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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[X] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
MFS Charter Income 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):
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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MFS(R) Proxy Information
The 2001 Shareholder
Proxy for MFS(R) Funds
Streamlined processes for greater efficiencies
Questions & Answers
Your proxy vote: your right and responsibility to your fellow shareholders
YOUR VOTE IS IMPORTANT
Starting in August 2001, the MFS(R) funds are asking all of their account
holders for their support by voting on the 2001 proxy. That means that more than
4.5 million account holders will receive a proxy. Because this is such a massive
undertaking, these proxy mailings will be sent in groups from late August
through mid-September.
Your proxy vote is important. It is your right, and it is your responsibility to
your fellow shareholders.
ALL SHARES IN ALL ACCOUNTS MUST BE VOTED
If you have more than one account, you'll receive more than one proxy --
possibly even in the same package. To conserve mailing costs, we have tried to
send all of your proxies together. However,the staggered mailings may mean that
you'll get several of these "householded" packages. It's very important that you
vote every proxy that you receive. Otherwise, there may not be enough votes to
conduct the shareholder meetings. And that will require costly follow-up
mailings to nonvoting account holders.
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Proxy mailings are a fund expense, so are follow-up solicitations and mailings.
Please vote all of your proxies now, and save your fund some money.
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FOCUS ON SIMPLIFICATION
The proposals contained in the proxy for each fund vary in the specifics, but
the general theme for most of them is the same: simplification. For example, we
currently have three different Boards of Trustees; we believe it would be more
efficient if we had just one. The questions and answers that follow will explain
the proxy process and help you wade through the proposals.
Please take the time to read the enclosed proxy material and vote your proxy.
You can vote by
o mailing your completed and signed proxy card in the enclosed postage-paid
envelope
o voting on the Internet
o voting by telephone on a toll-free number
You'll find the complete voting instructions included in this package.
Both we and your fellow shareholders thank you for voting now. We look forward
to hearing from you.
1. WHO IS ASKING FOR MY VOTE?
The Trustees of your MFS funds are asking you to vote on several proposals at
the upcoming shareholder meetings. The election of new Trustees requires a
shareholder vote, and MFS recommended to the Trustees that certain other
changes be made.
2. HOW DO THE TRUSTEES RECOMMEND SHAREHOLDERS TO VOTE?
The Trustees recommend that you vote FOR all proposals.
3. WHO IS ELIGIBLE TO VOTE?
If you were the shareholder of record on the record date, you are entitled to
vote at the meeting or at any adjournment of the meeting. You may cast one
vote for each share of record that you own on each matter presented at the
meeting that affects your fund.
4. WHAT WILL I BE ASKED TO VOTE ON?
o To elect a Board of Trustees
The purpose of this proposal is to streamline the oversight of these MFS
funds by creating a combined Board that will oversee all MFS funds organized
in the United States. Currently, three separate Boards of Trustees serve the
MFS funds. Due to a number of pending Trustee retirements, the combined Board
will avoid the need to add new Trustees to the various Boards in the near
future.
The combined Board would reduce the duplication of Board materials and
reports and avoid repeated presentations by the same personnel at different
meetings.
o To authorize the Trustees to adopt an amended and restated Declaration of
Trust
The Declaration of Trust is the charter document that describes how a fund
conducts business and how it is governed.
This proposal would modernize the Declaration of Trust and make it the same
for almost all MFS funds.
o To amend, remove, or add certain fundamental investment policies
The MFS funds have certain fundamental investment policies that cannot be
changed without shareholder approval. Some of these policies are no longer
needed due to changes in applicable laws and can now be eliminated or
revised. This proposal would modernize the funds' fundamental investment
policies and make them the same for almost all of the MFS funds. The funds
will continue to be managed in accordance with the investment policies
described in their prospectuses. The Trustees do not expect that the revised
policies will change significantly the level of investment risk associated
with an investment in the funds.
o To change the fund's investment policy relating to investments in
fixed-income securities from fundamental to nonfundamental.
Currently,the fund's investment policies may not be changed without
shareholder approval.
This proposal would allow the funds' Trustees to change this investment
policy without obtaining further shareholder approval. The added flexibility
would permit the fund to react more quickly if it determines that an
investment policy change is in shareholders' best interest. This would save
the cost and time delays of conducting a shareholder meeting. Currently, the
Trustees have no intention of changing this investment policy.
o To approve a new Investment Advisory Agreement with MFS
Each MFS fund has an Investment Advisory Agreement with MFS.
This proposal would modernize this Agreement and make it the same for almost
all of the MFS funds.
Under this proposal,the investment management fee payable by the fund would
not change.
o To ratify the selection of the independent public accountants for the current
fiscal year
This is a standard, routine item on proxy statements.
5. HOW WILL MY VOTES BE RECORDED?
Votes that are received prior to a fund's shareholder meeting will be voted
as you specify on each proposal. If you simply sign and date the proxy card
but do not specifically vote on one or more of the proposals, your shares
will be voted FOR all of the nonspecified proposals.
6. WHAT IF I WANT TO REVOKE MY PROXY?
You can revoke your proxy at any time by sending us a written revocation or a
more recently dated proxy card. Your request or new proxy card must be
received before the shareholder meeting.
7. WHAT HAPPENS IF THERE AREN'T ENOUGH VOTES TO APPROVE A PROPOSAL BY THE
SHAREHOLDER MEETING DATE?
The shareholder meeting for that fund will be adjourned to a later date, and
shareholders who have not voted will be solicited again. Follow-up
solicitations, which are a fund expense, are costly. That's why your vote is
so important and why we urge you to vote your proxy now. You should also know
that a fund may adjourn its meeting more than once.
8. HOW CAN I GET MORE INFORMATION ABOUT THE FUNDS?
A copy of the annual report for each fund was mailed previously to you. If
you would like us to send you free copies of any fund's most recent annual or
semiannual report, please call us toll free at 1-800-637-2304 or write to the
funds at MFS Service Center, Inc., 2 Avenue de Lafayette, Boston,
Massachusetts 02111-1738.
9. WHOM DO I CALL IF I HAVE QUESTIONS?
You May Call Georgeson Shareholder Communications Inc., the MFS Funds' Proxy
Solicitor, at 1-888-833-1493.
Your vote is important to us and to your fellow shareholders. Please vote
your proxies as soon as possible and return them in the envelope provided.
We look forward to receiving your vote.
[MFS LOGO]
INVESTMENT MANAGEMENT
(C)2001 MFS Investment Management(R).
MFS(R)investment products are offered through MFS Fund Distributors, Inc., 500
Boylston Street, Boston, MA 02116. MFS-4MCR-9/01
MFS Charter Income Trust
500 Boylston Street
Boston, Massachusetts 02116
September 13, 2001
Dear Shareholder:
An annual meeting of shareholders of MFS Charter Income Trust (referred
to as the Fund) will be held at the Fund's offices, 500 Boylston Street,
Boston, Massachusetts, on October 31, 2001, at 9:30 a.m. (Boston time).
At the meeting, you will be asked to elect Trustees of your Fund. Certain
nominees already serve as Trustees, and other nominees are currently Trustees
of other MFS funds. The new Board will combine your Fund's current Trustees
with Trustees supervising other funds in the MFS Family of Funds. The combined
Board is designed to simplify and streamline oversight of all funds in the MFS
Family of Funds.
You will also be asked to approve an amended and restated declaration of
trust, the revision or elimination of certain investment policies and a new
investment advisory agreement. These items are designed to modernize and
standardize the agreements and investment restrictions governing the funds in
the MFS Family of Funds, including the Fund, and to provide for efficiencies
and flexibility in the Fund's operations.
As a shareholder, you cast one vote for each share you own. THE TRUSTEES
RESPONSIBLE FOR YOUR FUND UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR EACH OF THESE
PROPOSALS.
If you cannot attend the meeting, you may participate by proxy. After you
have reviewed the enclosed materials, please cast your vote on the enclosed
proxy card or vote by telephone or over the Internet. Instructions for
telephone and Internet voting are enclosed.
YOUR VOTE ON THESE MATTERS IS IMPORTANT. PLEASE VOTE PROMPTLY BY
COMPLETING AND SIGNING THE PROXY CARD AND RETURNING IT IN THE ENVELOPE PROVIDED
OR BY FOLLOWING THE ENCLOSED INSTRUCTIONS TO VOTE BY TELEPHONE OR OVER THE
INTERNET.
If you have any questions about the proposals to be voted on, please call
Georgeson Shareholder Communications Inc. at 1-888-833-1493.
Thank you for your participation in the meeting.
Sincerely,
Jeffrey L. Shames
Chairman
MFS CHARTER INCOME TRUST
500 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 31, 2001
An Annual Meeting of Shareholders of MFS Charter Income Trust (referred to as
the Fund) will be held at the Fund's offices, 500 Boylston Street, Boston,
Massachusetts, 9:30 a.m. (Boston time) on Wednesday, October 31, 2001, for the
following purposes:
ITEM 1. To elect a Board of Trustees, 10 of whom are independent of the MFS
Funds' investment adviser.
ITEM 2. To authorize the Trustees to adopt an Amended and Restated Declaration
of Trust.
ITEM 3. To amend or remove certain fundamental investment policies.
ITEM 4. To change the Fund's investment policy relating to investments in
fixed income securities from fundamental to non-fundamental.
ITEM 5. To approve a new investment advisory agreement with Massachusetts
Financial Services Company.
ITEM 6. To ratify the selection of the independent public accountants for the
current fiscal year.
ITEM 7. To transact such other business as may properly come before the
Meeting and any adjournments thereof.
YOUR TRUSTEES RECOMMEND THAT YOU VOTE FOR ALL ITEMS.
Shareholders of record on August 14, 2001 are entitled to vote at the Annual
Meeting of Shareholders and at any adjournments thereof.
Stephen E. Cavan, Secretary and Clerk
September 13, 2001
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 Charter Income Trust
(referred to as the Fund) to be used at the Annual Meeting of Shareholders of
the Fund to be held at 9:30 a.m. on Wednesday, October 31, 2001 at the Fund's
offices, 500 Boylston Street, Boston Massachusetts, and at any adjournment
thereof. The Meeting will be held for the purposes set forth in the
accompanying Notice. 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 Secretary of the Fund or delivered at the Meeting. Solicitation of
proxies is being made by the mailing of this Notice and Proxy Statement with
its enclosures on or about September 13, 2001.
Shareholders of record at the close of business on August 14, 2001 will be
entitled to one vote for each share held. The number of shares of the Fund
outstanding on August 14, 2001 was __________.
The mailing address of the Fund is 500 Boylston Street, Boston, Massachusetts
02116. A copy of the Annual or Semi-Annual Report for the Fund may be obtained
without charge by contacting MFS Service Center, Inc., P.O. Box 9024, Boston,
Massachusetts 02205-9824 or calling MFS by telephone toll-free 1-800-637-2304.
VOTE REQUIRED: Each nominee named in Item 1 must be elected by a plurality of
the shares of the Fund voted at the Meeting. Approval of Item 2 requires the
affirmative vote of 66 and 2/3% of the shares of the Fund outstanding and
entitled to vote. Approval of Items 3, 4 and 5 requires the affirmative vote of
a "majority of the outstanding voting securities" of the Fund. Approval of Item
6 requires the affirmative vote of a majority of the shares of the Fund voted
at the Meeting.
Under applicable law, the vote of "a majority of the outstanding voting
securities" means the affirmative vote of the lesser of (a) 67% or more of the
voting securities of the Fund that are present at the Meeting or represented by
proxy if holders of more than 50% of the outstanding voting securities of the
Fund are present or represented by proxy or (b) more than 50% of the
outstanding voting securities of the Fund.
The following table summarizes these voting requirements:
Vote Required for Approval
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Item 1 Each nominee must be elected by a plurality
(Election of Trustees) of the shares of the Fund voted at the
Meeting
Item 2 Approved by 66 and 2/3% of the shares of
(Approval of Amended and Restated the Fund outstanding and entitled to vote
Declaration of Trust)
Item 3 Approved by a "majority of the outstanding
(Changes to Fundamental Investment voting securities" of the Fund
Policies)
Item 4 Approved by a "majority of the outstanding
(Change to the Fund's investment voting securities" of the Fund
policy relating to investments in
fixed income securities from
fundamental to non-fundamental)
Item 5 Approved by a "majority of the outstanding
(Approval of Investment Advisory voting securities" of the Fund
Agreement)
Item 6 Approved by a majority of the shares of the
(Ratification of Selection of Fund voted at the Meeting
Accountants)
GENERAL BACKGROUND
At the meeting, you will be asked to elect Trustees of your Fund. Certain
nominees already serve as Trustees, and other nominees are currently Trustees
of other MFS funds. The new Board will combine your Fund's current Trustees
with Trustees supervising other funds in the MFS Family of Funds. The combined
Board is designed to simplify and streamline oversight of all funds in the MFS
Family of Funds.
You will also be asked to approve an amended and restated declaration of trust,
the revision or elimination of certain investment policies and a new investment
advisory agreement. These items are designed to modernize and standardize the
agreements and restrictions governing the funds in the MFS Family of Funds,
including the Fund, and to provide for efficiencies and flexibility in the
Fund's operations.
If approved, each proposal will take effect on January 1, 2002, or, in the
event that shareholder approval has not been obtained by that date, as soon as
reasonably practicable after shareholders have approved the proposal.
ITEM 1 -- TO ELECT A BOARD OF TRUSTEES.
At the Meeting, you will be asked to elect a Board of Trustees for your Fund.
The existing Trustees of the Fund have determined, pursuant to the Fund's
declaration of trust, that the number of Trustees of the combined Board of
Trustees shall be fixed for the time being at 13. Proxies not containing
specific instructions to the contrary will be voted for the election as
Trustees of the 14 nominees listed below. (As noted below, Mr. Robb's term of
office expires at this annual meeting of shareholders, and he is seeking
re-election only for the remainder of 2001).
Currently, funds in the MFS Family of Funds are served by three separate Boards
of Trustees. Under this proposal, the separate Boards will be consolidated so
that the same individuals serve on the Boards of all of the MFS Funds.
Historically, the three separate Boards have had separate meetings but often
have reviewed the same policy issues, contractual arrangements and other
matters. Among other potential efficiencies, consolidating into one Board would
reduce the duplication of Board materials and reports covering the same topics
and would avoid the need for repeated presentations by the same personnel at
different meetings. The Trustees of the three Boards, including the Trustees of
your Fund, have agreed that both the MFS Funds and their adviser, Massachusetts
Financial Services Company (referred to as MFS), would enjoy efficiencies and
potential future cost savings if the same individuals served as Trustees of all
of the MFS Funds.
The Trustees who currently supervise your Fund are Marshall N. Cohan, Lawrence
H. Cohn, Sir J. David Gibbons, Abby M. O'Neill, Walter E. Robb, III, Arnold D.
Scott, Jeffrey L. Shames, J. Dale Sherratt and Ward Smith. The Trustees who
currently supervise your Fund have served in that capacity continuously since
originally elected or appointed. These Trustees, other than Messrs. Cohan and
Robb who will be retiring at the end of 2001, are nominees to serve on the
combined Board of the MFS Funds.
The other nominees listed on page __ were nominated by your Fund's Board of
Trustees on June 13, 2001, subject to approval by the shareholders. These
nominees do not currently serve as Trustees of your Fund, but have agreed to do
so if elected by shareholders. These nominees currently serve on one other
Board of the MFS Funds, and have served in that capacity continuously since
originally elected or appointed.
The Board of Trustees of your Fund is currently divided into three classes,
each having a term of three years. Each year the term of one class expires. The
term of office of the class containing Messrs. Gibbons and Scott expires at
this annual meeting of shareholders. Mr. Robb's term also expires at this
annual meeting of shareholders. He is seeking re-election, but will retire at
the end of 2001. The term of office of Mr. Cohan would have expired at the 2002
annual meeting of shareholders, but he will be retiring at the end of 2001. In
connection with the election of the new Trustees and the anticipated retirement
of Messrs. Cohan and Robb, the new Trustees will be assigned to particular
classes and existing Trustees may be assigned to new classes in order to
achieve a balanced number of Trustees among the classes. The proposed new class
assignments are listed below. Each Trustee's term of office will expire at the
annual meeting of shareholders noted below.
