Edgar Filing: MFS INTERMEDIATE HIGH INCOME FUND

MFS INTERMEDIATE HIGH INCOME FUND N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-05567

MFS INTERMEDIATE HIGH INCOME FUND

(Exact name of registrant as specified in charter)

111 Huntington Avenue, Boston, Massachusetts 02199

(Address of principal executive offices) (Zip code)

Christopher R. Bohane

Massachusetts Financial Services Company

111 Huntington Avenue

Boston, Massachusetts 02199

(Name and address of agents for service)

Registrant’s telephone number, including area code: (617) 954-5000

Date of fiscal year end: November 30

Date of reporting period: November 30, 2018

ITEM 1.

REPORTS TO STOCKHOLDERS.

Annual Report

November 30, 2018

LOGO

MFS® Intermediate High

Income Fund

LOGO

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the complete reports will be made available on the fund’s Web site, and you will be notified by mail each time a report is posted and provided with a Web site link to access the report.

If you are already signed up to receive shareholder reports by email, you will not be affected by this change and you need not take any action. You may sign up to receive shareholder reports and other communications from the fund by email by contacting your financial intermediary (such as a broker-dealer or bank) or, if you hold your shares directly with the fund, by calling 1-800-637-2304 or by logging into your Investor Center account at www.computershare.com/investor.

Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge. Contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the fund, you can call 1-800-637-2304 to let the fund know that you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the MFS fund complex if you invest directly.

CIH-ANN

MANAGED DISTRIBUTION POLICY DISCLOSURE

The MFS Intermediate High Income Fund’s (the fund) Board of Trustees adopted a managed distribution policy. The fund seeks to pay monthly distributions based on an annual rate of 9.50% of the fund’s average monthly net asset value. The primary purpose of the managed distribution policy is to provide shareholders with a constant, but not guaranteed, fixed minimum rate of distribution each month. You should not draw any conclusions about the fund’s investment performance from the amount of the current distribution or from the terms of the fund’s managed distribution policy. The Board may amend or terminate the managed distribution policy at any time without prior notice to fund shareholders. The amendment or termination of the managed distribution policy could have an adverse effect on the market price of the fund’s shares.

With each distribution, the fund will issue a notice to shareholders and an accompanying press release which will provide detailed information regarding the amount and composition of the distribution and other related information. The amounts and sources of distributions reported in the notice to shareholders are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. Please refer to “Tax Matters and Distributions” under Note 2 of the Notes to Financial Statements for information regarding the tax character of the fund’s distributions.

Under a managed distribution policy the fund may at times distribute more than its net investment income and net realized capital gains; therefore, a portion of your distribution may result in a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. Any such returns of capital will decrease the fund’s total assets and, therefore, could have the effect of increasing the fund’s expense ratio. In addition, in order to make the level of distributions called for under its managed distribution policy, the fund may have to sell portfolio securities at a less than opportune time. A return of capital does not necessarily reflect the fund’s investment performance and should not be confused with ‘yield’ or ‘income’. The fund’s total return in relation to changes in net asset value is presented in the Financial Highlights.

MFS® Intermediate High Income Fund

New York Stock Exchange Symbol: CIF


Letter from the Executive Chairman			1
Portfolio composition			2
Management review			4
Performance summary			6
Portfolio managers’ profiles			8
Dividend reinvestment and cash purchase plan			9
Portfolio of investments			10
Statement of assets and liabilities			22
Statement of operations			23
Statements of changes in net assets			24
Statement of cash flows			25
Financial highlights			26
Notes to financial statements			28
Report of independent registered public accounting firm			40
Results of shareholder meeting			42
Trustees and officers			43
Board review of investment advisory agreement			49
Proxy voting policies and information			53
Quarterly portfolio disclosure			53
Further information			53
Information about fund contracts and legal claims			53
Federal tax information			53
MFS® privacy notice			54
Contact information back cover

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

LOGO

LETTER FROM THE EXECUTIVE CHAIRMAN

Dear Shareholders:

Higher bond yields, international trade friction, and geopolitical uncertainty have contributed to an uptick in market volatility in recent quarters — a departure from the

low-volatility environment that prevailed for much of 2017. Against this more challenging backdrop, equity markets in the United States have outperformed most international markets on a relative basis, though returns have been modest year to date on an absolute basis. Global economic growth has become less synchronized over the past few months, with Europe, China, and some emerging markets having shown signs of slowing growth while U.S. growth has remained above average.

Although the U.S. Federal Reserve continues to gradually raise interest rates and shrink its balance sheet, monetary policy remains fairly accommodative around the world, with many central banks taking only tentative steps toward tighter policies.

U.S. tax reforms adopted in late 2017 have been welcomed by equity markets while emerging market economies have recently had to contend with tighter financial conditions as a result of firmer U.S. Treasury yields and a stronger dollar. With the Republicans losing control of the U.S. House of Representatives, further meaningful U.S. fiscal stimulus appears less likely. A partial U.S. government shutdown, beginning in late 2018, also added to political uncertainty. Globally, inflation remains largely subdued, but tight labor markets and moderate global demand have investors on the lookout for its potential reappearance. Increased U.S. protectionism is also a growing concern, as investors fear trade disputes could dampen business sentiment, leading to even slower global growth. While there has been progress on this front — a NAFTA replacement has been agreed upon between the U.S., Mexico, and Canada; the free trade pact with Korea has been updated; and a negotiating framework with the European Union has been agreed upon — tensions over trade with China remain quite high.

As a global investment manager with nearly a century of expertise, MFS® firmly believes active risk management offers downside mitigation and may help improve investment outcomes. We built our active investment platform with this belief in mind. Our long-term perspective influences nearly every aspect of our business, ensuring our investment decisions align with the investing time horizons of our clients.

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

January 15, 2019

The opinions expressed in this letter are subject to change and may not be relied upon for investment advice. No forecasts can be guaranteed.

PORTFOLIO COMPOSITION

Portfolio structure (i)

LOGO


Top five industries (i)
Cable TV			11.7%
Medical & Health Technology & Services			8.4%
Midstream			8.0%
Energy – Independent			7.5%
Containers			7.2%


Composition including fixed income credit quality (a)(i)
BBB			2.2%
BB			71.7%
B			50.0%
CCC			10.9%
CC			0.5%
Not Rated			(1.7)%
Non-Fixed Income			0.4%
Cash & Cash Equivalents (Less Liabilities)			(36.0)%
Other			2.0%

Portfolio facts (i)
Average Duration (d)			6.1
Average Effective Maturity (m)			6.4 yrs.

(a)

For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). Securities rated BBB or higher are considered investment grade. All ratings are subject to change. Not Rated includes fixed income securities and fixed income derivatives, which have not been rated by any rating agency. Non-Fixed Income includes equity securities (including convertible bonds and equity derivatives) and/or commodity-linked derivatives. The fund may or may not have held all of these instruments on this date. The fund is not rated by these agencies.

(d)	Duration is a measure of how much a bond’s price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value due to the interest rate move.

Portfolio Composition – continued

(i)

For purposes of this presentation, the components include the value of securities, and reflect the impact of the equivalent exposure of derivative positions, if any. These amounts may be negative from time to time. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than value. The bond component will include any accrued interest amounts.

(m)

In determining each instrument’s effective maturity for purposes of calculating the fund’s dollar-weighted average effective maturity, MFS uses the instrument’s stated maturity or, if applicable, an earlier date on which MFS believes it is probable that a maturity-shortening device (such as a put, pre-refunding or prepayment) will cause the instrument to be repaid. Such an earlier date can be substantially shorter than the instrument’s stated maturity.

Where the fund holds convertible bonds, they are treated as part of the equity portion of the portfolio.

Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.

From time to time Cash & Cash Equivalents may be negative due to borrowings for leverage transactions and/or timing of cash receipts and disbursements.

Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions.

Percentages are based on net assets as of November 30, 2018.

The portfolio is actively managed and current holdings may be different.

MANAGEMENT REVIEW

Summary of Results

MFS Intermediate High Income Fund (“fund”) is a closed-end fund. The fund’s investment objective is to seek high current income but may also consider capital appreciation. MFS normally invests at least 80% of the fund’s net assets, including borrowings for investment purposes, in high income debt instruments.

For the twelve months ended November 30, 2018, shares of the fund provided a total return of –2.81%, at net asset value and a total return of –8.21%, at market value. This compares with a return of 0.36% for the fund’s benchmark, the Bloomberg Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index.

The performance commentary below is based on the net asset value performance of the fund which reflects the performance of the underlying pool of assets held by the fund. The total return at market value represents the return earned by owners of the shares of the fund which are traded publicly on the exchange.

Market Environment

During the reporting period, the US Federal Reserve (“Fed”) raised interest rates by 100 basis points, bringing the total number of rate hikes to eight since the central bank began to normalize monetary policy in late 2015. Economic growth rates in the US, eurozone and Japan remained above trend despite a slowing in global growth, particularly toward the end of the period. Inflation remained contained, particularly outside the US. Late in the period, the European Central Bank announced that it would halt its asset purchase program at the end of 2018, but issued forward guidance that it does not expect to raise interest rates at least until after the summer of 2019. Both the Bank of England and the Bank of Canada raised rates several times during the period. The European political backdrop became a bit more volatile late in the period, spurred by concerns over cohesion in the eurozone after the election of an anti-establishment, Eurosceptic coalition government in Italy.

Bond yields rose in the US during the period but remained low by historical standards, while yields in many developed markets fell. Outside of emerging markets, where spreads and currencies came under pressure, credit spreads remained quite tight until the end of the period when thinner liquidity, lower oil prices and concerns over high degrees of corporate leverage emerged. Growing concern over increasing global trade friction appeared to have weighed on business sentiment during the period’s second half, especially outside the US. Tighter financial conditions from rising US rates and a strong dollar, combined with trade uncertainty, helped expose structural weaknesses in several emerging markets in the second half of the period.

Volatility increased at the end of the period amid signs of slowing global economic growth and increasing trade tensions, which prompted a market setback shortly after US markets set record highs in September. It was the second such equity market decline during the reporting period. The correction came despite a third consecutive quarter of strong growth in US earnings per share. Strong earnings growth, combined with the market decline, brought US equity valuations down from elevated levels, earlier in the period, to multiples more in line with long-term averages. While the US economy maintained its strength, global economic growth became less synchronized

Management Review – continued

during the period, with Europe and China showing signs of a modest slowdown and some emerging markets coming under stress.

Factors Affecting Performance

Relative to the Bloomberg Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index, the fund’s security selection in both “B” and “CCC” rated^(r) bonds, particularly in the energy, communications and consumer non-cyclical sectors, detracted from performance.

The fund employs leverage which has been created through the use of loan agreements with a bank. To the extent that investments are purchased through the use of leverage, the fund’s net asset value may increase or decrease at a greater rate than a comparable unleveraged fund. During the reporting period, the use of leverage had a negative impact on the fund’s performance.

On the positive side, the fund’s greater allocation to “B” rated bonds contributed to relative returns. The fund’s positioning along the yield curve^(y)further benefited relative performance as rates generally rose during the reporting period.

Respectfully,

Portfolio Manager(s)

David Cole and Michael Skatrud

(r)

Bonds rated “BBB”, “Baa”, or higher are considered investment grade; bonds rated “BB”, “Ba”, or below are considered non-investment grade. The source for bond quality ratings is Moody’s Investors Service, Standard & Poor’s and Fitch, Inc. and are applied using the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). For securities which are not rated by any of the three agencies, the security is considered Not Rated.

(y)	A yield curve graphically depicts the yields of different maturity bonds of the same credit quality and type; a normal yield curve is upward sloping, with short-term rates lower than long-term rates.

Note to Shareholders: Effective March 1, 2018, Michael Skatrud became a Portfolio Manager of the Fund. Effective September 1, 2018, William Adams is no longer a Portfolio Manager of the Fund.

The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.

PERFORMANCE SUMMARY THROUGH 11/30/18

The following chart presents the fund’s historical performance in comparison to its benchmark(s). Investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than their original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the sale of fund shares. Performance data shown represents past performance and is no guarantee of future results.

Price Summary for MFS Intermediate High Income Fund

Date

Price

Year Ended 11/30/18

Net Asset Value

11/30/18

$2.46

11/30/17

$2.79

New York Stock Exchange Price

11/30/18

$2.29

1/04/18

(high) (t)

$2.98

11/20/18

(low) (t)

$2.25

11/30/17

$2.75

Total Returns vs Benchmark(s)

Year Ended 11/30/18

MFS Intermediate High Income Fund at

New York Stock Exchange Price (r)

(8.21)%

Net Asset Value (r)

(2.81)%

Bloomberg Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index (f)

0.36%

(f)	Source: FactSet Research Systems Inc.

