<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[graphic omitted]
MFS(R) INTERMEDIATE
INCOME FUND
SEMIANNUAL REPORT o APRIL 30, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 13
Notes to Financial Statements ............................................. 17
Trustees and Officers ..................................................... 24
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
--------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
This spring, the U.S. stock market experienced record point drops and volatility
that have given many investors cause for concern. While the recent market
correction has rattled a lot of nerves, it's important to put the current market
environment in perspective. Throughout the history of the market, investors have
experienced numerous corrections (declines of more than 20%) and periods of
extreme volatility. Of course, past performance is no guarantee of future
results; however, over the long term, stock and bond investors have enjoyed
returns that have solidly outpaced inflation.
From our perspective, as we look at the global investment climate at the
beginning of the new millennium, we see many reasons for optimism, as well as
the need to voice some words of caution. Our reasons for being optimistic about
both stock and bond markets include
o STRONG CORPORATE EARNINGS GROWTH: We believe that, over time, the most
important driver of stock prices is corporate earnings. Our research
indicates that the average earnings growth for U.S. companies could approach
15% in 2000, which would bode very well for U.S. equities. We are also
seeing encouraging signs that companies worldwide, and particularly in
Europe, are beginning to focus more on earnings and shareholder value --
that is, delivering stock price performance that will reward investors. As
we research companies around the globe, we are finding that specific areas
of opportunity include technology companies, especially those involved in
wireless telecommunications and in supplying infrastructure and services for
the Internet.
o LOW INFLATION WORLDWIDE: We believe accelerating inflation is one of the
chief factors that could end the current economic boom. While the U.S.
economy continues to grow rapidly, we have not experienced significant signs
of inflation. In our opinion, perhaps the major force keeping inflation at
bay is worldwide productivity increases, fueled by advancing technology. A
technological revolution based on computerization and the Internet appears
to be making it possible for companies to produce more products with fewer
employees, thereby enabling companies to increase earnings without raising
prices. A related factor keeping inflation down is the heightened
competition of an increasingly global marketplace, where, for example,
businesses are beginning to use computer networks and the Internet to shop
worldwide for the lowest prices from suppliers.
o STRONG GLOBAL ECONOMIES: Our outlook is that a majority of national
economies will continue to experience healthy growth with low inflation. In
late January, the current economic boom in the United States became the
longest in the nation's history. It appears to us that the U.S. Federal
Reserve Board's (the Fed's) program of gradual interest-rate increases will
eventually be successful in cooling the somewhat overheated U.S. economy
while prolonging the boom. In Europe, we see strong evidence that most
countries will continue on a moderate growth path with low inflation. A
major reason for this is that European companies have begun to adopt the
practices of downsizing, outsourcing, and consolidation that have helped
revitalize U.S. industry over the past decade. We are witnessing a similar
situation in Japan, as more firms merge, restructure, and invest in
technology. In the Pacific Rim, most economies have recovered from the
economic turmoil of late summer 1998 and are surging ahead. We believe
progress toward restructuring Asia's banking systems and other ailing
industries bodes well for stronger investor confidence in the region. While
business conditions have been less favorable in Latin America due to
relatively high inflation, increased exports and industrial production
suggest to us that the region's recession has ended.
Amid this positive global outlook, however, we believe investors should also
heed some cautionary notes:
o IT IS HIGHLY UNLIKELY THAT U.S. EQUITY MARKETS WILL CONTINUE TO PERFORM AT
THE PACE OF THE LAST SEVERAL YEARS. Although our outlook for U.S. markets
this year is quite positive, we believe it is unrealistic for investors to
expect stock market returns, as measured by the Standard & Poor's 500
Composite Index,(1) to routinely exceed 20%, as they did for each of the
past four years.
o HIGH VALUATIONS, ESPECIALLY OF TECHNOLOGY STOCKS, HAVE MADE U.S. MARKETS
INCREASINGLY VOLATILE. Investor excitement over the past year has pushed
many technology-related stocks to very high relative prices, as expressed by
their price/earnings (P/E) ratios. In general, we believe these higher
valuations are largely supported by the strong earnings growth mentioned
earlier. However, as we've recently experienced, this backdrop has led to a
highly volatile environment, where the market is swift to punish companies
whose earnings are less than expected and where fear can rapidly overcome
the desire to invest for long-term goals.
o RISING INTEREST RATES MAY DAMPEN MARKETS IN THE SHORT TERM, PARTICULARLY IN
THE UNITED STATES AND EUROPE. The Fed's current program of raising interest
rates could potentially cool both stock and bond markets, and the European
Central Bank has tended to follow the lead of the Fed in adjusting its own
interest rates. It is our expectation, however, that in the long term
interest rates will trend down again, perhaps by the end of this year. We
believe that could be favorable for both equity and fixed-income
investments.
