[MFS INVESTMENT MANAGEMENT LOGO]
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MFS[RegTM] INTERMEDIATE INCOME TRUST
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Semiannual Report
April 30,1997
[graphic: silhouette of a man and woman in front of circular window]
<PAGE>
Dear Shareholders:
The central theme for the past six months has been strong U.S. economic growth.
During this period the nation's gross domestic product grew at a 4.8% annual
rate and unemployment dropped to a 23-year low of 4.9%. The Federal Reserve
Board demonstrated its determination to keep inflation in check by hiking
interest rates. Accordingly, the U.S. bond market turned in a lackluster
performance, while the dollar soared. The 10-year U.S. Treasury yield rose by 38
basis points (0.38%), while the dollar appreciated from 1.5181 to 1.7295 German
marks per dollar.
Economic growth has been much less robust outside the United States. Fiscal
austerity and structural rigidities continue to constrain growth in Europe,
while Japan's private sector is struggling to overcome the deflationary impact
of deregulation and fiscal tightening. As a consequence, 10-year yields in
Germany and Japan declined modestly over the period, by 15 and seven basis
points (0.15% and 0.07%), respectively. Meanwhile, the higher-yielding markets
of Spain and Italy, driven by anticipation of European monetary union in 1999 as
well as by global investors' efforts to maintain portfolio yield, continued to
experience narrowing yield spreads versus Germany. As in past periods, the
Trust's ability to allocate up to 50% of its assets to international
fixed-income markets enhanced return and diversified the risk in the U.S.
government market.
The Trust's stock market price, which stood at $7.125 on October 31, 1996,
declined to $6.938 on April 30, 1997, while its net-asset-value (NAV) price
decreased from $7.82 to $7.70, representing a total return of 1.42% based on
market price and 2.57% based on NAV. For comparative purposes, the Salomon
Brothers Medium Term (one- to 10-year) Treasury Government Sponsored Index, an
unmanaged index of medium-term Treasury and agency securities, appreciated by
1.75% over this period, and the J.P. Morgan Nondollar Government Bond Index, an
unmanaged index of actively traded government bonds issued from 12 countries
(excluding the United States) with remaining maturities of at least one year,
appreciated by 3.67% in local currency terms.
U.S. Government Sector
With the backdrop of an economy operating near its long-term growth potential,
the U.S. fixed-income market has vacillated between opposing themes. The first
has been concern that, six years into this business expansion, and with the
economy operating near what is commonly viewed as full employment, inflationary
pressures could be building. The second has been the belief that, by some
measures, inflationary pressures have actually been abating. Stronger momentum
in the economy during the second half of 1996 and early in 1997 led the Federal
Reserve and the fixed-income market to focus on inflationary risks, pushing
yields on two-year and 10-year Treasuries from 5.58% and 6.05%, respectively, in
November, to highs of 6.54% and 6.98% in April. In anticipation of the March
tightening of monetary policy, our strategy was to de-emphasize intermediate-
maturity Treasuries and increase allocations to very short-maturity Treasuries,
offset by a slightly greater emphasis on longer-maturity 10-year Treasuries.
Although the degree of further Fed tightening over the next several months
remains uncertain, we believe the Fed will perceive the need for further modest
tightening. Should it choose to raise interest rates, short- and
intermediate-maturity securities would be the most adversely affected. By
repositioning our Treasury exposure between cash and longer maturities, we
believe we can reduce overall interest-rate sensitivity in the portfolio, while
reducing exposure to intermediate maturities.
In this environment, the mortgage-backed pass-through sector posted strong
relative performance, and we anticipate a continuation of this trend in the
months ahead. Mortgage securities tend to outperform Treasuries in uncertain
market environments for two important reasons. First, they are, on average,
shorter in maturity than outstanding Treasuries and, thus, decline less in price
as yields increase, as they did during 1996. Second, because they are
1
<PAGE>
higher-yielding securities, their additional coupon income provides a total
return cushion to help offset price declines. (Principal value and interest on
Treasury securities are guaranteed by the U.S. government if held to maturity.)
An index, or average, allocation to this sector would be about 36%. We recently
reduced our overweighting of this sector to an approximately neutral, or 36%,
weighting, but we will add to this sector should yield spreads widen during the
next few months.
International Sector
In 1996, we maintained the Trust's exposure to foreign markets near the limit of
50%, enabling the portfolio to capture the strong performance of the
higher-yielding Canadian, Australian, and European markets. More recently, the
foreign allocation has been reduced because U.S. interest rates appear
increasingly attractive from a global perspective. Of the 35% of assets
allocated to foreign bonds, 10% is invested in the dollar bloc, 15% in
higher-yielding European bonds, and 10% in emerging market instruments offering
attractive yields with low duration.
With the Fed tightening in the United States and yield spreads already tight by
historical standards, we do not anticipate rapid price appreciation in
international bond markets. Our focus, therefore, is on earning an attractive
yield within a high-quality portfolio and on capturing longer-term spread
convergence. Within the dollar bloc, we remain concentrated in Australian bonds
based on their high real (inflation-adjusted) yield and our belief that their
current spread versus U.S. Treasuries reflects undue fear of a rate hike by the
Reserve Bank of Australia. In Europe, we believe that European monetary union
will begin on time in 1999. This should help maintain downward pressure on yield
spreads throughout Europe -- even for countries such as Italy that may not
participate right away. As part of the convergence process, official interest
rates are likely to be cut in Italy, Spain, and possibly Sweden. Over time, we
would also expect emerging market spreads to shrink as investors become more
comfortable with these markets.
