disinterested Trustees (or if
there are no Disinterested Trustees with respect to the matter in
question, by a majority of the Trustees who are not Interested Persons
of the Trust) and determined by them in their reasonable judgment to be
independent.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be a Covered Person and shall
inure to the benefit of the heirs, executors and administrators of such person.
Nothing contained herein shall limit the Trust from entering into other
insurance arrangements or affect any rights to indemnification to which Trust
personnel, including Covered Persons, may be entitled by contract or otherwise
under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the Covered Person to repay
such amount if it is ultimately determined that the Covered Person is not
entitled to indemnification under this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or
11
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or legal counsel meeting the requirement in Section 5.3(b)
(iii)(B) above in a written opinion, shall determine, based upon a review
of readily available facts (as opposed to a full trial-type inquiry), that
there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
As used in this Section 5.3 a "Disinterested Trustee" is one (i) who is not
an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.
(e) With respect to any such determination or opinion referred to in clause
(b)(iii) above or clause (d)(ii) above, a rebuttable presumption shall be
afforded that the Covered Person has not engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office in accordance with pronouncements of
the Commission.
Section 5.4. No Bond Required. No Trustee, Advisory Trustee or officer
shall be obligated to give any bond or other security for the performance of
any of his or her duties hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments. No
purchaser, lender, shareholder servicing agent, Transfer Agent or other Person
dealing with the Trustees or any officer, employee or agent of the Trust shall
be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent or
be liable for the application of money or property paid, loaned, or delivered
to or on the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking, and every other act or thing whatsoever executed in
connection with the Trust shall be conclusively presumed to have been executed
or done by the executors thereof only in their capacity as Trustees under the
Declaration or in their capacity as officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees or officers
shall recite that the same is executed or made by them not individually, but as
or on behalf of Trustees under the Declaration, and that the obligations of any
such instrument are not binding upon any of the Trustees, officers or
Shareholders individually, but bind only the Trust estate, and may contain any
further recital deemed appropriate, but the omission of such recital shall not
operate to bind any of the Trustees, officers or Shareholders individually. The
Trustees may maintain insurance for the protection of the Trust Property,
Shareholders, Trustees, Advisory Trustees, officers, employees and agents in
such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment
shall deem advisable.
Section 5.6. Good Faith Action; Reliance on Experts. The exercise by the
Trustees or the officers of the Trust of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. The Trustees or the officers of the
Trust shall not be liable for errors of judgment or mistakes of fact or law.
Each Trustee and officer or employee of the Trust shall, in the performance of
his or her duties, be under no liability and fully and completely justified and
protected with regard to any act or any failure to act resulting from reliance
in good faith upon the books of account or other records of the Trust, upon
advice of counsel,
12
or upon reports made to the Trust by any of its officers or employees or by the
Investment Adviser, the Distributor, Transfer Agent, custodian, any shareholder
servicing agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or
employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
Section 5.7. Derivative Actions. No Shareholder shall have the right to
bring or maintain any court action, proceeding or claim on behalf of the Trust
or any Class of Shares thereof without first making demand on the Trustees
requesting the Trustees to bring or maintain such action, proceeding or claim.
Such demand shall be excused only when the plaintiff makes a specific showing
that irreparable injury to the Trust or Class of Shares thereof would otherwise
result, or if a majority of the Board of Trustees, or a majority of any
committee established to consider the merits of such action, has a material
personal financial interest in the action at issue. A Trustee shall not be
deemed to have a personal financial interest in an action or otherwise be
disqualified from ruling on a Shareholder demand by virtue of the fact that
such Trustee receives remuneration from his or her service on the Board of
Trustees of the Trust or on the boards of one or more investment companies with
the same or an affiliated investment adviser or underwriter, or the amount of
such remuneration.
Such demand shall be mailed to the Secretary or Clerk of the Trust at the
Trust's principal office and shall set forth in reasonable detail the nature of
the proposed court action, proceeding or claim and the essential facts relied
upon by the Shareholder to support the allegations made in the demand. The
Trustees shall consider such demand within 45 days of its receipt by the Trust.
In their sole discretion, the Trustees may submit the matter to a vote of
Shareholders of the Trust or any Class thereof, as appropriate. Any decision by
the Trustees to bring, maintain or settle (or not to bring, maintain or settle)
such court action, proceeding or claim, or to submit the matter to a vote of
Shareholders, shall be made by the Trustees in their business judgment and
shall be binding upon the Shareholders. Any decision by the Trustees to bring
or maintain a court action, proceeding or suit on behalf of the Trust or any
Class thereof shall be subject to the right of the Shareholders under Section
6.8 of the Declaration to vote on whether or not such court action, proceeding
or suit should or should not be brought or maintained.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The Trustees may, without Shareholder
approval, authorize one or more Classes of Shares with or without par value
(which Classes may be divided into two or more Series), Shares of each such
Class or Series having such preferences, voting powers, terms of redemption, if
any, and special or relative rights or privileges (including conversion rights,
if any) as the Trustees may determine.
