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<SEC-DOCUMENT>0000912938-06-000225.txt : 20060228
<SEC-HEADER>0000912938-06-000225.hdr.sgml : 20060228
<ACCEPTANCE-DATETIME>20060228105927
ACCESSION NUMBER:		0000912938-06-000225
CONFORMED SUBMISSION TYPE:	POS AMI
PUBLIC DOCUMENT COUNT:		8
FILED AS OF DATE:		20060228
DATE AS OF CHANGE:		20060228

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MFS INTERMEDIATE INCOME TRUST
		CENTRAL INDEX KEY:			0000826735
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		POS AMI
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-05440
		FILM NUMBER:		06649175

	BUSINESS ADDRESS:	
		STREET 1:		500 BOYLSTON ST
		STREET 2:		15TH FL
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02116
		BUSINESS PHONE:		18006372929

	MAIL ADDRESS:	
		STREET 1:		500 BOYLSTON STREET
		STREET 2:		15TH FL
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02116

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MFS MULTI GOVERNMENT INTERMEDIATE TRUST
		DATE OF NAME CHANGE:	19880308

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INTERNATIONAL GOVERNMENT INCOME TRUST
		DATE OF NAME CHANGE:	19880211
</SEC-HEADER>
<DOCUMENT>
<TYPE>POS AMI
<SEQUENCE>1
<FILENAME>min.txt
<DESCRIPTION>N-2 FOR MFS INTERMEDIATE INCOME TRUST
<TEXT>
             AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON


                                FEBRUARY 28, 2006


                           1940 ACT FILE NO. 811-5400

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM N-2

                             REGISTRATION STATEMENT
                    UNDER THE INVESTMENT COMPANY ACT OF 1940       |X|

                               Amendment No. 11                    |X|


                        MFS(R) INTERMEDIATE INCOME TRUST
               (Exact Name of Registrant as Specified in Charter)

                500 Boylston Street, Boston, Massachusetts 02116
               (Address of Principal Executive Offices) (Zip Code)

        Registrant's Telephone Number, including Area Code: 617-954-5000


                                 Susan S. Newton
                     Assistant Secretary and Assistant Clerk

                          MFS Intermediate Income Trust
                  c/o Massachusetts Financial Services Company
                               500 Boylston Street
                           Boston, Massachusetts 02116
                     (Name and Address of Agent for Service)


                                       1
<PAGE>
                          MFS INTERMEDIATE INCOME TRUST

                                     PART A.

                      INFORMATION REQUIRED IN A PROSPECTUS

Items 1 and 2: Omitted pursuant to General Instruction G.3 to Form N-2.

Item 3.1  Fee Table:  Inapplicable - 1940 Act filing only.

Items 3.2, 4, 5, 6 and 7: Omitted pursuant to General Instruction G.3 to Form
N-2.

Item 8.  General Description of Registrant:


8.1. General: The MFS Intermediate Income Trust ("Trust") is a closed-end,
diversified management investment company which was organized as a business
trust under the laws of The Commonwealth of Massachusetts on December 30, 1987.


8.2, 8.3, and 8.4.  Investment  Objectives and Policies,  Risk Factors and Other
Policies:

                        INVESTMENT OBJECTIVE AND POLICIES


The Trust's investment objective is to preserve capital and provide high current
income. The investment objective and policies of the Trust may, unless otherwise
specifically stated, be changed by the Trustees of the Trust without a vote of
the shareholders. A change in a Trust's objective may result in the Trust having
an investment objective different from the objective which the shareholder
considered appropriate at the time of investment in the Trust. 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 ("U.S. Government Securities") and in obligations issued or
guaranteed by a foreign government or any of its political subdivisions,
authorities, agencies or instrumentalities, which are not traded on a U.S.
exchange ("Foreign Government Securities"). 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 ten years. Equivalent maturities are utilized with respect to
certain securities, including Government Agencies. Under normal market
conditions, at least 65% of the Fund's total assets will be invested in income
producing securities. Under normal market conditions, the Trust's average
weighted portfolio maturity will not be less than three years. Contractual
rights to dispose of a security will be considered in calculating average
maturity, because such rights limit the period during which the Trust bears a
market risk with respect to the security. The investment adviser, Massachusetts
Financial Services Company, a Delaware corporation ("MFS" or "Investment
Adviser") believes that this strategy will enable the Trust to preserve capital
while seeking high current income. Shorter term U.S. and Foreign Government
Securities generally are more stable and less susceptible to principal loss than
longer term securities. While shorter term securities in most cases offer lower
yields than securities with longer maturities, the Trust may seek to enhance
income by writing options on U.S. and Foreign Government Securities. Option
writing can result in the loss of principal under certain market conditions.
Although the percentage of the Trust's assets invested in Foreign Government


                                       2
<PAGE>

Securities will vary depending on the state of the economies of the principal
countries around the world, their financial markets and the relationship of
their currencies to the U.S. dollar, under normal conditions the Trust's
portfolio is expected to be globally diversified. See "Special Considerations"
below. There can be no assurance that the Trust will achieve its investment
objective.

For purposes of the foregoing investment policy, securities having a certain
maturity will be deemed to include securities with an equivalent "duration" of
such securities. "Duration" is a commonly used measure of the longevity of a
debt instrument that takes into account the full stream of payments received on
a debt instrument, including both interest and principal payments, based on
their present values. A debt instrument's duration is derived by discounting
principal and interest payments to their present value using the instrument's
current yield to maturity and taking the dollar-weighted average time until
those payments will be received. Contractual rights to dispose of a security,
call options and prepayment assumptions may be considered in calculating
duration and average maturity because such rights limit the period during which
the Trust bears a market risk with respect to the security.

U.S. Government Securities. The U.S. Government Securities in which the Trust
intends to invest include (i) U.S. Treasury obligations, which differ only in
their interest rates, maturities and times of issuance: U.S. Treasury bills
(maturities of one year or less), U.S. Treasury notes (maturities of one to 10
years), and U.S. Treasury bonds (generally original maturities of greater than
10 years), all of which are backed by the full faith and credit of the United
States; (ii) obligations issued or guaranteed by U.S. Government agencies,
authorities or instrumentalities, some of which are backed by the full faith and
credit of the U.S. Treasury, e.g., direct pass-through certificates of the
Government National Mortgage Association ("GNMA"); some of which are supported
by the right of the issuer to borrow from the U.S. Government, e.g., obligations
of Federal Home Loan Banks; and some of which are backed only by the credit of
the issuer itself, e.g., obligations of the Federal National Mortgage
Association ("FNMA"); and (iii) interests in trusts or other entities
representing interests in obligations that are issued and guaranteed by the U.S.
Government, its agencies, authorities or instrumentalities. For a description of
obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, see "Description of Obligations Issued or Guaranteed by U.S.
Government Agencies or Instrumentalities" below.


Some U.S. Government Securities do not generally involve the credit risks
associated with other types of interest bearing securities, although, as a
result, the yields available from U.S. Government Securities are generally lower
than the yields available from other interest bearing securities. Like other
interest bearing securities, however, the values of U.S. Government Securities
change as interest rates fluctuate. Shorter-term U.S. and Foreign Government
Securities generally are more stable and less susceptible to principal loss than
longer-term securities.


Foreign Government Securities. The Trust may invest up to 50% of its net assets
in Foreign Government Securities, including up to 20% of the Trust's net assets
in securities of government, government-related, and supranational issuers
located, or primarily conducting their business, in emerging markets (see
"Emerging Markets Securities" below).  Up to 10% of the Trust's net assets may
be invested in non-convertible fixed income securities rated BB or lower by
Standard & Poor's Ratings Services, Inc. ("S&P"), Fitch IBCA, Inc. ("Fitch") and
Duff & Phelps Credit Rating Co ("Duff & Phelps") or Ba or lower by Moody's
Investors Service, Inc. ("Moody's") or, if unrated, will be determined by the
Adviser to be comparable quality (commonly referred to as "junk


                                       3
<PAGE>

bonds").  The  percentage of the Trust's assets  invested in Foreign  Government
Securities  will vary depending on the relative yields of such  securities,  the
economies of the countries in which the investments are made and such countries'
financial  markets,  the  interest  rate  climate  of  such  countries  and  the
relationship of such countries' currencies to the U.S. dollar.

Investments in Foreign Government Securities and currency will be evaluated on
the basis of fundamental economic criteria (e.g., relative inflation levels and
trends, growth rate forecasts, balance of payments status, and economic
policies) as well as technical and political data. In addition to the foregoing,
interest rates are evaluated on the basis of differentials or anomalies that may
exist between different countries. The Trust's portfolio, under normal
conditions, will include securities of a number of foreign countries. The
Foreign Government Securities in which the Trust intends to invest will
generally consist of obligations supported by national, state or provincial
governments or similar political subdivisions. The Trust may hold foreign
currency for hedging purposes to protect against declines in the U.S. dollar
value of foreign securities held by the Trust and against increases in the U.S.
dollar value of the foreign securities which the Trust might purchase. The Trust
may also hold foreign currency for non-hedging purposes.

Consistent with the Fund's investment objective and policies, the Trust may also
invest in fixed income securities of corporate issuers.

Brady Bonds. The Trust may invest in Brady Bonds, which are securities created
through the exchange of existing commercial bank loans to public and private
entities in certain emerging markets for new bonds in connection with debt
restructurings under a debt restructuring plan introduced by former U.S.
Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan"). Brady Plan debt
restructurings have been implemented to date in Argentina, Brazil, Bulgaria,
Costa Rica, Croatia, the Dominican Republic, Ecuador, Jordan, Mexico, Morocco,
Nigeria, Panama, Peru, the Philippines, Poland, Slovenia, Uruguay and Venezuela.
Brady Bonds have been issued only recently, and for that reason do not have a
long payment history. Brady Bonds may be collateralized or uncollateralized, are
issued in various currencies (but primarily the U.S. dollar) and are actively
traded in over-the-counter secondary markets. U.S. dollar-denominated,
collateralized Brady Bonds, which may be fixed-rate bonds or floating-rate
bonds, are generally collateralized in full as to principal by U.S. Treasury
zero coupon bonds having the same maturity as the bonds. Brady Bonds are often
viewed as having three or four valuation components: the collateralized
repayment of principal at final maturity; the collateralized interest payments;
the uncollateralized interest payments; and any uncollateralized repayment of
principal at maturity (these uncollateralized amounts constituting the "residual
risk"). In light of the residual risk of Brady Bonds and the history of defaults
of countries issuing Brady Bonds with respect to commercial bank loans by public
and private entities, investments in Brady Bonds may be viewed as speculative.