Although some of the forces pushing the dollar up may be waning, we remain
almost fully hedged back into the dollar. In the near term, we believe it should
be supported by capital inflows induced by favorable interest-rate and growth
differentials. Longer term, however, concern over worsening trade and current
accounts may temper this strength.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
/s/ Steven E. Nothern
Steven E. Nothern
Portfolio Manager
/s/ Christopher D. Piros
Christopher D. Piros
Portfolio Manager
May 14, 1997
2
<PAGE>
Investment Objective and Policies
The investment objective of MFS[RegTM] Intermediate Income Trust is to preserve
capital and provide high current income.
The Trust will attempt to achieve this objective by investing in obligations
issued or guaranteed by the U.S. government, its agencies, authorities, or
instrumentalities and in obligations issued or guaranteed by a foreign
government or any of its political subdivisions, authorities, agencies, or
instrumentalities. The Trust will maintain an average weighted portfolio
maturity of approximately seven years or less and will invest substantially all
of its assets in securities with remaining maturities less than or equal to 10
years. Under normal market conditions, the Trust's average weighted portfolio
maturity will not be less than three years. The Trust may enter into options and
futures transactions and forward foreign currency exchange contracts and
purchase securities on a "when-issued" basis.
Number of Shareholders
As of April 30, 1997, our records indicate that there are 17,257 registered
shareholders and approximately 101,000 shareholders owning Trust shares in
"street" name, such as through brokers, banks, and other financial
intermediaries.
If you are a "street" name shareholder and wish to directly receive our reports,
which contain important information about the Trust, please write or call:
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
1-800-637-2304
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Performance Summary
(For the period ended April 30, 1997)
<TABLE>
<S> <C>
Net Asset Value Per Share
October 31, 1996 $7.82
April 30, 1997 $7.70
New York Stock Exchange Price
October 31, 1996 $7.125
December 4, 1996 (high)* $7.250
April 25, 1997 (low)* $6.750
April 30, 1997 $6.938
</TABLE>
*For the period November 1, 1996, through April 30, 1997.
- ----------------------------------------------------------
Number of Employees
The Trust is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as a closed-end, nondiversified,
management investment company and has no employees.
New York Stock Exchange Symbol
The New York Stock Exchange symbol is MIN.
3
<PAGE>
Dividend Reinvestment and
Cash Purchase Plan
The Trust offers a Dividend Reinvestment and Cash Purchase Plan which allows you
to reinvest either all of the distributions or only the long-term capital gains
paid by the Trust. Unless the shares are trading at a premium (exceeding net
asset value), purchases are made at the market price. Otherwise, purchases will
be made at a discounted price of either the net asset value or 95% of the market
price, whichever is greater. You can also buy shares of the Trust. Investments
from $100 to $500 can be made in January and July on the 15th of the month or
shortly thereafter.
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 Trust. 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 commissions. A service fee of $0.75 is charged for
each cash purchase as well as a pro rata share of the brokerage commissions, if
any. 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.
To enroll in or withdraw from the Plan or to receive a brochure providing a
complete description of the Plan, please contact the Plan agent at the address
and telephone number located on the back cover of this report. Please have
available the name of the Trust and your account and Social Security numbers.
For certain types of registrations, such as corporate accounts, instructions
must be submitted in writing. When you withdraw from the Plan, you can receive
the value of the reinvested shares in one of two ways: a check for the value of
the full and fractional shares, or a certificate for the full shares and a check
for the fractional shares.
----------------------
In accordance with Section 23(c) of the Investment Company Act of 1940, the
Trust hereby gives notice that it may from time to time repurchase shares of the
Trust in the open market at the option of the Board of Trustees and on such
terms as the Trustees shall determine.