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Term Expires at 2002 Term Expires at 2003 Term Expires at 2004
Annual Meeting Annual Meeting Annual Meeting
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William R. Gutow John W. Ballen Lawrence H. Cohn
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J. Atwood Ives William J. Poorvu Sir J. David Gibbons
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Abby M. O'Neill J. Dale Sherratt Lawrence T. Perera
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Jeffrey L. Shames Ward Smith Arnold D. Scott
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Marshall N. Cohan* Elaine R. Smith
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Walter E. Robb, III*
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* As noted above, these Trustees are retiring as of December 31, 2001.
If, before the election, any nominee refuses or is unable to serve, proxies
will be voted for a replacement nominee designated by your current Trustees.
You are being asked to elect all of the nominees listed in the table below and
to re-elect your current Trustees. Aside from those Trustees who are retiring
at the end of the year and Messrs. Gibbons and Scott, your current Trustees
will continue to serve as Trustees of your Fund even if shareholders do not
approve Item 1.
The following table presents certain information regarding the Trustees (other
than Mr. Cohan, who will be retiring) and nominees for Trustee, 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.
NAME, POSITION WITH THE FUND, AGE
PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS(1)
JEFFREY L. SHAMES* (born 6/2/55) Trustee, Chairman and President
Massachusetts Financial Services Company, Chairman and Chief Executive
Officer.
JOHN W. BALLEN* (born 9/12/59) Nominee for Trustee
Massachusetts Financial Services Company, President and Director.
LAWRENCE H. COHN, M.D. (born 3/11/37) Trustee
Brigham and Women's Hospital, Chief of Cardiac Surgery; Harvard
Medical School, Professor of Surgery.
THE HON. SIR J. DAVID GIBBONS, KBE (born 6/15/27) Trustee
Edmund Gibbons Limited (diversified holding company), Chief
Executive Officer; Colonial Insurance Company Ltd., Director and
Chairman; Bank of Butterfield, Chairman (until 1997).
WILLIAM R. GUTOW (born 9/27/41) Nominee for Trustee
Private investor and real estate consultant; Capitol Entertainment
Management Company (video franchise), Vice Chairman.
J.ATWOOD IVES (born 5/1/36) Nominee for Trustee
Private investor; Eastern Enterprises (diversified services company),
Chairman, Trustee and Chief Executive Officer (until November 2000);
KeySpan Corporation (energy related services), Director.
ABBY M. O'NEILL (born 4/27/28) Trustee
Private investor; Rockefeller Financial Services, Inc. (investment
advisers), Chairman and Chief Executive Officer.
LAWRENCE T. PERERA (born 6/23/35) Nominee for Trustee
Hemenway & Barnes (attorneys), Partner.
WILLIAM J. POORVU (born 4/10/35) Nominee for Trustee
Harvard University Graduate School of Business Administration, Adjunct
Professor; CBL & Associates Properties, Inc. (real estate investment
trust), Director; The Baupost Fund (a mutual fund), Vice Chairman and
Trustee.
WALTER E. ROBB, III (born 8/18/26) Trustee
Benchmark Advisors, Inc. (corporate financial consultants),
President and Treasurer; Benchmark Consulting Group, Inc. (office
services), President; Smith Barney CitiFunds (mutual funds),
Trustee.
ARNOLD D. SCOTT* (born 12/16/42) Trustee
Massachusetts Financial Services Company, Senior Executive Vice
President and Director.
J. DALE SHERRATT (born 9/23/38) Trustee
Insight Resources, Inc. (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); Paragon Trade Brands, Inc.
(disposable consumer products), Director.
ELAINE R. SMITH (born 4/25/46) Nominee for Trustee
Independent consultant.
WARD SMITH (born 9/13/30) Trustee
Private investor.
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(1) Directorships or trusteeships of companies required to report to the
Securities and Exchange Commission (i.e., "public companies").
* "Interested person" of MFS 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. The address of MFS is 500
Boylston Street, Boston, Massachusetts.
Each Trustee holds comparable positions with certain affiliates of MFS or with
certain other funds of which MFS or a subsidiary is the investment adviser or
distributor. Messrs. Ballen, Ives, Perera, and Poorvu and Ms. Smith serve as
board members of 45 funds within the MFS Family of Funds. Messrs. Cohn,
Gibbons, Sherratt and Smith and Ms. O'Neill serve as board members of 42 funds
within the MFS Family of Funds. Mr. Gutow serves as board member of 73 funds
within the MFS Family of Funds. Messrs. Shames and Scott serve as board members
of 115 funds within the MFS Family of Funds.
Information about Trustee compensation, Trustee retirement plan arrangements
and the executive officers of the Fund appears under "Fund Information" on page
___.
Your current Board of Trustees meets regularly throughout the year to discuss
matters relating to your Fund. The Board has a standing Audit Committee,
currently composed of Messrs. Cohan, Robb, Sherratt, and Smith, to review the
internal and external accounting and auditing procedures of your Fund and,
among other things, to consider the selection of independent public accountants
for your Fund, to approve all significant services proposed to be performed by
those accountants and to consider the possible effect of the services on the
independence of those accountants. The Audit Committee consists only of
Trustees who are not "interested persons" of your Fund as defined in the 1940
Act and who are independent of the Fund as defined by New York Stock Exchange
Listing Standards. The Fund's Audit Committee Charter appears in Appendix A to
this proxy statement. The Audit Committee's report on the Fund's most recent
audited financials is included in Item 6 below.
The Board has also created a Nominating Committee, composed solely of all of
the current Trustees who are not "interested persons" of the Fund as defined in
the 1940 Act, that is responsible for recommending qualified candidates to the
Board in the event that a position is vacated or created. The Nominating
Committee would consider recommendations by shareholders if a vacancy were to
exist. Shareholders wishing to recommend Trustee candidates for consideration
by the Nominating Committee may do so by writing the Fund's Secretary. Members
of the Nominating Committee confer periodically and hold meetings as required.
Information about Board and Committee meetings held by the Fund appears under
"Fund Information" on page ____. Each Trustee attended at least 75% of the
Board and applicable Committee meetings noted.
The Fund's declaration of trust currently provides that the Fund 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 Fund, 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 Fund 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 his
or her office.
REQUIRED VOTE
Approval of this proposal as to any nominee will require the affirmative vote
of a plurality of the outstanding shares of your Fund voting at the Meeting in
person or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
EACH NOMINEE AS A TRUSTEE.
ITEM 2 -- TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST.
The Fund is organized as a Massachusetts business trust. Under Massachusetts
law, a business trust usually operates under a charter or organizational
document, called a declaration of trust, that contains various provisions
relating primarily to how the trust conducts business and how the trust is
governed. The Fund operates under a declaration of trust.
At the Meeting, you will be asked to authorize your Trustees to adopt for your
Fund the Amended and Restated Declaration of Trust appearing in Appendix B to
this proxy statement (called, in this proxy statement, the Restated
Declaration). The Restated Declaration amends and restates the existing
declaration of trust of the Fund (called, in this proxy statement, the Existing
Declaration) in its entirety. The Trustees have approved the Restated
Declaration and recommend that you authorize the Trustees to adopt it. The
Restated Declaration is the standard form that will be used for all MFS
closed-end funds organized as Massachusetts business trusts in the future.
The Restated Declaration gives the Trustees more flexibility and, subject to
applicable requirements of the 1940 Act and Massachusetts law, broader
authority to act. This increased flexibility may allow the Trustees to react
more quickly to changes in competitive and regulatory conditions and, as a
consequence, may allow the Fund to operate in a more efficient and economical
manner. Adoption of the Restated Declaration will not alter in any way the
Trustees' existing fiduciary obligations to act with due care and in the
shareholders' interests.
You should note that your Fund's investments and investment policies will not
change by virtue of the adoption of the Restated Declaration. However, certain
of your Fund's investment policies will be affected by other items in this
proxy statement.
The Restated Declaration makes a number of significant changes to the Existing
Declaration. Certain of these changes give the Trustees greater flexibility and
broader authority to act without shareholder approval. The most significant
changes are summarized below. In addition to the changes described below, there
are other substantive and stylistic differences between the Restated
Declaration and the Existing Declaration. The following summary is qualified in
its entirety by reference to the Restated Declaration itself in Appendix B. The
attached Restated Declaration has been marked to show changes from the Existing
Declaration.
SIGNIFICANT CHANGES
1. REORGANIZATION. The Restated Declaration permits the Trustees, without
shareholder approval, to change the Fund's form of organization, reorganize all
or a portion of the Fund into a newly created entity or a newly created series
of an existing entity, or incorporate all or a portion of the Fund as a newly
created entity. The Existing Declaration requires shareholder approval for this
type of reorganization.
Under certain circumstances, it may not be in the shareholders' interests to
require a shareholder meeting to permit all or a portion of the Fund to
reorganize into another entity or to incorporate. For example, in order to
reduce the cost and scope of state regulatory requirements or to take advantage
of a more favorable tax treatment offered by another state, the Trustees may
determine that it would be in the shareholders' interests to reorganize the
Fund to domicile it in another state or to change its legal form. Under the
Existing Declaration, the Trustees cannot effectuate such a potentially
beneficial reorganization without first conducting a shareholder meeting and
incurring the attendant costs and delays. The Restated Declaration gives the
Trustees the flexibility to reorganize all or a portion of the Fund and achieve
potential shareholder benefits without incurring the delay and potential costs
of a proxy solicitation. This flexibility should help to assure that the Fund
operates under the most appropriate form of organization.
The Restated Declaration requires that shareholders receive written
notification of any reorganization transaction.
The Restated Declaration does not permit the Fund to merge with or sell its
assets to another operating entity without first obtaining shareholder
approval.
2. FUTURE AMENDMENTS. The Restated Declaration may be amended without
shareholder approval in most cases. The Existing Declaration may be amended
without shareholder approval only in certain limited circumstances. Under the
Restated Declaration, shareholders generally retain the right to vote on any
amendment affecting their voting powers, on any amendment affecting the
amendment provisions of the Restated Declaration, on any amendment required by
law or by the applicable Fund's registration statement to be approved by
shareholders, and on any amendment submitted to shareholders by the Trustees.
By allowing amendment of the Restated Declaration without shareholder approval
(except as noted above), the Restated Declaration gives the Trustees the
necessary authority to react quickly to future contingencies.
The Restated Declaration also permits the Trustees to adopt By-Laws concerning
the conduct of business of the Fund and to amend or repeal the By-Laws at any
time so long as the By-Laws are not inconsistent with the Restated Declaration.
3. INVESTMENT IN OTHER INVESTMENT COMPANIES. The Restated Declaration permits
the Fund to invest in other investment companies to the extent not prohibited
by the 1940 Act, and rules and regulations thereunder. Recent amendments to the
1940 Act permit investment companies to invest their assets in one or more
registered investment companies so long as certain conditions are met. It is
possible that there could be additional amendments to the 1940 Act in the
future which affect investment companies' ability to invest in other funds. An
investment structure where a fund invests all of its assets in a single
investment company is sometimes referred to as a "master/feeder" structure. An
investment structure where a fund invests its assets in more than one
investment company is sometimes referred to as a "fund of funds" structure.
Both the master/feeder and fund of funds structure attempt to achieve economies
of scale and efficiencies in portfolio management by consolidating portfolio
management with other investment companies, while permitting a fund to retain
its own characteristics and identity.
The Restated Declaration will permit the Fund to take advantage of the recent
changes in law, as well as any future changes in law or regulation on this
topic. Under the Restated Declaration, the Trustees have the power to implement
a master/feeder, fund of funds or other similar structure without seeking
shareholder approval. If the Fund invests in other investment companies, the
Fund will indirectly bear expenses, such as management fees, of those other
investment companies, in addition to the Fund's own expenses. While the
Trustees have no current intention of implementing a master/feeder, fund of
funds or other similar structure at this time, the Trustees believe
circumstances could arise in which it would be in the best interest of the Fund
to do so at a future date. Shareholders of the Fund would be notified if the
Trustees decide to implement such a structure for the Fund, and the Fund will
not implement such a structure unless its investment restrictions permit it to
do so. Item 3 below also seeks approval of changes to the Fund's investment
restrictions that would permit the use of these structures.
4. TERMINATION OF THE FUND. The Restated Declaration permits the Trustees,
without shareholder approval, to terminate the Fund. The Existing Declaration
permits the Trustees to terminate the Fund only with shareholder approval. The
Board of Trustees may determine that it is in the shareholders' best interests
to terminate the Fund, for example, because the Fund is not big enough to
operate on an economical basis. Shareholders of the Fund would be notified if
the Trustees decide to terminate the Fund.
OTHER CHANGES
The Restated Declaration also changes the Existing Declaration as follows:
1. The Restated Declaration permits the Fund to enter into and amend advisory
and subadvisory agreements without shareholder approval if permitted by
applicable law.
2. The Restated Declaration explicitly allows the Trustees, with shareholder
approval, to effect mergers, reorganizations and similar transactions
through a variety of methods, including share-for-share exchanges,
transfers or sales of assets, and exchange offers.
3. The Restated Declaration provides for (i) the removal of any Trustee with
or without cause at any time by the affirmative vote of two-thirds of the
outstanding shares of the trust or by the vote of three-quarters of the
Trustees, and (ii) the automatic retirement of Trustees in accordance with
any retirement policy set by the Trustees. The Restated Declaration does
not require the Trustees to provide notice to shareholders of the
appointment of a new Trustee.
4. The Restated Declaration no longer requires that the number of Trustees be
fixed in writing or that Trustees be appointed in writing, but permits
these actions to be taken at Board meetings. The Restated Declaration also
provides that the Trustees may act by a two-thirds majority (rather than
unanimous) written consent. The Restated Declaration permits electronic
delivery to shareholders of notices and other information, and simplifies
the information delivery requirements for shareholders in the same
household. These provisions are intended to simplify administration of the
Fund's affairs.
5. The Restated Declaration confirms and clarifies various existing Trustee
powers. For example, the Restated Declaration clarifies that, among other
things, the Trustees may delegate authority to investment advisers and
other agents, purchase insurance insuring Fund assets, employees, Trustees
and Trustees Emeritus, and invest Fund assets in all types of investments
including derivatives. The Restated Declaration also provides that the
Trustees may, but are not obligated to, employ a custodian for the
safekeeping of Fund assets.
6. The Restated Declaration provides that by becoming a shareholder of the
Fund each shareholder shall be held expressly to have assented to and
agreed to be bound by the provisions of the Restated Declaration.
7. The Restated Declaration provides that except when a larger vote is
required by applicable law or by any provision of the Declaration or the
By-Laws, a majority of the shares voted in person or by proxy on a matter
will decide that matter and a plurality will elect a Trustee. A similar
provision is contained in the Fund's By-Laws.
8. The Restated Declaration provides that rights to indemnification or
insurance cannot be limited retroactively.
9. The Restated Declaration provides that shareholders may not bring suit on
behalf of the Fund without first requesting that the Trustees bring such
suit unless there would be irreparable injury to the Fund or if a majority
of the Trustees has personal financial interest in the action. Trustees are
not considered to have a personal financial interest by virtue of being
compensated for their services as Trustees or as trustees of funds with the
same or an affiliated investment adviser or distributor. The effect of this
provision may be to discourage suits brought on behalf of the Fund by its
shareholders. This provision is not intended to impair the right of
shareholders under federal law. A similar provision currently appears in the
Fund's By-Laws.
10. The Restated Declaration provides that actions taken by the Trustees and
officers in good faith and with reasonable care are binding on all
concerned.
ADDITIONAL INFORMATION
Like the Existing Declaration, the Restated Declaration has certain provisions
which could have the effect of limiting the ability of other entities or
persons to acquire control of the Fund, to cause it to merge with or sell its
assets to another operating entity, to terminate the Fund, or to modify its
structure. In addition, the Restated Declaration, like the Existing
Declaration, requires the affirmative vote of a "majority of the outstanding
voting securities" of the Fund to authorize the conversion of the Fund from a
closed-end to an open-end investment company. The foregoing provisions will
make more difficult a change in the Fund's management without the Trustees'
approval, and could have the effect of depriving shareholders of an opportunity
to sell their shares at a premium over prevailing market prices by discouraging
a third party from seeking to obtain control of the Fund in a tender offer or
similar transaction. However, the Board of Trustees has considered these
provisions and believes that they are in the shareholders' best interests and
benefit shareholders by providing the advantage of potentially requiring
persons seeking control of the Fund to negotiate with its management regarding
the price to be paid and facilitating the continuity of the Fund's management.
REQUIRED VOTE
Approval of the Restated Declaration requires the affirmative vote of 66 and
2/3% of the shares of the Fund outstanding and entitled to vote.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR AUTHORIZING THE
TRUSTEES TO ADOPT THE AMENDED AND RESTATED DECLARATION OF TRUST.