As of the date of the Amended and Restated Declaration, the Shares shall be
divided into [two][three] Classes of Shares, a Class of an unlimited number of
common shares of beneficial interest, without par value (the "Common Shares")
and [a Class][two Classes] of an unlimited number of preferred shares of
beneficial interest, without par value (the "Preferred Shares").
The designations and powers, preferences and rights, and the
qualifications, limitations and restrictions of the Common Shares are as
follows and as set forth elsewhere in this Declaration.
13
(a) Subject to the rights of the holders of the Preferred Shares, if any,
in the event of the termination of the Trust the holders of the Common Shares
shall be entitled to receive pro rata the net distributable assets of the
Trust.
(b) The holders of the Common Shares shall not, as such holders, have any
right to acquire, purchase or subscribe for any Common Shares or securities of
the Trust which it may hereafter issue or sell, other than such right, if any,
as the Trustees in their discretion may determine.
(c) Subject to the rights of the holders of the Preferred Shares, if any,
dividends or other distributions, when, as and if declared by the Trustees,
shall be shared equally by the holders of Common Shares on a share for share
basis. The Trustees may direct that any dividends or other distributions or any
portion thereof as declared and distributed shall be paid in cash to the
holder, or, alternatively, may direct that any such dividends be reinvested in
full and fractional Shares of the Trust if such holder elects to have them
reinvested.
(d) The Trustees may hold as treasury shares (of the same or some other
Series), reissue for such consideration and on such terms as they may
determine, or cancel any Common Shares of any Series reacquired by the Trust at
their discretion from time to time. Shares shall not entitle the Shareholder to
any title in or to the whole or any part of the Trust. The designations and
powers, preferences and rights, and the qualifications, limitations and
restrictions of the Preferred Shares, if any, shall be as set forth in the
By-Laws or the Statement relating to the Preferred Shares.
All Shares issued hereunder including, without limitations, Shares issued
in connection with a dividend in Shares, or a split of Shares, shall be fully
paid and non-assessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be called upon
to assume any losses of the Trust or suffer an assessment of any kind by virtue
of their ownership of Shares. The Shares shall be personal property giving only
the rights specifically set forth in the Declaration. The Shares shall not
entitle the holder to preference, preemptive, appraisal, conversion or exchange
rights, except as the Trustees may determine with respect to any Class or
Series of Shares. By becoming a Shareholder each Shareholder shall be held
expressly to have assented to and agreed to be bound by the provisions of the
Declaration.
Section 6.3. Trust Only. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.4. Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, including
cash or property, at such time or times, and on such terms as the Trustees may
deem best, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in
14
connection with, the assumption of liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional Shares. The
Trustees may from time to time divide or combine the Shares, including the
Shares of any Class, into a greater or lesser number without thereby changing
their proportionate beneficial interests in Trust Property. Contributions to
the Trust may be accepted for whole Shares and/or 1/1,000ths of a Share or
integral multiples thereof.
Section 6.5. Register of Shares. A register or registers shall be kept at
the principal office of the Trust or at an office of the Transfer Agent which
shall contain the names and addresses (which may be addresses for electronic
delivery) of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares, including Shares of any
Class or Series, and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to that Shareholder as provided herein
or in the By-Laws, until the Shareholder has given his or her address to the
Transfer Agent or such other officer or agent of the Trustees as shall keep the
said register for entry thereon. The Trustees, in their discretion, may
authorize the issuance of Share certificates and promulgate appropriate rules
and regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by the record
holder's agent thereunto authorized in writing, upon delivery to the Trustees
or, if there is a Transfer Agent with respect to such Shares, the Transfer
Agent of a duly executed instrument of transfer together with any certificate
or certificates (if issued) for such Shares and such evidence of the
genuineness of each such execution and authorization and of other matters as
may reasonably be required. Upon such delivery the transfer shall be recorded
on the register of the Trust. Until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor any Transfer Agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any notice of the
proposed transfer.
Any Person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent; but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law.
Section 6.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given
(i) if mailed, postage prepaid, addressed to any Shareholder of record at the
Shareholder's last known address as recorded on the register of the Trust, (ii)
if sent by electronic transmission to the Shareholder of record at the
Shareholder's last known address for electronic delivery as recorded on the
register of the Trust, (iii) if mailed or sent by electronic delivery to one or
more members of the Shareholder's household in accordance with applicable law
or regulation, or (iv) if otherwise sent in accordance with applicable law or
regulation.
Section 6.8. Voting Powers. Subject to the voting power of one or more
Classes or Series of Shares as set forth in the Declaration, and in the By-
Laws or in any Statement, Shareholders shall
15
have power to vote only (i) for the election of Trustees when that issue is
submitted to Shareholders, and for the removal of Trustees as provided in
Section 2.2 hereof, (ii) with respect to any investment advisory or management
contract on which a shareholder vote is required by the 1940 Act, (iii) with
respect to termination of the Trust or any Class to the extent and as provided
in Section 8.2 hereof, (iv) with respect to any amendment of the Declaration to
the extent and as provided in Section 8.3 hereof, (v) with respect to any
merger, consolidation, or sale of assets to the extent and as provided in
Sections 8.4 and 8.7 hereof, (vi) with respect to any conversion of the Trust
to an "open-end company" to the extent and as provided in Section 8.6 hereof,
(vii) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or the Shareholders, and (viii) with respect to such additional
matters relating to the Trust as may be required by the Declaration, the
By-Laws, any Statement, or any registration of the Trust with the Commission
(or any successor agency) or any other regulator having jurisdiction over the
Trust, or as the Trustees may consider necessary or desirable.