(r)	Includes reinvestment of all distributions.

(t)	For the period December 1, 2017 through November 30, 2018.

Benchmark Definition(s)

Bloomberg Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index – a component of the Bloomberg Barclays U.S. High-Yield Corporate Bond Index, which measures performance of non-investment grade, fixed rate debt. The index limits the maximum exposure to any one issuer to 2%.

It is not possible to invest directly in an index.

Notes to Performance Summary

The fund’s shares may trade at a discount or premium to net asset value. When fund shares trade at a premium, buyers pay more than the net asset value underlying fund shares, and shares purchased at a premium would receive less than the amount paid for them in the event of the fund’s concurrent liquidation.

Performance Summary – continued

The fund’s target annual distribution rate is calculated based on an annual rate of 9.50% of the fund’s average monthly net asset value, not a fixed share price, and the fund’s dividend amount will fluctuate with changes in the fund’s average monthly net assets.

Net asset values and performance results based on net asset value per share do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the Statement of Assets and Liabilities or the Financial Highlights.

From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

In accordance with Section 23(c) of the Investment Company Act of 1940, the fund hereby gives notice that it may from time to time repurchase shares of the fund in the open market at the option of the Board of Trustees and on such terms as the Trustees shall determine.

PORTFOLIO MANAGERS’ PROFILES


Portfolio Manager	Primary Role	Since	Title and Five Year History
David Cole	Portfolio Manager	2007	Investment Officer of MFS; employed in the investment management area of MFS since 2004.

Michael Skatrud	Portfolio Manager	2018	Investment Officer of MFS; employed in the investment management area of MFS since 2013.

Note to Shareholders: Effective March 1, 2018, Michael Skatrud became a Portfolio Manager of the Fund. Effective September 1, 2018, William Adams is no longer a Portfolio Manager of the Fund.

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

The fund offers a Dividend Reinvestment and Cash Purchase Plan (the “Plan”) that allows common shareholders to reinvest either all of the distributions paid by the fund or only the long-term capital gains. Generally, purchases are made at the market price unless that price exceeds the net asset value (the shares are trading at a premium). If the shares are trading at a premium, purchases will be made at a price of either the net asset value or 95% of the market price, whichever is greater. You can also buy shares on a quarterly basis in any amount $100 and over. The Plan Agent will purchase shares under the Cash Purchase Plan on the 15th of January, April, July, and October or shortly thereafter.

If shares are registered in your own name, new shareholders will automatically participate in the Plan, unless you have indicated that you do not wish to participate. If your shares are in the name of a brokerage firm, bank, or other nominee, you can ask the firm or nominee to participate in the Plan on your behalf. If the nominee does not offer the Plan, you may wish to request that your shares be re-registered in your own name so that you can participate. There is no service charge to reinvest distributions, nor are there brokerage charges for shares issued directly by the fund. However, when shares are bought on the New York Stock Exchange or otherwise on the open market, each participant pays a pro rata share of the transaction expenses, including commissions. The tax status of dividends and capital gain distributions does not change whether received in cash or reinvested in additional shares – the automatic reinvestment of distributions does not relieve you of any income tax that may be payable (or required to be withheld) on the distributions.

If your shares are held directly with the Plan Agent, you may withdraw from the Plan at any time by going to the Plan Agent’s website at www.computershare.com/investor, by calling 1-800-637-2304 any business day from 9 a.m. to 5 p.m. Eastern time or by writing to the Plan Agent at P.O. Box 43078, Providence, RI 02940-3078. Please have available the name of the fund and your account number. For certain types of registrations, such as corporate accounts, instructions must be submitted in writing. Please call for additional details. When you withdraw from the Plan, you can receive the value of the reinvested shares in one of three ways: your full shares will be held in your account, the Plan Agent will sell your shares and send the proceeds to you, or you may transfer your full shares to your investment professional who can hold or sell them. Additionally, the Plan Agent will sell your fractional shares and send the proceeds to you.

If you have any questions or for further information or a copy of the Plan, contact the Plan Agent Computershare Trust Company, N.A. (the Transfer Agent for the fund) at 1-800-637-2304, at the Plan Agent’s website at www.computershare.com/investor, or by writing to the Plan Agent at P.O. Box 43078, Providence, RI 02940-3078.

PORTFOLIO OF INVESTMENTS

11/30/18

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.


Bonds - 133.1%
Issuer	Shares/Par		Value ($)
Aerospace - 2.3%
Bombardier, Inc., 7.5%, 3/15/2025 (n)	$	55,000	$	52,250
DAE Funding LLC, 5.75%, 11/15/2023 (n)		255,000		250,538
DAE Funding LLC, 5%, 8/01/2024 (n)		440,000		414,700
TransDigm, Inc., 6.5%, 7/15/2024		315,000		315,787
TransDigm, Inc., 6.375%, 6/15/2026		65,000		63,449

			$	1,096,724
Automotive - 2.2%
Allison Transmission, Inc., 5%, 10/01/2024 (n)	$	600,000	$	577,500
IHO Verwaltungs GmbH, 4.75%, (4.75% cash or 5.5% PIK) 9/15/2026 (n)(p)		400,000		353,000
Jaguar Land Rover Automotive PLC, 4.5%, 10/01/2027 (n)		200,000		147,500

			$	1,078,000
Broadcasting - 4.0%
Liberty Media Corp. - Liberty Formula One, 8.5%, 7/15/2029	$	270,000	$	279,450
Liberty Media Corp. - Liberty Formula One, 8.25%, 2/01/2030		120,000		124,200
Match Group, Inc., 6.375%, 6/01/2024		295,000		305,030
Netflix, Inc., 5.875%, 2/15/2025		255,000		260,100
Netflix, Inc., 4.875%, 4/15/2028		90,000		83,025
Netflix, Inc., 5.875%, 11/15/2028 (n)		330,000		325,347
Netflix, Inc., 4.625%, 5/15/2029 (n)	EUR	100,000		111,229
WMG Acquisition Corp., 5%, 8/01/2023 (n)	$	65,000		64,106
WMG Acquisition Corp., 4.875%, 11/01/2024 (n)		330,000		319,275
WMG Acquisition Corp., 5.5%, 4/15/2026 (n)		65,000		63,050

			$	1,934,812
Building - 5.7%
ABC Supply Co., Inc., 5.75%, 12/15/2023 (n)	$	380,000	$	379,506
ABC Supply Co., Inc., 5.875%, 5/15/2026 (n)		220,000		213,125
Beacon Escrow Corp., 4.875%, 11/01/2025 (n)		370,000		335,775
James Hardie International Finance Ltd., 5%, 1/15/2028 (n)		300,000		267,750
New Enterprise Stone & Lime Co., Inc., 10.125%, 4/01/2022 (n)		290,000		298,700
New Enterprise Stone & Lime Co., Inc., 6.25%, 3/15/2026 (n)		216,000		199,260
PriSo Acquisition Corp., 9%, 5/15/2023 (n)		128,000		130,240
Standard Industries, Inc., 5.375%, 11/15/2024 (n)		380,000		361,000
Standard Industries, Inc., 6%, 10/15/2025 (n)		180,000		175,500
Summit Materials LLC/Summit Materials Finance Co., 6.125%, 7/15/2023		335,000		331,640

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Building - continued
Summit Materials LLC/Summit Materials Finance Co., 5.125%, 6/01/2025 (n)	$	80,000	$	72,600

			$	2,765,096
Business Services - 6.1%
Alliance Data Systems Corp., 5.875%, 11/01/2021 (n)	$	125,000	$	126,563
Ascend Learning LLC, 6.875%, 8/01/2025 (n)		200,000		194,000
CDK Global, Inc., 4.875%, 6/01/2027		395,000		368,337
Equinix, Inc., 5.375%, 4/01/2023		240,000		241,800
Equinix, Inc., 5.75%, 1/01/2025		170,000		172,941
Equinix, Inc., 5.875%, 1/15/2026		150,000		152,250
Financial & Risk U.S. Holdings, Inc., 8.25%, 11/15/2026 (n)		285,000		271,462
First Data Corp., 5%, 1/15/2024 (n)		510,000		502,962
MSCI, Inc., 4.75%, 8/01/2026 (n)		290,000		276,225
Travelport Worldwide Ltd., 6%, 3/15/2026 (n)		280,000		275,800
Vantiv LLC/Vantiv Issuer Corp., 4.375%, 11/15/2025 (n)		250,000		232,812
Verscend Escrow Corp., 9.75%, 8/15/2026 (n)		135,000		129,938

			$	2,945,090
Cable TV - 11.5%
CCO Holdings LLC/CCO Holdings Capital Corp., 5.75%, 1/15/2024	$	520,000	$	522,704
CCO Holdings LLC/CCO Holdings Capital Corp., 5.375%, 5/01/2025 (n)		205,000		201,412
CCO Holdings LLC/CCO Holdings Capital Corp., 5.75%, 2/15/2026 (n)		495,000		495,005
CCO Holdings LLC/CCO Holdings Capital Corp., 5.875%, 5/01/2027 (n)		260,000		254,800
CSC Holdings LLC, 5.5%, 5/15/2026 (z)		200,000		193,687
CSC Holdings LLC, 5.5%, 4/15/2027 (n)		600,000		575,430
CSC Holdings LLC, 7.5%, 4/01/2028 (z)		200,000		206,240
DISH DBS Corp., 5%, 3/15/2023		130,000		113,750
DISH DBS Corp., 5.875%, 11/15/2024		245,000		208,250
Intelsat Connect Finance, 9.5%, 2/15/2023 (n)		95,000		88,825
Intelsat Jackson Holdings S.A., 5.5%, 8/01/2023		270,000		238,275
Sirius XM Radio, Inc., 4.625%, 5/15/2023 (n)		125,000		121,438
Sirius XM Radio, Inc., 6%, 7/15/2024 (n)		325,000		332,719
Sirius XM Radio, Inc., 5.375%, 4/15/2025 (n)		165,000		162,525
Telenet Finance Luxembourg S.A., 5.5%, 3/01/2028 (n)		400,000		366,000
Unitymedia KabelBW GmbH, 6.125%, 1/15/2025 (n)		240,000		244,726
Videotron Ltd., 5.375%, 6/15/2024 (n)		80,000		79,800
Videotron Ltd., 5.125%, 4/15/2027 (n)		480,000		454,800
Virgin Media Finance PLC, 5.75%, 1/15/2025 (n)		200,000		190,000
Virgin Media Secured Finance PLC, 5.25%, 1/15/2026 (n)		200,000		187,250
Ziggo Bond Finance B.V., 5.875%, 1/15/2025 (n)		400,000		364,752

			$	5,602,388

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Chemicals - 3.8%
Axalta Coating Systems Co., 4.875%, 8/15/2024 (n)	$	450,000	$	435,690
Consolidated Energy Finance S.A., 6.875%, 6/15/2025 (n)		200,000		197,950
OCI N.V., 6.625%, 4/15/2023 (n)		400,000		406,000
PolyOne Corp., 5.25%, 3/15/2023		265,000		264,338
SPCM S.A., 4.875%, 9/15/2025 (n)		375,000		342,937
Starfruit Finance Co./Starfruit U.S. Holding Co. LLC, 6.5%, 10/01/2026 (n)	EUR	200,000		210,333

			$	1,857,248
Computer Software - 0.9%
Diamond 1 Finance Corp./Diamond 2 Finance Corp., 5.875%, 6/15/2021 (n)	$	235,000	$	238,274
Diamond 1 Finance Corp./Diamond 2 Finance Corp., 6.02%, 6/15/2026 (n)		205,000		207,239

			$	445,513
Computer Software - Systems - 2.4%
CDW LLC/CDW Finance Corp., 5.5%, 12/01/2024	$	45,000	$	45,000
CDW LLC/CDW Finance Corp., 5%, 9/01/2025		135,000		131,625
Fair Isaac Corp., 5.25%, 5/15/2026 (n)		310,000		305,737
JDA Software Group, Inc., 7.375%, 10/15/2024 (n)		200,000		202,750
Sabre GLBL, Inc., 5.375%, 4/15/2023 (n)		495,000		492,525

