MFS Closed-end Funds Announce Special Shareholder Meetings Relating to Proposed Reorganizations and Proposed Appointment of Aberdeen Investments as Investment Adviser
MWN-AI** Summary
MFS Investment Management has announced significant changes regarding its closed-end funds—MFS High Income Municipal Trust, MFS High Yield Municipal Trust, and MFS Investment Grade Municipal Trust. The Board of Trustees has approved reorganizing these funds into the newly designated MFS Municipal Income Trust, also referred to as the Surviving Fund. Among the key proposals are the appointment of Aberdeen Investments as the new investment adviser, the election of five new trustees, and the issuance of additional common shares related to these reorganizations. These changes are aimed at enhancing the scale, liquidity, and marketability of the funds, potentially reducing the discount to net asset value over time and providing shareholders with a more substantial investment vehicle that promises a higher annual distribution rate and lower operating expenses.
Shareholder approval is essential for these changes to be enacted, with special meetings scheduled for March 11, 2026. All common and preferred shareholders will be solicited for votes to approve the reorganizations. Post-approval, the funds will transition to the new management structures and the Surviving Fund will adopt the name “Aberdeen Municipal Income Fund.”
Aberdeen Investments, recognized as one of the globe's largest asset management firms with extensive expertise in closed-end fund management, will assume the advisory role under the proposed new management agreement. Shareholder communications, including a prospectus/proxy statement, will be sent out by late January 2026. The Board has expressed confidence that the reorganizations and new adviser appointment are in the best interests of shareholders, paving the way for potentially improved fund performance and returns.
MWN-AI** Analysis
MFS Investment Management's recent announcement regarding the reorganization of its closed-end funds — MFS High Income Municipal Trust (CXE), MFS High Yield Municipal Trust (CMU), and MFS Investment Grade Municipal Trust (CXH) — represents a significant strategic shift that could enhance investor value. The planned consolidation into the MFS Municipal Income Trust (MFM) aims to increase operational efficiency, liquidity, and marketability, potentially reducing the current discount to net asset value (NAV) seen in the Target Funds.
Investors should closely consider the implications of appointing Aberdeen Investments as the new investment adviser. With over $515 billion in assets under management and extensive experience in managing closed-end funds, Aberdeen's involvement may lead to improved fund performance and distribution rates. This transition is expected to cater to shareholders who could benefit from lower total annual operating expenses after agreed-upon waivers. The recommended vote from the respective Boards suggests confidence in Aberdeen's capabilities and the long-term alignment with shareholders' interests.
As stakeholders prepare for the special meetings scheduled for March 11, 2026, it’s critical to evaluate the historical performance of the Target Funds and compare it with Aberdeen’s track record. Furthermore, shareholders should assess the potential for enhanced governance with the introduction of five new trustees, which may bring fresh perspectives and improved oversight to the Surviving Fund.
While the proposed mergers hold promise, investors should be mindful of the risks associated with such transitions, including the need for shareholder approval and the complexities of merging investment strategies. Given these dynamics, existing and prospective shareholders might consider waiting for the outcome of the shareholder meetings before making significant investment decisions, ensuring they align with the proposed changes and their long-term investment goals.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
MFS Investment Management (“MFS”) announced today that the Board of Trustees (the “Board”) of MFS High Income Municipal Trust (NYSE: CXE), MFS High Yield Municipal Trust (NYSE: CMU), and MFS Investment Grade Municipal Trust (NYSE: CXH) (each a “Target Fund” and collectively, the “Target Funds”) approved the proposed reorganization of each Target Fund into the MFS Municipal Income Trust (NYSE: MFM) (the “Surviving Fund”) (each a “Reorganization” and collectively, the “Reorganizations”). The Board has also approved three related proposals for the Surviving Fund: i) the appointment of Aberdeen Investments, the global specialist asset manager, as the new investment adviser, ii) the appointment of five new trustees, and iii) the issuance of additional common shares in connection with the proposed Reorganizations. Each of the three proposals is subject to approval by the Surviving Fund’s shareholders, the consummation of certain of the proposed Reorganizations and certain other conditions.