On balance, it appears to us that the current global investment climate is well
matched to MFS' research-oriented style of investing. In the equity markets,
where we believe earnings growth is the most reliable indicator of long-term
performance, we feel our research team is second to none in determining the real
value of a company and its long-term earnings potential. To do that, our
portfolio managers and our worldwide team of research analysts spend extensive
time visiting with companies, talking to their customers, and investigating
their competition. In fixed-income investing, we believe the quality of our
research gives us an advantage by helping us determine which types of securities
can add the most value to a fund and by helping us reduce credit risk, which is
the biggest danger to some higher-income bond funds. In sum, MFS Original
Research(R) is one of the most important factors in our ongoing effort to
deliver competitive performance to you, our investors.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
May 18, 2000
--------------
(1)The Standard & Poor's 500 Composite Index (the S&P 500) is a popular,
unmanaged index of common stock total return performance. It is not possible
to invest directly in an index.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
Dear Shareholders,
For the six months ended April 30, 2000, the Trust provided a total return of
5.46% based on its beginning and ending stock market prices and assuming the
reinvestment of any distributions paid during the period. The Trust's total
return based on its net asset value (NAV) was 1.53%. During the same period, the
Salomon Brothers Medium Term (1- to 10-year) Treasury Government Sponsored Index
(the Salomon Index), an unmanaged index of medium-term U.S. Treasury and
government-agency securities, returned 1.10%. The J.P. Morgan Non-Dollar
Government Bond Index (the Morgan Index), an unmanaged index of actively traded
government bonds issued by 12 countries (excluding the United States) with
remaining maturities of at least one year, returned -7.08% over the same period.
The past six months have been marked by persistent concerns about mounting
inflation pressures and the prospects of further interest-rate increases by the
Federal Reserve Board (the Fed). During most of the period, Treasuries absorbed
the negative inflation news fairly well, benefiting from the turbulence in the
equity market and ongoing positive supply and demand trends.
The performance of Treasuries also was helped by the solid fiscal performance of
the U.S. government. Growing federal budget surpluses prompted the U.S. Treasury
to limit the size and frequency of its auctions of new debt and to begin a
buyback of nearly $30 billion worth of longer-maturity Treasury bonds
outstanding during 2000. The anticipated scarcity of long-term Treasury bonds
caused them to rally even as short-term interest rates kept climbing and most
other fixed-income investments lost ground.
In this environment, we have favored Treasuries because their total return
potential has been more attractive than nongovernment securities. Generally, we
use our Treasury investments to help balance the Trust's duration, which is an
indicator of a portfolio's sensitivity to interest-rate changes. Currently, the
portfolio's duration is about the same as that of the Salomon Index. We want to
avoid holding too many longer-maturity bonds because we feel their prices would
decline if interest rates went up. By the same token, we don't want to hold too
many short-maturity bonds because they produce relatively low yields.
Accordingly, we emphasized Treasuries with eight- to 10-year and one-year and
under maturities, avoiding one- to four-year Treasury securities because we
believe they tended to be more negatively affected by the Fed's interest-rate
increases during the period. However, if the economy begins to show signs of
weakness as a result of the Fed's interest-rate hikes, we will consider
increasing our holdings in longer-term bonds as a way to potentially gain
additional yield.
For most of the period, we underweighted the Trust's investments in
mortgage-backed securities relative to the Salomon Index, which proved to be a
helpful strategy. Although mortgages performed well during the first few months
of the year, performance worsened as interest rates started to rise. One of the
characteristics of mortgage-backed securities is that their interest-rate
sensitivity increases as interest rates rise, causing prices to drop.
More recently, however, we've started to look closely at mortgage-backed bonds
issued by federal agencies such as the Government National Mortgage Association,
the Federal National Mortgage Association, and the Federal Home Loan Mortgage
Corporation because we believe they have offered unusually attractive values.
Yield spreads -- the yield differences between U.S. Treasuries, agency bonds,
and other fixed-income securities -- were at record levels, reflecting both the
shrinking supply of Treasury issues and investors' concerns that legislative
changes could affect the regulatory treatment of government-sponsored
institutions. (Principal value and interest on treasury securities are
guaranteed by the U.S. government if held to maturity.) However, we do not
foresee any changes that would alter the high ratings of existing agency
securities. In addition, we believe any changes that may occur are unlikely to
jeopardize the ability of these agencies to make timely coupon or principal
payments.
International bonds are used opportunistically in the Trust when we think they
will perform better than U.S. Treasuries. As the relative attractiveness and
value of many international bonds began to deteriorate in the first quarter of
2000, we took some profits on international bonds that had performed well. By
the end of the period, we had significantly reduced our exposure to
international bonds to approximately 13% of assets.