ITEM 3 -- TO AMEND OR REMOVE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF
THE FUND.
The Fund has adopted certain investment restrictions or policies that are
"fundamental," meaning that as a matter of law they cannot be changed without
shareholder approval. The Fund's fundamental policies reflect certain
regulatory, business or industry conditions at the time they were adopted.
Changes in applicable law now permit investment companies like the Fund to
revise or eliminate certain of these policies.
The Fund's Board of Trustees, together with the Fund's officers and MFS, have
reviewed the Fund's current fundamental policies, and have concluded that
certain policies should be eliminated or revised based on the development of
new practices and changes in applicable law and to facilitate administration of
the Fund. The proposed revised policies for the Fund are listed in Appendix C.
At the Meeting, shareholders will be asked to approve the revised policies and
to eliminate all other fundamental policies.
The revised policies maintain important investor protections while providing
flexibility to respond to changing markets, new investment opportunities and
future 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 Fund's assets and simplify the process of
monitoring compliance with investment policies. The revised policies (with
variations required by the specific investment focus of a fund) will be the
standard form for funds in the MFS fund complex.
THE REVISED POLICIES DO NOT AFFECT THE INVESTMENT OBJECTIVES OF THE FUND, WHICH
REMAIN UNCHANGED. THE FUND WILL CONTINUE TO BE MANAGED IN ACCORDANCE WITH THE
INVESTMENT POLICIES DESCRIBED IN THE PROSPECTUS AND IN ACCORDANCE WITH FEDERAL
LAW. THE REVISED POLICIES WOULD GIVE THE FUND INCREASED ABILITY TO ENGAGE IN
CERTAIN ACTIVITIES. THE TRUSTEES MAY CONSIDER AND ADOPT SUCH NON-FUNDAMENTAL
INVESTMENT POLICIES FOR THE FUND AS THEY DETERMINE TO BE APPROPRIATE AND IN THE
SHAREHOLDERS' BEST INTERESTS. THE TRUSTEES 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 THE FUND.
Each investment policy proposed to be revised, eliminated or added is discussed
below. Appendix C lists the fundamental policies that will apply to the Fund if
shareholders of the Fund approve this proposal. Appendix D lists the Fund's
current fundamental investment policies and the proposed action to be taken
with respect to each policy.
A. Borrowing
It is proposed that the policy concerning borrowing be changed so that the Fund
may borrow money to the fullest extent permitted by applicable law.
Currently, the Fund may borrow up to one-third of its assets or may pledge,
mortgage or hypothecate its assets: (1) as a temporary measure for
extraordinary or emergency purposes, (2) for a tender offer or otherwise to
repurchase its shares, (3) for investment in accordance with its investment
objective and policies, or (4) whenever the Fund is permitted to make short
sales, which occurs when the Fund, in anticipation that the price of a security
will decline, enters into an agreement to sell a security it does not own.
Currently, the Fund may only engage in short sales "against the box" (short
sales where the Fund owns or has the right to acquire at no added cost
securities identical to those sold short).
The 1940 Act, which is the federal law that governs investment companies like
the Fund, does not require that borrowings be made only for limited purposes,
nor does the 1940 Act require any limit on assets pledged to secure borrowings.
It is possible that the Fund's existing policies could prevent it from
borrowing when it is in the best interests of shareholders to do so. The
revised policy will give the Fund the maximum amount of flexibility to borrow
permitted by applicable law. Currently, the 1940 Act permits investment
companies like the Fund to borrow money so long as there is 300% asset coverage
of the borrowings at the time of the loan. This means that at the time of the
loan borrowings cannot exceed one-third of an investment company's total assets
after subtracting liabilities other than the borrowings. While the statutory
test currently is similar to the Fund's existing policy, the revised policy
would allow the Fund to take advantage of any future changes in the statutory
test.
Investment companies like the Fund generally borrow money to try to enhance
returns to shareholders (this is referred to as leverage). Borrowing money
creates risks and expenses for the Fund and may make the Fund's net asset value
more volatile. The interest and other costs of borrowing may reduce the Fund's
return. The Fund also could be forced to sell securities at inopportune times
to repay loans.
B. Underwriting Securities
It is proposed that the policy concerning underwriting securities be changed so
that the Fund may not underwrite securities issued by other persons, 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. The revised policy also provides that
the Fund is not deemed to underwrite securities by virtue of employing a
master/feeder or fund-of-funds investment structure as permitted by applicable
law. Utilizing these investment structures is discussed in Item 2 of this proxy
statement (under "Significant Changes -- 3. Investment in Other Investment
Companies").
Currently, the Fund is prohibited from underwriting securities issued by others
except to the extent the Fund may be deemed to be an underwriter, under the
federal securities laws, when it sells portfolio securities.
C. Issuance of Senior Securities
It is proposed that the policy concerning the issuance of senior securities be
changed so that the Fund may issue senior securities to the fullest extent
permitted by applicable law. For purposes of this restriction, collateral
arrangements with respect to swaps, options, futures, forwards and initial and
variation margin are not deemed to be the issuance of a senior security.
Currently, the Fund is subject to a fundamental policy that provides that it
may not issue any senior securities except as permitted by the 1940 Act.
Certain technical changes are being made to this policy to clarify the
circumstances in which the Fund may issue senior securities, including pursuant
to any exemptive relief under the 1940 Act. In addition, the revised policy
clarifies and expands the types of collateral arrangements that are excluded
from the restriction to include swaps.
D. Lending of Money or Securities
It is proposed that the policy concerning lending money be changed so that the
Fund may make loans to the fullest extent permitted by applicable law.
Currently, the Fund is prohibited from lending money. The Fund may lend its
securities, but not in excess of 30% of its total assets (taken at market
value). Investments in commercial paper, debt securities and repurchase
agreements are not treated as loans for purposes of these policies. The revised
policy will permit the Fund to make loans, whether of money or securities, so
long as the transactions are permitted by applicable law.
Lending securities may be a source of income to the Fund and is permitted under
the 1940 Act, subject to certain limitations. As with other extensions of
credit there are risks of delay in recovery or even loss of rights in the
underlying securities should the borrower of the securities fail financially.
However, loans would be made in accordance with procedures approved by the
Trustees only to firms deemed by MFS to be of good standing, and when, in the
judgment of MFS, the income from securities loans justifies the attendant risk.
It is unlikely that the Fund would lend money, except to the extent that the
purchase of debt securities can be considered a loan; however, the Fund could
lend money to other funds advised by MFS or one of its affiliates. The Fund
would have to obtain exemptive relief from the Securities and Exchange
Commission (referred to as the SEC) to make loans to other MFS-advised funds.
E. Real Estate, Oil and Gas, Mineral Interests, and Commodities
It is proposed that the policy concerning real estate, oil, gas and mineral
interests, and commodities be changed so that the Fund may not purchase or sell
real estate, interests in oil, gas or mineral leases, commodities or commodity
contracts in the ordinary course of its business. Under this policy, the Fund
will be able to invest in securities secured by real estate and securities of
companies that deal in real estate, as well as options and futures and forward
contracts, and the Fund also will retain the right to hold and sell real
estate, mineral leases, commodities or commodity contracts acquired as a result
of the ownership of securities.
The revised policy clarifies that the restrictions relating to investments in
real estate and commodities do not apply to investments in any type of option
contract, futures contracts, forward contracts, and securities of companies,
such as real estate investment trusts, which deal in real estate or interests
therein.
F. Industry Concentration
It is proposed that the policy concerning concentration in a particular
industry be changed so that the Fund may not purchase securities of an issuer
of a particular industry if as a result 25% or more of the Fund's 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, except
that the Fund may invest up to 40% of the value of its assets in each of the
electric utility and telephone industries.
This revised policy is similar to the Fund's existing concentration policy,
except that the revised policy clarifies that the calculation of concentration
is made with respect to the Fund's total assets taken at market value at the
time of purchase of the security in question. The revised policy also removes
the restriction that the Fund may not invest more than 25% of its total assets
in either of the electric utility and telephone industries unless yields
available for four consecutive weeks in the four highest rating categories on
new issue bonds in such industry (issue size of $50 million or more) have
averaged in excess of 105% of yields of new issue longer term industrial bonds
similarly rated (issue size of $50 million or more). If the Fund concentrates
in the electric utility and telephone industries, its investment performance
would be closely tied to the performance of companies in these industries.
Companies in a single industry often are faced with the same obstacles, issues
and regulatory burdens, and their securities may react similarly and more in
unison to these or other market conditions. Accordingly, the Fund could be
riskier than funds with more broadly diversified portfolios.
G. Purchasing Securities on Margin - Removal of Policy
The Fund has a fundamental policy that prevents the Fund from purchasing any
security on margin. Margin transactions generally involve the purchase of
securities with money borrowed from a broker, with cash or securities being
used as collateral for the loan. MFS has recommended the elimination of this
policy on margin transactions to provide the Fund with the maximum amount of
flexibility permitted by applicable law, and any future changes in law, on this
topic. Accordingly, it is proposed that this policy be eliminated in its
entirety.
H. Short Sales - Removal of Policy
Currently, the Fund is prohibited from making short sales of securities, except
that the Fund may make short sales "against the box" (as described above)
subject to the limitation that not more than 10% of the Fund's net assets
(taken at market value) is held as collateral for such sales at any one time.
The 1940 Act prohibits investment companies from making short sales of
securities except in accordance with SEC rules and regulations. The SEC has not
adopted any rules or regulations relating to short sales, except that the staff
of the SEC regards a short sale as a form of leverage and has taken positions
with respect to the use of leveraging transactions. Accordingly, the Fund's
investment policy is more restrictive than applicable law. The Fund is
proposing to delete this policy in its entirety in order to have the maximum
amount of flexibility permitted by applicable law, and any future changes in
law, on this topic.
In a typical short sale the Fund borrows securities from a broker that it
anticipates will decline in value in order to sell to a third party. The Fund
becomes obligated to return securities of the same issue and quantity at some
future date, and it realizes a profit or loss depending upon whether the market
price of the security decreases or increases between the date of the short sale
and the date on which the Fund must replace the borrowed security. Because the
value of a particular security can increase without limit, the Fund could
potentially realize losses with respect to short sales that are not "against
the box" that could be significantly greater than the value of the securities
at the time they are sold short, and such losses could also be unlimited.
I. Investments in a Single Issuer - Removal of Policy
Currently, the Fund is prohibited 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.
Although the Fund is non-diversified, the Fund must meet certain
diversification requirements under the Internal Revenue Code in order to
qualify for beneficial tax treatment as a regulated investment company. These
diversification requirements provide in part that as to 50% of the fund's
assets, investments in any one issuer cannot exceed 5% of the fund's assets and
the fund cannot hold more than 10% of the issuer's outstanding voting
securities at the end of each quarter. The Fund intends to qualify as a
regulated investment company for tax purposes.
The Fund's current diversification policies are more restrictive than required
for the Fund to qualify as a regulated investment company. The Trustees believe
that it is unnecessary to have fundamental policies that are more restrictive
than what the Internal Revenue Code requires. Accordingly, the Fund proposes to
delete this investment policy.
To the extent that the Fund invests its assets in a small number of issuers,
the Fund is more susceptible to any single economic, political or regulatory
event affecting those issuers.
J. Illiquid Investments - Removal of Policy
Currently, the Fund is prohibited from investing more than 20% of the Fund's
assets (taken at market value) in securities of issuers which are subject to
legal or contractual restrictions on resale or which are not readily
marketable. This investment policy is more restrictive than the current
policies of the SEC. The staff of the SEC takes the position that open-end
funds should limit their investments in securities that are not readily
marketable or illiquid securities, to no more than 15% of their net assets
because a higher percentage could make it more difficult to satisfy the funds'
ongoing obligations to redeem fund shares. The staff has not taken the same
position for closed-end funds, like this Fund, which do not have the same
redemption obligations. The Fund wishes to remove the current fundamental
policy in order to have the full flexibility permitted by applicable law and
policy positions, and any future changes in law and policy, on this topic.
To the extent the Fund invests in illiquid securities, the inability to value
or sell these securities at a fair price could have a negative impact on the
Fund's performance. Of course, the Fund will continue to adhere to applicable
rules and policies relating to investments in illiquid securities. Current SEC
policies require that a fund's ability to invest in illiquid securities should
be disclosed in its prospectus. The Fund's prospectus complies with this
policy.
REQUIRED VOTE
Approval of this Item will require the affirmative vote of the holders of a
"majority of the outstanding voting securities" of the Fund.
THE BOARD OF TRUSTEES HAS CONCLUDED THAT THE PROPOSAL TO AMEND OR REMOVE THE
FUNDAMENTAL INVESTMENT POLICIES OF THE FUND WILL BENEFIT THE FUND AND ITS
SHAREHOLDERS. THE TRUSTEES UNANIMOUSLY RECOMMEND VOTING FOR THE PROPOSAL.
ITEM 4 -- TO CHANGE THE FUND'S INVESTMENT POLICY RELATING TO
INVESTMENTS IN FIXED INCOME SECURITIES FROM FUNDAMENTAL TO
NON-FUNDAMENTAL.
The Fund has adopted a policy requiring it to invest, under normal
circumstances, at least 80% of its assets in fixed income securities. Currently
this policy is fundamental, meaning that it may not be changed without
shareholder approval. At the Meeting, shareholders of the Fund will be asked to
approve changing this policy from fundamental to non-fundamental. A
non-fundamental policy may be changed by the Trustees. The Trustees have no
current intention to change this investment policy for the Fund.
Permitting this policy to be changed without shareholder approval will provide
the Fund with greater flexibility should such a change be warranted due to
changing regulations or economic or market conditions. Of course, shareholders
would be notified of any future change.
REQUIRED VOTE
Approval of this Item will require the affirmative vote of the holders of a
"majority of the outstanding voting securities" of the Fund.
THE BOARD OF TRUSTEES HAS CONCLUDED THAT THIS PROPOSAL WILL BENEFIT THE FUND
AND ITS SHAREHOLDERS. THE TRUSTEES UNANIMOUSLY RECOMMEND VOTING FOR THE
PROPOSAL.
ITEM 5 -- TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT WITH
MASSACHUSETTS FINANCIAL SERVICES COMPANY.
At the meeting, you will be asked to approve a new Investment Advisory
Agreement between your Fund and MFS. The investment management fee payable by
your Fund will not increase or decrease if shareholders of your Fund approve
the new Investment Advisory Agreement.
Currently, each fund in the MFS Family of Funds, including your Fund, has a
separate Investment Advisory Agreement with MFS. These Investment Advisory
Agreements were entered into at various times over the past several decades,
and their provisions differ. MFS has recommended that the provisions of all of
the Investment Advisory Agreements be standardized and modernized. MFS believes
that the standardization and modernization of the Investment Advisory
Agreements will simplify the administration of the Fund and other funds in the
MFS Family of Funds.
The discussion below describes the principal differences between the current
and proposed Investment Advisory Agreement (referred to as the Current
Agreement and the New Agreement) and provides additional information about MFS
and about the Board's review of the New Agreement. The New Agreement will be
the standard form for all U.S. registered funds in the MFS fund complex.
The information provided herein is intended to be a summary of the material
changes between the Current Agreement and the New Agreement. This summary is
qualified in its entirety by reference to the comparison of the Current
Agreement and the New Agreement in Appendix E. In particular, please refer to
Appendix E for additional information about other technical changes that were
made to the New Agreement.
A. Current Agreement
MFS has served as the investment adviser for the Fund since the commencement of
the Fund's operations. The Current Agreement, dated July 19, 1989, was last
submitted to shareholders for approval on June 20, 1989.
Under the Current Agreement, MFS provides the Fund with overall investment
advisory services. Subject to such policies as the Trustees may determine, MFS
makes investment decisions for the Fund. For these services and facilities, MFS
receives an annual management fee, computed and paid monthly in an amount equal
to the sum of 0.32% of the average daily net assets of the Fund and 4.57% of
the Fund's daily gross income (i.e., income other than gains from the sale of
securities, short-term gains from options and futures transactions and premium
income from options written). For the fiscal year ended November 30, 2000, MFS
received $4,172,893 from the Fund as compensation under the Current Agreement.
MFS pays the compensation of the Fund's officers and of any Trustee who is an
officer of MFS. MFS also furnishes at its own expense all necessary
administrative services, including office space, equipment, clerical personnel,
investment advisory facilities and all executive and supervisory personnel
necessary for managing the Fund's investments and effecting its portfolio
transactions. The Fund pays the compensation of its Trustees who are not
officers of MFS and all expenses of the Fund (other than those assumed by MFS).