			$	1,177,637
Conglomerates - 5.1%
Amsted Industries Co., 5%, 3/15/2022 (n)	$	495,000	$	486,337
BWX Technologies, Inc., 5.375%, 7/15/2026 (n)		290,000		281,300
EnerSys, 5%, 4/30/2023 (n)		510,000		497,250
Entegris, Inc., 4.625%, 2/10/2026 (n)		450,000		416,425
Gates Global LLC, 6%, 7/15/2022 (n)		133,000		132,335
Stevens Holding Co., Inc., 6.125%, 10/01/2026 (n)		300,000		296,250
TriMas Corp., 4.875%, 10/15/2025 (n)		385,000		360,938

			$	2,470,835
Construction - 1.4%
Empresas ICA S.A.B. de C.V., 8.9%, 2/04/2021 (a)(d)	$	135,000	$	21,965
Mattamy Group Corp., 6.5%, 10/01/2025 (n)		310,000		291,012
Toll Brothers Finance Corp., 4.875%, 11/15/2025		120,000		114,000
Toll Brothers Finance Corp., 4.35%, 2/15/2028		315,000		276,413

			$	703,390
Consumer Products - 1.7%
Coty, Inc., 6.5%, 4/15/2026 (n)	$	165,000	$	145,200
Energizer Gamma Acquisition, Inc., 6.375%, 7/15/2026 (n)		285,000		267,900

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Consumer Products - continued
Prestige Brands, Inc., 6.375%, 3/01/2024 (n)	$	84,000	$	83,265
Spectrum Brands, Inc., 6.125%, 12/15/2024		40,000		38,600
Spectrum Brands, Inc., 5.75%, 7/15/2025		325,000		307,531

			$	842,496
Consumer Services - 2.7%
Cimpress N.V., 7%, 6/15/2026 (n)	$	300,000	$	291,750
Frontdoor, Inc., 6.75%, 8/15/2026 (n)		260,000		250,900
Matthews International Corp., 5.25%, 12/01/2025 (n)		260,000		241,800
NVA Holdings, Inc., 6.875%, 4/01/2026 (n)		225,000		214,594
ServiceMaster Co. LLC, 5.125%, 11/15/2024 (n)		325,000		312,812

			$	1,311,856
Containers - 7.0%
ARD Finance S.A., 6.625%, 9/15/2023	EUR	100,000	$	110,097
ARD Finance S.A., 7.125%, 9/15/2023	$	200,000		184,000
ARD Securities Finance, 8.75%, (8.75% cash or 8.75%
PIK) 1/31/2023 (p)(z)		200,000		163,472
Berry Global Group, Inc., 5.5%, 5/15/2022		335,000		335,000
Berry Global Group, Inc., 6%, 10/15/2022		165,000		167,062
Crown American LLC, 4.5%, 1/15/2023		326,000		320,784
Crown Americas LLC/Crown Americas Capital Corp., 4.75%, 2/01/2026 (n)		140,000		134,932
Crown Americas LLC/Crown Americas Capital Corp. V, 4.25%, 9/30/2026		150,000		139,500
Flex Acquisition Co., Inc., 6.875%, 1/15/2025 (n)		265,000		244,794
Multi-Color Corp., 6.125%, 12/01/2022 (n)		402,000		403,005
Reynolds Group, 5.75%, 10/15/2020		125,984		125,826
Reynolds Group, 5.125%, 7/15/2023 (n)		180,000		175,725
Sealed Air Corp., 4.875%, 12/01/2022 (n)		335,000		333,744
Sealed Air Corp., 5.125%, 12/01/2024 (n)		95,000		92,625
Sealed Air Corp., 5.5%, 9/15/2025 (n)		50,000		49,375
Silgan Holdings, Inc., 4.75%, 3/15/2025		235,000		220,900
W/S Packaging Group, Inc., 9%, 4/15/2023 (n)		210,000		213,150

			$	3,413,991
Electrical Equipment - 1.0%
CommScope Technologies LLC, 5%, 3/15/2027 (n)	$	575,000	$	473,656

Electronics - 1.7%
Qorvo, Inc., 5.5%, 7/15/2026 (n)	$	300,000	$	291,000
Sensata Technologies B.V., 5.625%, 11/01/2024 (n)		155,000		155,388
Sensata Technologies B.V., 5%, 10/01/2025 (n)		375,000		360,937

			$	807,325

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Energy - Independent - 7.4%
Alta Mesa Holdings LP/Alta Mesa Finance Services Corp., 7.875%, 12/15/2024	$	395,000	$	281,437
Callon Petroleum Co., 6.375%, 7/01/2026		300,000		288,750
CrownRock LP/CrownRock Finance, Inc., 5.625%, 10/15/2025 (n)		350,000		327,250
Diamondback Energy, Inc., 5.375%, 5/31/2025		460,000		454,825
Gulfport Energy Corp., 6%, 10/15/2024		180,000		164,700
Gulfport Energy Corp., 6.375%, 5/15/2025		185,000		167,888
Indigo Natural Resources LLC, 6.875%, 2/15/2026 (n)		270,000		251,100
Magnolia Oil & Gas Operating LLC/Magnolia Oil & Gas Finance Corp., 6%, 8/01/2026 (n)		290,000		280,575
Oasis Petroleum, Inc., 6.25%, 5/01/2026 (n)		250,000		230,625
Parsley Energy LLC/Parsley Finance Corp., 5.25%, 8/15/2025 (n)		70,000		66,150
Parsley Energy LLC/Parsley Finance Corp., 5.625%, 10/15/2027 (n)		425,000		403,750
QEP Resources, Inc., 5.25%, 5/01/2023		240,000		229,200
Sanchez Energy Corp., 6.125%, 1/15/2023		210,000		52,500
SM Energy Co., 6.75%, 9/15/2026		395,000		379,200

			$	3,577,950
Entertainment - 1.9%
Live Nation Entertainment, Inc., 5.625%, 3/15/2026 (n)	$	325,000	$	323,274
Six Flags Entertainment Corp., 4.875%, 7/31/2024 (n)		605,000		579,288

			$	902,562
Financial Institutions - 1.8%
Avolon Holdings Funding Ltd., 5.125%, 10/01/2023	$	195,000	$	194,269
Park Aerospace Holdings Ltd., 5.5%, 2/15/2024 (n)		475,000		477,911
Wand Merger Corp., 8.125%, 7/15/2023 (n)		175,000		176,750

			$	848,930
Food & Beverages - 4.7%
Aramark Services, Inc., 4.75%, 6/01/2026	$	275,000	$	261,938
Aramark Services, Inc., 5%, 2/01/2028 (n)		195,000		185,250
Cott Holdings, Inc., 5.5%, 4/01/2025 (n)		385,000		371,525
JBS USA LLC/JBS USA Finance, Inc., 6.75%, 2/15/2028 (n)		65,000		63,050
JBS USA Lux S.A./JBS USA Finance, Inc., 5.875%, 7/15/2024 (n)		355,000		348,787
Lamb Weston Holdings, Inc., 4.625%, 11/01/2024 (n)		215,000		207,475
Lamb Weston Holdings, Inc., 4.875%, 11/01/2026 (n)		120,000		116,880
Pilgrim’s Pride Corp., 5.875%, 9/30/2027 (n)		370,000		350,575
U.S. Foods Holding Corp., 5.875%, 6/15/2024 (n)		370,000		367,225

			$	2,272,705
Gaming & Lodging - 5.9%
CCM Merger, Inc., 6%, 3/15/2022 (n)	$	230,000	$	232,875
GLP Capital LP/GLP Financing II, Inc., 5.375%, 11/01/2023		155,000		157,082

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Gaming & Lodging - continued
GLP Capital LP/GLP Financing II, Inc., 5.25%, 6/01/2025	$	220,000	$	218,570
GLP Capital LP/GLP Financing II, Inc., 5.375%, 4/15/2026		40,000		39,672
Hilton Domestic Operating Co., Inc., 5.125%, 5/01/2026 (n)		250,000		244,375
Hilton Worldwide Finance LLC, 4.625%, 4/01/2025		310,000		299,150
Marriot Ownership Resorts, Inc., 5.625%, 4/15/2023 (z)		270,000		267,975
MGM Resorts International, 6.625%, 12/15/2021		135,000		141,413
MGM Resorts International, 6%, 3/15/2023		140,000		142,276
MGM Resorts International, 5.75%, 6/15/2025		370,000		363,987
Ryman Hospitality Properties, Inc., REIT, 5%, 4/15/2021		305,000		301,950
Ryman Hospitality Properties, Inc., REIT, 5%, 4/15/2023		200,000		197,500
Wyndham Hotels Group, LLC, 5.375%, 4/15/2026 (n)		285,000		274,312

			$	2,881,137
Industrial - 1.2%
Cleaver Brooks, Inc., 7.875%, 3/01/2023 (n)	$	250,000	$	247,500
KAR Auction Services, Inc., 5.125%, 6/01/2025 (n)		375,000		350,625

			$	598,125
Insurance - 0.5%
AssuredPartners Inc., 7%, 8/15/2025 (n)	$	270,000	$	254,813

Insurance - Health - 1.1%
Centene Corp., 6.125%, 2/15/2024	$	185,000	$	192,381
Centene Corp., 5.375%, 6/01/2026 (n)		335,000		337,094

			$	529,475
Insurance - Property & Casualty - 0.5%
Hub International Ltd., 7%, 5/01/2026 (n)	$	255,000	$	242,888

Machinery & Tools - 0.6%
Ashtead Capital, Inc., 5.625%, 10/01/2024 (n)	$	265,000	$	268,975

Major Banks - 0.8%
UBS Group AG, 6.875% to 8/07/2025, FLR (Swap Rate - 5yr. + 4.59%) to 12/29/2049	$	400,000	$	387,476

Medical & Health Technology & Services - 8.0%
Avantor, Inc., 9%, 10/01/2025 (n)	$	220,000	$	223,025
DaVita, Inc., 5%, 5/01/2025		195,000		182,813
Encompass Health Corp., 5.75%, 9/15/2025		120,000		119,250
HCA, Inc., 7.5%, 2/15/2022		345,000		372,600
HCA, Inc., 5%, 3/15/2024		265,000		265,662
HCA, Inc., 5.375%, 2/01/2025		330,000		332,062
HCA, Inc., 5.875%, 2/15/2026		435,000		448,050

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Medical & Health Technology & Services - continued
HealthSouth Corp., 5.125%, 3/15/2023	$	385,000	$	384,519
Heartland Dental, LLC, 8.5%, 5/01/2026 (n)		205,000		190,138
Polaris, 8.5%, (8.5% cash or 8.5% PIK) 12/01/2022 (n)(p)		185,000		184,075
Quintiles IMS Holdings, Inc., 5%, 10/15/2026 (n)		200,000		193,500
Regional Care/LifePoint Health, Inc., 9.75%, 12/01/2026 (z)		180,000		179,325
Tenet Healthcare Corp., 6.75%, 6/15/2023		230,000		227,125
Universal Health Services, Inc., 7.625%, 8/15/2020		340,000		340,000
West Street Merger Sub, Inc., 6.375%, 9/01/2025 (n)		245,000		229,736

			$	3,871,880
Medical Equipment - 1.1%
Teleflex, Inc., 5.25%, 6/15/2024	$	240,000	$	241,200
Teleflex, Inc., 4.875%, 6/01/2026		105,000		101,688
Teleflex, Inc., 4.625%, 11/15/2027		200,000		188,000

			$	530,888
Metals & Mining - 5.7%
Baffinland Iron Mines Corp./Baffinland Iron Mines LP, 8.75%, 7/15/2026 (n)	$	190,000	$	186,675
First Quantum Minerals Ltd., 7.25%, 4/01/2023 (n)		200,000		185,000
Freeport-McMoRan Copper & Gold, Inc., 5.4%, 11/14/2034		305,000		256,200
Freeport-McMoRan, Inc., 6.875%, 2/15/2023		598,000		622,667
Kaiser Aluminum Corp., 5.875%, 5/15/2024		410,000		407,950
Northwest Acquisitions ULC/Dominion Finco, Inc., 7.125%, 11/01/2022 (n)		355,000		351,450
Novelis Corp., 5.875%, 9/30/2026 (n)		415,000		386,988
Petra Diamonds U.S. Treasury PLC, 7.25%, 5/01/2022 (n)		200,000		184,750
TMS International Corp., 7.25%, 8/15/2025 (n)		205,000		200,900