In Europe, we mostly bought German bonds because we felt they offered favorable
liquidity and because there was relatively less inflation in Germany than in the
United States. Greek bonds also looked attractive, offering high yields compared
to other European markets. In addition, as Greece gets closer to acceptance into
the European monetary union (EMU), its bonds rallied as the country lowered its
interest rates in line with EMU countries.
Over the next few months, we believe the U.S. bond market will most likely
remain cautious in anticipation of further Fed interest-rate hikes. Economic
growth during the third and fourth quarters of 1999 was very strong, but we
think we're almost at the point where economic growth and inflation concerns
have peaked. We believe we should start to see evidence that economic growth is
decelerating, which could start to calm inflation worries. If this scenario
begins to take shape, we could experience improved performance from fixed-income
securities. In the meantime, we feel the market remains uncertain about how much
inflation might accelerate and how far the Fed needs to go to achieve a better
balance between growth and the potential for inflation.
Respectfully,
/s/ Stephen C. Bryant /s/ Steven E. Nothern
Stephen C. Bryant Steven E. Nothern
Portfolio Manager Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are current only through the end of the period of the report as stated on the
cover. The managers' views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
The portfolio is actively managed, and current holdings may be different.
<PAGE>
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PORTFOLIO MANAGERS' PROFILES
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STEPHEN C. BRYANT IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND
PORTFOLIO MANAGER OF MFS(R) INSTITUTIONAL GLOBAL FIXED INCOME FUND, MFS(R)
INTERMEDIATE INCOME FUND, AND THE GLOBAL GOVERNMENTS SERIES OFFERED THROUGH
MFS(R)/SUN LIFE ANNUITY PRODUCTS. HE ALSO MANAGES MFS(R) GOVERNMENT MARKETS
INCOME TRUST AND MFS(R) INTERMEDIATE INCOME TRUST, TWO CLOSED-END FUNDS. HE
JOINED MFS IN 1987 AS ASSISTANT VICE PRESIDENT. HE WAS NAMED VICE PRESIDENT IN
1989, PORTFOLIO MANAGER IN 1992, AND SENIOR VICE PRESIDENT IN 1993. MR. BRYANT
IS A GRADUATE OF WESLEYAN UNIVERSITY.
STEVEN E. NOTHERN IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R). HE
IS PORTFOLIO MANAGER OF MFS(R) GOVERNMENT SECURITIES FUND AND THE GOVERNMENT
SECURITIES SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS. MR. NOTHERN
ALSO MANAGES TWO CLOSED-END FUNDS, MFS(R) INTERMEDIATE INCOME TRUST AND MFS(R)
GOVERNMENT MARKETS INCOME TRUST. MR. NOTHERN JOINED MFS IN 1986 IN THE FIXED
INCOME DEPARTMENT AND WAS NAMED VICE PRESIDENT IN 1989, PORTFOLIO MANAGER IN
1991, AND SENIOR VICE PRESIDENT IN 1993. HE IS A GRADUATE OF MIDDLEBURY COLLEGE
AND HOLDS A MASTER OF BUSINESS ADMINISTRATION DEGREE FROM BOSTON UNIVERSITY. HE
IS A CHARTERED FINANCIAL ANALYST AND A MEMBER OF THE BOSTON SECURITY ANALYSTS
SOCIETY, INC.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL RESEARCH(R), A
GLOBAL, SECURITY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING SECURITIES.
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.
<PAGE>
OBJECTIVE: To preserve capital and provide high current income.
NEW YORK STOCK EXCHANGE SYMBOL: MIN
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY
--------------------------------------------------------------------------------
(For the six months ended April 30, 2000)
NET ASSET VALUE PER SHARE
October 31, 1999 $7.25
April 30, 2000 $7.05
NEW YORK STOCK EXCHANGE PRICE
October 29, 1999 $6.2500
April 11, 2000 (high)* $6.4375
December 30, 1999 (low)* $5.9375
April 28, 2000 $6.3125
*For the six months ended April 30, 2000.
NOTES TO PERFORMANCE SUMMARY
U.S. Treasury bills and U.S. government bonds fluctuate in value, but they are
guaranteed as to the timely payment of interest and, if held to maturity,
provide a guaranteed return of principal.
Government guarantees apply to individual securities only and not to prices and
yields of shares in a managed portfolio. Nondiversified Trusts have more risk
than diversified Trusts.
An investment in shares of the Trust should not be considered to constitute a
complete investment program. The Trust may invest in foreign, emerging market,
and derivative securities. Investing in foreign and emerging market securities
also involves special risks. The Trust has the flexibility to invest in
derivative securities when its managers believe such securities can provide
better value relative to direct investments in bonds.