4
<PAGE>
Portfolio of Investments -- April 30, 1997
Bonds -- 90.7%
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
<S> <C> <C>
U.S. Bonds -- 61.7%
U.S. Federal Agencies -- 18.0%
AID Israel, 6.625s, 2003 ........................... $ 15,000 $ 14,880,300
AID Israel, 6.625s, 2004 ........................... 14,600 14,353,698
Federal National Mortgage Assn., 7.8s, 2002 ...... 21,000 20,983,620
Federal National Mortgage Assn., 8.33s, 2005 ...... 20,000 20,646,800
Federal National Mortgage Assn., 7.55s, 2007 ...... 18,000 17,980,380
Federal National Mortgage Assn., 9s, 2008 ......... 43 44,661
Federal National Mortgage Assn., 7s, 2026 ......... 64,702 62,679,735
Guaranteed Trade Trust, 7.39s, 2006 ............... 38,000 38,459,800
Private Export Funding Corp., 9.1s, 1998 ......... 9,000 9,348,750
-------------
$199,377,744
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U.S. Government Guaranteed -- 43.7%
Government National Mortgage Association -- 18.0%
GNMA, 7s, 2023 - 2026 .............................. $ 85,714 $ 83,181,001
GNMA, 7.5s, 2022 - 2026 ........................... 53,423 52,994,788
GNMA, 8s, 2025 - 2026 .............................. 33,394 33,842,015
GNMA, 8.5s, 2008 - 2009 ........................... 28,704 29,951,153
-------------
$199,968,957
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U.S. Treasury Obligations -- 25.7%
U.S. Treasury Notes, 9.25s, 1998 .................. $ 87,000 $ 90,344,280
U.S. Treasury Notes, 9.125s, 1999 .................. 58,800 61,932,864
U.S. Treasury Bonds, 14.25s, 2002 .................. 5,000 6,557,050
U.S. Treasury Bonds, 12.375s, 2004 ............... 34,500 45,367,500
U.S. Treasury Bonds, 13.875s, 2011 ............... 25,500 37,445,220
U.S. Treasury Bonds, 12s, 2013 ..................... 31,500 43,893,360
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$285,540,274
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Total U.S. Government Guaranteed ................................. $485,509,231
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Total U.S. Bonds ................................................ $684,886,975
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Foreign Bonds -- 29.0%
Australia -- 8.5%
Commonwealth of Australia, 8.75s, 2001 ............ AUD 27,505 $ 22,614,428
Commonwealth of Australia, 9.75s, 2002 ............ 25,160 21,520,118
Commonwealth of Australia, 10s, 2002 ............... 25,180 21,841,534
Commonwealth of Australia, 9.5s, 2003 ............ 34,000 28,988,456
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$ 94,964,536
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Denmark -- 2.1%
Kingdom of Denmark, 8s, 2001 ..................... DKK 62,857 $ 10,572,987
Kingdom of Denmark, 7s, 2007 ..................... 13,996 2,166,040
Nykredit Bank, 8s, 2026 ........................... 66,520 10,281,602
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$ 23,020,629
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Greece -- 1.6%
Hellenic Republic, 12.6s, 2003 ..................... GRD 3,175,000 $ 12,126,616
Hellenic Republic, 14.3s, 2003 ..................... 900,000 3,452,212
Hellenic Republic, 14.5s, 2003 ..................... 600,000 2,293,828
-------------
$ 17,872,656
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Ireland -- 1.8%
Republic of Ireland, 8s, 2000 ..................... IEP 9,730 $ 15,457,354
Republic of Ireland, 6.5s, 2001 .................. 3,380 5,144,250
-------------
$ 20,601,604
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</TABLE>
5
<PAGE>
Portfolio of Investments -- continued
Bonds -- continued
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
<S> <C> <C> <C>
Foreign Bonds -- continued
Italy -- 1.2%
Republic of Italy, 9.5s, 1999 ...................................................... ITL 21,415,000 $ 13,068,095
---------------
Mexico -- 2.0%
United Mexican States, 7.625s, 2001 ................................................ $ 6,000 $ 6,076,800
United Mexican States, 7.625s, 2001# ................................................ 15,500 15,693,750
---------------
$ 21,770,550
---------------
New Zealand -- 1.7%
Government of New Zealand, 8s, 2001 ................................................ NZD 26,550 $ 18,597,317
---------------
Poland -- 0.8%
Government of Poland, 6.5s, 2024 ................................................... $ 9,000 $ 8,741,250
---------------
Spain -- 2.9%
Government of Spain, 10.1s, 2001 ................................................... ESP 1,768,210 13,854,129
Government of Spain, 10.5s, 2003 ................................................... 1,763,080 14,654,878
Government of Spain, 7.35s, 2007 ................................................... 458,240 3,255,916
---------------
$ 31,764,923
---------------
Sweden -- 1.1%
Kingdom of Sweden, 10.25s, 2000 ................................................... SEK 84,100 $ 12,083,814
---------------
Thailand -- 1.5%
Industrial Finance Corporation of Thailand, 10.4s, 2004 ........................... THB 450,000 $ 17,202,335
---------------
United Kingdom -- 3.8%
United Kingdom Treasury, 9.75s, 2002 ................................................ GBP 6,320 11,369,642
United Kingdom Treasury, 9.5s, 2004 ................................................ 17,000 30,945,028
---------------
$ 42,314,670
---------------
Total Foreign Bonds .................................................................................... $ 322,002,379
---------------
Total Bonds (Identified Cost, $1,023,738,834) ............................................................ $ 1,006,889,354
---------------
Short-Term Obligations -- 3.0%
Bayerische Landesbank Koruna-Linked CD, due 07/23/97 .............................. $ 23,750 $ 22,237,125
Indonesia Central Bank Bill, due 01/08/98 .......................................... IDR 30,000,000 11,351,278
---------------
Total Short-Term Obligations (Identified Cost $35,394,127) ............................................. $ 33,588,403
---------------
Repurchase Agreement -- 3.7%
Goldman Sachs, dated 4/30/97, due 5/1/97, total to be received $40,971,088
(secured by various U.S. Treasury and Federal Agency obligations in a jointly
traded account) at amortized cost .................................................. $ 40,965 $ 40,965,000
---------------
Call Options Purchased Principal Amount
of Contracts
Issuer/Expiration Month/Strike Price (000 Omitted)
Canadian Dollars/June/1.36500 (Premiums Paid, $490,454).............................. CAD 38,475 $ 11,581
---------------
Total Investments (Identified Cost, $1,100,588,415) ...................................................... $ 1,081,454,338
---------------
Call Options Written
Issuer/Expiration Month/Strike Price
Swiss Francs/Deutsche Marks/March/0.847
(premiums received $338,285) ...................................................... CHF/DEM 48,509 $ (547,716)
---------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Principal Amount Value
Issuer (000 Omitted)
<S> <C>
Other Assets, Less Liabilities -- 2.6% $ 28,680,588
---------------
Net Assets -- 100.0% ...................................... $1,109,587,210
===============
</TABLE>
#SEC Rule 144A restriction.