American Depositary Receipts. The Trust may invest in American Depositary
Receipts ("ADRs") which are certificates issued by a U.S. depository (usually a
bank) and represent a specified quantity of shares of an underlying non-U.S.
stock on deposit with a custodian bank as collateral. ADRs may be sponsored or
unsponsored. A sponsored ADR is issued by a depository which has an exclusive
relationship with the issuer of the underlying security. An unsponsored ADR may
be issued by any number of U.S. depositories. Under the terms of most sponsored
arrangements, depositories agree to distribute notices of shareholder meetings
and voting instructions, and to provide shareholder communications and other
information to the ADR holders at the request of the issuer of the deposited
securities. The depository of an unsponsored ADR, on the other hand, is under no
obligation to distribute shareholder communications received from the issuer of


                                       4
<PAGE>


the deposited securities or to pass through voting rights to ADR holders in
respect of the deposited securities. The Trust may invest in either type of ADR.
Although the U.S. investor holds a substitute receipt of ownership rather than
direct stock certificates, the use of the depositary receipts in the United
States can reduce costs and delays as well as potential currency exchange and
other difficulties. The Trust may purchase securities in local markets and
direct delivery of these ordinary shares to the local depository of an ADR agent
bank in the foreign country. Simultaneously, the ADR agents create a certificate
which settles at the Trust's custodian in five days. The Trust may also execute
trades on the U.S. markets using existing ADRs. A foreign issuer of the security
underlying an ADR is generally not subject to the same reporting requirements in
the United States as a domestic issuer. Accordingly the information available to
a U.S. investor will be limited to the information the foreign issuer is
required to disclose in its own country and the market value of an ADR may not
reflect undisclosed material information concerning the issuer of the underlying
security. ADRs may also be subject to exchange rate risks if the underlying
foreign securities are traded in foreign currency.

Emerging Market Securities. Emerging markets in which the Trust may invest
include countries or regions with relatively low gross national product per
capita compared to the world's major economies, and in countries or regions with
the potential for rapid economic growth. Emerging markets will include any
country: (i) having an "emerging stock market" as defined by the International
Finance Corporation; (ii) with low-to middle-income economies according to the
International Bank for Reconstruction and Development (the "World Bank"); (iii)
listed in World Bank publications as developing, or (iv) determined by the
Adviser to be an emerging market as defined above.

Other Investments. When the Investment Adviser believes that investing for
defensive purposes is appropriate, such as during periods of unusual market
conditions, part or all of the Trust's assets may be temporarily invested in
cash (including foreign currency) or cash equivalent short-term obligations
including, but not limited to, certificates of deposit, commercial paper, notes,
U.S. Government Securities, Foreign Government Securities and repurchase
agreements. The Trust may also invest in similar instruments when relative
yields are attractive, provided that it adheres to the 65% policy stated below.

The investment objective and policies described above may be changed without
shareholder approval, except that, as a fundamental policy, at least 65% of the
Trust's assets under normal circumstances will be invested in U.S. and Foreign
Government Securities. This fundamental policy may not be changed without the
approval of the holders of a majority of the Trust's shares (as defined below
under "Investment Restrictions").

Lower-Rated Fixed Income Securities. The Trust may invest in lower-rated fixed
income securities. No minimum rating standard is required by the Trust. These
securities are considered speculative and, while generally providing greater
income than investments in higher rated securities, will involve greater risk of
principal and income (including the possibility of default or bankruptcy of the
issuers of such securities) and may involve greater volatility of price
(especially during periods of economic uncertainty or change) than securities in
the higher rating categories. However, since yields vary over time, no specific
level of income can ever be assured). These lower-rated high yielding fixed
income securities generally tend to be reflect economic changes,


                                       5
<PAGE>

short-term  corporate and industry  developments to a greater extent than higher
rated securities,  which react primarily to fluctuations in the general level of
interest rates  (although  these  lower-rated  fixed income  securities are also
affected by changes in interest rates,  the market's  perception of their credit
quality,  and the outlook for economic growth).  In the past, economic downturns
or an increase in interest  rates have,  under certain  circumstances,  caused a
higher  incidence of default by the issuers of these securities and may do so in
the future,  especially in the case of highly leveraged issuers.  During certain
periods, the higher yields on the Trust's lower-rated high yielding fixed income
securities are paid primarily because of the increased risk of loss of principal
and income,  arising from such factors as the heightened  possibility of default
or  bankruptcy  of the  issuers  of such  securities.  Due to the  fixed  income
payments of these  securities,  the Trust may continue to earn the same level of
interest  income while its net asset value  declines  due to  portfolio  losses,
which could result in an increase in the Trust's  yield  despite the actual loss
of principal.  The market for these  lower-rated  fixed income securities may be
less liquid than the market for investment  grade fixed income  securities,  and
judgment may at time play a greater role in valuing these securities than in the
case of  investment  grade  fixed  income  securities.  Changes  in the value of
securities  subsequent to their acquisition will not affect cash income or yield
to the  Trust  but will be  reflected  in the net  asset  value of shares of the
Trust.

While the Adviser may refer to ratings issued by established credit rating
agencies, it is not the Trust's policy to rely exclusively on ratings issued by
these rating agencies, but rather to supplement such ratings with the Adviser's
own independent and ongoing review of credit quality. The Trust's achievement of
its investment objective may be more dependent on the Adviser's own credit
analysis than in the case of an investment company primarily investing in higher
quality fixed income securities. For a description of these and other rating
categories, see "Description of Bond Ratings" below.


                              INVESTMENT PRACTICES

The following investment practices apply to the portfolio investments of the
Trust. These practices may be changed without shareholder approval.

Options on U.S. and Foreign Government Securities. The Trust may write covered
put and call options and purchase put and call options on U.S. and Foreign
Government Securities that are traded on United States and foreign securities
exchanges and over-the-counter. This practice may result in the loss of
principal under certain market conditions. Other than the requirement that
options written on U.S. and Foreign Government Securities be covered, there are
no limitations on the use of such options. For a further discussion of the use,
risks and costs of options trading, see "Options and Futures" below.

Futures Contracts and Options on Futures Contracts. The Trust may enter into
contracts for the purchase or sale for future delivery of fixed income
securities or foreign currencies, or contracts based on financial indices
including any index of U.S. or Foreign Government Securities ("Futures
Contracts") and may purchase and write options to buy or sell Futures Contracts
("Options on Futures Contracts"). Futures Contracts and Options on Futures
Contracts to be written or purchased by the Trust will be traded on U.S. or
foreign exchanges. These investment techniques are designed only to hedge
against anticipated future changes in interest or exchange rates which otherwise
might either adversely affect the value of the Trust's portfolio securities or


                                       6
<PAGE>

adversely affect the prices of securities which the Trust intends to purchase at
a later date. Should interest or exchange rates move in an unexpected manner,
the Trust may not achieve the anticipated benefits of Futures Contracts or
Options on Futures Contracts or may realize a loss. For further discussion of
the use, risks and costs of Futures Contracts and Options on Futures Contracts,
see "Options and Futures" below.

Options on Foreign Currencies. The Trust may purchase and write put and call
options on foreign currencies for the purpose of protecting against declines in
the dollar value of foreign portfolio securities and against increases in the
dollar cost of foreign securities to be acquired. As in the case of other kinds
of options, however, the writing of an option on foreign currency will
constitute only a partial hedge, up to the amount of the premium received, and
the Trust could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against
fluctuations in exchange rates although, in the event of rate movements adverse
to the Trust's position, it may forfeit the entire amount of the premium plus
related transaction costs. Options on foreign currencies to be written or
purchased by the Trust will be traded on U.S. or foreign exchanges or
over-the-counter. Other than the requirement that options written on foreign
currencies only be used for hedging purposes, there are no limitations on the
use of such options. For further discussion of the use, risks and costs of
options on foreign currencies, see "Options and Futures" below.

Forward Foreign Currency Exchange Contracts. The Trust may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
currency at a future date at a price set at the time of the contract (a "Forward
Contract"). The Trust will enter into Forward Contracts for hedging purposes as
well as for non-hedging purposes. Transactions in Forward Contracts entered into
for hedging purposes will include forward purchases or sales of foreign
currencies for the purpose of protecting the dollar value of securities
denominated in a foreign currency or protecting the dollar equivalent of
interest or dividends to be paid on such securities. The Trust may also enter
into a Forward Contract on one currency in order to hedge against risk of loss
arising from fluctuations in the value of a second currency (referred to as a
"cross hedge") if, in the judgment of the Adviser, a reasonable degree of
correlation can be expected between movements in the values of the two
currencies. By entering into such transactions, however, the Trust may be
required to forego the benefits of advantageous changes in exchange rates. The
Trust may also enter into transactions in Forward Contracts for other than
hedging purposes. For example, if the Investment Adviser expects that the value
of a particular foreign currency will increase or decrease relative to the value
of the U.S. dollar, the Trust may purchase or sell such currency, respectively,
through a Forward Contract. If the expected changes in the value of the currency
occur, the Trust will realize profits which will increase its gross income.
Where exchange rates do not move in the direction or to the extent anticipated,
however, the Trust may sustain losses which will reduce its gross income. Such
transactions could involve significant risk of loss.

The Trust has established procedures consistent with the General Statement of
Policy of the Securities and Exchange Commission (the "SEC") and its staff
regarding the use of Forward Contracts by registered investment companies which
require the use of segregated assets or "cover" in connection with the purchase
and sale of such contracts. In those instances in which the Trust satisfies this
requirement through segregation of assets, it will segregate liquid assets,
which will be marked to market on a daily basis, in an amount equal to the value
of its


                                       7
<PAGE>

commitments under Forward Contracts entered into by the Trust. While
these contracts are not presently regulated by the Commodity Futures Trading
Commission ("CFTC"), the CFTC may in the future assert authority to regulate
Forward Contracts. In such event, the Trust's ability to utilize Forward
Contracts in the manner set forth above may be restricted.