NUMBER OF SHAREHOLDERS
As of April 30, 2000, our records indicate that there are 11,720 registered
shareholders and approximately 59,400 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
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
MFS offers a Dividend Reinvestment and Cash Purchase Plan that allows you to
reinvest either all of the distributions paid by the Trust or only the long-term
capital gains. 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 discounted price of either the
net asset value or 95% of the market price, whichever is greater. Twice each
year you can also buy shares. 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. 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 if you have any questions call
1-800-637-2304 any business day from 8 a.m. to 8 p.m. Eastern time. 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. Please call for additional details. When you
withdraw, 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.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- April 30, 2000
Bonds - 96.0%
------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
------------------------------------------------------------------------------
U.S. Bonds - 82.7%
Corporate Asset Backed - 0.5%
Commercial Mortgage Asset Trust,
7.839s, 2020 (interest only) $ 150,712 $ 4,913,132
------------------------------------------------------------------------------
U.S. Federal Agencies - 36.7%
AID, 6.625s, 2003 $ 15,000 $ 14,748,600
AID, 6.625s, 2004 14,600 14,276,026
FHLB, 5.125s, 2001 11,250 11,060,100
FHLM, 5.83s, 2013 2,540 2,509,506
FHLM, 6.625s, 2009 6,000 5,719,680
FHLM, 6.875s, 2005 27,850 27,449,518
FNMA, 6.956s, 2007 5,596 5,421,562
FNMA, 7s, 2029 14,898 14,254,423
GNMA, 6.5s, 2028 TBA 76,834 71,989,036
GNMA, 7s, 2023 - 2024 28,562 27,599,100
GNMA, 7s, 2025 TBA 32,104 30,882,520
GNMA, 7.5s, 2022 - 2023 3,206 3,167,237
GNMA, 7.5s, 2027 TBA 39,779 39,150,420
GNMA, 8s, 2030 44,379 44,495,416
GNMA, 8.5s, 2008 2,085 2,144,554
GNMA, 8.5s, 2009 8,976 9,161,161
GNMA, 9.25s, 2001 3,053 3,114,293
Small Business Administration,
7.64s, 2010 10,000 9,956,250
------------
$337,099,402
------------------------------------------------------------------------------
U.S. Treasury Obligations - 45.5%
U.S. Treasury Bonds, 10.75s, 2003 $ 26,000 $ 28,620,280
U.S. Treasury Bonds, 11.875s, 2003 43,000 49,906,660
U.S. Treasury Notes, 5.875s, 2004 29,000 28,234,110
U.S. Treasury Bonds, 12.375s, 2004 34,500 41,313,750
U.S. Treasury Bonds, 10.375s, 2009 18,350 20,913,312
U.S. Treasury Notes, 4.25s, 2010 67,870 69,312,135
U.S. Treasury Bonds, 13.875s, 2011 25,500 34,460,955
U.S. Treasury Bonds, 10.375s, 2012 84,600 103,000,500
U.S. Treasury Bonds, 12s, 2013 31,500 42,096,915
------------
$417,858,617
------------------------------------------------------------------------------
Total U.S. Bonds $759,871,151
------------------------------------------------------------------------------
Foreign Bonds - 13.3%
Argentina - 0.6%
Republic of Argentina, 0s, 2001 $ 3,050 $ 2,623,000
Republic of Argentina, 6s, 2023 1,252 875,466
Republic of Argentina, 6.875s, 2023 1,300 1,099,682
Republic of Argentina, 11.375s, 2010 220 210,980
Province of Buenos Aires, 13.25s, 2010## 1,000 995,000
------------
$ 5,804,128
------------------------------------------------------------------------------
Brazil - 1.1%
Republic of Brazil, 5s, 2014 $ 4,056 $ 2,905,113
Republic of Brazil, 7.375s, 2024 3,519 2,670,041
Republic of Brazil, 7.438s, 2012 348 250,560
Republic of Brazil, 10.125s, 2027 200 156,000
Republic of Brazil, 12.25s, 2030 2,885 2,639,775
Republic of Brazil, 12.75s, 2020 1,555 1,490,468
------------
$ 10,111,957
------------------------------------------------------------------------------
Bulgaria - 0.3%
Republic of Bulgaria, 7.063s, 2024 $ 3,060 $ 2,340,900
------------------------------------------------------------------------------
Denmark - 0.4%
Kingdom of Denmark, 7s, 2007 DKK 28,905 $ 3,820,097
------------------------------------------------------------------------------
Germany - 2.5%
Depfa Pfandbriefbank, 5.5s, 2013
(Banks and Credit Cos.) EUR 2,700 $ 2,369,881
Republic of Germany, 4.5s, 2009 18,964 16,226,277
Republic of Germany, 5.375s, 2010 4,742 4,332,649
------------
$ 22,928,807
------------------------------------------------------------------------------
Grand Cayman Islands - 0.1%
Enersis S.A., 7.4s, 2016
(Utilities - Electric) $ 1,100 $ 954,195
------------------------------------------------------------------------------
Greece - 3.6%
Hellenic Republic, 5.75s, 2008 EUR 1,566 $ 1,421,914
Hellenic Republic, 8.01s, 2003 GRD 5,650,000 16,453,662
Hellenic Republic, 8.7s, 2005 1,130,000 3,401,172
Republic of Greece, 6s, 2006 4,350,000 11,760,571
------------
$ 33,037,319
------------------------------------------------------------------------------