Subject to the aforementioned approvals, upon closing it is intended that the Surviving Fund name would be changed from “MFS Municipal Income Trust” to “Aberdeen Municipal Income Fund.”
The Reorganizations
Each Reorganization is subject to the receipt of necessary shareholder approval by the respective Target Fund, as discussed further below.
Target Fund | Surviving Fund |
MFS High Income Municipal Trust | MFS Municipal Income Trust |
MFS High Yield Municipal Trust | |
MFS Investment Grade Municipal Trust | |
abrdn National Municipal Income Fund 1 |
The Reorganizations are intended to increase the scale, liquidity and marketability of the Target Funds and the Surviving Fund, which may help reduce the discount to net asset value per share over time. The Reorganizations will allow shareholders of each Target Fund and the Surviving Fund to continue their investment in a significantly larger fund with the potential for a higher annual distribution rate and the potential for lower total annual fund operating expenses after agreed upon expense waivers. Each Target Fund and the Surviving Fund have similar investment objectives and investment policies. Each Target Fund’s Board believes that the Reorganization is in the best interest of the applicable Target Fund’s shareholders.
Required Approval of Each Target Fund’s Common Shareholders
Common and preferred shareholders of each Target Fund as of December 11, 2025, will be asked to approve their respective Reorganization at a special meeting of shareholders of each Target Fund, tentatively scheduled for March 11, 2026.
Shareholders of each Target Fund will receive a prospectus/proxy statement (the “Target Funds Prospectus/Proxy Statement”) providing additional information and soliciting a vote in favor of the respective Target Fund’s Reorganization. Each Target Fund’s Board has determined that the Reorganization of that Target Fund into the Surviving Fund is in the best interests of the Target Fund’s shareholders and recommends shareholders vote in favor of their Target Fund’s Reorganization. If approved, the Reorganizations are expected to consummate in the second quarter of 2026.
Issuance of Shares by the Surviving Fund
Shareholders of the Surviving Fund will be asked to approve the issuance of additional common shares (the “Reorganization Shares”) to accommodate the Reorganizations.
Appointment of Aberdeen Investments as Investment Adviser and the Election of Five New Trustees for the Surviving Fund
In addition to and in connection with the Reorganizations, the Board of the Surviving Fund has approved (i) a new investment management agreement with the US Subsidiary of Aberdeen Investments, abrdn Inc., to serve as the investment adviser to the Surviving Fund following the consummation of the Reorganizations and (ii) the nomination of five new trustees to serve as the Surviving Fund’s board of trustees following the consummation of the Reorganizations. The appointment of abrdn Inc. as the Surviving Fund’s investment adviser and the election of the five new trustees as the Surviving Fund’s board of trustees are subject to the approval of the Surviving Fund’s shareholders and certain contingencies, as discussed further below.
About Aberdeen Investments
In the United States, Aberdeen Investments is the marketing name for the following affiliated, registered investment advisers: abrdn Inc., abrdn Investments Limited and abrdn Asia Limited.
Aberdeen Investments constitutes one of the world’s largest asset management firms with extensive experience in managing closed-end funds dating back to the 1980s. As of September 30, 2025, Aberdeen Investments had approximately $515 billion in assets under management. Moreover, closed-end funds are an important element of Aberdeen Investments’ client base in the U.S. and globally, managing 15 U.S. closed-end funds and 13 non-U.S. closed-end funds, totaling $26.1 billion in assets as of September 30, 2025.