			$	2,782,580
Midstream - 7.8%
Blue Racer Midstream LLC/Blue Racer Finance Corp., 6.125%, 11/15/2022 (n)	$	190,000	$	188,100
Blue Racer Midstream LLC/Blue Racer Finance Corp., 6.625%, 7/15/2026 (n)		235,000		231,475
Cheniere Energy, Inc., 5.875%, 3/31/2025		310,000		319,300
DCP Midstream Operating LP, 4.95%, 4/01/2022		170,000		169,575
DCP Midstream Operating LP, 3.875%, 3/15/2023		215,000		205,862
DCP Midstream Operating LP, 5.375%, 7/15/2025 (n)		180,000		180,225
DCP Midstream Operating LP, 5.6%, 4/01/2044		130,000		115,375
Energy Transfer Equity LP, 5.875%, 1/15/2024		360,000		370,768
EnLink Midstream Partners LP, 4.4%, 4/01/2024		305,000		290,972
Tallgrass Energy LP, 5.5%, 1/15/2028 (n)		655,000		643,537
Targa Resources Partners LP/Targa Resources Finance Corp., 5.25%, 5/01/2023		170,000		169,575

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Midstream - continued
Targa Resources Partners LP/Targa Resources Finance Corp., 5.125%, 2/01/2025 (n)	$	260,000	$	250,900
Targa Resources Partners LP/Targa Resources Finance Corp., 5.375%, 2/01/2027		695,000		667,200

			$	3,802,864
Network & Telecom - 1.1%
Zayo Group LLC/Zayo Capital, Inc., 6.375%, 5/15/2025	$	190,000	$	186,438
Zayo Group LLC/Zayo Capital, Inc., 5.75%, 1/15/2027 (n)		380,000		362,900

			$	549,338
Oil Services - 1.3%
Apergy Corp., 6.375%, 5/01/2026 (n)	$	305,000	$	301,950
Diamond Offshore Drill Co., 7.875%, 8/15/2025		140,000		124,950
Diamond Offshore Drill Co., 5.7%, 10/15/2039		335,000		214,400

			$	641,300
Oils - 0.9%
Parkland Fuel Corp., 6%, 4/01/2026 (n)	$	440,000	$	426,800

Pharmaceuticals - 1.6%
Endo Finance LLC/Endo Finco, Inc., 5.375%, 1/15/2023 (z)	$	90,000	$	74,025
Mallinckrodt International Finance S.A., 5.75%, 8/01/2022 (n)		210,000		191,415
Valeant Pharmaceuticals International, Inc., 5.5%, 3/01/2023 (n)		290,000		280,213
Valeant Pharmaceuticals International, Inc., 6.125%, 4/15/2025 (n)		230,000		215,901

			$	761,554
Precious Metals & Minerals - 0.5%
Teck Resources Ltd., 6%, 8/15/2040	$	30,000	$	28,950
Teck Resources Ltd., 6.25%, 7/15/2041		240,000		236,700

			$	265,650
Printing & Publishing - 0.7%
Nielsen Co. Lux S.A.R.L., 5%, 2/01/2025 (n)	$	35,000	$	34,125
Nielsen Finance LLC, 5%, 4/15/2022 (n)		302,000		295,326

			$	329,451
Real Estate - Healthcare - 1.4%
MPT Operating Partnership LP/MPT Financial Co., REIT, 5.25%, 8/01/2026	$	325,000	$	316,063
MPT Operating Partnership LP/MPT Financial Co., REIT, 5%, 10/15/2027		360,000		342,000

			$	658,063

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Real Estate - Other - 1.2%
CyrusOne LP/CyrusOne Finance Corp., REIT, 5%, 3/15/2024	$	385,000	$	382,113
CyrusOne LP/CyrusOne Finance Corp., REIT, 5.375%, 3/15/2027		215,000		210,700

			$	592,813
Restaurants - 1.0%
Golden Nugget, Inc., 6.75%, 10/15/2024 (n)	$	140,000	$	137,550
KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC, 5.25%, 6/01/2026 (n)		340,000		333,411

			$	470,961
Retailers - 1.2%
DriveTime Automotive Group, Inc./DT Acceptance Corp., 8%, 6/01/2021 (n)	$	165,000	$	166,650
Hanesbrands, Inc., 4.625%, 5/15/2024 (n)		90,000		86,625
Hanesbrands, Inc., 4.875%, 5/15/2026 (n)		355,000		333,700

			$	586,975
Specialty Chemicals - 0.9%
Univar USA, Inc., 6.75%, 7/15/2023 (n)	$	430,000	$	429,463

Specialty Stores - 0.4%
Penske Automotive Group Co., 5.375%, 12/01/2024	$	55,000	$	52,181
Penske Automotive Group Co., 5.5%, 5/15/2026		175,000		161,875

			$	214,056
Supermarkets - 0.6%
Albertsons Cos. LLC/Safeway Co., 6.625%, 6/15/2024	$	290,000	$	279,488

Telecommunications - Wireless - 6.8%
Altice France S.A., 8.125%, 2/01/2027 (n)	$	400,000	$	392,000
Altice Luxembourg S.A., 7.75%, 5/15/2022 (n)		200,000		190,500
Altice Luxembourg S.A., 7.625%, 2/15/2025 (n)		200,000		162,000
Digicel Group Ltd., 6.75%, 3/01/2023 (n)		225,000		181,125
SBA Communications Corp., 4%, 10/01/2022		360,000		347,400
SBA Communications Corp., 4.875%, 9/01/2024		145,000		140,672
SFR Group S.A., 7.375%, 5/01/2026 (n)		200,000		192,000
Sprint Corp., 7.875%, 9/15/2023		275,000		289,355
Sprint Corp., 7.125%, 6/15/2024		410,000		416,150
Sprint Nextel Corp., 6%, 11/15/2022		325,000		324,870
T-Mobile USA, Inc., 6.5%, 1/15/2024		95,000		97,850
T-Mobile USA, Inc., 5.125%, 4/15/2025		195,000		193,537
T-Mobile USA, Inc., 6.5%, 1/15/2026		195,000		202,312
T-Mobile USA, Inc., 5.375%, 4/15/2027		165,000		160,463

			$	3,290,234

Portfolio of Investments – continued


Issuer	Shares/Par		Value ($)
Bonds - continued
Telephone Services - 1.0%
Level 3 Financing, Inc., 5.375%, 1/15/2024	$	130,000	$	127,594
Level 3 Financing, Inc., 5.375%, 5/01/2025		350,000		340,812

			$	468,406
Transportation - Services - 0.6%
Navios South American Logistics, Inc./Navios Logistics Finance (U.S.), Inc., 7.25%, 5/01/2022	$	110,000	$	100,375
Syncreon Group BV/Syncre, 8.625%, 11/01/2021 (n)		200,000		170,000

			$	270,375
Utilities - Electric Power - 3.4%
Clearway Energy Operating LLC, 5.75%, 10/15/2025 (n)	$	355,000	$	341,687
Covanta Holding Corp., 5.875%, 3/01/2024		235,000		226,481
Covanta Holding Corp., 5.875%, 7/01/2025		320,000		301,200
Covanta Holding Corp., 6%, 1/01/2027		270,000		251,100
Drax Finco PLC, 6.625%, 11/01/2025 (n)		220,000		216,150
NextEra Energy Operating Co., 4.25%, 9/15/2024 (n)		345,000		325,163
Pattern Energy Group, Inc., 5.875%, 2/01/2024 (n)		9,000		8,753

			$	1,670,534
Total Bonds (Identified Cost, $67,509,716)			$	64,584,766

Floating Rate Loans (r) - 0.5%
Consumer Products - 0.2%
Spectrum Brands, Inc., Term Loan B, 4.425%, 6/23/2022	$	66,933	$	66,110

Medical & Health Technology & Services - 0.3%
DaVita, Inc., Term Loan B, 5.094%, 6/24/2021	$	160,804	$	160,230
Total Floating Rate Loans (Identified Cost, $227,466)			$	226,340

Common Stocks - 0.4%
Oil Services - 0.4%
LTRI Holdings LP (a)(u) (Identified Cost, $72,000)		200	$	177,884



	Strike Price		First Exercise
Warrants - 0.0%
Forest & Paper Products - 0.0%
Appvion Holdings Corp. - Tranche A (1 share for 1 warrant) (a)	$	27.17		8/24/18	84	$	756
Appvion Holdings Corp. - Tranche B (1 share for 1 warrant) (a)		31.25		8/24/18	84		630
Total Warrants (Identified Cost, $0)						$	1,386

Portfolio of Investments – continued

Investment Companies (h) - 4.7%


Issuer	Shares/Par		Value ($)
Money Market Funds - 4.7%
MFS Institutional Money Market Portfolio, 2.31% (v) (Identified Cost, $2,300,293)		2,300,651	$	2,300,651

Other Assets, Less Liabilities - (38.7)%				(18,783,507	)
Net Assets - 100.0%			$	48,507,520

(a)	Non-income producing security.

(d)	In default.

(h)

An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund’s investments in affiliated issuers and in unaffiliated issuers were $2,300,651 and $64,990,376, respectively.

(n)

Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $39,145,807, representing 80.7% of net assets.

(p)	Payment-in-kind (PIK) security for which interest income may be received in additional securities and/or cash.

(r)

The remaining maturities of floating rate loans may be less than the stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty. These loans may be subject to restrictions on resale. The interest rate shown represents the weighted average of the floating interest rates on settled contracts within the loan facility at period end, unless otherwise indicated. The floating interest rates on settled contracts are determined periodically by reference to a base lending rate and a spread.

(u)	The security was valued using significant unobservable inputs and is considered level 3 under the fair value hierarchy. For further information about the fund’s level 3 holdings, please see Note 2 in the Notes to Financial Statements.

(v)	Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end.

(z)

Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:


Restricted Securities	Acquisition Date	Cost		Value
ARD Securities Finance, 8.75%, (8.75% cash or 8.75% PIK) 1/31/2023	11/05/18		$198,023		$163,472
CSC Holdings LLC, 5.5%, 5/15/2026	1/13/17		205,993		193,687
CSC Holdings LLC, 7.5%, 4/01/2028	6/11/18		203,998		206,240
Endo Finance LLC/Endo Finco, Inc., 5.375%, 1/15/2023	11/28/18-11/29/18		74,355		74,025
Marriot Ownership Resorts, Inc., 5.625%, 4/15/2023	11/14/18		271,494		267,975
Regional Care/LifePoint Health, Inc., 9.75%, 12/01/2026	8/30/18		180,000		179,325
Total Restricted Securities					$1,084,724
% of Net assets					2.2%

Portfolio of Investments – continued

The following abbreviations are used in this report and are defined:

FLR

Floating Rate. Interest rate resets periodically based on the parenthetically disclosed reference rate plus a spread (if any). The period-end rate reported may not be the current rate. All reference rates are USD unless otherwise noted.

PLC

Public Limited Company

REIT

Real Estate Investment Trust

Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below:

EUR

Euro

Derivative Contracts at 11/30/18

Forward Foreign Currency Exchange Contracts

Currency
Purchased

Currency
Sold

Counterparty

Settlement
Date

Unrealized
Appreciation
(Depreciation)

Asset Derivatives

USD

116,735

EUR

101,707

Citibank N.A.

1/11/2019

$1,151

USD

358,196

EUR

307,707

Goldman Sachs International

1/11/2019

8,503

$9,654

Futures Contracts

Description

Long/
Short

Currency

Contracts

Notional
Amount

Expiration
Date

Value/
Unrealized
Appreciation
(Depreciation)

Liability Derivatives

Interest Rate Futures

German Euro-Bobl 5 yr

Short

EUR

$149,403

December - 2018

$(1,338

)

U.S. Treasury Note 10 yr

Short

USD

836,172

March - 2019

(3,197

)

$(4,535

)

At November 30, 2018, the fund had cash collateral of $8,657 to cover any collateral or margin obligations for certain derivative contracts. Restricted cash and/or deposits with brokers in the Statement of Assets and Liabilities are comprised of cash collateral.

See Notes to Financial Statements

Financial Statements

STATEMENT OF ASSETS AND LIABILITIES

At 11/30/18

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.


Assets
Investments in unaffiliated issuers, at value (identified cost, $67,809,182)	$64,990,376
Investments in affiliated issuers, at value (identified cost, $2,300,293)	2,300,651
Cash	755
Deposits with brokers for
Futures contracts	8,657
Receivables for
Forward foreign currency exchange contracts	9,654
Investments sold	514,689
Interest	989,206
Other assets	1,958
Total assets	$68,815,946
Liabilities
Notes payable	$20,000,000
Payables for
Distributions	16,801
Daily variation margin on open futures contracts	1,020
Investments purchased	135,935
Payable to affiliates
Investment adviser	4,441
Transfer agent and dividend disbursing costs	204
Payable for independent Trustees’ compensation	15
Accrued interest expense	48,525
Accrued expenses and other liabilities	101,485
Total liabilities	$20,308,426
Net assets	$48,507,520
Net assets consist of
Paid-in capital	$56,110,999
Total distributable earnings (loss)	(7,603,479	)
Net assets	$48,507,520
Shares of beneficial interest outstanding	19,715,183
Net asset value per share (net assets of $48,507,520 / 19,715,183 shares of beneficial interest outstanding)	$2.46

See Notes to Financial Statements

Financial Statements

STATEMENT OF OPERATIONS

Year ended 11/30/18

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.