Mexico - 0.9%
Petroleos Mexicanos, 9.5s, 2027 (Oils) $ 1,110 $ 1,079,475
United Mexican States, 6.25s, 2019 1,750 1,437,188
United Mexican States, 6.836s, 2019 1,350 1,319,625
United Mexican States, 7.313s, 2019 2,150 2,101,625
Grupo Iusacell SA DE CV, 14.25s, 2006
(Cellular Telecom)## 1,071 1,119,195
Maxcom Telecomunicacione, 13.75s,
2007 (Telephone)## 1,365 1,351,350
------------
$ 8,408,458
------------------------------------------------------------------------------
Netherlands - 0.2%
Netia Holdings B V, 10.25s, 2007
(Special Purpose) $ 1,600 $ 1,348,000
------------------------------------------------------------------------------
New Zealand - 1.6%
Government of New Zealand, 8s, 2006 NZD 29,650 $ 15,103,696
------------------------------------------------------------------------------
Panama - 0.3%
Republic of Panama, 8.25s, 2008 $ 580 $ 514,750
Republic of Panama, 8.875s, 2027 2,600 2,203,500
------------
$ 2,718,250
------------------------------------------------------------------------------
South Korea - 0.2%
Hanvit Bank, 12.75s, 2010 (Banks)## $ 1,435 $ 1,449,350
------------------------------------------------------------------------------
Turkey - 0.3%
Republic of Turkey, 11.875s, 2030 $ 2,370 $ 2,562,563
------------------------------------------------------------------------------
United Kingdom - 1.2%
Halifax Building Society PLC, 6.409s,
2012 (Banks and Credit Cos.) GBP 2,300 $ 3,582,130
Lloyds TSB Bank PLC, 7.375s, 2004
(Banks & Credit Cos.) 2,580 4,077,801
Woolwich Building Society PLC, 6.609s,
2012 (Banks and Credit Cos.) 2,280 3,486,275
------------
$ 11,146,206
------------------------------------------------------------------------------
Total Foreign Bonds $121,733,926
------------------------------------------------------------------------------
Total Bonds (Identified Cost, $941,036,416) $881,605,077
------------------------------------------------------------------------------
Call Options Written - (0.2)%
------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
DESCRIPTION/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
------------------------------------------------------------------------------
Australian Dollars/June/0.6 AUD (41,343) $ (1,320,419)
Japanese Yen/June/103 JPY (3,096,640) (80,513
------------------------------------------------------------------------------
Total Call Options Written
(Premiums Received, $959,964) $ (1,400,932)
------------------------------------------------------------------------------
Put Options Written
------------------------------------------------------------------------------
Canadian Dollars/June/1.49
(Premiums Received, $214,577) CAD (45,031) $ (154,682
------------------------------------------------------------------------------
Other Assets, Less Liabilities - 4.2% 38,759,555
------------------------------------------------------------------------------
Net Assets - 100.0% $918,809,018
------------------------------------------------------------------------------
## 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 Drachma
CAD = Canadian Dollars JPY = Japanese Yen
DKK = Danish Kroner NZD = New Zealand Dollars
EUR = Euro SEK = Swedish Kronor
GBP = British Pounds
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------
APRIL 30, 2000
-------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $941,036,416) $ 881,605,077
Cash 739,119
Foreign currency, at value (identified cost, $57,720) 57,046
Net receivable for forward foreign currency exchange
contracts to sell 4,893,969
Receivable for investments sold 21,084,857
Interest receivable 19,248,974
Other assets 13,354
--------------
Total assets $ 927,642,396
--------------
Liabilities:
Payable to dividend disbursing agent $ 459,438
Payable for investments purchased 1,067,021
Payable for Treasury shares reacquired 634,270
Payable for swap agreements 41,142
Net payable for forward foreign currency exchange
contracts to purchase 1,785,934
Net payable for forward foreign currency exchange
contracts subject to master netting agreements 2,738,638
Written options outstanding, at value (premiums
received, $1,174,541) 1,555,613
Payable to affiliates -
Management fee 23,329
Administrative fee 1,613
Transfer and dividend disbursing agent fee 19,067
Accrued expenses and other liabilities 507,313
--------------
Total liabilities $ 8,833,378
--------------
Net assets $ 918,809,018
==============
Net assets consist of:
Paid-in capital $1,042,032,364
Unrealized depreciation on investments and translation
of assets and
liabilities in foreign currencies (59,660,613)
Accumulated net realized loss on investments and
foreign currency transactions (57,224,294)
Accumulated distributions in excess of net investment
income (6,338,439)
--------------
Total $ 918,809,018
==============