More detailed information about the expenses paid by the Fund is discussed
under "Changes Proposed in the New Agreement" below.
B. Changes Proposed in the New Agreement
1. Advice regarding Other Instruments
The Current Agreement provides that MFS will continuously furnish an investment
program for the Fund and determine from time to time what securities will be
purchased, sold or exchanged and what portion of the assets of the Fund will be
held uninvested. The New Agreement provides that MFS will determine what
securities or other instruments will be purchased, sold or exchanged for the
Fund. The change clarifies that MFS may provide advice as to certain
investments, such as some derivative contracts, that may not be considered
securities. Certain other references to "securities" have been changed to
"securities or other instruments" throughout the New Agreement. This change is
not intended to change the type of investments in which the Fund may invest.
The Fund's investments are governed by its registration statement.
2. Proxy Voting
The New Agreement clarifies that MFS will exercise voting rights, rights to
consent to corporate actions and any other rights pertaining to the Fund's
portfolio securities in accordance with policies and procedures that MFS
presents to the Trustees from time to time. The Current Agreement provides that
MFS may make recommendations as to the manner in which rights relating to
portfolio securities are exercised. This provision in the New Agreement more
closely reflects MFS's current practice with respect to the exercise of rights
pertaining to the Fund's portfolio securities.
3. Brokerage Transactions
The Current Agreement provides that in connection with the selection of brokers
and dealers and the placing of orders, MFS is directed to seek for the Fund
execution of transactions at the best available price.
The New Agreement provides that, in connection with the selection of brokers or
dealers and the placing of orders, MFS is directed to seek for the Fund the
best overall price and execution available from responsible brokerage firms,
taking into account all factors it deems relevant, including by way of
illustration: price, the size of the transaction; the nature of the market for
the security; the amount of the commission; the timing and impact of the
transaction taking into account market prices and trends; the reputation,
experience and financial stability of the broker or dealer involved; and the
quality of services rendered by the broker or dealer in other transactions.
This provision clarifies that MFS may consider factors other than just price
when seeking to obtain best execution for the Fund's transactions. Under the
policies of the SEC, MFS considers the full range and quality of a broker's
services in placing brokerage orders in order to fulfill its duty to obtain
best execution for the Fund's transactions.
The New Agreement provides that MFS may cause the Fund to pay a broker or
dealer a higher commission than another broker or dealer might have charged for
effecting that transaction, if MFS determines, in good faith, that the higher
commission was reasonable in relation to the value of brokerage and research
services provided by the broker or dealer. The value of these brokerage and
research services may be viewed in terms of either the Fund's particular
transactions or MFS's overall responsibilities with respect to the Fund and
MFS's other clients. The Fund's Current Agreement provides that subject to the
requirement of seeking the best available price, securities may be bought from
or sold to broker dealers who have furnished statistical, research and other
information or services to MFS.
The New Agreement also provides that, subject to seeking the best price and
execution as described above, and in accordance with applicable rules and
regulations, MFS may consider sales of shares of the Fund or of other MFS funds
or accounts as a factor in the selection of brokers and dealers.
The additional provisions in the New Agreement are not intended to change the
current practice of MFS as to its consideration of brokerage and research
services and sales of Fund shares in the selection of brokers and dealers.
4. Expenses
The Current Agreement provides that the Fund will pay all of its own expenses.
The Current Agreement contains a list of typical Fund expenses. This list of
expenses has been amended to include expenses of repurchasing shares;
organizational and start up costs; and such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Fund is a party or otherwise may have an exposure and
the legal obligation which the Fund may have to indemnify the Trustees and
officers with respect thereto. This amendment is being proposed in order to
provide a standardized list of Fund expenses within the MFS Family of Funds.
The New Agreement provides that if MFS pays or assumes any expenses of the
Fund, MFS is not obligated by the New Agreement to pay or assume the same or
similar expenses of the Fund on any subsequent occasion.
These amendments are designed to clarify the types of expenses which the Fund
may bear.
5. Certain Recordkeeping Services by MFS
The New Agreement adds a provision that MFS must maintain certain records in a
form acceptable to the Fund and in compliance with the rules and regulations of
the SEC. MFS currently maintains such records, even without the express
obligation to do so.
6. Sub-Advisory Agreements
The New Agreement provides that the Adviser may from time to time enter into
investment sub-advisory agreements with respect to the Fund with one or more
investment advisers with such terms and conditions as MFS may determine,
provided that such investment sub-advisory agreements have been approved in
accordance with the provisions of applicable law. Under applicable law, any new
investment sub-advisory agreement generally must be submitted to shareholders
for approval, subject to limited exceptions. It is not currently intended that
MFS enter into an investment sub-advisory agreement with respect to the Fund,
but MFS has in the past engaged investment sub-advisers with respect to other
MFS funds and may seek to engage sub-advisers for the Fund in the future.
7. Other Agreements with MFS
The New Agreement adds a provision that the Fund may enter into such other
agreements covering the provision of administrative and other additional
services to the Fund as the Trustees may deem appropriate, and that such an
agreement will not expand, reduce or otherwise alter the services which MFS is
required to provide, or the compensation which MFS is due, under the Agreement.
These other agreements may be with MFS, an affiliate of MFS or a third party.
These amendments are not intended to change the services MFS is required to
provide, or change the fees paid to MFS.
8. Other Clients of MFS
The Current Agreement for the Fund provides that the services of MFS to the
Fund are not exclusive, and that MFS is free to render investment and/or other
services to others. The New Agreement adds an express acknowledgment by the
Fund that it is possible that certain funds or accounts managed by MFS or its
affiliates may at times take investment positions or engage in investment
techniques which are contrary to positions taken or techniques engaged in on
behalf of the Fund, but that MFS will at all times endeavor to treat all of its
clients in a fair and equitable manner.
Under the New Agreement, the Fund acknowledges that whenever the Fund and one
or more other funds or accounts advised by MFS have money available for
investment, investments suitable for each will be allocated in a manner
believed by MFS to be fair and equitable to each entity. Similarly,
opportunities to sell investments will be allocated in a manner believed by MFS
to be fair and equitable to each client. In some instances, this may adversely
affect the size of the position that may be acquired or disposed of for the
Fund.
9. Other Provisions
The New Agreement adds certain other technical, legal provisions which are
standard for investment advisory contracts in the investment company industry,
including provisions concerning the Fund's ability to use the acronym "MFS" and
related trade and service marks in its name.
C. Information about MFS and its Affiliates
MFS is a Delaware corporation with offices at 500 Boylston Street, Boston,
Massachusetts 02116. MFS is an 81.8%-owned subsidiary of Sun Life of Canada
(U.S.) Financial Services Holdings, Inc., 500 Boylston Street, Boston,
Massachusetts 02116, which is in turn a wholly-owned subsidiary of Sun Life
Assurance Company of Canada - U.S. Operations Holdings, Inc., One SunLife
Executive Park, Wellesley Hills, Massachusetts 02481. Sun Life Assurance
Company of Canada - U.S. Operations Holdings, Inc. is a wholly-owned subsidiary
of Sun Life Assurance Company of Canada, 150 King Street West, 14th Floor,
Toronto, Canada M5H 1J9, which in turn is a wholly-owned subsidiary of Sun Life
Financial Services of Canada, Inc. at the same address.
The Directors of MFS are Arnold D. Scott, John W. Ballen, James C. Baillie,
Kevin R. Parke, Thomas J. Cashman, Jr., Joseph W. Dello Russo, William W.
Scott, Jr., Donald A. Stewart, C. James Prieur and William W. Stinson. The
Executive Officers of MFS are Jeffrey L. Shames, Chairman and Chief Executive
Officer; Mr. Ballen, President; Mr. Arnold Scott, Senior Executive Vice
President; Mr. Dello Russo, Executive Vice President, Chief Financial Officer
and Chief Administrative Officer; Mr. Parke, Executive Vice President and Chief
Investment Officer; Mr. Cashman, Executive Vice President; and Mr. William
Scott, Jr., Vice Chairman. As noted above, Messrs. Arnold Scott and Shames also
serve as Trustees to the Fund.
The address of each Director and Executive Officer of MFS is 500 Boylston
Street, Boston, Massachusetts 02116. Each Director and Executive Officer
principally devotes his time to his role at MFS.
The Fund has entered into certain other agreements with MFS or its affiliates
for administrative and shareholder services. The approval of the New Agreement
will not affect the services provided by MFS or its affiliates under these
agreements.
MFS provides the Fund with certain financial, legal, compliance, shareholder
servicing, and other administrative services pursuant to a Master
Administrative Services Agreement. Under this Agreement, the Fund pays MFS an
administrative fee of up to 0.0175% on the first $2.0 billion; 0.0130% on the
next $2.5 billion; 0.0005% on the next $2.5 billion; and 0.0% on amounts in
excess of $7.0 billion, per annum of the Fund's average daily net assets. This
fee reimburses MFS for a portion of the costs it incurs to provide such
services. For the fiscal year ended November 30, 2000, MFS received $84,103
from the Fund for its services to the Fund under the Master Administrative
Services Agreement.
Pursuant to the Registrar, Transfer Agency and Service Agreement between the
Fund and MFS Service Center, Inc. (MFSC), a wholly owned subsidiary of MFS,
MFSC acts as the Fund's registrar and transfer agent as well as dividend
disbursing agent and agent in connection with the Fund's Dividend Reinvestment
and Cash Purchase Plan. For account maintenance, the Fund currently pays MFSC a
fee based on the total number of accounts for all closed-end funds advised by
MFS for which MFSC acts as registrar and transfer agent. If the total number of
accounts is less than 75,000, the annual account fee is $9.00 per account. If
the total number of accounts is 75,000 or more, the annual account fee is $8.00
per account. For dividend services, MFSC charges $0.75 per dividend
reinvestment and $0.75 per cash infusion. If the total amount of fees related
to dividend services is less than $1,000 per month for all closed-end funds
advised by MFS for which MFSC acts as registrar and transfer agent, the minimum
fee for the Fund for these services will be $167 per month. In addition, MFSC
is reimbursed by the Fund for certain expenses incurred by MFSC on behalf of
the Fund. For the fiscal year ended November 30, 2000, MFSC received $121,796
from the Fund for its services to the Fund under the Registrar, Transfer Agency
and Service Agreement.
D. Actions and Recommendations of the Board of Trustees
At meetings of the Board of Trustees on April 10, June 12, June 13 and August
8, 2001, the Board considered the standardization and modernization of the
advisory agreements of the Fund. The Board reviewed materials comparing the
Current and New Agreement and providing information about the potential
benefits and costs to shareholders of the adoption of the New Agreement. Among
other things, the Board of Trustees considered that the management fees under
the Current Agreement will not change under the New Agreement. The Board also
considered the potential efficiencies from the proposed standardization and
modernization of the Current Agreement's provisions. Based on this review, the
Trustees, including the Independent Trustees, approved the terms of the New
Agreement and submission of the New Agreement for the consideration of the
shareholders of the Fund.
If the New Agreement is approved, it will continue for an initial two-year
term. Thereafter, the New Agreement will continue as to the Fund from year to
year if that continuation is approved in accordance with applicable law.
REQUIRED VOTE
Approval of this Item will require the affirmative vote of the holders of a
"majority of the outstanding voting securities" of the Fund.
YOUR TRUSTEES HAVE CONCLUDED THAT THE NEW ADVISORY AGREEMENT WITH MFS WILL
BENEFIT YOUR FUND AND ITS SHAREHOLDERS. THE TRUSTEES UNANIMOUSLY RECOMMEND
VOTING FOR THE PROPOSAL.
ITEM 6 -- TO RATIFY THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS.
At the Meeting, you will be asked to ratify the selection of accountants for
your Fund. The Trustees, including a majority of the Trustees who are not
"interested persons" (as that term is defined in the 1940 Act) of the Fund,
have selected Ernst & Young LLP as independent public accountants for the Fund
for its next fiscal year. It is intended that proxies not limited to the
contrary will be voted in favor of ratifying that selection. No change to the
Fund's accountants is being proposed.
Ernst & Young has no direct or material indirect interest in the Fund.
Representatives of Ernst & Young are not expected to be present at the meeting.
Audit Committee Report. The Audit Committee of the Board of Trustees issued the
following report concerning the financial statements for the Fund's most recent
fiscal year.
The Audit Committee reviewed and discussed the audited financial
statements with Fund management. The Audit Committee also discussed with
Ernst & Young 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 Ernst & Young
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and discussed with Ernst & Young its
independence.
Based on this review and these discussions, the Audit Committee
recommended to the Board of Trustees that the audited financial
statements be included in the Fund's annual report to shareholders for
the fiscal year ended November 30, 2000 for filing with the Securities
and Exchange Commission.
Marshall N. Cohan
Walter E. Robb, III
J. Dale Sherratt
Ward Smith
Fees Paid to Ernst & Young. The following table sets forth the aggregate fees
paid to Ernst & Young for the Fund's fiscal year ended November 30, 2000, for
professional services rendered for: (i) the audit of the Fund's financial
statements for that fiscal year; (ii) the audits of the annual financial
statements for all funds in the MFS complex audited by Ernst & Young; (iii)
financial information systems design and implementation services to the Fund,
MFS and any entity controlling, controlled by or under common control with MFS
that provides services to the Fund (including MFS Service Center, Inc. and MFS
Distributors, Inc.); and (iv) all other services (other than the foregoing
services) to the Fund, MFS, and any entity controlling, controlled by or under
common control with MFS that provides services to the Fund (Approximately 80%
of this amount represents tax consulting services rendered to MFS and MFS
related entities that provide services to the Fund.). The Audit Committee of
the Fund considered whether the provision of information technology services
and of non-audit services by Ernst & Young is compatible with the maintenance
of that firm's independence.
- -------------------------------------------------------------------------
All Other
Financial Fees (Other
Information than Fees
Systems Design Listed in
Aggregate and Adjoining
Audit Audit Implementation Columns)
Fees Fees Paid Fees Paid by Paid by the
Paid by by All the Fund, MFS Fund, MFS
the Fund Funds in and MFS and MFS
for its the MFS Related Related
Most Complex Entities that Entities
Recent Audited Provide that Provide
Fiscal by Ernst Services to Services to
Year & Young the Fund the Fund
- -------------------------------------------------------------------------------
MFS Charter Income Trust $31,600 $719,700 $0 $108,800
- -------------------------------------------------------------------------------
REQUIRED VOTE
Approval of this proposal will require the affirmative vote of a majority of
the shares of the Fund voted at the Meeting in person or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION
OF THE SELECTION OF ACCOUNTANTS.
FUND INFORMATION
This section provides certain information about the Fund, including information
about executive officers, the number of Board and Committee meetings, Trustee
compensation and the identity of any shareholders holding 5% or more of the
outstanding shares of the Fund.
EXECUTIVE OFFICERS
The following table provides information about the executive officers of the
Fund. 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.
JEFFREY L. SHAMES* (born 6/2/55) Trustee, Chairman and President
Massachusetts Financial Services Company, Chairman and Chief Executive
Officer.
JAMES R. BORDEWICK, JR.* (born 3/6/59) Assistant Secretary and
Assistant Clerk
Massachusetts Financial Services Company, Senior Vice President
and Associate General Counsel.
MARK E. BRADLEY* (born 11/23/59) Assistant Treasurer
Massachusetts Financial Services Company, Vice President (since March
1997); Putnam Investments, Vice President (prior to March 1997).
STEPHEN E. CAVAN* (born 11/6/53) Secretary and Clerk
Massachusetts Financial Services Company, Senior Vice President, General
Counsel and Secretary.
ROBERT R. FLAHERTY* (born 09/18/63) Assistant Treasurer
Massachusetts Financial Services Company, Vice President (since August
2000); UAM Fund Services, Senior Vice President (since 1996).
LAURA F. HEALY* (born 3/20/64) Assistant Treasurer
Massachusetts Financial Services Company, Vice President (since December
1996); State Street Bank and Trust Company, Assistant Vice President
(prior to December 1996).
ELLEN MOYNIHAN* (born 11/13/57) Assistant Treasurer
Massachusetts Financial Services Company, Vice President (since September
1996).
JAMES O. YOST* (born 6/12/60) Treasurer
Massachusetts Financial Services Company, Senior Vice President.
* "Interested person" (as defined in the 1940 Act) of MFS, the address of
which is 500 Boylston Street, Boston, Massachusetts.
