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Auction Rate Market Update - April 11, 2013

MFS High Income Municipal Trust
MFS High Yield Municipal Trust
MFS Investment Grade Municipal Trust
MFS Municipal Income Trust

Auctions for so-called “auction rate securities” continue to be adversely affected by liquidity constraints in the credit markets and the Municipal Auction Rate Cumulative Preferred shares (“ARPS”) of the four MFS closed-end funds (listed above) continue to be subject to auction failures.

The dividend rate due on the Funds’ ARPS during periods of failed auctions is set weekly based on a maximum rate.  The maximum rate formula for each Fund and the rate for the previous week is set forth in the attached chart.  Please refer to earlier releases for more complete information on the Funds’ ARPS.

Statements made in this release that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such risks and uncertainties include, without limitation, the adverse effect from a decline in the securities markets or a decline in a Fund’s performance, a general downturn in the economy, competition from other closed-end investment companies, changes in government policy or regulation, inability of a Fund’s investment adviser to attract or retain key employees, inability of a Fund to implement its investment strategy, inability of a Fund to manage rapid expansion and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations.

This Market Update is not a prospectus, circular or representation intended for use in the purchase or sale of Trust shares.  Shares of the Funds are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank.  Shares of the Funds involve investment risk, including possible loss of principal.  For more complete information about each Fund, including risks, charges, and expenses, please see the Fund’s annual and semi annual shareholder report or contact your financial adviser.

The Funds are closed-end investment products.  Common shares of the Funds are only available for purchase/sale on the NYSE at the current market price.  Common shares may trade at a discount to NAV.  ARPS are available for purchase/sale through the Fund’s auction agent Deutsche Bank Trust Company Americas.

 

MFS High Income Municipal Trust Series W

MFS High Income Municipal Series T

MFS High Yield Municipal Trust

MFS Investment Grade Municipal Trust  Series M

MFS Municipal Income Trust Series T

MFS Municipal Income Trust Series Th

Ticker

CXE

CXE

CMU

CXH

MFM

MFM

Rating

Moody’s/Fitch

Aa2/AAA

Aa2/AAA

Aa2/AAA

Aa1/AAA

Aa2/AAA

Aa2/AAA

Applicable Maximum Rate:

 

 

 

 

 

 

Reference Rate

Higher of (1) AA Commercial Paper Rate or (2) Taxable Equivalent of Short-Term Municipal Bond Rate**

Higher of (1) AA Commercial Paper Rate or (2) Taxable Equivalent of Short-Term Municipal Bond Rate**

Higher of (1) AA Commercial Paper Rate or (2) Taxable Equivalent of Short-Term Municipal Bond Rate**

Higher of (1) AA Commercial Paper Rate or (2) Taxable Equivalent of Short-Term Municipal Bond Rate**

Higher of (1) AA Commercial Paper Rate or (2) Taxable Equivalent of Short-Term Municipal Bond Rate**

Higher of (1) AA Commercial Paper Rate or (2) Taxable Equivalent of Short-Term Municipal Bond Rate**

Max Rate Calculation*

 

110%

 

110%

 

110%

 

110%

 

110%

 

110%

Current Maximum Rate ***

 

0.098%

 

0.098%

 

0.114%

 

0.098%

 

0.098%

 

0.098%

 

 

 


































*    At current ratings for ARPS

**  "Taxable Equivalent of the Short-Term Municipal Bond Rate" means 90% of the quotient of (A) the per annum rate expressed on an interest equivalent basis equal to the Standard & Poor's, a division of McGraw-Hill Companies, Inc., Municipal Bond 7 Day High Grade Index, divided by (B) 1.00 minus the greater of the maximum marginal regular Federal individual income tax rate applicable to ordinary income or the maximum marginal Federal corporate income tax rate applicable to ordinary income (in each case expressed as a decimal).

*** Based on most recent auction rate through April 11, 2014.