Net investment income (loss)
Income
Interest	$4,052,466
Dividends from affiliated issuers	38,619
Other	11,340
Total investment income	$4,102,425
Expenses
Management fee	$474,603
Transfer agent and dividend disbursing costs	16,284
Administrative services fee	17,787
Independent Trustees’ compensation	11,367
Stock exchange fee	23,753
Custodian fee	7,248
Reimbursement of custodian expenses	(3,183	)
Shareholder communications	62,014
Audit and tax fees	83,035
Legal fees	3,284
Interest expense and fees	557,849
Miscellaneous	42,626
Total expenses	$1,296,667
Reduction of expenses by investment adviser	(47,352	)
Net expenses	$1,249,315
Net investment income (loss)	$2,853,110
Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Unaffiliated issuers	$(624,139	)
Affiliated issuers	(298	)
Futures contracts	49,247
Forward foreign currency exchange contracts	18,678
Foreign currency	247
Net realized gain (loss)	$(556,265	)
Change in unrealized appreciation or depreciation
Unaffiliated issuers	$(3,907,437	)
Affiliated issuers	560
Futures contracts	(12,940	)
Forward foreign currency exchange contracts	9,654
Translation of assets and liabilities in foreign currencies	(35	)
Net unrealized gain (loss)	$(3,910,198	)
Net realized and unrealized gain (loss)	$(4,466,463	)
Change in net assets from operations	$(1,613,353	)

See Notes to Financial Statements

Financial Statements

STATEMENTS OF CHANGES IN NET ASSETS

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.


	Year ended
	11/30/18			11/30/17
Change in net assets
From operations
Net investment income (loss)		$2,853,110			$3,217,690
Net realized gain (loss)		(556,265	)		395,907
Net unrealized gain (loss)		(3,910,198	)		2,016,255
Change in net assets from operations		$(1,613,353	)		$5,629,852
Distributions to shareholders (a)		$(3,000,689	)		$(3,374,668	)
Tax return of capital distributions to shareholders		$(1,972,890	)		$(1,934,037	)
Change in net assets from fund share transactions		$144,505			$(2,155,759	)
Total change in net assets		$(6,442,427	)		$(1,834,612	)
Net assets
At beginning of period		54,949,947			56,784,559
At end of period (b)		$48,507,520			$54,949,947

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended November 30, 2017, distributions from net investment income were $3,374,668.

(b)	Parenthetical disclosure of accumulated distributions in excess of net investment income is no longer required. See Note 2. For the year ended November 30, 2017, end of period net assets included accumulated distributions in excess of net investment income of $44,890.

See Notes to Financial Statements

Financial Statements

STATEMENT OF CASH FLOWS

Year ended 11/30/18

This statement provides a summary of cash flows from investment activity for the fund.


Cash flows from operating activities:
Change in net assets from operations	$(1,613,353	)
Adjustments to reconcile change in net assets from operations to net cash provided by operating activities:
Purchase of investment securities	(36,644,399	)
Proceeds from disposition of investment securities	39,537,632
Proceeds from disposition of short-term investments, net	894,543
Realized gain/loss on investments	624,139
Unrealized appreciation/depreciation on investments	3,906,877
Unrealized appreciation/depreciation on foreign currency contracts	(9,654	)
Net amortization/accretion of income	88,910
Decrease in interest receivable	2,665
Decrease in accrued expenses and other liabilities	(2,051	)
Decrease in receivable for daily variation margin on open futures contracts	3,797
Increase in payable for daily variation margin on open futures contracts	1,020
Decrease in restricted cash	9,450
Increase in deposits with brokers	(8,657	)
Increase in other assets	(16	)
Increase in interest payable	12,845
Net cash provided by operating activities	$6,803,748
Cash flows from financing activities:
Distributions paid in cash	(4,832,432	)
Decrease in notes payable	(2,000,000	)
Net cash used by financing activities	$(6,832,432	)
Net decrease in cash	$(28,684	)
Cash:
Beginning of period	$29,439
End of period	$755

Supplemental disclosure of cash flow information:

Non-cash financing activities not included herein consist of reinvestment of dividends and distributions of $144,505.

Cash paid during the year ended November 30, 2018 for interest was $545,004.

See Notes to Financial Statements

Financial Statements

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the fund’s financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.


	Year ended
	11/30/18			11/30/17			11/30/16			11/30/15			11/30/14
Net asset value, beginning of period		$2.79			$2.77			$2.70			$3.09			$3.16
Income (loss) from investment operations
Net investment income (loss) (d)		$0.14	(c)		$0.16			$0.19			$0.20			$0.21
Net realized and unrealized gain (loss)		(0.22	)		0.12			0.14			(0.33	)		(0.05	)
Total from investment operations		$(0.08	)		$0.28			$0.33			$(0.13	)		$0.16
Less distributions declared to shareholders
From net investment income		$(0.15	)		$(0.17	)		$(0.20	)		$(0.21	)		$(0.23	)
From tax return of capital		(0.10	)		(0.10	)		(0.06	)		(0.05	)		—
Total distributions declared to shareholders		$(0.25	)		$(0.27	)		$(0.26	)		$(0.26	)		$(0.23	)
Net increase from repurchase of capital shares		$—			$0.01			$0.00	(w)		$0.00	(w)		$0.00	(w)
Net asset value, end of period (x)		$2.46			$2.79			$2.77			$2.70			$3.09
Market value, end of period		$2.29			$2.75			$2.48			$2.32			$2.73
Total return at market value (%)		(8.21	)		22.30			18.72			(6.15	)		5.46
Total return at net asset value (%) (j)(r)(s)(x)		(2.81	)(c)		11.09			13.94			(3.50	)		5.77
Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		2.50	(c)		2.15			2.07			1.77			1.66
Expenses after expense reductions (f)		2.41	(c)		2.05			1.84			1.70			1.61
Net investment income (loss)		5.50	(c)		5.75			6.97			6.63			6.61
Portfolio turnover		45			49			34			34			48
Net assets at end of period (000 omitted)		$48,508			$54,950			$56,785			$56,362			$65,100
Supplemental Ratios (%):
Ratios of expenses to average net assets after expense reductions and excluding interest expense and fees (f)		1.33	(c)		1.34			1.34			1.35			1.34
Senior Securities:
Total notes payable outstanding (000 omitted)		$20,000			$22,000			$22,000			$22,000			$22,000
Asset coverage per $1,000 of indebtedness (k)		$3,425			$3,498			$3,581			$3,562			$3,959

Financial Highlights – continued

(c)	Amount reflects a one-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher. See Note 2 in the Notes to Financial Statements for additional information.

(d)	Per share data is based on average shares outstanding.

(f)	Ratios do not reflect reductions from fees paid indirectly, if applicable.

(j)	Total return at net asset value is calculated using the net asset value of the fund, not the publicly traded price and therefore may be different than the total return at market value.

(k)	Calculated by subtracting the fund’s total liabilities (not including notes payable) from the fund’s total assets and dividing this number by the notes payable outstanding and then multiplying by 1,000.

(r)	Certain expenses have been reduced without which performance would have been lower.

(s)	From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

(w)	Per share amount was less than $0.01.

(x)	The net asset values and total returns at net asset value have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes.

See Notes to Financial Statements

NOTES TO FINANCIAL STATEMENTS

(1) Business and Organization

MFS Intermediate High Income Fund (the fund) is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a diversified closed-end management investment company.

The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.

(2) Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in high-yield securities rated below investment grade. Investments in below investment grade quality securities can involve a substantially greater risk of default or can already be in default, and their values can decline significantly. Below investment grade quality securities tend to be more sensitive to adverse news about the issuer, or the market or economy in general, than higher quality debt instruments. The fund invests in foreign securities. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political, regulatory, geopolitical, and other conditions.

In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230) – Restricted Cash (“ASU 2016-18”). For entities that have restricted cash and are required to present a statement of cash flows, ASU 2016-18 changes the cash flow presentation for restricted cash. Management has evaluated the potential impacts of ASU 2016-18 and expects that the effects of the fund’s adoption will be limited to the reclassification of restricted cash on the fund’s Statement of Cash Flows and the addition of disclosures regarding the nature of the restrictions on restricted cash. ASU 2016-18 will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods.

In March 2017, the FASB issued Accounting Standards Update 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) – Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). For entities that hold callable debt securities at a premium, ASU 2017-08 requires that the premium be amortized to the earliest call date. ASU 2017-08 will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Management has evaluated the potential impacts of ASU 2017-08 and believes that adoption of ASU 2017-08 will not have a material effect on the fund’s overall financial position or its overall results of operations.

Notes to Financial Statements – continued

In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”) which introduces new fair value disclosure requirements as well as eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years; however, management has elected to early adopt ASU 2018-13 effective with the current reporting period. The impact of the fund’s adoption was limited to changes in the fund’s financial statement disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy.

In August 2018, the Securities and Exchange Commission (SEC) released its Final Rule on Disclosure Update and Simplification (the “Final Rule”) which is intended to simplify an issuer’s disclosure compliance efforts by removing redundant or outdated disclosure requirements without significantly altering the mix of information provided to investors. Effective with the current reporting period, the fund adopted the Final Rule with the impacts being that the fund is no longer required to present the components of distributable earnings on the Statement of Assets and Liabilities or the sources of distributions to shareholders and the amount of undistributed net investment income on the Statements of Changes in Net Assets.

Balance Sheet Offsetting – The fund’s accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund’s right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.

Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Debt instruments and floating rate loans, including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Futures contracts are generally valued at last posted settlement price on their primary exchange as provided by a third-party pricing service. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation on their primary exchange as provided by a third-party pricing service. Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Open-end investment companies are

Notes to Financial Statements – continued

generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining

Notes to Financial Statements – continued

the fair value of investments. Other financial instruments are derivative instruments, such as futures contracts and forward foreign currency exchange contracts. The following is a summary of the levels used as of November 30, 2018 in valuing the fund’s assets or liabilities:


Financial Instruments	Level 1			Level 2		Level 3		Total
Equity Securities		$—			$1,386		$177,884		$179,270
U.S. Corporate Bonds		—			53,269,465		—		53,269,465
Foreign Bonds		—			11,315,301		—		11,315,301
Floating Rate Loans		—			226,340		—		226,340
Mutual Funds		2,300,651			—		—		2,300,651
Total		$2,300,651			$64,812,492		$177,884		$67,291,027

Other Financial Instruments
Futures Contracts – Liabilities		$(4,535	)		$—		$—		$(4,535	)
Forward Foreign Currency Exchange Contracts – Assets		—			9,654		—		9,654

For further information regarding security characteristics, see the Portfolio of Investments.

The following is a reconciliation of level 3 assets for which significant unobservable inputs were used to determine fair value. The table presents the activity of level 3 securities held at the beginning and the end of the period.


	Equity Securities
Balance as of 11/30/17		$177,884
Change in unrealized appreciation or depreciation		0
Balance as of 11/30/18		$177,884

The net change in unrealized appreciation or depreciation from investments held as level 3 at November 30, 2018 is $0. At November 30, 2018, the fund held one level 3 security.

Foreign Currency Translation – Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.

Derivatives – The fund uses derivatives primarily to increase or decrease exposure to a particular market or segment of the market, or security, to increase or decrease interest rate or currency exposure, or as alternatives to direct investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to

Notes to Financial Statements – continued

increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund during the period were futures contracts and forward foreign currency exchange contracts. Depending on the type of derivative, the fund may exit a derivative position by entering into an offsetting transaction with a counterparty or exchange, negotiating an agreement with the derivative counterparty, or novating the position to a third party. The fund may be unable to promptly close out a futures position in instances where the daily fluctuation in the price for that type of future exceeds the daily limit set by the exchange. The fund’s period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract tables, generally are indicative of the volume of its derivative activity during the period.

The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at November 30, 2018 as reported in the Statement of Assets and Liabilities:


		Fair Value (a)
Risk	Derivative Contracts	Asset Derivatives		Liability Derivatives
Interest Rate	Interest Rate Futures		$—	$	(4,535	)
Foreign Exchange	Forward Foreign Currency Exchange Contracts		9,654		—
Total			$9,654	$	(4,535	)

(a)	Values presented in this table for futures contracts correspond to the values reported in the fund’s Portfolio of Investments. Only the current day net variation margin for futures contracts is separately reported within the fund’s Statement of Assets and Liabilities.