Zero Coupon Bonds. U.S. and Foreign Government Securities in which the Trust may
invest also include zero coupon bonds. Zero coupon bonds are debt obligations
which are issued at a significant discount from face value and do not require
the periodic payment of interest. The discount approximates the total amount of
interest the bonds will accrue and compound over the period until maturity or
the first interest payment date at a rate of interest reflecting the market rate
of the security at the time of issuance. Zero coupon bonds benefit the issuer by
mitigating its need for cash to meet debt service, but also require a higher
rate of return to attract investors who are willing to defer receipt of such
cash. Such investments may experience greater volatility in market value than
debt obligations which make regular payments of interest. The Trust will accrue
income on such investments for tax and accounting purposes, which is
distributable to shareholders and which, because no cash is received at the time
of accrual, may require the liquidation of other portfolio securities to satisfy
the Trust's distribution obligations.

Collateralized Mortgage Obligations. The Trust may invest a portion of its
assets in collateralized mortgage obligations or "CMOs", which are debt
obligations collateralized by mortgage loans or mortgage pass-through securities
which, in the case of U.S. Government Securities, are issued or guaranteed by
the U.S. Government, its agencies, authorities or instrumentalities. Typically,
CMOs are collateralized by certificates issued by GNMA, FNMA or the Federal Home
Loan Mortgage Corporation (such collateral collectively hereinafter referred to
as "Mortgage Assets"). Payments of principal and interest on the Mortgage
Assets, and any reinvestment income thereon, provide the funds to pay debt
service on the CMOs. CMOs may be issued by agencies or instrumentalities of the
U.S. or foreign governments or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage banks,
commercial banks, investment banks and special purpose subsidiaries of the
foregoing.

In a CMO, a series of bonds or certificates may be issued in multiple classes.
Each class of CMOs, often referred to as a "tranche", is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates resulting in a loss of all or part of the premium if any has been paid.
Interest is paid or accrued on all classes of the CMOs on a monthly, quarterly
or semi-annual basis. The principal of and interest on the Mortgage Assets may
be allocated among the several classes of a series of a CMO in innumerable ways.
In a common structure, payments of principal, including any principal
prepayments, on the Mortgage Assets are applied to the classes of the series of
a CMO in the order of their respective stated maturities or final distribution
dates, so that no payment of principal will be made on any class of CMOs until
all other classes having an earlier stated maturity or final distribution date
have been paid in full. Certain CMOs may be stripped (securities which provide
only the principal or interest factor of the underlying security). See "Stripped
Mortgage-Backed Securities" below for a discussion of the risks of investing in
these stripped securities and of investing in classes consisting primarily of
interest payments or principal payments.

The Trust may also invest in parallel pay CMOs and Planned Amortization Class
CMOs ("PAC Bonds"). Parallel pay CMOs are structured to provide payments of
principal on each payment date to



                                       8
<PAGE>

more than one class.  These  simultaneous  payments  are taken  into  account in
calculating the stated maturity date or final  distribution  date of each class,
which, as with other CMO structures, must be retired by its stated maturity date
or final  distribution  date but may be  retired  earlier.  PAC Bonds  generally
require  payments of a specified  amount of principal on each payment date.  PAC
Bonds are always parallel pay CMOs with the required  principal  payment on such
securities  having the  highest  priority  after  interest  has been paid to all
classes.


Indexed Securities. The Trust may purchase securities whose prices are indexed
to the prices of other securities, securities indices, currencies, precious
metals or other commodities, or other financial indicators. Indexed securities
typically, but not always, are debt securities or deposits whose value at
maturity (i.e., principal value) or coupon rate is determined by reference to a
specific instrument or statistic. Gold-indexed securities, for example,
typically provide for a maturity value that depends on the price of gold,
resulting in a security whose price tends to rise and fall together with gold
prices. Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest rates are
determined by references to the values of one or more specified foreign
currencies, and may offer higher yields than U.S. dollar-denominated securities
of equivalent issuers. Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value or interest rates may increase
when the specified currency value increases, resulting in a security that
performs similarly to a foreign-denominated instrument, or their maturity value
may decline when foreign currencies increase, resulting in a security whose
price characteristics are similar to a put on the underlying currency and could
involve the loss of all or a portion of the principal amount of or interest on
the instrument. Currency-indexed securities may also have prices that depend on
the values of a number of different foreign currencies relative to each other.

The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the U.S. and
abroad. At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
government agencies.

Inverse Floating Rate Obligations. The Trust may invest in so-called "inverse
floating rate obligations" or "residual interest" bonds or other obligations or
certificates relating thereto structured to have similar features. Such
obligations generally have floating or variable interest rates that move in the
opposite direction of short-term interest rates and generally increase or
decrease in value in response to changes in short-term interest rates at a rate
which is a multiple of the rate at which fixed-rate long-term securities
increase or decrease in response to such changes. As a result, such obligations
have the effect of providing investment leverage and may be more volatile than
long-term fixed-rate obligations.

Mortgage "Dollar Roll" Transactions. The Trust may enter into mortgage "dollar
roll" transactions with selected banks and broker-dealers pursuant to which the
Trust sells mortgage-backed securities for delivery in the future (generally
within 30 days) and simultaneously contracts to repurchase substantially similar
(same type, coupon and maturity) securities on a specified future date. The
Trust records these transactions as sale and purchase transactions rather than
as borrowing transactions. The Trust will only enter into covered rolls. A
"covered roll" is a specific type of "dollar roll" for which there is an
offsetting cash position or


                                       9
<PAGE>


a cash  equivalent  security  position  which  matures on or before the  forward
settlement date of the "dollar roll"  transaction.  During the roll period,  the
Trust foregoes  principal and interest paid on the  mortgage-backed  securities.
The Trust is  compensated  for the lost interest by the  difference  between the
current sales price and the lower price for the future  purchase (often referred
to as the "drop") as well as by the interest  earned on the cash proceeds of the
initial sale. The Trust may also be compensated by receipt of a commitment fee.

Stripped Mortgage-Backed Securities. The Trust may invest a portion of its
assets in stripped mortgage-backed securities ("SMBS"), which are derivative
multi-class mortgage securities issued by agencies or instrumentalities of the
U.S. Government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks and
investment banks.

SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions from a pool of mortgage assets. A
common type of SMBS will have one class receiving some of the interest and most
of the principal from the Mortgage Assets, while the other class will receive
most of the interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the interest-only or "IO"
class) while the other class will receive all of the principal (the
principal-only or "PO" class). The yield to maturity on an IO is extremely
sensitive to the rate of principal payments (including prepayments) on the
related underlying Mortgage Assets, and a rapid rate of principal payments may
have a material adverse effect on such security's yield to maturity. If the
underlying Mortgage Assets experience greater than anticipated prepayments of
principal, the Trust may fail to fully recoup its initial investment in these
securities. The market value of the class consisting primarily or entirely of
principal payments may be unusually volatile in response to changes in interest
rates.

Swaps and Related Transactions. As one way of managing its exposure to different
types of investments, the Trust may enter into interest rate swaps, currency
swaps or structures with embedded swaps and other types of available swap
agreements, such as caps, collars and floors. Swaps involve the exchange by the
Trust with another party of cash payments based upon different interest rate
indexes, currencies, and other prices or rates such as the value of mortgage
prepayment rates. For example, in the typical interest rate swap, the Trust
might exchange a sequence of cash payments based on a floating rate index for
cash payments based on a fixed rate. Payments made by both parties to a swap
transaction are based on a notional principal amount determined by the parties.

The Trust may also purchase and sell caps, floors and collars. In a typical cap
or floor agreement, one party agrees to make payments only under specified
circumstances, usually in return for payment of a fee by the counterparty. For
example, the purchase of an interest rate cap entitles the buyer, to the extent
that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually-based principal amount from the
counterparty selling such interest rate cap. The sale of an interest rate floor
obligates the seller to make payments to the extent that a specified interest
rate falls below an agreed-upon level. A collar arrangement combines elements of
buying a cap and selling a floor.

Swap agreements could be used to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, in each case based on a
fixed rate, the swap agreement would tend to decrease a Fund's


                                       10
<PAGE>

exposure to U.S.  interest  rates and increase its exposure to foreign  currency
and interest rates.  Caps and floors have an effect similar to buying or writing
options.  Depending  on how they are  used,  swap  agreements  may  increase  or
decrease the overall  volatility of a Fund's investments and its share price and
yield.

Swap agreements are sophisticated hedging instruments that typically involve a
small investment of cash relative to the magnitude of risks assumed, or no
investment of cash. As a result, swaps can be highly volatile and may have a
considerable impact on the Trust's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in value
if the counterparty's creditworthiness deteriorates. The Trust may also suffer
losses if it is unable to terminate outstanding swap agreements or reduce its
exposure through offsetting transactions.

Swaps, caps, floors and collars are highly specialized activities which involve
certain risks. Swap agreements may be individually negotiated and structured to
include exposure to a variety of different types of investments or market
factors. Depending on their structure, swap agreements may increase or decrease
the Trust's exposure to long or short-term interest rates (in the U.S. or
abroad), foreign currency values, mortgage securities, corporate borrowing
rates, or other factors such as securities prices or inflation rates. Swap
agreements can take many different forms and are known by a variety of names.
The Trust is not limited to any particular form or variety of swap agreements if
MFS determines it is consistent with the Trust's investment objective and
policies.

The Trust will maintain liquid assets to cover its current obligations under
swap transactions. If the Trust enters into a swap agreement on a net basis
(i.e., the two payment streams are netted out, with the Trust receiving or
paying, as the case may be, only the net amount of the two payments), the Trust
will maintain liquid assets with a daily value at least equal to the excess, if
any, of the Trust's accrued obligations under the swap agreement over the
accrued amount the Trust is entitled to receive under the agreement. If the
Trust enters into a swap agreement on other than a net basis, it will maintain
liquid assets with a value equal to the full amount of the Trust's accrued
obligations under the agreement.

