SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER
THAN THE REGISTRANT [ ]
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by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
MFS Government Markets Income Trust
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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MFS(R) GOVERNMENT MARKETS INCOME TRUST
500 Boylston Street, Boston, Massachusetts 02116
Notice of the 2007 Annual Meeting of Shareholders
To be held on November 1, 2007
The 2007 Annual Meeting of Shareholders of the above referenced trust (the
"Trust") will be held at 500 Boylston Street, Boston, Massachusetts 02116, at
9:30 a.m. on Thursday, November 1, 2007, for the following purposes:
ITEM 1. To elect Robert J. Manning, Lawrence T. Cohn, M.D., Lawrence T.
Perera, and Laurie J. Thomsen as Trustees of the Trust; and
ITEM 2. To amend the Trust's fundamental investment policy concerning
borrowing.
ITEM 3. To act upon, if properly presented at the Meeting, a shareholder
proposal that the Board of Trustees promptly take the steps necessary
to open-end the Trust or otherwise enable shareholders to realize net
asset value for their shares.
ITEM 4. To transact such other business as may properly come before the
Meeting and any adjournments thereof.
THE TRUSTEES OF YOUR TRUST RECOMMEND THAT YOU VOTE IN FAVOR OF
ITEMS 1 AND 2 AND AGAINST ITEM 3.
Only a Trust's shareholders of record on September 4, 2007 will be entitled to
vote at the Trust's Meeting of Shareholders.
By order of the Board of Trustees
SUSAN S. NEWTON
Assistant Secretary and Assistant Clerk
September 14, 2007
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND
RETURNING THE ENCLOSED PROXY SO THAT IT IS RECEIVED BY THE DATE OF THE SPECIAL
MEETING OR RECORDING YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE INTERNET
BY 9:29 A.M., EASTERN TIME, ON THE DATE OF THE SPECIAL MEETING, WHICH WILL HELP
AVOID THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION FOR YOUR TRUST. THE
ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS PROVIDED FOR YOUR
CONVENIENCE.
MFS(R) GOVERNMENT MARKETS INCOME TRUST
Proxy Statement
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the MFS Government Markets Income Trust (the
"Trust") to be used at the Meeting of Shareholders of the Trust (the "Meeting")
to be held at 9:30 a.m. on November 1, 2007 at 500 Boylston Street, Boston,
Massachusetts 02116, for the purposes set forth in the accompanying Notice.
Information regarding the members of the Board of Trustees can be found in the
section of this Proxy Statement entitled "Election of Trustees." If the
enclosed form of proxy is executed and returned, it may nevertheless be revoked
prior to its exercise by a signed writing filed with the proxy tabulation
agent, Computershare, Inc. "Computershare", 250 Royall Street, Canton,
Massachusetts 02021, or delivered at a Meeting. On September 4, 2007, the
following number of shares were outstanding for the Trust:
# OF COMMON # OF PREFERRED
TRUST SHARES OUTSTANDING SHARES OUTSTANDING
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MFS Government Markets Income Trust TBU TBU
Shareholders of record at the close of business on September 4, 2007 will be
entitled to one vote for each share held, and each fractional share will be
entitled to a proportionate fractional vote.
The mailing address of the Trust is 500 Boylston Street, Boston, Massachusetts
02116. Solicitation of proxies is being made by the mailing of this Notice and
Proxy Statement with its enclosures on or about September 14, 2007. In addition
to soliciting proxies by mail, the Trustees of your Trust and employees of
Massachusetts Financial Services Company ("MFS"), the Trust's investment
adviser and administrator, may solicit proxies in person or by telephone. The
expenses of the preparation of proxy statements and related materials,
including printing and delivery costs, are borne by the Trust. The Trust has
engaged Computershare and Georgeson, Inc. to provide base shareholder meeting
services including the distribution of this Proxy Statement and related
materials to shareholders, as well as vote solicitation and tracking. It is
anticipated that the cost of these services will be [TBU] and may increase
substantially in the event that any vote is contested and increased
solicitation efforts are required.
A copy of the Trust's most recent annual report and semi-annual report may be
obtained without charge by contacting Computershare, the Trust's transfer and
shareholder servicing agent, 250 Royall Street, Canton, Massachusetts 02021, or
by telephoning (800) 637-2304.
ITEM 1 -- ELECTION OF TRUSTEES
The Board of Trustees, which oversees the Trust, provides broad supervision
over the affairs of the Trust. Those Trustees who are not "interested persons"
(as defined in the Investment Company Act of 1940, as amended (the "1940 Act"))
of your Trust or of MFS are referred to as "Independent Trustees" throughout
this Proxy Statement. MFS is responsible for the investment management of the
Trust's assets and for providing a variety of other administrative services to
the Trust. The officers of the Trust are responsible for its operations.
The Board has fixed the number of Trustees of the Trust at twelve. Under the
provisions of the Trust's Declaration of Trust, the Trustees are divided into
three classes, each having a term of three years. The Nomination and
Compensation Committee has recommended that the Board nominate for election by
shareholders Robert J. Manning, Lawrence T. Cohn, M.D., Lawrence T. Perera, and
Laurie J. Thomsen as Trustees of the class whose term will expire at the 2010
Annual Meeting of Shareholders (or special meeting in lieu thereof) of the
Trust, and the Board of Trustees has nominated such individuals. Each nominee
is presently a Trustee of the Trust and has agreed to serve as a Trustee of the
Trust if elected. The Board of Trustees recommends that you vote in favor of
their election.
It is intended that proxies not limited to the contrary will be voted in favor
of electing Dr. Cohn, Messrs. Manning and Perera and Ms. Thomsen. If, before
the Meeting, any nominee refuses or is unable to serve, or if any of the
nominees is unavailable at the time of the Meeting, and such refusal or
inability to serve or unavailability is not anticipated, the Trustees may vote
for other nominees at their discretion, or the Trustees may fix the number of
Trustees at fewer than twelve for the Trust. Under the terms of each Trust's
retirement policy, the Trustees have a mandatory retirement age of 73 years.
The following table presents certain information regarding the current Trustees
of the Trust, including their principal occupations, which, unless specific
dates are shown, are of more than five years duration, although the titles may
not have been the same throughout.
PRINCIPAL OCCUPATIONS
POSITION(s) HELD TERM DURING THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH TRUST TRUSTEE SINCE(1) EXPIRING OTHER DIRECTORSHIPS(2)
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INTERESTED TRUSTEES
Robert J. Manning(3); Trustee February 2004 2010 Massachusetts Financial
(born 10/20/63) Services Company, Chief
Executive Officer, President,
Chief Investment Officer and
Director
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Robert C. Pozen(3) Trustee February 2004 2009 Massachusetts Financial
(born 08/08/46) Services Company, Chairman
(since February 2004); MIT
Sloan School (education),
Senior Lecturer (since 2006);
Secretary of Economic Affairs,
The Commonwealth of
Massachusetts (January 2002 to
December 2002); Fidelity
Investments, Vice Chairman
(June 2000 to December 2001);
Fidelity Management & Research
Company (investment adviser),
President (March 1997 to July
2001); Bell Canada Enterprises
(telecommunications),
Director; Medtronic, Inc.
(medical technology),
Director; Telesat (satellite
communications), Director
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INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair February 1992 2008 Private investor; Eastern
(born 05/01/36) of Trustees Enterprises (diversified
services company), Chairman,
Trustee and Chief Executive
Officer (until November 2000)
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Robert E. Butler(4) Trustee January 2006 2009 Consultant - regulatory and
(born 11/29/41) compliance matters (since July
2002); PricewaterhouseCoopers
LLP (professional services
firm), Partner (until 2002)
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Lawrence H. Cohn, M.D. Trustee August 1993 2010 Brigham and Women's Hospital,
(born 03/11/37) Chief of Cardiac Surgery
(until 2005); Harvard Medical
School, Professor of Cardiac
Surgery; Physician Director of
Medical Device Technology for
Partners Health Care
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David H. Gunning Trustee January 2004 2009 Retired; Cleveland-Cliffs Inc.
(born 05/30/42) (mining products and service
provider), Vice Chairman/
Director (until May 2007);
Portman Limited (mining)
Director (since 2005);
Encinitos Ventures (private
investment company), Principal
(1997 to April 2001); Lincoln
Electric Holdings, Inc.