BOARD AND COMMITTEE MEETINGS
The Board of Trustees and the Audit Committee held the following number of
meetings during the Fund's fiscal year ended November 30, 2000:
- ---------------------------------------------------------------------------
Number of Board Number of Audit
Meetings Committee Meetings
- ---------------------------------------------------------------------------
MFS Charter Income Trust 6 3
- ---------------------------------------------------------------------------
The Fund's Nominating Committee met once on June 13, 2001.
TRUSTEE COMPENSATION TABLE
The table below shows the cash compensation paid to the current Trustees (other
than Mr. Cohan, who will be retiring) and the retirement benefits accrued as
part of Fund expenses to those Trustees for the Fund's fiscal year ended
November 30, 2000. As interested persons of MFS, Messrs. Shames and Scott do
not receive any compensation or retirement plan benefits from the Fund for
their services as Trustees.
- ---------------------------------------------------------------------------
Retirement Total Trustee
Benefits Accrued Fees from Fund
Trustee Fees as Part of Fund and Fund
Trustee from Fund(1) Expenses Complex(2)
- ---------------------------------------------------------------------------
Lawrence H. Cohn $13,414 $6,849 $143,874
- ---------------------------------------------------------------------------
J. David Gibbons $13,275 $4,761 $135,084
- ---------------------------------------------------------------------------
Abby M. O'Neill $12,775 $4,761 $128,034
- ---------------------------------------------------------------------------
Walter E. Robb, III $14,414 $5,261 $157,524
- ---------------------------------------------------------------------------
J. Dale Sherratt $14,360 $8,024 $153,526
- ---------------------------------------------------------------------------
Ward Smith $14,860 $5,500 $160,351
- ---------------------------------------------------------------------------
- ----------------
(1) During the fiscal year ended November 30, 2000, Messrs. Cohn and Robb
deferred $940 and $6,201 of compensation pursuant to the deferred
compensation plan.
(2) For calendar year 2000. All Trustees receiving compensation from the Fund
served as Trustee of 42 funds within the MFS Family of Funds having
aggregate net assets at December 31, 2000, of approximately $33.9 billion.
The Fund currently has a retirement plan for non-interested Trustees and
Trustees who are not officers of the trust. Under this plan, Trustees must
retire upon reaching a specified age and thereafter are entitled to annual
payments during their lifetime of up to 50% of their average annual
compensation (based on the three years prior to retirement) depending on length
of service. Trustees must have served as Trustees for at least five years to be
entitled to these payments. A Trustee may also retire prior to the specified
retirement age and receive reduced payments if he or she has completed at least
5 years of service. Under the plan, a Trustee (or his or her beneficiaries)
will also receive benefits for a period of time in the event the Trustee is
disabled or dies. These benefits will also be based on the Trustee's average
annual compensation and length of service. The Fund will accrue its allocable
portion of compensation expenses under the retirement plan each year to cover
the current year's service and amortize past service cost.
The Trustees will terminate the Fund's retirement plan effective December 31,
2001 with respect to those Trustees listed in the table above, subject to
shareholder approval of Item 1 relating to the consolidation of the Board of
Trustees. The Trustees are considering whether adjustments should be made to
the fees they receive from the Fund in consideration for the loss of future
benefit accruals under the retirement plans. Upon termination of the plan, an
amount equivalent to the present value of each applicable Trustee's accrued
benefits thereunder through the date of termination would be calculated. The
Trustee would defer receipt of these accrued benefits under a new deferred
compensation plan, under which the value of the benefits would be periodically
adjusted as though an equivalent amount had been invested in shares of the
Fund. The deferred compensation would be paid to the Trustees upon retirement
or thereafter.
The Trustees also have adopted a deferred compensation plan for disinterested
Trustees of the Fund that enables these Trustees to elect to defer all or a
portion of the annual fees they are entitled to receive from the Fund until a
payment date elected by the Trustee (or the Trustee's termination of services).
Under the plan, the compensation deferred by Trustees is periodically adjusted
as though an equivalent amount had been invested in shares of one or more funds
in the MFS Family of Funds designated by the Trustee. The amount paid to the
Trustee on the payment date will be determined based on the performance of the
selected funds. To the extent permitted by the 1940 Act, the Fund may invest in
shares of these other selected MFS Funds in order to match the deferred
compensation obligation. Deferral of fees in accordance with the plan will not
materially affect the Fund's assets, liabilities or net income per share. The
plan does not obligate the Fund to retain the services of any Trustee or pay
any particular level of compensation to any Trustee. The plan is not funded and
the Fund's obligation to pay the Trustees' deferred compensation is a general
unsecured obligation.
INTERESTS OF CERTAIN PERSONS
As of August 14, 2001, the following Trustees and officers owned the number of
shares of the Fund noted in the table below.
NUMBER OF SHARES
NAME OF TRUSTEE OR OFFICER OWNED PERCENT OF FUND
Lawrence H. Cohn 1,443.523
Walter E. Robb III 977.474
Arnold D. Scott 407.062
J. Dale Sherratt 9,822.580
TOTAL HOLDINGS OF TRUSTEES AND 12,650.639
OFFICERS AS A GROUP
As of August 14, 2001, to the best knowledge of the Fund, the following
shareholders beneficially owned 5% or more of the outstanding shares of the
Fund:
NAME AND ADDRESS OF NUMBER OF OUTSTANDING PERCENTAGE OF
SHAREHOLDER SHARES OWNED OUTSTANDING SHARES OWNED
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
matters listed in the accompanying Notice of Annual Meeting of Shareholders and
"for" any other matters deemed appropriate. The presence in person or by proxy
of the holders of a majority of the outstanding shares of the Fund entitled to
vote is required to constitute a quorum at the Meeting for purposes of voting
on Items 1 through 6.
For the purposes of determining the presence of a quorum, abstentions and
broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
person entitled to vote shares on a particular matter with respect to which
brokers or nominees do not have discretionary power) will be treated as shares
that are present but which have not been voted. Abstentions and broker
"non-votes" will not constitute a vote "for" or "against" a matter and will be
disregarded in determining the "votes cast" on an issue. Abstentions and broker
"non-votes" will have the same effect as a vote "against" Items 2, 3, 4 and 5,
and will have no effect on Items 1 or 6.
The Fund has engaged the services of Georgeson Shareholder Communications Inc.
to assist in the solicitation of proxies for the Fund. The costs of the proxy
solicitation are estimated to be $67,493.00 and will be borne by the Fund. The
Fund will reimburse the record holders of its shares for their expenses
incurred in sending proxy material to and obtaining voting instructions from
beneficial owners.
The Fund knows of no other matters to be brought before the Meeting. If,
however, because of any unexpected occurrence, any other matters properly come
before the Meeting, it is the Fund'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.
SUBMISSION OF PROPOSALS
Proposals of shareholders which are intended to be presented at the 2002 Annual
Meeting of Shareholders must be received by the Fund on or prior to March 6,
2002.
SECTION 16(a) -- BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires trustees,
directors and certain directors and certain officers of the Fund and MFS, and
persons who own more than 10% of the Fund'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 the Fund with
copies of all Section 16(a) forms they file.
Based solely on review of the copies of Forms 3, 4, and 5 and amendments
thereto furnished to the Fund with respect to its most recent fiscal year, or
written representations that no Forms 5 were required, the Fund believes that,
during the fiscal year ended November 30, 2000, all Section 16(a) filing
requirements applicable to Trustees, directors and certain officers of the Fund
and MFS and greater than ten percent beneficial owners were complied with.
ADDITIONAL INFORMATION
In the event that sufficient votes in favor of the proposals set forth in the
Notice of Annual Meeting are not received by October 31, 2001, the persons
named as appointed proxies on the enclosed proxy card may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the shares present in person or by proxy at the session of the Meeting to be
adjourned. The persons named as appointed proxies on the enclosed proxy card
will vote in favor of any such adjournment those proxies required to be voted
in favor of the proposal for which further solicitation of proxies is made.
They will vote against any such adjournment those proxies required to be voted
against such proposal. The meeting may be adjourned as to one or more items.
The costs of any additional solicitation and of any adjournment session will be
borne by the Fund.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
September 13, 2001
APPENDIX A
AUDIT COMMITTEE CHARTER
This Audit Committee Charter (Charter) has been adopted by the Board of
Trustees (the Board) of funds listed on Exhibit 1 hereto (each a Fund). The
Audit Committee of the Board (the Committee) shall review and reassess this
charter annually and recommend any proposed changes to the Board for approval.
The Committee assists the Board in fulfilling its responsibility for oversight
of the quality and integrity of the accounting, auditing, internal control and
financial reporting practices of the Fund. It may also have such other duties
as may from time to time be assigned to it by the Board. The membership of the
Committee shall consist of at least three Trustees, who are each free of any
relationship that, in the opinion of the Board, may interfere with such
member's individual exercise of independent judgment. Each Committee member
shall be a non-"interested" Trustee, as such term is defined in Section
2(a)(19) of the Investment Company Act of 1940, and also meet the independence
and financial literacy requirements for serving on audit committees, and at
least one member shall have accounting or related financial management
expertise, all as set forth in the applicable rules of the New York Stock
Exchange. In discharging its oversight role, the Committee shall have the power
to conduct or authorize investigations into any matters within its scope of
responsibilities and shall be empowered to retain, at the expense of the Fund,
independent counsel, accountants, or others to assist it in the conduct of any
investigation. Costs incurred by the Committee in performing its function under
this charter shall be borne by the Fund.
Although the Committee may wish to consider other duties from time to time, the
general recurring activities of the Committee in carrying out its oversight
role are described below. The Committee shall be responsible for:
o Recommending to the Board the independent auditors to be retained (or
nominated for shareholder approval) to audit the financial statements of the
Fund. Such auditors are ultimately accountable to the Board and the
Committee, as representatives of the shareholders.
o Evaluating the performance of the independent auditors and, where
appropriate, recommending to the Board the replacement of such auditors.
o Obtaining annually from the independent auditors a formal written statement
required by Independence Standards Board (ISB) Standard No. 1, as may be
modified or supplemented, and discussing with the auditors their
independence, including information furnished by the auditors detailing all
significant relationships (including non-audit and/or consulting
relationships) the auditors have with the Fund and its investment adviser
and affiliates of such investment adviser and shall consider the
compatibility of nonaudit services with the auditor's independence. The
Committee will recommend that the Board of Trustees take appropriate action
on any disclosed relationships that may reasonably be thought to bear on the
independence of the auditors as required by the Securities Acts administered
by the Securities and Exchange Commission.
The Committee's job is one of oversight. Management is responsible for the
preparation of the Fund's financial statements and the independent auditors are
responsible for auditing those financial statements. The Committee and the
Board recognize that management and the independent auditors have more
resources and time, and more detailed knowledge and information regarding the
Fund's accounting, auditing, internal control and financial reporting practices
than the Committee does; accordingly the Committee's oversight role does not
provide any expert or special assurance as to the financial statements and
other financial information provided by the Fund to its shareholders and others
or any professional certification as to the independent auditors' work.
Exhibit 1
MFS Charter Income Trust
MFS Intermediate Income Trust
MFS Government Markets Income Trust
MFS Multimarket Income Trust
MFS Municipal Income Trust
MFS Special Value Trust
APPENDIX B
NOTE: THIS APPENDIX CONTAINS A COMPARISON OF THE EXISTING DECLARATION OF THE
FUND AND THE STANDARDIZED RESTATED DECLARATION PROPOSED TO BE USED FOR
CLOSED-END FUNDS IN THE MFS FAMILY OF FUNDS. THE DECLARATION HAS BEEN MARKED TO
SHOW THE CHANGES THAT WILL BE MADE IF THE RESTATED DECLARATION PROPOSED IN ITEM
2 IS APPROVED AND ADOPTED. DELETED TEXT IS MARKED THROUGH AND ADDED TEXT APPEARS
IN ITALICS. FOR EDGAR DELETED TEXT IS SET IN BRACKETS AND ADDED TEXT IS SET IN
DOUBLE BRACKETS. THE COVER PAGE AND TABLE OF CONTENTS FOR BOTH THE EXISTING
DECLARATION AND THE RESTATED DECLARATION HAVE BEEN OMITTED.
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MFS CHARTER INCOME TRUST
Dated [[as of _________]][June 13, 1989]
[Declaration of trust made June 13, 1989 by the Trustees:]
WHEREAS, [[MFS Charter Income Trust was established]] pursuant to [a]
[[that certain Amended and Restated]] Declaration of Trust [dated June 2, 1989,
the Trustees established a trust][[, dated as of June 13, 1989, as amended (the
"Existing Declaration"),]] for the investment and reinvestment of funds
contributed thereto;
WHEREAS, [said Declaration of Trust provides] [[the Trustees desire]]
that the beneficial interest in the [trust] [[Trust]] assets [[continue to]] be
divided into transferable [shares of beneficial interest] [[Shares of Beneficial
Interest (without par value)]], as hereinafter provided;
[WHEREAS, said Declaration provides that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time of the shares of beneficial
interest issued hereunder and subject to the provisions hereof;] and
WHEREAS, the Trustees [desire] [[wish]] to amend and restate [said]
[[the Existing]] Declaration [of Trust] in its entirety[[, and hereby certify
that this Amended and Restated]] [as hereafter provide;]
[NOW, THEREFORE, the undersigned Trustees hereby amend and restate the]
Declaration of Trust [[(this "Declaration"), has been amended and restated in
accordance with the provisions of the Existing 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 Existing 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 created hereby] [[Trust]] is
[the "] MFS Charter Income Trust["][[.]]
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "By-Laws" [mean] [[means]] the By-laws referred to in [section]
[[Section]] 3.9 hereof, as from time to time amended.
(b) [the terms]"Commission[," "Interested Person," and "Majority
Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable) have the meanings given
to them][[" has the meaning given that term]] in the 1940 Act.
(c) "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.
(d) "Distributor" means [the] [[a]] party[, other than] [[furnishing
services to]] the Trust[,] [[pursuant]] to [the] [[any]] contract described in
Section 4.2 hereof.
(e) [["Interested Person" has the meaning given that term in the 1940
Act.]]
[[(f)]] "Investment Adviser" means a party furnishing services to the
Trust pursuant to any contract described in Section 4.1 hereof.
[[(g) "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.]]
[[(h)]][(f) The] "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 pursuant
to any exemptive order or similar relief or interpretation issued by the
Commission under such Act.]]
[(g) "Persons]
[[(i) "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.
[(h)]
[[(j)]] "Shareholder" means a record owner of outstanding Shares.
[(i)]
[[(k)]] "Shares" means the Shares of Beneficial Interest into which the
beneficial interest in the Trust shall be divided from time to time [and][[. The
term "Shares"]] includes fractions of Shares as well as whole Shares.
[(j)]
[[(l)]] "Transfer Agent" means [the] [[a]] party[, other than]
[[furnishing services to]] the Trust[, to the] [[pursuant to any transfer
agency]] contract described in Section [4.3] [[4.4]] hereof.
[(k) The]
[[(m)]] "Trust" means the [entity specified in Section 1.1 above.]
[[trust hereunder.]]
[(l) The]
[[(n)]] "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.
[(m) The]
[[(o)]] "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.
[Section 1.3. Address. The address]
[[(p) "Trustees Emeritus" means any former Trustees who, from time
to time, are appointed by the Trustees to serve as trustees emeritus]] of the
Trust [[in accordance with the guidelines and conditions for such service
adopted by the Trustees from time to time, for so long as they serve in that
capacity. Trustees Emeritus, in their capacity as such, are not Trustees of the
Trust for any purpose, and shall not have any powers or obligations of Trustees
hereunder.]] [shall be:]
[500 Boylston Street]
[Boston, Massachusetts 02116]
ARTICLE II
TRUSTEES
--------
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a [written instrument signed 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 [of this Article II] [[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 [all of] the [Trustees] [[first class]] shall
expire on the date of [[the]] first annual meeting of [shareholders]
[[Shareholders]] or special meeting in lieu thereof following [the effective
date of the Registration Statement relating to the Shares under the Securities
Act of 1933, as amended] [[January 1, 2002]]. The term of office of the [first]
[[second]] class shall expire on the date of the second annual meeting of
[shareholders] [[Shareholders]] or special meeting in lieu thereof. The term of
office of the [second] [[third]] class shall expire on the date of the third
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 fourth annual meeting
of shareholders] [[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]
[[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] [[Shareholders]] or special meeting
in lieu thereof called for that purpose, except as provided in Section 2.3 [of
this Article and each] [[hereof.]]