Shares of beneficial interest outstanding (202,648,016
issued, less 72,320,100 treasury shares) 130,327,916
===========
Net asset value (net assets / shares of beneficial
interest outstanding) $7.05
=====
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
-----------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2000
-----------------------------------------------------------------------------
Net investment income:
Interest income $ 36,452,178
-------------
Expenses -
Management fee $ 3,546,548
Trustees' compensation 92,608
Transfer and dividend disbursing agent fee 113,470
Administrative fee 52,172
Custodian fee 218,193
Auditing fees 21,779
Postage 27,106
Printing 30,156
Legal fees 2,879
Miscellaneous 399,303
-------------
Total expenses $ 4,504,214
Fees paid indirectly (31,744)
-------------
Net expenses $ 4,472,470
-------------
Net investment income $ 31,979,708
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (12,098,211)
Written option transactions 500,778
Foreign currency transactions 2,963,022
-------------
Net realized loss on investments and foreign
currency transactions $ (8,634,411)
-------------
Change in unrealized appreciation (depreciation) -
Investments $ (17,328,737)
Written options 304,886
Translation of assets and liabilities in
foreign currencies (952,083)
Swap transactions 275,220
-------------
Net unrealized loss on investments and foreign
currency translation $ (17,700,714)
-------------
Net realized and unrealized loss on investments
and foreign currency $ (26,335,125)
-------------
Increase in net assets from operations $ 5,644,583
=============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
(UNAUDITED)
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in net assets:
From operations -
Net investment income $ 31,979,708 $ 68,180,520
Net realized loss on investments and foreign currency transactions (8,634,411) (14,761,370)
Net unrealized loss on investments and foreign currency translation (17,700,714) (58,863,567)
--------------- ---------------
Increase (decrease) in net assets from operations $ 5,644,583 $ (5,444,417)
--------------- ---------------
Distributions declared to shareholders -
From net investment income $ (36,139,772) $ (61,667,843)
From paid-in capital -- (7,405,223)
--------------- ---------------
Total distributions declared to shareholders $ (36,139,772) $ (69,073,066)
--------------- ---------------
Trust share (principal) transactions -
Cost of shares reacquired $ (27,707,066) $ (39,105,641)
--------------- ---------------
Total decrease in net assets $ (58,202,255) $ (113,623,124)
Net assets:
At beginning of period 977,011,273 1,090,634,397
--------------- ---------------
At end of period (including accumulated distributions
in excess of net investment income of $6,338,439 and
$2,178,375 respectively) $ 918,809,018 $ 977,011,273
=============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
-------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED --------------------------------------------------------------------
APRIL 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 7.25 $ 7.75 $ 7.76 $ 7.82 $ 7.83 $ 7.33
------- ------- ------- ------- ------- -------
Income from investment operations# -
Net investment income $ 0.24 $ 0.49 $ 0.51 $ 0.54 $ 0.53 $ 0.55
Net realized and unrealized gain
(loss) on investments and foreign
currency (0.24) (0.53) (0.01) (0.05) (0.03) 0.32
------- ------- ------- ------- ------- -------
Total from investment operations $ 0.00 $ (0.04) $ 0.50 $ 0.49 $ 0.50 $ 0.87
------- ------- ------- ------- ------- -------
Less distributions declared to
shareholders -
From net investment income $ (0.27) $ (0.45) $ (0.46) $ (0.54) $ (0.53) $ (0.53)
In excess of net realized gain on
investments and foreign currency
transactions -- -- -- (0.04) (0.04) --
From paid in capital -- (0.05) (0.05) -- -- --
------- ------- ------- ------- ------- -------
Total distributions declared to
shareholders $ (0.27) $ (0.50) $ (0.51) $ (0.58) $ (0.57) $ (0.53)
------- ------- ------- ------- ------- -------
Net increase from repurchase of
capital shares $ 0.07 $ 0.04 $ -- +++ $ 0.03 $ 0.06 $ 0.16
------- ------- ------- ------- ------- -------
Net asset value - end of period $ 7.05 $ 7.25 $ 7.75 $ 7.76 $ 7.82 $ 7.83
======= ======= ======= ======= ======= =======
Per share market value -- end of period $ 6.313 $ 6.250 $ 6.938 $ 7.000 $ 7.125 $ 6.625
======= ======= ======= ======= ======= =======
Total return at market value 5.46%++ (2.92)% 6.56% 6.46% 17.40% 17.08%
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.95%+ 0.93% 0.91% 0.91% 0.97% 1.02%
Net investment income 6.77%+ 6.57% 6.59% 6.92% 6.75% 7.13%
Portfolio turnover 52% 85% 184% 213% 257% 242%
Net assets at end of period
(000,000 Omitted) $919 $977 $1,091 $1,098 $1,160 $1,247
+ Annualized.