The most significant factor in the performance of swaps, caps, floors and
collars is the change in the specific interest rate, currency or other factor
that determines the amount of payments to be made under the arrangement. If MFS
is incorrect in its forecasts of such factors, the investment performance of the
Trust would be less than what it would have been if these investment techniques
had not been used. If a swap agreement calls for payments by the Trust, the
Trust must be prepared to make such payments when due. In addition, if the
counterparty's creditworthiness declines, the value of the swap agreement would
be likely to decline, potentially resulting in losses. If the counterparty
defaults, the Trust's risk of loss consists of the net amount of payments that
the Trust is contractually entitled to receive. The Trust anticipates that it
will be able to eliminate or reduce its exposure under these arrangements by
assignment or other disposition or by entering into an offsetting agreement with
the same or another counterparty.

Yield Curve Options. The Trust may also enter into options on the "spread", or
differential, between two U.S. or Foreign Government Securities, in a
transaction referred to as a


                                       11
<PAGE>

"yield  curve"  option.  In contrast  to other  types of options,  a yield curve
option is based on the  difference  between  the yields of  designated  U.S.  or
Foreign  Government  Securities,  rather  than  the  prices  of  the  individual
securities,  and is usually settled through cash payments.  Accordingly, a yield
curve option is  profitable  to the holder if this  differential  widens (in the
case of a call) or narrows  (in the case of a put),  regardless  of whether  the
yields of the underlying securities increase or decrease.


Yield curve options may be used for the same purposes as other options on
securities. Specifically, the Trust may purchase or write such options in order
to protect against the adverse effects of a potential widening or narrowing of
the spreads between U.S. or Foreign Government Securities, or other interest
rate sensitive instruments, held in the Trust's portfolio. The Trust may also
purchase or write yield curve options for other than hedging purposes if, in the
judgment of the Adviser, the Trust will be able to profit from movements in the
spread between the yields of the underlying U.S. or Foreign Government
Securities. The trading of yield curve options is subject to all of the risks
associated with the trading of other types of options. In addition, however,
such options present risk of loss even if the yield of one of the underlying
securities remains constant, if the spread moves in a direction or to an extent
which was not anticipated. Yield curve options written by the Trust will be
covered. A call (or put) option is covered if the Trust holds another call (or
put) option on the spread between the same two securities and segregates liquid
assets sufficient to cover the Trust's net liability under the two options.
Yield curve options may also be covered in such other manner as may be in
accordance with the requirements of the counterparty with which the option is
traded and applicable laws and regulations. Yield curve options are traded
over-the-counter and, because they have been only recently introduced,
established trading markets for these securities have not yet developed. Because
these securities are traded over-the-counter, the SEC has taken the position
that yield curve options are illiquid, and, therefore, cannot exceed the SEC
illiquidity ceiling.

"Reset Options". In certain instances, the Trust may enter into options on
Treasury securities which provide for periodic adjustment of the premium during
the term of each such option. Like other types of options, these transactions,
which may be referred to as "reset options" or "adjustable strike options",
grant the purchaser the right to purchase (in the case of a call) or sell (in
the case of a put), a specified type and series of U.S. Treasury security at any
time up to a stated expiration date (or, in certain instances, on such date). In
contrast to other types of options, however, the price at which the underlying
security may be purchased or sold under a "reset option" is determined at
various intervals during the term of the option, and such price fluctuates from
interval to interval based on changes in the market value of the underlying
security. As a result, the strike price of a "reset option", at the time of
exercise, may be less advantageous to the Trust than if the strike price had
been fixed at the initiation of the option. In addition, the premium paid for
the purchase of the option may be determined at the termination, rather than the
initiation, of the option. If the premium is paid at termination, the Trust
assumes the risk that (i) the premium may be less than the premium which would
otherwise have been received at the initiation of the option because of such
factors as the volatility in yield of the underlying Treasury security over the
term of the option and adjustments made to the strike price of the option, and
(ii) the option purchaser may default on its obligation to pay the premium at
the termination of the option.

Lending of Portfolio Securities. The Trust may seek to increase its income by
lending portfolio securities to the extent consistent with present regulatory
policies, including those of the Board of Governors of the Federal Reserve
System and the SEC. Such loans will usually be made only


                                       12
<PAGE>


to member banks of the Federal Reserve System and member firms (and subsidiaries
thereof) of a national securities exchange  ("Exchange"),  and would be required
to be secured  continuously by collateral,  including  cash, or U.S.  Government
Securities,  an  irrevocable  letter of credit or other  collateral  permissible
under SEC policies and maintained on a current basis at an amount at least equal
to the market value of the securities  loaned. The Trust would have the right to
call a loan and obtain the securities  loaned at any time on customary  industry
settlement notice (which will usually not exceed five days). For the duration of
a loan,  the Trust would  continue to receive the  equivalent of the interest or
dividends  paid by the issuer on the  securities  loaned.  The Trust  would also
receive a fee from the borrower.  The Trust would also receive compensation from
the  investment  of the  collateral),  less a fee paid to the  borrower,  if the
collateral  is in the form of cash.  . The Trust  would not,  however,  have the
right to vote any  securities  having  voting rights during the existence of the
loan, but the Trust would call the loan in  anticipation of an important vote to
be taken among  holders of the  securities  or of the giving or  withholding  of
their  consent on a material  matter  affecting  the  investment.  As with other
extensions  of  credit,  there  are risks of delay in  recovery  or even loss of
rights in the collateral should the borrower of the securities fail financially.
However,  the loans would be made only to firms deemed by the Investment Adviser
to be of good standing, and when, in the judgment of the Investment Adviser, the
consideration  which can be earned  currently from securities loans of this type
justified  the  attendant  risk. If the  Investment  Adviser  determines to make
securities  loans, it is intended that the value of the securities  loaned would
not exceed 30% of the value of the Trust's total assets.

"When-Issued Securities". Securities may be purchased on a "when-issued" or on a
"forward delivery" basis, which means that the obligations will be delivered at
a future date beyond customary settlement time. The commitment to purchase a
security for which payment will be made on a future date may be deemed a
separate security. Although the Trust is not limited to the amount of securities
for which it may have commitments to purchase on such basis, it is expected that
under normal circumstances, the Trust will not commit more than 30% of its
assets to such purchases. The Trust does not pay for the securities until
received or start earning interest on them until the contractual settlement
date. While awaiting delivery of securities purchased on such bases, the Trust
will segregate liquid assets sufficient to cover its commitments. Although the
Trust does not intend to make such purchases for speculative purposes, purchases
on such bases may involve more risk than other types of purchases.

When the Trust commits to purchase a security on a "when-issued" or "forward
delivery" basis, it will segregate liquid assets consistent with the General
Statement of Policy of the SEC described in "Forward Foreign Currency Exchange
Contracts" above, concerning such purchases. However, although the Trust does
not intend to make such purchases for speculative purposes and intends to adhere
to the provisions of the SEC policy, purchases of securities on such basis may
involve more risk than other types of purchases. For example, if the Trust
determines it is necessary to sell the "when-issued" or "forward delivery"
securities before delivery, it may incur a gain or a loss because of market
fluctuations since the time the commitment to purchase such securities was made.
Purchasing securities on a when-issued basis involves a risk that the yields
available in the market when delivery takes place may be higher than yields on
the securities purchased.

Repurchase Agreements. The Trust may enter into repurchase agreements in order
to earn income on available cash or as a temporary defensive measure. Under a
repurchase agreement,


                                       13
<PAGE>


the Trust acquires securities subject to the seller's agreement to repurchase at
a specified time and price. If the seller becomes subject to a proceeding  under
the  bankruptcy  laws or its assets are otherwise  subject to a stay order,  the
Trust's right to liquidate the securities  may be restricted  (during which time
the value of the securities could decline).

The Trust may enter into repurchase agreements with sellers who are member
firms, or a subsidiary thereof, of an Exchange or members of the Federal Reserve
System, recognized primary U.S. Government Securities dealers or institutions
which the Adviser has determined to be of comparable creditworthiness. The
securities that the Trust purchases and holds through its agent are U.S.
Government Securities, the values of which are equal to or greater than the
repurchase price agreed to be paid by the seller. The repurchase price may be
higher than the purchase price, the difference being income to the Trust, or the
purchase and repurchase prices may be the same, with interest at a standard rate
due to the Trust together with the repurchase price on repurchase. In either
case, the income to the Trust is unrelated to the interest rate on U.S.
Government Securities.

The repurchase agreement provides that in the event the seller fails to pay the
amount agreed upon on the agreed upon delivery date or upon demand, as the case
may be, the Trust will have the right to liquidate the securities. If at the
time the Trust is contractually entitled to exercise its right to liquidate the
securities, the seller is subject to a proceeding under the bankruptcy laws or
its assets are otherwise subject to a stay order, the Trust's exercise of its
right to liquidate the securities may be delayed and result in certain losses
and costs to the Trust. The Trust has adopted and follows procedures which are
intended to minimize the risks of repurchase agreements. For example, the Trust
only enters into repurchase agreements after the Adviser has determined that the
seller is creditworthy, and the Adviser monitors the seller's creditworthiness
on an ongoing basis. Moreover, under such agreements, the value of the
securities (which are marked to market every business day) is required to be
greater than the repurchase price, and the Trust has the right to make margin
calls at any time if the value of the securities falls below the agreed upon
collateral. For additional information concerning repurchase agreements, see
"Investment Restrictions" below.

Securities Purchased at a Discount. When and if available, fixed income
securities may be purchased at a market discount from face value. However, the
Trust does not intend to hold such securities to maturity for the purpose of
achieving potential capital gains, unless current yields on these securities
remain attractive.


                               OPTIONS AND FUTURES

Options on U.S. and Foreign  Government  Securities.  The Trust intends to write
covered  put and call  options and  purchase  put and call  options on U.S.  and
Foreign  Government  Securities  that are traded on United  States  and  foreign
securities exchange and over-the-counter.

Call options written by the Trust give the holder the right to buy the
underlying securities from the Trust at a stated exercise price; put options
written by the Trust give the holder the right to sell the underlying security
to the Trust at a stated exercise price. A call option written by the Trust is
"covered" if the Trust owns the security covered by the call or has an absolute
and immediate right to acquire that security without additional


                                       14
<PAGE>

cash consideration) upon conversion or exchange of other securities held in its
portfolio.  A call option is also  covered if the Trust holds a call on the same
security and in the same principal amount as the call written where the exercise
price of the call held is (a) equal to or less  than the  exercise  price of the
call written or (b) liquid assets  representing  greater than the exercise price
of the call written if the difference is segregated by the Trust. . A put option
written by the Trust is "covered" if the Trust  segregates  liquid assets with a
value equal to the exercise price , or else holds a put on the same security and
in the same principal  amount as the put written where the exercise price of the
put held is (a) equal to or greater than the  exercise  price of the put written
or (b) less than the  exercise  price of the put  written if the  difference  is
segregated  by the Trust . The premium  paid by the  purchaser of an option will
reflect,  among other  things,  the  relationship  of the exercise  price to the
market price and  volatility of the underlying  security,  the remaining term of
the option,  supply and demand and interest rates. Put and call options may also
be covered in such other manner as may be in accordance with the requirements of
the exchange on which, or the counterparty  with which, the option is traded and
applicable rules and regulations.


The writer of an option may have no control over when the underlying securities
must be sold, in the case of a call option or purchased, in the case of a put
option, since with regard to certain options, the writer may be assigned an
exercise notice at any time prior to the termination of the obligation. Whether
or not an option expires unexercised, the writer retains the amount of the
premium. This amount, of course, may, in the case of a covered call option, be
offset by a decline in the market value of the underlying security during the
option period. If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to purchase the underlying security at the
exercise price, which will usually exceed the then-market value of the
underlying security. Even if an option is exercised, the writer retains the
amount of the premium.

The writer of an option that wishes to terminate its obligation may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. The effect of the purchase is that
the writer's position will be canceled by the clearing corporation. However, a
writer may not effect a closing purchase transaction after being notified of the
exercise of an option. Likewise, an investor who is the holder of an option may
liquidate its position by effecting a "closing sale transaction". This is
accomplished by selling an option of the same series as the option previously
purchased. There is no guarantee that either a closing purchase or a closing
sale transaction can be effected.


Effecting a closing transaction in the case of a written call option will permit
the Trust to write another call option on the underlying security with either a
different exercise price or expiration date or both, or in the case of a written
put option will permit the Trust to write another put option to the extent that
the exercise price thereof is secured by deposited cash or short-term
securities. Also, effecting a closing transaction will permit the cash or
proceeds from the concurrent sale of any securities subject to the option to be
used for other Trust investments. If the Trust desires to sell a particular
security from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale of the
security.

The Trust will realize a profit from a closing transaction if the price of the
transaction is less than the premium received from writing the option or is more
than the premium paid to purchase


                                       15
<PAGE>

the  option;  the Trust will  realize a loss from a closing  transaction  if the
price of the  transaction  is more than the premium  received  from  writing the
option  or is less  than  the  premium  paid to  purchase  the  option.  Because
increases in the market price of a call option will generally  reflect increases
in the market price of the  underlying  security,  any loss  resulting  from the
repurchase  of a call  option  is  likely  to be  offset  in whole or in part by
appreciation of the underlying security owned by the Trust.

An option position may be closed out only where there exists a secondary market
for an option of the same series. If a secondary market does not exist, it might
not be possible to effect closing transactions in particular options with the
result that the Trust would have to exercise the options in order to realize any
profit. If the Trust is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise. Reasons for
the absence of a liquid secondary market include the following: (i) there may be
insufficient trading interest in certain options; (ii) restrictions may be
imposed by an Exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
Exchange; (v) the facilities of an Exchange or the Options Clearing Corporation
may not at all times be adequate to handle current trading volume; or (vi) one
or more Exchanges could, for economic or other reasons, decide or be compelled
at some future date to discontinue the trading of options (or a particular class
or series of options), in which event the secondary market on that Exchange (or
in that class or series of options) would cease to exist, although outstanding
options on that Exchange that had been issued by the Options Clearing
Corporation as a result of trades on that Exchange would continue to be
exercisable in accordance with their terms.

The Trust may write options in connection with buy-and-write transactions; that
is, the Trust may purchase a security and then write a call option against that
security. The exercise price of the call the Trust determines to write will
depend upon the expected price movement of the underlying security. The exercise
price of a call option may be below ("in-the-money"), equal to ("at-the-money")
or above ("out-of-the-money") the current value of the underlying security at
the time the option is written. Buy-and-write transactions using in-the-money
call options may be used when it is expected that the price of the underlying
security will remain flat or decline moderately during the option period.
Buy-and-write transactions using at-the-money call options may be used when it
is expected that the price of the underlying security will remain fixed or
advance moderately during the option period. Buy-and-write transactions using
out-of-the-money call options may be used when it is expected that the premiums
received from writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. If the call options
are exercised in such transactions, the Trust's maximum gain will be the premium
received by it for writing the option, adjusted upwards or downwards by the
difference between the Trust's purchase price of the security and the exercise
price. If the options are not exercised and the price of the underlying security
declines, the amount of such decline will be offset in part, or entirely, by the
premium received.

The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Trust's gain will be limited to the


                                       16
<PAGE>

premium  received.  If the market price of the underlying  security  declines or
otherwise is below the exercise price, the Trust may elect to close the position
or take  delivery of the security at the exercise  price and the Trust's  return
will be the premium  received  from the put option minus the amount by which the
market  price of the  security is below the  exercise  price.  Out-of-the-money,
at-the-money,  and in-the-money put options may be used by the Trust in the same
market  environments  that call  options  are used in  equivalent  buy-and-write
transactions.

The Trust may purchase put options to hedge against a decline in the value of
its portfolio. By using put options in this way, the Trust will reduce any
profit it might otherwise have realized in the underlying security by the amount
of the premium paid for the put option and by transaction costs. The Trust, from
time to time, may purchase securities such as FNMA bonds and Federal Housing
Administration ("FHA") project loans which carry with them the right to sell
them back to the issuer prior to the stated maturity. The Trust will consider
these rights in determining the maturity of such securities.

The Trust may purchase call options to hedge against an increase in the price of
U.S. or Foreign Government Securities that the Trust anticipates purchasing in
the future. The premium paid for the call option plus any transaction costs will
reduce the benefit, if any, realized by the Trust upon exercise of the option,
and unless the price of the underlying security rises sufficiently, the option
may expire worthless to the Trust.

Futures Contracts. The Trust may enter into contracts for the purchase or sale
for future delivery of fixed income securities or foreign currencies, or
contracts based on bonds or financial indices including any index of U.S. or
Foreign Government Securities ("Futures Contracts"). A "sale" of a Futures
Contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies called for by the contract at a specified price
on a specified date. A "purchase" of a Futures Contract means the acquisition of
a contractual obligation to acquire the securities or foreign currencies called
for by the contract at a specified price on a specified date. U.S. Futures
Contracts have been designed by exchanges which have been designated "contracts
markets" by the Commodity Futures Trading Commission ("CFTC"), and must be
executed through a futures commission merchant, or brokerage firm, which is a
member of the relevant contract market. Existing contract markets include the
Chicago Board of Trade and International Money Market of the Chicago Mercantile
Exchange. Futures Contracts trade on these markets, and, through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange. The Trust will enter into Futures
Contracts which are based on debt securities that are backed by the full faith
and credit of the U.S. Government, such as long-term U.S. Treasury Bonds,
Treasury Notes and three-month U.S. Treasury Bills. The Trust may also enter
into Futures Contracts which are based on non-U.S. Government bonds.

At the same time a Futures Contract is purchased or sold, the Trust must
allocate cash or securities as a deposit payment ("initial deposit"). The
initial deposit varies, but may be as low as 5% or less of a contract's face
value. Daily thereafter, the Futures Contract is valued on a marked-to-market
basis and the Trust may be required to pay or receive a "variation margin,"
which reflects any decline or increase in the contract's value.

At the time of delivery of securities pursuant to such a contract, adjustments
are made to recognize differences in value arising from the delivery of
securities with a different interest rate from that specified in the contract.
In some (but not many) cases, securities called for by a Futures Contract


                                       17
<PAGE>

may not have been issued when the contract was written. A Futures Contract on an
index of securities provides for a cash settlement based on changes in the value
of the underlying index.


Although Futures Contracts by their terms call for the actual delivery or
acquisition of securities, or in the case of futures on an index of securities,
a cash settlement, in most cases the contractual obligation is fulfilled before
the date of the contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is accomplished by buying
(or selling, as the case may be) on a commodities exchange an identical Futures
Contract calling for delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation to make or take
delivery of the securities. Since all transactions in the futures market are
made, offset or fulfilled through a clearinghouse associated with the exchange
on which the contracts are traded, the Trust will incur brokerage fees when it
purchases or sells Futures Contracts.

The purpose of the acquisition or sale of a Futures Contract, in the case of a
portfolio, such as the portfolio of the Trust, which hold or intends to acquire
long-term fixed income securities, is to attempt to protect the Trust from
fluctuations in interest or foreign exchange rates without actually buying or
selling long-term fixed income securities or foreign currency. For example, if
the Trust owns long-term bonds, and interest rates were expected to increase,
the Trust might enter into Futures Contracts for the sale of debt securities.
Such a sale would have much the same effect as selling an equivalent value of
the long-term bonds owned by the Trust. If interest rates did increase, the
value of the debt securities in the portfolio would decline, but the value of
the Futures Contracts to the Trust would increase at approximately the same
rate, thereby keeping the net asset value of the Trust from declining as much as
it otherwise would have. The Trust could accomplish similar results by selling
bonds with long maturities and investing in bonds with short maturities when
interest rates are expected to increase. However, since the futures market is
more liquid than the cash market the use of Futures Contracts as an investment
technique allows the Trust to maintain a defensive position without having to
sell its portfolio securities.

Similarly, when it is expected that interest rates may decline, Futures
Contracts may be purchased to attempt to hedge against anticipated purchases of
long-term bonds at higher prices. Since the fluctuations in the value of Futures
Contracts should be similar to that of long-term bonds, the Trust could take
advantage of the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that time, the Futures
Contracts could be liquidated and the Trust could then buy long-term bonds on
the cash market. To the extent the Trust enters into Futures Contracts for this
purpose, the Trust will segregate liquid assets in an amount equal to the
difference between the fluctuating market value of such Futures Contracts and
the aggregate value of the initial and variation margin payments made by the
Trust with respect to such Futures Contracts, thereby assuring the position is
unleveraged.

The ordinary spreads between prices in the cash and futures markets, due to
differences in the natures of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close Futures Contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of


                                       18
<PAGE>

speculators,  the margin  deposit  requirements  in the futures  market are less
onerous than margin requirements in the securities market. Therefore,  increased
participation  by speculators in the futures  market may cause  temporary  price
distortions. Due to the possibility of distortion, a correct forecast of general
interest  rate  trends by the  Investment  Adviser  may  still  not  result in a
successful transaction.


In addition, Futures Contracts entail risks. Although the Trust believes that
use of such contracts will benefit the Trust, if the Investment Adviser's
investment judgment about the direction of interest rates is incorrect, the
Trust's overall performance would be poorer than if it had not entered into any
such contract. For example, if the Trust had hedged against the possibility of
an increase in interest rates which would adversely affect the price of bonds
held in its portfolio and interest rates decrease instead, the Trust will lose
part or all of the benefit of the increased value of its bonds which it has
hedged because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Trust has insufficient cash, it may have to
sell bonds from its portfolio to meet daily variation margin requirements. Such
sales of bonds may be, but will not necessarily be, at increased prices which
reflect the rising market. The Trust may have to sell securities at a time when
it may be disadvantageous to do so.

Options on Futures Contracts. The Trust intends to purchase and write Options on
Futures Contracts for hedging purposes. The purchase of a call option on a
Futures Contract is similar in some respects to the purchase of a call option on
an individual security. Depending on the pricing of the option compared to
either the price of the Futures Contract upon which it is based or the price of
the underlying debt securities, it may or may not be less risky than ownership
of the Futures Contract or underlying debt securities. As with the purchase of
Futures Contracts, when the Trust is not fully invested it may purchase a call
option on a Futures Contract to hedge a market advance due to declining interest
rates.

The writing of a call option on a Futures Contract constitutes a partial hedge
against declining prices of the security or foreign currency which is
deliverable upon exercise of the Futures Contract. If the futures price at
expiration of the option is below the exercise price, the Trust will retain the
full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Trust's portfolio holdings. The writing of
a put option on a Futures Contract constitutes a partial hedge against
increasing prices of the security or foreign currency which is deliverable upon
exercise of the Futures Contract. If the futures price at expiration of the
option is higher than the exercise price, the Trust will retain the full amount
of the option premium which provides a partial hedge against any increase in the
price of securities which the Trust intends to purchase. If a put or call option
the Trust has written is exercised, the Trust will incur a loss which will be
reduced by the amount of the premium it receives. Depending on the degree of
correlation between changes in the value of its portfolio securities and changes
in the value of its futures positions, the Trust's losses from existing options
on futures may to some extent be reduced or increased by changes in the value of
portfolio securities.

The purchase of a put option on a Futures Contract is similar in some respects
to the purchase of protective put options on portfolio securities. For example,
the Trust may purchase a put option on a Futures Contract to hedge the Trust's
portfolio against the risk of risking interest rates.


                                       19
<PAGE>


The amount of risk the Trust assumes when it purchases an Option on a Futures
Contract is the premium paid for the option plus related transaction costs,
although it may be necessary to exercise the option which will result in a
position in the Futures Contract. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that changes in the value
of the underlying Futures Contract will not be fully reflected in the value of
the option purchased. The writing of an Option on a Futures Contract involves
all of the risks of purchases or sales of Futures Contracts, including initial
and variation margin requirements.

The Trust's ability to engage in the options and futures strategies described
above will depend on the availability of liquid markets in such instruments.
Therefore, no assurance can be given that the Trust will be able to utilize
these instruments effectively for the purposes set forth above. Furthermore, the
Trust's ability to engage in options and futures transactions may be limited by
tax considerations.

Options on Futures Contracts may be covered in any such manner as may be in
accordance with the requirements of the exchange on which they are traded and
applicable rules and regulations.

Options on Foreign Currencies. The Trust may purchase and write options on
foreign currencies for hedging purposes in a manner similar to that in which
Futures Contracts on foreign currencies, or Forward Contracts, will be utilized.
For example, a decline in the dollar value of a foreign currency in which
portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of portfolio securities,
the Trust may purchase put options on the foreign currency. If the value of the
currency does decline, the Trust will have the right to sell such currency for a
fixed amount in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have resulted.

Conversely, where a rise in the dollar value of a currency in which securities
to be acquired are denominated is projected, thereby increasing the cost of such
securities, the Trust may purchase call options thereon. The purchase of such
options could offset, at least partially, the effects of the adverse movements
in exchange rates. As in the case of other types of options, however, the
benefit to the Trust deriving from purchases of foreign currency options will be
reduced by the amount of the premium and related transaction costs. In addition,
where currency exchange rates do not move in the direction or to the extent
anticipated, the Trust could sustain losses on transactions in foreign currency
options which would require it to forego a portion or all of the benefits of
advantageous changes in such rates.

The Trust may write options on foreign currencies for the same types of hedging
purposes. For example, where the Trust anticipates a decline in the dollar value
of foreign-denominated securities due to adverse fluctuations in exchange rates
it could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised, and the diminution in value of portfolio securities will be
offset by the amount of the premium received.

Similarly, instead of purchasing a call option to hedge against an anticipated
increase in the dollar cost of securities to be acquired, the Trust could write
a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Trust to hedge such increased
cost up to the amount of the premium. As in the case of


                                       20
<PAGE>


other types of options,  however,  the writing of a foreign currency option will
constitute  only a partial  hedge up to the amount of the  premium,  and only if
rates move in the expected direction.  If this does not occur, the option may be
exercised  and the Trust would be  required  to purchase or sell the  underlying
currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on foreign currencies,  the Trust also may be required to
forego all or a portion of the benefits which might otherwise have been obtained
from favorable movements in exchange rates.

All call options written on foreign currencies will be covered. A call option
written on a foreign currency by the Trust is "covered" if the Trust owns the
underlying foreign currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash consideration (or
for additional cash consideration segregated by the Trust ) upon conversion or
exchange of other foreign currency held in its portfolio. A call option is also
covered if the Trust has purchased a call on the same foreign currency and in
the same principal amount as the call written where the exercise price of the
call held is (a) equal to or less than the exercise price of the call written or
(b) greater than the exercise price of the call written if liquid assets
representing the difference is segregated by the Trust. Call and put options on
foreign currencies may also be covered in such other manner as may be in
accordance with the requirements of the exchange on which they are traded and
applicable rules and regulations.

Call and put options and Options on Futures Contracts may be covered in any such
manner as may be in accordance with the requirements of the exchange on which
they are traded and applicable rules and regulations.

Options on securities may be traded over-the-counter. In an over-the-counter
trading environment, many of the protections afforded to exchange participants
will not be available. For example, there are no clearing house performance
guarantees. In addition, there are no daily price fluctuation limits, and
adverse market movements could therefore continue to an unlimited extent over a
period of time. Although the purchaser of an option cannot lose more than the
amount of the premium plus related transaction costs, this entire amount could
be lost.

As a result of its investments in foreign securities, the Trust may receive
interest payments, or the proceeds of the sale or redemption of such securities,
in foreign currencies. In that event, the Trust may promptly convert such
currencies into dollars at the then-current exchange rate. Under certain
circumstances, alternatively, such as where the Investment Adviser anticipates
that the exchange rate will improve, the Trust may hold such currencies for an
indefinite period of time. The Trust may also hold foreign currency in
anticipation of purchasing foreign securities.

In addition, the Trust may be required or elect to receive delivery of the
foreign currencies underlying options on foreign currencies or Forward Contracts
it has entered into. This could occur, for example, if an option written by the
Trust is exercised or the Trust is unable to close out a Forward Contract it has
entered into. The Trust may also elect to take delivery of the currencies
underlying options or Forward Contracts if, in the judgment of the Investment
Adviser, it is in the best interest of the Trust to do so. The holding of
currencies exposes the Trust to risk of loss if currency exchange rates move in
a direction adverse to the Trust's position. Such losses could reduce any
profits or increase any losses sustained by the Trust from the sale or
redemption of securities, and could reduce the dollar value of


                                       21
<PAGE>


interest or dividend payments received.  In addition,  the holding of currencies
could adversely affect the Trust's profit or loss on currency options or Forward
Contracts, as well as its hedging strategies.

Additional Risks of Options on U.S. and Foreign Government Securities, Options
on Futures Contracts, Forward Contracts and Options on Foreign Currencies.
Unlike transactions entered into by the Trust in Futures Contracts, options on
foreign currencies and Forward Contracts are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) by the SEC. To the contrary, such instruments are traded through
financial institutions acting as market-makers, although foreign currency
options are also traded on certain national securities exchanges, such as the
Philadelphia Stock Exchange and the Chicago Board Options Exchange, subject to
SEC regulation. Similarly, options on securities may be traded over-the-counter.
In an over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option writer and trader
of Forward Contracts could lose amounts substantially in excess of their initial
investments, due to the margin and collateral requirements associated with such
positions. In addition, where the Trust enters into Forward Contracts as a
"cross hedge" (i.e., the purchase or sale of a Forward Contract on one currency
to hedge against risk of loss arising from changes in value of a second
currency), the Trust incurs the risk of imperfect correlation between changes in
the values of the two currencies, which could result in losses.

In order to assure that the Trust will not be deemed a "commodity pool" for
purposes of the Commodity Exchange Act, regulations of the CFTC require that the
Trust enter into transactions in Futures Contracts, Options on Futures Contracts
and Options on Foreign Currencies traded on CFTC - regulated exchange only (i)
for bona fide hedging purposes (as defined in CFTC regulations), or (ii) for
non-bona fide hedging purposes, provided that the aggregate initial margin and
premiums to establish such non-bona fide hedging positions do not exceed 5% of
the liquidation value of the Trust's assets, after taking into account
unrealized profits and unrealized losses on any such contracts the Trust has
entered into, and excluding, in computing such 5%, the in-the-money amount with
respect to an option that is in-the-money at the time of purchase.

The staff of the SEC has taken the position that purchased over-the-counter
options and assets used to cover written over-the-counter options are illiquid;
therefore, together with other illiquid securities, such options and assets
cannot exceed a certain percentage of the Trust's assets (the "SEC illiquidity
ceiling"). Although the Investment Adviser disagrees with this position, the
Investment Adviser intends to limit the Trust's writing of over-the-counter
options in accordance with the following procedure. Except as provided below,
the Trust intends to write over-the-counter options only with primary U.S.
Government Securities dealers recognized by the Federal Reserve Bank of New
York. Also, the contracts which the Trust has in place with such primary dealers
will provide that the Trust has the absolute right to repurchase an option it
writes at any time at a price which represents the fair market value, as
determined in good faith through negotiation between the parties, but which in
no event will exceed a price determined pursuant to a formula in the contract.
Although the specific formula may vary between contracts with different primary
dealers, the formula will generally be based on a multiple of the premium
received by the Trust for writing the option, plus the amount, if any, of the


                                       22
<PAGE>


option's intrinsic value (i.e., the amount that the option is in-the-money). The
formula may also include a factor to account for the difference between the
price of the security and the strike price of the option if the option is
written out-of-the-money. The Trust will treat all or a part of the formula
price as illiquid for purposes of the SEC illiquidity ceiling. The Trust may
also write over-the-counter options with non-primary dealers, including foreign
dealers, and will treat the assets used to cover these options as illiquid for
purposes of such SEC illiquidity ceiling.

Options on foreign currencies traded on national securities exchanges are within
the jurisdiction of the SEC, as are other securities traded on such exchanges.
As a result, many of the protections provided to traders on organized exchanges
will be available with respect to such transactions. In particular, all foreign
currency option positions entered into on a national securities exchange are
cleared and guaranteed by the Options Clearing Corporation ("OCC"), thereby
reducing the risk of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more readily available
than in the over-the-counter market, potentially permitting the Trust to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.


The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in applicable foreign countries
for this purpose. As a result, the OCC may, if it determines that foreign
governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on the OCC
or its clearing member, impose special procedures on exercise and settlement,
such as technical changes in the mechanics of delivery of currency, the fixing
of dollar settlement prices or prohibitions, on exercise.


In addition, options on U.S. and Foreign Government Securities, Futures
Contracts, Options on Futures Contracts, Forward Contracts and options on
foreign currencies may be traded on foreign exchanges. Such transactions are
subject to the risk of governmental actions affecting trading in or the prices
of foreign currencies or securities. The value of such positions also could be
adversely affected by (i) other complex foreign political and economic factors,
(ii) lesser availability than in the United States of data on which to make
trading decisions, (iii) delays in the Trust's ability to act upon economic
events occurring in foreign markets during non-business hours in the United
States, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the Untied States, and (v) lesser
trading volume.

Future Developments. The Trust proposes to take advantage of opportunities in
the area of options and Futures Contracts and Options on Futures Contracts which
are not presently contemplated for use by the Trust or which are not currently
available but which may be developed, to the extent such opportunities are both
consistent with the Trust's investment objective and legally permissible for the
Trust. Such opportunities, if they arise, may involve risks which exceed those
involved in the options and futures activities described above.


                                       23
<PAGE>


                              PORTFOLIO MANAGEMENT


The Trust's portfolio management may include the following strategies:

(1) changing from one U.S. Government Security to an essentially similar U.S.
Government Security when their respective yields are distorted due to market
factors;

(2) changing from U.S. Government Securities to Foreign Government Securities or
from Foreign Government Securities to U.S. Government Securities when
disparities arise in their relative yields;

(3) selling one kind of U.S. Government Security (e.g., Treasury bonds) and
buying another (e.g., FNMA direct pass-through certificates) when disparities
arise in the relative values of each;

(4) shortening the average maturity of its portfolio in anticipation of a rise
in interest rates so as to minimize depreciation of principal; and

(5) lengthening the average maturity of its portfolio in anticipation of a
decline in interest rates so as to maximize appreciation of principal.

The Trust may also use the techniques described above under "Investment
Practices" to manage its portfolio.

While these strategies are designed to increase the Trust's current income
available for distribution to its shareholders, if the Trust's expectations of
changes in interest rates or its evaluation of the normal yield relationship
between two securities or obligations proves to be incorrect, the Trust's income
and net asset value may be reduced.


                             SPECIAL CONSIDERATIONS

The Trust is designed primarily as a long-term investment and not as a trading
vehicle. The value of shares of the Trust will vary as the aggregate value of
the Trust's portfolio securities increases or decreases. The net asset value of
the Trust may change as the general levels of interest rates fluctuate. When
interest rates decline, the value of a portfolio invested at higher yields can
be expected to rise. Conversely, when interest rates rise, the value of a
portfolio invested at lower yields can be expected to decline. If the Trust's
expectations of changes in interest rates or its evaluation of the normal yield
relationship between two securities proves to be incorrect, the Trust's income,
net asset value and potential capital gain may be decreased or its potential
capital loss may be increased.

Although changes in the value of the Trust's portfolio securities subsequent to
their acquisition are reflected in the net asset value of shares of the Trust,
such changes will not affect the income received by the Trust from such
securities. The dividends paid by the Trust will increase or decrease in
relation to the income received by the Trust from its investments, which will in
any case be reduced by the Trust's expenses before being distributed to the
Trust's shareholders.


                                       24
<PAGE>




The Trust's use of options, Futures Contracts, Options on Futures Contracts,
Forward Contracts and options on foreign currencies may result in the loss of
principal under certain market conditions. See "Options and Futures" above.

Investing in Foreign Government Securities involves considerations and possible
risks not typically associated with investing in U.S. Government Securities. The
value of Foreign Government Securities investments will be affected by changes
in currency rates or exchange control regulations. Because interest and
principal payments of Foreign Government Securities may be made in foreign
currencies, if the exchange rate declines after the Trust receives these
payments the Trust may not have sufficient cash to make distributions to
shareholders without selling portfolio securities. A decline in the exchange
rate would also result in a decrease in the value of certain portfolio
securities. The Trust may enter into Forward Contracts and options on foreign
currencies in an effort to protect against this risk. The value of Foreign
Government Securities can also be affected by the application of foreign tax
laws, including withholding taxes, changes in governmental administration or
economic or monetary policy (in this country or abroad) or changed circumstances
in dealings between nations. Costs may be incurred in connection with
conversions between various currencies. Foreign brokerage commissions are
generally higher than in the United States, and foreign securities markets may
be less liquid, more volatile and less subject to governmental supervision than
in the United States. Investments in foreign countries could be affected by
other factors not present in the United States, including expropriation,
confiscatory taxation and potential difficulties in enforcing contractual
obligations and could be subject to extended settlement periods. A delay in
settlement could hinder the ability of the Trust to take advantage of changing
market conditions with a possible resulting adverse effect on net asset value.

The risks of investing in foreign securities may be intensified in the case of
investments in emerging markets. Securities of many issuers in emerging markets
may be less liquid and more volatile than securities of comparable domestic
issuers. Emerging markets also have different clearance and settlement
procedure, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Trust is uninvested and no
return is earned thereon. The inability of the Trust to make intended security
purchases due to settlement problems could cause the Trust to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to the Trust due to subsequent
declines in value of the portfolio security or, if the Trust has entered into a
contract to sell the security, in possible liability to the purchaser. Certain
markets may require payment for securities before delivery. Securities prices in
emerging markets can be significantly more volatile than in the more developed
nations of the world, reflecting the greater uncertainties of investing in less
established markets and economies. In particular, countries with emerging
markets may have relatively unstable governments, present the risk of
nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries of emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions and may suffer from
extreme and volatile debt burdens or inflation rates. Local securities markets
may trade a small number of securities and may be unable to respond effectively
to increases in trading volume potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Securities of issuers
located in countries with


                                       25
<PAGE>


emerging  markets  may have  limited  marketability  and may be  subject to more
abrupt or erratic price movements.

Certain emerging markets may require governmental approval for the repatriation
of investment income, capital or the proceeds of sale of securities of foreign
investors. In addition, if a deterioration occurs in an emerging market's
balance of payments or for other reasons a country could impose temporary
restrictions on foreign capital remittances. The Trust could be adversely
effected by delays in, or a refusal to grant, any required governmental approval
for repatriation of capital, as well as by the application to the Trust of any
restrictions on investments.

Investment in certain foreign emerging market debt obligations may be restricted
or controlled to varying degrees. These restrictions or controls may at times
preclude investment in certain foreign emerging market debt obligations and
increase the expenses of the Trust.

For these reasons, an investment in shares of the Trust should not constitute a
complete investment program since it involves the risk of capital depreciation
inherent in seeking higher income.

                             INVESTMENT RESTRICTIONS

The Trust has adopted the following policies which cannot be changed without the
approval of the holders of a majority of its shares (which means the lesser of
(i) more than 50% of the outstanding shares of the Trust, or (ii) 67% or more of
the outstanding shares of the Trust present at a meeting at which holders of
more than 50% of its outstanding shares are represented in person or by proxy).
Except with respect to borrowings and investing in illiquid securities, all
percentage limitations set forth below apply immediately after a purchase or
initial investment and any subsequent change in any applicable percentage
resulting from market fluctuations does not require elimination of any security
from the portfolio. The Trust may not:

                  (1) borrow money, except as a temporary measure for
         extraordinary or emergency purposes or for a repurchase of its shares
         or except as contemplated by clause (9) below, and in no event shall
         the Trust borrow in excess of 1/3 of its assets. The Trust will not
         purchase securities while borrowings are outstanding, except that it
         will honor prior commitments to purchase securities.