A Shareholder shall be entitled to one vote for each Share owned by such
Shareholder on each matter on which such Shareholder is entitled to vote and
each fractional Share shall be entitled to a proportionate fractional vote,
except as otherwise provided in the By-Laws or any Statement. Shares held in
the treasury of the Trust shall not be voted.
Except when a larger vote is required by applicable law or by any provision
of the Declaration, the By-Laws, or a Statement, if any, Shares representing a
majority of the Shares voted in person or by proxy shall decide any questions
and a plurality shall elect a Trustee, provided that where any provision of
law, the Declaration, the By-Laws, or a Statement requires that holders of any
Class or Series shall vote as a class, then Shares representing a majority of
the Shares of that Class or Series voted on the matter (or a plurality with
respect to the election of a Trustee) shall decide that matter insofar as that
Class or Series is concerned, and provided further, that abstentions and broker
non-votes shall not be counted as votes cast but shall be counted as being
present for purposes of determining the existence of a quorum.
Notwithstanding any provision hereof to the contrary but subject to the
By-Laws or any Statement relating to Preferred Shares on any matter submitted
to a vote of the Shareholders of the Trust, all Shares of the Trust then
entitled to vote shall be voted in the aggregate as a single Class, except that
(i) when required by the 1940 Act to be voted by individual Class or Series,
Shares shall not be voted in the aggregate, and (ii) when the Trustees have
determined that a matter affects only the interests of Shareholders of
particular Classes or Series of Shares, only Shareholders of such Class or
Series of Shares, as applicable, shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees. Until
Shares of a particular Class or Series are issued and during any period when
no Shares of a particular Class or Series are outstanding, the Trustees may
exercise all rights of Shareholders of such Class or Series and may take any
action required by law, the Declaration, the By-Laws or any Statement to be
taken by Shareholders as to such Class or Series. The By-Laws or any Statement
may include further provisions for Shareholder votes and meetings and related
matters.
16
ARTICLE VII
DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS
The Trustees, in their absolute discretion, may prescribe and shall set forth
in the By-Laws, in any Statement, or in a duly adopted vote of the Trustees
such bases and times for determining the per Share net asset value of the
Shares, including any Class or Series of Shares or net income, or the
declaration and payment of dividends and distributions, as they may deem
necessary or desirable.
ARTICLE VIII
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust shall continue without limitation of time
but subject to the provisions of this Article VIII.
Section 8.2. Termination of Trust. (a) Subject to the voting powers of one
or more Classes or Series of Shares as set forth in this Declaration, and in
the By-Laws or in any Statement, the Trust may be terminated at any time (i) by
the affirmative vote of the holders of not less than two-thirds of the Shares
outstanding and entitled to vote at any meeting of Shareholders, or (ii) by the
Trustees by written notice to the Shareholders. Any Class of the Trust may be
terminated at any time (i) by the affirmative vote of the holders of not less
than two-thirds of the Shares of that Class outstanding and entitled to vote at
any meeting of Shareholders, or (ii) by the Trustees by written notice to the
Shareholders of that Class. Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust and
all the powers of the Trustees under the Declaration shall continue until
the affairs of the Trust shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dispose of all or any part
of the remaining Trust Property to one or more Persons at public or private
sale for consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its liabilities,
and to do all other acts appropriate to liquidate its business; and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly in
cash and partly in kind, among the Shareholders of the Trust according to
their respective rights and as required or permitted by the preferences and
special or relative rights and privileges of any Class or Series of Shares.
The foregoing provisions shall also apply, with appropriate modifications
as determined by the Trustees, to the termination of any Class.
(b) After termination of the Trust or Class and distribution to the
Shareholders of the Trust or Class as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust an instrument
in writing setting forth the fact of such termination, and the Trustees shall
thereupon be discharged from all further liabilities and duties hereunder with
respect to the Trust or Class, and the rights and interests of all Shareholders
of the Trust or Class shall thereupon cease.
17
Section 8.3. Amendment Procedure. (a) Except as specifically provided
herein, the Trustees may, without any Shareholder vote, amend or otherwise
supplement the Declaration by making an amendment, a Declaration of Trust
supplemental hereto or an amended and restated Declaration. Without limiting
the foregoing power reserved to the Trustees, the Trustees may, without any
Shareholder vote, amend the Declaration to designate or redesignate Classes or
Series, to change the name or principal office of the Trust, to supply any
omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or if they deem it necessary or advisable, to
conform the Declaration to the requirements of applicable law, including the
1940 Act and the Internal Revenue Code of 1986, as amended, but the Trustees
shall not be liable for failing to do so. Shareholders shall have the right to
vote on (i) any amendment that would affect their right to vote granted in
Section 6.8; (ii) any amendment to Section 8.3(a) or (b); (iii) any amendment
as may be required by law, by the Trust's registration statement, by the By-
Laws, or by any Statement to be approved by Shareholders; and (iv) any
amendment submitted to them by the Trustees. Except to the extent a higher vote
is required by the By-Laws or any Statement, or as otherwise provided in
Section 8.3(c), any amendment on which Shareholders have the right to vote
shall require a Majority Shareholder Vote of the Shareholders of the Trust, or
the written consent, without a meeting, of the holders of Shares representing
not less than a majority of the voting power of the Shares of the Trust.