(welding equipment
manufacturer), Director
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William R. Gutow Trustee December 1993 2008 Private investor and real
(born 09/27/41) estate consultant; Capitol
Entertainment Management
Company (video franchise),
Vice Chairman Atlantic Coast
Tan (tanning salons), Vice
Chairman (since 2002)
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Michael Hegarty Trustee December 2004 2008 Retired; AXA Financial
(born 12/21/44) (financial services and
insurance), Vice Chairman and
Chief Operating Officer (until
May 2001); The Equitable Life
Assurance Society (insurance),
President and Chief Operating
Officer (until May 2001)
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Lawrence T. Perera Trustee July 1981 2010 Hemenway & Barnes (attorneys),
(born 06/23/35) Partner
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J. Dale Sherratt Trustee August 1993 2009 Insight Resources, Inc.
(born 09/23/38) (acquisition planning
specialists), President;
Wellfleet Investments
(investor in health care
companies), Managing General
Partner (since 1993);
Cambridge Nutraceuticals
(professional nutritional
products), Chief Executive
Officer (until May 2001)
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Laurie J. Thomsen Trustee March 2005 2010 New Profit, Inc. (venture
(born 08/05/57) philanthropy), Partner (since
2006); Private investor; Prism
Venture Partners (venture
capital), Co-founder and
General Partner (until June
2004); The Travelers Companies
(commercial property liability
insurance), Director
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Robert W. Uek Trustee January 2006 2008 Retired (since 1999);
(born 05/18/41) PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 1999);
Consultant to investment
company industry (since 2000);
TT International Funds (mutual
fund complex), Trustee (2000
until 2005); Hillview
Investment Trust II Funds
(mutual fund complex), Trustee
(2000 until 2005)
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(1) Date first appointed to serve as Trustee of an MFS fund. Each Trustee has served continuously since appointment
unless indicated otherwise.
(2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e.,
"public companies").
(3) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the
1940 Act), which is the principal federal law governing investment companies like the fund, as a result of
position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
(4) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant retained by
MFS pursuant to its settlement with the SEC concerning market timing and related matters. The terms of that
settlement required that compensation and expenses related to the independent compliance consultant be borne
exclusively by MFS and, therefore, MFS paid Mr. Butler for the services he rendered to the independent
compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total of $351,119.29.
Each current Trustee listed above served as a board member of 97 funds within
the MFS Family of Funds (the "MFS Funds") as of December 31, 2006. The address
of each Trustee is c/o MFS, 500 Boylston Street, Boston, Massachusetts 02116.
Information about the Trust, including information about its investment adviser
and administrator, independent registered public accounting firm, executive
officers, and the interests of certain persons appears under "Trust
Information" beginning on page 19.
REQUIRED VOTE. Approval of this matter as to any nominee will require the
affirmative vote of a plurality of the Trust's outstanding shares voting at the
Meeting in person or by proxy.
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE
TRUST VOTE TO ELECT EACH OF THE NOMINEES AS TRUSTEES OF THE TRUST.
COMMITTEES
The Trust's Board of Trustees meets regularly throughout the year to discuss matters and take certain
actions relating to the Trust. The Trust's Board has several standing committees, which are
described below.
NUMBER OF
MEETINGS
IN LAST CURRENT
NAME OF COMMITTEE FISCAL YEAR FUNCTIONS MEMBER(1)
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AUDIT COMMITTEE 9 Oversees the accounting and Butler*(2), Gutow*,
auditing procedures of the Trust Sherratt*, Thomsen*(2)
and, among other things, considers and Uek*(2)
the selection of the independent
accountants for the Trust and the
scope of the audit, and considers
the effect on the independence of
those accountants of any non-audit
services such accountants provide
to the Trust and any audit or non-
audit services such accountants
provide to other MFS Trusts, MFS
and/or certain affiliates. The
Committee is also responsible for
establishing procedures for the
receipt, retention and treatment of
complaints received by the Trust
regarding accounting, internal
accounting controls, or auditing
matters and the confidential,
anonymous submission of concerns
regarding questionable Trust
accounting matters by officers of
the Trust and employees of the
Trust's investment adviser,
administrator, principal
underwriter or any other provider
of accounting-related services to
the Trust.
COMPLIANCE AND GOVERNANCE 8 Oversees the development and Butler*, Cohn*,
COMMITTEE implementation of the Trust's Gunning*, Gutow* and
regulatory and fiduciary compliance Sherratt*
policies, procedures and practices
under the 1940 Act and other applicable
laws as well as oversight of compliance
policies of the Trust's investment
adviser and certain other service
providers as they relate to Trust
activities. The Trust's Independent
Chief Compliance Officer, reports
directly to the Committee and assists
the Committee in carrying out its
responsibilities. In addition, the
Committee advises and makes
recommendations to the Board on matters
concerning Trustee practices and
recommendations concerning the
functions and duties of the committees
of the Board.
CONTRACTS REVIEW 5 Requests, reviews and considers the All non-interested
COMMITTEE information deemed reasonably necessary Trustees of the Board
to evaluate the terms of the investment (Butler, Cohn, Gunning,
advisory and principal underwriting Gutow, Hegarty, Ives,
agreements and the Plan of Distribution Perera, Sherratt,
under Rule 12b-1 that the Trust Thomsen and Uek)
proposes to renew or continue, and to
make its recommendations to the full
Board of Trustees on these matters.
NOMINATION AND 1 Recommends qualified candidates to All non-interested
COMPENSATION COMMITTEE the Board in the event that a Trustees of the Board
position is vacated or created. The (Butler, Cohn, Gunning,
Committee will consider recommendations Gutow, Hegarty, Ives,
by shareholders when a vacancy exists. Perera, Sherratt,
Shareholders wishing to recommend Thomsen and Uek)
candidates for Trustee for
consideration by the Committee may do
so by writing to the Trust's Secretary
at the principal executive office of
the Trust. Such recommendations must be
accompanied by biographical and
occupational data on the candidate
(including whether the candidate would
be an "interested person" of the
Trust), a written consent of the
candidate to be named as a nominee and
to serve as Trustee if elected, record
and ownership information for the
recommending shareholder with respect
to the Trust, and a description of any
arrangements or understandings
regarding recommendation of the
candidate for consideration. The
Committee is also responsible for
making recommendations to the Board
regarding any necessary standards or
qualifications for service on the
Board. The Committee also reviews and
makes recommendations to the Board
regarding compensation for the
non-interested Trustees.
PORTFOLIO TRADING AND 8 Oversees the policies, procedures, Cohn*, Gunning*,
MARKETING REVIEW and practices of the Trust with Hegarty* and Perera*
COMMITTEE respect to brokerage transactions
involving portfolio securities as those
policies, procedures, and practices are
carried out by MFS and its affiliates.
The Committee also oversees the
administration of the Trust's proxy
voting policies and procedures by MFS.
In addition, the Committee receives
reports from MFS regarding the
policies, procedures, and practices of
MFS and its affiliates in connection
with their marketing and distribution
of shares of the Trust.
PRICING COMMITTEE 8 Oversees the determination of the Hegarty*, Perera*,
value of the portfolio securities Thomsen* and Uek*
and other assets held by the Trust
and determines or causes to be
determined the fair value of
securities and assets for which
market quotations are not "readily
available" in accordance with the
1940 Act. The Committee delegates
primary responsibility for carrying
out these functions to MFS and MFS'
internal valuation committee
pursuant to pricing policies and
procedures approved by the
Committee and adopted by the full
Board, which include methodologies
to be followed by MFS to determine
the fair values of portfolio
securities and other assets held by
the Trust for which market
quotations are not readily
available. The Committee meets
periodically with the members of
MFS' internal valuation committee
to review and assess the quality of
fair valuation and other pricing
determinations made pursuant to the
Trust's pricing policies and
procedures, and to review and
assess the policies and procedures
themselves. The Committee also
exercises the responsibilities of
the Board under the Amortized Cost
Valuation Procedures approved by
the Board on behalf of each Trust
which holds itself out as a "money
market fund" in accordance with
Rule 2a-7 under the 1940 Act.