The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the year ended November 30, 2018 as reported in the Statement of Operations:


Risk	Futures Contracts		Forward Foreign Currency Exchange Contracts
Interest Rate		$49,247		$—
Foreign Exchange		—		18,678
Total		$49,247		$18,678

The following table presents, by major type of derivative contract, the change in unrealized appreciation or depreciation on derivatives held by the fund for the year ended November 30, 2018 as reported in the Statement of Operations:


Risk	Futures Contracts			Forward Foreign Currency Exchange Contracts
Interest Rate		$(12,940	)		$—
Foreign Exchange		—			9,654
Total		$(12,940	)		$9,654

Notes to Financial Statements – continued

Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain, but not all, uncleared derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an ISDA Master Agreement on a bilateral basis. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a specified deterioration in the credit quality of the other party. Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right to close out all transactions traded under such agreement and to net amounts owed under each agreement to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any.

Collateral and margin requirements differ by type of derivative. For cleared derivatives (e.g., futures contracts, cleared swaps, and exchange-traded options), margin requirements are set by the clearing broker and the clearing house and collateral, in the form of cash or securities, is posted by the fund directly with the clearing broker. Collateral terms are counterparty agreement specific for uncleared derivatives (e.g., forward foreign currency exchange contracts, uncleared swap agreements, and uncleared options) and collateral, in the form of cash and securities, is held in segregated accounts with the fund’s custodian in connection with these agreements. For derivatives traded under an ISDA Master Agreement, which contains a collateral support annex, the collateral requirements are netted across all transactions traded under such counterparty-specific agreement and one amount is posted from one party to the other to collateralize such obligations. Cash that has been segregated or delivered to cover the fund’s collateral or margin obligations under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities as restricted cash for uncleared derivatives and/or deposits with brokers for cleared derivatives. Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments. The fund may be required to make payments of interest on uncovered collateral or margin obligations with the broker. Any such payments are included in “Interest expense and fees” in the Statement of Operations.

Futures Contracts – The fund entered into futures contracts which may be used to hedge against or obtain broad market exposure, interest rate exposure, currency exposure, or to manage duration. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the fund is required to deposit with the broker, either in cash or securities, an initial margin in an amount equal to a specified percentage of the notional amount of the contract. Subsequent payments (variation margin) are made or received by the fund each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gain or loss by the fund until the contract is closed or expires at which point the gain or loss on futures contracts is realized.

The fund bears the risk of interest rates, exchange rates or securities prices moving unexpectedly, in which case, the fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. While futures contracts may present less

Notes to Financial Statements – continued

counterparty risk to the fund since the contracts are exchange traded and the exchange’s clearinghouse guarantees payments to the broker, there is still counterparty credit risk due to the insolvency of the broker. The fund’s maximum risk of loss due to counterparty credit risk is equal to the margin posted by the fund to the broker plus any gains or minus any losses on the outstanding futures contracts.

Forward Foreign Currency Exchange Contracts – The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be used to hedge the fund’s currency risk or for non-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. For non-hedging purposes, the fund may enter into contracts with the intent of changing the relative exposure of the fund’s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.

Forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on forward foreign currency exchange contracts.

Risks may arise upon entering into these contracts from unanticipated movements in the value of the contract and from the potential inability of counterparties to meet the terms of their contracts. Generally, the fund’s maximum risk due to counterparty credit risk is the unrealized gain on the contract due to the use of Continuous Linked Settlement, a multicurrency cash settlement system for the centralized settlement of foreign transactions. This risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and, where applicable, by the posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Loans and Other Direct Debt Instruments – The fund invests in loans and loan participations or other receivables. These investments may include standby financing commitments, including revolving credit facilities, which contractually obligate the fund to supply additional cash to the borrower on demand. The fund generally provides this financial support in order to preserve its existing investment or to obtain a more senior secured interest in the assets of the borrower. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary.

Statement of Cash Flows – Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows is the amount included within the fund’s Statement of Assets and Liabilities and includes cash on hand at its custodian bank and does not include any short-term investments.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the

Notes to Financial Statements – continued

performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. The fund earns certain fees in connection with its floating rate loan purchasing activities. These fees are in addition to interest payments earned and may include amendment fees, commitment fees, facility fees, consent fees, and prepayment fees. Commitment fees are recorded on an accrual basis as income in the accompanying financial statements. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Interest payments received in additional securities are recorded on the ex-interest date in an amount equal to the value of the security on such date. Debt obligations may be placed on non-accrual status or set to accrue at a rate of interest less than the contractual coupon when the collection of all or a portion of interest has become doubtful. Interest income for those debt obligations may be further reduced by the write-off of the related interest receivables when deemed uncollectible.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Reimbursement of Expenses by Custodian – The fund’s custodian (or former custodian), State Street Bank and Trust Company, reimbursed its asset servicing clients for expense amounts that it billed in error during the period 1998 through 2015. The amount of this one-time reimbursement attributable to the fund is reflected as “Reimbursement of custodian expenses” in the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.

Notes to Financial Statements – continued

Distributions to shareholders are recorded on the ex-dividend date. The fund seeks to pay monthly distributions based on an annual rate of 9.50% of the fund’s average monthly net asset value. As a result, distributions may exceed actual earnings which may result in a tax return of capital or, to the extent the fund has long-term gains and a capital loss carryforward, distributions of current year long-term gains may be recharacterized as ordinary income. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.

Book/tax differences primarily relate to expiration of capital loss carryforwards.

The tax character of distributions declared to shareholders for the last two fiscal years is as follows:


	Year ended		Year ended
	11/30/18		11/30/17
Ordinary income (including any short-term capital gains)		$3,000,689		$3,374,668
Tax return of capital (b)		1,972,890		1,934,037
Total distributions		$4,973,579		$5,308,705

(b)	Distributions in excess of tax basis earnings and profits are reported in the financial statements as a tax return of capital.

The federal tax cost and the tax basis components of distributable earnings were as follows:


As of 11/30/18
Cost of investments	$70,242,705
Gross appreciation	281,421
Gross depreciation	(3,227,980	)
Net unrealized appreciation (depreciation)	$(2,946,559	)
Capital loss carryforwards	(4,640,083	)
Other temporary differences	(16,837	)

As of November 30, 2018, the fund had capital loss carryforwards available to offset future realized gains. These net capital losses may be carried forward indefinitely and their character is retained as short-term and/or long-term losses. Such losses are characterized as follows:


Short-Term	$(403,891	)
Long-Term	(4,236,192	)
Total	$(4,640,083	)

(3) Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and

Notes to Financial Statements – continued

facilities to the fund. The management fee is computed daily and paid monthly at an annual rate of 0.65% of the fund’s average daily net assets. The fund pays the adviser a monthly fee equal to 20% of the fund’s leverage income after deducting the expenses of leveraging (“net leverage income”); provided, however, if the fund’s net leverage income is less than zero, the adviser pays the fund the percentage indicated of the fund’s net leverage income. The management fee incurred for the year ended November 30, 2018 was equivalent to an annual effective rate of 0.92% of the fund’s average daily net assets.

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total fund operating expenses do not exceed 1.34% annually of the fund’s average daily net assets. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until November 30, 2019. For the year ended November 30, 2018, this reduction amounted to $47,352, which is included in the reduction of total expenses in the Statement of Operations.

Transfer Agent – The fund engages Computershare Trust Company, N.A. (“Computershare”) as the sole transfer agent for the fund. MFS Service Center, Inc. (MFSC) monitors and supervises the activities of Computershare for an agreed upon fee approved by the Board of Trustees. For the year ended November 30, 2018, these fees paid to MFSC amounted to $2,838.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the year ended November 30, 2018 was equivalent to an annual effective rate of 0.0343% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into a service agreement (the ISO Agreement) which provides for payment of fees solely by the funds to Tarantino LLC in return for the provision of services of an Independent Senior Officer (ISO) for the funds. Frank L. Tarantino serves as the ISO and is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the ISO Agreement with Tarantino LLC at any time under the terms of the ISO Agreement. For the year ended November 30, 2018, the fee paid by the fund under this agreement was $85 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

Notes to Financial Statements – continued

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS.

(4) Portfolio Securities

For the year ended November 30, 2018, purchases and sales of investments, other than short-term obligations, aggregated $32,148,266 and $35,629,201, respectively.

(5) Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. The Trustees have authorized the repurchase by the fund of up to 10% annually of its own shares of beneficial interest. During the year ended November 30, 2018, the fund did not repurchase any shares. The fund repurchased 860,544 shares of beneficial interest during the year ended November 30, 2017 at an average price per share of $2.61 and a weighted average discount of 7.78% per share. Transactions in fund shares were as follows:


	Year ended 11/30/18				Year ended 11/30/17
	Shares		Amount		Shares			Amount
Shares issued to shareholders in reinvestment of distributions		54,110		$144,505		30,369			$86,253
Capital shares reacquired		—		—		(860,544	)		(2,242,012	)
Net change		54,110		$144,505		(830,175	)		$(2,155,759	)

(6) Loan Agreement

The fund has a credit agreement with a bank for a revolving secured line of credit that can be drawn upon up to $25,000,000. At November 30, 2018, the fund had outstanding borrowings under this agreement in the amount of $20,000,000, which are secured by a lien on the fund’s assets. The loan’s carrying value in the fund’s Statement of Assets and Liabilities approximates its fair value. The loan value as of the reporting date is considered level 2 under the fair value hierarchy. The credit agreement matures on August 19, 2019. Borrowings under the agreement can be made for liquidity or leverage purposes. Interest is charged at a rate per annum equal to LIBOR plus an agreed upon spread with the option to choose LIBOR periods of overnight, 1, 2, 3, or 6 months, or at the option of the borrower an alternate base rate plus an agreed upon spread. The fund incurred interest expense of $553,627 during the period, which is included in “Interest expense and fees” in the Statement of Operations. The fund may also be charged a commitment fee based on the average daily unused portion of the line of credit. The fund paid a commitment fee of $4,036 during the period, which is included in “Interest expense and fees” in the Statement of Operations. For the year ended November 30, 2018, the average loan balance was $21,810,959 at a weighted average annual interest rate of 2.54%. The fund is subject to certain covenants including, but not limited to, requirements with respect to asset coverage, portfolio diversification and liquidity.

Notes to Financial Statements – continued

(7) Investments in Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:


Affiliated Issuers				Beginning Shares/Par Amount		Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount
MFS Institutional Money Market Portfolio					3,194,953		20,324,172		(21,218,474	)		2,300,651

Affiliated Issuers	Realized Gain (Loss)			Change in Unrealized Appreciation/ Depreciation		Capital Gain Distributions		Dividend Income			Ending Value
MFS Institutional Money Market Portfolio		$(298	)		$560		$—		$38,619			$2,300,651

(8) Legal Proceedings

In May 2015, the Motors Liquidation Company Avoidance Action Trust (hereafter, “AAT”) served upon the fund a complaint in an adversary proceeding in the U.S. Bankruptcy Court for the Southern District of New York, captioned Motors Liquidation Company Avoidance Action Trust v. JPMorgan Chase Bank, N.A., et al. (No. 09-00504 (REG)). The complaint, which was originally filed in 2009 but not served on the fund until 2015, names as defendants over 500 entities (including the fund) that held an interest in a $1.5 billion General Motors (GM) term loan in 2009, when GM filed for bankruptcy. The AAT alleges that the fund and the other term loan lenders were improperly treated as secured lenders with respect to the term loan shortly before and immediately after GM’s bankruptcy, receiving full principal and interest payments under the loan. The AAT alleges that the fund and other term loan lenders should have been treated as unsecured (or partially unsecured) creditors because the main lien securing the collateral was allegedly not perfected at the time of GM’s bankruptcy due to an erroneous filing in October 2008 that terminated the financing statement perfecting the lien. The AAT seeks to claw back payments made to the fund and the other term loan lenders after, and during the 90 days before, GM’s June 2009 bankruptcy petition. During that time period, the fund received term loan payments of approximately $380,000. The fund cannot predict the outcome of this proceeding. Among other things, it is unclear whether the AAT’s claims will succeed; what the fund would be entitled to as an unsecured (or partially unsecured) creditor, given the existence of other collateral not impacted by the erroneous October 2008 filing; whether third parties responsible for the erroneous October 2008 filing would bear some or all of any liability; and the degree to which the fund may be entitled to indemnification from a third party for any amount required to be disgorged. The fund has and will continue to incur legal expenses associated with the defense of this action and in related claims against third parties.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Trustees of MFS Intermediate High Income Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of MFS Intermediate High Income Fund (the “Fund”), including the portfolio of investments, as of November 30, 2018, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at November 30, 2018, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2018, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included

Report of Independent Registered Public Accounting Firm – continued

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

LOGO

We have served as the auditor of one or more MFS investment companies since 1993.