Abbreviations have been used throughout this report to indicate amounts shown
in currencies other than the U.S. Dollar. A list of abbreviations is shown
below.
AUD = Australian Dollars GRD = Greek Drachmas
CAD = Canadian Dollars IDR = Indonesian Rupiah
CHF = Swiss Francs IEP = Irish Punts
DEM = Deutsche Marks ITL = Italian Lira
DKK = Danish Krones JPY = Japanese Yen
ESP = Spanish Pesetas NZD = New Zealand Dollars
GBP = British Pounds SEK = Swedish Kronas
THB = Thai Baht
See notes to financial statements
7
<PAGE>
Statement of Assets and Liabilities -- April 30, 1997
<TABLE>
<S> <C>
Assets:
Investments, at value (identified cost, $1,100,588,415) ...........................$1,081,454,338
Cash .............................................................................. 296,271
Foreign currency, at value (identified cost, $653,604).............................. 645,600
Net receivable for foreign currency exchange contracts closed or subject to master 9,328,568
netting agreements
Net receivable for forward foreign currency exchange contracts sold ............... 1,620,966
Receivable for investments sold ................................................... 23,566
Interest receivable ............................................................... 20,615,936
Other assets ..................................................................... 13,707
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Total assets ....................................................................$1,113,998,952
---------------
Liabilities:
Payable to dividend disbursing agent .............................................$ 646,757
Payable for investments purchased ................................................ 5,065
Payable for Treasury shares reacquired ............................................. 791,384
Written options outstanding, at value (premiums received, $338,285) ............... 547,716
Net payable for forward foreign currency exchange contracts purchased ............ 1,864,312
Payable to affiliates --
Management fee .................................................................. 23,840
Administrative fee ............................................................... 448
Transfer and dividend disbursing agent fee ....................................... 25,080
Accrued expenses and other liabilities ............................................. 507,140
---------------
Total liabilities ................................................................$ 4,411,742
---------------
Net assets ........................................................................$1,109,587,210
===============
Net assets consist of:
Paid-in capital ..................................................................$1,146,879,613
Unrealized depreciation on investments and translation of assets and liabilities in (10,461,393)
foreign currencies
Accumulated net realized loss on investments and foreign currency transactions ... (19,280,610)
Accumulated distributions in excess of net investment income ..................... (7,550,400)
---------------
Total ............................................................................$1,109,587,210
===============
Shares of beneficial interest outstanding .......................................... 144,099,216
===============
Net asset value (net assets [divided by] shares of beneficial interest outstanding).. $7.70
=====
</TABLE>
See notes to financial statements
8
<PAGE>
Statement of Operations -- Six Months Ended April 30, 1997
<TABLE>
<S> <C>
Net investment income:
Interest income ...................................................... $ 43,954,488
------------
Expenses --
Management fee ..................................................... $ 4,276,941
Trustees' compensation ............................................... 102,167
Transfer and dividend disbursing agent fee .......................... 147,825
Administrative fee .................................................. 27,833
Custodian fee ........................................................ 244,407
Postage .............................................................. 45,266
Auditing fees ........................................................ 38,028
Printing ........................................................... 37,587
Legal fees ........................................................... 5,292
Miscellaneous ........................................................ 8,515
------------
Total expenses .................................................... $ 4,933,861
Fees paid indirectly ................................................ (38,122)
------------
Net expenses ...................................................... $ 4,895,739
------------
Net investment income ........................................... $ 39,058,749
------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) --
Investment transactions .............................................. $ 3,087,385
Written option transactions ......................................... 165,622
Foreign currency transactions ........................................ 156,629
--------------
Net realized gain on investments and foreign currency transactions . $ 3,409,636
--------------
Change in unrealized appreciation (depreciation) --
Investments .......................................................... $(34,158,773)
Written options ..................................................... (209,431)
Translation of assets and liabilities in foreign currencies .......... 13,992,262
. --------------
Net unrealized loss on investments and foreign currency translation . $(20,375,942)
--------------
Net realized and unrealized loss on investments and foreign currency $(16,966,306)
--------------
Increase in net assets from operations ............................. $ 22,092,443
==============
</TABLE>
See notes to financial statements
9
<PAGE>
Statement of Changes in Net Assets
<TABLE>
Six Months Ended Year Ended
Increase (decrease) in net assets: April 30, 1997 October 31, 1996
-------------------- ------------------
From operations --
<S> <C> <C>
Net investment income ......................................................... $ 39,058,749 $ 81,775,251
Net realized gain on investments and foreign currency transactions ............ 3,409,636 10,348,422