[[Each]] Trustee [elected] shall hold office until [his ][[the earlier
of his or her death or the election and qualification of his or her]] successor
[shall have been elected and shall have qualified]; except [(a)] that[[:]]
[[(a)]] any Trustee may resign his [[or her]] trust (without need for
prior or subsequent accounting) by an instrument in writing signed by [him]
[[that Trustee]] and delivered to the [other Trustees] [[Trust]], which shall
take effect upon such delivery or upon such later date as is specified therein;
(b) [that] any Trustee may be removed [(provided the aggregate number
of Trustees after such removal shall not be less than the number required by
Section 2.1 hereof) with cause,] at any time[[, with or without cause,]] by
written instrument[,] signed by at least [two-thirds] [[three-quarters]] of the
[remaining] Trustees, specifying the date when such removal shall become
effective;
(c) [that] any Trustee who [requests in writing to be retired or who
has become incapacitated by illness or injury may be retired by] [[has attained
a mandatory retirement age established pursuant to any]] written [instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; and (d) a Trustee may be removed at any meeting of Shareholders by a
vote of] [[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) a Trustee may be removed at any meeting of Shareholders by a
vote of Shares representing two-thirds of the]] outstanding Shares [[of the
Trust 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, [he] [[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]
[[Property]] held in the name of the resigning[[, retiring]] or removed Trustee.
Upon the incapacity or death of any Trustee, [his] [[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 [or inability] 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 [shall] [[may]] fill such vacancy by appointing such other
[person] [[individual]] as they in their discretion shall see fit. [Such
appointment shall be evidenced by a written instrument signed by a majority of
the Trustees in office.] Any such appointment shall not become effective,
however, until the person [named in the written instrument or appointment]
[[appointed]] shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of the Declaration. [Within twelve months of
such appointment, the Trustees shall cause notice of such appointment to be
mailed to each Shareholder at his address as recorded on the books of the
Trustees.] An appointment of a Trustee may be made by the Trustees then in
office [and notice thereof mailed to Shareholders as aforesaid] 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] [[all applicable]] provisions [of
Section 16(a)] of the 1940 Act.
Section 2.4. Vacancies. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any [one] of them, shall
not operate to annul the Trust or to revoke any existing agency created pursuant
to the terms of [this] [[the]] Declaration. Whenever a vacancy in the number of
Trustees shall occur, until such vacancy is filled as provided in Section 2.3,
[the] [[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 [of such vacancy] [[thereof]].
Section 2.5. Delegation of Power to Other Trustees. [Any] [[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
[(6)] months at any one time to any other Trustee or Trustees; provided that in
no case shall [less] [[fewer]] than two [(2)] Trustees personally exercise the
powers granted to the Trustees under the Declaration except as [herein]
otherwise expressly provided [[herein]].
ARTICLE III
[Powers of Trustees]
[[POWERS OF TRUSTEES]]
----------------------
Section 3.1. General. [The] [[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] [[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 [to]:
(i) [[to]] 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 [United States] [[securities
of every nature and kind, U.S.]] and foreign currencies, any form of gold [and]
[[or]] other precious [metals] [[metal]], commodity contracts, [options] [[any
form of option contract]], contracts for the future acquisition or delivery of
[[fixed income or other]] securities [and securities][[, derivative
instruments]] of every [nature and kind,] [[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, [evidence] [[evidences]] of
indebtedness, certificates of deposit or indebtedness, commercial paper,
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 [of the] political [subdivisions, agencies or
instrumentalities thereof, and by the United States] [[subdivision, agency or
instrumentality of any such Person,]]
[[(B) the U.S.]] Government, any foreign government, [[or any]]
political [subdivisions thereof or their agencies or instrumentalities, or by]
[[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 [by any
corporation or organization organized] under any foreign law[, or in "when
issued" contracts for any such securities, or][[;]]
[[to]] retain Trust assets in cash and from time to time [[to]] change the
investments [of] [[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, firms,
associations or corporations] [[Persons]] to exercise any of said rights, powers
and privileges in respect of any of said [instruments.] [[investments; and]]
(iii) to carry on any other business in connection with or incidental
to any of the foregoing powers, to do everything necessary, [suitable or] 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 [the] 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 [as] [[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] [[person]] who may hereafter become a Trustee.
Upon the resignation, [[retirement,]] removal or death of a Trustee [he][[, 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] [[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.
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[,
bonds, debentures, notes or other instruments evidencing indebtedness and, ]
[[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[, bonds, debentures, notes or other instruments evidencing
indebtedness] any funds [or property] of the Trust [[or other Trust Property,]]
whether capital or surplus or otherwise[, to the full extent now or hereafter
permitted by the laws of the Commonwealth of Massachusetts governing business
corporations].
Section 3.5. Borrowing Money; Lending Trust Property. The [trustees]
[[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
[assets of 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] [[Property]].
Section 3.6. Delegation[; Committees]. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees [or
agents][[, 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 Trustees [[Emeritus]].
Section 3.9. Manner of Acting; [Bylaws] [[By-Laws]]. Except as
otherwise provided herein[[, in the 1940 Act]] or in the By-[laws] [[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 [being present)] [[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 [all] [[two-thirds
of]] the Trustees. The Trustees may adopt By-[laws] [[Laws]] not inconsistent
with [this] [[the]] Declaration to provide for the conduct of the business of
the Trust and may amend or repeal such By-[laws] [[Laws]] to the extent [such
power is not reserved to the Shareholders] [[permitted therein at any time]].
Section 3.10. Miscellaneous Powers. [The] [[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) [remove Trustees or fill vacancies in or add to their number,]
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 [from their own number,] 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;
(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, [Officers] [[Trustees Emeritus, officers]],
employees, agents, [investment advisers, distributors] [[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] [[Share]]
purchase[[, deferred compensation,]] and other retirement, incentive and benefit
plans for any Trustees, officers, employees [and] [[or]] agents of the Trust;
(f) to the extent permitted by law, indemnify any person with whom the
Trust has dealings, including [the] [[any]] Investment Adviser, [[administrator,
custodian,]] Distributor, Transfer Agent [and selected dealers][[, 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 [but][[, provided, that]] the absence of
such seal shall not impair the validity of any instrument executed on behalf of
the Trust.
[Section 3.11. Principal Transactions. Except in transactions permitted by the
1940 Act, or any order of exemption issued by the Commission, the Trustees shall
not, on behalf of the Trust, buy any securities (other than shares) from or sell
any securities (other than Shares) to, or lend any assets of the Trust to, any
Trustee or officer of the Trust or any firm of which any such Trustee or officer
is a member of the Trust or any firm of which any such Trustee or officer is a
member of the Trust or any firm of which any such Trustee or officer is a member
acting as principal, or have any such dealings with the Investment Adviser,
Distributor or Transfer Agent or with any Interested Person of such Person; but
the Trust may employ any such Person, or firm or company in which such Person is
an Interested Person, as broker, legal counsel, registrar, transfer agent,
dividend disbursing agent or custodian upon customary terms.]
[Section 3.12. Trustees and Officers as Shareholders. No officer, Trustee or
Member of the Advisory Board of the Trust, and no member, partner, officer,
director or trustee of the Investment Adviser or of the Distributor, and no
Investment Adviser or Distributor of the Trust, shall take a short position in
the securities issued by the Trust.]
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR[[, CUSTODIAN]] AND TRANSFER AGENT
-----------------------------------------------------------------
Section 4.1. Investment Adviser. Subject to [a Majority Shareholder
Vote] [[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 [a] [[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 [provisions]
[[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 [and] [[or]]
exchanges shall be deemed to have been authorized by all [of] the Trustees.
[[Such services may be provided by one or more Persons.]]
Section 4.2. Distributor. [The] [[Subject to applicable requirements of
the 1940 Act, the]] Trustees may in their discretion from time to time enter
into [a contract] [[one or more exclusive or non-exclusive distribution
contracts]] providing for the sale of Shares[[,]] whereby the Trust may either
agree to sell the Shares to the other party to [the] [[any such]] contract or
appoint [[any]] such other party its sales agent for such Shares. In either
case, [the] [[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 [this Article IV] [[the
Declaration]] or the By-[laws] [[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 [registered] 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 [a] [[one or more transfer agency or sub-]]transfer
agency and shareholder [service contract or] [[servicing]] contracts whereby the
other party to [[each]] such contract shall undertake to furnish [[such]]
transfer agency and/or shareholder services to the Trust[. The contract or
contracts shall have] [[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]
[[Laws]]. Such services may be provided by one or more Persons.
Section [4.4] [[4.5]]. Parties to Contract. Any contract of the
character described in [[any]] Section [4.1, 4.2 or 4.3] of this Article IV [or
any Custodian contract, as described in the By-laws,] 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 [said] [[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] [[Laws]]. The same
Person may be the other party to contracts entered into pursuant to [Section]
[[Sections]] 4.1, 4.2 [and][[,]] 4.3 [[and 4.4]] above [or Custodian contracts],
and any individual may be financially interested or otherwise affiliated with
Persons who are parties to any or all of the [contract] [[contracts]] mentioned
in this Section [4.4] [[4.5]].
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
-----------------------------------------
TRUSTEES AND OTHERS
-------------------
Section 5.1. No Personal Liability of Shareholders[, Trustees, etc.
Subject to Section 5.3, no][[. 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[. No Trustee,
officer, employee or agent of the Trust shall be subject to any personal
liability whatsoever to any Person, other than the Trust or its Shareholders, in
connection with Trust Property or the affairs of the Trust, save only that
arising from bad faith, willful misfeasance, gross negligence or reckless
disregard for his duty to such Person; and all such Persons shall look solely to
the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any] [[solely by reason of being or
having been a]] Shareholder[, trustee, officer, employee, or agent, as such, of
the Trust, is made a party to any suit or proceeding to enforce any such
liability, he shall not, on account thereof, be held to any personal liability].
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
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. [Non-][[Limitation of]] Liability of Trustees[, etc.
Subject to Section 5.3, no] [[and Others. (a) No]] Trustee, [[Trustee
Emeritus,]] officer, employee or agent of the Trust shall be [liable to
][[subject to any liability whatsoever to any Person in connection with Trust
Property or the affairs of]] the Trust, [its Shareholders, or to any
Shareholder, Trustee,] [[and no Trustee or Trustee Emeritus shall be responsible
or liable in any event for any neglect or wrongdoing of any]] officer,
employee[,] or agent [thereof for any action or failure to act (including
without limitation the failure to compel in any way any former or acting Trustee
to redress any breach] [[of the Trust or for the act of omission of any other
Trustee or Trustee Emeritus. Notwithstanding anything to the contrary in this
Section 5.2(a) or otherwise, nothing in the Declaration shall protect any
Trustee, Trustee Emeritus, 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 [trust) except of his own bad faith,]
willful misfeasance, [[bad faith,]] gross negligence or reckless disregard of
[his duties.] [[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 Trustee
Emeritus, 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[[, Trustee Emeritus]] 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 [he] [[that individual]] becomes involved as
a party or otherwise by virtue of [his] being or having been a Trustee[[,
Trustee Emeritus]] or officer and against amounts paid or incurred by [him]
[[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 threatened; 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 [Trustee or
officer] [[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 [he] [[the Covered Person]] engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of [his] [[that individual's]] office;
(ii) with respect to any matter as to which [he] [[the Covered Person]]
shall have been finally adjudicated not to have acted in good faith in the
reasonable belief that [his] [[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[[,
Trustee Emeritus]] 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 [Trustee or officer] [[Covered Person]], unless there has been
either a determination that such [Trustee or officer] [[Covered Person]] did not
engage in willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of [his] [[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 [he] [[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 [independent][[(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 [Trustee or officer] [[Covered Person]] may
now or hereafter be entitled, shall continue as to a [Person] [[person]] who has
ceased to be [such Trustee or officer] [[a Covered Person]] and shall inure to
the benefit of the heirs, executors and administrators of such [Person]
[[person]]. Nothing contained herein shall [[limit the Trust from entering into
other insurance arrangements or]] affect any rights to indemnification to which
[[Trust]] personnel [other than Trustees and officers][[, 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 [recipient] [[Covered
Person]] to repay such amount if it is ultimately determined that [he] [[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
(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 [an independent] 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 [recipient] [[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][["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 [of Trustees]. No Trustee[[, Trustee
Emeritus 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[,
etc]. No purchaser, lender, [transfer agent ][[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] [[Trust]] estate, and may contain any further recital [which
they or he may deem] [[deemed]] appropriate, but the omission of such recital
shall not operate to bind any of the Trustees[[, officers]] or Shareholders
individually. The Trustees [shall at all times] [[may]] maintain insurance for
the protection of the Trust Property, [its] Shareholders, Trustees, [[Trustees
Emeritus,]] 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[, etc. ][[. 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 [an opinion] [[advice]] of counsel, 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 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 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, 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 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 interest of the beneficiaries
hereunder [shall] [[may]] be divided into transferable [shares of beneficial
interest, all of one class,] [[Shares of Beneficial Interest (]]without par
value[[)]]. The number of [shares of beneficial interest] [[Shares]] authorized
hereunder is unlimited. All Shares issued hereunder including, without
limitation, 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 [any] [[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
[specifically set forth]. The Shares shall not entitle the holder to preference,
preemptive, appraisal, conversion or exchange rights.[[ 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 [and] [[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 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 into a greater or lesser number without
thereby changing [the] [[their]] proportionate beneficial interests in [the]
Trust [[Property]]. Contributions to the Trust may be accepted for whole Shares
and/or [1 1,000 this] [[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 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, [no] [[nor]] to have notice given to [him as ][[that
Shareholder as provided]] herein or in the By-[laws provided, until he] [[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 [his] [[the record
holder's]] agent thereunto [duly] 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
[genuiness] [[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 [register]
[[registrar]] nor any officer, employee or agent of the Trust shall be affected
by any notice of the proposed transfer.
Any [person] [[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 [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
[his] [[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. The Shareholders shall have power to vote
only (i) for the election of Trustees [or for their] [[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 [as provided in Section 4.1] [[on which a shareholder vote is required
by the 1940 Act]], (iii) with respect to termination of the Trust [[to the
extent and]] as provided in Section 8.2 [[hereof]], (iv) with [respects]
[[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,
[conversion] or sale of assets [[to the extent and]] as provided in Sections
8.4[, 8.5] and 8.7 [[hereof]], (vi) with respect to [incorporation] [[any
conversion]] of the Trust [[to an "open-end company"]] to the extent and as
provided in Section [8.5] [[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] [[Laws,]] or any registration of
the Trust with the Commission (or any successor agency) or any [state] [[other
regulator having jurisdiction over the Trust]], or as the Trustees may consider
necessary or desirable.
[Each whole Share]
[[A Shareholder]] shall be entitled to one vote [as to any] [[for each
Share owned by such Shareholder on each]] matter on which [it] [[such
Shareholder]] is entitled to vote and each fractional Share shall be entitled to
a proportionate fractional vote[, except that][[.]] 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 or the By-Laws, 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 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.]]
There shall be no cumulative voting in the election of Trustees. Until
Shares are issued [[and during any period when no Shares are outstanding]], the
Trustees may exercise all rights of Shareholders and may take any action
required by law, the Declaration or the By-[laws] [[Laws]] to be taken by
Shareholders. The By-[laws] [[Laws]] may include further provisions for
[Shareholders'] [[Shareholder]] votes and meetings and related matters.
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 or in a duly adopted vote of the Trustees such bases and
times for determining the per Share net asset value of the 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) 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 [an instrument in writing, without a meeting, signed by
a majority of the Trustees and consented to by the holders of not less than
two-thirds of such Shares] [[the Trustees by written notice to the
Shareholders]]. 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 [of] the powers of the Trustees under [this] [[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] [[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; [provided, that any
sale, conveyance, assignment, exchange, transfer or other disposition of all or
substantially all of the Trust Property shall require Shareholder approval in
accordance with Section 8.4 hereof;] 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.
(b) After termination of the Trust and distribution [of] [[to]] the
Shareholders [[of the Trust]] 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]], and the rights and interests of all Shareholders [[of the Trust]]
shall thereupon cease.
Section 8.3. Amendment Procedure. (a) Except as [[specifically]]
provided [in paragraph (c) of this Section 8.3 this Declaration may be amended
by a Majority] [[herein, the Trustees may, without any]] Shareholder [Vote or by
an instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the holders of not less than a majority of the
Shares outstanding and entitled to vote. The] [[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 [also amend this
Declaration][[,]] without [the vote or consent of Shareholders] [[any
Shareholder vote, amend the Declaration]] 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 [to conform this] [[or advisable, to conform the]] Declaration to the
requirements of applicable [federal or state laws or regulations or the
requirements of the regulated investment company provisions of] [[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 or by the Trust's registration statement to be
approved by Shareholders; and (iv) any amendment submitted to them by the
Trustees. Except 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]] [so to do.]