++ Not annualized.
+++ For the year ended October 31, 1998, the net increase from repurchase of capital shares was less than $0.01 per share.
# Per share data is based on average shares outstanding.
## Ratios do not reflect reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(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. The Trust
can invest 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
legal, political, and economic environment.
Investment Valuations - Debt securities (other than short-term obligations which
mature in 60 days or less), including listed issues, forward contracts, and swap
agreements, 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. Options contracts listed on commodities exchanges are reported at
market value using closing settlement prices. Over-the-counter options on
securities are valued by brokers. Over- the-counter currency options are valued
through the use of a pricing model which takes into account foreign currency
exchange spot and forward rates, implied volatility, and short-term repurchase
rates. Securities for which there are no such quotations or valuations are
valued in good faith, at fair value, by 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 collateral 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 collateral to ensure that its value, including
accrued interest, is greater than amounts owed to the Trust under each such
repurchase agreement. The Trust, along with other affiliated entities of
Massachusetts Financial Services 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.
Deferred Trustee Compensation - Effective July 24, 1999, under a Deferred
Compensation Plan (the Plan) independent Trustees may elect to defer receipt of
all or a portion of their annual compensation. Deferred amounts are treated as
though equivalent dollar amounts had been invested in shares of the trust or
other MFS trust's selected by the Trustee. Deferred amounts represent an
unsecured obligation of the trust until distributed in accordance with the Plan.
Written Options - The Trust may write call or put options in exchange for a
premium. The premium is initially recorded as a liability which is subsequently
adjusted to the current value of the option contract. When a written option
expires, the Trust realizes a gain equal to the amount of the premium received.
When a written call option is exercised or closed, the premium received is
offset against the proceeds to determine the realized gain or loss. When a
written 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 may 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. The Trust 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 as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains or
losses on foreign currency transactions.
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
discount is amortized for financial statement and tax reporting purposes as
required by federal income tax regulations. Interest payments received in
additional securities are recorded on ex-interest date in an amount equal to the
value of the security on such date. The Trust uses the effective interest method
for reporting interest income on payment-in-kind (PIK) bonds. Some securities
may be purchased on a "when-issued" or "forward delivery" basis, which means
that the securities will be delivered to the Trust at a future date, usually
beyond customary settlement time.
Fees Paid Indirectly - The Trust's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
Trust. This amount is shown as a reduction of total expenses on the Statement of
Operations.
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 net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
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 be reported in the financial statements as distributions from paid-in
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 net realized gains.
At October 31, 1999, the Trust, for federal income tax purposes, had a capital
loss carryforward of $48,587,250 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, 2007, ($11,376,973), October 31, 2006, ($13,874,621),
October 31, 2004, ($645,525), October 31, 2003, ($6,526,984), and October 31,
2002, ($16,163,147).
(3) Transactions with Affiliates
Investment Adviser - The Trust has an investment advisory agreement with
Massachusetts Financial Services Company (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
the Trust's 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 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 of its
independent Trustees and Mr. Bailey. Included in Trustees' compensation is a net
periodic pension expense of $28,112 for the six months ended April 30, 2000.
Administrator - The Trust has an administrative services agreement with MFS to
provide the Trust with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Trust incurs an administrative fee at
the following annual percentages of the Trust's average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Transfer Agent - MFSC acts as registrar and dividend disbursing agent for the
Trust. The agreement provides that the Trust will pay MFSC an account
maintenance fee of no more than $9.00 and a dividend services fee of $0.75 per
reinvestment and will reimburse MFSC for reasonable out-of-pocket expenses.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
PURCHASES SALES
-------------------------------------------------------------------------------
U.S. government securities $397,118,281 $361,520,670
------------ ------------
Investments (non-U.S. government securities) $ 77,703,540 $151,944,207
------------ ------------
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Trust, as computed on a federal income tax basis, are
as follows:
Aggregate cost $941,036,416
------------
Gross unrealized depreciation $(63,084,822)
Gross unrealized appreciation 3,653,483
------------
Net unrealized depreciation $(59,431,339)
============
(5) Shares of Beneficial Interest
The Trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Trust shares were as follows:
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------
Treasury shares acquired 4,434,900 $27,707,066 5,984,100 $39,105,641
--------- ----------- --------- -----------
In accordance with the provisions of the Trust's prospectus, 4,434,900 shares of
beneficial interest were purchased by the Trust during the period ended April
30, 2000 at an average price per share of $6.41 and a weighted average discount
of 11.91% per share. The Trust repurchased 5,984,100 shares of beneficial
interest during the year ended October 31, 1999, at an average price per share
of $6.53 and a weighted average discount of 11.69% per share.