SERVICES CONTRACTS 8 Reviews and evaluates the Gunning*, Sherratt*,
COMMITTEE contractual arrangements of the Thomsen* and Uek*
Trust relating to transfer agency,
administrative services, custody,
pricing and bookkeeping services and
lending of portfolio securities, and
makes recommendations to the full Board
of Trustees on these matters.
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(1) Information about each committee member is set forth above on pages 3, 4 and 5. Although Mr. Ives
is not a member of all Committees of the Board, he is invited to and attends many of the
Committees' meetings in his capacity as Chair of the Trustees.
(2) Audit Committee Financial Expert.
* Independent Trustees.
The Trustees generally hold at least nine regular meetings each calendar year.
These regular meetings take place over a two-day period. The performance and
operations of the Trust is reviewed by the Trustees at each meeting and more
in-depth reviews are conducted by the Trustees throughout the year. MFS
Government Markets Income Trust held 10 Board meetings during the fiscal year
ended November 30, 2006. Each Trustee attended at least 75% of the Board and
applicable committee meetings noted for the Trust.
AUDIT COMMITTEE
The Trust's Audit Committee consists only of Independent Trustees and Trustees
who are independent of the Trust as defined by New York Stock Exchange Listing
Standards. The Trust's Audit Committee's report on the Trust's most recent
audited financials is included below under Independent Registered Public
Accounting Firm. The Trust's Board has adopted a written charter for the Audit
Committee. A copy of the Committee's charter is available on mfs.com.
NOMINATION AND COMPENSATION COMMITTEE
The Trustees have adopted a written charter for the Nomination and Compensation
Committee. A copy of the Committee's charter is available on mfs.com.
The Trust's Nomination and Compensation Committee consists only of Independent
Trustees and Trustees who are independent of the Trust as defined by New York
Stock Exchange Listing Standards.
The Nomination and Compensation Committee requires that Trustee candidates have
a college degree or equivalent business experience, but has not otherwise
established specific, minimum qualifications that must be met by an individual
to be considered by the Committee for nomination as a Trustee. The Nomination
and Compensation Committee may take into account a wide variety of factors in
considering Trustee candidates, including, but not limited to: (i) availability
and commitment of a candidate to attend meetings and perform his or her
responsibilities to the Board; (ii) relevant industry and related experience;
(iii) educational background; (iv) financial expertise; (v) an assessment of
the candidate's ability, judgment and expertise; (vi) overall diversity of the
composition of the Board; and (vii) such other factors as the Committee deems
appropriate. The Nomination and Compensation Committee may consider candidates
for Trustee recommended by the Trust's current Trustees, officers or
shareholders or by MFS or any other source deemed appropriate by the Nomination
and Compensation Committee. The Nomination and Compensation Committee may, but
is not required to, retain a third-party search firm at the Trust's expense to
identify potential candidates.
The Nomination and Compensation Committee will review and consider nominees
recommended by shareholders to serve as Trustee, provided that the recommending
shareholder follows the Procedures for Shareholders to Submit Nominee
Candidates, which are set forth as Appendix B to the Trust's Nomination and
Compensation Committee Charter. Among other requirements, these procedures
provide that the recommending shareholder must submit any recommendation in
writing to the Trust, to the attention of the Trust's Secretary, at the address
of the principal executive offices of the Trust. Any recommendation must
include certain biographical information and other information regarding the
candidate and the recommending shareholder, and must include a written and
signed consent of the candidate to be named as a nominee and to serve as a
Trustee if elected. The foregoing description is only a summary.
The Nomination and Compensation Committee has full discretion to reject
nominees recommended by shareholders, and there is no assurance that any such
person properly recommended and considered by the Committee will be nominated
for election to the Board of a Trust.
SHARE OWNERSHIP
As of September 4, 2007, the Trustees and officers of the Trust as a whole
owned less than 1% of the outstanding shares of the Trust.
The following table shows the dollar range of equity securities beneficially
owned by each nominee or Trustee (a) of the Trust and (b) on an aggregate
basis, in all MFS funds overseen by the nominee or Trustee, as of September 4,
2007.
The following dollar ranges apply:
N. None
A. $1 - $10,000
B. $10,001 - $50,000
C. $50,001 - $100,000
D. Over $100,000
AGGREGATE DOLLAR
RANGE OF
AGGREGATE SECURITIES IN
DOLLAR RANGE ALL MFS FUNDS
OF EQUITY OVERSEEN OR
SECURITIES IN TO BE OVERSEEN BY
NAME OF TRUSTEE TRUST NAME THE TRUST THE NOMINEE
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INTERESTED TRUSTEES
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Robert J. Manning MFS Government Markets Income Trust TBU
Robert C. Pozen MFS Government Markets Income Trust TBU
INDEPENDENT TRUSTEES
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Robert E. Butler MFS Government Markets Income Trust TBU
Lawrence H. Cohn, M.D. MFS Government Markets Income Trust TBU
David H. Gunning MFS Government Markets Income Trust TBU
William R. Gutow MFS Government Markets Income Trust TBU
Michael Hegarty MFS Government Markets Income Trust TBU
J. Atwood Ives MFS Government Markets Income Trust TBU
Lawrence T. Perera MFS Government Markets Income Trust TBU
J. Dale Sherratt MFS Government Markets Income Trust TBU
Laurie J. Thomsen MFS Government Markets Income Trust TBU
Robert W. Uek MFS Government Markets Income Trust TBU
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF TRUSTEES
The Board of Trustees of the Trust has adopted procedures by which shareholders
may send communications to the Board. Shareholders may mail written
communications to the Board of Trustees, MFS Government Markets Income Trust,
c/o Massachusetts Financial Services Company, 500 Boylston Street, Boston,
Massachusetts 02116, Attention: Frank Tarantino, Independent Chief Compliance
Officer. Shareholder communications must (i) be in writing and be signed by the
shareholder, (ii) identify the MFS Trust to which they relate and (iii)
identify the class and number of shares held by the shareholder. The Fund's
Independent Chief Compliance Officer ("ICCO") is responsible for reviewing all
properly submitted shareholder communications. The ICCO shall either (i)
provide a copy of each properly submitted shareholder communication to the
Board at its next regularly scheduled meeting or (ii) if the ICCO determines
that the communication requires more immediate attention, forward the
communication to the Chair of the Trustees promptly after receipt. The ICCO
may, in good faith, determine that a shareholder communication should not be
provided to the Board because it is ministerial in nature (such as a request
for Trust literature, share data or financial information). The ICCO may in
such cases forward the communication to the appropriate party or parties at
MFS. These procedures do not apply to (i) any communication from an officer or
Trustee of the Trust, (ii) any communication from an employee or agent of the
Trust, unless such communication is made solely in such employee's or agent's
capacity as a shareholder or (iii) any shareholder proposal submitted pursuant
to Rule l4a-8 under the Securities Exchange Act of 1934, as amended, or any
communication made in connection with such a proposal. The Trustees are not
required to attend the Trust's shareholder meetings or to otherwise make
themselves available to shareholders for communications, other than pursuant to
the aforementioned procedures. No Board members attended the 2006 Annual
Meeting of Shareholders.
The Trust's Declaration of Trust currently provides that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred
in connection with litigation in which they may be involved because of their
offices with the Trust, unless it is finally adjudicated or, in case of a
settlement, it has been determined by Trustees not involved in the matter or
independent legal counsel, that they have not acted in good faith in the
reasonable belief that their actions were in the best interests of the Trust or
that they engaged in willful misfeasance or acted with bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of their
offices.
TRUSTEE COMPENSATION TABLE
The table below shows the cash compensation paid to the Trustees by the Trust
for the fiscal year ended November 30, 2006. Interested Trustees receive no
compensation from the Trust for their services as Trustees. The table includes
information for Ms. Amy B. Lane, who retired as Trustee of the Trust on
February 22, 2006.
TOTAL CASH
RETIREMENT BENEFITS COMPENSATION
TRUSTEE FEES ACCRUED AS PART OF FROM TRUST AND
NAME OF TRUSTEE(1) FROM TRUST TRUST EXPENSE FUND COMPLEX(2)
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Robert E. Butler(4) $5,358 N/A $210,289
Lawrence H. Cohn, M.D. $6,016 $1,537 $208,289
David H. Gunning $5,820 N/A $219,642
William R. Gutow $6,016 N/A $208,289
Michael Hegarty $6,020 N/A $209,289
J. Atwood Ives $6,335 $0 $285,289
Amy B. Lane(3) $2,020 N/A $ 50,423
Lawrence T. Perera $6,079 $0 $228,289
J. Dale Sherratt $6,158 $1,390 $250,289
Laurie J. Thomsen $6,020 N/A $209,289
Robert W. Uek(4) $5,408 N/A $227,789
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(1) Each Trustee who is an "interested person" of MFS within the meaning of the 1940 Act (Pozen and
Manning) serves without any compensation from the Trust.