Notwithstanding the foregoing, if the Trustees shall determine that any
amendment required or permitted to be submitted to Shareholders would affect
only the interest of Shareholders of particular Classes of Shares, then only
Shareholders of such Classes shall be entitled to vote thereon, and no vote of
Shareholders of any other Classes shall be required.
(b) Nothing contained in the Declaration shall permit the amendment of the
Declaration to impair the exemption from personal liability of the
Shareholders, former Shareholders, Trustees, Advisory Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders or
former Shareholders. Notwithstanding anything else herein, any amendment to
Section 5.3 shall not limit the rights to indemnification or insurance provided
therein with respect to actions or omissions of persons entitled to
indemnification under such Section prior to such amendment.
No amendment may be made which shall amend, alter, change or repeal any of
the provisions of Section 2.2, Section 8.2, this Section 8.3(c), Section 8.4,
Section 8.6 and Section 8.7 unless the amendment effecting such amendment,
alteration, change or repeal shall receive the affirmative vote or consent of
sixty-six and two-thirds percent (66 2/3%) of the Shares outstanding and
entitled to vote. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of Shares otherwise required by law or by the
terms of any Class or Series of preferred stock, whether now or hereafter
authorized, or any agreement between the Trust and any national securities
exchange.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders (if
applicable) or by the Trustees as aforesaid or a copy of the Declaration, as
amended, and executed by a majority of the Trustees, shall be conclusive
evidence of such amendment when lodged among the records of the Trust.
(e) Notwithstanding any other provision hereof, until such time as Shares
of a particular Class are first issued the Declaration may be terminated or
amended in any respect as to that Class, and as to any Class in which Shares
are not outstanding, by the affirmative vote of a majority of the Trustees or
by an instrument signed by a majority of the Trustees.
18
Section 8.4. Merger, Consolidation and Sale of Assets. Subject to
applicable law and except as otherwise provided in Section 8.5 hereof, the
Trust or any Class thereof may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of the Trust Property (or all or substantially all of the
Trust Property allocated to a particular Class of the Trust) including its good
will, upon such terms and conditions and for such consideration when and as
authorized (a) at any meeting of Shareholders called for the purpose by the
affirmative vote of the holders of not less than two- thirds of the Shares
outstanding and entitled to vote of all Classes of the Trust voting as a single
class if the entire Trust is merging, consolidating or disposing of assets, or
by the affirmative vote of the holders of not less than two-thirds of the
Shares of a Class if only that Class is merging consolidating or disposing of
assets, or (b) by the written consent, without a meeting, of the holders of not
less than two-thirds of such Shares or of the Shares of the particular Class as
described above, provided, however, that if such merger, consolidation, sale,
lease or exchange is recommended by the Trustees, the vote or written consent
of the holders of a majority of Shares of the Trust outstanding and entitled to
vote or of the Shares of the particular Class as described above, shall be
sufficient authorization. Any such merger, consolidation, sale, lease or
exchange shall be deemed for all purposes to have been accomplished under and
pursuant to the statutes of The Commonwealth of Massachusetts. Such
transactions may be effected through share-for-share exchanges, transfers or
sales of assets, in-kind redemptions and purchases, exchange offers, or any
other method approved by the Trustees. Nothing contained herein shall be
construed as requiring approval of Shareholders for any recapitalization or
reclassification of any Class, for any sale of assets in the ordinary course of
the business of the Trust, or for any transaction, whether deemed a merger,
consolidation, reorganization or exchange of shares or otherwise, whereby the
Trust issues shares of one or more Classes in connection with the acquisition
of assets (including those subject to liabilities) from any other investment
company or similar entity.
Section 8.5. Incorporation, Reorganization. The Trustees may, without the
vote or consent of Shareholders, cause to be organized or assist in organizing
a corporation or corporations under the laws of any jurisdiction, or any other
trust (or series or class of a trust), unit investment trust, partnership,
limited liability company, association or other organization to acquire all or
a portion of the Trust Property (or all or a portion of the Trust Property
allocated to a particular Class) or to carry on any business in which the Trust
shall directly or indirectly have any interest, and to sell, convey and
transfer such Trust Property to any such corporation, trust (or series or class
of a trust), partnership, limited liability company, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any
other interest. The Trustees may also, without the vote or consent of
Shareholders, cause a merger or consolidation between the Trust or any
successor thereto and any such corporation, trust (or series or class of a
trust), partnership, association or other organization if and to the extent
permitted by law. The Trustees shall provide written notice to affected
Shareholders of each transaction pursuant to this Section 8.5. Such
transactions may be effected through share-for-share exchanges, transfers or
sales of assets, in-kind redemptions and purchases, exchange offers, or any
other method approved by the Trustees.