Boston, Massachusetts

January 15, 2019

RESULTS OF SHAREHOLDER MEETING

(unaudited)

At the annual meeting of shareholders of MFS Intermediate High Income Fund, which was held on October 4, 2018, the following action was taken:

Item 1: To elect the following individuals as Trustees:


	Number of Shares
Nominee	For		Withheld Authority
John A. Caroselli		13,780,008.342		916,437.451
Clarence Otis, Jr.		13,778,188.342		918,257.451
Robin A. Stelmach		13,784,503.989		911,941.804

TRUSTEES AND OFFICERS — IDENTIFICATION AND BACKGROUND

The Trustees and Officers of the Trust, as of January 1, 2019, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.

Name, Age

Position(s)
Held

with Fund

Trustee/
Officer

Since^(h)

Term

Expiring

Number
of MFS
Funds
overseen
by the
Trustee

Principal
Occupations

During

the Past

Five Years

Other

Directorships
During the
Past Five
Years^(j)

INTERESTED TRUSTEES

Robert J. Manning^(k)
(age 55)

Trustee

February 2004

2019

135

Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015); Co-Chief Executive Officer (2015-2016)

N/A

Robin A. Stelmach^(k)

(age 57)

Trustee

January 2014

2021

135

Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)

N/A

INDEPENDENT TRUSTEES

John P. Kavanaugh

(age 64)

Trustee and Chair of Trustees

January 2009

2020

135

Private investor

N/A

Steven E. Buller

(age 67)

Trustee

February 2014

2020

135

Financial Accounting Standards Advisory Council, Chairman (2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)

N/A

Trustees and Officers – continued

Name, Age

Position(s)
Held

with Fund

Trustee/
Officer

Since^(h)

Term

Expiring

Number
of MFS
Funds
overseen
by the
Trustee

Principal
Occupations

During

the Past

Five Years

Other

Directorships
During the
Past Five
Years^(j)

John A. Caroselli

(age 64)

Trustee

March 2017

2021

135

JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)

N/A

Maureen R. Goldfarb

(age 63)

Trustee

January 2009

2019

135

Private investor

N/A

Michael Hegarty
(age 74)

Trustee

December 2004

2020

135

Private investor

Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones
(age 63)

Trustee

January 2019

2020

135

Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)

N/A

James W. Kilman, Jr.
(age 57)

Trustee

January 2019

2021

135

KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking, Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)

alpha-En Corporation, Director (since 2016)

Trustees and Officers – continued

Name, Age

Position(s)
Held

with Fund

Trustee/
Officer

Since^(h)

Term

Expiring

Number
of MFS
Funds
overseen
by the
Trustee

Principal
Occupations

During

the Past

Five Years

Other

Directorships
During the
Past Five
Years^(j)

Clarence Otis, Jr.

(age 62)

Trustee

March 2017

2021

135

Darden Restaurants, Inc., Chief Executive Officer (until 2014)

VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke

(age 62)

Trustee

May 2014

2019

135

American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)

N/A

Laurie J. Thomsen
(age 61)

Trustee

March 2005

2019

135

Private investor

The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since^(h)	Term Expiring	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane^(k) (age 44)	Assistant Secretary and Assistant Clerk	July 2005	N/A	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel
Kino Clark^(k) (age 50)	Assistant Treasurer	January 2012	N/A	135	Massachusetts Financial Services Company, Vice President
John W. Clark, Jr.^(k) (age 51)	Assistant Treasurer	April 2017	N/A	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head –Treasurer’s Office (until February 2017)

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since^(h)	Term Expiring	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Thomas H. Connors^(k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	N/A	135	Massachusetts Financial Services Company, Vice President and Senior Counsel
Ethan D. Corey^(k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	N/A	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel
David L. DiLorenzo^(k) (age 50)	President	July 2005	N/A	135	Massachusetts Financial Services Company, Senior Vice President
Heidi W. Hardin^(k) (age 51)	Secretary and Clerk	April 2017	N/A	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)
Brian E. Langenfeld^(k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	N/A	135	Massachusetts Financial Services Company, Vice President and Senior Counsel
Amanda S. Mooradian^(k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	N/A	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel
Susan A. Pereira^(k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	N/A	135	Massachusetts Financial Services Company, Vice President and Senior Counsel
Kasey L. Phillips^(k) (age 48)	Assistant Treasurer	September 2012	N/A	135	Massachusetts Financial Services Company, Vice President

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since^(h)	Term Expiring	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Matthew A. Stowe^(k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	N/A	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	N/A	135	Tarantino LLC (provider of compliance services), Principal
Richard S. Weitzel^(k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	N/A	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel
Martin J. Wolin^(k) (age 51)	Chief Compliance Officer	July 2015	N/A	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)
James O. Yost^(k) (age 58)	Treasurer	September 1990	N/A	135	Massachusetts Financial Services Company, Senior Vice President

(h)

Date first appointed to serve as Trustee/officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. For the period from December 15, 2004 until February 22, 2005, Mr. Manning served as Advisory Trustee. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively.

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

“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 a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.

The Trust holds annual shareholder meetings for the purpose of electing Trustees, and Trustees are elected for fixed terms. The Board of Trustees is currently divided into three classes, each having a term of three years which term expires on the date of the third annual meeting following the election to office of the Trustee’s class. Each year the term of one class expires. Each Trustee and officer will serve until next elected or his or her earlier death, resignation, retirement or removal. Under the terms of the

Trustees and Officers – continued

Board’s retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.


Investment Adviser		Custodian
Massachusetts Financial Services Company		State Street Bank and Trust Company
111 Huntington Avenue		1 Lincoln Street
Boston, MA 02199-7618		Boston, MA 02111-2900
Portfolio Manager(s)		Independent Registered Public Accounting Firm
David Cole		Ernst & Young LLP
Michael Skatrud		200 Clarendon Street
		Boston, MA 02116

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2018 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by the MFS Funds’ Independent Senior Officer, a senior officer appointed by and reporting to the independent Trustees.

In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.

In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance (based on net asset value) of the Fund for various time periods ended December 31, 2017 and the investment performance (based on net asset value) of a group of funds with substantially similar investment classifications/ objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge (the “Broadridge expense group”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about MFS’ senior management and other personnel

Board Review of Investment Advisory Agreement – continued

providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.

The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s common shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s common shares ranked 7th out of a total of 28 funds in the Broadridge performance universe for this three-year period (a ranking of first place out of the total number of funds in the performance universe indicating the best performer and a ranking of last place out of the total number of funds in the performance universe indicating the worst performer). The total return performance of the Fund’s common shares ranked 19th out of a total of 31 funds for the one-year period and 9th out of a total of 24 funds for the five-year period ended December 31, 2017. Given the size of the Broadridge performance universe and information previously provided by MFS regarding differences between the Fund and other funds in its Broadridge performance universe, the Trustees also reviewed the Fund’s performance in comparison to the Bloomberg Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index. The Fund outperformed the Bloomberg Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index for each of the one-, three-, and five-year periods ended December 31, 2017 (one-year: 8.7% total return for the Fund versus 7.5% total return for the benchmark; three-year: 7.4% total return for the Fund versus 6.4% total return for the benchmark; five-year: 6.9% total return for the Fund versus 5.8% total return for the benchmark). Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

In the course of their deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance. After reviewing these and

Board Review of Investment Advisory Agreement – continued

related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.

In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s common shares as a percentage of average daily net assets and the advisory fee and total expense ratios of peer groups of funds based on information provided by Broadridge. The Trustees considered that MFS currently observes an expense limitation for the Fund, which may not be changed without the Trustees’ approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each lower than the Broadridge expense group median.

The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds.

The Trustees considered that, as a closed-end fund, the Fund is unlikely to experience meaningful asset growth. As a result, the Trustees did not view the potential for realization of economies of scale as the Fund’s assets grow to be a material factor in their deliberations. The Trustees noted that they would consider economies of scale in the future in the event the Fund experiences significant asset growth, such as through an offering of preferred shares (which is not currently contemplated) or a material increase in the market value of the Fund’s portfolio securities.

The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.

After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.

In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life

Board Review of Investment Advisory Agreement – continued

Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.

The Trustees also considered the nature, quality, cost, and extent of administrative services provided to the Fund by MFS under agreements other than the investment advisory agreement. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.

The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that, effective January 3, 2018, MFS had discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds and would thereafter voluntarily reimburse a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.

Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2018.

PROXY VOTING POLICIES AND INFORMATION

MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund’s fiscal year at mfs.com/closedendfunds by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available at https://www.mfs.com/en-us/what-we-do/announcements.html or at mfs.com/closedendfunds by choosing the fund’s name.

Additional information about the fund (e.g. performance, dividends and the fund’s price history) is also available by clicking on the fund’s name under “Closed-End Funds” in the “Products” section of mfs.com.

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

The fund has entered into contractual arrangements with an investment adviser, administrator, transfer agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the Trust’s By-Laws, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

FEDERAL TAX INFORMATION (unaudited)

The fund will notify shareholders of amounts for use in preparing 2018 income tax forms in January 2019.

rev. 3/16

FACTS

WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


Why?		Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

What?

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you are no longer our customer, we continue to share your information as described in this notice.


How?		All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share


Questions?		Call 800-225-2606 or go to mfs.com.


Page 2


Who we are
Who is providing this notice?		MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company.


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

LOGO

CONTACT US

TRANSFER AGENT, REGISTRAR, AND

DIVIDEND DISBURSING AGENT

CALL

1-800-637-2304

9 a.m. to 5 p.m. Eastern time

WRITE

Computershare Trust Company, N.A.

P.O. Box 43078

Providence, RI 02940-3078

New York Stock Exchange Symbol: CIF

ITEM 2.

CODE OF ETHICS.

The Registrant has adopted a Code of Ethics (the “Code”) pursuant to Section 406 of the Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the Registrant’s principal executive officer and principal financial and accounting officer. During the period covered by this report, the Registrant has not amended any provision in the Code that relates to an element of the Code’s definition enumerated in paragraph (b) of Item 2 of this Form N-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit waiver, from any provision of the Code.

A copy of the Code is filed as an exhibit to this Form N-CSR.

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT.

Messrs. Steven E. Buller and Clarence Otis, Jr. and Ms. Maryanne L. Roepke, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of “audit committee financial expert” as such term is defined in Form N-CSR. In addition, Messrs. Buller and Otis and Ms. Roepke are “independent” members of the Audit Committee (as such term has been defined by the Securities and Exchange Commission in regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The Securities and Exchange Commission has stated that the designation of a person as an audit committee financial expert pursuant to this Item 3 on the Form N-CSR does not impose on such a person any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Audit Committee and the Board of Trustees in the absence of such designation or identification.

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Items 4(a) through 4(d) and 4(g):

The Board of Trustees has appointed Ernst & Young LLP (“E&Y”) to serve as independent accountants to the Registrant (hereinafter the “Registrant” or the “Fund”). The tables below set forth the audit fees billed to the Fund as well as fees for non-audit services provided to the Fund and/or to the Fund’s investment adviser, Massachusetts Financial Services Company (“MFS”), and to various entities either controlling, controlled by, or under common control with MFS that provide ongoing services to the Fund (“MFS Related Entities”).

For the fiscal years ended November 30, 2018 and 2017, audit fees billed to the Fund by E&Y were as follows:


	Audit Fees
	2018		2017
Fees billed by E&Y:
MFS Intermediate High Income Fund		59,838		58,567

For the fiscal years ended November 30, 2018 and 2017, fees billed by E&Y for audit-related, tax and other services provided to the Fund and for audit-related, tax and other services provided to MFS and MFS Related Entities were as follows:

Audit-Related Fees¹

Tax Fees²

All Other Fees³

2018

2017

2018

2017

2018

2017

Fees billed by E&Y:

To MFS Intermediate High Income Fund

11,608

11,358

10,585

10,363

1,017

1,019

Audit-Related Fees¹

Tax Fees²

All Other Fees³

2018

2017

2018

2017

2018

2017

Fees billed by E&Y:

To MFS and MFS Related Entities of MFS Intermediate High Income Fund^*

1,728,076

1,603,983

103,950

101,450


	Aggregate Fees for Non-audit Services
	2018		2017
Fees Billed by E&Y:
To MFS Intermediate High Income Fund, MFS and MFS Related Entities^#		2,135,136		1,860,173

^*	This amount reflects the fees billed to MFS and MFS Related Entities 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 other funds within the MFS Funds complex).

