<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 2000
1933 ACT FILE NO.
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MFS MUNICIPAL SERIES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
500 Boylston Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (617) 954-5000
STEPHEN E. CAVAN, ESQ.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
500 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(NAME AND ADDRESS OF AGENT FOR SERVICE)
--------------------
With copies to:
JEREMIAH J. BRESNAHAN, ESQ.
BINGHAM DANA LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the registration statement.
TITLE OF SECURITIES BEING REGISTERED:
Shares of Beneficial Interest (without par value) of the Registrant
NO FILING FEE IS REQUIRED BECAUSE AN INDEFINITE NUMBER OF SHARES HAVE PREVIOUSLY
BEEN REGISTERED PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
PURSUANT TO RULE 429, THIS REGISTRATION STATEMENT RELATES TO SHARES PREVIOUSLY
REGISTERED ON FORM N-1A (FILE NO. 2-92915).
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON
DECEMBER 31, 2000 PURSUANT TO RULE 488.
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<PAGE>
PROXY INFORMATION
The enclosed proxy statement discusses important issues affecting your
investment in PaineWebber New York Tax-Free Income Fund. To make voting faster
and more convenient for you, we're offering the options of voting on the
internet, by fax, or by telephone instead of completing and mailing the enclosed
proxy card. All three methods are generally available 24 hours a day. If you
vote via the internet or by telephone, your vote will be confirmed and posted
immediately. If you choose to vote via the internet, by fax, or by phone, do not
mail the proxy card.
However you choose to vote, it is important that you vote to save the expense of
additional solicitations.
WAYS TO VOTE:
TO VOTE ON THE INTERNET
1. Read the proxy statement.
2. Go to [**www.proxyvote.com**] or the "Proxy voting" link on
[**www._______.com**].
3. Enter the [___]-digit control number on your proxy card.
4. Follow the instructions on the site.
TO VOTE BY FAX
1. Read the proxy statement.
2. Complete and sign the proxy card.
3. Fax the completed proxy card toll-free to [_____________]
TO VOTE BY TELEPHONE
1. Read the proxy statement.
2. Call toll-free [_____________].
3. Enter the [___]-digit control number on your proxy card.
4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT TO US, PLEASE VOTE NOW.
QUESTIONS:
[_________________________], a professional proxy solicitation firm, has been
selected to assist shareholders in the voting process. If we have not received
your proxy card as the date of the meeting approaches, [___] may call you to
remind you to exercise your right to vote.
If you have any questions, please call [___]toll-free at [_____________] any
business day between __ a.m. and __ p.m. Eastern time.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
Facing Page
A Message from the President
Notice of Shareholder Meeting
Combined Prospectus/Proxy Statement
Form of Proxy Card
Statement of Additional Information
Other Information
Signature Page
Exhibits
<PAGE>
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
JANUARY 1, 2001
Dear Shareholder:
I am writing to ask for your vote on an important matter that will affect
your investment in PaineWebber New York Tax-Free Income Fund (the "PaineWebber
Fund"). While you are, of course, welcome to attend the PaineWebber Fund's
special meeting of shareholders described in the attached Prospectus/Proxy
Statement, most shareholders cast their vote by filling out, signing and then
mailing or faxing the enclosed proxy card or by voting via telephone or the
internet.
You are being asked to vote on an Agreement and Plan of Reorganization
under which all of the assets of the PaineWebber Fund will be transferred in a
tax-free reorganization to the MFS New York Municipal Bond Fund (the "MFS
Fund"), in exchange for shares of the MFS Fund.
If the Agreement and Plan of Reorganization is approved and consummated,
you will no longer be a shareholder of the PaineWebber Fund; you will become a
shareholder of the MFS Fund. You should know that the reorganization of the
PaineWebber Fund will not affect the value of your account.
The MFS Fund is advised by Massachusetts Financial Services Company
("MFS"). MFS advises a large and diverse family of more than 140 mutual funds,
including 23 municipal bond funds. MFS and its predecessor organizations have a
history of money management dating from 1924 and the founding of the nation's
first mutual fund, Massachusetts Investors Trust.
Each Fund is a municipal bond fund that seeks to invest a significant
portion of its assets in municipal securities the interest on which is exempt
from federal income tax and New York personal income tax. The MFS Fund and the
PaineWebber Fund have similar investment goals and policies. Historically, the
MFS Fund has had greater net assets than the PaineWebber Fund. Combining the
assets of the PaineWebber Fund with a larger mutual fund such as the MFS Fund
could result in more efficient mutual fund operations due to economies of scale
without substantially changing the PaineWebber Fund's investment profile. In
addition, PaineWebber Fund shareholders will become part of a larger and more
diverse family of MFS mutual funds, including a greater variety of municipal
bond funds, and will be able to exchange their shares among all MFS funds
available for sale.
After careful consideration, the PaineWebber Fund's Trustees have
unanimously agreed that a tax-free reorganization of the PaineWebber Fund into
the MFS Fund will benefit the PaineWebber Fund shareholders. For this reason,
your Trustees recommend that you vote FOR the proposed reorganization, by
signing and returning the enclosed proxy card or by following the instructions
on the proxy card to vote via telephone or the internet. This proposed
reorganization is detailed in the enclosed Prospectus/Proxy Statement. For your
convenience, a summary of the reorganization in question and answer format is
included in the beginning of the Prospectus/Proxy Statement. I suggest you read
both thoroughly before voting.
<PAGE>
YOUR VOTE MAKES A DIFFERENCE
No matter what size your investment may be, your vote is critical. I urge
you to review the enclosed materials and to complete, sign and return the
enclosed proxy card to us or to vote via telephone or the internet immediately.
Your prompt response will help avoid the need for further solicitations. For
your convenience, we have provided a postage-paid envelope.
If you have any questions or need additional information, please contact
your Financial Advisor or call [_____________________] at [______________],
Monday through Friday between [__________] and [___________]. I thank you for
your prompt vote on this matter.
Sincerely,
Brian M. Storms
President
<PAGE>
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
A SERIES OF PAINEWEBBER MUNICIPAL SERIES
51 WEST 52ND STREET, NEW YORK, NEW YORK 10019-6114
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 1, 2001
A Special Meeting of Shareholders of PaineWebber New York Tax-Free Income Fund
(the "PaineWebber Fund"), a series of PaineWebber Municipal Series, a
Massachusetts business trust, will be held at 1285 Avenue of the Americas, 14th
Floor, New York, New York 10019, on Thursday, March 1, 2001, at ________
a.m./p.m. for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Agreement") providing for (i)
the transfer of all of the PaineWebber Fund's assets to MFS New
York Municipal Bond Fund (the "MFS Fund") in exchange for shares
of the designated classes of the MFS Fund of equal value and the
assumption by the MFS Fund of the PaineWebber Fund's stated
liabilities, (ii) the distribution of the MFS Fund shares to the
shareholders of the PaineWebber Fund and (iii) the termination of
the PaineWebber Fund.
ITEM 2. To transact such other business as may properly come before the
meeting and any adjournments thereof.
YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU
VOTE IN FAVOR OF ITEM 1.
Only shareholders of record as of the close of business on December 22, 2000
will be entitled to vote at the meeting or any adjournment thereof.
By Order of the Board of Trustees,
Dianne E. O'Donnell, Secretary
January 1, 2001
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND
RETURNING THE ENCLOSED PROXY OR VOTING VIA TELEPHONE OR THE INTERNET. THIS WILL
HELP IN AVOIDING THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION. THE ENCLOSED
ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS INTENDED FOR YOUR CONVENIENCE.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense involved in validating your vote if you
fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
REGISTRATION VALID SIGNATURE
------------ ---------------
Corporate Accounts
(1) ABC Corp. ................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp. ................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer ........... John Doe
(4) ABC Corp. Profit Sharing Plan ............... John Doe, Trustee
Partnership Accounts
(1) The XYZ Partnership ......................... Jane B. Smith, Partner
(2) Smith and Jones Limited Partnership ......... Jane B. Smith, General
Partner
Trust Accounts
(1) ABC Trust Account ........................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/18/78 ......... Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr.,
UGMA/UTMA ................................... John B. Smith
(2) Estate of John B. Smith ..................... John B. Smith, Jr.,
Executor
<PAGE>
PROSPECTUS/PROXY STATEMENT
JANUARY 1, 2001
ACQUISITION OF THE ASSETS OF
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
A SERIES OF PAINEWEBBER MUNICIPAL SERIES
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6114
(800) 647-1568
BY AND IN EXCHANGE FOR SHARES OF
MFS NEW YORK MUNICIPAL BOND FUND
A SERIES OF MFS MUNICIPAL SERIES TRUST
500 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 954-5000
* * * * *
This document will give you the information you need to vote on the proposed
reorganization. Much of the information is required under rules of the
Securities and Exchange Commission (the "SEC") and may be technical. If there is
anything you do not understand, please contact your PaineWebber Financial
Advisor.
This Prospectus/Proxy Statement relates to the proposed reorganization
(the "Reorganization") of PaineWebber New York Tax-Free Income Fund (the
"PaineWebber Fund") into MFS New York Municipal Bond Fund (the "MFS Fund"). As a
result of the Reorganization, each Class A, Class B and Class C shareholder of
the PaineWebber Fund will receive a number of full and fractional Class A, Class
B and Class C shares, respectively, of the MFS Fund equal in value on the date
of the exchange to the total value of the shareholder's PaineWebber Fund shares.
Because the MFS Fund does not offer Class Y shares, each Class Y shareholder of
the PaineWebber Fund will receive a number of full and fractional Class A shares
of the MFS Fund equal in value on the date of the exchange to the total value of
the shareholder's PaineWebber Fund Class Y shares. The MFS Fund is in the family
of funds managed by Massachusetts Financial Services Company ("MFS") and is a
series of a registered open-end management investment company (mutual fund). The
MFS Fund and the PaineWebber Fund are collectively referred to herein as the
"Funds," and each is sometimes referred to individually as a "Fund."
This Prospectus/Proxy Statement explains concisely what you should know
before voting on the Reorganization or investing in the MFS Fund. Please read it
and keep it for future reference. This Prospectus/Proxy Statement is accompanied
by (i) the Prospectus, dated August 1, 2000, of the MFS Fund (the "MFS Fund
Prospectus"), (ii) the Report of Independent Accountants and financial
statements included in the MFS Fund's Annual Report to Shareholders for the
fiscal year ended March 31, 2000, and (iii) the unaudited financial statements
included in the MFS Fund's Semi-Annual Report to Shareholders for the six-month
period ended September 30, 2000. Additional information is available in the
Statement of Additional Information relating to this Prospectus/Proxy Statement
dated January 1, 2001, and the Statement of Additional Information of the MFS
Fund dated August 1, 2000. The MFS Fund Prospectus, the MFS Fund's Annual and
Semi-Annual Reports, and the Statement of Additional Information dated January
1, 2001 are incorporated into this Prospectus/Proxy Statement by reference. For
a free copy of the Statement of Additional Information, dated January 1, 2001,
relating to the Reorganization or any of the documents relating to the MFS Fund,
please contact the MFS Fund at its toll-free number (1-800-225-2606).
The following documents have been filed with the Securities and Exchange
Commission with respect to the PaineWebber Fund and are also incorporated into
this Prospectus/Proxy Statement by reference: (i) the Prospectus of the
PaineWebber Fund, dated June 30, 2000; (ii) the Statement of Additional
Information of the PaineWebber Fund, dated June 30, 2000; (iii) the Report of
Independent Accountants and financial statements included in the PaineWebber
Fund's Annual Report to Shareholders for the fiscal year ended February 29,
2000; and (iv) the PaineWebber Fund's Semiannual Report to Shareholders for the
six-month period ended August 31, 2000. For a free copy of the documents
relating to the PaineWebber Fund, please contact the PaineWebber Fund at its
toll-free number (1-800-647-1568).
Proxy materials, registration statements and other information filed by
the Funds can be inspected and copied at the Public Reference Room maintained by
the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such material can also be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549 at prescribed rates.
You may also access reports and other information about the Funds on the
Commission's Internet site at http://www.sec.gov.
The securities offered by the accompanying Prospectus/Proxy Statement have
not been approved or disapproved by the Securities and Exchange Commission nor
has the Securities and Exchange Commission passed upon the accuracy or adequacy
of such Prospectus/Proxy Statement. Any representation to the contrary is a
criminal offense.
* * * * *
TABLE OF CONTENTS
PAGE
----
Synopsis .......................................................... [___]
Risk Factors ...................................................... [___]
General ........................................................... [___]
Proposal Regarding Approval of Reorganization
and Related Agreement and Plan of Reorganization ............... [___]
Background and Reasons for the Proposed Reorganization ............ [___]
Information About the Reorganization .............................. [___]
Voting Information ................................................ [___]
Agreement and Plan of Reorganization .............................. A-1
Enclosures
Prospectus of the MFS New York Municipal Bond Fund, dated August 1, 2000
Annual Report of the MFS New York Municipal Bond Fund, for the fiscal year
ended March 31, 2000
Semi-Annual Report of the MFS New York Municipal Bond Fund, for the six-month
period ended September 30, 2000
SYNOPSIS
The responses to the questions that follow provide an overview of key
points typically of concern to shareholders considering a proposed
reorganization between funds. These responses are qualified in their entirety by
the remainder of the Prospectus/Proxy Statement, which contains additional
information and further details regarding the Reorganization.
1. WHAT IS BEING PROPOSED?
The Trustees who oversee the PaineWebber Fund (the "PaineWebber Trustees")
are recommending that shareholders of the PaineWebber Fund approve its
Reorganization into the MFS Fund. If approved by shareholders, the PaineWebber
Fund will transfer all its assets to the MFS Fund in exchange for shares of the
MFS Fund with a value equal to those assets net of liabilities (the
"Reorganization Shares") and for the assumption by the MFS Fund of all of the
PaineWebber Fund's stated liabilities. Immediately following the transfer, the
PaineWebber Fund will distribute the Reorganization shares to its shareholders,
pro rata.
2. WHAT WILL HAPPEN TO MY SHARES OF THE PAINEWEBBER FUND AS A RESULT OF THE
REORGANIZATION?
Your shares of the PaineWebber Fund will, in effect, be exchanged for
Reorganization Shares of the MFS Fund with an equal total net asset value. If
you do not wish to participate in the Reorganization, you may redeem your shares
of the PaineWebber Fund at net asset value or exchange your shares for
corresponding shares of another eligible PaineWebber Fund, but you generally
will recognize a gain or loss for tax purposes upon redemption or exchange of
your PaineWebber Fund shares.
3. WHY ARE THE PAINEWEBBER TRUSTEES PROPOSING THIS REORGANIZATION?
The proposal is the result of a review by the PaineWebber Fund's
investment adviser and administrator, Mitchell Hutchins Asset Management Inc.
("MHAM"), of the investment strategies and position of the municipal bond funds
in the PaineWebber fund complex. The PaineWebber Fund has remained relatively
small in comparison to other mutual funds managed by MHAM and has not achieved
the growth in assets that was originally anticipated. As a result, MHAM has
advised the PaineWebber Trustees that the PaineWebber Fund may benefit from a
combination with a larger municipal bond fund with similar investment
strategies, such as the MFS Fund.
4. WHAT ARE THE BENEFITS OF MERGING THE PAINEWEBBER FUND INTO THE MFS FUND?
As discussed in more detail below, the two Funds have similar
investment strategies and policies. The PaineWebber Trustees believe that the
Reorganization offers PaineWebber Fund shareholders the opportunity to become
part of a larger and more diverse family of MFS mutual funds, including 23
municipal bond funds, which PaineWebber Fund shareholders will be able to access
through the exchange privilege once the Reorganization has been approved and
completed. Through the Reorganization, PaineWebber Fund shareholders will have
the opportunity to invest in a municipal bond fund managed by an investment
adviser that has historically devoted substantial resources towards its
municipal bond funds. MFS has a long history of innovations in managing
municipal bond funds, and the MFS Fund, established in 1988, has a long track
record. The PaineWebber Trustees also believe that combining the PaineWebber
Fund with the larger MFS Fund could result in more efficient mutual fund
operations due to economies of scale without changing in any significant way the
essential investment profile of the PaineWebber Fund.
5. HOW DO THE INVESTMENT GOALS, POLICIES AND RESTRICTIONS OF THE TWO FUNDS
COMPARE?
The investment goals and policies of the two Funds are similar. The
investment goal of the PaineWebber Fund is to provide high current income exempt
from federal income tax and New York State and New York City personal income
taxes. The investment goal of the MFS Fund is to provide current income exempt
from federal income tax and New York personal income tax.
The MFS Fund invests, under normal market conditions, at least 80% of its
net assets in municipal securities and participation interests in municipal
securities issued by banks, the interest on which is exempt from federal income
tax and New York personal income tax. This policy may be changed without
shareholder approval. Shareholders may need to include the interest income on
certain of the municipal securities in which the MFS Fund invests as a tax
preference item when calculating their federal alternative minimum tax
liability. The PaineWebber Fund normally invests substantially all of its assets
in municipal securities the interest on which is exempt from federal income tax,
and from New York State and New York City personal income taxes. The PaineWebber
Fund invests, under normal market conditions, at least 80% of its net assets in
debt obligations issued by the state of New York, its municipalities and public
authorities or by other issuers if such obligations pay interest that is exempt
from federal income tax and New York State and New York City personal income
taxes and that is not treated as a tax preference item in calculating the
federal alternative minimum tax. This policy is fundamental and cannot be
changed without a shareholder vote. The PaineWebber Fund may invest up to 20% of
its total assets in New York municipal securities that pay interest that is
treated as a tax preference item in calculating federal alternative minimum tax.
Because the MFS Fund is not subject to any limit on the percentage of its assets
invested in New York municipal securities that pay such interest, MFS
shareholders may receive a higher portion of interest income that may subject
them to the federal alternative minimum tax. As of September 30, 2000, ___% of
the MFS Fund's portfolio consisted of securities that pay interest that is
treated as a tax preference item in calculating the federal alternative minimum
tax.
The MFS Fund invests under normal market conditions in: (i) municipal
securities rated in one of the top three credit ratings by credit rating
agencies (or which are unrated and considered by MFS to be of comparable
quality); (ii) securities of issuers that have securities that are rated in one
of the top three credit ratings by credit rating agencies or which are
guaranteed by the U.S. government; and (iii) speculative and lower rated
tax-exempt securities (commonly known as junk bonds). Speculative securities are
securities rated in the lowest investment grade category by credit rating
agencies or which are unrated and considered by MFS to be comparable to
speculative securities. Lower rated bonds, or junk bonds, are bonds assigned
credit ratings below the four highest credit ratings by credit rating agencies
or which are unrated and considered by MFS to be comparable to lower rated
bonds. These speculative securities and lower rated securities may not exceed
one-third of the MFS Fund's net assets. The PaineWebber Fund normally invests at
least 65% of its total assets in investment grade municipal bonds. The
PaineWebber Fund may invest up to 35% of its total assets in municipal bonds
that are not investment grade.
The PaineWebber Fund is permitted to invest a slightly higher percentage
of its assets in so-called junk bonds than the MFS Fund. As of September 30,
2000, the MFS Fund and the PaineWebber Fund had an average portfolio credit
quality rating of AA. While a portfolio with a higher average credit quality
rating may present less risks, a Fund with a higher percentage of its portfolio
invested in junk bonds may generate higher yields.
Each Fund is a non-diversified mutual fund. This means that each Fund may
invest a relatively high percentage of its assets in a small number of issuers.
Because each Fund concentrates in securities of municipal issuers in New
York, certain factors with respect to New York will disproportionately affect
the value of a Fund's investments, including local economic factors or policy
changes, erosion of a state's tax base, or changes in the credit ratings
assigned to New York's municipal issuers. In addition, the MFS Fund may invest
in excess of 25% of its assets in revenue bonds relating to any one specific
industry (i.e., housing, healthcare, water and sewer, etc.). Similarly, the
PaineWebber Fund may invest more than 25% of its total assets in municipal bonds
that are issued to finance similar types of projects.
The risks associated with the principal investment techniques and
practices of the MFS Fund are described below under "Risk Factors." In addition
to the Funds' principal investment strategies referred to above, the Funds may
engage in a number of other investment techniques and practices. Both principal
and non-principal investment techniques and practices are described, together
with their risks, in each Fund's Statement of Additional Information.
Among its permitted non-principal investment strategies, the MFS Fund may
(but is not required to) use various types of derivatives including futures
contracts, options on futures contracts, options on securities and swaps and
related agreements. The PaineWebber Fund may (but is not required to) use
interest rate futures contracts and other derivatives to help manage its
portfolio duration, and is also permitted to invest in futures contracts and
options on futures contracts, securities and indices although it is not
permitted to invest in swaps and related agreements as is the MFS Fund.
6. HOW DO THE EXPENSES OF THE TWO FUNDS COMPARE, AND WHAT ARE THEY ESTIMATED TO
BE FOLLOWING THE REORGANIZATION?
All Classes
As shown in the Annual Fund Operating Expense table below, the pro forma
post-Reorganization total annual fund operating expenses of the Class A, B and C
shares of the MFS Fund are lower than those of the Class A, B and C shares of
the PaineWebber Fund on a per share basis. However, the pro forma
post-Reorganization total annual fund operating expenses of the Class A shares
of the MFS Fund are higher than those of the Class Y shares of the PaineWebber
Fund on a per share basis. In the year ended September 30, 2000, the MFS Fund
paid a management fee of 0.55% of the Fund's average daily net assets before
waivers, which is, on a pro forma basis after giving effect to the
Reorganization, 0.05% lower than that of the PaineWebber Fund, which pays a
management fee of 0.60% annually of its average daily net assets.
Class A Shares
Class A shares of each Fund are sold at net asset value plus a front-end
sales charge. The front-end sales charge on purchases of Class A shares of the
MFS Fund is higher than the charge applicable to purchases of Class A shares of
the PaineWebber Fund. A maximum front-end sales charge of 4.75% is imposed on
Class A shares of the MFS Fund as compared to a maximum front-end sales charge
of 4.00% on Class A shares of the PaineWebber Fund. However, no initial sales
charge will be charged to PaineWebber Fund shareholders in connection with the
Reorganization. You do not pay an initial sales charge when you purchase
$1,000,000 or more of Class A shares of either Fund, but if you redeem these
shares within one year of purchase you will pay a deferred sales charge of 1%.
Each Fund has established certain policies waiving or reducing the Class A
initial sales charge for certain types of investors under certain circumstances.
For example, the MFS Fund provides for letter of intent privileges,
reinstatement privileges and rights of accumulation as well as other waivers
available to eligible investors to reduce the Class A initial sales charge.
Similarly, the PaineWebber Fund provides for rights of accumulation,
reinstatement privileges and combined purchase privileges as well as other
waivers available to eligible investors to reduce the Class A initial sales
charge. Holders of Class A shares of the PaineWebber Fund who are permitted to
purchase additional Class A shares of that Fund at net asset value pursuant to
the terms of the PaineWebber Fund's current Prospectus and Statement of
Additional Information will be permitted, after the Reorganization, to purchase
additional Class A shares of the MFS Fund at net asset value. Other shareholders
who wish to purchase Class A shares of the MFS Fund after the Reorganization
should review the Fund's Prospectus and Statement of Additional Information for
additional information about the applicable waivers.
Each Fund has adopted a Rule 12b-1 distribution plan for its Class A
shares. Under its plan, Class A shares of the PaineWebber Fund pay service fees
in the amount of 0.25%. Under the MFS Fund's plan, the Class A service fee of
0.25% per annum is currently paid by the Fund. The MFS Fund's plan also provides
for a 0.10% per annum distribution fee, which may commence on such date as the
Trustees, who oversee the MFS Fund, may determine.
As shown by the Annual Fund Operating Expenses table below, the pro forma
post-Reorganization total operating expenses for the Class A shares of the MFS
Fund are 1.05% of the Fund's average daily net assets, which is 0.28% lower than
the total operating expenses of 1.33% for the Class A shares of the PaineWebber
Fund for the twelve-month period ended September 30, 2000.
Class B Shares
Class B shares of each Fund are sold without a front-end sales load, but
shareholders are charged a contingent deferred sales charge ("CDSC") if they
sell their Class B shares within six years after purchase. The CDSC applicable
to sales of Class B shares of each Fund is the same, except that the CDSC
applicable to sales of Class B shares of the MFS Fund is lower during the first
year after purchase and higher during the fourth year after purchase than that
applicable to the Class B shares of the PaineWebber Fund. For purposes of
determining the applicable CDSC, PaineWebber Fund shareholders who acquire Class
B shares of the MFS Fund as a result of the Reorganization will be deemed to
have held those shares since the date occurring twenty-four months prior to the
date of their original purchase of Class B shares of the PaineWebber Fund. As a
result, the CDSCs applicable to Class B Reorganization Shares will be lower than
the CDSCs applicable to the PaineWebber Fund Class B Shares.
Each Fund has established certain policies waiving or reducing the Class B
CDSC for certain types of investors under certain circumstances. For example,
the CDSC on Class B shares of the MFS Fund and the PaineWebber Fund will
generally be waived for redemptions pursuant to a Systematic Withdrawal Plan, or
on account of the death of the account owner, subject to certain limitations.
You should review the Prospectus and Statement of Additional Information of the
MFS Fund for a more complete description of the CDSC waiver policies that may be
applicable after the Reorganization.
After eight years, Class B shares of the MFS Fund automatically convert
into Class A shares. Class B shares of the PaineWebber Fund automatically
convert into Class A shares after six years. For each Fund, Class A shares have
lower total annual operating expenses. For purposes of determining when Class B
Reorganization Shares automatically convert into Class A shares of the MFS Fund,
such shares will be deemed to have been purchased on the date occurring
twenty-four months prior to the date of their original purchase. As a result,
Class B Reorganization Shares will take no longer to convert to Class A Shares
of the MFS Fund than Class B Shares of the PaineWebber Fund take to convert to
Class A Shares.
Each Fund has adopted a Rule 12b-1 distribution plan for its Class B
shares under which its Class B shares pay distribution and service fees of
1.00%.
As shown by the Annual Fund Operating Expenses table below, the pro forma
post-Reorganization total operating expenses for the Class B shares of the MFS
Fund are 1.80% of the Fund's average daily net assets, which is 0.30% lower than
the total operating expenses of 2.10% for the Class B shares of the PaineWebber
Fund for the twelve-month period ended September 30, 2000.
Class C Shares
Class C shares of each Fund are sold without a front-end sales load, but
shareholders are charged a CDSC if they sell their Class C shares within one
year after purchase. The CDSC applicable to sales of Class C shares of the MFS
Fund is 1.00%, which is higher than the CDSC of 0.75% applicable to the Class C
shares of the PaineWebber Fund. For purposes of determining whether this CDSC
applies, PaineWebber Fund shareholders who acquire Class C Reorganization Shares
will be deemed to have held those shares since the date of their original
purchase of PaineWebber Fund Class C shares.
Each Fund has established certain policies waiving or reducing the Class C
CDSC for certain types of investors under certain circumstances. For example,
the CDSC on Class C shares of the MFS Fund and the PaineWebber Fund will
generally be waived for redemptions pursuant to a Systematic Withdrawal Plan, or
on account of the death of the account owner, subject to certain limitations.
You should review the Prospectus and Statement of Additional Information of the
MFS Fund for a more complete description of the CDSC waiver policies that may be
applicable after the Reorganization.
Each Fund has adopted a Rule 12b-1 distribution plan for its Class C
shares. Under these plans, each Fund pays distribution and service fees. The
distribution and service fees applicable to the MFS Fund's Class C shares are
1.00%, which are higher than the distribution and service fees of 0.75%
applicable to the Class C shares of the PaineWebber Fund.
As shown by the Annual Fund Operating Expenses table below, the pro forma
post-Reorganization total operating expenses for the Class C shares of the MFS
Fund are 1.80% of the Fund's average net assets, which is 0.03% lower than the
total operating expenses of 1.83% for the Class C shares of the PaineWebber Fund
for the twelve-month period ended September 30, 2000. However, after waivers,
the net expenses for the Class C shares of the MFS Fund are 1.60% of the Fund's
average net assets, which is 0.07% higher than the net expenses of 1.52% for the
Class C shares of the PaineWebber Fund for the twelve month period ended
September 30, 2000.
Class C shares of the MFS Fund will be newly issued in connection with the
Reorganization.
Class Y Shares
Class Y shares of the PaineWebber Fund are not subject to any sales
charges or distribution and service fees and are available only to certain types
of investors. In the Reorganization, Class Y shareholders of the PaineWebber
Fund will receive Class A shares of the MFS Fund, which, as noted above, are
sold with a front-end sales load. Class Y shareholders will not, however, have
to pay any front-end or back-end sales charge in connection with the
Reorganization. Holders of Class Y shares of the PaineWebber Fund will be
permitted, after the Reorganization, to purchase additional Class A shares of
the MFS Fund at net asset value.
Class Y shares of the PaineWebber Fund do not pay ongoing 12b-1
distribution or service fees, but the Class A shares of the MFS Fund currently
pay a service fee equal to 0.25% per annum. Please see the description of "Class
A Shares" above for more information about the Class A shares of the MFS Fund
that Class Y shareholders will receive in the Reorganization.
As shown by the Annual Fund Operating Expenses table below, the pro forma
post-Reorganization total operating expenses for the Class A shares of the MFS
Fund are 1.05% of the Fund's average daily net assets, which is 0.02% higher
than those of the Class Y shares of the PaineWebber Fund for the twelve-month
period ended September 30, 2000.
The following tables summarize the maximum fees and expenses you may pay
when investing in the Funds, expenses that each of the Funds incurred in the 12
months ended September 30, 2000, and pro forma expenses which assume that the
Reorganization was completed on October 1, 1999.
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
------ ------ ------ ------
Fees (fees paid directly from your
investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage of
offering price)
PaineWebber Fund 4.00% None None None
MFS Fund 4.75%+ None None N/A
Maximum Deferred Sales Charge (Load)
(as a percentage of the original
purchase price or redemption
proceeds, whichever is lower)
PaineWebber Fund None* 5.00%** 0.75%*** None
MFS Fund None* 4.00%** 1.00%*** N/A
----------
+ No sales charge will be paid on shares of the MFS Fund issued in connection
with this Reorganization.
* A contingent deferred sales charge of 1.00% of the shares' offering price or
the net asset value at the time of sale by the shareholder, whichever is
less, is assessed on certain redemptions of Class A shares of either Fund,
made within one year of the purchase date, that were purchased without an
initial sales charge as part of an investment of $1 million or more or, with
respect to the MFS Fund, as part of a purchase through a retirement plan.
** In the first year, declining to 1.0% in the sixth year, and eliminated
thereafter. For purposes of determining the applicable CDSC, PaineWebber
Fund shareholders who acquire Class B shares of the MFS Fund as a result of
the Reorganization will be deemed to have held those shares since the date
occurring twenty-four months prior to the date of their original purchase of
their Class B shares of the PaineWebber Fund.
*** A CDSC will be charged on certain redemptions made within one year of the
purchase date.
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
Fee Waiver
and/or
Management Distribution Other Total Annual Fund Expense Net
Fees (12b-1) Fees Expenses Operating Expenses Reimbursement Expenses
---------- ------------ -------- ------------------ ------------- --------
<S> <C> <C> <C> <C> <C> <C>
PAINEWEBBER FUND
Class A 0.60% 0.25% 0.48% 1.33% -0.31%* 1.02%
Class B 0.60% 1.00% 0.50% 2.10% -0.33%* 1.77%
Class C 0.60% 0.75% 0.48% 1.83% -0.31%* 1.52%
Class Y 0.60% 0.00% 0.43% 1.03% -0.26%* 0.77%
MFS FUND
Class A 0.55% 0.25%** 0.26% 1.06% -0.20%*** 0.86%
Class B 0.55% 1.00% 0.26% 1.81% -0.20%*** 1.61%
Class C 0.55% 1.00% 0.26%+ 1.81% -0.20%*** 1.61%
MFS FUND
(PRO FORMA COMBINED)++
Class A 0.55% 0.25% 0.25% 1.05% -0.20%*** 0.85%
Class B 0.55% 1.00% 0.25% 1.80% -0.20%*** 1.60%
Class C 0.55% 1.00% 0.25% 1.80% -0.20%*** 1.60%
* The PaineWebber Fund and MHAM have entered into a written expense reimbursement agreement. MHAM is contractually obligated to
reimburse the PaineWebber Fund to the extent that the Fund's expenses through June 30, 2001 otherwise would exceed the "Net
Expenses" rate for each class as shown above. The PaineWebber Fund has agreed to repay MHAM for those reimbursed expenses if it
can do so over the following three years without causing the PaineWebber Fund's expenses in any of those years to exceed those
"Net Expenses" rates.
** Class A shares of the MFS Fund may pay distribution and service fees up to 0.35% (a 0.10% distribution fee and a 0.25% service
fee). The Class A service fee equal to 0.25% per annum is currently being paid. Payment of the 0.10% per annum Class A
distribution fee will commence on such date as the Trustees of the Fund may determine.
*** MFS has contractually agreed to waive its right to receive a management fee greater than 0.35% annually of the average daily net
assets of the Fund. This contractual arrangement will remain in effect until at least August 1, 2001, absent an earlier change
approved by the Fund's Board of Trustees.
+ Class C shares of the MFS Fund will be newly issued in connection with the Reorganization and therefore "Other Expenses" of the
Class C shares have been estimated based on the "Other Expenses" of Class A and Class B shares.
++ Assumes that the Reorganization was completed on October 1, 1999.
</TABLE>
The tables are provided to help you understand the expenses of investing in the
Funds, including pro forma expenses of the MFS Fund after giving effect to the
Reorganization, and your share of the operating expenses that each Fund incurs.
The expenses shown in the table do not reflect the application of credits
related to expense offset arrangements that reduce certain MFS Fund expenses.
EXAMPLES
These examples translate the expense percentages shown in the preceding table
into dollar amounts. By doing this, you can more easily compare the cost of
investing in the Funds. The examples assume that you invest $10,000 in a Fund
for the time periods shown and then, except as shown for Class B and Class C
shares, redeem all your shares at the end of these periods. They also assume a
5% return on your investment each year and that a Fund's operating expenses
remain the same, except for the one year period when the expenses are lower due
to fee waivers by MFS and MHAM. The examples are hypothetical; your actual costs
and returns may be higher or lower.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
PAINEWEBBER FUND
Class A ..................... $500 $775 $1,071 $1,911
Class B ..................... $680 $926 $1,299 $2,027*
Class B (no redemption) ..... $180 $626 $1,099 $2,027*
Class C ..................... $230 $545 $ 961 $2,123
Class C (no redemption) ..... $155 $545 $ 961 $2,123
Class Y ..................... $ 79 $302 $ 543 $1,236
MFS FUND
Class A ..................... $559 $777 $1,013 $1,690
Class B ..................... $564 $850 $1,161 $1,913*
Class B (no redemption) ..... $164 $550 $ 961 $1,913*
Class C ..................... $264 $550 $ 961 $2,110
Class C (no redemption) ..... $164 $550 $ 961 $2,110
MFS FUND
(PRO FORMA COMBINED)**
Class A ..................... $558 $774 $1,008 $1,679
Class B ..................... $563 $847 $1,156 $1,902*+
Class B (no redemption) ..... $163 $547 $ 956 $1,902*+
Class C ..................... $263 $547 $ 956 $2,100
Class C (no redemption) ..... $163 $547 $ 956 $2,100
* Reflects conversion of Class B shares to Class A shares (which pay lower
ongoing expenses) approximately six years (with respect to the PaineWebber
Fund) and eight years (with respect to the MFS Fund and the pro forma
combined fund) after purchase.
** Assumes that the Reorganization was completed on October 1, 1999.
+ For purposes of determining the applicable CDSC and the time period for
conversion to Class A shares, PaineWebber Fund shareholders who acquire
Class B shares of the MFS Fund as a result of the Reorganization will be
deemed to have held those shares as of the date occurring twenty-four months
prior to the date of their original purchase of their Class B shares of the
PaineWebber Fund. As a result, the Class B Reorganization Shares held by
former PaineWebber Fund shareholders will convert to Class A shares after
six years. If calculated based on a six year conversion, the expenses paid
by former PaineWebber Fund shareholders on Class B Reorganization Shares
after 10 years for the pro forma combined fund would be $1,721.
7. HOW HAS THE MFS FUND PERFORMED?
Set forth in the table below are the average annual total returns of each
class of shares of the MFS Fund, at net asset value, for the periods specified:
AVERAGE ANNUAL TOTAL RETURNS AS OF SEPTEMBER 30, 2000
1 Year 5 Years 10 Years
------ ------- --------
Class A shares 5.53% 5.25% 7.09%
Class B shares 4.74% 4.45% 6.50%
The yield for MFS Fund shares for the 30-day period ended September 30,
2000 was 4.80% for Class A shares and 4.27% for Class B shares.
The MFS Fund commenced investment operations on June 6, 1988 with the
offering of Class A shares, and subsequently offered Class B shares on September
7, 1993. Class B share performance includes the performance of the MFS Fund's
Class A shares for periods prior to the offering of Class B shares. This blended
performance has not been adjusted to take into account differences in class
specific operating expenses. Because operating expenses of Class B shares are
higher than those of Class A shares, this blended Class B share performance is
higher than the performance of Class B shares would have been had Class B shares
been offered for the entire period. Class C shares of the MFS Fund are newly
offered and therefore performance information is not available for this class.
Set forth below is average annual total return information for the Class A
shares of the MFS Fund and the PaineWebber Fund for the one year periods ending
on the dates stated:
AVERAGE ANNUAL TOTAL RETURN (TOTAL INVESTMENT RETURN AT NAV)
Year Ended PAINEWEBBER
December 31, MFS FUND FUND
------------ -------- -----------
1999 (3.39)% (4.57)%
1998 5.53% 6.29%
1997 9.99% 9.31%
1996 2.67% 3.46%
1995 16.79% 17.57%
1994 (6.14)% (8.48)%
1993 13.23% 12.72%
1992 9.84% 9.85%
1991 13.66% 12.85%
1990 6.04% 5.53%
Of course the Funds' past performance is not an indication of future
performance. The performance information in the table above reflects
reinvestment of dividends and other earnings, but does not reflect any
applicable sales charges. The total returns for other classes of each Fund would
have been lower than the returns of the Class A shares of such Fund because such
other classes of shares have higher total annual expense ratios (except with
respect to Class Y shares of the PaineWebber Fund, which have a lower expense
ratio than that of the Fund's Class A shares).
To review the MFS Fund in more detail, please refer to the MFS Fund's
prospectus and most recent annual and semi-annual reports, all of which are
enclosed.
8. WHAT ARE THE DIFFERENCES IN PORTFOLIO TURNOVER RATES OF THE TWO FUNDS?
Portfolio turnover is a measure of how frequently a fund trades
portfolio securities. Frequent trading of portfolio securities increases
transaction costs, which could detract from a Fund's performance. Additionally,
active and frequent trading may result in the realization and distribution to a
Fund of higher capital gains, which would increase the tax liability for the
Fund's shareholders. During its fiscal year ended February 29, 2000, the
PaineWebber Fund had a portfolio turnover rate of 19%. The MFS Fund's portfolio
turnover rate was 38% during its fiscal year ended March 31, 2000.
9. WHO MANAGES THE MFS FUND?
Michael L. Dawson and Geoffrey L. Schechter manage the MFS Fund. Mr.
Dawson, a Vice President of MFS, has been a portfolio manager of the MFS Fund
since January 1, 1999, and has been employed in the investment management area
of MFS since September, 1998. Prior to joining MFS, Mr. Dawson was employed as a
sales representative in the Institutional Sales Group at Fidelity Capital
Markets from March, 1997 to May, 1998, and was employed by Goldman Sachs & Co.
in the Institutional Sales - Fixed Income Division from January, 1993 to March,
1997. Mr. Schechter, a Vice President of MFS, became a portfolio manager of the
MFS Fund on March 23, 2000. Mr. Schechter has been employed in the investment
management area of MFS since June, 1993.
10. HOW DO I VOTE?
Shareholders can vote in any of the following ways:
o by proxy: by completing, signing and either returning the enclosed proxy
card using the postage-paid envelope provided or faxing the proxy card to
__________; or
o by telephone: by calling the toll-free number listed on your proxy card,
entering the [____]-digit control number on your proxy card and following
the recorded instructions; or
o by internet: by going to [**www.proxyvote.com**] or clicking on the "Proxy
voting" link on [____________], entering the [___]-digit control number on
your proxy card and following the instructions on the site.
If you prefer to vote in person, you are cordially invited to attend a
meeting of shareholders of your Fund, which will be held at [_____ a.m./p.m.] on
Thursday, March 1, 2001 at 1285 Avenue of the Americas, 14th Floor, New York,
New York 10019. If you vote now, you will help avoid the expense of further
solicitations.
11. HOW WILL THE REORGANIZATION HAPPEN?
If the Reorganization is approved, your PaineWebber Fund shares will be
converted to Reorganization Shares of the MFS Fund, using the Funds' net asset
value share prices, excluding sales charges, as of the close of trading on March
9, 2001. This conversion will not affect the total dollar value of your
investment. The net asset value of the PaineWebber Fund for purposes of the
Reorganization will be determined in accordance with the MFS Fund's procedures
for determining net asset value set forth in its Prospectus and Statement of
Additional Information and its charter documents in consultation with MHAM.
Prior to the Reorganization, the PaineWebber Fund's custodian will begin to use
the securities pricing sources and vendors that are used by the MFS Fund for the
purpose of valuing the assets of the PaineWebber Fund. The use of these
procedures may increase or decrease the net asset value of the PaineWebber Fund
as compared to the net asset value determined through use of the PaineWebber
Fund's procedures.
Any PaineWebber Fund certificate that remains outstanding on the closing
date of the Reorganization shall be deemed to be cancelled, shall no longer
evidence ownership of shares of the PaineWebber Fund and shall not represent
ownership of the Reorganization Shares issued by the MFS Fund.
12. WILL THE REORGANIZATION HAVE TAX CONSEQUENCES?
Although any taxable dividends and capital gain distributions will be paid
prior to the Reorganization, the Reorganization itself will be a non-taxable
event for federal income tax purposes and will not need to be reported on your
2001 federal tax return. You should consult your tax adviser regarding the
effect, including state and local tax consequences, if any, of the
Reorganization in light of your individual circumstances.
13. WHAT PAYMENTS WILL BE MADE IN CONNECTION WITH THE REORGANIZATION?
Upon the consummation of the Reorganization and the reorganizations of
certain other PaineWebber funds into MFS funds, and upon the satisfaction of
certain other obligations and conditions, MFS has agreed to make payments to
MHAM based on the value of the net assets of the PaineWebber Fund and the other
acquired PaineWebber funds immediately preceding the closing date of the
reorganizations. MFS also has agreed to pay MHAM an amount equal to the net
present value of the expected Class B distribution fees to be paid to MFS on the
Class B shareholder accounts of the acquired PaineWebber funds. In addition, on
the first year anniversary of the closing of the reorganizations, MFS has agreed
to pay MHAM an additional amount depending upon the value of the net assets
transferred from the PaineWebber Fund and the other acquired PaineWebber funds
which remain in the MFS funds plus the other net assets of the MFS funds for
which PaineWebber Incorporated is listed as the broker-dealer of record. Because
of these payments, which may be substantial, MHAM has an interest in the
approval of the Reorganization.
14. WILL MY DIVIDEND BE AFFECTED BY THE REORGANIZATION?
After the Reorganization you will continue to receive distributions of any
net investment income once a month and any net realized capital gains at least
once a year. Except as described below, your distributions will continue to be
either reinvested or paid in cash, according to the option you selected with the
PaineWebber Fund. Of course, the amount of these distributions will reflect the
investment performance of the MFS Fund.
15. DO THE PROCEDURES FOR PURCHASING, REDEEMING AND EXCHANGING SHARES OF THE TWO
FUNDS DIFFER?
Yes. Although the procedures for purchasing and redeeming shares of
each Fund and for exchanging shares of each Fund for shares of other funds are
generally similar, there are certain differences. These differences are
discussed below.
PURCHASE POLICIES. You may purchase shares of each Fund at the Fund's net
asset value, plus any applicable sales charge, that is next calculated after the
Fund receives your purchase request in good order. You may establish an account
with the MFS Fund by having your financial adviser process your initial
purchase. If you are a PaineWebber client or a client of a PaineWebber
correspondent firm, you may purchase shares of the PaineWebber Fund through your
Financial Advisor. Otherwise, you may purchase shares of the PaineWebber Fund by
mailing a check and completed application to the Fund's transfer agent. Each
Fund may reject any purchase order in its discretion including, without
limitation, when the Fund believes an investor to be engaging in excessive
trading or market-timing practices.
Each Fund imposes certain minimum initial and subsequent investment
requirements. The MFS Fund imposes the following investment minimums:
Initial investments $1,000
Additional investments $50
Automatic investment plans $50
Automatic exchange plans $50
Certain tax-deferred retirement $50
plans (non-IRA)
Employer-sponsored investment $50
programs
IRAs $250
The MFS Fund permits additional purchases to be made by wire transfer and has
certain other features for adding to a shareholder's MFS Fund account that are
discussed at greater length in the MFS Fund's Prospectus.
The PaineWebber Fund requires initial investments of $1000 and additional
investments of at least $100. The PaineWebber Fund may waive these investment
minimums for employees of PaineWebber or its affiliates, participants in certain
pension plans, retirement accounts, unaffiliated investment plans, or automatic
investment plans.
REDEMPTIONS. Shares of each Fund are redeemable on any business day at a
price equal to the net asset value of the shares the next time it is calculated
after receipt of your redemption request in good order. Shareholders of the MFS
Fund may redeem their shares by having their financial advisers process
redemption requests or by contacting the Fund's shareholder servicing agent, MFS
Service Center, Inc. ("MFSC") directly in writing or by telephone. PaineWebber
Fund shareholders that have an account with PaineWebber or a PaineWebber
correspondent firm may redeem shares by contacting their Financial Advisors.
Other PaineWebber Fund shareholders must send their redemption requests in
writing to the Fund's transfer agent. Each Fund may require a signature
guarantee or supporting documentation in connection with a redemption request.
If you purchased your shares by check, each Fund may delay the payment of
redemption proceeds until the check has cleared. Additionally, each Fund may
suspend redemption privileges or postpone payment of redemption proceeds under
unusual circumstances such as when the New York Stock Exchange is closed,
trading on the Exchange is restricted or if there is an emergency.
Each Fund has reserved the right to automatically redeem shares from
accounts that contain less than $500 due to redemptions or exchanges. Before
making such an automatic redemption, each Fund will notify the shareholder and
give him or her 60 days to make additional investments to avoid having his or
her shares redeemed. Additionally, each Fund has reserved the right to pay
redemption proceeds by a distribution in-kind of portfolio securities rather
than cash.
EXCHANGES. Shareholders of the MFS Fund may exchange Fund shares for
shares of the same class of all MFS funds available for sale. Shareholders of
Class A, B or C shares of the PaineWebber Fund may exchange those shares for
shares of the same class of other PaineWebber funds. Class Y shares of the
PaineWebber Fund are not exchangeable. Each Fund imposes minimum restrictions on
the dollar value of exchanges. The MFS Fund requires that exchanges be in
amounts of $1,000 or greater (or $50 for automatic exchanges under an automatic
exchange plan). The PaineWebber Fund requires that any exchange must meet the
minimum investment amount for the PaineWebber fund for which shares are to be
exchanged.
Neither Fund will assess a sales charge upon an exchange but the
transaction will be treated as a sale of the first fund's shares and taxed
accordingly. Your deferred sales charge (if any) will continue to be measured
from the date of your original purchase (which, for the Class B Reorganization
Shares received by the PaineWebber Fund shareholders, will be deemed to be the
date twenty-four months prior to the date of the original purchase of the Class
B shares of the PaineWebber Fund).
Shareholders of the MFS Fund may place exchange orders through their
financial advisers or by contacting MFSC directly. Shareholders of the
PaineWebber Fund who purchased their shares through PaineWebber or a PaineWebber
correspondent firm may place exchange orders by contacting their Financial
Advisors. Otherwise, PaineWebber Fund shareholders may exchange shares by
writing to the Fund's transfer agent.
PURCHASE AND REDEMPTION PROGRAMS. The MFS Fund offers additional purchase
and redemption programs, including an automatic investment plan, automatic
exchange plan, distribution investment program, a systematic withdrawal plan,
and checkwriting privileges for Class A or Class C shares. The PaineWebber Fund
also offers an automatic investment plan and a systematic withdrawal plan. More
information about these plans is available in the Prospectus and Statement of
Additional Information of the applicable Fund.
16. HOW WILL I BE NOTIFIED OF THE OUTCOME OF THE REORGANIZATION?
If the Reorganization is approved by shareholders, you will receive
confirmation after the Reorganization is completed, indicating your new Fund
account number and the number of shares you are receiving. If the Reorganization
is not approved, shareholders will be notified, and the results of the meeting
will be provided in the next annual report of the PaineWebber Fund. In that
case, you will continue to own your PaineWebber Fund shares, the PaineWebber
Fund will continue to be managed as a separate fund in accordance with its
current investment objectives and policies, and the PaineWebber Trustees may
consider such alternatives as may be in the best interest of PaineWebber Fund
shareholders.
17. WILL THE NUMBER OF SHARES I OWN CHANGE?
Yes, but the total value of the Reorganization Shares of the MFS Fund you
receive will equal the total value of the shares of the PaineWebber Fund that
you hold at the time of the Reorganization. Even though the net asset value per
share of each Fund is different, the total value of a shareholder's holdings
will not change as a result of the Reorganization.
RISK FACTORS
WHAT ARE THE PRINCIPAL RISK FACTORS ASSOCIATED WITH AN INVESTMENT IN THE
MFS FUND, AND HOW DO THEY COMPARE WITH THOSE FOR THE PAINEWEBBER FUND?
Because the Funds share similar goals and policies, the risks of an
investment in the MFS Fund are similar to the risks of an investment in the
PaineWebber Fund. A more detailed description of certain risks associated with
an investment in each Fund is contained in the Fund's Prospectus. Each Fund is
principally subject to the risks described below:
o Interest Rate Risk: As with any fixed income security, the prices of municipal
securities in the Funds' portfolios will generally fall when interest rates
rise. Conversely, when interest rates fall, the prices of municipal securities
in the Funds' portfolios will generally rise.
o Maturity Risk: Interest rate risk will affect the price of a municipal
security more if the security has a longer maturity. Municipal securities with
longer maturities will therefore be more volatile than other fixed income
securities with shorter maturities. Conversely, municipal securities with
shorter maturities will be less volatile but generally provide lower returns
than municipal securities with longer maturities. The average maturity of the
Funds' municipal security investments will affect the volatility of the Funds'
share prices.
o Credit Risk: Credit risk is the risk that the issuer of a municipal security
will be unable or unwilling to pay principal and interest when due. Rating
agencies assign credit ratings to certain municipal securities to indicate
their credit risk. The price of a municipal security will generally fall if
the issuer defaults on its obligation to pay principal or interest, the rating
agencies downgrade the issuer's credit rating or other news affects the
market's perception of the issuer's credit risk.
Each Fund may invest in participation interests, which are interests in
holdings of municipal obligations backed by a letter of credit or guarantee
from the issuing bank. These participation interests are also subject to the
risk of default by the issuing bank.
o General Obligations and Revenue Obligations Risk: The Funds may invest in
municipal bonds that are general obligations backed by the full faith and
credit of the municipal issuer. The Funds may also invest in municipal bonds
called revenue obligations which are subject to a higher degree of credit risk
than general obligations. Revenue obligations finance specific projects, such
as building a hospital, and are not backed by the full faith and credit of the
municipal issuer. Because revenue obligations are repaid from the revenues
generated by the facility that used the bonds for financing, they are subject
to a risk of default in payments of principal and interest if the facility
does not generate enough revenue to make repayment possible.
o Municipal Lease Obligations Risk: Each Fund's investments in municipal
securities may include municipal lease obligations. Municipal lease
obligations are undivided interests issued by a state or municipality in a
lease or installment purchase which generally relates to equipment or
facilities. When a Fund invests in municipal lease obligations, it may have
limited recourse in the event of default or termination. In some cases,
municipal lease obligations have "non-appropriation" clauses which provide
that payments under the municipal leases do not have to be made unless the
appropriate legislative body specifically approves money for that purpose.
Each of the Funds may invest in municipal lease securities, but, unlike the
MFS Fund, the PaineWebber Fund may not invest more than 5% of its total assets
in uninsured "non-appropriation" municipal lease obligations.
o Concentration Risk: Because each Fund concentrates in securities of municipal
issuers in New York, its performance may be disproportionately affected by
local, state and regional factors. These may include state or local
legislation or policy changes, economics, erosion of the city's or state's tax
base, natural disasters, and the possibility of credit problems. New York City
and certain localities outside New York City have experienced financial
problems. These problems may affect the fiscal health of New York State.
o Non-Diversified Status Risk: Because each Fund may invest its assets in a
small number of issuers, each Fund is more susceptible to any single economic,
political or regulatory event affecting those issuers than is a diversified
fund. Because each Fund may invest in municipal bonds that are issued to
finance similar projects, economic, business or political developments or
changes that affect one municipal bond also may affect other municipal bonds
in the same sector. Under a policy that may not be changed without shareholder
approval, the MFS Fund may not purchase securities of any issuer if such
purchase at the time thereof would cause more than 10% of the voting
securities of such issuer to be held by the Fund. In addition, the MFS Fund
may not purchase securities (other than certain U.S. government securities
which may be purchased without limitation) if as a result, at the close of any
quarter in the MFS Municipal Series Trust's taxable year, 25% or more of the
Fund's total assets would be invested in securities of any one issuer.
o Speculative Municipal Securities Risk: Speculative bonds are subject to a
higher risk that the issuer will default on payments of principal and interest
than higher rated investment grade bonds. Although the issuer's ability to
make interest and principal payments appears adequate, an adverse change in
economic conditions or other circumstances is more likely to cause a default
by the issuer of a speculative bond than the issuer of a higher rated
investment grade bond.
o Liquidity Risk: The fixed income securities purchased by the Funds may be
illiquid and/or restricted and may be traded in the over-the-counter market
rather than on an organized exchange. These securities are therefore subject
to liquidity risk, which means that they may be harder to purchase or sell at
a fair price. The inability to purchase or sell these fixed income securities
at a fair price could have a negative impact on the Funds' performance.
o Lower Rated Municipal Securities Risk
^ Higher Credit Risk: Junk bonds are subject to a substantially higher degree
of credit risk than higher-rated bonds. During recessions, a high percentage
of issuers of junk bonds may default on payments of principal and interest.
The price of a junk bond may therefore fluctuate drastically in response to
negative news about the particular issuer or the economy in general.
^ Higher Liquidity Risk: During recessions and periods of broad market
declines, junk bonds could become less liquid, meaning that they will be
harder to value or sell at a fair price.
o Active or Frequent Trading Risk: The Funds may engage in active and frequent
trading to achieve their principal investment strategies. This may result in
the realization and distribution to shareholders of higher capital gains, as
compared to a Fund with less active trading policies, and an increase in your
tax liability. Frequent trading also increases transaction costs, which could
detract from the Funds' performance.
o Political Risk: The Funds' investments are significantly affected by political
changes, including legislative proposals which may make municipal bonds less
attractive in comparison to taxable bonds.
o Temporary Defensive Policies: The MFS Fund may depart from its principal
investment strategies by temporarily investing for defensive purposes when
adverse market, economic, or political conditions exist. While the MFS Fund
invests defensively, it may not be able to pursue its investment objective.
When such conditions exist the MFS Fund may invest up to 50% of its total
assets in the following short-term investments:
o U.S. government securities; and
o commercial paper, obligations of banks (including certificates of deposit,
bankers acceptances and repurchase agreements) with $1 billion of assets
and cash.
Interest income from these short-term investments will be taxable to
shareholders as ordinary income. The MFS Fund's defensive investment position,
therefore, may not be effective in protecting its value.
To protect itself from adverse market conditions, the PaineWebber Fund may
also take a temporary defensive position that is different from its normal
investment strategy. This means that the PaineWebber Fund may temporarily
invest a larger-than-normal part, or even all, of its assets in cash or money
market instruments that pay taxable interest, including repurchase agreements.
In addition, for temporary defensive purposes, the PaineWebber Fund may invest
more than 20% of its net assets in municipal obligations that pay interest
that is exempt from federal income tax but is subject to New York State and
New York City personal income taxes or is an item of tax preference for
purposes of the federal alternative minimum tax.
o As with any mutual fund, you could lose money on your investment in a Fund.
An investment in a Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Other Investments. In addition to the Funds' main investment strategies of
investing in municipal securities the interest on which is exempt from federal
income tax and New York personal income tax, the Funds may also buy and sell
other types of investments. The risks associated with the principal investment
techniques and practices used by the Funds are summarized above. The
non-principal investment techniques in which the Funds are permitted to engage
are described, together with their risks, in each Fund's Statement of Additional
Information.
Among other non-principal investment techniques, the MFS Fund may invest
in derivatives, including futures contracts, options on futures contracts,
options on securities, and swaps and related agreements. The PaineWebber Fund
may also invest in derivatives, including futures contracts and options on
futures contracts, securities and indices although it does not invest in swap
agreements and its investments in futures contracts and options are subject to
certain limitations not applicable to the MFS Fund. Derivatives may present the
Funds with special risks and investments in derivatives may rise and fall more
rapidly than other investments. Please see the MFS Fund's Statement of
Additional Information for a further description of the risks of the MFS Fund's
derivative investments.
Certain of the non-principal investments and related risk factors may
differ for each Fund. For example, the MFS Fund may invest in securities in
which the PaineWebber Fund may not invest, including collateralized mortgage
obligations, equity securities, and mortgage dollar-rolls. To the extent a Fund
engages in these non-principal investment strategies, it may be subject to
special risks. Please see the Statement of Additional Information for further
details. The MFS Fund may not engage in short sales "against the box," lend its
portfolio securities or invest in stand-by commitments, transactions which are
permitted for the PaineWebber Fund, subject to some restrictions.
Among the MFS Fund's non-principal investment techniques, the MFS Fund may
be permitted to invest in certain investments subject to different limitations
than the PaineWebber Fund. For example, the MFS Fund may not knowingly invest in
securities (other than repurchase agreements) which are subject to legal or
contractual restrictions on resale if more than 15% of the MFS Fund's net assets
(taken at market value) would be so invested. By contrast, the PaineWebber Fund
may invest up to 10% of its net assets in illiquid securities. A Fund may not be
able to readily liquidate its investments in illiquid securities, and the lack
of a liquid secondary market for illiquid securities may make it more difficult
for a Fund to assign a value to those securities for purposes of valuing its
portfolio and calculating its net asset value. The PaineWebber Fund may not
invest more than 10% of its total assets in inverse floaters, while the MFS Fund
does not have a similar limitation. The market value of an inverse floater may
be more volatile than that of a fixed-rate obligation. For additional
information, please see the MFS Fund's Statement of Additional Information.
GENERAL
This Prospectus/Proxy Statement is furnished in connection with the
Reorganization of the PaineWebber Fund into the MFS Fund and the solicitation of
proxies by and on behalf of the PaineWebber Trustees for use at the Meeting of
Shareholders. The Meeting is to be held on Thursday, March 1, 2001 at [_______
a.m./p.m.] at 1285 Avenue of the Americas, 14th Floor, New York, New York 10019.
The Notice of the Meeting, the combined Prospectus/Proxy Statement and the
enclosed proxy card are being mailed to shareholders on or about January 5,
2001.
Any shareholder giving a proxy has the power to revoke it by mail
(addressed to the PaineWebber Fund's Secretary at the principal office of the
PaineWebber Fund, 51 West 52nd Street, New York, New York 10019-6114), by
attending the meeting and voting in person, by executing a superseding proxy, or
by submitting a notice of revocation to the PaineWebber Fund. All properly
executed proxies received in time for the Meeting will be voted as specified in
the proxy, or, if no specification is made, FOR the proposal (set forth in
Proposal 1 of the Notice of Meeting) to implement the Reorganization of the
PaineWebber Fund by the transfer of all of its assets to the MFS Fund in
exchange for the Reorganization Shares and the assumption by the MFS Fund of all
of the stated liabilities of the PaineWebber Fund.
As of December 22, 2000, each class of the PaineWebber Fund had the number
of shares outstanding and entitled to be voted as set forth below:
Shares Outstanding and
Entitled to Vote
Class A __________
Class B __________
Class C __________
Class Y __________
Only shareholders of record on December 22, 2000 will be entitled to notice of
and to vote at the Meeting. Each share is entitled to one vote, with fractional
shares voting proportionally.
The PaineWebber Trustees know of no matters other than those set forth
herein to be brought before the Meeting. If, however, any other matters properly
come before the Meeting, it is the Fund's intention that proxies will be voted
on such matters in accordance with the judgment of the persons named in the
enclosed proxy card.
PROPOSAL REGARDING APPROVAL OF REORGANIZATION
AND RELATED AGREEMENT AND PLAN OF REORGANIZATION
The shareholders of the PaineWebber Fund are being asked to approve a
reorganization of the PaineWebber Fund into the MFS Fund pursuant to an
Agreement and Plan of Reorganization between PaineWebber Municipal Series, on
behalf of the PaineWebber Fund, and the MFS Municipal Series Trust, on behalf of
the MFS Fund, dated as of November 30, 2000 (the "Agreement"), a copy of which
is attached to this Prospectus/Proxy Statement as Exhibit A.
The Reorganization is structured as a transfer of all of the assets of the
PaineWebber Fund to the MFS Fund in exchange for the assumption by the MFS Fund
of all of the stated liabilities of the PaineWebber Fund and for that number of
the Class A, Class B, and Class C Reorganization Shares equal in total net asset
value to the net value of assets transferred to the MFS Fund, all as more fully
described below under "Information about the Reorganization."
After receipt of the Reorganization Shares, the PaineWebber Fund will
distribute the Class A Reorganization Shares to its Class A and Class Y
shareholders, the Class B Reorganization Shares to its Class B shareholders, and
the Class C Reorganization Shares to its Class C shareholders, in proportion to
their existing shareholdings as part of the complete liquidation of the
PaineWebber Fund, and the legal existence of the PaineWebber Fund as a separate
series of the PaineWebber Municipal Series, a Massachusetts business trust,
under Massachusetts law will be terminated. Each shareholder of the PaineWebber
Fund will receive a number of full and fractional Class A, Class B, or Class C
Reorganization Shares equal in value at the date of the exchange to the
aggregate value of the shareholder's PaineWebber Fund shares of the applicable
class.
Prior to the date of the transfer (the "Exchange Date"), the PaineWebber
Fund will declare and pay a distribution to shareholders which, together with
all previous distributions, will have the effect of distributing to shareholders
all of its investment company taxable income (computed without regard to the
deduction for dividends paid) plus its net interest income exempt from federal
income tax and net realized gains, if any, through the Exchange Date.
The PaineWebber Trustees have voted unanimously to approve the
Reorganization and to recommend that shareholders also approve the
Reorganization. The transactions contemplated by the Agreement will be
consummated only if approved by the affirmative vote of the holders of the
lesser of (a) 67% or more of the voting securities present at the Meeting or
represented by proxy if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy or (b) more than 50% of the
outstanding voting securities of the PaineWebber Fund. The Reorganization does
not require the approval of the shareholders of the MFS Fund.
If this proposal is not approved by the shareholders of the PaineWebber
Fund, you will continue to own your PaineWebber Fund shares, the PaineWebber
Fund will continue to be managed as a separate fund in accordance with its
current investment objectives and policies, and the PaineWebber Trustees may
consider such alternatives as may be in the best interests of its shareholders.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION The
PaineWebber Trustees, including all Trustees who are not
"interested persons" of the PaineWebber Fund, have determined that the
Reorganization would be in the best interests of the PaineWebber Fund's
shareholders. The PaineWebber Trustees have unanimously approved the
Reorganization and have recommended its approval by shareholders.
The proposal is the result of a review by the PaineWebber Fund's
investment adviser and administrator, MHAM, of the investment strategies and
position of the municipal bond funds in the PaineWebber Fund complex. The
PaineWebber Fund has remained relatively small in comparison to other mutual
funds managed by MHAM and has not achieved the growth in assets that was
originally anticipated. As a result, MHAM has advised the PaineWebber Trustees
that the PaineWebber Fund may benefit from a combination with a larger municipal
bond fund with similar investment strategies, such as the MFS Fund. As discussed
above, while not identical, the Funds have similar investment policies, each
investing a significant portion of its assets in municipal securities the
interest on which is exempt from federal income tax and New York personal income
tax.
In light of the similarity of the Funds, MHAM advised the PaineWebber
Trustees that combining the PaineWebber Fund with the MFS Fund would be in the
best interests of shareholders of the PaineWebber Fund. The PaineWebber Trustees
believe that the Reorganization will be advantageous to the Fund's shareholders
for several reasons and considered the following matters, among others, in
unanimously approving the proposal:
1. The investment objectives, policies and restrictions of the MFS Fund
are compatible with those of the PaineWebber Fund.
2. The Reorganization offers PaineWebber Fund shareholders the
opportunity to become part of a larger and more diverse family of
more than 140 mutual funds, including 23 municipal bond funds.
PaineWebber Fund shareholders will be able to exchange their shares
among all MFS funds available for sale upon completion of the
Reorganization.
3. MFS and its predecessor organizations have a history of money
management dating from 1924. Net assets under the management of the
MFS organization were approximately $158.6 billion as of September
30, 2000, including $5.3 billion in municipal bond fund assets under
management. MFS has a long history of innovations in managing
municipal bond funds, including the establishment of the MFS
Municipal Bond Fund, among the first municipal bond funds, in 1976.
The Reorganization offers PaineWebber Fund shareholders the
opportunity to invest in a municipal bond fund managed by an
investment adviser with a proven track record.
4. The MFS Fund has historically had greater net assets than the
PaineWebber Fund. Some of the fixed expenses currently paid by the
PaineWebber Fund, such as accounting, legal, and printing costs,
would be spread over a larger asset base upon the combination of the
MFS Fund and the PaineWebber Fund. Shareholders may benefit from
economies of scale through lower operating expenses over time. In
addition, Class A and Class B shareholders of the PaineWebber Fund
will benefit from the lower total annual operating expenses of the
Class A and Class B shares, respectively, of the MFS Fund. The total
annual operating expenses of the Class C shares of the MFS Fund
after waivers are higher than the total annual operating expenses of
the Class C shares of the PaineWebber Fund after waivers, and the
total annual operating expenses of the Class A shares of the MFS
Fund are higher than the total annual operating expenses of the
Class Y shares of the PaineWebber Fund.
5. The MFS Fund, established in 1988, has a long track record. While
past performance is not a guarantee of future results, the
performance history of the MFS Fund is fairly comparable to the
performance history of the PaineWebber Fund, although the
PaineWebber Fund outperformed the MFS Fund in certain years.
6. The greater net assets of the combined Fund may allow it to invest
its assets in a greater variety of municipal investments.
7. The Reorganization is intended to qualify as a tax-free
reorganization for federal income tax purposes, pursuant to which no
gain or loss will be recognized by the PaineWebber Fund or its
shareholders for federal income tax purposes as a result of
transactions included in the Reorganization.
8. The PaineWebber Trustees also took into consideration that, absent
the Reorganization, it appeared unlikely that the PaineWebber Fund
would experience a material growth in assets in the future.
9. MFS has warranted and represented that it has no current intention
to ask the Board of Trustees which oversees the MFS Fund (the "MFS
Trustees") to increase the management fee applicable to the MFS Fund
above the maximum fee provided in its Investment Advisory Agreement
during the twelve months immediately following the closing date of
the Reorganization.
10. MHAM and MFS Municipal Series Trust, on behalf of the MFS Fund,
would enter into a cross-indemnity agreement under which each party
would indemnify the other and certain affiliated parties for certain
omissions or misstatements relating to the Fund-specific disclosure
in the Prospectus/Proxy Statement. MHAM would also provide
indemnification for losses arising out of compliance of the
PaineWebber Fund with tax and securities laws, the use of share
certificates, and the representations, warranties and covenants
contained in the Agreement.
11. MFS and MHAM would enter into an agreement under which MFS would pay
MHAM certain amounts if the Reorganization, along with the
reorganizations of certain other PaineWebber funds ("PW Funds") into
MFS funds, is completed, and upon satisfaction of certain
obligations and conditions. First, MFS would pay MHAM an amount
equal to 0.50% of the aggregate value of the PW Funds' net assets as
of the last business day prior to the closing date of the
reorganizations minus any distributions made on that business day
(including any final distribution). Second, within 30 days after the
closing date of reorganizations, MFS would pay MHAM an amount equal
to the net present value of the expected Class B share distribution
fees to be paid to MFS based on shareholder accounts transferred
from the PW Funds. Third, MFS may pay MHAM a fee based on the
aggregate value of the net assets transferred from the PW Funds, and
remaining in the MFS Funds, together with other net assets of the
MFS Funds with respect to which PaineWebber Incorporated is listed
as the broker-dealer of record, as of the last business day
preceding the first year anniversary of the closing date of the
reorganizations. The amount of this fee would be up to 0.60% of the
value of the PW Funds' net assets on the last business day preceding
the closing date of the reorganizations.
In approving the Reorganization, the MFS Trustees considered that the
Reorganization presents an opportunity for the MFS Fund to acquire investment
assets without the need to pay brokerage commissions or other transaction costs
that are normally associated with the purchase of securities. The MFS Trustees
also considered that the expenses that the MFS Fund would incur as a result of
the Reorganization were reasonable in relation to the benefits the MFS Fund
would realize as a result of the Reorganization. The MFS Trustees believe that
the MFS Fund shareholders will over time also benefit from improved access to
municipal investments and other economies of scale as a result of the
Reorganization.
Exchange without recognition of gain or loss for federal income tax
purposes. If a PaineWebber Fund shareholder were to redeem his or her shares to
invest in another fund, like the MFS Fund, that shareholder would generally
recognize gain or loss for federal income tax purposes. Also, if the PaineWebber
Fund were liquidated or were reorganized in a taxable reorganization, the
transaction would likely result in a taxable event for its shareholders. By
contrast, the Reorganization will permit the PaineWebber Fund's shareholders to
exchange their investment for an investment in the MFS Fund without recognizing
gain or loss for federal income tax purposes. After the Reorganization,
shareholders will be free to redeem any or all of the Reorganization Shares at
net asset value at any time, at which point a taxable gain or loss would
generally be recognized.
INFORMATION ABOUT THE REORGANIZATION
Agreement and Plan of Reorganization. The Reorganization will be governed
by the Agreement. The Agreement provides that the MFS Fund will acquire all of
the assets of the PaineWebber Fund in exchange for the assumption by the MFS
Fund of the stated liabilities of the PaineWebber Fund and for the issuance of
Class A, Class B and Class C Reorganization Shares equal in value to the value
of the transferred assets net of assumed liabilities. The shares will be issued
on the Exchange Date which will be the next full business day following the time
as of which the Funds' shares are valued for determining net asset value for the
Reorganization (4:00 p.m. Eastern time on March 9, 2001 or such other date as
may be agreed upon by the parties). The following discussion of the Agreement is
qualified in its entirety by the full text of the Agreement, which is attached
as Exhibit A to this Prospectus/Proxy Statement.
The PaineWebber Fund will transfer all of its assets to the MFS Fund, and
in exchange, the MFS Fund will assume all of the stated liabilities of the
PaineWebber Fund and will deliver to the PaineWebber Fund (i) a number of full
and fractional Class A Reorganization Shares having an aggregate net asset value
equal to the value of assets of the PaineWebber Fund attributable to its Class A
and Class Y shares, less the value of the liabilities of the PaineWebber Fund
assumed by the MFS Fund attributable thereto; (ii) a number of full and
fractional Class B Reorganization Shares having a net asset value equal to the
value of assets of the PaineWebber Fund attributable to its Class B shares, less
the value of the liabilities of the PaineWebber Fund assumed by the MFS Fund
attributable thereto, and (iii) a number of full and fractional Class C
Reorganization Shares having a net asset value equal to the value of assets of
the PaineWebber Fund attributable to its Class C shares, less the value of the
liabilities of the PaineWebber Fund assumed by the MFS Fund attributable
thereto.
On the Exchange Date, the PaineWebber Fund will distribute pro rata to its
shareholders of record as of the close of business on the day before the
Exchange Date the full and fractional Reorganization Shares received by the
PaineWebber Fund, with Class A Reorganization Shares being distributed to
holders of Class A and Class Y shares of the PaineWebber Fund, Class B
Reorganization Shares being distributed to holders of Class B shares of the
PaineWebber Fund, and Class C Reorganization Shares being distributed to holders
of Class C shares of the PaineWebber Fund. As a result of the Reorganization,
each holder of Class A, Class B, Class C and Class Y shares of the PaineWebber
Fund will receive a number of Class A, Class B and Class C Reorganization Shares
equal in aggregate value on the Exchange Date to the value of the Class A and
Class Y, Class B, and Class C shares, respectively, of the PaineWebber Fund held
by the shareholder. This distribution will be accomplished by the establishment
of accounts on the share records of the MFS Fund in the name of such PaineWebber
Fund shareholders, each account representing the respective number of full and
fractional Class A, Class B and Class C Reorganization Shares due such
shareholder. Share certificates for Reorganization Shares will not be issued.
The PaineWebber Trustees have determined that the Reorganization is in the
best interests of the PaineWebber Fund.
The consummation of the Reorganization is subject to the conditions set
forth in the Agreement. The Agreement may be terminated and the Reorganization
abandoned at any time, before or after approval by the shareholders, prior to
the Exchange Date by mutual consent of the Funds or, if any condition set forth
in the Agreement has not been fulfilled and has not been waived by the party
entitled to its benefits, by that party.
The fees and expenses for the Reorganization are estimated to be
[$80,000]. MHAM has agreed to pay all of the expenses associated with
typesetting, printing and mailing this combined Prospectus/Proxy Statement, and
for the solicitation and meeting expenses associated with the special meeting of
PaineWebber Fund shareholders. If the shareholders of the PaineWebber Fund do
not approve the Reorganization, then MHAM shall pay one-half of the costs and
expenses incurred by MFS and the MFS Fund in connection with matters
contemplated by the Agreement. Otherwise, MHAM shall bear the PaineWebber Fund's
fees and expenses, including legal and accounting expenses, portfolio transfer
taxes (if any) or other similar expenses incurred in connection with the
consummation of the transactions contemplated by the Agreement, and the MFS Fund
shall bear its own fees and expenses.
Upon the consummation of this Reorganization and reorganizations of
certain other PaineWebber funds into MFS funds, and upon the satisfaction of
certain other obligations and conditions, MFS has agreed to pay MHAM an amount
equal to 0.50% of the value of the net assets of the PaineWebber Fund and the
other acquired PaineWebber funds as of the last business day preceding the
closing date of the reorganizations (minus certain distributions). MFS also has
agreed to pay MHAM an amount equivalent to the net present value of expected
distribution fees on Class B shares to be paid out of the assets acquired from
the PaineWebber Fund and the other PaineWebber funds. In addition, on the first
year anniversary of the closing of the reorganizations, MFS has agreed to pay
MHAM an amount up to 0.60% of the value of the net assets of the PaineWebber
Fund and the other acquired PaineWebber funds as of the last business day
preceding the closing date of the reorganizations (minus certain distributions)
depending upon the aggregate value as of the first year anniversary of (i) the
net assets transferred from the PaineWebber Fund and the other acquired
PaineWebber funds which remain in the MFS funds and (ii) other net assets of MFS
funds with respect to which PaineWebber Incorporated is listed as the
broker-dealer of record. Because of these payments, which may be substantial,
MHAM has an interest in the approval of the Reorganization.
Description of the Reorganization Shares. Reorganization Shares will be
issued to the PaineWebber Fund's shareholders in accordance with the procedures
under the Agreement as described above. The Reorganization Shares are Class A,
Class B and Class C shares of the MFS Fund.
Investors purchasing Class A shares of the MFS Fund pay a sales charge at
the time of purchase, but Class A and Class Y PaineWebber Fund shareholders
receiving Class A Reorganization Shares in the Reorganization will not pay a
sales charge on such shares. If a PaineWebber Fund shareholder is permitted to
purchase additional Class A or Class Y shares of the PaineWebber Fund at net
asset value in accordance with the then-current Prospectus and Statement of
Additional Information of the PaineWebber Fund, then the PaineWebber Fund
shareholder will be permitted to purchase additional Class A shares of the MFS
Fund at net asset value. Under its Rule 12b-1 plan, Class A shares of the MFS
Fund may pay distribution and service fees up to 0.35% (a 0.10% distribution fee
and a 0.25% service fee). The Class A service fee equal to 0.25% per annum is
currently paid by the MFS Fund. Payment of the 0.10% per annum Class A
distribution fee will commence on such dates as the MFS Trustees may determine.
Class B shares of the MFS Fund are sold without a sales charge, but are
subject to a CDSC of up to 4% if redeemed within six years of purchase. For
purposes of determining the CDSC payable on redemption of Class B Reorganization
Shares received by holders of Class B shares of the PaineWebber Fund, such
shares will be treated as having a holding period that started 24 months before
the date such shareholders originally acquired their PaineWebber Fund Class B
shares. Class B shares are also subject to a Rule 12b-1 fee at the annual rate
of up to 1.00% of the MFS Fund's average daily net assets attributable to Class
B shares. Class B shares will automatically convert to Class A shares, based on
relative net asset value, approximately eight years after purchase. For purposes
of determining the conversion date of Class B Reorganization Shares, such shares
will be treated as having a holding period that started 24 months before the
date such shareholders originally acquired their PaineWebber Fund Class B
shares.
Class C shares of the MFS Fund will be newly issued in connection with the
Reorganization and initially will only be available for purchase by PaineWebber
Fund shareholders who receive Class C Reorganization Shares in connection with
the Reorganization. Class C shares of the MFS Fund are sold at net asset value
without an initial sales charge, but if you redeem your shares within the first
year you may be subject to a CDSC of 1.00%. For purposes of determining the CDSC
payable on redemption of Class C Reorganization Shares received by PaineWebber
Fund Class C shareholders, such shares will be treated as having been acquired
as of the dates such shareholders originally acquired their Class C shares of
the PaineWebber Fund. Class C shares of the MFS Fund are subject to distribution
and service fees up to a maximum of 1.00% of net assets annually. Class C shares
do not convert to any other class of shares of the MFS Fund.
Each of the Reorganization Shares will be fully paid and nonassessable
when issued, will be transferable without restriction, and will have no
preemptive or conversion rights, except that Class B Reorganization Shares will
have the conversion rights specified above. The Amended and Restated Declaration
of Trust (the "Declaration of Trust") of MFS Municipal Series Trust, of which
the MFS Fund is a series, permits the Fund to divide its shares, without
shareholder approval, into one or more classes of shares having such variations
as may be approved by the MFS Trustees. The MFS Fund's shares will be divided
into three classes -- Class A, Class B, and Class C shares.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the MFS Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the MFS Fund and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by MFS Municipal
Series Trust, on behalf of the MFS Fund or the MFS Trustees. The Declaration of
Trust provides for indemnification out of Fund property for all loss and expense
of any shareholder held personally liable for the obligations of the MFS Fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the MFS Fund would be
unable to meet its obligations. The likelihood of such circumstances is remote.
The shareholders of the PaineWebber Fund are currently subject to a similar risk
of shareholder liability.
Federal Income Tax Consequences. As a condition to each party's obligation
to consummate the Reorganization, the PaineWebber Fund and the MFS Fund will
receive an opinion from Bingham Dana LLP (which opinion will be based on certain
factual representations and subject to certain qualifications) substantially to
the effect that, on the basis of the provisions of the Internal Revenue Code as
in effect as of the date of the opinion (the "Code"), and the regulations,
rulings, and interpretations thereof in force as of the same date, for federal
income tax purposes:
(a) The acquisition by the MFS Fund of all of the assets of the
PaineWebber Fund, in exchange solely for Reorganization Shares and the
assumption by the MFS Fund of the stated liabilities (collectively, the
"Liabilities") of the PaineWebber Fund as set forth in the Statement of
Assets and Liabilities, followed by the distribution by the PaineWebber
Fund of the Reorganization Shares to the shareholders of the PaineWebber
Fund in exchange for their PaineWebber Fund shares and in complete
liquidation of the PaineWebber Fund, will constitute a reorganization
within the meaning of Section 368(a) of the Code, and each Fund will be a
"party to a reorganization" within the meaning of Section 368(b) of the
Code;
(b) No gain or loss will be recognized by the PaineWebber Fund upon
the transfer of all of its assets to the MFS Fund in exchange solely for
Reorganization Shares and the assumption by the MFS Fund of the
Liabilities, or upon the distribution to the PaineWebber Fund shareholders
of such Reorganization Shares pursuant to the Agreement;
(c) No gain or loss will be recognized by the MFS Fund upon the
receipt of the assets of the PaineWebber Fund in exchange solely for
Reorganization Shares and the assumption by the MFS Fund of the
Liabilities;
(d) The basis of the assets of the PaineWebber Fund acquired by the
MFS Fund will be, in each instance, the same as the basis of those assets
in the hands of the PaineWebber Fund immediately prior to the transfer;
(e) The holding period of the assets of the PaineWebber Fund in the
hands of the MFS Fund will include, in each instance, the holding period
of those assets in the hands of the PaineWebber Fund;
(f) The PaineWebber Fund shareholders will not recognize gain or
loss upon the exchange of all of their PaineWebber Fund shares solely for
Reorganization Shares as part of the Reorganization;
(g) The basis of the Reorganization Shares to be received by each
PaineWebber Fund shareholder will be, in the aggregate, the same as the
basis, in the aggregate, of the PaineWebber Fund shares surrendered by
such shareholder in exchange therefor; and
(h) The holding period of the Reorganization Shares to be received
by each PaineWebber Fund shareholder will include, in each instance, the
holding period of the PaineWebber Fund shares surrendered by such
shareholder in exchange therefor, provided the PaineWebber Fund shares
were held by such shareholder as capital assets on the Exchange Date.
Capitalization. The following table shows the capitalization of the Funds
as of September 30, 2000, and on a pro forma combined basis, giving effect to
the proposed acquisition of assets at net asset value as of that date:
UNAUDITED
SHARES
NET ASSETS OUTSTANDING NET ASSET VALUE
(000'S OMITTED) (000'S OMITTED) PER SHARE
---------------------------------------------------------------------------
MFS FUND
Class A 99,971 9,365 10.67
Class B 21,144 1,982 10.67
Class C N/A N/A N/A
PAINEWEBBER FUND
Class A 23,918 2,320 10.31
Class B 2,607 253 10.30
Class C 9,204 893 10.31
Class Y 100 10 10.31
PRO FORMA COMBINED
FUND*
Class A** 123,989 11,616 10.67
Class B 23,752 2,226 10.67
Class C 9,204 863 10.67
---------------------------------------------------------------------------
* If the Reorganization had taken place on September 30, 2000, the
PaineWebber Fund would have received 2,250,991, 244,350 and 862,648 Class
A, B and C shares, respectively, of the MFS Fund, which would be available
for distribution to its shareholders. No assurances can be given as to the
number of Reorganization Shares the PaineWebber Fund will receive on the
Exchange Date. The foregoing is merely an example of what the PaineWebber
Fund would have received and distributed had the Reorganization been
consummated on September 30, 2000, and should not be relied upon to
reflect the amount that will actually be received on or after the Exchange
Date.
** Class A and Class Y shareholders of the PaineWebber Fund will receive Class A
Reorganization Shares. The pro forma combined Class A information includes
the combination of the Class A shares of the MFS Fund and the Class A and
Class Y shares of the PaineWebber Fund.
Unaudited pro forma combined financial statements of the Funds as of
September 30, 2000 and for the twelve month period then ended are included in
the Statement of Additional Information relating to the Reorganization. Because
the Agreement provides that the MFS Fund will be the surviving Fund following
the Reorganization and because the MFS Fund's investment objectives and policies
will remain unchanged, the pro forma combined financial statements reflect the
transfer of the assets and liabilities of the PaineWebber Fund to the MFS Fund
as contemplated by the Agreement.
THE PAINEWEBBER TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMEND APPROVAL OF THE AGREEMENT.
VOTING INFORMATION
Required Vote. Proxies are being solicited from the PaineWebber Fund's
shareholders by its Trustees for the Special Meeting of Shareholders to be held
on March 1, 2001 at [________ a.m./p.m.] (the "Meeting"), at 1285 Avenue of the
Americas, 14th Floor, New York, New York 10019, or at such later time made
necessary by adjournment. Unless revoked, all valid proxies will be voted in
accordance with the specification thereon or, in the absence of specifications,
FOR approval of the Agreement. The transactions contemplated by the Agreement
will be consummated only if approved by the affirmative vote of a "majority of
the outstanding voting securities" of the PaineWebber Fund entitled to vote.
Under the Investment Company Act of 1940, as amended, 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 present at the Meeting or represented
by proxy if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy or (b) more than 50% of the outstanding
voting securities.
Record Date, Quorum and Method of Tabulation. Shareholders of record of
the PaineWebber Fund at the close of business on December 22, 2000 (the "record
date") will be entitled to vote at the Meeting or any adjournment thereof. The
holders of a majority of the shares of the PaineWebber Fund outstanding at the
close of business on the record date present in person or represented by proxy
will constitute a quorum for the Meeting. Shareholders are entitled to one vote
for each share held, with fractional shares voting proportionally.
Votes cast by proxy or in person at the Meeting will be counted by
person(s) appointed by the PaineWebber Fund as the vote tabulator(s) for the
Meeting. The vote tabulator(s) will count the total number of votes cast "for"
approval of the proposal for purposes of determining whether sufficient
affirmative votes have been cast. The vote tabulator(s) will count shares
represented by proxies that are marked with an abstention or that reflect
"broker non-votes" (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or the persons
entitled to vote and (ii) the broker or nominee does not have the discretionary
voting power on a particular matter) as shares that are present and entitled to
vote on the matter for purposes of determining the presence of a quorum but not
as shares voted for or against any proposal or adjournment. Thus, abstentions
and broker non-votes have the effect of a negative vote on the proposal.
As of December 22, 2000, the officers and Trustees of the PaineWebber Fund
as a group beneficially owned less than 1% of any class of the outstanding
shares of the PaineWebber Fund. To the best of the knowledge of the PaineWebber
Fund, the following shareholders owned of record or beneficially 5% or more of
the following classes of the PaineWebber Fund's outstanding shares:
SHAREHOLDER PERCENTAGE PERCENTAGE OWNED
CLASS NAME AND ADDRESS OWNED POST-REORGANIZATION
----- ---------------- ---------- -------------------
The votes of the shareholders of the MFS Fund are not being solicited,
because their approval or consent is not necessary for this transaction. As of
December 22, 2000, the officers and Trustees of the MFS Fund as a group
beneficially owned less than 1% of any class of the outstanding shares of the
MFS Fund. To the best of the knowledge of the MFS Fund, the following
shareholders owned of record or beneficially 5% or more of the following classes
of the MFS Fund's outstanding shares:
SHAREHOLDER PERCENTAGE PERCENTAGE OWNED
CLASS NAME AND ADDRESS OWNED POST-REORGANIZATION
----- ---------------- ---------- -------------------
Solicitation of Proxies. In addition to soliciting proxies by mail, the
PaineWebber Trustees and employees of PaineWebber [**and
_____________________**] may solicit proxies in person or by telephone. In
addition, the PaineWebber Fund has authorized the use of ____________________ to
aid in the solicitation of instructions for nominee and registered account. MHAM
will pay a fee of approximately $_____, plus reasonable out-of-pocket expenses
for mailing and phone costs. The PaineWebber Fund also has arranged to have
votes recorded by telephone. The telephonic voting procedure is designed to
authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions and to confirm that
their instructions have been properly recorded. Shareholders who vote by
telephone will be asked for their social security numbers or other identifying
information. The shareholders would then be given an opportunity to authorize
their proxies to vote their shares in accordance with their instructions. To
ensure that the shareholders' instructions have been recorded correctly, they
will also receive a confirmation of their instructions in the mail. A toll-free
number will be available in the event the information in the confirmation is
incorrect. If we do not hear from a shareholder, that shareholder may also be
called at the phone number the PaineWebber Fund has in its records for the
account, and would be given an opportunity to vote by telephone.
Depending on how you own your shares you may also be able to vote by
signing and faxing the completed proxy card toll-free to the fax number included
on your proxy card.
Shareholders have the opportunity to vote via the internet by utilizing a
program provided through [______________________]. The giving of such a proxy
will not affect your right to vote in person should you decide to attend the
Meeting. To vote via the internet, you will need the [___]-digit "control"
number that appears with your proxy materials. To vote via the internet, please
access [____] on the World Wide Web at [**www.proxyvote.com,**]. The internet
voting procedures are designed to authenticate shareholder identities, to allow
shareholders to give their voting instructions, and to confirm that
shareholders' instructions have been recorded properly. Shareholders voting via
the internet should understand that there may be costs associated with
electronic access, such as usage charges from internet access providers and
telephone companies, that must be borne by the shareholders.
Persons holding shares as nominees will, upon request, be reimbursed for
their reasonable expenses in soliciting instructions from their principals.
Revocation of Proxies. Proxies, including proxies given by telephone,
facsimile or via the internet, may be revoked at any time before they are voted
by a written revocation received by the Secretary of the PaineWebber Fund, by
properly executing a later-dated proxy or by attending the Meeting and voting in
person.
Shareholder Proposals. The PaineWebber Fund does not hold annual
shareholder meetings. If the Reorganization is not approved, any shareholder who
wishes to submit a proposal to be considered by the Fund's shareholders at the
next meeting of shareholders should send the proposal to the PaineWebber Fund,
c/o Diane E. O'Donnell, Secretary, at 51 West 52nd Street, New York, New York,
10019-6114, so as to be received within a reasonable time before the PaineWebber
Trustees make the solicitation relating to such meeting. Shareholder proposals
that are submitted in a timely manner will not necessarily be included in the
PaineWebber Fund's proxy materials. Including shareholder proposals in proxy
materials is subject to limitations under federal securities laws.
Adjournment. If sufficient votes in favor of the proposal are not received
by the time scheduled for the Meeting, the persons named as proxies may propose
adjournments of the Meeting within a reasonable time after the date set for the
Meeting to permit further solicitation of proxies. Any adjournment will require
the affirmative vote of a majority of the votes cast on the question in person
or by proxy at the session of the Meeting to be adjourned. The persons named as
proxies will vote in favor of such adjournment those proxies which they are
entitled to vote in favor of the proposal. They will vote against any such
adjournment those proxies required to be voted against the proposal. Shares
represented by proxies marked with an abstention or that reflect broker
non-votes will not be voted for or against such adjournment and thus will have
the effect of a vote against the adjournment. MHAM pays the costs of any
additional solicitation and of any adjourned session.
MISCELLANEOUS
INDEPENDENT AUDITORS
The audited financial statements of the PaineWebber Fund for the fiscal
year ended February 29, 2000 included in the Fund's Statement of Additional
Information have been audited by Ernst & Young LLP, independent auditors, whose
reports thereon are included in the Statement of Additional Information and in
the Annual Report to Shareholders for the fiscal year ended February 29, 2000.
The audited financial statements of the MFS Fund for the fiscal year ended March
31, 2000 included in the Fund's Statement of Additional Information have been
audited by Deloitte & Touche LLP, independent auditors, whose reports are
included in the Statement of Additional Information and in the Annual Report to
Shareholders for the fiscal year ended March 31, 2000. The financial statements
audited by Ernst & Young LLP and Deloitte & Touche LLP have been incorporated by
reference in reliance on their reports given on their authority as experts in
auditing and accounting. The unaudited financial statements of the MFS Fund for
the six months ended September 30, 2000 and of the PaineWebber Fund for the six
months ended August 31, 2000 are included in the Statement of Additional
Information to this Prospectus/Proxy Statement.
AVAILABLE INFORMATION
The PaineWebber Fund and the MFS Fund are each subject to the
informational requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, and in accordance with these laws, they each
file reports, proxy material and other information with the Commission. Such
reports, proxy material and other information can be inspected and copied at the
Public Reference Room maintained by the Commission at 450 Fifth Street, N.W.,
Washington D.C. 20549 and 7 World Trade Center, New York, NY 10048. Copies of
such material can also be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington D.C. 20549, at prescribed rates, or at the Commission's website
(http://www.sec.gov).
OTHER BUSINESS
Management of the PaineWebber Fund knows of no business other than the
matters specified above which will be presented at the Meeting. Because matters
not known at the time of the solicitation may come before the Meeting, the proxy
as solicited confers discretionary authority with respect to such matters as
properly come before the Meeting, including any adjournment or adjournments
thereof, and it is the intention of the persons named as proxies to vote the
proxy in accordance with their judgment on such matters.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
January 1, 2001
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND, a series of
PAINEWEBBER MUNICIPAL SERIES
51 West 52nd Street
New York, New York 10019-6114
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this
30th day of November, 2000, by and between PaineWebber Municipal Series, a
Massachusetts business trust (the "PW Trust"), on behalf of PaineWebber New York
Tax-Free Income Fund, a series thereof (the "Acquired Fund"), and MFS Municipal
Series Trust, a Massachusetts business trust (the "MFS Trust"), on behalf of MFS
New York Municipal Bond Fund, a series thereof (the "Surviving Fund"). The
principal place of business of the Acquired Fund is 51 West 52nd Street, New
York, New York, 10019-6114, and of the Surviving Fund is 500 Boylston Street,
Boston, Massachusetts 02116.
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(a) of the United States Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder. The
reorganization will consist of (i) the transfer of all of the assets of the
Acquired Fund to the Surviving Fund in exchange solely for the assumption by the
Surviving Fund of stated liabilities of the Acquired Fund and the issuance to
the Acquired Fund of shares of beneficial interest of the Surviving Fund (the
"Surviving Fund Shares"), (ii) the distribution, promptly after the Closing Date
hereinafter referred to, of the Surviving Fund Shares to the shareholders of the
Acquired Fund as part of the liquidation of the Acquired Fund as provided herein
and (iii) the termination of the Acquired Fund as a series of the PW Trust, all
upon the terms and conditions hereinafter set forth in this Agreement (the
"Reorganization"). The Acquired Fund and the Surviving Fund are each referred to
herein individually as a "Fund," and collectively as the "Funds."
Shares of beneficial interest of the Acquired Fund ("Acquired Fund Shares")
are divided into four classes of shares, designated Class A, Class B, Class C,
and Class Y shares. Surviving Fund Shares are divided into three classes of
shares, designated Class A, Class B and Class C shares.
All representations, warranties, covenants and obligations of the Surviving
Fund and the Acquired Fund contained herein shall be deemed to be
representations, warranties, covenants and obligations of the MFS Trust and the
PW Trust, respectively, acting on behalf of the Surviving Fund and the Acquired
Fund, respectively, and all rights and benefits created hereunder in favor of
the Surviving Fund and the Acquired Fund shall inure to the MFS Trust and the PW
Trust, respectively, and shall be enforceable by the MFS Trust and the PW Trust,
respectively, acting on behalf of the Surviving Fund and the Acquired Fund,
respectively.
In consideration of the premises of the covenants and agreements hereinafter
set forth, the parties hereto covenant and agree as follows:
1. THE REORGANIZATION
1.1. The Acquired Fund agrees to assign, sell, convey, transfer, and deliver
its assets described in Section 1.2 hereof (the "Assets") to the Surviving Fund.
The Surviving Fund agrees in exchange therefor:
(a) to issue and deliver to the Acquired Fund the number of full and
fractional (i) Class A Surviving Fund Shares determined by dividing
the portion of the net value of the Assets (such net value computed
as set forth in Section 2 hereof and referred to as the "Acquired
Fund Value") attributable to the Class A Acquired Fund Shares by
the net asset value ("NAV") of a Class A Surviving Fund Share
(computed as set forth in Section 2), (ii) Class B Surviving Fund
Shares determined by dividing the portion of the Acquired Fund
Value attributable to the Class B Acquired Fund Shares by the NAV
of a Class B Surviving Fund Share (computed as set forth in Section
2), (iii) Class C Surviving Fund Shares determined by dividing the
portion of the Acquired Fund Value attributable to the Class C
Acquired Fund Shares by the NAV of a Class C Surviving Fund Share
(computed as set forth in Section 2), and (iv) Class A Surviving
Fund Shares determined by dividing the portion of the Acquired Fund
Value attributable to the Class Y Acquired Fund Shares by the NAV
of a Class A Surviving Fund Share (computed as set forth in Section
2), and
(b) to assume the Acquired Fund's liabilities described in Section 1.3
hereof (the "Liabilities").
Such transactions shall take place on the Closing Date (as defined in Section
1.5 hereof).
1.2. The Assets shall consist of all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), deferred and prepaid
expenses and other property owned by the Acquired Fund as of the Valuation Time
(as defined in Section 1.5 hereof). The Assets shall be set forth in the
Statement of Assets and Liabilities (as defined in Section 7.2 hereof).
1.3. The Liabilities shall mean all of the Acquired Fund's liabilities,
debts and obligations known as of the Valuation Time. The Liabilities shall be
set forth in the Statement of Assets and Liabilities.
1.4. The Acquired Fund has provided the Surviving Fund with a list of the
current securities holdings of the Acquired Fund as of the date of execution of
this Agreement. The Acquired Fund reserves the right to sell any of these
securities (except to the extent sales may be limited by representations made in
connection with issuance of the tax opinion described in Section 8.6 hereof) but
will not, without the prior approval of the Surviving Fund, acquire any
additional securities other than securities of the type in which the Surviving
Fund is permitted to invest.
1.5. On or as soon after the closing date established in Section 3.1 hereof
(the "Closing Date") as is conveniently practicable, the Acquired Fund will
liquidate and distribute pro rata to its shareholders of record ("Acquired Fund
shareholders"), determined as of the close of business on the last business day
preceding the Closing Date (the "Valuation Time"), the Surviving Fund Shares
received by the Acquired Fund pursuant to Section 1.1 hereof in actual or
constructive exchange for Acquired Fund Shares held by the Acquired Fund
shareholders. Acquired Fund shareholders owning (i) Class A Acquired Fund Shares
shall receive Class A Surviving Fund Shares therefor, (ii) Class B Acquired Fund
Shares shall receive Class B Surviving Fund Shares therefor, (iii) Class C
Acquired Fund Shares shall receive Class C Surviving Fund Shares therefor, and
(iv) Class Y Acquired Fund Shares shall receive Class A Surviving Fund Shares
therefor. Such distribution will be accomplished by the transfer of the
Surviving Fund Shares then credited to the account of the Acquired Fund on the
books of the Surviving Fund to open accounts on those books in the names of the
Acquired Fund shareholders in amounts representing the respective pro rata
number of the Surviving Fund Shares due such shareholders. The Surviving Fund
will not issue share certificates representing the Surviving Fund Shares in
connection with such exchange.
1.6. Any Acquired Fund Share certificate that remains outstanding on the
Closing Date shall be deemed to be cancelled, shall no longer evidence ownership
of shares of beneficial interest of the Acquired Fund and shall not evidence
ownership of the Surviving Fund Shares.
1.7. Any transfer taxes payable upon issuance of the Surviving Fund Shares
in a name other than the registered holder of the Surviving Fund Shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Surviving Fund Shares
are to be issued and transferred.
1.8. The Acquired Fund shall be terminated as a series of the PW Trust as
soon as practicable following the Closing Date, but in no event later than 6
months following the Closing Date.
2. VALUATION
2.1 The NAV of each class of the Surviving Fund Shares and the Acquired Fund
Value shall in each case be determined as of the Valuation Time. The NAV of the
Surviving Fund Shares shall be computed by State Street Bank and Trust Company,
each Fund's custodian (the "Custodian"), in the manner set forth in the MFS
Trust's Amended and Restated Declaration of Trust (the "MFS Trust's Declaration
of Trust") or By-Laws and the Surviving Fund's then current prospectus and
statement of additional information and shall be computed to not fewer than two
decimal places. The Acquired Fund Value shall be computed by the Custodian (in
consultation with Mitchell Hutchins Asset Management Inc. ("MH"), the Acquired
Fund's investment adviser, and subject to final approval by MH as delegate of
the PW Trust Board of Trustees) in a manner identical to that being used by the
Surviving Fund as described in the preceding sentence.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be as soon as practicable after the
Reorganization is approved by shareholders of the Acquired Fund, but in no event
later than April 30, 2001 (or such other date as the parties may agree in
writing). The closing shall be held at 8:00 a.m., Eastern time, at the offices
of the Surviving Fund, 500 Boylston Street, Boston, Massachusetts 02116, or at
such other time and/or place as the parties may agree.
3.2 Portfolio securities shall be delivered by the Acquired Fund to the
Custodian for the account of the Surviving Fund on the Closing Date, duly
endorsed in proper form for transfer, in such condition as to constitute good
delivery thereof in accordance with the custom of brokers, and shall be
accompanied by all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof. The cash delivered shall be in the
form of currency, certified or official bank check or federal fund wire, payable
to the order of "State Street Bank and Trust Company, Custodian for the MFS
Municipal High Income Fund" or in the name of any successor organization.
3.3 If at the Valuation Time (a) the New York Stock Exchange shall be closed
to trading or trading thereon shall be restricted, or (b) trading or the
reporting of trading on said Exchange or elsewhere shall be disrupted so that
accurate appraisal of the net value of the assets of the Surviving Fund or the
Acquired Fund is impracticable, the Closing Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored; provided that if trading shall not be fully
resumed and reporting restored on or before April 30, 2001, this Agreement may
be terminated by the MFS Trust or the PW Trust upon the giving of written notice
to the other party.
3.4 The Acquired Fund shall deliver on the Closing Date the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status of the Acquired Fund shareholders and the
number of outstanding shares of beneficial interest of the Acquired Fund owned
by each such shareholder, all as of the Valuation Time (the "Shareholder List").
The Surviving Fund shall issue and deliver to the Acquired Fund a confirmation
evidencing the Surviving Fund Shares to be credited on the Closing Date, or
provide evidence satisfactory to the Acquired Fund that such Surviving Fund
Shares have been credited to Acquired Fund shareholder accounts on the books of
the Surviving Fund. On the Closing Date each party shall deliver to the other
such bills of sale, checks, assignments, stock certificates, receipts or other
documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The PW Trust represents and warrants, on its behalf and on behalf of the
Acquired Fund, to the MFS Trust as follows:
(a) The PW Trust is a business trust duly organized and validly
existing under the laws of The Commonwealth of Massachusetts and
has the power to own all of its properties and assets and, subject
to approval by the shareholders of the Acquired Fund, to carry out
this Agreement. Neither the PW Trust nor the Acquired Fund is
required to qualify to do business in any other jurisdiction where
it is not duly qualified. This Agreement has been duly authorized
by the PW Trust, subject to the approval of the shareholders of the
Acquired Fund. The PW Trust has all necessary federal, state and
local authorizations to own all of the properties and assets of the
PW Trust and to carry on its business as now being conducted;
(b) The PW Trust is a duly registered investment company classified as
a management company of the open-end type and its registration with
the Securities and Exchange Commission (the "Commission") as an
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), is in full force and effect;
(c) The PW Trust is not, and the execution, delivery and performance of
this Agreement by the PW Trust will not result, in violation of any
provision of the Declaration of Trust or By-Laws of the PW Trust or
of any agreement, indenture, instrument, contract, lease or other
undertaking to which the PW Trust or the Acquired Fund is a party
or by which the PW Trust or the Acquired Fund is bound;
(d) All material contracts of the PW Trust (other than this Agreement
and investment contracts) will be terminated without liability to
the Acquired Fund at or prior to the Closing Date;
(e) Except as previously disclosed in writing to and accepted by the
MFS Trust, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is
currently pending or (to the PW Trust's knowledge) threatened as to
the Acquired Fund or any of its properties or assets. The PW Trust
knows of no facts that might form the basis for the institution of
such proceedings, and the PW Trust is not a party to or subject to
the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein
contemplated;
(f) The statement of assets and liabilities, including the schedule of
portfolio investments, of the Acquired Fund as of February 29, 2000
and the related statement of operations for the year then ended,
and the statement of changes in net assets for the years ended
February 29, 2000 and February 28, 1999 (copies of which have been
furnished to the MFS Trust) have been audited by Ernst & Young,
LLP, independent auditors, and present fairly in all material
respects the financial position of the Acquired Fund as of February
29, 2000 and the results of its operations and changes in net
assets for the respective stated periods in accordance with
generally accepted accounting principles consistently applied, and
there are no known actual or contingent liabilities of the Acquired
Fund as of the respective dates thereof not disclosed therein;
(g) Since February 29, 2000, there has not been any material adverse
change in the Acquired Fund's financial condition, assets,
liabilities or business other than changes occurring in the
ordinary course of business, or any incurrence by the Acquired Fund
of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to and
accepted by the MFS Trust. For the purposes of this subparagraph
(g), a decline in NAV per share of beneficial interest of the
Acquired Fund resulting from losses upon the disposition of
investments or from changes in the value of investments held by the
Acquired Fund, or a distribution or a payment of dividends, shall
not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal, state and
other tax returns and reports, including information returns and
payee statements, of the Acquired Fund required by law to have been
filed or furnished by such dates shall have been filed or
furnished, and all federal, state and other taxes, interest and
penalties shall have been paid so far as due, and to the best of
the Acquired Fund's knowledge no such return is currently under
audit and no assessment has been asserted with respect to such
returns or reports;
(i) The Acquired Fund has elected to be a regulated investment company
for federal tax purposes, has qualified for treatment as such for
each taxable year of its operation and intends as of the date of
execution of this Agreement to qualify, and will as of the Closing
Date qualify for treatment as such for its taxable year ending on
the Closing Date;
(j) The authorized capital of the PW Trust consists of an unlimited
number of shares of beneficial interest, $0.001 par value per
share, divided into two series and, with respect to the Acquired
Fund, into four classes at the date hereof. All issued and
outstanding Acquired Fund Shares are, and on the Closing Date will
be, duly and validly issued and outstanding, fully paid and
nonassessable by the PW Trust. All of the issued and outstanding
Acquired Fund Shares will, on the Closing Date, be held by the
persons and in the amounts set forth in the Shareholder List. The
PW Trust does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Acquired Fund Shares, nor
is there outstanding any security convertible into any Acquired
Fund Shares;
(k) Except as previously disclosed to the MFS Trust, on the Closing
Date the PW Trust will have good and marketable title to the Assets
and full right, power and authority to sell, assign, transfer and
deliver the Assets, and upon delivery and payment for the Assets,
the Surviving Fund will acquire good and marketable title thereto
subject to no restrictions on the full transfer thereof, including
such restrictions as might arise under the Securities Act of 1933,
as amended (the "1933 Act");
(l) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the PW Trust
(with the exception of the approval of this Agreement by Acquired
Fund shareholders holding at least a majority of the outstanding
voting securities (as defined by the 1940 Act) of the Acquired
Fund), and this Agreement constitutes a valid and binding
obligation of the PW Trust enforceable in accordance with its
terms, subject to the approval by the Acquired Fund shareholders,
except as the same may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors' rights and by general
principles of equity;
(m) The information to be furnished by the PW Trust for use in
applications for orders, registration statements, proxy materials
and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and
shall comply fully with federal securities and other laws and
regulations thereunder applicable thereto;
(n) The written information furnished by the PW Trust or by its agents
or representatives for inclusion in the proxy statement of the
Acquired Fund (the "Proxy Statement") to be included in the
Registration Statement referred to in Section 5.7 hereof, on the
effective date of the Registration Statement, on the date of the
meeting of the Acquired Fund shareholders (the "Meeting") and on
the Closing Date, will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made,
not misleading;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the PW
Trust and the Acquired Fund of the transactions contemplated by
this Agreement, except such as have been obtained under the 1933
Act, the Securities Exchange Act of 1934, as amended (the "1934
Act") and the 1940 Act (collectively, the "Acts"), and such as may
be required under state securities laws;
(p) All of the issued and outstanding Acquired Fund Shares have been
offered for sale and sold in conformity with all applicable federal
and state securities laws, except as may have been previously
disclosed in writing to the MFS Trust; and
(q) The current prospectus and statement of additional information of
the Acquired Fund, each dated June 30, 2000 as supplemented and
updated from time to time (collectively, the "Acquired Fund
Prospectus"), will conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the
rules and regulations of the Commission thereunder on the date of
the Proxy Statement, on the date of the Meeting and on the Closing
Date and will not on such dates include any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
4.2 The MFS Trust represents and warrants, on its behalf and on behalf of
the Surviving Fund, to the PW Trust as follows:
(a) The MFS Trust is a business trust duly organized and validly
existing under the laws of The Commonwealth of Massachusetts and
has the power to own all of its properties and assets and to carry
out this Agreement. Neither the MFS Trust nor the Surviving Fund is
required to qualify to do business in any other jurisdiction where
it is not duly qualified. This Agreement has been duly authorized
by the MFS Trust. The MFS Trust has all necessary federal, state
and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted;
(b) The Surviving Fund is a duly established and designated segregated
portfolio of assets ("series") of the MFS Trust;
(c) The MFS Trust is a duly registered investment company classified as
a management company of the open-end type and its registration with
the Commission as an investment company under the 1940 Act is in
full force and effect;
(d) The current prospectus and statement of additional information of
the Surviving Fund, each dated August 1, 2000, as supplemented and
updated from time to time (collectively, the "Surviving Fund
Prospectus"), and the Registration Statement referred to in Section
5.7 hereof (other than written information furnished by the PW
Trust for inclusion therein as covered by the PW Trust's warranties
in Sections 4.1(m) and 4.1(n) hereof) will conform in all material
respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the Commission thereunder
on the date of the Proxy Statement, on the date of the Meeting and
on the Closing Date and will not on such dates include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading;
(e) On the Closing Date, the MFS Trust will have good and marketable
title to the Assets;
(f) The MFS Trust is not, and the execution, delivery and performance
of this Agreement by the MFS Trust will not result, in violation of
any provision of the MFS Trust's Declaration of Trust or By-Laws or
of any agreement, indenture, instrument, contract, lease or other
undertaking to which the MFS Trust is a party or by which the MFS
Trust or the Surviving Fund is bound;
(g) Except as previously disclosed in writing to and accepted by the PW
Trust, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is
currently pending or (to the MFS Trust's knowledge) threatened as
to the Surviving Fund or any of its properties or assets. The MFS
Trust knows of no facts that might form the basis for the
institution of such proceedings, and the MFS Trust is not a party
to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects its business or its ability to consummate the transaction
herein contemplated;
(h) The statements of assets and liabilities, including the schedule of
portfolio investments, of the Surviving Fund as of March 31, 2000,
and the related statement of operations for the year then ended,
and the statement of changes in net assets for the years ended
March 31, 2000 and March 31, 1999 (copies of which have been
furnished to the PW Trust) have been audited by Deloitte & Touche
LLP, independent auditors, and present fairly in all material
respects the financial position of the Surviving Fund as of March
31, 2000 and the results of its operations and changes in net
assets for the respective stated periods in accordance with
generally accepted accounting principles consistently applied, and
there are no known actual or contingent liabilities of the
Surviving Fund as of the respective dates thereof not disclosed
therein;
(i) Since March 31, 2000, there has not been any material adverse
change in the Surviving Fund's financial condition, assets,
liabilities or business other than changes occurring in the
ordinary course of business or any incurrence by the Surviving Fund
of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to the PW
Trust. For the purposes of this subparagraph (h), a decline in net
asset value per share of beneficial interest of the Surviving Fund
resulting from losses upon the disposition of investments or from
changes in the value of investments held by the Surviving Fund, or
a distribution or a payment of dividends, shall not constitute a
material adverse change;
(j) The Surviving Fund has elected to be a regulated investment company
for federal tax purposes, has qualified for treatment as such for
each taxable year of its operation, and, to the best of the
Surviving Fund's knowledge, will qualify for treatment as such for
its taxable year in which the Reorganization occurs;
(k) At the date hereof and on the Closing Date, all federal, state and
other tax returns and reports, including information returns and
payee statements, of the Surviving Fund required by law to have
been filed or furnished by such dates shall have been filed or
furnished, and all federal, state and other taxes, interest and
penalties shall have been paid so far as due, or provision shall
have been made for the payment thereof, and to the best of the
Surviving Fund's knowledge no such return is currently under audit
and no assessment has been asserted with respect to such returns or
reports;
(l) The authorized capital of the MFS Trust consists of an unlimited
number of shares of beneficial interest, no par value, divided into
three series and, with respect to the Surviving Fund, into three
classes, at the date hereof. All issued and outstanding Surviving
Fund Shares are, and on the Closing Date will be, duly and validly
issued and outstanding, fully paid and nonassessable by the MFS
Trust. The MFS Trust does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Surviving
Fund Shares, nor is there outstanding any security convertible into
any Surviving Fund Shares;
(m) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the MFS
Trust, and this Agreement constitutes a valid and binding
obligation of the MFS Trust enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors' rights and by general
principles of equity;
(n) The Surviving Fund Shares to be issued and delivered to the PW
Trust pursuant to the terms of this Agreement will have been duly
authorized on the Closing Date, and when so issued and delivered
will be duly and validly issued shares and will be fully paid and
nonassessable by the MFS Trust;
(o) The information to be furnished by the MFS Trust for use in
applications for orders, registration statements, proxy materials
and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and
shall comply fully with federal securities and other laws and
regulations applicable thereto;
(p) The written information furnished by the MFS Trust or by its agents
or representatives for inclusion in the Proxy Statement to be
included in the Registration Statement referred to in Section 5.7
hereof, on the effective date of the Registration Statement, on the
date of the meeting and on the Closing Date, will not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under with such
statements were made, not misleading;
(q) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the MFS
Trust and the Surviving Fund of the transactions contemplated by
this Agreement, except such as have been obtained under the Acts,
and such as may be required under state securities laws; and
(r) All of the Surviving Fund Shares will be offered and sold in
conformity with all applicable federal and state securities laws,
except as may have been previously disclosed in writing to the PW
Trust.
5. COVENANTS
5.1 Each Fund will operate its business in the ordinary course between the
date hereof and the Closing Date, it being understood that such ordinary course
of business will include the declaration and payment of customary dividends and
distributions.
5.2 The PW Trust will call a meeting of shareholders of the Acquired Fund
(as earlier defined, the "Meeting") to consider and act upon this Agreement and
to take all other action necessary to obtain approval of the transactions
contemplated herein.
5.3 The PW Trust covenants that the Surviving Fund Shares to be issued
hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
5.4 The PW Trust will provide such information as the MFS Trust reasonably
requests concerning the ownership of the Acquired Fund Shares, including the
Shareholder List.
5.5 Subject to the provisions of this Agreement, the PW Trust and the MFS
Trust each will take, or cause to be taken, all action, and do or cause to be
done all things, reasonably necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement.
5.6 As promptly as practicable, but in any case within 60 days after the
Closing Date, the PW Trust or its designee shall furnish to the MFS Trust, in
such form as is reasonably satisfactory to the MFS Trust, a statement of the
earnings and profits of the Acquired Fund for federal income tax purposes, and
of any capital loss carryovers and other items that the Surviving Fund will
succeed to and take into account as a result of Section 381 of the Code.
5.7 The MFS Trust will prepare and file with the Commission a Registration
Statement on Form N-14 (the "Registration Statement"), in compliance with the
1933 Act and the 1940 Act, in connection with the issuance of the Surviving Fund
Shares as contemplated herein.
5.8 The MFS Trust will prepare the Proxy Statement, to be included in the
Registration Statement, in compliance with the Acts in connection with the
Meeting. The PW Trust agrees to provide the MFS Trust with information
applicable to the PW Trust and the Acquired Fund required under the Acts for
inclusion in the Proxy Statement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PW TRUST
The obligations of the PW Trust to consummate the transactions provided for
herein shall be, at its election, subject to the performance by the MFS Trust of
all the obligations to be performed by it or the Surviving Fund hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations and warranties of the MFS Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
6.2 The MFS Trust shall have delivered to the PW Trust on the Closing Date a
certificate executed in its name by its President, Secretary or Assistant
Secretary and Treasurer or Assistant Treasurer, in form and substance
satisfactory to the PW Trust and dated as of the Closing Date, to the effect
that the representations and warranties of the MFS Trust made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and as to such
other matters as the PW Trust shall reasonably request; and
6.3 The PW Trust shall have received on the Closing Date a favorable opinion
from James R. Bordewick, Jr., Associate General Counsel and Senior Vice
President of Massachusetts Financial Services Company ("MFS"), the MFS Trust's
investment adviser, dated as of the Closing Date, in a form reasonably
satisfactory to the PW Trust, to the effect that:
(a) the MFS Trust is a business trust duly organized and validly
existing under the laws of The Commonwealth of Massachusetts and
has power to own all of its properties and assets and to carry on
its business as currently conducted;
(b) this Agreement has been duly authorized, executed and delivered by
the MFS Trust and, assuming the due authorization, execution and
delivery of this Agreement by the PW Trust and the due
authorization by shareholders of the Acquired Fund, is a valid and
binding obligation of the MFS Trust enforceable against the MFS
Trust in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and
other equitable principles;
(c) the Surviving Fund Shares to be issued to the Acquired Fund
shareholders as provided by this Agreement are duly authorized and
upon such delivery will be validly issued and outstanding and fully
paid and nonassessable by the MFS Trust, and no shareholder of the
Surviving Fund has any preemptive right to subscription or purchase
in respect thereof pursuant to any federal or Massachusetts law or
the Declaration of Trust or By-laws of the MFS Trust;
(d) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
violate the MFS Trust's Declaration of Trust or By-Laws, or any
material provision of any agreement (known to such counsel) to
which the MFS Trust is a party or by which it or the Surviving Fund
is bound;
(e) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the MFS Trust of the transactions
contemplated herein, except such as have been obtained under the
Acts, and such as may be required under state securities laws;
(f) the descriptions in the Registration Statement of statutes, legal
and governmental proceedings and contracts and other documents, if
any, only insofar as they relate to the MFS Trust and the Surviving
Fund, are accurate in all material respects;
(g) such counsel does not know of any legal or governmental proceedings
existing on or before the date of mailing of the Proxy Statement or
the Closing Date, only insofar as they relate to the MFS Trust or
the Surviving Fund, required to be described in the Proxy Statement
which are not described as required;
(h) to the knowledge of such counsel, the MFS Trust is a duly
registered investment company and its registration with the
Commission as an investment company under the 1940 Act is in full
force and effect; and
(i) to the best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court
or governmental body currently is pending or threatened as to the
MFS Trust or any of its properties or assets, and the MFS Trust is
not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body, which materially and
adversely affects its business or its ability to consummate the
transactions contemplated hereby.
Such opinion shall also state that while such counsel has not verified, and
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, he generally reviewed and discussed certain of such statements with
certain officers of the MFS Trust and that in the course of such review and
discussion no facts came to the attention of such counsel that led him to
believe that, on the effective date of the Registration Statement or on the date
of the Meeting and only insofar as such statements relate to the MFS Trust or
the Surviving Fund, the Registration Statement contained any statement that, in
the light of the circumstances under which it was made, was false or misleading
with respect to any material fact or that omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
false or misleading.
In rendering such opinion, counsel may rely, as to matters governed by the
laws of the State of New York, on an opinion of competent New York counsel. Such
opinion may state that such counsel does not express any opinion or belief as to
the financial statements or other financial or statistical data, or as to the
information relating to the PW Trust or the Acquired Fund, contained in the
Registration Statement. Such opinion may also state that such opinion is solely
for the benefit of the PW Trust, its Board of Trustees and its officers. Such
opinion shall also include such other matters incidental to the transactions
contemplated hereby as the PW Trust may reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE MFS TRUST
The obligations of the MFS Trust to complete the transactions provided for
herein shall be, at its election, subject to the performance by the PW Trust of
all the obligations to be performed by it or the Acquired Fund hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the PW Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
7.2 The PW Trust shall have delivered to the MFS Trust a statement of assets
and liabilities, which shall be prepared in accordance with generally accepted
accounting principles, together with a list of the Acquired Fund's portfolio
securities showing the federal income tax bases and holding periods of such
securities, as of the Valuation Time, certified by the Treasurer or Assistant
Treasurer of the PW Trust (the "Statement of Assets and Liabilities");
7.3 The PW Trust shall have delivered to the MFS Trust on the Closing Date a
certificate executed in its name by its President, Vice President, Secretary or
Assistant Secretary and Treasurer or Assistant Treasurer, in form and substance
satisfactory to the MFS Trust and dated as of the Closing Date, to the effect
that the representations and warranties of the PW Trust in this Agreement are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the MFS Trust shall reasonably request;
7.4 The MFS Trust shall have received on the Closing Date a favorable
opinion from Dianne E. O'Donnell, Deputy General Counsel and Senior Vice
President, or Amy Doberman, General Counsel and Senior Vice President, of MH,
dated as of the Closing Date, in a form reasonably satisfactory to the MFS Trust
to the effect that:
(a) the PW Trust is a business trust duly organized and validly
existing under the laws of The Commonwealth of Massachusetts and
has power to own all of its properties and assets and to carry on
its business as currently conducted;
(b) this Agreement has been duly authorized, executed and delivered by
the PW Trust and, assuming the due authorization, execution and
delivery of this Agreement by the MFS Trust, is a valid and binding
obligation of the PW Trust enforceable against the PW Trust in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and other
equitable principles;
(c) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
violate the PW Trust's Declaration of Trust or By-Laws, or any
material provision of any agreement (known to such counsel) to
which the PW Trust is a party or by which it or the Acquired Fund
is bound;
(d) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the PW Trust of the transactions
contemplated herein, except such as have been obtained under the
Acts, and such as may be required under state securities laws;
(e) the descriptions in the Registration Statement of statutes, legal
and governmental proceedings and contracts and other documents, if
any, only insofar as they relate to the PW Trust and the Acquired
Fund, are accurate in all material respects;
(f) such counsel does not know of any legal or governmental proceedings
existing on or before the date of mailing the Proxy Statement or
the Closing Date, only insofar as they relate to the PW Trust or
the Acquired Fund, required to be described in the Proxy Statement
which are not described as required;
(g) to the knowledge of such counsel, the PW Trust is a duly registered
investment company and its registration with the Commission as an
investment company under the 1940 Act is in full force and effect;
and
(h) to the best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court
or governmental body is currently pending or threatened as to the
PW Trust or any of its properties or assets, and the PW Trust is
not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body, which materially and
adversely affects its business or its ability to consummate the
transactions contemplated hereby.
Such opinion shall also state that while such counsel has not verified, and
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, she generally reviewed and discussed certain of such statements with
certain officers of the PW Trust and that in the course of such review and
discussion no facts came to the attention of such counsel that led her to
believe that, on the effective date of the Registration Statement or on the date
of the Meeting and only insofar as such statements relate to the PW Trust or the
Acquired Fund, the Registration Statement contained any statement that, in the
light of the circumstances under which it was made, was false or misleading with
respect to any material fact or that omitted to state any material fact required
to be stated therein or necessary to make the statements therein not false or
misleading.
In rendering such opinion, counsel may rely, as to matters governed by the
laws of The Commonwealth of Massachusetts, on an opinion of competent
Massachusetts counsel. Such opinion may state that such counsel does not express
any opinion or belief as to the financial statements or other financial or
statistical data, or as to the information relating to the MFS Trust or the
Surviving Fund, contained in the Registration Statement. Such opinion may also
state that such opinion is solely for the benefit of the MFS Trust, its Board of
Trustees and its officers. Such opinion shall also include such other matters
incident to the transactions contemplated hereby as the MFS Trust may reasonably
request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE MFS TRUST AND THE PW
TRUST
The obligations of the PW Trust hereunder are, at the option of the MFS
Trust, and the obligations of the MFS Trust hereunder are, at the option of the
PW Trust, each subject to the further conditions that on or before the Closing
Date:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding Acquired Fund
Shares in accordance with the provisions of the PW Trust's Declaration of Trust
and By-Laws, and certificates evidencing such approval shall have been delivered
to the MFS Trust;
8.2 On the Closing Date no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and permits
of federal, state and local regulatory authorities (including those of the
Commission and of state Blue Sky and securities authorities, including
"no-action" positions of such federal or state authorities) deemed necessary by
the MFS Trust or the PW Trust to permit consummation, in all material respects,
of the transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a risk of
a material adverse effect on the assets or properties of either Fund, provided
that either the MFS Trust or the PW Trust may waive any such conditions for
itself or for the Surviving Fund or the Acquired Fund, respectively;
8.4 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act;
8.5 The Acquired Fund shall have distributed to its shareholders all of its
investment company taxable income referred to in Section 852(a)(1)(A) of the
Code, plus all of the excess of (i) its interest income excludable from gross
income under Section 103(a) of the Code over (ii) its deductions disallowed
under Sections 265 and 171(a)(2) of the Code, for its taxable year ending on the
Closing Date and all of its net capital gain (as defined in Section 1222(11) of
the Code), after reduction by any capital loss carryforward, for such taxable
year.
8.6 The parties shall have received an opinion of Bingham Dana LLP,
reasonably satisfactory to the PW Trust and the MFS Trust, substantially to the
effect that for federal income tax purposes:
(a) The acquisition by the Surviving Fund of all of the Assets, in
exchange solely for Surviving Fund Shares and the assumption by the
Surviving Fund of the Liabilities, followed by the distribution by
the Acquired Fund of the Surviving Fund Shares to the Acquired Fund
shareholders in exchange for their Acquired Fund Shares and the
termination of the Acquired Fund pursuant to this Agreement, will
constitute a reorganization within the meaning of Section 368(a) of
the Code, and each Fund will be "a party to a reorganization"
within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund upon the
transfer of all of its Assets to the Surviving Fund in exchange
solely for Surviving Fund Shares and the assumption by the
Surviving Fund of the Liabilities or upon the distribution to the
Acquired Fund shareholders of such Surviving Fund Shares pursuant
to this Agreement;
(c) No gain or loss will be recognized by the Surviving Fund upon the
receipt of the Assets in exchange solely for Surviving Fund Shares
and the assumption by the Surviving Fund of the Liabilities;
(d) The basis of the Assets acquired by the Surviving Fund will be, in
each instance, the same as the basis of those Assets in the hands
of the Acquired Fund immediately prior to the transfer;
(e) The holding period of the Assets in the hands of the Surviving Fund
will include, in each instance, the holding period of those Assets
in the hands of the Acquired Fund;
(f) The Acquired Fund shareholders will not recognize gain or loss upon
the exchange of all of their Acquired Fund Shares solely for
Surviving Fund Shares as part of the Reorganization;
(g) The basis of the Surviving Fund Shares to be received by each
Acquired Fund shareholder will be, in the aggregate, the same as
the basis, in the aggregate, of the Acquired Fund Shares
surrendered by such shareholder in exchange therefor; and
(h) The holding period of the Surviving Fund Shares to be received by
each Acquired Fund shareholder will include, in each instance, the
holding period of the Acquired Fund Shares surrendered by such
shareholder in exchange therefor, provided the Acquired Fund shares
were held by such shareholder as capital assets on the date of the
exchange.
The MFS Trust and the PW Trust each agrees to make and provide
representations with respect to the Surviving Fund and the Acquired Fund,
respectively, that are reasonably requested by Bingham Dana LLP in connection
with the opinion to be delivered pursuant to this Section 8.6. Notwithstanding
anything herein to the contrary, the MFS Trust and the PW Trust may not waive in
any material respect the conditions set forth in this Section 8.6.
9. FURTHER REPRESENTATIONS, WARRANTIES AND AGREEMENTS
9.1 The MFS Trust and the PW Trust each represents and warrants to the other
that there are no brokers or finders entitled to receive any payments from
either party to this Agreement in connection with the transactions provided for
herein.
9.2 The MFS Trust and the PW Trust agree that the Surviving Fund Shares
received by the Acquired Fund shareholders in the Reorganization shall be
subject to all of the terms (including sales commissions, distribution/service
fees, sales charges, operating expenses and shareholding servicing requirements)
applicable to the Surviving Fund Shares received as if the Acquiring Fund
shareholder had originally purchased such Surviving Fund Shares, except as
follows:
(i) If an Acquired Fund shareholder is permitted to purchase additional
Class A Acquired Fund Shares at NAV, in accordance with the Acquired
Fund Prospectus, then such shareholder will be permitted to purchase
additional Class A Surviving Fund Shares at NAV;
(ii) Acquired Fund shareholders owning Class Y Acquired Fund Shares will
be permitted to purchase additional Class A Surviving Fund Shares at
NAV; and
(iii) If, as of the Closing Date or thereafter an Acquired Fund
shareholder's Class B Acquired Fund Shares are subject to a
contingent deferred sales charge (a "CDSC"), then an additional
twenty-four months will be added to the so-called "aging period" of
the Class B Surviving Fund Shares received in exchange therefor, for
the purposes of determining the date on which such Class B shares
would be converted into Class A Surviving Fund Shares and the
calculation of any applicable CDSC.
9.3 Each Fund will be liable for its own expenses incurred in connection
with entering into and carrying out the provisions of this Agreement whether or
not the Reorganization is consummated, except to the extent that, pursuant to an
agreement dated October 30, 2000, between MH and MFS, MH has agreed to pay the
following expenses associated with the Reorganization:
(i) typesetting the Registration Statement and the proxy card (but not
the expenses of converting these documents into so-called EDGAR
format, which shall be an expense of the MFS Fund);
(ii) printing the Proxy Statement and combined statement of additional
information contained in the Registration Statement and the proxy
card;
(iii) mailing the Proxy Statement and combined statement of additional
information (if required to be mailed) contained in the Registration
Statement, the proxy card and the Surviving Fund prospectus (and the
Surviving Fund annual or semi-annual report and statement of
additional information, if required to be mailed) to shareholders of
the Acquired Fund in connection with the Meeting and for the
solicitation and meeting expenses associated therewith; and
(iv) one half of the costs and expenses incurred by MFS and the Surviving
Fund in connection with the matters contemplated by this Agreement if
the shareholders of the Acquired Fund do not approve the
Reorganization.
9.4 The PW Trust agrees that it or its designee shall, on behalf of the
Acquired Fund, file or furnish by such dates as required by law all federal,
state and other tax returns, forms and reports, including information returns
and payee statements, if applicable, of the Acquired Fund required by law to be
filed or furnished, and shall provide such other federal and state tax
information to shareholders of the Acquired Fund as has been customarily
provided by the Acquired Fund, all with respect to the fiscal period that
commenced March 1, 2000 and ending on the Closing Date.
9.5 The PW Trust agrees that it or its designee shall, on behalf of the
Acquired Fund, deliver to the MFS Trust on the Closing Date or as soon
thereafter as possible: (i) copies of Acquired Fund shareholder statements and
Forms 1099 for the year ended December 31, 2000 and the period that commenced
January 1, 2001 through the Closing Date (all on microfilm or microfiche, if
available); (ii) detailed records indicating the status of all outstanding
certificates representing ownership of the Acquired Fund Shares; and (iii) for
each Acquired Fund shareholder, a record indicating the dollar amount of such
shareholder's Acquired Fund shareholdings as of the Closing Date representing
the respective portions of such holdings subject and not subject to a CDSC as of
such date, together with such other information with respect thereto as the MFS
Trust may reasonably request.
10. ENTIRE AGREEMENT
The MFS Trust and the PW Trust agree that neither party has made any
representation, warranty or covenant not set forth herein or referred to in
Section 4 hereof or required in connection with Section 8.6 hereof and that this
Agreement constitutes the entire agreement between the parties.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the MFS
Trust and the PW Trust. In addition, either party may at its option terminate
this Agreement at or prior to the Closing Date because of:
(a) a material breach by the other of any representation, warranty or
agreement contained herein to be performed at or prior to the
Closing Date; or
(b) a condition herein expressed to be precedent to the obligations of
the terminating party which has not been met and which reasonably
appears will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of either the MFS Trust or the PW Trust, or their respective
trustees or officers, to the other party or its trustees or officers.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the PW
Trust and the MFS Trust; provided, however, that following the Meeting, no such
amendment may have the effect of changing the provisions for determining the
number of Surviving Fund Shares to be issued to the Acquired Fund shareholders
under this Agreement to the detriment of such shareholders without their further
approval; and provided further that nothing contained in this Section 12 shall
be construed to prohibit the parties from amending this Agreement to change the
Closing Date or the Valuation Time.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telecopy or certified mail addressed to the MFS Trust or the PW Trust (as
applicable):
For the MFS Trust:
MFS Municipal Series Trust, on behalf of MFS New York
Municipal Bond Fund
500 Boylston Street
Boston, Massachusetts 02116
Attention: Stephen E. Cavan
General Counsel and Senior Vice President of MFS
For the PW Trust:
PaineWebber Municipal Series, on behalf of PaineWebber
New York Tax-Free Income Fund
51 West 52nd Street
New York, New York 10019-6114
Attention: Dianne E. O'Donnell
Deputy General Counsel and Senior Vice President of MH
14. MISCELLANEOUS
14.1 The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5 A copy of the MFS Trust's Declaration of Trust and the PW Trust's
Declaration of Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts. Each party hereto acknowledges that the obligations of or
arising out of this instrument are not binding upon any of the MFS Trust's or
the PW Trust's trustees, officers, employees, agents or shareholders
individually, but are binding solely upon the assets and property of the MFS
Trust and the PW Trust, respectively, in accordance with its proportionate
interest hereunder. Each party hereto further acknowledges that the assets and
liabilities of each series of the MFS Trust and the PW Trust are separate and
distinct and that the obligations of or arising out of this instrument are
binding solely upon the assets or property of the Surviving Fund and the
Acquiring Fund, respectively.
14.6 Notwithstanding Section 12 of this Agreement, but subject to the first
proviso contained therein, either party to this Agreement, with the consent of
its President, Vice President, Secretary or its Assistant Secretary, may waive
any condition or covenant to which the other party is subject or may modify such
condition or covenant in a manner deemed appropriate by any such officer.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its Chairman, President or a Trustee and attested by its
Secretary or Assistant Secretary.
Attest: PAINEWEBBER MUNICIPAL SERIES, on its behalf
and on behalf of PAINEWEBBER NEW YORK TAX-FREE
INCOME FUND, one of its series
DIANNE E. O'DONNELL BY: BRIAN STORMS
------------------------------- ---------------------------------------
Dianne E. O'Donnell Brian Storms
Vice President and Secretary President
Attest: MFS MUNICIPAL SERIES TRUST on its behalf
and on behalf of MFS NEW YORK MUNICIPAL BOND
FUND, one of its series
JAMES R. BORDEWICK, JR. BY: STEPHEN E. CAVAN
------------------------------- ---------------------------------------
James R. Bordewick, Jr. Stephen E. Cavan
Assistant Secretary Secretary
<PAGE>
PROXY PAINEWEBBER NEW YORK TAX-FREE INCOME FUND PROXY
(A SERIES OF PAINEWEBBER MUNICIPAL SERIES)
SPECIAL MEETING OF SHAREHOLDERS - MARCH 1, 2001
THIS PROXY IS BEING SOLICITED FOR THE BOARD OF TRUSTEES OF PAINEWEBBER MUNICIPAL
SERIES ("TRUST") ON BEHALF OF PAINEWEBBER NEW YORK TAX-FREE INCOME FUND, A
SERIES OF THE TRUST. The undersigned hereby appoints as proxies SCOTT GRIFF and
ROBYN GREEN and each of them (with the power of substitution) to vote for the
undersigned all shares of beneficial interest of the undersigned in PaineWebber
New York Tax-Free Income Fund at the above referenced meeting and any
adjournment thereof, with all the power the undersigned would have if personally
present. The shares represented by this proxy will be voted as instructed on the
reverse side of this proxy card. UNLESS INDICATED TO THE CONTRARY, THIS PROXY
SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE "FOR" THE PROPOSAL RELATING TO
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND.
YOUR VOTE IS IMPORTANT
VOTE VIA MAIL USING ENCLOSED ENVELOPE
VOTE VIA THE INTERNET: HTTP://
VOTE VIA TELEPHONE:
VOTE VIA FACSIMILE:
CONTROL NUMBER: [999 9999 9999 999]
If shares are held by an individual, sign
your name exactly as it appears on this
card. If shares are held jointly, either
party may sign, but the name of the party
signing should conform exactly to the name
shown on this proxy card. If shares are held
by a corporation, partnership or similar
account, the name and the capacity of the
individual signing the proxy card should be
indicated - for example: "ABC Corp., John
Doe, Treasurer."
------------------------------------------
Signature
------------------------------------------
Signature (if held jointly)
-----------------------------------, 200---
Date
10740/PWU
PLEASE MARK YOUR VOTE ON THE REVERSE SIDE OF THIS CARD.
<PAGE>
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL. PLEASE
INDICATE YOUR VOTE BY FILLING IN THE BOX COMPLETELY. EXAMPLE:
FOR AGAINST ABSTAIN
1. Approval of the Agreement and Plan of [ ] [ ] [ ]
Reorganization providing for (i) the transfer of
all of the assets of PaineWebber New York Tax-Free
Income Fund ("PaineWebber Fund"), a series of
PaineWebber Municipal Series, to MFS New York
Municipal Bond Fund ("MFS Fund"), a series of MFS
Municipal Series Trust, in exchange for shares of
the designated classes of the MFS Fund of equal
value and the assumption by the MFS Fund of the
PaineWebber Fund's stated liabilities, (ii) the
distribution of the MFS Fund shares to the
shareholders of the PaineWebber Fund and (iii) the
termination of the PaineWebber Fund.
PLEASE DATE AND SIGN THE REVERSE SIDE OF THIS CARD.
10740/PWU
<PAGE>
YOUR PROXY VOTE IS IMPORTANT
[Insert Graphic]
AND NOW YOU CAN VOTE YOUR
PROXY ON THE PHONE OR ON
THE INTERNET
It saves Money! Telephone and Internet voting saves
postage costs.
Savings which can help to minimize fund expenses.
It saves Time! Telephone and Internet voting is
instantaneous-24 hours a day.
It's Easy! Just follow these simple steps:
1. Read your proxy statement and have it at hand.
2. Call toll-free _________ for automated instructions, or go
to website http://vote_proxy-direct.com
3. Enter your ___ digit Control Number from your Proxy Card.
4. Follow the recorded or on-screen directions.
5. Do NOT mail your Proxy Card when you vote by phone or
internet.
6. If you have any questions regarding the meeting agenda or
the execution of your proxy, please call Toll Free
_________.
<PAGE>
FORM N-14
PART B
MFS MUNICIPAL SERIES TRUST
ON BEHALF OF
MFS NEW YORK MUNICIPAL BOND FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 2001
This Statement of Additional Information contains material that may be of
interest to investors but that is not included in the Prospectus/Proxy Statement
(the "Prospectus/Proxy Statement") of MFS New York Municipal Bond Fund (the "MFS
Fund") dated January 1, 2001 relating to the transfer of all the assets of
PaineWebber New York Tax-Free Income Fund (the "PaineWebber Fund") to the MFS
Fund. The MFS Fund's Statement of Additional Information dated August 1, 2000,
and the PaineWebber Fund's Statement of Additional Information dated June 30,
2000, have been filed with the Securities and Exchange Commission and are
incorporated herein by reference. This Statement is not a Prospectus and is
authorized for distribution only when it accompanies or follows delivery of the
Prospectus/Proxy Statement.
This Statement should be read in conjunction with the Prospectus/Proxy
Statement. Investors may obtain a free copy of the Prospectus/Proxy Statement
and/or the Statement of Additional Information relating to the MFS Fund by
writing MFS Service Center, Inc., 2 Avenue de Lafayette, Boston, MA 02111 or by
calling 1-800-225-2606. Investors may obtain a free copy of the Statement of
Additional Information relating to the PaineWebber Fund by calling
1-800-647-1568.
INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
Ernst & Young LLP are the independent auditors for the PaineWebber Fund,
and Deloitte & Touche LLP are the independent auditors for the MFS Fund. Ernst &
Young LLP and Deloitte & Touche LLP provide audit services, tax return review
and other tax consulting services and assistance and consultation in connection
with the review of various Securities and Exchange Commission filings for the
respective Funds. The following documents are incorporated by reference into
this Statement of Additional Information: (i) the Report of Independent
Accountants and financial statements included in the MFS Fund's Annual Report
for the fiscal year ended March 31, 2000, filed electronically on May 30, 2000
(File No. 811-04096); (ii) the Report of Independent Accountants and financial
statements included in the PaineWebber Fund's Annual Report for the fiscal year
ended February 29, 2000, filed electronically on May 10, 2000 (File No.
811-05014); (iii) the unaudited financial statements included in the MFS Fund's
Semiannual Report for the six-month period ended September 30, 2000, filed
electronically on November 22, 2000 (File No. 811-04096); and (iv) the unaudited
financial statements included in the PaineWebber Fund's Semiannual Report for
the six-month period ended August 31, 2000, filed electronically on November 6,
2000 (File No. 811-05014). The audited financial statements for the MFS Fund and
the PaineWebber Fund incorporated by reference into the Prospectus/Proxy
Statement and this Statement of Additional Information have been so included and
incorporated in reliance upon the reports of Deloitte & Touche LLP and Ernst &
Young LLP, respectively, given on their authority as experts in auditing and
accounting.
TABLE OF CONTENTS
Unaudited Pro Forma Combined Financial Statements of the MFS Fund
and the PaineWebber Fund............................................. B-3
<PAGE>
MFS NEW YORK MUNICIPAL BOND FUND
AND
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying unaudited pro forma combined statements of investment
portfolios and assets and liabilities assume that the exchange described in the
next paragraph occurred as of September 30, 2000, and the unaudited pro forma
combined statement of operations for the twelve months ended September 30, 2000
presents the results of operations of MFS New York Municipal Bond Fund (the "MFS
Fund") as if the combination with PaineWebber New York Tax-Free Income Fund (the
"PaineWebber Fund") had been consummated at October 1, 1999. The pro forma
results of operations are not necessarily indicative of future operations or the
actual results that would have occurred had the combination been consummated at
October 1, 1999. The historical statements have been derived from the MFS Fund's
books and records utilized in calculating daily net asset value at September 30,
2000, and for the twelve-month period then ended.
The pro forma statements give effect to the proposed transfer of all of
the assets of the PaineWebber Fund to the MFS Fund in exchange for the
assumption by the MFS Fund of the stated liabilities of the PaineWebber Fund and
for a number of the MFS Fund's shares equal in value to the value of the net
assets of the PaineWebber Fund transferred to the MFS Fund. Under generally
accepted accounting principles, the historical cost of investment securities
will be carried forward to the surviving entity and the results of operations of
the MFS Fund for pre-combination periods will not be restated. The pro forma
statement of operations does not reflect the expenses of either Fund in carrying
out its obligations under the Agreement and Plan of Reorganization.
The unaudited pro forma combined statements should be read in conjunction
with the separate financial statements of the MFS Fund and the PaineWebber Fund
incorporated by reference in this statement of additional information.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS AND PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 2000
<CAPTION>
---------------------------------
MFS New York Municipal
Municipal Bonds Bond Fund
----------------------------------------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation
Huntington, NY, 5.5s, 2013 $ 0 $ 0
New York City, NY, 5.375s, 2017 1,250 1,219,275
New York City, NY, 6s, 2019 1,000 1,034,220
New York City, NY, FGIC, 5.375s, 2017 0 0
New York City, NY, FGIC, 5.5s, 2026 0 0
New York City, NY, FSA, 5.375s, 2017 0 0
Niagara Falls, NY, FGIC, 5.5s, 2008 0 0
North Babylon, NY, Union Free School District, FGIC, 5.5s, 2018 2,415 2,393,144
Port Byron, NY, Central School District, AMBAC, 7.4s, 2012 500 604,135
Port Byron, NY, Central School District, AMBAC, 7.4s, 2013 500 606,895
Port Byron, NY, Central School District, AMBAC, 7.4s, 2014 500 608,350
Port Byron, NY, Central School District, AMBAC, 7.4s, 2015 500 610,800
Rome, NY, City School District, FSA, 5.5s, 2019 1,000 982,610
State of New York, 5.7s, 2011 0 0
State of New York, AMBAC, 6s, 2010 0 0
Washingtonville, NY, Central School District, FGIC, 7.35s, 2008 550 636,708
Washingtonville, NY, Central School District, FGIC, 7.35s, 2009 550 643,324
------------
$ 9,339,461
------------
State and Local Appropriation
Metropolitan Transportation Authority, NY, Dedicated Tax Fund, FGIC, 5.25s, 2014 $1,500 $ 1,490,955
Metropolitan Transportation Authority, NY, Service Contract, 7.375s, 2008 2,000 2,222,500
Metropolitan Transportation Authority, NY, Service Contract, 5.5s, 2017 750 739,305
Metropolitan Transportation Authority, NY, Service Contract, AMBAC, 5.75s, 2013 825 875,284
New York Dormitory Authority Rev. (City University), 5.625s, 2016### 1,450 1,477,724
New York Dormitory Authority Rev. (City University), 5s, 2028 0 0
New York Dormitory Authority Rev. (City University), AMBAC, 5.75s, 2018 800 829,696
New York Dormitory Authority Rev. (City University), FSA, 5.75s, 2013 3,000 3,182,850
New York Dormitory Authority Rev. (State University), 5.75s, 2011 0 0
New York Dormitory Authority Rev. (State University), 5s, 2013 1,000 965,990
New York Dormitory Authority Rev. (State University), 5s, 2017 0 0
New York Dormitory Authority Rev. (State University), 5.875s, 2017 1,130 1,180,567
New York Dormitory Authority Rev. (State University), FSA, 5.375s, 2018 1,500 1,454,010
New York Local Government Assistance Corp., 4.875s, 2020 0 0
New York Local Government Assistance Corp., MBIA, 5s, 2021 1,750 1,583,540
New York Medical Care Facilities Financing Agency Rev., 6.375s, 2014 15 15,453
New York Medical Care Facilities Financing Agency Rev., MBIA, 6s, 2025 20 20,418
New York Dormitory Authority Rev., Mental Health Facilities Improvement, 5.25s, 2013 0 0
New York Urban Development Corp. Rev. (Correctional Facilities), AMBAC, 0s, 2009 5,000 3,300,600
New York Urban Development Corp. Rev. (State Facilities), AMBAC, 5.6s, 2015 2,750 2,846,195
------------
$ 22,185,087
------------
Refunded and Special Obligations
Islip, NY, Community Development Agency Rev. (New York Institute of Technology), 7.5s, 2006 $1,990 $ 2,287,306
New York City, NY, 8s, 2001 490 511,590
New York City, NY, 8.25s, 2001 2,000 2,112,820
New York City, NY, 7.2s, 2004 1,000 1,102,010
New York City, NY, 7.3s, 2004 880 974,503
New York City, NY, 7.3s, 2004 5,000 5,527,550
New York City, NY, 7.375s, 2004 1,600 1,776,032
New York City, NY, Municipal Water & Sewer Finance Authority, 7s, 2001 745 766,098
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2002 1,975 2,092,039
New York Medical Care Facilities Financing Agency Rev. (Mental Health Services), 6.375s, 2004 965 1,043,628
New York Medical Care Facilities Financing Agency Rev. (Montefiore Medical), AMBAC, 6.5s, 2005 2,550 2,789,725
Puerto Rico Aqueduct & Sewer Authority Rev., FSA, 9s, 2005 250 287,963
------------
$ 21,271,264
------------
Airport and Port Revenue
New York City, NY, Industrial Development Agency, Special Facilities Rev. (American Airlines),
5.4s, 2019 $ 0 $ 0
New York City, NY, Industrial Development Agency, Special Facilities Rev. (American Airlines),
6.9s 2024 1,000 1,028,710
Port Authority NY & NJ, Special Obligation (JFK International), MBIA, 6.25s, 2015 1,000 1,081,486
------------
$ 2,110,196
------------
Electric and Gas Utility Revenue
Guam Power Authority Rev., AMBAC, 5.25s, 2013 $2,120 $ 2,163,651
Guam Power Authority Rev., RITES, AMBAC, 6.236s, 2014 +(++)(++) 500 513,115
New York Energy Research & Development Authority (Niagara Mohawk), FGIC, 6.625s, 2013 0 0
New York Energy Research & Development Authority (Consolidated Edison Co.), 6.1s, 2020 0 0
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2020 0 0
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2022 725 751,528
Port Authority NY & NJ, Special Obligation (KIAC Cogen), 6.75s, 2011 0 0
Port Authority NY & NJ, Special Obligation, 6.75s, 2019 1,750 1,791,142
------------
$ 5,219,436
------------
Health Care Revenue
Albany, NY, Industrial Development Authority, Civic Facilities Rev., 8.25s, 2004 $1,140 $ 1,175,693
Chautauqua County, NY, Industrial Development Agency, Civic Facility Rev. (Womans
Christian Assn.), 6.35s, 2017 200 183,274
Chautauqua County, NY, Industrial Development Agency, Civic Facility Rev. (Womans
Christian Assn.), 6.4 2029### 500 414,195
Dutchess, NY, Industrial Development Agency, Civic Facilities Rev., 8.625s, 2016 1,035 1,073,295
Fulton County, NY, Industrial Development Agency, Civic Facilities Rev. (Nathan Littauer
Hospital Assn.), 5.75s, 2009 750 672,825
New York City, NY, Health & Hospital Corp. Rev., 5.25s, 2017 750 690,870
New York City, NY, Industrial Development Agency, Civic Facilities Rev. (A Very Special
Place, Inc.), 5.75s, 2029 1,000 884,530
New York Medical Care Facilities Finance Agency Rev., Mental Health Services (Huntington
Mortgage), 6.5s, 2014 1,250 1,286,113
------------
$ 6,380,795
------------
Industrial Revenue (Corporate Guarantee)
Allegany County, NY, Industrial Development Agency, Solid Waste Rev. (Atlantic Richfield),
6.625s, 2016 $1,000 $ 1,041,040
Essex County, NY, Industrial Development Agency (International Paper Co.), 5.55s, 2014 750 728,182
Essex County, NY, Industrial Development Agency (International Paper Co.), 6.15s, 2021 1,000 978,110
Monroe County, NY, Industrial Development Agency (Weyerhauser Co.), 9s, 2006 1,000 1,003,600
New York City, NY, Industrial Development Agency (Japan Airlines Co.), 6s, 2015 0 0
Onondaga County, NY, Industrial Development Agency (Bristol-Meyers Squibb), 5.75s, 2024 1,000 993,620
Suffolk County, NY, Industrial Development Agency (Nissequogue Cogeneration Partners),
5.3s, 2013 0 0
------------
$ 4,744,552
------------
Insured Health Care Revenue
Nassau County, NY, (Nassau Health Care Corp.), FSA, 6s, 2014 $1,000 $ 1,060,850
New York Dormitory Authority Rev. (St. Vincent's Hospital), FHA, 7.375s, 2011 2,105 2,185,116
------------
$ 3,245,966
------------
Multi-Family Housing Revenue
New York City, NY, Housing Development Corp., 5.6s, 2019 $ 400 $ 393,540
------------
Sales and Excise Tax Revenue
New York City, NY, Transitional Finance Authority Rev., 5.75s, 2018 $2,730 $ 2,783,890
------------
Single Family Housing Revenue
New York Housing Finance Agency, Service Contract Rev., 7.3s, 2012 $ 0 $ 0
New York Mortgage Agency Rev., 5.85s, 2018 2,000 1,999,980
New York Mortgage Agency Rev., 5.8s, 2020 1,555 1,538,672
------------
$ 3,538,652
------------
Solid Waste Revenue
Oneida-Herkimer, NY, Solid Waste Authority, Waste Systems, 6.75s, 2014 $ 0 $ 0
------------
Turnpike Revenue
Metropolitan Transportation Authority, NY, FGIC, 5.875s, 2018 $1,980 $ 2,040,707
Metropolitan Transportation Authority, NY, Commuter Facilities Rev., 5.25s, 2028 0 0
New York Thruway Authority Rev., 5.25s, 2015 0 0
New York Thruway Authority Rev., Highway & Bridges, 5s, 2018 0 0
New York Thruway Authority Rev., Highway & Bridges, AMBAC, 5.375s, 2018 2,000 1,952,080
New York Thruway Authority Rev., Highway & Bridges, FGIC, 5.4s, 2017 2,000 1,971,720
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5.75s, 2015 1,000 1,038,690
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5.375s, 2016 2,000 1,979,860
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5s, 2018 2,400 2,219,184
Niagara Falls, NY, Bridge Commission Toll Rev., RITES, FGIC, 6.172s, 2015 +(++)(++) 3,500 3,509,310
Puerto Rico Highway & Transportation Authority, 6.25s, 2013 0 0
Puerto Rico Highway & Transportation Authority, 5s, 2036 0 0
Triborough Bridge & Tunnel Authority, NY, 6s, 2012 0 0
Triborough Bridge & Tunnel Authority, NY, 5.5s, 2017 0 0
Triborough Bridge & Tunnel Authority, NY, RITES, 6.643s, 2017 +(++)(++) 5,000 5,154,100
------------
$ 19,865,651
------------
Universities
Cattaraugus County, NY, Industrial Development Agency (Jamestown Community College),
6.4s, 2019 $ 500 $ 505,905
Hempstead Town, NY, Civic Facilities Rev. (Hofstra University), MBIA, 5.8s, 2015 1,500 1,549,920
New York Dormitory Authority Rev. (Fordham University), 7.2s, 2015 0 0
New York Dormitory Authority Rev. (Pace University), AMBAC, 5.5s, 2015 1,500 1,474,920
New York Dormitory Authority Rev. (Pace University), MBIA, 6s, 2019 1,690 1,764,563
New York Dormitory Authority Rev. (Upstate Community College), FSA, 6s, 2018 1,000 1,046,490
Tompkins County, NY, Industrial Development Agency (Cornell University), 5.625s, 2020 1,000 1,003,050
Utica, NY, Industrial Development Agency (Utica College), 5.3s, 2008 465 461,447
------------
$ 7,806,295
------------
Water and Sewer Utility Revenue
Erie County, NY, Water Authority Rev., AMBAC, 6.75s, 2014 $ 0 $ 0
New York City, NY, Municipal Water & Sewer Finance Authority, 6s, 2010 620 672,812
New York City, NY, Municipal Water & Sewer Finance Authority, 7.1s, 2012 675 692,455
New York City, NY, Municipal Water & Sewer Finance Authority, MBIA, 5.5s, 2027 0 0
New York Environmental Facilities Corp., Pollution Control Rev., 5.75s, 2010 2,235 2,386,176
New York Environmental Facilities Corp., Pollution Control Rev., 6.875s, 2010 220 227,359
New York Environmental Facilities Corp., Pollution Control Rev., 7.25s, 2010 0 0
New York Environmental Facilities Corp., Pollution Control Rev., 5.75s, 2012 1,080 1,150,632
New York Environmental Facilities Corp., Water Facilities Rev., 8.85s, 2015 2,500 2,658,675
New York Environmental Facilities Corp., Water Facilities Rev. (Spring Valley Water Co.),
AMBAC, 6.15s, 2024 0 0
Suffolk County, NY, Water Authority, MBIA, 5.1s, 2012 1,895 1,907,431
Virgin Islands Water & Power Authority, Water Systems Rev., 5.5s, 2017 0 0
------------
$ 9,695,540
------------
-------------------------------------------------------------------------------------------- ------------------------
Total Municipal Bonds (Identified Cost, $113,606,980) $118,580,325
-------------------------------------------------------------------------------------------- ------------------------
Floating Rate Demand Notes
Essex County, NY, Industrial Development Authority (International Paper Co.), 6.45s, 2023 $ 0 $ 0
New York City, NY, due 10/02/00 1,200 1,200,000
New York City, NY, Industrial Development Agency, Civic Facility Rev. (National Audubon
Society), due 10/02/00 0 0
New York Medical Care Facilities Finance Agency Rev., due 10/03/00 0 0
Sevier County, TN, Public Building Authority, due 10/05/00 100 100,000
-------------------------------------------------------------------------------------------- ------------------------
Total Floating Rate Demand Notes, at Amortized Cost and Value $1,300,000
-------------------------------------------------------------------------------------------- ------------------------
-------------------------------------------------------------------------------------------- ------------------------
Total Investments (Identified Cost, $114,906,980) $119,880,325
-------------------------------------------------------------------------------------------- ------------------------
Other Assets, Less Liabilities $ 1,234,982
-------------------------------------------------------------------------------------------- ------------------------
Net assets $121,115,307
-------------------------------------------------------------------------------------------- ------------------------
<CAPTION>
---------------------------------
Paine Webber New York
Municipal Bonds Tax Free Income Fund
----------------------------------------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation
Huntington, NY, 5.5s, 2013 $1,000 $ 1,013,510
New York City, NY, 5.375s, 2017 0 0
New York City, NY, 6s, 2019 0 0
New York City, NY, FGIC, 5.375s, 2017 1,000 985,230
New York City, NY, FGIC, 5.5s, 2026 2,100 2,043,867
New York City, NY, FSA, 5.375s, 2017 500 492,615
Niagara Falls, NY, FGIC, 5.5s, 2008 1,025 1,057,031
North Babylon, NY, Union Free School District, FGIC, 5.5s, 2018 0 0
Port Byron, NY, Central School District, AMBAC, 7.4s, 2012 0 0
Port Byron, NY, Central School District, AMBAC, 7.4s, 2013 0 0
Port Byron, NY, Central School District, AMBAC, 7.4s, 2014 0 0
Port Byron, NY, Central School District, AMBAC, 7.4s, 2015 0 0
Rome, NY, City School District, FSA, 5.5s, 2019 0 0
State of New York, 5.7s, 2011 1,000 1,033,900
State of New York, AMBAC, 6s, 2010 1,000 1,051,590
Washingtonville, NY, Central School District, FGIC, 7.35s, 2008 0 0
Washingtonville, NY, Central School District, FGIC, 7.35s, 2009 0 0
------------
$ 7,677,743
------------
State and Local Appropriation
Metropolitan Transportation Authority, NY, Dedicated Tax Fund, FGIC, 5.25s, 2014 $ 0 $ 0
Metropolitan Transportation Authority, NY, Service Contract, 7.375s, 2008 0 0
Metropolitan Transportation Authority, NY, Service Contract, 5.5s, 2017 0 0
Metropolitan Transportation Authority, NY, Service Contract, AMBAC, 5.75s, 2013 0 0
New York Dormitory Authority Rev. (City University), 5.625s, 2016### 1,000 1,017,720
New York Dormitory Authority Rev. (City University), 5s, 2028 1,000 865,300
New York Dormitory Authority Rev. (City University), AMBAC, 5.75s, 2018 0 0
New York Dormitory Authority Rev. (City University), FSA, 5.75s, 2013 0 0
New York Dormitory Authority Rev. (State University), 5.75s, 2011 1,175 1,243,538
New York Dormitory Authority Rev. (State University), 5s, 2013 0 0
New York Dormitory Authority Rev. (State University), 5s, 2017 1,000 934,530
New York Dormitory Authority Rev. (State University), 5.875s, 2017 0 0
New York Dormitory Authority Rev. (State University), FSA, 5.375s, 2018 0 0
New York Local Government Assistance Corp., 4.875s, 2020 1,250 1,120,037
New York Local Government Assistance Corp., MBIA, 5s, 2021 0 0
New York Medical Care Facilities Financing Agency Rev., 6.375s, 2014 0 0
New York Medical Care Facilities Financing Agency Rev., MBIA, 6s, 2025 0 0
New York Dormitory Authority Rev., Mental Health Facilities Improvement, 5.25s, 2013 1,000 1,003,760
New York Urban Development Corp. Rev. (Correctional Facilities), AMBAC, 0s, 2009 0 0
New York Urban Development Corp. Rev. (State Facilities), AMBAC, 5.6s, 2015 0 0
------------
$ 6,184,885
------------
Refunded and Special Obligations
Islip, NY, Community Development Agency Rev. (New York Institute of Technology), 7.5s, 2006 $ 0 $ 0
New York City, NY, 8s, 2001 0 0
New York City, NY, 8.25s, 2001 0 0
New York City, NY, 7.2s, 2004 0 0
New York City, NY, 7.3s, 2004 0 0
New York City, NY, 7.3s, 2004 0 0
New York City, NY, 7.375s, 2004 0 0
New York City, NY, Municipal Water & Sewer Finance Authority, 7s, 2001 0 0
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2002 0 0
New York Medical Care Facilities Financing Agency Rev. (Mental Health Services), 6.375s, 2004 0 0
New York Medical Care Facilities Financing Agency Rev. (Montefiore Medical), AMBAC, 6.5s, 2005 0 0
Puerto Rico Aqueduct & Sewer Authority Rev., FSA, 9s, 2005 0 0
------------
$ 0
------------
Airport and Port Revenue
New York City, NY, Industrial Development Agency, Special Facilities Rev. American Airlines),
5.4s, 2019 $ 500 $ 444,790
New York City, NY, Industrial Development Agency, Special Facilities Rev. (American Airlines),
6.9s 2024 0 0
Port Authority NY & NJ, Special Obligation (JFK International), MBIA, 6.25s, 2015 0 0
------------
$ 1,472,740
------------
Electric and Gas Utility Revenue
Guam Power Authority Rev., AMBAC, 5.25s, 2013 $ 0 $ 0
Guam Power Authority Rev., RITES, AMBAC, 6.236s, 2014 +++++ 0 0
New York Energy Research & Development Authority (Niagara Mohawk), FGIC, 6.625s, 2013 250 259,197
New York Energy Research & Development Authority (Consolidated Edison Co.), 6.1s, 2020 2,400 2,451,336
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2020 180 187,866
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2022 80 83,496
Port Authority NY & NJ, Special Obligation (KIAC Cogen), 6.75s, 2011 1,000 1,027,950
Port Authority NY & NJ, Special Obligation, 6.75s, 2019 0 0
------------
$ 4,009,865
------------
Health Care Revenue
Albany, NY, Industrial Development Authority, Civic Facilities Rev., 8.25s, 2004 $ 0 $ 0
Chautauqua County, NY, Industrial Development Agency, Civic Facility Rev. (Womans
Christian Assn.), 6.35s, 2017 0 0
Chautauqua County, NY, Industrial Development Agency, Civic Facility Rev. (Womans
Christian Assn.), 6.4 2029### 0 0
Dutchess, NY, Industrial Development Agency, Civic Facilities Rev., 8.625s, 2016 0 0
Fulton County, NY, Industrial Development Agency, Civic Facilities Rev. (Nathan Littauer
Hospital Assn.), 5.75s, 2009 0 0
New York City, NY, Health & Hospital Corp. Rev., 5.25s, 2017 0 0
New York City, NY, Industrial Development Agency, Civic Facilities Rev. (A Very Special
Place, Inc.), 5.75s, 2029 0 0
New York Medical Care Facilities Finance Agency Rev., Mental Health Services (Huntington
Mortgage), 6.5s, 2014 0 0
------------
$ 0
------------
Industrial Revenue (Corporate Guarantee)
Allegany County, NY, Industrial Development Agency, Solid Waste Rev. (Atlantic Richfield),
6.625s, 2016 $ 0 $ 0
Essex County, NY, Industrial Development Agency (International Paper Co.), 5.55s, 2014 0 0
Essex County, NY, Industrial Development Agency (International Paper Co.), 6.15s, 2021 0 0
Monroe County, NY, Industrial Development Agency (Weyerhauser Co.), 9s, 2006 0 0
New York City, NY, Industrial Development Agency (Japan Airlines Co.), 6s, 2015 1,835 1,926,273
Onondaga County, NY, Industrial Development Agency (Bristol-Meyers Squibb), 5.75s, 2024 0 0
Suffolk County, NY, Industrial Development Agency (Nissequogue Cogeneration Partners),
5.3s, 2013 1,250 1,123,000
------------
$ 3,049,273
------------
Insured Health Care Revenue
Nassau County, NY, (Nassau Health Care Corp.), FSA, 6s, 2014 $ 0 $ 0
New York Dormitory Authority Rev. (St. Vincent's Hospital), FHA, 7.375s, 2011 0 0
------------
$ 0
------------
Multi-Family Housing Revenue
New York City, NY, Housing Development Corp., 5.6s, 2019 $ 0 $ 0
------------
Sales and Excise Tax Revenue
New York City, NY, Transitional Finance Authority Rev., 5.75s, 2018 $ 0 $ 0
------------
Single Family Housing Revenue
New York Housing Finance Agency, Service Contract Rev., 7.3s, 2012 $ 10 $ 10,414
New York Mortgage Agency Rev., 5.85s, 2018 0 0
New York Mortgage Agency Rev., 5.8s, 2020 0 0
------------
$ 10,414
------------
Solid Waste Revenue
Oneida-Herkimer, NY, Solid Waste Authority, Waste Systems, 6.75s, 2014 $ 60 $ 60,928
------------
Turnpike Revenue
Metropolitan Transportation Authority, NY, FGIC, 5.875s, 2018 $ 0 $ 0
Metropolitan Transportation Authority, NY, Commuter Facilities Rev., 5.25s, 2028 1,000 931,630
New York Thruway Authority Rev., 5.25s, 2015 1,500 1,480,635
New York Thruway Authority Rev., Highway & Bridges, 5s, 2018 1,000 925,190
New York Thruway Authority Rev., Highway & Bridges, AMBAC, 5.375s, 2018 0 0
New York Thruway Authority Rev., Highway & Bridges, FGIC, 5.4s, 2017 0 0
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5.75s, 2015 0 0
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5.375s, 2016 0 0
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5s, 2018 0 0
Niagara Falls, NY, Bridge Commission Toll Rev., RITES, FGIC, 6.172s, 2015 +++++ 0 0
Puerto Rico Highway & Transportation Authority, 6.25s, 2013 1,000 1,112,740
Puerto Rico Highway & Transportation Authority, 5s, 2036 1,700 1,511,300
Triborough Bridge & Tunnel Authority, NY, 6s, 2012 1,000 1,082,500
Triborough Bridge & Tunnel Authority, NY, 5.5s, 2017 500 507,835
Triborough Bridge & Tunnel Authority, NY, RITES, 6.643s, 2017 +++++ 0 0
------------
$ 7,551,830
------------
Universities
Cattaraugus County, NY, Industrial Development Agency (Jamestown Community College),
6.4s, 2019 $ 0 $ 0
Hempstead Town, NY, Civic Facilities Rev. (Hofstra University), MBIA, 5.8s, 2015 0 0
New York Dormitory Authority Rev. (Fordham University), 7.2s, 2015 40 40,883
New York Dormitory Authority Rev. (Pace University), AMBAC, 5.5s, 2015 0 0
New York Dormitory Authority Rev. (Pace University), MBIA, 6s, 2019 0 0
New York Dormitory Authority Rev. (Upstate Community College), FSA, 6s, 2018 0 0
Tompkins County, NY, Industrial Development Agency (Cornell University), 5.625s, 2020 0 0
Utica, NY, Industrial Development Agency (Utica College), 5.3s, 2008 0 0
------------
$ 40,883
------------
Water and Sewer Utility Revenue
Erie County, NY, Water Authority Rev., AMBAC, 6.75s, 2014 $1,000 $ 1,126,880
New York City, NY, Municipal Water & Sewer Finance Authority, 6s, 2010 0 0
New York City, NY, Municipal Water & Sewer Finance Authority, 7.1s, 2012 185 189,927
New York City, NY, Municipal Water & Sewer Finance Authority, MBIA, 5.5s, 2027 1,250 1,211,637
New York Environmental Facilities Corp., Pollution Control Rev., 5.75s, 2010 0 0
New York Environmental Facilities Corp., Pollution Control Rev., 6.875s, 2010 0 0
New York Environmental Facilities Corp., Pollution Control Rev., 7.25s, 2010 70 72,662
New York Environmental Facilities Corp., Pollution Control Rev., 5.75s, 2012 0 0
New York Environmental Facilities Corp., Water Facilities Rev., 8.85s, 2015 0 0
New York Environmental Facilities Corp., Water Facilities Rev. (Spring Valley Water Co.),
AMBAC, 6.15s, 2024 1,500 1,544,235
Suffolk County, NY, Water Authority, MBIA, 5.1s, 2012 0 0
Virgin Islands Water & Power Authority, Water Systems Rev., 5.5s, 2017 200 184,732
------------
$ 4,330,073
------------
-------------------------------------------------------------------------------------------- -----------------------
Total Municipal Bonds (Identified Cost, $33,239,507) $ 33,360,664
-------------------------------------------------------------------------------------------- -----------------------
Floating Rate Demand Notes
Essex County, NY, Industrial Development Authority (International Paper Co.), 6.45s, 2023 $ 700 $ 700,000
New York City, NY, due 10/02/00 0 0
New York City, NY, Industrial Development Agency, Civic Facility Rev. (National Audubon
Society), due 10/02/00 400 400,000
New York Medical Care Facilities Finance Agency Rev., due 10/03/00 800 800,000
Sevier County, TN, Public Building Authority, due 10/05/00 0 0
-------------------------------------------------------------------------------------------- -----------------------
Total Floating Rate Demand Notes, at Amortized Cost and Value $ 1,900,000
-------------------------------------------------------------------------------------------- -----------------------
-------------------------------------------------------------------------------------------- -----------------------
Total Investments (Identified Cost, $35,139,507) $ 35,260,664
-------------------------------------------------------------------------------------------- -----------------------
Other Assets, Less Liabilities $ 569,075
-------------------------------------------------------------------------------------------- -----------------------
Net assets $ 35,829,739
-------------------------------------------------------------------------------------------- -----------------------
<CAPTION>
----------------------------------
Pro Forma
Municipal Bnads Combined
----------------------------------------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation
Huntington, NY, 5.5s, 2013 $1,000 $ 1,013,510
New York City, NY, 5.375s, 2017 1,250 1,219,275
New York City, NY, 6s, 2019 1,000 1,034,220
New York City, NY, FGIC, 5.375s, 2017 1,000 985,230
New York City, NY, FGIC, 5.5s, 2026 2,100 2,043,867
New York City, NY, FSA, 5.375s, 2017 500 492,615
Niagara Falls, NY, FGIC, 5.5s, 2008 1,025 1,057,031
North Babylon, NY, Union Free School District, FGIC, 5.5s, 2018 2,415 2,393,144
Port Byron, NY, Central School District, AMBAC, 7.4s, 2012 500 604,135
Port Byron, NY, Central School District, AMBAC, 7.4s, 2013 500 606,895
Port Byron, NY, Central School District, AMBAC, 7.4s, 2014 500 608,350
Port Byron, NY, Central School District, AMBAC, 7.4s, 2015 500 610,800
Rome, NY, City School District, FSA, 5.5s, 2019 1,000 982,610
State of New York, 5.7s, 2011 1,000 1,033,900
State of New York, AMBAC, 6s, 2010 1,000 1,051,590
Washingtonville, NY, Central School District, FGIC, 7.35s, 2008 550 636,708
Washingtonville, NY, Central School District, FGIC, 7.35s, 2009 550 643,324
------------
$ 17,017,204
------------
State and Local Appropriation
Metropolitan Transportation Authority, NY, Dedicated Tax Fund, FGIC, 5.25s, 2014 1,500 1,490,955
Metropolitan Transportation Authority, NY, Service Contract, 7.375s, 2008 2,000 2,222,500
Metropolitan Transportation Authority, NY, Service Contract, 5.5s, 2017 750 739,305
Metropolitan Transportation Authority, NY, Service Contract, AMBAC, 5.75s, 2013 825 875,284
New York Dormitory Authority Rev. (City University), 5.625s, 2016### 2,450 2,495,444
New York Dormitory Authority Rev. (City University), 5s, 2028 1,000 865,300
New York Dormitory Authority Rev. (City University), AMBAC, 5.75s, 2018 800 829,696
New York Dormitory Authority Rev. (City University), FSA, 5.75s, 2013 3,000 3,182,850
New York Dormitory Authority Rev. (State University), 5.75s, 2011 1,175 1,243,538
New York Dormitory Authority Rev. (State University), 5s, 2013 1,000 965,990
New York Dormitory Authority Rev. (State University), 5s, 2017 1,000 934,530
New York Dormitory Authority Rev. (State University), 5.875s, 2017 1,130 1,180,567
New York Dormitory Authority Rev. (State University), FSA, 5.375s, 2018 1,500 1,454,010
New York Local Government Assistance Corp., 4.875s, 2020 1,250 1,120,037
New York Local Government Assistance Corp., MBIA, 5s, 2021 1,750 1,583,540
New York Medical Care Facilities Financing Agency Rev., 6.375s, 2014 15 15,453
New York Medical Care Facilities Financing Agency Rev., MBIA, 6s, 2025 20 20,418
New York Dormitory Authority Rev., Mental Health Facilities Improvement, 5.25s, 2013 1,000 1,003,760
New York Urban Development Corp. Rev. (Correctional Facilities), AMBAC, 0s, 2009 5,000 3,300,600
New York Urban Development Corp. Rev. (State Facilities), AMBAC, 5.6s, 2015 2,750 2,846,195
------------
$ 28,369,972
------------
Refunded and Special Obligations
Islip, NY, Community Development Agency Rev. (New York Institute of Technology), 7.5s, 2006 $1,990 $ 2,287,306
New York City, NY, 8s, 2001 490 511,590
New York City, NY, 8.25s, 2001 2,000 2,112,820
New York City, NY, 7.2s, 2004 1,000 1,102,010
New York City, NY, 7.3s, 2004 880 974,503
New York City, NY, 7.3s, 2004 5,000 5,527,550
New York City, NY, 7.375s, 2004 1,600 1,776,032
New York City, NY, Municipal Water & Sewer Finance Authority, 7s, 2001 745 766,098
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2002 1,975 2,092,039
New York Medical Care Facilities Financing Agency Rev. (Mental Health Services), 6.375s, 2004 965 1,043,628
New York Medical Care Facilities Financing Agency Rev. (Montefiore Medical), AMBAC, 6.5s, 2005 2,550 2,789,725
Puerto Rico Aqueduct & Sewer Authority Rev., FSA, 9s, 2005 250 287,963
------------
$ 21,271,264
------------
Airport and Port Revenue
New York City, NY, Industrial Development Agency, Special Facilities Rev. (American Airlines),
5.4s, 2019 $ 500 $ 444,790
New York City, NY, Industrial Development Agency, Special Facilities Rev. (American Airlines),
6.9s 2024 1,000 1,028,710
Port Authority NY & NJ, Special Obligation (JFK International), MBIA, 6.25s, 2015 1,000 1,081,486
------------
$ 3,582,936
------------
Electric and Gas Utility Revenue
Guam Power Authority Rev., AMBAC, 5.25s, 2013 $2,120 $ 2,163,651
Guam Power Authority Rev., RITES, AMBAC, 6.236s, 2014 +++++ 500 513,115
New York Energy Research & Development Authority (Niagara Mohawk), FGIC, 6.625s, 2013 250 259,197
New York Energy Research & Development Authority (Consolidated Edison Co.), 6.1s, 2020 2,400 2,451,336
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2020 180 187,866
New York Energy Research & Development Authority, Electric Facilities Rev., 7.15s, 2022 805 835,024
Port Authority NY & NJ, Special Obligation (KIAC Cogen), 6.75s, 2011 1,000 1,027,950
Port Authority NY & NJ, Special Obligation, 6.75s, 2019 1,750 1,791,142
------------
$ 9,229,281
------------
Health Care Revenue
Albany, NY, Industrial Development Authority, Civic Facilities Rev., 8.25s, 2004 $1,140 $ 1,175,693
Chautauqua County, NY, Industrial Development Agency, Civic Facility Rev. (Womans
Christian Assn.), 6.35s, 2017 200 183,274
Chautauqua County, NY, Industrial Development Agency, Civic Facility Rev. (Womans
Christian Assn.), 6.4 2029### 500 414,195
Dutchess, NY, Industrial Development Agency, Civic Facilities Rev., 8.625s, 2016 1,035 1,073,295
Fulton County, NY, Industrial Development Agency, Civic Facilities Rev. (Nathan Littauer
Hospital Assn.), 5.75s, 2009 750 672,825
New York City, NY, Health & Hospital Corp. Rev., 5.25s, 2017 750 690,870
New York City, NY, Industrial Development Agency, Civic Facilities Rev. (A Very Special
Place, Inc.), 5.75s, 2029 1,000 884,530
New York Medical Care Facilities Finance Agency Rev., Mental Health Services (Huntington
Mortgage), 6.5s, 2014 1,250 1,286,113
------------
$ 6,380,795
------------
Industrial Revenue (Corporate Guarantee)
Allegany County, NY, Industrial Development Agency, Solid Waste Rev. (Atlantic Richfield),
6.625s, 2016 $1,000 $ 1,041,040
Essex County, NY, Industrial Development Agency (International Paper Co.), 5.55s, 2014 750 728,182
Essex County, NY, Industrial Development Agency (International Paper Co.), 6.15s, 2021 1,000 978,110
Monroe County, NY, Industrial Development Agency (Weyerhauser Co.), 9s, 2006 1,000 1,003,600
New York City, NY, Industrial Development Agency (Japan Airlines Co.), 6s, 2015 1,835 1,926,273
Onondaga County, NY, Industrial Development Agency (Bristol-Meyers Squibb), 5.75s, 2024 1,000 993,620
Suffolk County, NY, Industrial Development Agency (Nissequogue Cogeneration Partners),
5.3s, 2013 1,250 1,123,000
------------
$ 7,793,825
------------
Insured Health Care Revenue
Nassau County, NY, (Nassau Health Care Corp.), FSA, 6s, 2014 $1,000 $ 1,060,850
New York Dormitory Authority Rev. (St. Vincent's Hospital), FHA, 7.375s, 2011 2,105 2,185,116
------------
$ 3,245,966
------------
Multi-Family Housing Revenue
New York City, NY, Housing Development Corp., 5.6s, 2019 $ 400 $ 393,540
------------
Sales and Excise Tax Revenue
New York City, NY, Transitional Finance Authority Rev., 5.75s, 2018 $2,730 $ 2,783,890
------------
Single Family Housing Revenue
New York Housing Finance Agency, Service Contract Rev., 7.3s, 2012 $ 10 $ 10,414
New York Mortgage Agency Rev., 5.85s, 2018 2,000 1,999,980
New York Mortgage Agency Rev., 5.8s, 2020 1,555 1,538,672
------------
$ 3,549,066
------------
Solid Waste Revenue
Oneida-Herkimer, NY, Solid Waste Authority, Waste Systems, 6.75s, 2014 $ 60 $ 60,928
------------
Turnpike Revenue
Metropolitan Transportation Authority, NY, FGIC, 5.875s, 2018 $1,980 $ 2,040,707
Metropolitan Transportation Authority, NY, Commuter Facilities Rev., 5.25s, 2028 1,000 931,630
New York Thruway Authority Rev., 5.25s, 2015 1,500 1,480,635
New York Thruway Authority Rev., Highway & Bridges, 5s, 2018 1,000 925,190
New York Thruway Authority Rev., Highway & Bridges, AMBAC, 5.375s, 2018 2,000 1,952,080
New York Thruway Authority Rev., Highway & Bridges, FGIC, 5.4s, 2017 2,000 1,971,720
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5.75s, 2015 1,000 1,038,690
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5.375s, 2016 2,000 1,979,860
New York Thruway Authority Rev., Highway & Bridges, MBIA, 5s, 2018 2,400 2,219,184
Niagara Falls, NY, Bridge Commission Toll Rev., RITES, FGIC, 6.172s, 2015 +++++ 3,500 3,509,310
Puerto Rico Highway & Transportation Authority, 6.25s, 2013 1,000 1,112,740
Puerto Rico Highway & Transportation Authority, 5s, 2036 1,700 1,511,300
Triborough Bridge & Tunnel Authority, NY, 6s, 2012 1,000 1,082,500
Triborough Bridge & Tunnel Authority, NY, 5.5s, 2017 500 507,835
Triborough Bridge & Tunnel Authority, NY, RITES, 6.643s, 2017 +++++ 5,000 5,154,100
------------
$ 27,417,481
------------
Universities
Cattaraugus County, NY, Industrial Development Agency (Jamestown Community College),
6.4s, 2019 $ 500 $ 505,905
Hempstead Town, NY, Civic Facilities Rev. (Hofstra University), MBIA, 5.8s, 2015 1,500 1,549,920
New York Dormitory Authority Rev. (Fordham University), 7.2s, 2015 40 40,883
New York Dormitory Authority Rev. (Pace University), AMBAC, 5.5s, 2015 1,500 1,474,920
New York Dormitory Authority Rev. (Pace University), MBIA, 6s, 2019 1,690 1,764,563
New York Dormitory Authority Rev. (Upstate Community College), FSA, 6s, 2018 1,000 1,046,490
Tompkins County, NY, Industrial Development Agency (Cornell University), 5.625s, 2020 1,000 1,003,050
Utica, NY, Industrial Development Agency (Utica College), 5.3s, 2008 465 461,447
------------
$ 7,847,178
------------
Water and Sewer Utility Revenue
Erie County, NY, Water Authority Rev., AMBAC, 6.75s, 2014 $1,000 $ 1,126,880
New York City, NY, Municipal Water & Sewer Finance Authority, 6s, 2010 620 672,812
New York City, NY, Municipal Water & Sewer Finance Authority, 7.1s, 2012 860 882,382
New York City, NY, Municipal Water & Sewer Finance Authority, MBIA, 5.5s, 2027 1,250 1,211,637
New York Environmental Facilities Corp., Pollution Control Rev., 5.75s, 2010 2,235 2,386,176
New York Environmental Facilities Corp., Pollution Control Rev., 6.875s, 2010 220 227,359
New York Environmental Facilities Corp., Pollution Control Rev., 7.25s, 2010 70 72,662
New York Environmental Facilities Corp., Pollution Control Rev., 5.75s, 2012 1,080 1,150,632
New York Environmental Facilities Corp., Water Facilities Rev., 8.85s, 2015 2,500 2,658,675
New York Environmental Facilities Corp., Water Facilities Rev. (Spring Valley Water Co.),
AMBAC, 6.15s, 2024 1,500 1,544,235
Suffolk County, NY, Water Authority, MBIA, 5.1s, 2012 1,895 1,907,431
Virgin Islands Water & Power Authority, Water Systems Rev., 5.5s, 2017 200 184,732
------------
$ 14,025,613
------------
-------------------------------------------------------------------------------------------- ------------------------
Total Municipal Bonds (Identified Cost, $146,846,487) $151,940,989
-------------------------------------------------------------------------------------------- ------------------------
Floating Rate Demand Notes
Essex County, NY, Industrial Development Authority (International Paper Co.), 6.45s, 2023 $ 700 $ 700,000
New York City, NY, due 10/02/00 1,200 1,200,000
New York City, NY, Industrial Development Agency, Civic Facility Rev. (National Audubon
Society), due 10/02/00 400 400,000
New York Medical Care Facilities Finance Agency Rev., due 10/03/00 800 800,000
Sevier County, TN, Public Building Authority, due 10/05/00 100 100,000
-------------------------------------------------------------------------------------------- ------------------------
Total Floating Rate Demand Notes, at Amortized Cost and Value $3,200,000
-------------------------------------------------------------------------------------------- ------------------------
-------------------------------------------------------------------------------------------- ------------------------
Total Investments (Identified Cost, $150,046,487) $155,140,989
-------------------------------------------------------------------------------------------- ------------------------
Other Assets, Less Liabilities $ 1,804,057
-------------------------------------------------------------------------------------------- ------------------------
Net assets $156,945,046
-------------------------------------------------------------------------------------------- ------------------------
++++ Inverse floating rate security.
+ Restricted security.
### Security segregated as collateral for an open futures contract.
NOTES:
The Pro Forma Combined Portfolio of Investments reflects the proposed acquisition of the net assets of the PaineWebber Tax-Free
Income Fund by the MFS New York Municipal Bond Fund as though such acquisition had become effective September 30, 2000, and includes
the portfolio securities of both entities at that date.
Investment Valuations - Debt securities (other than short-term obligations which mature in 60 days or less), including listed issues
are valued on the basis of valuations furnished by dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon exchange or over-the-counter prices. Short-term obligations,
which mature in 60 days or less, are valued at amortized cost, which approximates market value. Futures contracts are reported at
market value using closing settlement prices. Securities for which there are no such quotations or valuations are valued, in good
faith, at fair value, by the Trustees.
</TABLE>
<PAGE>
<TABLE>
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
SEPTEMBER 30, 2000
<CAPTION>
MFS NEW YORK PAINEWEBBER
MUNICIPAL NEW YORK TAX-FREE PRO FORMA
BOND FUND INCOME FUND COMBINED
------------ ----------------- ------------
<S> <C> <C> <C>
Assets:
Investments:
Identified cost $114,906,980 $ 35,139,507 $150,046,487
Unrealized appreciation (depreciation) 4,973,345 121,157 5,094,502
------------ ------------ ------------
Total investments, at value $119,880,325 $ 35,260,664 $155,140,989
Cash 22,189 75,625 97,814
Receivable for daily variation margin on open futures contracts 1,875 -- 1,875
Receivable for investments sold 2,037,534 -- 2,037,534
Receivable for fund shares sold 245,613 -- 245,613
Interest receivable 1,987,879 539,414 2,527,293
Other assets 969 53,368 54,337
------------ ------------ ------------
Total assets $124,176,384 $ 35,929,071 $160,105,455
------------ ------------ ------------
Liabilities:
Distributions payable $ 217,021 $ 17,180 $ 234,201
Payable for investments purchased 2,710,722 -- $ 2,710,722
Payable for fund shares reacquired 47,525 10,203 57,728
Payable for daily variation margin on open futures contracts -- 448 448
Payable to affiliates-
Management fee 2,328 10,212 12,540
Shareholder servicing agent fee 665 5,234 5,899
Distribution and service fee 2,532 12,672 15,204
Administrative fee 116 -- 116
Accrued expenses and other liabilities 80,168 43,383 123,551
------------ ------------ ------------
Total liabilities $ 3,061,077 $ 99,332 $ 3,160,409
------------ ------------ ------------
Net assets $121,115,307 $ 35,829,739 $156,945,046
------------ ------------ ------------
Net assets consist of:
Paid-in capital $117,086,642 $ 36,098,560 $153,185,202
Unrealized appreciation on investments 4,948,970 121,564 5,070,534
Accumulated net realized loss on investments (872,689) (390,383) (1,263,072)
Accumulated distributions in excess of net investment income (47,616) (2) (47,618)
------------ ------------ ------------
Total $121,115,307 $ 35,829,739 $156,945,046
------------ ------------ ------------
Shares of beneficial interest outstanding:
Class A 9,365,129 2,320,428 11,616,120
Class B 1,981,767 253,036 2,226,117
Class C -- 892,816 862,648
Class Y -- 9,674 --
------------ ------------ ------------
Total shares of beneficial interest outstanding 11,346,896 3,475,954 14,704,885
------------ ------------ ------------
Net assets:
Class A $ 99,970,905 $ 23,918,356 $123,988,979
Class B 21,144,402 2,607,212 23,751,614
Class C -- 9,204,453 9,204,453
Class Y -- 99,718 --
------------ ------------ ------------
Total net assets $121,115,307 $ 35,829,739 $156,945,046
------------ ------------ ------------
Class A shares:
Net asset value per share
(net assets / shares of beneficial interest outstanding) $10.67 $10.31 $10.67
====== ====== ======
Offering price per share (100 / 96 of net asset value per share) $10.74
======
Offering price per share (100 / 95.25 of net asset value per share) $11.20 $11.20
====== ======
Class B shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest outstanding) $10.67 $10.30 $10.67
====== ====== ======
Class C shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest outstanding) - $10.31 $10.67
====== ====== ======
Class Y shares:
Net asset value and offering price per share
(net assets / shares of beneficial interest outstanding) - $10.31 -
====== ====== ======
On sales of $100,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be
imposed on redemptions of Class A and Class B shares.
Notes:
The Pro Forma Combined Portfolio of Investments reflects the proposed acquisition of the net assets of the PaineWebber New
York Tax-Free Income Fund by the MFS New York Municipal Bond Fund as though such acquisition had become effective September
30, 2000, and reflects the accounts of both entities as of that date.
The above statement reflects neither any adjustment with respect to additional distributions that may be made prior to the
Reorganization nor any anticipated expense to be incurred in connection with the Reorganization.
The Pro Forma combined shares of each class' shares of beneficial interest outstanding represent those shares that would have
been outstanding on September 30, 2000, had the acquisition taken place on such date. In exchange for the net assets of the
PaineWebber New York Tax-Free Income Fund each class of shares of the MFS New York Municipal Bond Fund would have been issued
based upon the per-share net asset value as follows:
Class A Class B Class C Class Y*
----------- ----------- ----------- --------
Net assets - PW New York Tax-Free Income Fund $23,918,356 $ 2,607,212 $ 9,204,453 $ 99,718
Shares - MFS New York Municipal Bond Fund 2,241,645 244,350 862,648 9,346
Net asset value - MFS New York Municipal Bond Fund $10.67 $ 10.67 $ 10.67 $ 10.67
* Class Y shareholders of the PaineWebber New York Tax-Free Income Fund will receive Class A shares of the MFS New York
Municipal Bond Fund
</TABLE>
<PAGE>
<TABLE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2000
<CAPTION>
MFS NEW YORK PAINEWEBBER
MUNICIPAL NEW YORK TAX PRO FORMA PRO FORMA
BOND FUND FREE INCOME FUND ADJUSTMENTS COMBINED
-------------- ---------------- -------------- -----------
<S> <C> <C> <C>
Net investment income:
Interest income $ 7,544,560 $ 2,064,671 $ 9,609,231
----------- ----------- -----------
Expenses -
Management fee $ 682,352 $ 218,265 $ (18,003)(A) $ 882,614
Trustees' compensation 19,530 11,500 (11,500)(B) 19,530
Shareholder servicing agent fee 124,172 21,508 14,795 (C) 160,475
Distribution and service fee (Class A) 255,233 57,872 (974)(D) 312,131
Distribution and service fee (Class B) 220,793 35,394 (580)(D) 255,607
Distribution and service fee (Class C) 0 72,099 23,634 (E) 95,733
Administrative fee 17,399 0 5,068 (F) 22,467
Custodian fee 50,644 18,189 (15,000)(B) 53,833
Printing 9,907 15,195 (10,689)(B) 14,413
Postage 5,259 7,250 (5,429)(B) 7,080
Auditing fees 30,653 29,248 (29,248)(B) 30,653
Legal fees 1,635 33,248 (32,000)(B) 2,883
State Registration Fees 21,142 27,872 (16,409)(B) 32,605
Miscellaneous 28,544 9,740 (9,563)(B) 28,721
----------- ----------- ----------- -----------
Total expenses $ 1,467,263 $ 557,380 $ (105,898) $ 1,918,745
Fees paid indirectly (15,807) 0 0 (15,807)
Reduction of expenses by investment adviser (247,748) (111,424) 38,222 (G) (320,950)
----------- ----------- ----------- -----------
Net expenses $ 1,203,708 $ 445,956 $ (67,676) $ 1,581,988
----------- ----------- ----------- -----------
Net investment income $ 6,340,852 $ 1,618,715 $ 67,676 $ 8,027,243
----------- ----------- ----------- -----------
Realized and unrealized loss on investments:
Realized gain (loss)(identified cost basis) -
Investment transactions $ 41,639 $ (337,046) $ (295,407)
Futures contracts (126,266) 26,712 (99,554)
----------- ----------- ----------- -----------
Net realized loss on investments $ (84,627) $ (310,334) $ -- $ (394,961)
----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) -
Investments $ 17,459 $ 594,271 $ 611,730
Futures Contracts (20,469) (17,063) (37,532)
----------- ----------- ----------- -----------
Net unrealized loss on investments $ (3,010) $ 577,208 $ -- $ 574,198
----------- ----------- ----------- -----------
Net realized and unrealized loss on
investments $ (87,637) $ 266,874 $ -- $ 179,237
----------- ----------- ----------- -----------
Increase (decrease) in net
assets from operations $ 6,253,215 $ 1,885,589 $ 67,676 $ 8,206,480
----------- ----------- ----------- -----------
Pro Forma Adjustments:
(A) The investment advisory fee is 0.55% of the Fund's average daily net assets for the MFS New York Municipal Bond Fund. The
investment advisory fee is 0.60% of the Fund's average daily net assets for the PaineWebber New York Tax-Free Income Fund. The
PaineWebber New York Municipal Bond Fund assets would have been charged at the rate applicable to the MFS New York Municipal
Bond Fund.
(B) Expenditure reduced as the result of the elimination of duplicative functions.
(C) The shareholder servicing fee of the MFS New York Municipal Bond Fund is 0.10% annually.
(D) The distribution fees remain at 0.25% and 1.00% for Classes A and B, respectively.
(E) The Class C distribution and service fee was charged at a rate of 0.75% annually on the Paine Webber New York Tax-Free Income
Fund. The Class C distribution and service fee will be charged at a rate of 1.00% annually on the MFS New York Municipal Bond
Fund.
(F) The administrative fee is charged at a rate of up to 0.0175% on the MFS New York Municipal Bond Fund.
(G) The investement advisor for the Paine Webber New York Tax-Free Income Fund was waiving 0.30% of its fee annually. The investment
advisor for the MFS New York Municipal Bond Fund is waiving 0.20% of its fee annually.
Notes:
The Pro Forma Combined Statement of Operations reflects the proposed acquisition of the assets of the PaineWebber New York Tax-Free
Income Fund by the MFS New York Municipal Bond Fund as though such acquisition had become effective September 30, 2000, and reflects
the accounts of both entities for the twelve months ended September 30, 2000.
PaineWebber management fee includes the administrative fee.
The above statement reflects neither any adjustment with respect to additional distributions that may be made prior to the
reorganization nor any anticipated reorganization expenses.
</TABLE>
<PAGE>
MFS NEW YORK MUNICIPAL BOND FUND
FORM N-14
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Reference is hereby made to (a) Article V of Registrant's Declaration of
Trust, filed as an Exhibit to Post-Effective Amendment No. 26 to its
Registration Statement; (b) Section 4 of the Distribution Agreement between
Registrant and MFS Fund Distributors, Inc., filed as an Exhibit to
Post-Effective Amendment No. 26; and (c) the undertaking of the Registrant
regarding indemnification set forth in its Registration Statement as initially
filed.
The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser and distributor will be insured under an errors
and omissions liability insurance policy. The Registrant and its officers are
also insured under the fidelity bond required by Rule 17g-1 under the Investment
Company Act of 1940 as amended.
ITEM 16. EXHIBITS
1(a) Amended and Restated Declaration of Trust, dated February 3,
1995. (1)
1(b) Amendment to Declaration of Trust, dated April 29, 1999 to add
two new series. (9)
2 Amended and Restated By-Laws, dated December 14, 1994. (1)
3 Not applicable.
4 Agreement and Plan of Reorganization dated November 30, 2000, filed
herewith as Exhibit A to the MFS New York Municipal Bond Fund
Prospectus set forth as Part A to the Registration Statement on
Form N-14.
5 Form of Share Certificate for Class A, B and C Shares. (3)
6(a) Investment Advisory Agreement, dated August 24, 1984 for all series
other than Arkansas, California, Florida, Louisiana*, Mississippi,
Pennsylvania, Texas*, Washington*, and MFS Municipal Income Fund.
(3)
6(b) Investment Advisory Agreement, dated February 1, 1992, for the
MFS Arkansas Municipal Bond Fund. (3)
6(c) Investment Advisory Agreement, dated February 1, 1992, for the
MFS Florida Municipal Bond Fund. (3)
6(d) Investment Advisory Agreement, dated February 1, 1992, for the
MFS Texas Municipal Bond Fund*. (3)
6(e) Investment Advisory Agreement, dated August 1, 1992, for the MFS
Mississippi Municipal Bond Fund. (3)
6(f) Investment Advisory Agreement, dated August 1, 1992, for the MFS
Washington Municipal Bond Fund*. (3)
6(g) Investment Advisory Agreement, dated February 1, 1993, for MFS
Louisiana Municipal Bond Fund*. (3)
6(h) Investment Advisory Agreement, dated February 1, 1993, for MFS
Pennsylvania Municipal Bond Fund. (3)
6(i) Investment Advisory Agreement, dated September 1, 1993, for MFS
California Municipal Bond Fund. (3)
6(j) Investment Advisory Agreement, dated September 1, 1993, for the
MFS Municipal Income Fund. (3)
6(k) Investment Advisory Agreement, dated July 30, 1999, for the MFS
New York High Income Tax Free Fund. (10)
6(l) Investment Advisory Agreement, dated July 30, 1999, for the MFS
Massachusetts High Income Tax Free Fund. (10)
7(a) Amended and Restated Distribution Agreement for the MFS Municipal
Series Trust, dated January 1, 1995. (1)
7(b) Dealer Agreement between MFS Fund Distributors, Inc. ("MFD") and a
dealer and the Mutual Fund Agreement between MFS and a bank
effective November 29, 1999. (5)
8 Retirement Plan for Non-Interested Person Trustees, as amended
and restated February 10, 1999. (6)
9(a) Custodian Agreement, dated June 15, 1988. (3)
9(b) Amendment to Custodian Agreement, dated June 15, 1988.(3)
9(c) Amendment to Custodian Agreement, dated August 9, 1989. (3)
9(d) Amendment to Custodian Agreement, dated October 1, 1989. (3)
9(e) Amendment No. 3 to the Custodian Agreement, dated October 9,
1991. (3)
10(a) Amended and Restated Master Distribution Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940 effective December 8, 1999.
(7)
10(b) Exhibits as revised February 9, 2000, to Master Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940.
(7)
10(c) Plan pursuant to Rule 18f-3(d) under the Investment Company Act of
1940 amended and restated July 30, 1998 (Exhibit A dated April 12,
2000). (4)
11 Opinion of James R. Bordewick, Jr., to the MFS Municipal Series
Trust, as to the legality of securities being issued, including
consent, filed herewith.
12 Form of Opinion of Bingham Dana LLP as to Tax Matters, including
consent, filed herewith.
13(a) Shareholder Servicing Agent Agreement, dated August 1, 1985. (3)
13(b) Amendment to Shareholder Servicing Agent Agreement, dated April
1, 1999. (9)
13(c) Exchange Privilege Agreement, dated July 30, 1997. (3)
13(d) Master Administrative Services Agreement dated March 1, 1997, as
amended and restated April 1, 1999. (8)
13(e) Dividend Disbursing Agency Agreement, dated February 1, 1986. (3)
14(a) Consent of Deloitte & Touche LLP, independent auditors to MFS New
York Municipal Bond Fund, filed herewith.
14(b) Consent of Ernst & Young LLP, independent auditors to PaineWebber
New York Tax-Free Income Fund, filed herewith.
15 Not Applicable.
16(a) Power of Attorney, dated August 11, 1994. (2)
16(b) Power of Attorney, dated February 10, 1999. (10)
16(c) Power of Attorney, dated July 1, 2000. (10)
17(a) MFS New York Municipal Bond Fund Prospectus dated August 1, 2000 and
Statement of Additional Information dated August 1, 2000. (10)
17(b) MFS New York Municipal Bond Fund's Annual Report to Shareholders for
the fiscal year ended March 31, 2000. (11)
17(c) MFS New York Municipal Bond Fund's Semiannual Report to Shareholders
for the six month period ended September 30, 2000. (12)
17(d) PaineWebber New York Tax-Free Income Fund Prospectus and Statement
of Additional Information dated June 30, 2000. (13)
17(e) PaineWebber New York Tax-Free Income Fund's Annual Report to
Shareholders for the fiscal year ended February 29, 2000. (14)
17(f) PaineWebber New York Tax-Free Income Fund's Semi-Annual Report to
Shareholders for the six month period ended August 31, 2000. (15)
-------------------------------
*No longer in existence
(1) Incorporated by reference to Post-Effective Amendment No. 26 to the
Registration Statement on Form N-1A filed with the SEC via EDGAR on
February 22, 1995.
(2) Incorporated by reference to Post-Effective Amendment No. 27 to the
Registration Statement on Form N-1A filed with the SEC via EDGAR on May
31, 1995.
(3) Incorporated by reference to Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A filed with the SEC via EDGAR on July
28, 1995.
(4) Incorporated by reference to MFS Government Limited Maturity Fund (File
Nos. 2-96738 and 811-4253) Post-Effective Amendment No. 21 filed with
the SEC via EDGAR on April 28, 2000.
(5) Incorporated by reference to MFS Series Trust V (File Nos. 2-38613 and
81-2031) Post-Effective Amendment No. 48 filed with the SEC via EDGAR on
November 29, 1999.
(6) Incorporated by reference to MFS Government Limited Maturity Fund (File
Nos. 2-96738 and 811-4253) Post-Effective Amendment No. 20 filed with
the SEC via EDGAR on February 26, 1999.
(7) Incorporated by reference to MFS Series Trust VI (File Nos. 33-34502 and
811-6102) Post-Effective Amendment No. 15 filed with the SEC via EDGAR on
February 28, 2000.
(8) Incorporated by reference to MFS Series Trust III (File Nos. 2-60491 and
811-2794) Post-Effective Amendment No. 28 filed with the SEC via EDGAR on
March 31, 1999.
(9) Incorporated by reference to Registrant's Post-Effective Amendment No. 33
filed with the SEC via EDGAR on May 14, 1999.
(10) Incorporated by reference to Registrant's Post-Effective Amendment No. 34
filed with the SEC via EDGAR on July 28, 2000.
(11) Incorporated by reference to Registrant's Form N-30D (File No. 811-04096)
filed with the SEC via EDGAR on May 30, 2000.
(12) Incorporated by reference to Registrant's Form N-30D (File No. 811-04096)
filed with the SEC via EDGAR on November 28, 2000.
(13) Incorporated by reference to the PaineWebber Municipal Series'
Post-Effective No. 26 (File No. 811-05014) filed with the SEC via EDGAR on
June 27, 2000.
(14) Incorporated by reference to the PaineWebber New York Tax-Free Income
Fund's Form N-30D (File No. 811-05014) filed with the SEC via EDGAR on
May 10, 2000.
(15) Incorporated by reference to the PaineWebber New York Tax-Free Income
Fund's Form N-30D (File No. 811-05014) filed with the SEC via EDGAR on
November 6, 2000.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933 (the
"1933 Act"), the reoffering prospectus will contain the information called for
by the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(b) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (a) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(c) The Registrant agrees to file an executed copy of an opinion of
counsel supporting the tax consequences of the Reorganization as an amendment to
this Registration Statement within a reasonable time after receipt of such
opinion.
NOTICE
A copy of the Amended and Restated Declaration of Trust, as amended, of
MFS Municipal Series Trust, is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that this Registration
Statement has been executed on behalf of the Registrant by an officer of the
Registrant as an officer and not individually, and the obligations of or arising
out of this Registration Statement are not binding upon any of the Trustees,
officers, or shareholders of the Registrant individually, but are binding only
upon the assets and property of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Boston and The Commonwealth
of Massachusetts on the 30th day of November, 2000.
MFS(R) MUNICIPAL SERIES TRUST
ON BEHALF OF ONE OF ITS SERIES, MFS NEW YORK
MUNICIPAL BOND FUND
By: JAMES R. BORDEWICK, JR.
----------------------------
Name: James R. Bordewick, Jr.
Title: Assistant Clerk and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities indicated on November 30, 2000.
SIGNATURE TITLE
--------- -----
JEFFREY L. SHAMES* Chairman, President (Principal Executive
---------------------- Officer) and Trustee
Jeffrey L. Shames
JAMES O. YOST* Treasurer (Principal Financial Officer
---------------------- and Principal Accounting Officer)
James O. Yost
MARSHALL N. COHAN* Trustee
----------------------
Marshall N. Cohan
LAWRENCE H. COHN, M.D.* Trustee
----------------------
Lawrence H. Cohn, M.D.
SIR J. DAVID GIBBONS* Trustee
----------------------
Sir J. David Gibbons
ABBY M. O'NEILL* Trustee
----------------------
Abby M. O'Neill
WALTER E. ROBB, III* Trustee
----------------------
Walter E. Robb, III
ARNOLD D. SCOTT* Trustee
----------------------
Arnold D. Scott
J. DALE SHERRATT* Trustee
----------------------
J. Dale Sherratt
WARD SMITH* Trustee
----------------------
Ward Smith
*By: JAMES R. BORDEWICK, JR.
----------------------------
Name: James R. Bordewick, Jr.
as Attorney-in-fact
Executed by James R. Bordewick, Jr. on behalf of
those indicated pursuant to a Power of Attorney
dated July 1, 2000 incorporated by reference to
the Registrant's Post-Effective Amendment No. 34
filed with the Securities and Exchange Commission
on July 28, 2000.
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as a part of this Registration
Statement pursuant to General Instruction G of Form N-14.
Exhibits Description Page
-------- ----------- ----
4 Agreement and Plan of Reorganization; filed herewith
as Exhibit A to the MFS New York Municipal Bond Fund
Prospectus set forth as Part A to the Registration
Statement on Form N-14.
11 Opinion of James R. Bordewick, Jr., to the MFS Municipal
Series Trust, as to the legality of securities being
issued, including consent.
12 Form of Opinion of Bingham Dana LLP as to Tax Matters,
including consent.
14a. Consent of Deloitte & Touche LLP, independent auditors
to MFS New York Municipal Bond Fund.
14b. Consent of Ernst & Young, independent auditors to
PaineWebber New York Tax-Free Income Fund.