Section 8.6. Conversion. Notwithstanding any other provision of this
Declaration, the conversion of the Trust from a "closed-end company" to an
"open-end company," as those terms are defined in the 1940 Act, shall require
the affirmative vote or consent of the holders of sixty-six and two-thirds
19
percent (66 2/3%) of the Shares of each Class outstanding and entitled
to vote. Such affirmative vote or consent shall be in addition to the vote or
consent of the holders of the Shares otherwise required by law or by the terms
of any Class or Series of preferred stock, whether now or hereafter authorized,
or any agreement between the Trust and any national securities exchange.
Section 8.7. Certain Transactions. (a) Notwithstanding any other provision
of this Declaration and subject to the exceptions provided in paragraph (d) of
this Section, the types of transactions described in paragraph (c) of this
Section shall require the affirmative vote or consent of the holders of
sixty-six and two-thirds percent (66 2/3%) of the Shares outstanding and
entitled to vote, when a Principal Shareholder (as defined in paragraph (b) of
this Section) is a party to the transaction. Such affirmative vote or consent
shall be in addition to the vote or consent of the Shareholders otherwise
required by law or by the terms of any Class or Series of preferred stock,
whether now or hereafter authorized, or any agreement between the Trust and any
national securities exchange.
(b) The term "Principal Shareholder" shall mean any corporation, person or
other entity which is the beneficial owner, directly or indirectly, of more
than five percent (5%) of the outstanding Shares and shall include any
affiliate or associate, as such terms are defined in clause (ii) below, of a
Principal Shareholder. For the purposes of this Section, in addition to the
Shares which a corporation, person or other entity beneficially owns directly,
(a) any corporation, person or other entity shall be deemed to be the
beneficial owner of any Shares (i) which it has the right to acquire pursuant
to any agreement or upon exercise of conversion rights or warrants, or
otherwise (but excluding share options granted by the Trust) or (ii) which are
beneficially owned, directly or indirectly (including Shares deemed owned
through application of clause (i) above), by any other corporation, person or
entity with which its "affiliate" or "associate" (as defined below) has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of Shares, or which is its "affiliate" or "associate" as
those terms are defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934 as in effect on December 1, 1986, and
(b) the outstanding Shares shall include Shares deemed owned through
application of clauses (i) and (ii) above but shall not include any other
shares which may be issuable pursuant to any agreement, or upon exercise of
conversion rights or warrants, or otherwise.
(c) This Section shall apply to the following transactions:
(i) the merger or consolidation of the Trust or any subsidiary of the
Trust with or into any Principal Shareholder;
(ii) the issuance of any securities of the Trust to any Principal
Shareholder for cash;
(iii) the sale, lease or exchange of all or any substantial part of the
assets of the Trust to any Principal Shareholder (except assets having an
aggregate fair market value of less than $1,000,000, aggregating for the
purpose of such computation all assets sold, leased or exchanged in any
series of similar transactions within a twelve-month period);
(iv) the sale, lease or exchange to the Trust or any subsidiary
thereof, in exchange for securities of the Trust of any assets of any
Principal Shareholder (except assets having an aggregate fair market value
of less than $1,000,000, aggregating for the purposes of such computation
all assets sold, leased or exchanged in any series of similar transactions
within a twelve-month period).
20
(d) The provisions of this Section shall not be applicable to (i) any of
the transactions described in paragraph (c) of this Section if the Board of
Trustees of the Trust shall by resolution have approved a memorandum of
understanding with such Principal Shareholder with respect to and substantially
consistent with such transaction, or (ii) any such transaction with any
corporation of which a majority of the outstanding shares of all classes of
stock normally entitled to vote in elections of directors is owned of record or
beneficially by the Trust and its subsidiaries.
(e) The Board of Trustees shall have the power and duty to determine for
the purposes of this Section on the basis of information known to the Trust,
whether (i) a corporation, person or entity beneficially owns more than five
percent (5%) of the outstanding Shares, (ii) a corporation, person or entity is
an "affiliate" or "associate" (as defined above) of another, (iii) the assets
being acquired or leased to or by the Trust or any subsidiary thereof,
constitute a substantial part of the assets of the Trust and have an aggregate
fair market value of less than $1,000,000, and (iv) the memorandum of
understanding referred to in paragraph (d) hereof is substantially consistent
with the transaction covered thereby. Any such determination shall be
conclusive and binding for all purposes of this Section.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Filing. The Declaration and any subsequent amendment hereto
and any Statement shall be filed in the office of the Secretary of The
Commonwealth of Massachusetts and in such other place or places as may be
required under the laws of The Commonwealth of Massachusetts and may also be
filed or recorded in such other places as the Trustees deem appropriate,
provided that the failure to so file shall not invalidate this instrument or
any properly authorized amendment hereto. Each amendment so filed shall be
accompanied by a certificate signed and acknowledged by an officer or Trustee
stating that such action was duly taken in a manner provided herein, and unless
such amendment or such certificate sets forth some other time for the
effectiveness of such amendment, such amendment shall be effective upon its
filing. A restated Declaration, integrating into a single instrument all of the
provisions of the Declaration which are then in effect and operative, may be
executed from time to time by a majority of the Trustees and shall, upon filing
with the Secretary of The Commonwealth of Massachusetts, be conclusive evidence
of all amendments contained therein and may thereafter be referred to in lieu
of the original Declaration and the various amendments thereto.