[(b) No amendment may be made under this Section 8.3 which would change any
rights with respect to any Shares by reducing the amount payable thereon upon
liquidation] of the Trust [or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent ][[, or the written consent,
without a meeting,]] of the holders of [two-thirds] [[Shares representing not
less than a majority of the voting power]] of the Shares [outstanding and
entitled to vote.] [[of the Trust.]]
[[(b)]] Nothing contained in [this] [[the]] Declaration shall permit
the amendment of [this] [[the]] Declaration to impair the exemption from
personal liability of the Shareholders, [[former Shareholders,]] Trustees,
[[Trustees Emeritus,]] officers, employees and agents of the Trust or to permit
[assessment] [[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.]]
(c) No amendment may be made [under this Section 8.3] which shall
amend, alter[,] change or repeal any of the provisions of Section 2.2,[ 8.3,
8.4,] [[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.
[Notwithstanding any other provision hereof, until such time as a Registration
Statement under the Securities Act of 1933, as amended, covering the first
public offering of securities of the Trust shall have become effective, this
Declaration may be terminated or amended in any respect by the affirmative vote
of a majority of the Trustees or by an instrument signed by a majority of the
Trustees.]
Section 8.4. Merger, Consolidation and Sale of Assets. [The] [[Subject
to applicable law and except as otherwise provided in Section 8.5 hereof, the]]
Trust 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[,] 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, or [by
an instrument or instruments in writing][[(b) by the written consent,]] without
a meeting, [consented to by] [[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[; and any][[. 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] [[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 [shareholder]
[[Shareholders]] 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 in connection with the acquisition of assets (including
those subject to liabilities) from any other investment company or similar
entity]].
Section 8.5. Incorporation [and][[,]] Reorganization. [With the
approval of the holders of a majority of the Shares outstanding and entitled to
vote, the Trustees may] [[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 [take over] [[acquire]] all [[or
a portion]] of the Trust Property or to carry on any business in which the Trust
shall directly or indirectly have any interest, and to sell, convey and transfer
[the] [[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] [[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. [Subject to Section 8.4 hereof, the] [[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[, as provided under
the law then in effect. Nothing contained herein shall be construed as requiring
approval of Shareholders for the Trustees to organize or assist in organizing
one or more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the Trust
Property to such organizations or entities.][[. 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. [(a) Notwithstanding any other provision of
this Declaration, at any time prior to and including December 31, 1994, the
conversion of the Trust from a "closed-end company" to an "open-end
company[[,]]" as those terms are defined in Sections 5(a)(2) and 5(a)(1),
respectively, of the 1940 Act as in effect on December 1, 1986, 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. 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.]
[(b)] Notwithstanding any other provision of this Declaration, [at any time
after December 31, 1994,] the conversion of the Trust from a "closed-end
company" to an "open-end company," as those terms are defined in [Sections
5(a)(2) and 5(a)(1), respectively, of] the 1940 Act [as in effect on December 1,
1986], shall require a Majority Shareholder 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 [holders of Shares]
[[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] [[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] [[the]] merger or consolidation of the Trust or any
subsidiary of the Trust with or into any Principal Shareholder[[;]]
(ii) [The] [[the]] issuance of any securities of the Trust to any
[principal] [[Principal]] Shareholder for cash[[;]]
(iii) [The] [[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 [or assets sold in
the ordinary course of business).][[);]]
[(iv) The]
[[(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).
(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
[REPORTS TO SHAREHOLDERS]
[The Trustees shall at least semi-annually submit to the Shareholders a written
financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.]
[ARTICLE X]
MISCELLANEOUS
-------------
Section [10.1.] [[9.1.]] Filing. [This] [[The]] Declaration and any
[[subsequent]] amendment hereto shall be filed in the office of the Secretary of
[the] [[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 [a] [[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 [later] [[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]
[[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 [amendment] [[amendments]] thereto.
Section [10.2] [[9.2]]. Governing Law. [This] [[The]] Declaration is
executed by the [trustees] [[Trustees]] and delivered in [the] [[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 [State.]
[[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.]]
Section [10.3.] [[9.4.]] Counterparts. [This] [[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 [10.4] [[9.5]]. Reliance by Third Parties. Any certificate
executed by an individual who, according to the records of the Trust [appear][[,
appears]] to be [a] [[an officer or]] Trustee hereunder, certifying to:
[(a)][[(i)]] the number or identity of Trustees or Shareholders, [(b)][[(ii)]]
the due authorization of the execution of any instrument or writing,
[(c)][[(iii)]] the form of any vote passed at a meeting of Trustees or
Shareholders, [(d)][[(iv)]] the fact that the number of Trustees or Shareholders
present at any meeting or executing any written instrument satisfies the
requirements of [this] [[the]] Declaration, [(e)][[(v)]] the form of any
By-[laws] [[Laws]] adopted by or the identity of any officers elected by the
Trustees, or [(f)][[(vi)]] the existence of any fact or facts which in any
manner [relate] [[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.]]
[Section 10.5. 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.
IN WITNESS WHEREOF, the undersigned have executed this instrument [this
13th day of June, 1989.] [[as of the _____ day of ________, ________.]]
[[{Trustee Signature Lines}]]
APPENDIX C
FUNDAMENTAL POLICIES TO APPLY TO
THE FUND UPON SHAREHOLDER APPROVAL
The Fund may not:
(1) Borrow Money: borrow money except to the extent such borrowing is not
prohibited by the 1940 Act and exemptive orders granted under such Act.
(2) Underwrite Securities: underwrite securities issued by other persons,
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) Senior Securities: 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.
(4) Make Loans: make loans except to the extent not prohibited by the 1940 Act
and exemptive orders granted under such Act.
(5) Real Estate, Oil and Gas, Mineral Interests, Commodities: purchase or sell
real estate (excluding securities secured by real estate or interests
therein and securities of companies, such as real estate investment 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) 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.
(6) Industry Concentration: 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,
except that the Fund may invest up to 40% of the value of its assets in each
of the electric utility and telephone industries.
APPENDIX D
CURRENT FUNDAMENTAL INVESTMENT POLICIES AND
PROPOSED ACTION TO BE TAKEN
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY PROPOSED NEW POLICY OR PROPOSED REMOVAL OF POLICY
- -----------------------------------------------------------------------------------------------------------------------------------
The Fund may not: The Fund may not:
- -----------------------------------------------------------------------------------------------------------------------------------
(1) borrow money or pledge, mortgage or hypothecate its assets, except (i) Borrow Money: borrow money except to the extent
as a temporary measure for extraordinary or emergency purposes, (ii) for a such borrowing is not prohibited by the 1940 Act
tender offer or otherwise to repurchase its shares, (iii) for investment in and exemptive orders granted under such Act.
accordance with its investment objective and policies, or (iv) as
contemplated by clause (9) below, and in no event shall the Fund borrow in
excess of 1/3 of its assets (for the purpose of this restriction,
collateral arrangements with respect to options, futures Contracts, Options
on Futures Contracts, Forward Contracts and options on foreign currencies
and collateral arrangements with respect to initial and variation margin
are not considered a pledge of assets);
- -----------------------------------------------------------------------------------------------------------------------------------
(2) purchase any security or evidence of interest therein on margin, except It is proposed that this fundamental policy be
that the Fund may obtain such short-term credit as may be necessary for the removed.
clearance of purchases and sales of securities and except that the Fund may
make deposits on margin in connection with options, Futures Contracts,
Options on Futures Contracts, Forward Contracts and options on foreign
currencies;
- -----------------------------------------------------------------------------------------------------------------------------------
(3) underwrite securities issued by other persons except insofar as the Underwrite Securities: underwrite securities
Fund may technically be deemed an underwriter under the Securities Act of issued by other persons, except that all or any
1933 in selling a portfolio security; 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.
- -----------------------------------------------------------------------------------------------------------------------------------
(4) invest in illiquid investments, including securities which are subject It is proposed that this fundamental policy be
to legal or contractual restrictions on resale or for which there is no removed.
readily available market (e.g., trading in the security is suspended or, in
the case of unlisted securities, where no market makers exist), unless the
Board of Trustees has determined that such securities are liquid based upon
trading markets for the specific security, if more than 20% of the Fund's
assets (taken at market value) would be invested in such securities;
- -----------------------------------------------------------------------------------------------------------------------------------
(5) purchase or sell real estate (including limited partnership interests Real Estate, Oil and Gas, Mineral Interests,
but excluding securities secured by real estate or interests therein), Commodities: purchase or sell real estate
interests in oil, gas or mineral leases, commodities or commodity contracts (excluding securities secured by real estate or
(except currencies, currency options, Forward Contracts, Futures Contracts interests therein and securities of companies,
and Options on Futures Contracts) in the ordinary course of the business of such as real estate investment trusts, which
the Fund (the Fund reserves the freedom of action to hold and to sell real deal in real estate or interests therein),
estate acquired as a result of the ownership of securities); interests in oil, gas or mineral leases,
commodities or commodity contracts (excluding
currencies and any type of option, Futures
Contracts and Forward 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.
- -----------------------------------------------------------------------------------------------------------------------------------
(6) purchase securities of any issuer if such purchase at the time thereof It is proposed that this fundamental policy be
would cause more than 10% of the voting securities of such issuer to be removed.
held by the Fund;
- -----------------------------------------------------------------------------------------------------------------------------------
(7) issue any Senior Security (as that term is defined in the 1940 Act), if Senior Securities: issue any senior securities
such issuance is specifically prohibited by the 1940 Act or the rules and except to the extent not prohibited by the 1940
regulations promulgated thereunder (for the purpose of this restriction, Act and exemptive orders granted under such Act.
collateral arrangements with respect to options, Futures Contracts, Options For purposes of this restriction, collateral
on Futures Contracts, Forward Contracts and options on foreign currencies arrangements with respect to any type of swap,
and collateral arrangements with respect to initial and variation margin option, Forward Contracts and Futures Contracts
are not deemed to be the issuance of a senior security); and collateral arrangements with respect to
initial and variation margin are not deemed to
be the issuance of a senior security.
- -----------------------------------------------------------------------------------------------------------------------------------
(8) make loans to other persons except through the lending of its portfolio Make Loans: make loans except to the extent not
securities not in excess of 30% of its total assets (taken at market value) prohibited by the 1940 Act and exemptive orders
and except through the use of repurchase agreements, the purchase of granted under such Act.
commercial paper or the purchase of all or a portion of an issue of debt
securities in accordance with its investment objective, policies and
restrictions;
- -----------------------------------------------------------------------------------------------------------------------------------
(9) make short sales of securities or maintain a short position, unless at It is proposed that this fundamental policy be
all times when a short position is open it owns an equal amount of such removed.
securities or securities convertible into or exchangeable for, without
payment of any further consideration, for securities of the same issue as,
and equal in amount to, the securities sold short ("short sales against the
box"), and unless not more than 10% of the Fund's net assets (taken at
market value) is held as collateral for such sales at any one time (it is
the Fund's present intention to make such sales only for the purpose of
deferring realization of gain or loss for Federal income tax purposes; such
sales would not be made of securities subject to outstanding options);
- -----------------------------------------------------------------------------------------------------------------------------------
(10) invest more than 25% of the value of its total assets in any industry, Industry Concentration: purchase any securities
except as described above under the subsection "Corporate Fixed Income of an issuer in a particular industry if as a
Securities" of the section "Investment Objective and Policies." result 25% or more of its total assets (taken at
market value at the time of purchase) would be
This section provides that the Fund may invest up to 40% of the value of invested in securities of issuers whose
its total assets in each of the electric utility and telephone industries, principal business activities are in the same
but will not invest more than 25% in either of those industries unless industry, except that the Fund may invest up to
yields available for four consecutive weeks in the four highest rating 40% of the value of its assets in each of the
categories on new issue bonds in such industry (issue size of $50 million electric utility and telephone industries.
or more) have averaged in excess of 105% of yields of new issue long-term
industrial bonds similarly rated (issue size of $50 million or more).
- -----------------------------------------------------------------------------------------------------------------------------------
APPENDIX E
NOTE: THIS APPENDIX CONTAINS A COMPARISON BETWEEN THE CURRENT AGREEMENT AND THE
STANDARDIZED NEW AGREEMENT THAT THE TRUSTEES PROPOSE TO USE FOR ALL OF THE FUNDS
WITHIN THE MFS FAMILY OF FUNDS. THIS AGREEMENT HAS BEEN MARKED TO SHOW THE
CHANGES THAT WILL BE MADE IF THE NEW AGREEMENT PROPOSED IN ITEM 5 IS APPROVED
AND ADOPTED. DELETED TEXT IS MARKED THROUGH AND ADDED TEXT APPEARS IN
ITALICS. FOR EDGAR DELETED TEXT IS SET IN BRACKETS AND ADDED TEXT IS SET IN
DOUBLE BRACKETS.
INVESTMENT ADVISORY AGREEMENT
-----------------------------
INVESTMENT ADVISORY AGREEMENT, dated this [19th] [[1st]] day of [July,
1989] [[January, 2002]], by and between MFS CHARTER INCOME TRUST, a
Massachusetts business trust (the ["Trust") and Massachusetts Financial Services
Company][["Fund") and MASSACHUSETTS FINANCIAL SERVICES COMPANY]], a Delaware
corporation (the "Adviser").
WITNESSETH:
-----------
WHEREAS, the [Trust] [[Fund]] is engaged in business as [a closed-end]
[[an]] investment company registered under the Investment Company Act of 1940;
and
WHEREAS, the [adviser] [[Adviser]] is willing to provide [business
management] services to the [Trust] [[Fund]] on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
[[ARTICLE]] 1. DUTIES OF THE ADVISER. [[(a)]] The Adviser shall provide
the [Trust] [[Fund]] with such investment advice and supervision as the latter
may from time to time consider necessary for the proper supervision of its
[funds] [[assets]]. The Adviser shall act as [Adviser] [[investment adviser]] to
the [Trust] [[Fund]] and as such shall furnish continuously an investment
program and shall determine from time to time what securities [[or other
instruments]] shall be purchased, sold or exchanged and what portion of the
assets of the [Trust] [[Fund]] shall be held uninvested, subject always to the
restrictions of [its] [[the Fund's Amended and Restated]] Declaration of Trust,
dated [June 13, 1989] [[January 1, 2002]], and By-Laws, [as] each [may be]
[[as]] amended from time to time (respectively[[,]] the "Declaration" and
[[the]] "By-Laws"), to the provisions of the Investment Company Act of 1940 and
the Rules, Regulations and orders thereunder[,] and to the [Trust's] [[Fund's]]
then-current Prospectus [[and Statement of Additional Information]]. The Adviser
[shall also make recommendations as to the manner in which] [[also shall
exercise]] voting rights, rights to consent to corporate [action] [[actions]]
and any other rights pertaining to the [Trust's] [[Fund's]] portfolio securities
[shall be exercised] [[in accordance with the Adviser's policies and procedures
as presented to the Trustees of the Fund from time to time]]. Should the
Trustees at any time, however, make any definite determination as to [[the]]
investment policy and notify the Adviser thereof in writing, the Adviser shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination [has been] [[shall be]]
revoked.
[[(b)]] The Adviser shall take, on behalf of the [Trust] [[Fund]], all
actions which it deems necessary to implement the investment policies determined
as provided above, and in particular to place all orders for the purchase or
sale of portfolio securities [[or other instruments]] for the [Trust's]
[[Fund's]] account with brokers or dealers selected by it, and to that end[[,]]
the Adviser is authorized as the agent of the [Trust] [[Fund]] to give
instructions to the Custodian of the [Trust] [[Fund]] as to [[the]] deliveries
of securities [[or other instruments]] and payments of cash for the account of
the [Trust] [[Fund]]. In connection with the selection of such brokers or
dealers and the placing of such orders, the Adviser is directed to seek for the
[Trust execution at the best available price. Subject to this requirement of]
[[Fund the best overall price and execution available from responsible brokerage
firms, taking account of all factors it deems relevant, including by way of
illustration: price; the size of the transaction; the nature of the market for
the security; the amount of the commission; the timing and impact of the
transaction taking into account market prices and trends; the reputation,
experience and financial stability of the broker or dealer involved; and the
quality of services rendered by the broker or dealer in other transactions. In
fulfilling this requirement, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty, created by this Agreement or otherwise,
solely by reason of its having caused the Fund to pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Adviser determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Fund and to other clients of the Adviser as to which the Adviser exercises
investment discretion. Subject to]] seeking the best [available price,
securities may be bought from or sold to broker dealers who have furnished
statistical, research and other information or services to the Adviser.]