Net unrealized loss on investments and foreign currency translation ............ (20,375,942) (14,248,623)
----------------- -----------------
Increase in net assets from operations ....................................... $ 22,092,443 $ 77,875,050
----------------- -----------------
Distributions declared to shareholders --
From net investment income ................................................... $ (39,058,749) $ (81,775,251)
In excess of net investment income ............................................. (3,546,743) (6,449,169)
----------------- -----------------
Total distributions declared to shareholders ................................. $ (42,605,492) $ (88,224,420)
----------------- -----------------
Trust share (principal) transactions --
Cost of shares reacquired ...................................................... $ (29,578,940) $ (77,327,726)
----------------- -----------------
Total decrease in net assets ................................................ $ (50,091,989) $ (87,677,096)
Net assets:
At beginning of period ......................................................... 1,159,679,199 1,247,356,295
----------------- -----------------
At end of period (including accumulated distributions in excess of net investment
income of $7,550,400 and $4,003,657, respectively) ........................... $ 1,109,587,210 $ 1,159,679,199
================= =================
</TABLE>
See notes to financial statements
10
<PAGE>
Financial Highlights
<TABLE>
Six Months
Per share data (for a share Ended
Year Ended October 31,
-------------------------------------------------------
outstanding throughout April 30,
each period): 1997 1996 1995 1994 1993
------------ --------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value -- beginning
of period ............... $ 7.82 $ 7.83 $ 7.33 $ 8.18 $ 8.07
------------ --------- ----------- ---------------- ------------
Income from investment
operations# --
Net investment income[sec] $ 0.27 $ 0.53 $ 0.55 $ 0.51 $ 0.58
Net realized and unrealized
gain (loss) on
investments and foreign
currency transactions ... (0.12) (0.03) 0.32 (0.78) 0.21
------------ --------- ----------- ---------------- ------------
Total from investment
operations ............ $ 0.15 $ 0.50 $ 0.87 $ (0.27) $ 0.79
------------ --------- ----------- ---------------- ------------
Less distributions declared to
shareholders --
From net investment
income .................. $ (0.27) $ (0.53) $ (0.53) $ (0.03) $ (0.52)
From net realized gain on
investments and foreign
currency transactions ... -- -- -- -- (0.16)
In excess of net investment
income .................. (0.02) (0.04) -- (0.13) --
From paid-in capital ...... -- -- -- -- --
Tax return of capital ...... -- -- -- (0.42) --
------------ --------- ----------- ---------------- ------------
Total distributions
declared to
shareholders ............ $ (0.29) $ (0.57) $ (0.53) $ (0.58) $ (0.68)
------------ --------- ----------- ---------------- ------------
Net increase from repurchase
of capital shares ......... $ 0.02 $ 0.06 $ 0.16 $ -- $ --
------------ --------- ----------- ---------------- ------------
Net asset value -- end of
period ..................... $ 7.70 $ 7.82 $ 7.83 $ 7.33 $ 8.18
============ ========= =========== ================ ============
Per share market value --
end of period ............ $ 6.938 $ 7.125 $ 6.625 $ 6.125 $ 7.625
============ ========= =========== ================ ============
Total return ............... 1.42% 17.40% 17.08% (12.58)% 4.14%
Ratios (to average net assets)/
Supplemental data[sec]:
Expenses ## ............... 0.88% 0.97% 1.02% 0.91% 0.95%
Net investment income ...... 6.94% 6.75% 7.13% 6.61% 7.13%
Portfolio turnover ......... 122% 257% 242% 213% 270%
Net assets at end of period
(000,000 omitted) ......... $ 1,110 $ 1,160 $ 1,247 $ 1,411 $ 1,597
</TABLE>
<TABLE>
<CAPTION>
Per share data (for a share Year Ended October 31,
outstanding throughout ----------------------------------------------------------------------------
each period): 1992 1991 1990 1989 1988*
------------ ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Net asset value -- beginning
of period ............... $ 8.24 $ 8.45 $ 8.87 $ 9.16 $ 9.30
------------ ------------ --------------- ------------ ---------------
Income from investment
operations# --
Net investment income[sec] $ 0.66 $ 0.67 $ 0.75 $ 0.83 $ 0.48
Net realized and unrealized
gain (loss) on
investments and foreign
currency transactions ... (0.02) 0.17 (0.12) (0.07) (0.10)
------------ ------------ --------------- ------------ ---------------
Total from investment
operations ............ $ 0.64 $ 0.84 $ 0.63 $ 0.76 $ 0.38
------------ ------------ --------------- ------------ ---------------
Less distributions declared to
shareholders --
From net investment
income .................. $ (0.60) $ (0.62) $ (0.63) $ (0.92) $ (0.39)
From net realized gain on
investments and foreign
currency transactions ... -- -- -- -- --
In excess of net investment
income .................. -- -- -- -- --
From paid-in capital ...... (0.21) (0.43) (0.42) (0.13) (0.13)
Tax return of capital ...... -- -- -- -- --
------------ ------------ --------------- ------------ ---------------
Total distributions
declared to
shareholders ............ $ (0.81) $ (1.05) $ (1.05) $ (1.05) $ (0.52)
------------ ------------ --------------- ------------ ---------------
Net increase from repurchase
of capital shares ......... $ -- $ -- $ -- $ -- $ --
------------ ------------ --------------- ------------ ---------------
Net asset value -- end of
period ..................... $ 8.07 $ 8.24 $ 8.45 $ 8.87 $ 9.16
============ ============ =============== ============ ===============
Per share market value --
end of period ............ $ 8.000 $ 8.000 $ 7.625 $ 8.750 $ 9.375
============ ============ =============== ============ ===============
Total return ............... 10.35% 19.55% (0.94)% 4.94% (1.17)%+
Ratios (to average net assets)/
Supplemental data[sec]:
Expenses ## ............... 1.01% 1.00% 1.01% 1.10% 0.99%+
Net investment income ...... 7.96% 8.10% 8.74% 9.34% 8.39%+
Portfolio turnover ......... 401% 1,004% 554% 546% 206%
Net assets at end of period
(000,000 omitted) ......... $ 1,615 $ 1,644 $ 1,695 $ 1,791 $ 1,837
</TABLE>
*For the period from the commencement of investment operations, March 17,
1988, to October 31, 1988.