(2) For calendar year 2006. Trustees receiving compensation from the Trust served as Trustee of 97
funds within the MFS Fund Complex (having aggregate net assets at December 31, 2006 of
approximately $102 billion).
(3) Ms. Lane retired as a Trustee of the Trust on February 22, 2006.
(4) Messrs. Butler and Uek became Trustees of the Trust on January 1, 2006.
RETIREMENT BENEFIT DEFERRAL PLAN -- Under a Retirement Benefit Deferral Plan,
certain Trustees have deferred benefits from a prior retirement plan. The value
of the benefits is periodically readjusted as though the Trustee had invested
an equivalent amount in Class A shares of other fund(s) designated by such
Trustee. The value of the deferred benefits will be paid to the Trustees upon
retirement or thereafter. The plan does not obligate a Fund to retain the
services of any Trustee or pay any particular level of compensation to any
Trustee. The plan is not funded and a Fund's obligation to pay the Trustee's
deferred compensation is a general unsecured obligation.
ITEM 2 -- PROPOSAL TO AMEND THE TRUST'S FUNDAMENTAL INVESTMENT POLICY
CONCERNING BORROWING
The Board has approved and recommends that shareholders of the Fund approve an
amendment to the Fund's borrowing policy.
Under the 1940 Act, a closed-end Trust is generally permitted to borrow up to
33 1/3% of its assets.
More specifically, under the 1940 Act, a closed-end fund such as the Trust is
permitted to have outstanding senior securities representing indebtedness
("borrowings") if immediately after the financing giving rise to the borrowing,
the value of the Trust's total assets less liabilities (other than such
borrowings) is at least 300% of the principal amount of such borrowing (i.e.,
the principal amount may not exceed 33 1/3% of the trust's total assets). In
addition, a closed-end trust is permitted to declare any cash dividend or other
distribution on its common shares if, at the time of such declaration, the
value of the trust's total assets, less liabilities other than borrowings, is
at least 300% of such principal amount. The Trust's current borrowing policy is
more restrictive than is permitted under the 1940 Act, and allows the Trust to
borrow only as a temporary measure for extraordinary or emergency purposes or
for a repurchase of its shares and in no event in excess of 33 1/3% of its
assets.
MFS believes that it is appropriate for the Trust to be able to incur
indebtedness for investment purposes. A change to the Trust's investment policy
concerning borrowing requires the approval of shareholders. As proposed, the
new policy would allow the Trust to strategically incur indebtedness of up to
33 1/3% of its assets at short-term rates and invest the proceeds in
obligations that pay longer-term rates. Such borrowing would occur when
short-term rates are lower than long-term rates to provide the Trust with the
potential to earn the difference between the long-term rates earned on
investments and the short-term rates paid on the borrowing. MFS expects that
this can increase the investment performance of the Trust. However, leveraging
is a speculative technique and there are special risks involved. The borrowing
will generally increase the volatility of the Trust's net asset value and
possibly the market price of its shares. For example, if the Trust borrows
money to purchase securities and the Trust's investments decrease in value, the
Trust's losses will be greater than if the Trust did not borrow money for
investment purposes. In addition, if the return on an investment purchased with
borrowed funds is not sufficient to cover the cost of borrowing, then the net
income of the Trust will be less than if borrowing were not used. However MFS
believes that the potential benefit for enhanced performance and its possible
positive affect on the market price of the Trust's shares outweighs these
risks.
Under the Trust's management agreement, MFS is entitled to an annual management
fee of 0.32% of average net assets and 5.33% of gross income. MFS has agreed to
a voluntary limit on the total annual management fee to 0.85%. This limit can
be changed only with approval of the Trustees. If the proposal is approved by
shareholders, the Trust expects to use bank debt to effect the borrowing, and
MFS would not be paid the 0.32% asset-based portion of the management fee with
respect to the assets acquired through the borrowing. MFS will, however, be
entitled to be paid 5.33% of the gross income earned from the assets obtained
through leverage. Accordingly, MFS has some financial incentive for the Trust
to utilize borrowings as described because it may receive additional management
fees with respect to the portion of the fee based on gross income, up to the
total 0.85% management fee limit noted above.
The Trust's current fundamental investment policy with respect to borrowing
states:
The Trust may not "borrow money, except as a temporary measure for
extraordinary or emergency purposes or for a repurchase of its shares and
in no event in excess of 33 1/3% of its assets."
The proposed fundamental investment policy with respect to borrowing that you
are asked to approve states:
The Trust may not "borrow money [or issue any senior security] except to
the extent permitted by the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder (the "1940 Act") or exemptive orders
granted under such Act, or otherwise permitted from time to time by
regulatory authority having jurisdiction."
The Trust's investment objective and other fundamental investment policies will
not be affected by the proposed changes.
REQUIRED VOTE: Approval of this matter will require the vote of (i) 67% or more
of the outstanding voting securities of the Trust present at the Meeting, if
the holders of more than 50% of the outstanding voting securities of the Trust
are present or represented by proxy or (ii) more than 50% of the outstanding
voting securities of the Trust, whichever is less.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE TRUST VOTE TO
APPROVE THIS PROPOSAL.
ITEM 3 -- SHAREHOLDER PROPOSAL
The Board of Trustees has been informed by Bulldog Investors ("Bulldog"), a
shareholder of record owning [ ] shares of the Trust as of September 4, 2007,
that it intends to submit the following proposal at the meeting.
RESOLVED: The shareholders of MFS Government Markets Income Trust (the "Trust")
request that the Board of Trustees promptly take the steps necessary to open
end the Trust or otherwise enable shareholders to realize net asset value
("NAV") for their shares.
Bulldog's proposal will be submitted at the Meeting as Proposal 3. Bulldog has
requested that the following statement be included in the proxy statement in
support of its Proposal 3.
SUPPORTING STATEMENT
Shares of the Trust have traded at a discount to NAV continuously for almost 15
years. For example, on March 5, 2007 a shareholder that wished to sell his or
her shares would have only received $6.60 per share and not the NAV of $7.25.
After fifteen years of discounts, we believe shareholders deserve an
opportunity to realize NAV. Open-ending the Trust would allow all shareholders
to obtain a higher price for their shares whenever they decide to sell. We
think the time is right to permanently eliminate the Trust's discount to NAV.
If you agree, please vote in favor of this proposal.
* * *
AS DETAILED IN THE FOLLOWING STATEMENT OF OPPOSITION TO PROPOSAL 3, THE BOARD,
INCLUDING THE INDEPENDENT TRUSTEES, HAS CONCLUDED THAT PROPOSAL 3 IS NOT IN THE
BEST INTERESTS OF THE SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"AGAINST" PROPOSAL 3.
BOARD OF TRUSTEES' STATEMENT IN OPPOSITION TO THE PROPOSAL OF BULLDOG INVESTORS
Bulldog Investors' proposal seeks a fundamental change in the structure of the
Trust, asking you to approve a resolution to convert the Trust from a closed-
end structure to an open-end structure. The supporting statement portrays such
a conversion as a straightforward, uncontroversial action designed to allow all
shareholders to receive the full net asset value whenever they decide to redeem
their shares. It does not discuss, however, the potential negative consequences
of abandoning the closed-end structure or explain that changing a core
characteristic of the Trust is contrary to the interests of shareholders who
chose a closed-end fund and wish to remain in the Trust. Your Board has given
consideration to the proposal and firmly believes that it is not in the best
interests of the Trust's shareholders. After careful consideration of several
options to address the Trust's market price discount to NAV, your Board has
recently taken actions that it believes are superior alternatives to Bulldog's
proposal. Specifically, the Board has recently approved the adoption of a
level-distribution plan pursuant to which the Trust will make monthly
distributions at a minimum annual rate of 7.25% (based on average monthly net
asset value), has recommended approval of a proposal to use leverage as a means
to potentially increase the Trust's yield, and has authorized a change in the
Trust's investment strategy to allow investment in higher yielding securities.