Section 9.2. Governing Law. The Declaration is executed by the Trustees and
delivered in The Commonwealth of Massachusetts and with reference to the laws
thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust,
and the absence of a specific reference herein to any such power, privilege, or
action shall not imply that the Trust may not exercise such power or privilege
or take such action.
Section 9.3. Principal Office. The principal office of the Trust is 500
Boylston Street, Boston, Massachusetts. The Trustees, without a vote of
Shareholders, may change the principal office of the Trust.
21
Section 9.4. Counterparts. The Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument,
which shall be sufficiently evidenced by any such original counterpart.
Section 9.5. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, appears to be an officer
or Trustee hereunder, certifying to: (i) the number or identity of Trustees or
Shareholders, (ii) the due authorization of the execution of any instrument or
writing, (iii) the form of any vote passed at a meeting of Trustees or
Shareholders, (iv) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements
of the Declaration, (v) the form of any By-Laws adopted by or the identity of
any officers elected by the Trustees, or (vi) the existence of any fact or
facts which in any manner relates to the affairs of the Trust, shall be
conclusive evidence as to the matters so certified in favor of any Person
dealing with the Trustees and their successors.
Section 9.6. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration are severable, and if the Trustees
shall determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company or other
provisions of the Internal Revenue Code of 1986, as amended, or with other
applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of the Declaration; provided, however, that
such determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
22
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
day and year first written above.
----------------------------- -----------------------------
Robert E. Butler Robert J. Manning
c/o MFS Investment Management c/o MFS Investment Management
500 Boylston Street 500 Boylston Street
Boston, MA 02116 Boston, MA 02116
----------------------------- -----------------------------
Lawrence H. Cohn Lawrence T. Perera
c/o MFS Investment Management c/o MFS Investment Management
500 Boylston Street 500 Boylston Street
Boston, MA 02116 Boston, MA 02116
----------------------------- -----------------------------
David H. Gunning Robert C. Pozen
c/o MFS Investment Management c/o MFS Investment Management
500 Boylston Street 500 Boylston Street
Boston, MA 02116 Boston, MA 02116
----------------------------- -----------------------------
William R. Gutow J. Dale Sherratt
c/o MFS Investment Management c/o MFS Investment Management
500 Boylston Street 500 Boylston Street
Boston, MA 02116 Boston, MA 02116
----------------------------- -----------------------------
Michael Hegarty Laurie J. Thomsen
c/o MFS Investment Management c/o MFS Investment Management
500 Boylston Street 500 Boylston Street
Boston, MA 02116 Boston, MA 02116
----------------------------- -----------------------------
J. Atwood Ives Robert W. Uek
c/o MFS Investment Management c/o MFS Investment Management
500 Boylston Street 500 Boylston Street
Boston, MA 02116 Boston, MA 02116
23
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ELECTRONIC VOTING INSTRUCTIONS
YOU CAN VOTE BY INTERNET OR TELEPHONE! AVAILABLE 24 HOURS A DAY,
7 DAYS A WEEK!
Instead of mailing your proxy, you may choose one of the two
voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED
BY 9:29 A.M., EASTERN TIME, ON OCTOBER 9, 2008.
VOTE BY INTERNET
o Log on to the Internet and go to www.investorvote.com
o Follow the steps outlined on the secured website.
VOTE BY TELEPHONE
o Call toll free 1-800-652-VOTE (8683) within the United
States, Canada & Puerto Rico any time on a touch tone
telephone. There is NO CHARGE to you for the call.
o Follow the instructions provided by the recorded message.
Using a BLACK INK pen, mark your votes with an X as shown in [X]
this example. Please do not write outside the designated areas.
---------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD 123456 C0123456789 12345
---------------------------------------------------------------------------------------------------------------------------
\/ IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION
IN THE ENCLOSED ENVELOPE. \/
[A] PROPOSALS -- THE TRUSTEES OF YOUR TRUST RECOMMEND THAT YOU VOTE IN FAVOR OF ITEMS 1-3.
1. Election of Directors: 01 - William R. Gutow 02 - Michael Hegarty 03 - Robert W. Uek
[ ] MARK HERE TO VOTE FOR ALL NOMINEES
[ ] MARK HERE TO WITHHOLD VOTE FROM ALL NOMINEES
01 02 03
[ ] FOR ALL EXCEPT - To withhold a vote for one or [ ] [ ] [ ]
more nominees, mark the box to the left and the
corresponding numbered box(es) to the right.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. To approve an amended and restated [ ] [ ] [ ] 3. To amend or remove certain [ ] [ ] [ ]
Declaration of Trust for each Trust. fundamental investment
policies of the Trusts.