Required Approval of the Surviving Fund’s Shareholder
Shareholders of the Surviving Fund as of December 11, 2025, will be asked to approve the new investment management agreement appointing abrdn Inc. as its new investment adviser and to elect the five new trustees for the Surviving Fund at a special meeting of shareholders, tentatively scheduled for March 11, 2026. Shareholders of the Surviving Fund will receive a proxy statement (the “Surviving Fund Proxy Statement”) providing additional information and soliciting a vote in favor of each proposal, both of which are recommended by the Surviving Fund’s Board. If approved, it is expected that the appointment of abrdn Inc. as investment adviser and the election of the five new Trustees will take effect upon the consummation of the Reorganizations, which is expected to occur in the second quarter of 2026.
The Surviving Fund’s Board believes that each proposal described above is in the best interests of the Surviving Fund’s shareholders and recommends that shareholders of the Surviving Fund vote in favor of each proposal.
Further information concerning the above will be provided in the Target Funds Prospectus/Proxy Statement and the Surviving Fund Proxy Statement which will be mailed to shareholders of the Target Funds and Surviving Fund, respectively.
Filing and Mailing of Shareholder Materials
The Target Funds Proxy Statement and the Surviving Fund Proxy Statement have yet to be filed with the U.S. Securities and Exchange Commission (the “SEC”). After filing with the SEC, the Target Funds Prospectus/Proxy Statement and Surviving Fund Proxy Statement may be amended or withdrawn. The Target Funds Prospectus/Proxy Statement and Surviving Fund Proxy Statement are expected to be mailed to shareholders of record on December 11, 2025 of each Target Fund and the Surviving Fund, as applicable, in late January 2026.
Cautionary Statement Regarding Forward-Looking Statements
This press release may contain statements regarding plans and expectations for the future that constitute forward-looking statements within The Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking and can be identified by the use of words such as "may," "will," "expect," "anticipate," "estimate," "believe," "continue," or other similar words. Such forward-looking statements are based on the fund's current plans and expectations, are not guarantees of future results or performance, and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All forward-looking statements are as of the date of this release only; the funds undertake no obligation to update or review any forward-looking statements. You are urged to carefully consider all such factors.
About the Funds
The funds are closed-end investment company products advised by MFS Investment Management. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, common shares of the funds are bought and sold in the open market through a stock exchange. Shares may trade at a discount to the net asset value per share. 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.
About MFS Investment Management
In 1924, MFS launched the first US open-end mutual fund, opening the door to the markets for millions of everyday investors. Today, as a full-service global investment manager serving financial advisors, intermediaries and institutional clients, MFS still serves a single purpose: to create long term value for clients by allocating capital responsibly. That takes our powerful investment approach combining collective expertise, thoughtful risk management and long-term discipline. Supported by our culture of shared values and collaboration, our teams of diverse thinkers actively debate ideas and assess material risks to uncover what we believe are the best investment opportunities in the market. As of November 30, 2025, MFS had approximately US$655.2 billion in assets under management.
MFS Investment Management
111 Huntington Ave., Boston, MA 02199
| ____________ | |
1 | The reorganization of abrdn National Municipal Income Fund (“VFL”) into the Surviving Fund will be separately presented to and considered by VFL’s Board of Trustees and will be addressed in a separate press release issued by VFL. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20251211481732/en/
Media Contacts: Dan Flaherty , +1 617.954.4256
For Shareholders/Advisors: Brian Mastrullo , +1 617.954.7940
FAQ**
How do the proposed reorganizations of the MFS High Income Municipal Trust (CXE) align with the investment objectives aimed at increasing the scale and liquidity of the fund?
What specific benefits do the Boards of Trustees foresee for MFS High Income Municipal Trust (CXE) shareholders following the transition to Aberdeen Investments as the new investment adviser?
Can you elaborate on the expected impact of the share issuance in the MFS High Income Municipal Trust (CXE) Consolidation on the fund's marketability and potential discount to net asset value?
In terms of the upcoming shareholder vote for MFS High Income Municipal Trust (CXE), what key information will be highlighted in the prospectus/proxy statement to ensure investors understand the implications of the proposed reorganizations?
**MWN-AI FAQ is based on asking OpenAI questions about MFS Investment Grade Municipal Trust (NYSE: CXH).
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