+Annualized.
#Per share data for the periods subsequent to October 31, 1993 are based on
average shares outstanding.
##For the fiscal years ending after September 1, 1995, the Trust's expenses
are calculated without reduction for fees paid indirectly.
[sec]The investment adviser did not impose a portion of its management fee
amounting to $0.0018 per share for the year ended October 31, 1990. If
this fee had been incurred by the Trust, the ratio of expenses and net
investment income to average net assets would have been 1.03% and 8.72%,
respectively.
See notes to financial statements
11
<PAGE>
Notes to Financial Statements
(1) Business and Organization
MFS Intermediate Income Trust (the Trust) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, closed-end management investment company.
(2) Significant Accounting Policies
General -- The preparation of financial statements in conformity with 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates. 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 legal, political, and economic environment.
Investment Valuations -- Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues and forward contracts,
are valued on the basis of valuations furnished by dealers or by a pricing
service with consideration to factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data, without exclusive
reliance upon exchange or over-the-counter prices. Short-term obligations, which
mature in 60 days or less, are valued at amortized cost, which approximates
market value. Non-U.S. dollar-denominated short-term obligations are valued at
amortized cost as calculated in the base currency and translated into U.S.
dollars at the closing daily exchange rate. Futures contracts, options, and
options on futures contracts listed on commodities exchanges are valued at
closing settlement prices. Over-the-counter options are valued by brokers
through the use of a pricing model which takes into account closing bond
valuations, implied volatility, and short-term repurchase rates. Securities for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Trustees.
Repurchase Agreements -- The Trust may enter into repurchase agreements with
institutions that the Trust's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Trust requires
that the securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Trust to obtain those securities
in the event of a default under the repurchase agreement. The Trust monitors, on
a daily basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Trust under each such repurchase agreement. The
Trust, along with other affiliated entities of Massachusetts Financial Service
Company (MFS), may utilize a joint trading account for the purpose of entering
into one or more repurchase agreements.
Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. 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. 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 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.
12
<PAGE>
Written Options -- The Trust may write covered call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security purchased by the Trust. The Trust, as writer of an option, may have no
control over whether the underlying securities may be sold (call) or purchased
(put) and as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as part of an income-producing strategy reflecting the view of the
Trust's management on the direction of interest rates.
Forward Foreign Currency Exchange Contracts -- The Trust may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The Trust will enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Trust may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. It may also use contracts in a manner intended to protect foreign
currency-denominated securities from declines in value due to unfavorable
exchange rate movements. For non-hedging purposes, the Trust may enter into
contracts with the intent of changing the relative exposure of the Trust's
portfolio of securities to different currencies to take advantage of anticipated
changes. The forward foreign currency exchange contracts are adjusted by the
daily exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purposes as unrealized until the contract
settlement date.
Swap Agreements -- The Trust may enter into swap agreements. A swap is an
exchange of cash payments between the Trust and another party which is based on
a specific financial index. Cash payments are exchanged at specified intervals
and the expected income or expense is recorded on the accrual basis. The value
of the swap is adjusted daily and the change in value is recorded as unrealized
appreciation or depreciation. Risks may arise upon entering into these
agreements from the potential inability of counterparties to meet the terms of
their contract and from unanticipated changes in the value of the financial
index on which the swap agreement is based. The Trust uses swaps for both
hedging and non-hedging purposes. For hedging purposes, the Trust may use swaps
to reduce its exposure to interest and foreign exchange rate fluctuations. For
non-hedging purposes, the Trust may use swaps to take a position on anticipated
changes in the underlying financial index.
Investment Transactions and Income -- Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and original issue discount are amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
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.
Fees Paid Indirectly -- The Trust's custodian bank calculates its fee based on
the Trust's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the
Trust. This amount is shown as a reduction of expenses on the Statement of
Operations.
13
<PAGE>
Notes to Financial Statements -- continued
Tax Matters and Distributions -- The Trust's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Trust files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Trust's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV. Foreign taxes
have been provided for on interest income earned on foreign investments in
accordance with the applicable country's tax rates and to the extent
unrecoverable are recorded as a reduction of investment income. Distributions to
shareholders are recorded on the ex-dividend date.
The Trust distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
At October 31, 1996, the Trust, for federal income tax purposes, had a capital
loss carryforward of $22,689,428, which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on October 31, 2003, ($6,526,984) and October 31, 2002,
($16,162,444).
(3) Transactions with Affiliates
Investment Adviser -- The Trust has an investment advisory agreement with MFS to
provide overall investment advisory and administrative services, and general
office facilities. The management fee is computed daily and paid monthly at an
annual rate of 0.32% of average daily net assets and 5.65% of investment income.
The Trust pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Trust, all of whom receive
remuneration for their services to the Trust from MFS. Certain of the officers
and Trustees of the Trust are officers or directors of MFS and MFS Service
Center, Inc. (MFSC). The Trust has an unfunded defined benefit plan for all its
independent Trustees and Mr. Bailey. Included in Trustees' compensation is a net
periodic pension expense of $23,667 for the period ended April 30, 1997.
Transfer Agent -- MFS Service Center, Inc. (MFSC) acts as registrar and dividend
disbursing agent for the Trust. The agreement provides that the Trust will pay
MFSC an account maintenance fee and a dividend services fee and will reimburse
MFSC for reasonable out-of-pocket expenses. The account maintenance fee is
computed as follows:
<TABLE>
<CAPTION>
Total Number of Accounts Annual Account Fee
- -------------------------- -------------------
<S> <C>
Less than 75,000 ......................... $9.00
75,000 and over ......................... $8.00
</TABLE>
The dividend services fee is $0.75 per dividend reinvestment and $0.75 per cash
infusion.
14
<PAGE>
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. government securities ........................... $768,809,373 $635,284,567
============= =============
Investments (non-U.S. government securities) .......... $467,705,574 $609,389,338
============= =============
</TABLE>
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Trust, as computed on a federal income tax basis, are as follows:
<TABLE>
<S> <C>
Aggregate cost ..................... $ 1,100,588,415
===============
Gross unrealized appreciation ...... $ 2,115,505
Gross unrealized depreciation ...... (21,249,582)
---------------
Net unrealized depreciation ...... $ (19,134,077)
===============
</TABLE>
(5) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
Six Months Year Ended
Ended April 30, October 31,
1997 1996
----------------------------------------------------------------------------
<S> <C> <C>
Treasury shares reacquired ...... 4,182,800 11,114,600
========= ==========
</TABLE>
In accordance with the provisions of the Trust's prospectus, 4,182,800 shares of
beneficial interest were purchased by the Trust during the period ended April
30, 1997, at an average price per share of $7.07 and a weighted average discount
of 9.40% per share. The Trust repurchased 11,114,600 shares of beneficial
interest during the year ended October 31, 1996, at an average price per share
of $6.96 and a weighted average discount of 11.05% per share. Shares held in
Treasury were repurchased in an attempt to return the market value of the
discount to shareholders in the form of higher monthly distributions.
15
<PAGE>
Notes to Financial Statements -- continued
(6) Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
Net Realized and Net Increase (Decrease)
Unrealized Gain (Loss) in Net Assets Resulting
Quarterly Period Ended Investment Income Net Investment Income on Investments from Operations
- ----------------------- ----------------------------------------------------------------------------------------------------------
Per Per Per Per
Fiscal 1997 Amount Share Amount Share Amount Share Amount Share
- ------------ -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 31 ............ $ 22,146,150 $0.15 $19,379,466 $0.13 $ (2,488,683) $(0.02) $ 16,890,783 $ 0.11
April 30 ............ 21,808,338 0.15 19,679,283 0.14 (14,477,623) (0.10) 5,201,660 0.04
------------- ------ ------------ ------ ------------- ------- -------------- --------
$ 43,954,488 $0.30 $39,058,749 $0.27 $ (16,966,306) $(0.12) $ 22,092,443 $ 0.15
============= ====== ============ ====== ============= ======= ============== ========
Fiscal 1996
- ------------
January 31 ............ $ 23,565,999 $0.15 $20,589,786 $0.13 $ 25,021,893 $ 0.15 $ 45,611,679 $ 0.28
April 30 ............ 23,871,208 0.16 20,924,083 0.14 (46,704,849) (0.28) (25,780,766) (0.14)
July 31 ............... 23,418,189 0.15 20,480,501 0.13 (4,874,279) (0.05) 15,606,222 0.08
October 31 ............ 22,646,733 0.15 19,780,881 0.13 22,657,034 0.15 42,437,915 0.28
------------- ------ ------------ ------ ------------- ------- -------------- --------
$ 93,502,129 $0.61 $81,775,251 $0.53 $ (3,900,201) $(0.03) $ 77,875,050 $ 0.50
============= ====== ============ ====== ============= ======= ============== ========
Fiscal 1995
- ------------
January 31 ............ $ 28,725,198 $0.16 $25,410,754 $0.14 $ (21,600,785) $(0.11) $ 3,809,969 $ 0.03
April 30 ............ 26,563,252 0.15 23,068,269 0.13 50,225,758 0.29 73,294,027 0.42
July 31 ............... 26,175,083 0.16 22,848,135 0.14 17,506,205 0.09 40,354,340 0.23
October 31 ............ 23,933,306 0.16 20,953,262 0.14 10,981,615 0.05 31,934,877 0.19
------------- ------ ------------ ------ ------------- ------- -------------- --------
$105,396,839 $0.63 $92,280,420 $0.55 $ 57,112,793 $ 0.32 $ 149,393,213 $ 0.87
============= ====== ============ ====== ============= ======= ============== ========
</TABLE>
(7) Line of Credit
The Trust entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $400 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Trust shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Trust for the period ended April
30, 1997, was $5,155.
(8) Financial Instruments
The Trust trades financial instruments with off-balance sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include written options, forward foreign currency exchange contracts
and swap agreements. The notional or contractual amounts of these instruments
represent the investment the Trust has in particular classes of financial
instruments and does not necessarily represent the amounts potentially subject
to risk. The measurement of the risks associated with these instruments is
meaningful only when all related and offsetting transactions are considered. A
summary of obligations under these financial instruments for the period ending
April 30, 1997, is as follows:
16
<PAGE>
Written Option Transactions
- ---------------------------
<TABLE>
<CAPTION>
1997 Calls
------------------------------------------------
Principal Amounts of
Contracts (000 Omitted) Premiums
------------------------- -------------
<S> <C> <C>
Outstanding, beginning of period -- -- $ --
Options written --
Australian Dollars ............... 6,953 46,966
Swiss Francs/Deutsche Marks ...... 68,752 462,006
Options terminated in closing transactions --
Australian Dollars ............... (6,953) (46,966)
Swiss Francs/Deutsche Marks ...... (20,243) (123,721)
-------- ----------
Outstanding, end of period ......... 48,509 $ 338,285
======== ==========
Options outstanding at end of period consist of:
Swiss Francs/Deutsche Marks ...... 48,509 $ 338,285
======== ==========
</TABLE>
At April 30, 1997, the Trust had sufficient cash and/or securities at least
equal to the value of the written options.
Forward Foreign Currency Exchange Contracts
- -------------------------------------------
<TABLE>
<CAPTION>
Contracts to Contracts at Net Unrealized
Settlement Date Deliver/Receive In Exchange for Value Appreciation (Depreciation)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 6/30/97 - 8/26/97 ...... DEM 45,623,698 $27,270,943 $26,586,385 $684,558
6/30/97 - 8/26/97 ...... ESP 4,557,998,116 31,917,727 31,267,238 650,489
5/30/97 - 6/30/97 ...... JPY 713,130,690 5,934,871 5,648,952 285,919
------------ ------------ ------------
$65,123,541 $63,502,575 $ 1,620,966
============ ============ ============
Purchases
5/30/97 ............... CAD 29,298,655 $21,906,355 $21,038,954 $ (867,401)
6/30/97 - 8/26/97 ...... ESP 3,885,036,567 27,164,478 26,645,403 (519,075)
6/30/97 ............... IEP 433,848 688,908 649,176 (39,732)
6/30/97 .................. ITL 28,731,495,304 17,014,793 16,750,462 (264,331)
6/30/97 ............... SEK 11,856,667 1,688,936 1,515,163 (173,773)
------------ ------------ ------------
$68,463,470 $66,599,158 $ (1,864,312)
============ ============ ============
</TABLE>
Forward foreign currency purchases and sales under master netting arrangements
and closed forward foreign currency exchange contracts, excluded from above,
amounted to a net receivable of $6,928,876 with Merrill Lynch, $2,106,519 with
Swiss Bank Corp., $1,031,637 with Deutschebank, and a net payable of $617,147
with Morgan Stanley, $116,673 with Banker's Trust, and $4,644 with First Boston
at April 30, 1997.
At April 30, 1997, the Trust had sufficient cash and/or securities to cover any
commitments under these contracts.
17
<PAGE>
Independent Auditors' Report
To the Trustees and Shareholders of MFS Intermediate Income Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Intermediate Income Trust as of April
30,1997, the related statement of operations for the six months then ended, the
statement of changes in net assets for the six months then ended and the year
ended October 31, 1996, and the financial highlights for the six months ended
April 30, 1997, and for each of the years in the nine-year period ended October
31, 1996. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
April 30,1997, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Intermediate
Income Trust at April 30,1997, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 30, 1997
18
<PAGE>
MFS[RegTM] Intermediate Income Trust
Trustees
A. Keith Brodkin*
Chairman and President
Richard B. Bailey* (2)
Private Investor; Former Chairman and
Director (until 1991), Massachusetts
Financial Services Company;
Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Marshall N. Cohan(1)
Private Investor
Lawrence H. Cohn, M.D.(2)
Chief of Cardiac Surgery,
Brigham and Women's Hospital;
Professor of Surgery, Harvard
Medical School
The Hon. Sir J. David
Gibbons, KBE(2)
Chief Executive Officer,
Edmund Gibbons Ltd.;
Chairman, Bank of N.T.
Butterfield & Son Ltd.
Abby M. O'Neill(2)
Private Investor; Director,
Rockefeller Financial Services, Inc.
(investment advisers)
Walter E. Robb, III(1)
President and Treasurer,
Benchmark Advisors, Inc.
(corporate financial consultants);
President, Benchmark Consulting
Group, Inc. (office services);
Trustee, Landmark Funds
(mutual funds)
Arnold D. Scott *
Senior Executive Vice President,
Director and Secretary,
Massachusetts Financial
Services Company
Jeffrey L. Shames*
President and Director,
Massachusetts Financial
Services Company
J. Dale Sherratt(1)
President, Insight Resources, Inc.
(acquisition planning specialists)
Ward Smith(1)
Former Chairman (until 1994),
NACCO Industries;
Director, Sundstrand Corporation
Portfolio Managers
Steven E. Nothern*
Christopher D. Piros*
Treasurer
W. Thomas London*
Assistant Treasurer
James O. Yost*
Secretary
Stephen E. Cavan*
Assistant Secretary
James R. Bordewick, Jr.*
Transfer Agent,
Registrar and Dividend
Disbursing Agent
MFS Service Center, Inc.
P.O. Box 9024
Boston, MA 02205-9824
1-800-637-2304
Custodian
State Street Bank and
Trust Company
Independent Auditors
Deloitte & Touche LLP
Investment Adviser
Massachusetts Financial
Services Company
500 Boylston Street
Boston, MA 02116-3741
* Affiliated with the Investment Adviser
(1) Member of Audit Committee
(2) Member of Portfolio Trading Committee
[recycle logo] This report is printed on recycled paper. MINCE-3 6/97 112M