[[price and execution as described above, and in accordance with applicable
rules and regulations, the Adviser also is authorized to consider sales of
shares of the Fund or of other funds or accounts of the Adviser as a factor in
the selection of brokers and dealers.]]
[[(c) The Adviser may from time to time enter into sub-investment
advisory agreements with respect to the Fund with one or more investment
advisers with such terms and conditions as the Adviser may determine, provided
that such sub-investment advisory agreements have been approved in accordance
with applicable provisions of the Investment Company Act of 1940 and any rules,
regulations or orders of the Securities and Exchange Commission thereunder.
Subject to the provisions of Article 6, the Adviser shall not be liable for any
error of judgment or mistake of law by any sub-adviser or for any loss arising
out of any investment made by any sub-adviser or for any act or omission in the
execution and management of the Fund by any sub-adviser.]]
[[ARTICLE]] 2. ALLOCATION OF CHARGES AND EXPENSES. [[(a)]] The Adviser
shall furnish [[at]] its own expense investment advisory and administrative
services, office space, equipment and clerical personnel necessary for servicing
the investments of the [Trust] [[Fund]] and maintaining its organization, and
investment advisory facilities and executive and supervisory personnel for
managing the investments and effecting the portfolio transactions of the [Trust]
[[Fund]]. The Adviser shall arrange, if desired by the [Trust] [[Fund]], for
directors, officers and employees of the Adviser to serve as Trustees, officers
or agents of the [trust] [[Fund]] if duly elected or appointed to such positions
and subject to their individual consent and to any limitations imposed by law.
[[(b)]] It is understood that the [Trust] [[Fund]] will pay all of its
own expenses [[incurred in its operations and the offering of the Fund's shares,
unless specifically provided otherwise in this Agreement or except to the extent
that the Adviser agrees in a written instrument executed by the Adviser
(specifically referring to this Article 2(b)) to assume or otherwise pay for
specified expenses of the Fund,]] including, without limitation[,][[:]]
compensation of Trustees [not "][["not]] affiliated" with the Adviser;
governmental fees; interest charges; taxes; membership dues in the Investment
Company Institute allocable to the [Trust] [[Fund]]; fees and expenses of
independent auditors, of legal counsel[[,]] and of any transfer agent, registrar
or dividend [dispursing] [[disbursing]] agent of the [Trust;] [[Fund;]] expenses
of [[repurchasing and redeeming shares and]] servicing shareholder accounts;
expenses of preparing, printing and mailing [share] [[stock]] certificates,
shareholder reports, notices, proxy statements and reports to governmental
officers and commissions; brokerage and other expenses connected with the
execution, recording and settlement of portfolio security transactions;
insurance premiums; fees and expenses of the custodian for all services to the
[Trust] [[Fund]], including safekeeping of funds and securities and maintaining
required books and accounts; expenses of calculating the net asset value of
shares of the [Trust;] [[Fund; organizational and start up costs; such
non-recurring or extraordinary]] expenses [of shareholder meetings] [[as may
arise, including those relating to actions, suits or proceedings to which the
Fund is a party or otherwise may have an exposure, and the legal obligation
which the Fund may have to indemnify its Trustees and officers with respect
thereto]]; and expenses relating to the issuance[[,]] registration and
qualification of shares of the [Trust] [[Fund]] and the preparation, printing
and mailing of prospectuses for such purposes (except to the extent that any
Distribution Agreement to which the [Trust] [[Fund]] is a party provides that
another party is to pay some or all of such expenses).
[[(c) The payment or assumption by the Adviser of any expenses of the
Fund that the Adviser is not obligated by this Agreement or otherwise to pay or
assume shall not obligate the Adviser to pay or assume the same or any similar
expenses of the Fund on any subsequent occasion.]]
[[ARTICLE]] 3. COMPENSATION OF THE ADVISER. For the services to be
rendered and the facilities [to be] provided, the [Trust] [[Fund]] shall pay to
the Adviser [out of the assets of the Trust] an investment advisory fee computed
and paid monthly in an amount equal to the sum of .32% of the Trust's average
daily net assets (average daily net assets being computed for this purpose
without deducting any liability for money borrowed for investment in accordance
with the Trust's investment objective and policies) and 4.57% of the Trust's
gross income (i.e., income other than gains from the sale of securities, gains
from options and futures transactions, premium income from options written and
gains from foreign exchange transactions) in each case on an annual basis for
the Trust's then-current fiscal year. However, that portion of the Adviser's fee
which is based on income from leveraging, if any, shall be imposed only on net
income from leveraging (i.e., gross income from leveraging less expenses of
leveraging). If the Adviser shall serve for less than the whole of any period
specified in this Article 3, the compensation [[paid]] to the Adviser will be
prorated.
[[ARTICLE 4. ADDITIONAL SERVICES. Should the Fund have occasion to
request the Adviser or its affiliates to perform administrative or other
additional services not herein contemplated or to request the Adviser or its
affiliates to arrange for the services of others, the Adviser or its affiliates
will act for the Fund upon request to the best of its ability, with compensation
for the services to be agreed upon with respect to each such occasion as it
arises. No such agreement for additional services shall expand, reduce or
otherwise alter the obligations of the Adviser, or the compensation that the
Adviser is due, under this Agreement.]]
[[ARTICLE 5]] 4. COVENANTS OF THE ADVISER. The Adviser agrees that it
will not deal with itself, or with the Trustees of the [Trust] [[Fund]] or the
[Trust principal underwriter] [[Fund's distributor]], if any, as principals in
making purchases or sales of securities or other property for the account of the
[Trust] [[Fund]], except as permitted by the Investment Company Act of 1940 and
[the Rules, Regulations] [[any rules, regulations]] or orders [[of the
Securities and Exchange Commission]] thereunder, will not take a long or short
position in the shares of the [Trust] [[Fund]] except as permitted by the
[Declaration] [[applicable law]], and will comply with all other provisions of
the [declaration and] [[Declaration,]] By-Laws and [the] then-current Prospectus
[of the Trust] [[and Statement of Additional Information]] relative to the
Adviser and its directors and officers.
[5]
[[ARTICLE 6]]. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser
shall not be liable for any error of [judgement] [[judgment]] or mistake of law
or for any loss arising out of any investment or for any act or omission in the
execution and management of the [Trust] [[Fund]], except for willful
misfeasance, bad faith [or][[,]] gross negligence [in the performance of its
duties,] or [by reason of] reckless disregard of its duties and obligations
hereunder. As used in this [Section 5] [[Article 6]], the term "Adviser" shall
include directors, officers and employees of the Adviser as well as that
corporation itself.
[6]
[[ARTICLE 7]]. ACTIVITIES OF THE ADVISER. [The ][[(a) The Fund
acknowledges that the]] services of the Adviser to the [Trust] [[Fund]] are not
[to be deemed to be] exclusive, the Adviser being free to render investment
advisory and/or other services to others. The [Adviser may permit other fund
clients to use the initials "MFS" in their names. The Trust agrees that if]
[[Fund further acknowledges that it is possible that, based on its investment
objectives and policies, certain funds or accounts managed by]] the Adviser
[shall for any reason no longer serve as] [[or its affiliates may at times take
investment positions or engage in investment techniques which are contrary to
positions taken or techniques engaged in on behalf of the Fund. Notwithstanding
the foregoing, the Adviser will at all times endeavor to treat all of its
clients in a fair and equitable manner.]]
[[(b) The Fund acknowledges that whenever the Fund and one or more
other funds or accounts advised by the Adviser have available monies for
investment, investments suitable and appropriate for each shall be allocated in
a manner believed by]] the Adviser to [the Trust, the Trust will change its name
so as to delete the initials "MFS".] [[be fair and equitable to each entity.
Similarly, opportunities to sell securities or other investments shall be
allocated in a manner believed by the Adviser to be fair and equitable to each
entity. The Fund acknowledges that in some instances this may adversely affect
the size of the position that may be acquired or disposed of for the Fund.]]
[[(c)]] It is understood that [[the]] Trustees, officers and
shareholders of the [Trust] [[Fund]] are or may be or become interested in the
Adviser, as directors, officers, employees, or otherwise and that directors,
officers and employees of the Adviser are or may [be] become similarly
interested in the [Trust] [[Fund]], and that the Adviser may be or become
interested in the [Trust] [[Fund]] as a shareholder or otherwise.
[[ARTICLE 8. MFS NAME. The Fund acknowledges that the names
"Massachusetts Financial Services," "MFS" or any derivatives thereof or logos
associated with those names (collectively, the "MFS Marks") are the valuable
property of the Adviser and its affiliates. The Adviser grants the Fund a
non-exclusive and non-transferable right and sub-license to use the MFS Marks
only so long as the Adviser serves as investment adviser to the Fund. The Fund
agrees that if the Adviser for any reason no longer serves as investment adviser
to the Fund, and the Adviser so requests, the Fund promptly shall cease to use
the MFS Marks and promptly shall amend its Registration Statement and the
Declaration to delete any references to the MFS Marks. The Fund acknowledges
that the Adviser may permit other clients to use the MFS Marks in their names or
other material. For purposes of this Article, the Fund shall be deemed to have
taken the required action "promptly" if such action is taken within 90 days of
the Adviser no longer serving as the investment adviser to a Fund of the Fund,
or from the date of the Adviser's request, as the case may be.]]
[[ARTICLE 9]] [7]. DURATION, TERMINATION AND [AMENDMENTS] [[AMENDMENT]]
OF THIS AGREEMENT. [[(a)]] This Agreement shall become effective [as of the day
and year first above written and shall govern the relations between the parties
hereto thereafter, and shall] [[on the date first written above. Thereafter,
this Agreement will]] remain in [force until August 1, 1990] [[effect for a
period of two years from the date first written above]], on which date it will
terminate [[for the Fund]] unless its continuance [after August 1, 1990] is
"specifically approved at least annually" (i) by the vote of a majority of the
Trustees of the [Trust] [[Fund]] who are not "interested persons" of the [Trust]
[[Fund]] or of the Adviser at a meeting specifically called for the purpose of
voting on such approval, and (ii) by the Board of Trustees of the [Trust]
[[Fund]], or by "vote of a majority of the outstanding voting securities" of the
[Trust] [[Fund]].
[[(b)]] This Agreement may be terminated [[as to the Fund]] at any time
without the payment of any penalty by the Trustees or by "vote of a majority of
the outstanding voting securities" of the [Trust] [[Fund]], or by the Adviser,
in each case on not more than sixty days' nor less than thirty days' written
notice to the other party. This Agreement shall automatically terminate in the
event of its "assignment".
[[(c)]] This Agreement may be amended only if such amendment is [[in
writing signed by or on behalf of the Fund and the Adviser, and is]] approved by
"vote of a majority of the outstanding voting securities" of the [Trust] [[Fund
(if such shareholder approval is required by the Investment Company Act of
1940).]]
[[ARTICLE 10. SCOPE OF FUND'S OBLIGATIONS. A copy of the Fund's
Declaration of Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Fund's Trustees, officers,
employees, agents or shareholders individually, but are binding solely upon the
assets and property of the Fund.]]
[[ARTICLE 11. DEFINITIONS AND INTERPRETATIONS]]. The terms
"specifically approved at least annually["],[["]] "vote of a majority of the
outstanding voting securities["],[["]] "assignment[",][[,"]] "affiliated
person[",][[,"]] and [["]]interested person[",][[,"]] when used in this
Agreement, shall have the respective meanings specified [in], and shall be
construed in a manner consistent with, [in] the Investment Company Act of 1940
and the [Rules and Regulations] [[rules and regulations promulgated]]
thereunder[, subject, however, to such exemptions as may be granted by][[. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the Investment
Company Act of 1940, the Investment Advisers Act of 1940, the Securities Act of
1933, or the Securities Exchange Act of 1934 (collectively, the "Federal
Securities Acts") shall be resolved by reference to such term or provision of
the Federal Securities Acts and to interpretations thereof, if any, by United
States federal courts or, in the absence of any controlling decisions of any
such court, by rules or regulations of]] the Securities and Exchange Commission
[under said Act.][[. Where the effect of a requirement of the Federal Securities
Acts reflected in any provision of this Agreement is revised by rule or
regulation of the Securities and Exchange Commission, such provisions shall be
deemed to incorporate the effect of such rule or regulation.]]
[[ARTICLE 12. RECORD KEEPING. The Adviser will maintain records
in a form acceptable to the Fund and in compliance with the rules and
regulations of the Securities and Exchange Commission, including but not limited
to records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the rules thereunder, which at all times will be the property of
the Fund and will be available for inspection and use by the Fund.]]
[[ARTICLE 13. MISCELLANEOUS. (a) This Agreement contains the entire
understanding and agreement of the parties with respect to the subject matter
hereof.]]
[[(b) Headings in this Agreement are for ease of reference only and
shall not constitute a part of the Agreement.]]
[[(c) Should any portion of this Agreement for any reason be held void
in law or equity, the remainder of the Agreement shall be construed to the
extent possible as if such voided portion had never been contained herein.]]
[[(d) This Agreement shall be governed by the laws of the Commonwealth
of Massachusetts, without giving effect to the choice of laws provisions
thereof, except that questions of interpretation shall be resolved in accordance
with the provisions of Article 11 above.]]
MFS INVESTMENT MANAGEMENT ------------
P.O. BOX 9131 FIRST CLASS
HINGHAM, MA 02043-9131 U.S. POSTAGE
PAID
PROXY
TABULATOR
------------
4.5 MILLION
MFS(R)fund account holders are
counting on YOU
Please vote all your proxies
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL-FREE 1-888-221-0697
OR LOG ON TO WWW.PROXYWEB.COM
CONTROL NUMBER: 999 999 999 999 99
o Please fold and detach card at perforation before mailing o
MFS CHARTER INCOME TRUST PROXY FOR A MEETING OF SHAREHOLDERS
MFS FAMILY OF FUNDS TO BE HELD ON OCTOBER 31, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE FUND.
The undersigned hereby appoints James R. Bordewick, Jr., Stephen E. Cavan, James
O. Yost, Arnold D. Scott and Jeffrey L. Shames and each of them separately,
proxies, with power of substitution, and hereby authorizes them to represent,
and to vote, as designated on the reverse side, at the Meeting of Shareholders
of MFS Charter Income Trust, on Wednesday, October 31, 2001 at 9:30 a.m., Boston
time, and at any adjournments thereof, all of the shares of the Fund which the
undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL 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.
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
Date_________________________________
Signature (PLEASE SIGN WITHIN BOX)
-------------------------------------
-------------------------------------
NOTE: Please sign exactly as name
appears on this card. All joint owners
should sign. When signing as executor,
administrator, attorney, trustee or
guardian or as custodian for a minor,
please give full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partnership, sign
in the partnership name.
o Please fold and detach card at perforation before mailing o
PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS.
YOUR TRUSTEES RECOMMEND THAT YOU VOTE FOR ALL ITEMS.
FOR all nominees WITHHOLD
listed (except as authority
ITEM 1. To elect a Board of Trustees. marked to the to vote for
NOMINEES: (01) Jeffrey L. Shames, (02) John W. Ballen, (03) Lawrence H. contrary at left) all nominees
Cohn, M.D., (04) The Hon. Sir J. David Gibbons, KBE, (05) William R.
Gutow, (06) J. Atwood Ives, (07) Abby M. O'Neill, (08) Lawrence T. [ ] [ ] 1.
Perera, (09) William J. Poorvu, (10) Walter E. Robb, III, (11) Arnold D.
Scott (12) J. Dale Sherratt, (13) Elaine R. Smith and (14) Ward Smith
INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name on the space provided below.
FOR AGAINST ABSTAIN
- ------------- -----------------------------------------------------------------
ITEM 2. To authorize the Trustees to adopt an Amended and Restated Declaration [ ] [ ] [ ] 2.
of Trust.
ITEM 3. To amend, or remove certain fundamental investment policies. [ ] [ ] [ ] 3.
ITEM 4. To change the Fund's Investment policy relating to investments in fixed [ ] [ ] [ ] 4.
income securities from fundamental to non-fundamental.
ITEM 5. To approve a new investment advisory agreement with Massachusetts [ ] [ ] [ ] 5.
Financial Services Company.
ITEM 6. To ratify the selection of the independent public accountants for the [ ] [ ] [ ] 6.
current fiscal year.