(6) Line of Credit
The Trust and other affiliated funds participate in a $1.1 billion unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. Interest is
charged to each trust, 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, 2000, was $8,052. The Trust had no borrowings during the period.
(7) 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, swap agreements, and futures contracts. The notional or contractual
amounts of these instruments represent the investment the Fund 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.
Written Option Transactions
NUMBER OF
CONTRACTS PREMIUMS
-------------------------------------------------------------------------------
Outstanding, beginning of period 2 $ 685,959
Options written 6 1,241,087
Options terminated in closing transactions (2) (507,382)
Options expired (2) (245,123)
-- -----------
Outstanding, end of period 4 $ 1,174,541
== ===========
At April 30, 2000, 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>
NET
UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 6/16/00 AUD 45,931,726 $ 27,964,234 $ 26,809,950 $ 1,154,284
6/16/00 CAD 46,531,406 31,869,535 31,467,707 401,828
6/16/00 DKK 33,817,014 4,416,287 4,138,762 277,525
6/16/00 EUR 40,471,808 39,112,729 36,896,396 2,216,333
6/16/00 JPY 1,244,725,473 12,191,239 11,616,979 574,260
6/16/00 NZD 30,160,224 14,899,150 14,629,411 269,739
------------ ------------ -----------
$130,453,174 $125,559,205 $ 4,893,969
============ ============ ===========
Purchases 6/16/00 JPY 7,292,890,094 $ 69,850,216 $ 68,064,282 $(1,785,934)
------------ ------------ -----------
</TABLE>
At April 30, 2000, forward foreign currency purchases and sales under master
netting agreements excluded above amounted to a net receivable of $177,684 with
First Boston Bank, and a net payable of $1,705,291 with Deutsche Bank and
$1,211,031 with Merrill Lynch.
At April 30, 2000, the Trust had sufficient cash and/or securities to cover any
commitments under these contracts.
Swap Agreements Interest Rate Swaps
<TABLE>
<CAPTION>
CASH FLOWS UNREALIZED
NOTIONAL PRINCIPAL CASH FLOWS PAID RECEIVED BY APPRECIATION
EXPIRATION AMOUNT OF CONTRACT BY THE FUND THE FUND (DEPRECIATION)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3/22/03 SEK 167,900,000 Fixed -4.38% Floating - 3M $(582,282)
STIBOR
3/22/03 EUR 18,180,000 Floating -6M Fixed - 3.76% 541,140
---------
EURIBOR $ (41,142)
=========
</TABLE>
At April 30, 2000, the Trust had sufficient cash and/or securities to cover any
commitments under these contracts.
<PAGE>
MFS(R) INTERMEDIATE INCOME TRUST
TRUSTEES PORTFOLIO MANAGERS
Richard B. Bailey+(2) - Private Stephen C. Bryant*
Investor; Former Chairman and Director Steven E. Nothern*
(until 1991), MFS Investment
Management TREASURER
W. Thomas London*
Marshall N. Cohan+(1) - Private
Investor ASSISTANT TREASURERS
Mark E. Bradley*
Lawrence H. Cohn, M.D.+(2) - Chief of Ellen Moynihan*
Cardiac Surgery, Brigham and Women's James O. Yost*
Hospital; Professor of Surgery,
Harvard Medical School SECRETARY
Stephen E. Cavan*
The Hon. Sir J. David Gibbons, KBE+
(2) - Chief Executive Officer, Edmund ASSISTANT SECRETARY
Gibbons Ltd.; Chairman, Colonial James R. Bordewick, Jr.*
Insurance Company, Ltd.
TRANSFER AGENT, REGISTRAR, AND
Abby M. O'Neill+(2) - Private Investor DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
Walter E. Robb, III+(1) - President c/o MFS Service Center, Inc.
and Treasurer, Benchmark Advisors, P.O. Box 9024
Inc. (corporate financial Boston, MA 02205-9824
consultants); President, Benchmark 1-800-637-2304
Consulting Group, Inc. (office
services) CUSTODIAN
State Street Bank and Trust Company
Arnold D. Scott* - Senior Executive
Vice President, Director, and
Secretary, MFS Investment Management
Jeffrey L. Shames* - Chairman and
Chief Executive Officer, MFS
Investment Management
J. Dale Sherratt+(1) - President,
Insight Resources, Inc. (acquisition
planning specialists)
Ward Smith+(1) - Former Chairman
(until 1994), NACCO Industries
(holding company)
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
+ Independent Trustee
* MFS Investment Management
(1) Member of Audit Committee
(2) Member of Portfolio Trading Committee
<PAGE>
MFS(R) INTERMEDIATE INCOME FUND ------------
BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MINCE-3 06/00 89M
