DEF: MFS Trusts Set 2025 Annual Meeting for Trustee Elections

MFS closed-end trusts schedule 2025 annual meeting to elect trustees.

Summary

• Nine MFS Trusts (MFS Charter Income Trust, MFS Government Markets Income Trust, MFS High Income Municipal Trust, MFS High Yield Municipal Trust, MFS Intermediate High Income Fund, MFS Intermediate Income Trust, MFS Investment Grade Municipal Trust, MFS Multimarket Income Trust, MFS Municipal Income Trust) will hold their 2025 Annual Meeting of Shareholders.
• The meeting is scheduled for Thursday, October 2, 2025, at 10:30 a.m. Eastern Time, at 111 Huntington Avenue, Boston, Massachusetts.
• The primary purpose of the meeting is the election of Trustees to the Board of Trustees for each Trust.
• Shareholders of record as of the close of business on July 31, 2025, are entitled to receive notice of and to vote at the meeting.
• The Board of Trustees unanimously recommends that shareholders vote in favor of all nominated trustees.
• Proxy materials were mailed to shareholders on or about August 22, 2025.
• The anticipated cost for Computershare's solicitation and voting tabulation services is $32,084, with potential for substantial increases if proposals are contested or increased solicitation is required.
• A previous shareholder activist, Bulldog Investors, LLP, had intended to submit proposals for MFS Investment Grade Municipal Trust and MFS High Yield Municipal Trust, but a settlement agreement was reached, extending the deadline for a liquidity event proposal until December 31, 2025, contingent on a specific discount threshold.

Sentiment

Score: 6

Explanation: The filing is largely routine for an annual meeting proxy statement, focusing on trustee elections and corporate governance. The presence of shareholder activism, though managed by a settlement, introduces a minor negative sentiment, but the overall strong governance structure and proactive management of the activist situation prevent a lower score. No new financial or strategic developments are disclosed that would significantly alter sentiment.

Positives

• The Board of Trustees comprises 12 Trustees, with 11 being Independent Trustees, ensuring strong independent oversight.
• An Independent Trustee serves as the Chair of the Board, further enhancing independent leadership.
• Seven standing committees, all exclusively composed of Independent Trustees, are in place to delegate specific matters and enhance governance efficiency.
• The Board is committed to actively seeking individuals with diverse backgrounds, experience, and perspectives for trustee candidates, including women and underrepresented minority candidates.
• Independent Trustees are required to invest an amount equal to their prior calendar year's base retainer and meeting attendance fees in MFS Funds within two years of Board membership, aligning their interests with shareholders.
• The Audit Committee maintains robust oversight, reviewing audited financial statements with management and the independent public accounting firm, and establishing procedures for handling accounting-related complaints.

Negatives

• Laurie J. Thomsen, a Trustee since March 2005, is expected to retire effective December 31, 2025, due to the Board's retirement policy (20 years of service).
• A late filing of Form 3 was made on behalf of Kasey Phillips (Treasurer) due to an administrative oversight by the Trusts' administrator, although it did not involve trading in Trust shares.
• Shareholder activism from Bulldog Investors, LLP, regarding MFS Investment Grade Municipal Trust and MFS High Yield Municipal Trust, indicates some level of shareholder dissatisfaction, although a settlement agreement is currently in place.

Risks

• The Board's oversight of risk management processes of service providers, including those related to cybersecurity and other operational failures, is inherently limited as these operations are carried out by third-party providers.
• The cost of proxy solicitation and voting tabulation services, initially anticipated at $32,084, may increase substantially if any proposal is contested or if increased solicitation efforts are required.
• Bulldog Investors, LLP, may resubmit shareholder proposals for MFS Investment Grade Municipal Trust and MFS High Yield Municipal Trust if the average trading discount of shares is equal to or less than 7.50% for a consecutive 30-calendar day period prior to December 31, 2025.

Future Outlook

The Board reserves the right to reconsider the date, time, and/or means of convening each Trust's meeting, potentially conducting it solely by remote communications or as a hybrid meeting, with details to be announced via press release and SEC filing. Laurie J. Thomsen is expected to retire effective December 31, 2025, due to the Board's retirement policy. The Settlement Agreement with Bulldog Investors, LLP, extends the deadline for meeting the Discount Threshold until December 31, 2025, after which Bulldog may resubmit proposals if the condition is met.

Management Comments

• The Trustees of your Trust recommend that you vote in favor of Item 1.
• Your vote is important. We would appreciate you 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 10:00 a.m., Eastern Time, on the date of the meeting, which will help avoid the additional expense of a second solicitation for each Trust.
• The Board, including the Independent Trustees, unanimously recommends that the shareholders of each Trust vote to elect each of the nominees as a Trustee of each Trust.