4. To transact such other business as may
properly come before the Meeting and any
adjournment(s) or postponement(s) thereof.
[B] AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please give full title. If a corporation, please sign
in full corporate name and indicate the signer's office. If a partnership, sign in the partnership name.
Date (mm/dd/yyyy) -- Please print Signature 1 -- Please keep signature Signature 2 -- Please keep signature
date below. within the box. within the box.
---------------------------------- ------------------------------------ -------------------------------------
---------------------------------- ------------------------------------ -------------------------------------
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
\/ IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE
BOTTOM PORTION IN THE ENCLOSED ENVELOPE.\/
------------------------------------------------------------------------------------------------------------------------
PROXY -- MFS INVESTMENT MANAGEMENT
------------------------------------------------------------------------------------------------------------------------
MFS(R) HIGH INCOME MUNICIPAL TRUST - COMMON SHARES
MFS(R) HIGH YIELD MUNICIPAL TRUST - COMMON SHARES
MFS(R) INVESTMENT GRADE MUNICIPAL TRUST - COMMON SHARES
500 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF EACH TRUST
NOTICE OF THE 2008 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 9, 2008
The signer of this proxy card hereby appoints Christopher R. Bohane, Timothy M. Fagan, Mark D. Fischer, Brian E.
Langenfeld, Susan S. Newton, and Susan A. Pereira and each of them separately, proxies, with power of substitution, and
hereby authorizes each of them to represent, and to vote, as designated on the reverse side, at the Meeting of
Shareholders of the above-referenced Trusts, on Thursday, October 9, 2008 at 9:30 a.m., Boston time, and at any
adjournments thereof, all of the common shares of the Trust that the undersigned would be entitled to vote if personally
present.
Each trust will hold its meeting simultaneously with each other Trust. Shareholders of each Trust will vote separately on each item.
Only a Trust's shareholders of record on August 4, 2008 will be entitled to vote at that Trust's Meeting of Shareholders.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SIGNING SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES RECOMMEND A VOTE FOR THE PROPOSALS ON THE
REVERSE SIDE.
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND RETURNING THE ENCLOSED PROXY, WHICH WILL
HELP AVOID THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION FOR YOUR TRUST. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO
POSTAGE AND IS PROVIDED FOR YOUR CONVENIENCE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE
MFS INVESTMENT MANAGEMENT
Using a BLACK INK pen, mark your votes with an X as shown in [X]
this example. Please do not write outside the designated areas.
---------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
---------------------------------------------------------------------------------------------------------------------------
\/ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. \/
[A] PROPOSALS -- THE TRUSTEES OF YOUR TRUST RECOMMEND THAT YOU VOTE IN FAVOR OF ITEMS 1-3.
1. Election of Directors: 01 - William R. Gutow 02 - Michael Hegarty 03 - Robert W. Uek
04 - J. Atwood Ives 05 - Laurie J. Thomsen
[ ] MARK HERE TO VOTE FOR ALL NOMINEES
[ ] MARK HERE TO WITHHOLD VOTE FROM ALL NOMINEES
01 02 03 04 05
[ ] FOR ALL EXCEPT - To withhold a vote for one or [ ] [ ] [ ] [ ] [ ]
more nominees, mark the box to the left and the
corresponding numbered box(es) to the right.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. To approve an amended and restated [ ] [ ] [ ] 3. To amend or remove certain [ ] [ ] [ ]
Declaration of Trust for each Trust. fundamental investment
policies of the Trusts.
4. To transact such other business as may
properly come before the Meeting and any
adjournment(s) or postponement(s) thereof.
[B] AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please give full title. If a corporation, please sign
in full corporate name and indicate the signer's office. If a partnership, sign in the partnership name.
Date (mm/dd/yyyy) -- Please print Signature 1 -- Please keep signature Signature 2 -- Please keep signature
date below. within the box. within the box.
---------------------------------- ------------------------------------ -------------------------------------
---------------------------------- ------------------------------------ -------------------------------------
\/ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.\/
------------------------------------------------------------------------------------------------------------------------
PROXY -- MFS INVESTMENT MANAGEMENT
------------------------------------------------------------------------------------------------------------------------
MFS(R) HIGH INCOME MUNICIPAL TRUST - PREFERRED SHARES
MFS(R) HIGH YIELD MUNICIPAL TRUST - PREFERRED SHARES
MFS(R) INVESTMENT GRADE MUNICIPAL TRUST - PREFERRED SHARES
500 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF EACH TRUST
NOTICE OF THE 2008 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 9, 2008
The signer of this proxy card hereby appoints Christopher R. Bohane, Timothy M. Fagan, Mark D. Fischer, Brian E.
Langenfeld, Susan S. Newton, and Susan A. Pereira and each of them separately, proxies, with power of substitution, and
hereby authorizes each of them to represent, and to vote, as designated on the reverse side, at the Meeting of
Shareholders of the above-referenced Trusts, on Thursday, October 9, 2008 at 9:30 a.m., Boston time, and at any
adjournments thereof, all of the preferred shares of the Trust that the undersigned would be entitled to vote if
personally present.