Given the potential consequences of conversion to an open-end structure, and
the recent actions taken to address the Trust's discount, your Board recommends
that you oppose Bulldog's proposal.
Your Board Has Already Taken Actions To Address the Trust's Discount.
Since the time Bulldog submitted its proposal, the Board has taken actions to
address the Trust's market discount to NAV. In July 2007, the Board authorized
the adoption of a level distribution plan pursuant to which MGF will, beginning
on September 1, 2007, make monthly distributions at a minimum annual rate of
7.25%. Fund management has advised the Board that this plan, upon
implementation, may have the effect of narrowing or eliminating the Trust's
discount. Similar plans have been used by other trusts to address discounts. As
set forth elsewhere in this proxy statement, the Board has also recommended
approval of a proposal to allow the use of leverage in the management of Trust
assets (see Proposal 2) and, in April 2007, approved a change in the Trust's
investment strategy to permit the Trust to invest in higher yielding
securities. The Board believes that both of these additional measures may
increase the Trust's yield and result in a narrowing of the discount. In light
of these recent actions, which the Board believes are responsive to the Bulldog
proposal, the Board does not believe that it makes sense to take the further
dramatic step of open-ending the Trust, given the many potential negative
consequences of doing so.
Key Differences Between Open-End and Closed-End Trusts.
Conversion of the Trust from a closed-end structure to an open-end structure is
not a minor change. It is a change to a core characteristic of the Trust as an
investment. A closed-end trust is different from an open-end trust in
meaningful ways, and investors often choose a closed-end trust for the very
characteristics that distinguish it from an open-end trust.
Unlike an open-end trust, a closed-end trust has a fixed number of shares that
trade on an exchange, such as the New York Stock Exchange. By contrast, an
open-end trust does not trade on an exchange and has a constantly changing
number of shares, because it typically sells new shares continuously and is
required to "redeem" shares when investors choose to leave the trust. When an
investor redeems a share of an open-end trust, the trust typically pays that
investor cash. Thus, while the managers of a closed-end trust can count on a
fairly constant asset base, managers of an open-end trust must grapple with the
constant inflow and outflow of investors in the trust, typically leaving a
certain portion of trust assets uninvested (i.e., in cash or cash-equivalents)
to accommodate redemptions.
Managers of a closed-end trust, on the other hand, are free to keep trust
assets more fully invested, because they need not worry about redemptions. In
the case of a fixed-income closed-end trust, such as the Trust, that means that
the managers are free to invest more trust assets in fixed-income securities
that will generate income for shareholders. In addition, closed-end trusts are
not encumbered by certain SEC rules that limit the ability of open- end trusts
to invest in potentially attractive illiquid securities, again because open-end
trusts must stand ready to pay for redemptions. Trust management has advised
the Board that conversion of the Trust to an open-end structure would deprive
the Trust's managers of the ability to fully invest in income-generating
securities, to the detriment of Trust shareholders.
Conversion to an Open-End Structure Would Effectively Increase Fund Expenses.
Bulldog's supporting statement does not discuss the effect that open-ending the
Trust would have on the Trust's expenses. Experience has shown that, where
proposals such as Bulldog's proposal are acted upon, some investors - often
professional fund arbitrageurs and certain hedge funds - redeem their shares
immediately, reducing fund assets (sometimes substantially). Although those
redeeming shareholders would likely turn a quick profit, their short-term
strategy would be at the expense of long-term shareholders who wish to remain
in the Trust. Significant redemptions by some large shareholders with a short-
term future investment horizon would reduce the number of shares over which
fixed costs of the Trust are spread and thereby would increase the portion of
expenses the remaining, long-term shareholders must bear.
Your Trust's management estimates that, if investors holding 25% of the Trust
redeem their shares upon open-ending, your annual expense ratio would rise by
about 3 basis points. If 50% of the shares are redeemed, management estimates
your annual expense ratio would rise about 10 basis points. In some cases,
redemptions by some large, short-term shareholders after open-ending reduce
trust assets so greatly that the economies of the pooled investment are lost,
leaving the remaining shareholders little choice but to liquidate the trust
entirely or bear an increased share of fixed costs.
Conversion to an open-end trust would also involve a number of additional
expenses for your Trust, including the one-time legal, accounting and mailing
costs to obtain shareholder approval and, on an ongoing basis, shareholder
servicing costs, transfer agency fees to accommodate daily sales and
redemptions, the cost to register shares and maintain a current prospectus for
an ongoing distribution, as well as initial and ongoing state filing fees. As
an open-end trust, your Trust would also have to consider a means to pay
brokers for the ongoing distribution of new shares, possibly through a Rule
12b-1 fee. Rule 12b-1 fees are typical features of open-end trusts. As an
open-end trust, the Trust may also impose a sales "load" that would apply to
new purchases of certain share classes of the Trust.
Conversion to an Open-End Structure May Negatively Impact Returns and Portfolio
Management.
Conversion to an open-end trust could potentially dilute your investment
returns. Imagine, for example, that the Trust as an open-end fund held a
portfolio of securities with an overall yield (after expenses) of 5%, and
market yields fall below 5%. Investor money might flow into the Trust, because
investors want to take advantage of the higher yield available in the Trust. To
put this new money to work, the Trust would be forced to buy instruments
reflecting the lower yield then prevalent in the market, diluting the return
for all investors. This phenomenon, common in open-end bond trusts, does not
generally impact closed-end trusts, because closed-end trusts do not
continuously offer their shares and therefore do not take in significant flows
of new money.
The Trust's investment program could also be constrained by conversion to an
open-end structure. With potential large redemptions on the horizon, the
portfolio manager would need to raise cash to fund redemptions, which may
require significant restructuring of the portfolio and the sale of investments
that might not otherwise be sold at that time, possibly at unfavorable prices,
and with significant transaction costs. This, combined with the likely need to
maintain a portion of the portfolio in cash to handle redemptions as they
arise, could negatively impact the return for long-term Trust shareholders.
Depending on the portfolio makeup at the time, large redemptions could also
force the Trust to realize any unrealized capital gains with resulting
unfavorable tax consequences to some shareholders.
Open-ending could adversely affect the Trust in other ways as well. As
discussed above, experience suggests that there are more redemptions in open-
end trusts near market bottoms, which often are good times to invest and not
good times to sell portfolio securities at depressed prices. Conversely, new
money tends to be invested in open-end trusts near market peaks, which are
generally not good times for trusts to invest. These factors have a tendency to
increase investment volatility. Closed-end trusts, like the Trust, on the other
hand, are able to maintain their investment strategy during these peaks and
troughs without their portfolio managers being forced to invest new money or
liquidate portfolio holdings at times when sound investment practice could
dictate otherwise and without generating unnecessary portfolio turnover and
transaction costs.
Conversion Could Result in Lost Opportunities to Benefit from Leverage.
Because of restrictions that the Investment Company Act places on leveraging by
open-end trusts, conversion to an open-end structure would significantly
jeopardize management's efforts to seek increased investment return through
leverage (see Proposal 2), as detailed elsewhere in this proxy statement. The
leverage proposal, which your Board has recommended that you approve,
represents an effort to increase investment return, reduce the discount and
maintain the closed-end trust structure in which you invested.
In sum, your Board recommends you vote against the Bulldog proposal because it
seeks a fundamental change in the Trust that would deprive shareholders of the
benefit of the closed-end structure, potentially increase the Trust's total
expense ratio, result in new fees associated with open-end trusts, constrain
the Trust managers' investment discretion, potentially dilute or decrease your
investment returns, interfere with portfolio management and deprive the Trust
of the full benefit of the proposal to use leverage to potentially increase
yield. Moreover, since Bulldog submitted its proposal, your Board has taken
substantial actions in an effort to narrow or eliminate the Trust's discount.
REQUIRED VOTE: Approval of this matter will require the vote of a majority of
the outstanding voting securities of the Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE TRUST VOTE
AGAINST THIS PROPOSAL.
TRUST INFORMATION
This section provides certain information about the Trust, including
information about its investment adviser and administrator, independent
registered public accounting firm, executive officers and the identity of
persons holding more than 5% of the outstanding shares of any class of the
Trust.
INVESTMENT ADVISER AND ADMINISTRATOR
The Trust engages as its investment adviser and administrator MFS, a Delaware
corporation with offices at 500 Boylston Street, Boston, Massachusetts 02116.
MFS is a majority owned subsidiary of Sun Life of Canada (U.S.) Financial
Services Holdings, Inc., which in turn is a majority-owned subsidiary of Sun
Life Financial (U.S.) Holdings, Inc., 500 Boylston Street, Boston,
Massachusetts 02116, which in turn is a wholly-owned subsidiary of Sun Life
Assurance Company of Canada--U.S. Operations Holdings, Inc., One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481 ("Sun Life U.S.
Operations"). Sun Life U.S. Operations is a wholly-owned subsidiary of Sun Life
Financial Corp., 150 King Street West, Toronto, Canada MSH 1J9, which in turn
is a wholly-owned subsidiary of Sun Life Financial Inc.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Independent Registered Public Accounting Firm and fiscal year end for the
Trust is listed below:
INDEPENDENT REGISTERED PUBLIC FISCAL YEAR
TRUST ACCOUNTING FIRM END
------------------------------------------------------------------------------
MFS Government Markets Income Deloitte & Touche LLP
Trust ("Deloitte") November 30
The Independent Registered Public Accounting Firm has no direct or material
indirect interest in the Trust.
Representatives of the Independent Registered Public Accounting Firm are
expected to be present at the Meeting and will have an opportunity to make a
statement if they desire to do so. Such representatives also are expected to be
available to respond to appropriate questions.
The Audit Committee of the Board of Trustees of the Trust issued the following
report concerning the financial statements for the Trust's most recent fiscal
year.
The Audit Committee reviewed and discussed the audited financial statements
with Trust management. The Audit Committee also discussed with the Auditor
the matters required to be discussed by SAS 61 (Codification of Statements
on Auditing Standards). The Audit Committee received the written
disclosures and the letter from the Auditor required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and discussed with the Auditor its independence.
Based on this review and the review of other information and these and
other discussions, the Audit Committee recommended to the Board of Trustees
that the audited financial statements be included in the Trust's annual
report to shareholders for the Trust's 2006 fiscal year for filing with the
Securities and Exchange Commission.
Respectfully submitted for MFS Government Markets Income Trust by the Audit
Committee as of December 14, 2006.
Robert E. Butler
J. Atwood Ives
J. Dale Sherratt
Laurie J. Thomsen
Robert W. Uek
To the extent required by applicable regulations, pre-approval by the Audit
Committee of the Board is needed for all audit and permissible non-audit
services rendered by the Independent Registered Public Accounting Firm to the
Trust and all permissible non-audit services rendered by the Independent
Registered Public Accounting Firm to MFS and any entity controlling, controlled
by or under common control with MFS that provides ongoing services to the Trust
(including MFS Service Center, Inc.) (each, a "Service Affiliate") if the
services relate directly to the operations and financial reporting of the
Trust. Pre-approval is currently on an engagement-by- engagement basis. In the
event pre-approval of such services is necessary between regular meetings of
the Audit Committee and it is not practical to wait to seek pre-approval at the
next regular meeting of the Audit Committee, pre-approval of such services may
be referred to the Chair of the Audit Committee; provided that the Chair may
not pre-approve any individual engagement for such services exceeding $50,000
or multiple engagements for such services in the aggregate exceeding $100,000
between such regular meetings of the Audit Committee. Any engagement
pre-approved by the Chair between regular meetings of the Audit Committee shall
be presented for ratification by the entire Audit Committee at its next
regularly scheduled meeting.
Schedule A attached hereto includes tables that set forth for the Trust's two
most recent fiscal years, the fees billed by the Trust's Independent Registered
Public Accounting Firm for (a) all audit and non-audit services provided
directly to the Trust and (b) those non-audit services provided to the Trust's
Service Affiliates that relate directly to the Trust's operations and financial
reporting under the following captions:
(i) Audit Fees - fees related to the audit and review of the financial
statements included in annual reports and registration statements,
and other services that are normally provided in connection with
statutory and regulatory filings or engagements.
(ii) Audit-Related Fees - fees related to assurance and related services
that are reasonably related to the performance of the audit or review
of financial statements, but not reported under "Audit Fees",
including accounting consultations, agreed-upon procedure reports
(inclusive of annual review of basic maintenance testing associated
with the Preferred Shares), attestation reports, comfort letters and
internal control reviews.
(iii) Tax Fees - fees associated with tax compliance, tax advice and tax
planning, including services relating to the filing or amendment of
federal, state or local income tax returns, regulated investment
company qualification reviews and tax distribution and analysis
reviews.
(iv) All Other Fees - fees for products and services provided to the Trust
by the Independent Registered Public Accounting Firm other than those
reported under "Audit Fees", "Audit- Related Fees" and
"Tax Fees."
Schedule A attached hereto also sets forth the aggregate fees billed by the
Independent Registered Public Accounting Firm for the Trust's two most recent
fiscal years for non-audit services rendered to the Trust and the Trust's
Service Affiliates.
The Audit Committee has considered whether the provision by the Trust's
Independent Registered Public Accounting Firm of non-audit services to the
Trust's Service Affiliates that were not pre-approved by the Audit Committee
(because such services did not relate directly to the operations and financial
reporting of the Trust) was compatible with maintaining the independence of the
Independent Registered Public Accounting Firm as the Trust's principal auditor.
EXECUTIVE OFFICERS
The following table provides information about the current executive officers
of the Trust including their principal occupations, which, unless specific
dates are shown, are of more than five years duration, although the titles may
not have been the same throughout. Each officer will hold office until his or
her successor is chosen and qualified, or until he or she retires, resigns or
is removed from office.
PRINCIPAL OCCUPATIONS
POSITION(s) HELD OFFICER DURING THE PAST FIVE YEARS
NAME, DATE OF BIRTH WITH TRUST SINCE(1) & DIRECTORSHIPS(2)
-----------------------------------------------------------------------------------------------------------
OFFICERS
Maria F. Dwyer(3) President November 2005 Massachusetts Financial Services
(born 12/1/58) Company, Executive Vice President and
Chief Regulatory Officer (since March
2004) and Chief Compliance Officer
(since November 2006); Fidelity
Management & Research Company, Vice
President (prior to March 2004);
Fidelity Group of Funds, President and
Treasurer (prior to March 2004)
Tracy Atkinson(3) Treasurer September 2005 Massachusetts Financial Services
(born 12/30/64) Company, Senior Vice President (since
September 2004);
PricewaterhouseCoopers LLP, Partner
(prior to September 2004)
Christopher R. Bohane(3) Assistant Secretary July 2005 Massachusetts Financial Services
(born 01/18/74) and Assistant Clerk Company, Vice President and Senior
Counsel (since April 2003);
Kirkpatrick & Lockhart LLP (law firm),
Associate (prior to April 2003)
Ethan D. Corey(3) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/21/63) and Assistant Clerk Company, Special Counsel (since
December 2004); Dechert LLP (law
firm), Counsel (prior to December
2004)
David L. DiLorenzo(3) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 08/10/68) Company, Vice President (since June
2005); JP Morgan Investor Services,
Vice President (prior to June 2005)
Mark D. Fischer(3) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 10/27/70) Company, Vice President (since May
2005); JP Morgan Investment Management
Company, Vice President (prior to May
2005)
Brian E. Langenfeld(3) Assistant Secretary May 2006 Massachusetts Financial Services
(born 03/7/73) and Assistant Clerk Company, Vice President (since May
2006); John Hancock Advisers, LLC,
Assistant, Vice President and Counsel
(May 2005 to April 2006); John Hancock
Advisers, LLC, Attorney and Assistant
Secretary (prior to May 2005)
Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial Services
(born 11/13/57) Company, Senior Vice President
Susan S. Newton(3) Assistant Secretary May 2005 Massachusetts Financial Services
(born 03/7/50) and Assistant Clerk Company, Senior Vice President and
Associate General Counsel (since April
2005); John Hancock Advisers, LLC,
Senior Vice President, Secretary and
Chief Legal Officer (prior to April
2005); John Hancock Group of Funds,
Senior Vice President, Secretary and
Chief Legal Officer (prior to April
2005)
Susan A. Pereira(3) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/5/70) and Assistant Clerk Company, Vice President and Senior
Counsel (since June 2004); Bingham
McCutchen LLP (law firm), Associate
(prior to June 2004)
Mark N. Polebaum(3) Secretary and Clerk January 2006 Massachusetts Financial Services
(born 05/01/52) Company, Executive Vice President,
General Counsel and Secretary (since
January 2006); Wilmer Cutler Pickering
Hale and Dorr LLP (law firm), Partner
(prior to January 2006)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance
(born 03/07/44) Compliance Officer services), Principal (since June
2004); CRA Business Strategies Group
(consulting services), Executive Vice
President (April 2003 to June 2004);
David L. Babson & Co. (investment
adviser), Managing Director, Chief
Administrative Officer and Director
(prior to March 2003)
James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial Services
(born 06/12/60) Company, Senior Vice President
------------
(1) Date first appointed to serve as officer of an MFS fund.
(2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission
(i.e., "public companies").
(3) "Interested person" of the Trust within the meaning of the 1940 Act, as a result of position with MFS. The
address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
The Trust's officers held comparable positions with the 97 funds in the MFS
Family of Funds, and with certain affiliates of MFS as of December 31, 2006.
The address of each officer is MFS, 500 Boylston Street, Boston, Massachusetts
02116.
INTERESTS OF CERTAIN PERSONS
Schedule B attached hereto sets forth, as of September 4, 2007, to the best
knowledge of the Trust, the shareholders who beneficially owned more than 5% of
the outstanding shares of any class of the Trust.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Trustees,
directors and certain officers of the Trust and MFS, and persons who own more
than ten percent of the Trust's shares, to file reports of ownership and
changes in ownership with the SEC and the New York Stock Exchange. Such persons
are required by SEC regulation to furnish the Trust with copies of all Section
16(a) forms they file in relation to the Trust.
Based solely on a review of the copies of Forms 3, 4 and 5 and amendments
thereto furnished to the Trust with respect to its most recent fiscal year for
Trustees, directors and certain officers of the Trust and MFS and greater than
ten percent beneficial owners, the Trust believes all Section 16(a) filing
requirements were made on a timely basis, except for the following filings:
Peter Vaream (Former Portfolio Manager) made a Form 3 (Initial Statement of
Beneficial Ownership) filing on January 11, 2006; Joseph C. Flaherty, Jr.
(Former Portfolio Manager) made a Form 3 filing on December 5, 2005; Elaine R.
Smith (Former Trustee) made a Form 4 (Statement of Changes of Beneficial
Ownership) filing on December 14, 2005. To the extent that any Form 3, 3A and 4
filings were not made on a timely basis, certain Form 5 (Annual Statement of
Changes of Beneficial Ownership) filings were not filed on a timely basis as
well.
LITIGATION
Since December 2003, MFS, MFS Fund Distributors, Inc., MFS Service Center,
Inc., MFS Corporation Retirement Committee, Sun Life Financial Inc., various
MFS funds, certain current and/or former Trustees of the MFS funds, and certain
officers of MFS have been named as defendants in multiple lawsuits filed in
federal and state courts. The various lawsuits generally allege that some or
all of the defendants (i) permitted or acquiesced in market timing and/or late
trading in some of the MFS funds, and inadequately disclosed MFS; internal
policies concerning market timing and such matters, (ii) received excessive
compensation as fiduciaries with respect to the MFS funds, or (iii) permitted
or acquiesced in the improper use of fund assets by MFS to support the
distribution of MFS fund shares and inadequately disclosed MFS' use of the fund
assets in this matter. The lawsuits assert that some or all of the defendants
violated the federal securities laws, including the Securities Act of 1933 and
the Securities Exchange Act of 1934, the investment Company Act of 1940 and the
Investment Advisers Act of 1940, the Employee Retirement Income Security Act of
1974 (ERISA), as well as fiduciary duties and other violations of common law.
The lawsuits variously have been commenced as class actions or individual
actions on behalf of investors who purchased, held or redeemed shares of the
MFS funds during specified periods, as ERISA actions by participants in certain
retirement plan accounts on behalf of those accounts, or as derivative actions
on behalf of the MFS funds.
The lawsuits relating to market timing and related matters have been
transferred to, and consolidated before, the United States District Court for
the District of Maryland, as part of a multi-district litigation of market
timing and related claims involving several other fund complexes (In re Mutual
Funds Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam,
Allianz Dresdner), No. 1:04-md-15863 (transfer began March 19, 2004)). The
market timing cases related to the MFS funds include Riggs v. MFS et al., Case
No. 04-CV-01162-JFM (direct), Hammerslough v. MFS et al., Case No. 04-MD-01620
(derivative), Anita Walker v. MFS et al., Case No. 1:04-CV-01758 (ERISA), and
Reaves v. MFS Series Trust I, et al., Case No. 1:05-CV-02220-JFM (Class B
Shares). The plaintiffs in these consolidated lawsuits generally seek
injunctive relief including removal of the named Trustees, adviser and
distributor, rescission of contracts and 12b-1 Plans, disgorgement of fees and
profits, monetary damages, punitive damages, attorney's fees and costs and
other equitable and declaratory relief. Two lawsuits alleging improper
brokerage allocation practices and excessive compensation are pending in the
United States District Court for the District of Massachusetts (Forsythe v. Sun
Life Financial Inc., et al., No. 04cv10584 (GAO) (a consolidated action, first
filed on March 25, 2004) and Marcus Dumond, et al. v. Massachusetts Financial
Servs. Co., et al., No. 04cv11458 (GAO) filed on May 4, 2004)). The plaintiffs
in these lawsuits generally seek compensatory damages, punitive damages,
recovery of fees, rescission of contracts, an accounting, restitution,
declaratory relief, equitable and/or injunctive relief and attorney's fees and
costs. Insofar as any of the actions is appropriately brought derivatively on
behalf of any of the MFS funds, any recovery will inure to the benefit of the
MFS funds. Several claims of the various lawsuits have been dismissed; MFS and
other named defendants continue to defend the various lawsuits.
FURTHER INFORMATION ABOUT VOTING AND THE MEETING
MANNER OF VOTING PROXIES
All proxies received by management will be voted on all matters presented at
the Meeting, and if not limited to the contrary, will be voted: FOR the
election of Robert J. Manning, Lawrence T. Cohn, M.D., Lawrence T. Perera, and
Laurie J. Thomsen, as Trustees of the Trust (if still available for election);
FOR the approval of Proposal 2; and AGAINST the approval of Proposal 3.
All proxies received, including proxies that reflect (i) broker non-votes
(i.e., shares held by brokers or nominees as to which (a) instructions have not
been received from the beneficial owners or the persons entitled to vote, and
(b) the broker or nominee does not have discretionary voting power on a
particular matter), (ii) abstentions or (iii) the withholding of authority to
vote for a nominee for election as Trustee, will be counted as shares that are
present on a particular matter for purposes of determining the presence of a
quorum for that matter. A majority of the Trust's outstanding shares entitled
to be cast at the Meeting that are present in person or represented by proxy
constitutes a quorum. With respect to Proposals 1 and 2, neither broker non-
votes nor abstentions nor withholding authority to vote have any effect on the
outcome of the voting. With respect to proposal 3, broker non-votes,
absentions, and withholding authority to vote all will have the effect of
voting AGAINST the applicable proposal.
Each shareholder of the Trust is entitled to one vote for each share of the
Trust that such shareholder owns at the close of business on September 4, 2007,
on each matter on which the shareholder is entitled to vote. Each fractional
share is entitled to a proportionate fractional vote.
The Trust will reimburse the record holders of its shares for their reasonable
expenses incurred in sending proxy material to and obtaining voting
instructions from beneficial owners.
The Trust knows of no other matters to be brought before the Meeting. If,
however, because of any unexpected occurrence, any nominee is not available for
election or if any other matters properly come before the Meeting, it is the
Trust's intention that proxies not limited to the contrary will be voted in
accordance with the judgment of the persons named in the enclosed form of
proxy.
INSTRUCTIONS FOR VOTING PROXIES
The giving of a proxy will not affect a shareholder's right to vote in person
should the shareholder decide to attend the Meeting. To vote by mail, please
mark, sign, date and return the enclosed proxy card following the instructions
printed on the card.
SUBMISSION OF PROPOSALS
Proposals of shareholders which are intended to be presented at the 2008 Annual
Meeting of Shareholders must be received by the Trust on or prior to March 30,
2008. The submission by a shareholder of a proposal for inclusion in the proxy
materials does not guarantee that it will be included. Shareholder proposals
are subject to certain requirements under the federal securities laws.
A shareholder who wishes to make a proposal at the 2008 Annual Meeting of
Shareholders without including the proposal in the Trust's proxy statement must
ensure that the proposal is received by the Trust in good order and in
compliance with all applicable legal requirements and requirements set forth in
the Trust's By-Laws and Declaration of Trust by June 13, 2008 at the Trust's
principal office at 500 Boylston Street, Boston, Massachusetts 02116. The
persons named as proxies for the 2008 Annual Meeting of Shareholders will have
discretionary authority to vote on all matters presented at the meeting
consistent with the SEC's proxy rules.
ADDITIONAL INFORMATION
The expense of the preparation, printing and mailing of the enclosed form of
proxy, the Notice and this Proxy Statement, and any tabulation costs, will be
borne by the Trust.
Only one copy of this Proxy Statement may be mailed to a household, even if
more than one person in a household is a Trust shareholder of record, unless
the Trust has received contrary instructions from one or more of the
shareholders in such household. If you need additional copies of this Proxy
Statement and you are the holder of record of your shares, please contact
Computershare at 800-637-2304. If your shares are held in broker street name
please contact your financial intermediary to obtain additional copies of this
proxy statement. If in the future you do not want the mailing of proxy
statements to be combined with those for other members of your household or if
you are receiving multiple copies of this Proxy Statement and do want the
mailings to be combined with those for other members of your household, contact
Computershare, Inc. "Computershare", in writing, at 250 Royall Street, Canton,
Massachusetts 02021, or by telephone at (800) 637-2304, or contact your
financial intermediary.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
September 14, 2007 MFS(R) GOVERNMENT MARKETS INCOME TRUST
SCHEDULE A
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
For the Fund's last two fiscal years, fees billed by the Trust's Independent Registered Public Accounting Firm for
services provided directly to the Trust:
INDEPENDENT
REGISTERED AUDIT RELATED
PUBLIC AUDIT FEES FEES
ACCOUNTING --------------------------- ------------------------
TRUST FIRM 2006 2005 2006 2005
--------------------------------------------------------------------------------------------------------------------
MFS Government Markets Income Trust Deloitte $43,663 $44,463 $20,000 $15,000
INDEPENDENT
REGISTERED
PUBLIC TAX FEES ALL OTHER FEES
ACCOUNTING --------------------------- ------------------------
TRUST FIRM 2006 2005 2006 2005
--------------------------------------------------------------------------------------------------------------------
MFS Government Markets Income Trust Deloitte $8,400 $10,100 $0 $0
For the Trust's last two fiscal years, fees billed by the Trust's Independent Registered Public Accounting Firm
for services provided to the Trust's Service Affiliates that relate directly to the Trust's operations and financial
reporting:
INDEPENDENT
REGISTERED AUDIT RELATED
PUBLIC FEES(1) TAX FEES(1) ALL OTHER FEES(1)
ACCOUNTING ------------------------ ---------------------- ------------------------
TRUST FIRM 2006 2005 2006 2005 2006 2005
-----------------------------------------------------------------------------------------------------------------------------
Service Affiliates of MFS Deloitte $1,047,925 $729,371 $0 $30,000 $429,071 $858,675
Government Markets Income
Trust
------------
(1) This amount reflects the fees billed to Service Affiliates of the Fund for non-audit services relating directly to
the operations and financial reporting of the Fund (portions of which services also related to the operations and
financial reporting of all funds within the MFS funds complex).
During the periods indicated in the tables above, no services described under "Audit-Related Fees," "Tax Fees" or
"All Other Fees" were approved pursuant to the de minimis exception set forth in paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X.
Aggregate fees billed by the Independent Registered Public Accounting Firm, for the Trust's two most recent fiscal
years, for non-audit services rendered to the Trust and the Trust's Service Affiliates:
INDEPENDENT REGISTERED
TRUST PUBLIC ACCOUNTING FIRM 2006 2005
-------------------------------------------------------------------------------------------------------------------
MFS Government Markets Income Trust and its Service Deloitte $1,648,581 $1,685,542
Affiliates
SCHEDULE B
INTERESTS OF CERTAIN PERSONS
As of September 4, 2007, to the best knowledge of the Trust, the shareholders who beneficially owned more than 5%
of the outstanding shares of any class of the Trust are as follows:
NUMBER OF PERCENT OF
OUTSTANDING OUTSTANDING
SHARES SHARES OF
NAME AND ADDRESS CLASS OF BENEFICIALLY NOTED CLASS
TRUST OF SHAREHOLDER SHARES OWNED OWNED
------------------------------------------------------------------------------------------------------------------------
MFS Government Markets Income Trust
M F S(SM)
INVESTMENT MANAGEMENT(R) CE-MGF-PRX-9/07
MFS INVESTMENT MANAGEMENT
MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
Using a BLACK INK pen, mark your votes with an X as shown in this [X]
example. do not write outside the designated areas.
---------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD 123456 C0123456789 12345
---------------------------------------------------------------------------------------------------------------------------
\/ IF YOU HAVE NOT VOTED VIA TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.\/
[A] PROPOSALS -- THE TRUSTEES OF YOUR TRUST RECOMMEND THAT YOU VOTE IN FAVOR OF ITEMS 1 AND 2 AND AGAINST ITEM 3.
1. Election of Directors: 01 - Robert J. Manning 02 - Lawrence T. Cohn, M.D. 03 - Lawrence T. Perera 04 - Laurie J. Thomsen
[ ] MARK HERE TO VOTE FOR ALL NOMINEES
01 02 03 04
[ ] MARK HERE TO WITHHOLD VOTE FROM ALL NOMINEES [ ] [ ] [ ] [ ]
[ ] FOR ALL EXCEPT - To withhold a vote for one or more nominees, mark the box to the
left and the corresponding numbered box(es) to the right.
2. To amend the Trust's fundamental investment policy concerning borrowing. FOR AGAIUNST ABSTAIN
[ ] [ ] [ ]
3. To request that the Board of Trustees promptly take the steps necessary to
open-end the Trust or otherwise enable shareholders to realize net asset for
their shares. [ ] [ ] [ ]
4. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
[B] AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
corporate officer, trustee, guardian, or custodian, please give full title. If a corporation, please sign in full corporate name
and indicate the signer's office. If a partnership, sign in the partnership name.
Date (mm/dd/yyyy) -- Please print date Signature 1 -- Please keep signature Signature 2 -- Please keep signature
below. within the box. within the box.
[ ] [ ] [ ]
CHANGE OF ADDRESS -- Please print new address below.
[ ]
\/ IF YOU HAVE NOT VOTED VIA TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.\/
IF YOU HAVE NOT VOTED VIA TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE._
----------------------------------------------------------------------------------------------------------------------------------
PROXY -- MFS INVESTMENT MANAGEMENT
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) GOVERNMENT MARKETS INCOME TRUST
500 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST
NOTICE OF THE 2007 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 1, 2007
The signer of this proxy card hereby appoints Tracy A. Atkinson, Christopher R. Bohane, Mark D. Fischer, Brian E. Langenfeld,
Susan S. Newton, and Susan A. Pereira and each of them separately, proxies, with power of substitution, and hereby authorizes each
of them to represent, and to vote as designated on the reverse side, at the Meeting of Shareholders of the above-referenced Trust,
on Thursday, November 1, 2007 at 9:30 a.m. Boston time, and at any adjournment thereof, all of the shares of the Trust that the
undersigned would be entitled to vote if personally present.
Shareholders of the Trust will vote separately on each item.
Only a Trust's shareholders of record on September 4, 2007 will be entitled to vote at the Trust's Meeting of Shareholders.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SIGNING SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND 2 AND AGAINST PROPOSAL 3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND RETURNING THE ENCLOSED PROXY, WHICH WILL HELP AVOID
THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION FOR YOUR TRUST. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS
PROVIDED FOR YOUR CONVENIENCE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.