Industry Context

This filing is a standard proxy statement for closed-end funds, which routinely hold annual meetings to elect trustees and address corporate governance. The mention of shareholder activism from Bulldog Investors, LLP, highlights a common challenge in the closed-end fund industry, where persistent discounts to Net Asset Value (NAV) can attract activist investors seeking liquidity events or governance changes. The Board's commitment to diversity in trustee selection aligns with broader corporate governance trends and investor expectations.

Comparison to Industry Standards

• The Board structure, with 11 out of 12 Trustees being Independent and an Independent Chair, aligns with and often exceeds best practices for corporate governance in the investment company industry.
• The establishment of seven standing committees, all exclusively composed of Independent Trustees, demonstrates a robust and well-segregated oversight framework, consistent with leading closed-end fund complexes.
• The policy mandating Independent Trustees to invest in MFS Funds aligns their financial interests with those of shareholders, a practice considered a strong governance standard.
• The filing does not provide specific comparable companies, projects, or financial results to benchmark against global industry standards.

Management Changes

Corporate Governance

Legal Proceedings

• Bulldog Investors, LLP, a shareholder activist, previously provided notice of its intention to submit shareholder proposals for MFS Investment Grade Municipal Trust and MFS High Yield Municipal Trust, requesting the election of two individuals as Trustees and a non-binding proposal for a liquidity event. A settlement agreement was reached, deferring these proposals unless specific conditions related to share trading discount are met by December 31, 2025.

Related Party Transactions

• MFS (Massachusetts Financial Services Company) serves as the investment adviser and administrator for all nine Trusts.
• Certain employees of MFS also serve as the Trusts' officers, including the principal executive officer and principal financial and accounting officer.
• MFS is a subsidiary of Sun Life of Canada (U.S.) Financial Services Holdings, Inc., which is an indirect majority-owned subsidiary of Sun Life Financial Inc.
• The Board and its Contracts Review Committee evaluate the terms of investment advisory and principal underwriting agreements with MFS.
• The Pricing Committee delegates primary responsibility for valuation functions to MFS.
• The Audit Committee pre-approves audit and permissible non-audit services provided by the Independent Registered Public Accounting Firm to the Trust and to MFS and its Service Affiliates if the services relate directly to the Trust's operations and financial reporting.

Stakeholder Impact

• **Shareholders**: Directly impacted by the election of Trustees, who are responsible for the oversight of the Trusts. Common and preferred shareholders have specific voting rights for different trustee positions. Shareholder activism from Bulldog Investors highlights concerns about share price discount to NAV for some trusts, which could impact shareholder value if not addressed.
• **Trustees/Management**: The election process and the Board's retirement policy directly affect the composition and tenure of the Board. The compensation structure for Independent Trustees is disclosed.
• **MFS (Investment Adviser/Administrator)**: Continues its role as investment adviser and administrator, with its services and risk management activities subject to Board oversight.
• **Service Providers (e.g., Computershare, Independent Registered Public Accounting Firms)**: Their services are essential for the Trusts' operations, and their fees are disclosed, impacting their business relationship with the Trusts.

Next Steps

• Shareholders are encouraged to vote on the election of Trustees by October 2, 2025.
• The 2025 Annual Meeting of Shareholders will be held on October 2, 2025.
• Laurie J. Thomsen is expected to retire from the Board effective December 31, 2025.
• The deadline for Bulldog Investors, LLP's Discount Threshold is extended to December 31, 2025, after which they may resubmit proposals if the condition is met.
• Shareholder proposals intended for inclusion in the 2026 Annual Meeting Proxy Statement must be received by April 24, 2026.
• Shareholder proposals for the 2026 Annual Meeting not for inclusion in the proxy statement have specific submission windows between May 24, 2026, and July 8, 2026, or June 23, 2026, and July 8, 2026, depending on the Trust.

Key Dates

Recommendation

The filing is a standard proxy statement for an annual meeting, primarily addressing the election of trustees and corporate governance matters. It does not contain new financial disclosures or strategic shifts that would warrant a change in investment stance. While shareholder activism is mentioned, the existing settlement agreement suggests a managed situation rather than an immediate crisis. Investors should continue to monitor the performance of the underlying funds and the discount to NAV, but this filing itself does not present a compelling reason to buy or sell.

Keywords

MFS, Closed-End Funds, Proxy Statement, Annual Meeting, Trustee Election, Corporate Governance, Shareholder Vote, Investment Management, SEC Filing, MFS Charter Income Trust, MFS Government Markets Income Trust, MFS High Income Municipal Trust, MFS High Yield Municipal Trust, MFS Intermediate High Income Fund, MFS Intermediate Income Trust, MFS Investment Grade Municipal Trust, MFS Multimarket Income Trust, MFS Municipal Income Trust, Bulldog Investors, Shareholder Activism