#	This amount reflects the aggregate fees billed by E&Y for non-audit services rendered to the Fund and for non-audit services rendered to MFS and the MFS Related Entities.

The fees included under “Audit-Related Fees” are 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, attestation reports, comfort letters and internal control reviews.

²	The fees included under “Tax Fees” are 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.

³	The fees included under “All Other Fees” are fees for products and services provided by E&Y other than those reported under “Audit Fees,” “Audit-Related Fees” and “Tax Fees,” including fees for services related to review of internal controls and review of Rule 38a-1 compliance program.

Item 4(e)(1):

Set forth below are the policies and procedures established by the Audit Committee of the Board of Trustees relating to the pre-approval of audit and non-audit related services:

To the extent required by applicable law, pre-approval by the Audit Committee of the Board is needed for all audit and permissible non-audit services rendered to the Fund and all permissible non-audit services rendered to MFS or MFS Related Entities if the services relate directly to the operations and financial reporting of the Registrant. 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 for approval; 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.

Item 4(e)(2):

None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and All Other Fees paid by the Fund and MFS and MFS Related Entities relating directly to the operations and financial reporting of the Registrant disclosed above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (which permits audit committee approval after the start of the engagement with respect to services other than audit, review or attest services, if certain conditions are satisfied).

Item 4(f):

Not applicable.

Item 4(h):

The Registrant’s Audit Committee has considered whether the provision by a Registrant’s independent registered public accounting firm of non-audit services to MFS and MFS Related Entities that were not pre-approved by the Committee (because such services were provided prior to the effectiveness of SEC rules requiring pre-approval or because such services did not relate directly to the operations and financial reporting of the Registrant) was compatible with maintaining the independence of the independent registered public accounting firm as the Registrant’s principal auditors.

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS.

The Registrant has an Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. Effective January 1, 2019, the members of the Audit Committee are Messrs. Steven E. Buller, Clarence Otis, Jr., James W. Kilman, Jr., and Michael Hegarty and Ms. Maryanne L. Roepke.

ITEM 6.

SCHEDULE OF INVESTMENTS

A schedule of investments of the Registrant is included as part of the report to shareholders of the Registrant under Item 1 of this Form N-CSR.

ITEM 7.

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

A copy of the proxy voting policies and procedures are attached hereto as EX-99.PROXYPOL.

ITEM 8.

PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Portfolio Manager(s)

Information regarding the portfolio manager(s) of the MFS Intermediate High Income Fund (the “Fund”) is set forth below. Each portfolio manager is primarily responsible for the day-to-day management of the Fund.

Effective March 1, 2018, Michael Skatrud became a portfolio manager of the Fund. Effective September 1, 2018, William Adams is no longer a portfolio manager of the Fund.


Portfolio Manager	Primary Role	Since	Title and Five Year History
David Cole	Portfolio Manager	2007	Investment Officer of MFS; employed in the investment area of MFS since 2004.

Michael Skatrud	Portfolio Manager	March 2018	Investment Officer of MFS; employed in the investment area of MFS since 2013

Compensation

MFS’ philosophy is to align portfolio manager compensation with the goal to provide shareholders with long-term value through a collaborative investment process. Therefore, MFS uses long-term investment performance as well as contribution to the overall investment process and collaborative culture as key factors in determining portfolio manager compensation. In addition, MFS seeks to maintain total compensation programs that are competitive in the asset management industry in each geographic market where it has employees. MFS uses competitive compensation data to ensure that compensation practices are aligned with its goals of attracting, retaining, and motivating the highest-quality professionals.

MFS reviews portfolio manager compensation annually. In determining portfolio manager compensation, MFS uses quantitative means and qualitative means to help ensure a sustainable investment process. As of December 31, 2017, portfolio manager total cash compensation is a combination of base salary and performance bonus:

Base Salary – Base salary generally represents a smaller percentage of portfolio manager total cash compensation than performance bonus.

Performance Bonus – Generally, the performance bonus represents more than a majority of portfolio manager total cash compensation.

The performance bonus is based on a combination of quantitative and qualitative factors, generally with more weight given to the former and less weight given to the latter.

The quantitative portion is primarily based on the pre-tax performance of accounts managed by the portfolio manager over a range of fixed-length time periods, intended to provide the ability to assess performance over time periods consistent with a full market cycle and a strategy’s investment horizon. The fixed-length time periods include the portfolio manager’s full tenure on each fund and, when available, ten-, five-, and three-year periods. For portfolio managers who have served for less than three years, shorter-term periods, including the one-year period, will also be considered, as will performance in previous roles, if any, held at the firm. Emphasis is generally placed on longer performance periods when multiple performance periods are available. Performance is evaluated across the full set of strategies and portfolios managed by a given portfolio

manager, relative to appropriate peer group universes and/or representative indices (“benchmarks”). As of December 31, 2017, the following benchmarks were used to measure the following portfolio manager’s performance for the Fund:


Fund	Portfolio Manager	Benchmark(s)
MFS Intermediate High Income Fund	David Cole	Bloomberg Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index

	Michael Skatrud¹	Bloomberg Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index

¹	Information is as of March 1, 2018.

Benchmarks may include versions and components of indices, custom indices, and linked indices that combine performance of different indices for different portions of the time period, where appropriate.

The qualitative portion is based on the results of an annual internal peer review process (where portfolio managers are evaluated by other portfolio managers, analysts, and traders) and management’s assessment of overall portfolio manager contribution to the MFS investment process and the client experience (distinct from fund and other account performance).

The performance bonus is generally a combination of cash and a deferred cash award. A deferred cash award is issued for a cash value and becomes payable over a three-year vesting period if the portfolio manager remains in the continuous employ of MFS or its affiliates. During the vesting period, the value of the unfunded deferred cash award will fluctuate as though the portfolio manager had invested the cash value of the award in an MFS Fund(s) selected by the portfolio manager.

MFS Equity Plan – Portfolio managers also typically benefit from the opportunity to participate in the MFS Equity Plan. Equity interests are awarded by management, on a discretionary basis, taking into account tenure at MFS, contribution to the investment process, and other factors.

Finally, portfolio managers also participate in benefit plans (including a defined contribution plan and health and other insurance plans) and programs available generally to other employees of MFS. The percentage such benefits represent of any portfolio manager’s compensation depends upon the length of the individual’s tenure at MFS and salary level, as well as other factors.

Ownership of Fund Shares

The following table shows the dollar range of equity securities of the Fund beneficially owned by the Fund’s portfolio manager(s) as of the Fund’s fiscal year ended November 30, 2018. The following dollar ranges apply:

N. None

A. $1 – $10,000

B. $10,001 – $50,000

C. $50,001 – $100,000

D. $100,001 – $500,000

E. $500,001 – $1,000,000

F. Over $1,000,000


Name of Portfolio Manager		Dollar Range of Equity Securities in Fund
David Cole		N
Michael Skatrud¹		N

¹	Mr. Skatrud became a Portfolio Manager of the Fund on March 1, 2018.

Other Accounts

In addition to the Fund, each portfolio manager of the Fund is named as a portfolio manager of certain other accounts managed or sub-advised by MFS or an affiliate. The number and assets of these accounts were as follows as of the Fund’s fiscal year ended November 30, 2018:


	Registered Investment Companies*				Other Pooled Investment Vehicles				Other Accounts
Name	Number of Accounts		Total Assets		Number of Accounts		Total Assets		Number of Accounts		Total Assets
David Cole		12	$	7.6 billion		4	$	1.4 billion		1	$	42.3 million
Michael Skatrud (Became a Portfolio Manager of the Fund on March 1, 2018)		11	$	7.6 billion		5	$	723.1 million		1	$	42.3 million

*	Includes the Fund.

Advisory fees are not based upon performance of any of the accounts identified in the table above.

Potential Conflicts of Interest

MFS seeks to identify potential conflicts of interest resulting from a portfolio manager’s management of both the Fund and other accounts, and has adopted policies and procedures designed to address such potential conflicts.

The management of multiple funds and accounts (including proprietary accounts) gives rise to conflicts of interest if the funds and accounts have different objectives and strategies, benchmarks, time horizons and fees as a portfolio manager must allocate his or her time and investment ideas across multiple funds and accounts. In certain instances, there are securities which are suitable for the Fund’s portfolio as well as for accounts of MFS or its subsidiaries with similar investment objectives. MFS’ trade allocation policies may give rise to conflicts of interest if the Fund’s orders do not get fully executed or are delayed in getting executed due to being aggregated with those of other accounts of MFS or its subsidiaries. A portfolio manager may execute transactions for another fund or account that may adversely affect the value of the Fund’s investments. Investments selected for funds or accounts other than the Fund may outperform investments selected for the Fund.

When two or more clients are simultaneously engaged in the purchase or sale of the same security, the securities are allocated among clients in a manner believed by MFS to be fair and equitable to each. Allocations may be based on many factors and may not always be pro rata based on assets managed. The allocation methodology could have a detrimental effect on the price or volume of the security as far as the Fund is concerned.

MFS and/or a portfolio manager may have a financial incentive to allocate favorable or limited opportunity investments or structure the timing of investments to favor accounts other than the Fund, for instance, those that pay a higher advisory fee and/or have a performance adjustment and/or include an investment by the portfolio manager.

ITEM 9.

PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

MFS Intermediate High Income Fund


Period	(a) Total number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased under the Plans or Programs
12/01/17-12/31/17		0		N/A		0		1,964,627
1/01/18-1/31/18		0		N/A		0		1,964,627
2/01/18-2/28/18		0		N/A		0		1,964,627
3/01/18-3/31/18		0		N/A		0		1,964,627
4/01/18-4/30/18		0		N/A		0		1,964,627
5/01/18-5/31/18		0		N/A		0		1,964,627
6/01/18-6/30/18		0		N/A		0		1,964,627
7/01/18-7/31/18		0		N/A		0		1,964,627
8/01/18-8/31/18		0		N/A		0		1,964,627
9/01/18-9/30/18		0		N/A		0		1,964,627
10/1/18-10/31/18		0		N/A		0		1,971,518
11/1/18-11/30/18		0		N/A		0		1,971,518

*Total*		0		N/A		0

Note: The Board approved procedures to repurchase shares and reviews the results periodically. The notification to shareholders of the program is part of the semi-annual and annual reports sent to shareholders. These annual programs begin on October 1st of each year. The programs conform to the conditions of Rule 10b-18 of the Securities Exchange Act of 1934 and limit the aggregate number of shares that may be purchased in each annual period (October 1 through the following September 30) to 10% of the Registrant’s outstanding shares as of the first day of the plan year (October 1). The aggregate number of shares available for purchase for the October 1, 2018 plan year is 1,971,518.

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant’s Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407 (c)(2)(iv) of Regulation S-K or this Item.

ITEM 11.

CONTROLS AND PROCEDURES.

(a)

Based upon their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this Form N-CSR, the registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)

There were no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter covered by the report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 12.

DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

During the fiscal year ended November 30, 2018, there were no fees or income related to securities lending activities of the Registrant.

ITEM 13.

EXHIBITS.


(a)	(1)	Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached hereto as EX-99.COE.

	(2)	A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto as EX-99.302CERT.

	(3)	Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.

	(4)	Change in the registrant’s independent public accountant. Not applicable.

(b)	If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Attached hereto as EX-99.906CERT.

(c)	Proxy Voting Policies and Procedures pursuant to Item 7 of Form N-CSR. Attached hereto as EX-99.PROXYPOL.

(d)	Notices to Trust’s common shareholders in accordance with Investment Company Act Section 19(a) and Rule 19a-1. Attached hereto as EX-99.19a-1.

Notice

A copy of the Agreement and Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this instrument is 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 instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant: MFS INTERMEDIATE HIGH INCOME FUND


By (Signature and Title)*		DAVID L. DILORENZO
		David L. DiLorenzo, President

Date: January 15, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By (Signature and Title)*		DAVID L. DILORENZO
		David L. DiLorenzo, President (Principal Executive Officer)

Date: January 15, 2019


By (Signature and Title)*		JAMES O. YOST
		James O. Yost, Treasurer (Principal Financial Officer and Accounting Officer)

Date: January 15, 2019

*	Print name and title of each signing officer under his or her signature.