Each trust will hold its meeting simultaneously with each other Trust. Shareholders of each Trust will vote separately on each item.
Only a Trust's shareholders of record on August 4, 2008 will be entitled to vote at the Trust's Meeting of Shareholders.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SIGNING SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES RECOMMEND A VOTE FOR THE PROPOSALS ON THE
REVERSE SIDE.
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND RETURNING THE ENCLOSED PROXY, WHICH WILL
HELP AVOID THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION FOR YOUR TRUST. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO
POSTAGE AND IS PROVIDED FOR YOUR CONVENIENCE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE
MFS INVESTMENT MANAGEMENT
(CONTROL NUMBER HERE)
(BAR CODE HERE)
MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6
ELECTRONIC VOTING INSTRUCTIONS
YOU CAN VOTE BY INTERNET OR TELEPHONE! AVAILABLE 24 HOURS A DAY,
7 DAYS A WEEK!
Instead of mailing your proxy, you may choose one of the two
voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED
BY 9:29 A.M., EASTERN TIME, ON OCTOBER 9, 2008.
VOTE BY INTERNET
o Log on to the Internet and go to www.investorvote.com
o Follow the steps outlined on the secured website.
VOTE BY TELEPHONE
o Call toll free 1-800-652-VOTE (8683) within the United
States, Canada & Puerto Rico any time on a touch tone
telephone. There is NO CHARGE to you for the call.
o Follow the instructions provided by the recorded message.
Using a BLACK INK pen, mark your votes with an X as shown in [X]
this example. Please do not write outside the designated areas.
---------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD 123456 C0123456789 12345
---------------------------------------------------------------------------------------------------------------------------
\/ IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION
IN THE ENCLOSED ENVELOPE. \/
[A] PROPOSALS -- THE TRUSTEES OF YOUR TRUST RECOMMEND THAT YOU VOTE IN FAVOR OF ITEMS 1, 2 3 AND 4.
1. Election of Directors: 01 - J. Atwood Ives 02 - William R. Gutow 03 - Michael Hegarty
04 - Robert W. Uek
[ ] MARK HERE TO VOTE FOR ALL NOMINEES
[ ] MARK HERE TO WITHHOLD VOTE FROM ALL NOMINEES
01 02 03 04
[ ] FOR ALL EXCEPT - To withhold a vote for one or [ ] [ ] [ ] [ ]
more nominees, mark the box to the left and the
corresponding numbered box(es) to the right.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. To approve an amended and restated [ ] [ ] [ ] 3. To amend or remove certain [ ] [ ] [ ]
Declaration of Trust for each Trust. fundamental investment
policies of the Trusts.
4. For Intermarket Income Trust I only, [ ] [ ] [ ] 5. To transact such other
to approve a proposal to make business as may
non-fundamental an investment properly come before
policy of the Trust. the Meeting and any
adjournment(s) or
postponement(s)
thereof.
[B] AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please give full title. If a corporation, please sign
in full corporate name and indicate the signer's office. If a partnership, sign in the partnership name.
Date (mm/dd/yyyy) -- Please print Signature 1 -- Please keep signature Signature 2 -- Please keep signature
date below. within the box. within the box.
---------------------------------- ------------------------------------ -------------------------------------
---------------------------------- ------------------------------------ -------------------------------------
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
\/ IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE
BOTTOM PORTION IN THE ENCLOSED ENVELOPE.\/
------------------------------------------------------------------------------------------------------------------------
PROXY -- MFS INVESTMENT MANAGEMENT
------------------------------------------------------------------------------------------------------------------------
MFS(R)INTERMARKET INCOME TRUST I
MFS(R)INTERMEDIATE HIGH INCOME FUND
500 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF EACH TRUST
NOTICE OF THE 2008 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 9, 2008
The signer of this proxy card hereby appoints Christopher R. Bohane, Timothy M. Fagan, Mark D. Fischer, Brian E.
Langenfeld, Susan S. Newton, and Susan A. Pereira and each of them separately, proxies, with power of substitution, and
hereby authorizes each of them to represent, and to vote, as designated on the reverse side, at the Meeting of
Shareholders of the above-referenced Trusts, on Thursday, October 9, 2008 at 9:30 a.m., Boston time, and at any
adjournments thereof, all of the shares of the Trust that the undersigned would be entitled to vote if personally
present.
Each Trust will hold its meeting simultaneously with each Trust. Shareholders of each Trust will vote separately on each item.
Only a Trust's shareholders of record on August 4, 2008 will be entitled to vote at that Trust's Meeting of Shareholders.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SIGNING SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES RECOMMEND A VOTE FOR THE PROPOSALS ON THE
REVERSE SIDE.
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND RETURNING THE ENCLOSED PROXY, WHICH WILL
HELP AVOID THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION FOR YOUR TRUST. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO
POSTAGE AND IS PROVIDED FOR YOUR CONVENIENCE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE