MFS Board Approves Tender Option Bond Restructuring of Certain Auction Preferred Shares

Business Wire, June 25, 2008

BOSTON -- MFS Investment Management (MFS) announced today that it intends to restructure up to 20 percent of the leverage, subject to market conditions, used by MFS California Insured Municipal Fund (AMEX: CCA); MFS Investment Grade Municipal Trust (NYSE: CXH); MFS Municipal Income Trust (NYSE: MFM); MFS High Income Municipal Trust (NYSE: CXE); and MFS High Yield Municipal Trust (NYSE: CMU) (collectively, the "Funds").

MFS understands the uncertainty that closed-end fund shareholders have faced this year. This proposed restructuring represents a step toward restoring liquidity for the funds' auction rate preferred shares in a manner consistent with the best interests of the funds' common and preferred shareholders.

Subject to satisfying certain notice and regulatory requirements and closing conditions, the new financing, which has been approved by the Funds' Board of Trustees, will be provided through the creation by the Funds of tender options bonds ("TOBs"). In creating a TOB, a Fund will transfer a highly rated bond from its portfolio to a special purpose trust that will issue two classes of securities: floating rate certificates, which will pay an interest rate that will be reset weekly, and residual interest bonds, which will pay an interest rate based on the difference between the interest rate earned on the underlying bonds and the interest rate paid on the floating rate certificates, after TOB program expenses. The Fund will hold the residual interest bonds and use the proceeds from the sale of the floating rate certificates to redeem a portion of its outstanding auction preferred shares ("APS"). MFS has experience in creating TOBs and has invested in TOB residuals on behalf of other funds that it manages since 1991.

The TOB structure is less permanent than APS since TOBs may be unwound upon the occurrence of certain events such as a failed remarketing of the TOB securities, a bankruptcy of the issuer of the underlying security or if the bonds are insured, the bankruptcy of the issuer and the bankruptcy of the insurer, as well as certain other credit events. There is no certainty that TOB financing will be available in the future. TOBs have been reasonably steady in recent markets but there is no certainty that they will be profitable in future interest rate environments. Due to the requirements of the TOB structure, a fund that utilizes TOBs may hold more concentrated positions in individual securities, leading to increased impact on fund performance if such securities experience a ratings downgrade.

In today's market conditions, including the fact that the dividend rate payable on the APS is determined by reference to the maximum applicable dividend rate, the total cost of financing through TOBs is expected to be lower than the total cost of financing through APS. Various limitations on the Funds' ability to hold bonds suitable for use in the creation of TOBs, along with certain other considerations, permit only a portion of the Funds' APS to be redeemed at this time. Although MFS continues to seek other sources of liquidity for the remaining APS, it is not certain when, or if, the Funds' remaining APS will be redeemed. Under different market conditions, the cost of financing through TOBs may become disadvantageous (and may become more expensive than financing through APS); in that circumstance, the Board of Trustees will evaluate alternatives that it considers to be in the best interests of the Funds' shareholders.

The record holder of the APS for each Fund is Cede & Co., as the nominee of the Depository Trust Company ("DTC"). DTC will allocate partial redemptions among participating broker-dealer accounts. Each broker-dealer is then responsible for allocating the partial redemptions among its investors. Allocation procedures among different broker-dealers may vary, and MFS has no control over the allocation process of DTC or the broker-dealers. The Financial Industry Regulatory Authority recently issued Regulatory Notice 08-21, reminding members of its organization, which include registered broker-dealers, that they are obligated to follow procedures that are designed to treat their customers fairly and impartially. However, certain APS holders may have a higher percentage of their APS redeemed than others and some APS holders may not have any shares redeemed.

MFS continues to participate in industry-wide efforts to restructure APS in a way to make them eligible for purchase by money market funds. MFS expects that it will provide more specific information on the partial refinancing of the Funds' APS through the use of TOBs, including details on scheduled redemptions, within the next 30 to 60 days.

MFS manages $184 billion in assets on behalf of more than 5 million individual and institutional investors worldwide as of March 31, 2008. The company traces its origins to 1924 and the creation of America's first mutual fund.

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