                  (2) purchase any security or evidence of interest therein on
         margin, except that the Trust may obtain such short-term credit as may
         be necessary for the clearance of purchases and sales of securities and
         except that the Trust may make deposits on margin in connection with
         options, Futures Contracts and Options on Futures Contracts;

                  (3) underwrite securities issued by other persons except
         insofar as the Trust may technically be deemed an underwriter under the
         Securities Act of 1933 in selling a portfolio security;

                  (4) invest in illiquid investments, including securities which
         are subject to legal or contractual restrictions on resale or for which
         there is no readily available market (e.g.,


                                       26
<PAGE>


         trading  in the  security  is  suspended  or, in the case of  unlisted
         securities,  where no market  makers  exist),  if more than 10% of the
         Trust's  assets  (taken at market  value)  would be  invested  in such
         securities;

                  (5) purchase or sell real estate (including limited
         partnership interests but excluding securities secured by real estate
         or interests therein), interests in oil, gas or mineral leases,
         commodities or commodity contracts (except currencies, currency options
         or futures, Forward Contracts or Futures Contracts) in the ordinary
         course of the business of the Trust (the Trust reserves the freedom of
         action to hold and to sell real estate acquired as a result of the
         ownership of securities);

                  (6) purchase securities of any issuer if such purchase at the
         time thereof would cause more than 10% of the voting securities of such
         issuer to be held by the Trust;

                  (7) issue any senior security (as that term is defined in the
         1940 Act), if such issuance is specifically prohibited by the 1940 Act
         or the rules and regulations promulgated thereunder (for the purpose of
         this restriction, collateral arrangements with respect to options,
         Futures Contracts and Options on Futures Contracts and collateral
         arrangements with respect to initial and variation margin are not
         deemed to be the issuance of a senior security);

                  (8) make loans to other persons except through the lending of
         its portfolio securities not in excess of 30% of its total assets
         (taken at market value) and except through the use of repurchase
         agreements, the purchase of commercial paper or the purchase of all or
         a portion of an issue of debt securities in accordance with its
         investment objective, policies and restrictions; or

                  (9) make short sales of securities or maintain a short
         position, unless at all times when a short position is open it owns an
         equal amount of such securities or securities convertible into or
         exchangeable, without payment of any further consideration, for
         securities of the same issue as, and equal in amount to, the securities
         sold short ("short sales against the box"), and unless not more than
         10% of the Trust's net assets (taken at market value) is held as
         collateral for such sales at any one time .

The Trust's investment limitations and policies are adhered to at the time of
purchase or utilization of assets; a subsequent change in circumstances will not
be considered to result in a violation of policy.


                                       27
<PAGE>



               DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY
                  U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES


Federal Farm Credit System Notes and Bonds-

     are bonds issued by a cooperatively  owned  nationwide  system of banks and
     associations  supervised by the Farm Credit Administration,  an independent
     agency of the U.S.  Government.  These bonds are not guaranteed by the U.S.
     Government.

Maritime Administration Bonds-
     are bonds issued and provided by the  Department of  Transportation  of the
     U.S. Government and are guaranteed by the United States.

FHA debentures-
     are debentures  issued by the Federal Housing  Administration  of the U. S.
     Government and are guaranteed by the United States.

GNMA Certificates-
     are   mortgage-backed   securities  which  represent  a  partial  ownership
     interests  in a pool of mortgage  loans  issued by lenders such as mortgage
     bankers, commercial banks and savings and loan associations.  Each mortgage
     loan  included  in the  pool  is  either  insured  by the  Federal  Housing
     Administration or guaranteed by the Veterans Administration.

FHLMC Bonds-
     are  bonds  issued  and  guaranteed  by  the  Federal  Home  Loan  Mortgage
     Corporation and are not guaranteed by the U.S. Government.

FNMA Bonds-
     are  bonds  issued  and  guaranteed  by  the  Federal   National   Mortgage
     Association and are not guaranteed by the U.S. Government.

Federal Home Loan Bank Notes and Bonds-
     are notes and bonds issued by the Federal  Home Loan Bank  System,  and are
     not guaranteed by the U.S. Government.

         Although this list includes a description of the primary types of U.S.
Government agency or instrumentality obligations in which the Trust intends to
invest, the Trust may invest in obligations of U.S. Government agencies or
instrumentalities other than those listed above.

                           DESCRIPTION OF BOND RATINGS

The ratings of Moody's, S&P and Fitch represent their opinions as to the quality
of various debt instruments. It should be emphasized, however, that ratings are
not absolute standards of quality. Consequently, debt instruments with the same
maturity, coupon and rating may have different yields while debt instruments of
the same maturity and coupon with different ratings may have the same yield.


                                       28
<PAGE>



                         MOODY'S INVESTORS SERVICE, INC.

Aaa:  Obligations rated Aaa are judged to be of the highest quality with minimal
credit risk.

Aa:  Obligations  rated Aa are judged to be of high  quality  and are subject to
very low credit risk.

A: Obligations rated A are considered  upper-medium-grade and are subject to low
credit risk.

Baa:  Obligations  rated Baa are  subject  to  moderate  credit  risk.  They are
considered   medium-grade   and  as  such  may   possess   certain   speculative
characteristics.

Ba: Obligations rated Ba are judged to have speculative elements and are subject
to substantial credit risk.

B: Obligations rated B are considered speculative and are subject to high credit
risk.

Caa:  Obligations rated Caa are judged to be of poor standing and are subject to
very high credit risk.

Ca:  Obligations rated Ca are highly speculative and are likely in, or very near
default, with some prospect of recovery of principal and interest.

C: Obligations  rated C are the lowest rated class of bonds and are typically in
default, with little prospect for recovery of principal or interest.

Note: Moody's applies numerical modifiers "1", "2" and "3" in each generic
rating classification from "Aa" through "Caa." The modifier "1" indicates that
the obligation ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and the modifier "3" indicates a
ranking in the lower end of that generic rating category.

                        STANDARD AND POOR'S RATINGS GROUP

Issue credit ratings are based in varying degrees, on the following
considerations: (1) likelihood of payment capacity and willingness of the
obligor to meet its financial commitment on an obligation in accordance with the
terms of the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization, or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.

The issue ratings definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above.

AAA: An obligation rated "AAA" has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitments on the
obligation is extremely strong.

AA: An obligation rated "AA" differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial obligations is
extremely strong.


                                       29
<PAGE>


A: An obligation rated "A" is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher-rated
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is still strong.

BBB: An obligation rated "BBB" exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligator to meet its financial obligations is very
strong.

BB, B, CCC, CC, and C: Obligations rated "BB", "B", "CCC", "CC", and "C" are
regarded as having significant speculative characteristics. `B' indicates the
least degree of speculation and `C' the highest. While such obligations will
likely have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.

BB: An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions, which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

B: An obligation rated "B" is more vulnerable to non-payment than obligations
rated `BB', but the obligor currently has the capacity to meet its financial
commitment on the obligations. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.

CCC: An obligation rated "CCC" is currently vulnerability to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligator to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions is not likely to have the
capacity to meet its financial commitment on the obligation.

CC:  An obligation rated "CC" is currently vulnerable to nonpayment.

C: The "C" rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this obligation
are being continued.

CC: An obligation rated "CC" is currently highly vulnerable to nonpayment.

C: The "C" rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this obligation
are being continued.

D: An obligation rated "D" is in payment default. The "D" rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The "D" rating also will be used upon the
filing of a bankruptcy petition or the taking of a similar action if debt
service payments are jeopardized.

Plus (+) or Minus (-): The "AA" and "CCC" ratings may be modified by the
addition of a plus or minus sign to show relative standing within the applicable
rating category.


                                       30
<PAGE>



The `c' subscript is used to provide additional information to investors that
the bank may terminate its obligation to purchase tendered bonds if the
long-term credit rating of the issuer is below an investment-grade level and/or
the issuer's bonds are deemed taxable.

The letter `p' indicates that the rating is provisional. A provisional rating
assumes the successful completion of the project financed by the debt being
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful, timely completion of the project. This
rating, however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of or the risk of default upon
failure of such completion. The investor should exercise his own judgment with
respect to such likelihood and risk.

Asterisk (*): Continuance of the ratings is contingent upon Standard & Poor's
receipt of an executed copy of the escrow agreement or closing documentation
confirming investments and cash flows.

The `r' highlights derivative, hybrid, and certain other obligations that
Standard & Poor's believes may experience high volatility or high variability in
expected returns as a result of noncredit risks. Examples of such obligations
are securities with principal or interest return indexed to equities,
commodities, or currencies; certain swaps and options; and interest-only and
principal-only mortgage securities. The absence of an `r' symbol should not be
taken as an indication that an obligation will exhibit no volatility or
variability in total return.

N.R.:  Not rated.

Debt obligations of issuers outside the United States and its territories are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.

Bond Investment Quality Standards: Under present commercial bank regulations
issued by the Comptroller of the Currency, bonds rated in the top four
categories (`AAA', `AA', `A', `BBB', commonly known as investment-grade ratings)
generally are regarded as eligible for bank investment. Also, the laws of
various states governing legal investments impose certain rating or other
standards for obligations eligible for investment by savings banks, trust
companies, insurance companies, and fiduciaries in general.


                                      FITCH

Investment Grade

AAA: Highest credit quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in case of exceptionally strong capacity for
timely payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.

AA: Very high credit  quality.  "AA" ratings  denote a very low  expectation  of
credit risk.  They indicate very strong capacity for timely payment of financial
commitments.  This  capacity  is not  significantly  vulnerable  to  foreseeable
events.


                                       31
<PAGE>




A: High credit quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB: Good credit quality. "BBB" ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.

Speculative Grade

BB:  Speculative.  "BB" ratings  indicate that there is a possibility  of credit
risk  developing,  particularly  as the result of adverse  economic  change over
time;  however,  business or  financial  alternatives  may be available to allow
financial  commitments  to be met.  Securities  rated in this  category  are not
investment grade.

B: Highly speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC, CC, C: High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.

DDD, DD, D: Default. Entities rated in this category have defaulted on some or
all of the obligations. The ratings of obligations in this category are based on
their prospects for achieving partial or full recovery in a reorganization or
liquidation of the obligor. While expected recovery values are highly
speculative and cannot be estimated with any precision, the following serve as
general guidelines. "DDD" obligations have the highest potential for recovery,
around 90% - 100% of outstanding amounts and accrued interest. "DD" indicates
expected recoveries in the range of 50% - 90% and "D" the lowest recovery
potential, i.e. below 50%.

 "+" or "-" may be appended to a rating to denote relative status within major
rating categories. Such suffixes are not added to the `AAA' long-term rating
category, or to categorize below `CCC'.

NR indicates that Fitch Ratings does not rate the issuer or issue in question.

Withdrawn: A rating is withdrawn when Fitch Ratings deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.

Rating Watch: Ratings are placed on Rating Watch to notify investors that there
is a reasonable probability of a rating change and the likely direction of such
change. These are designated as "Positive", indicating a potential upgrade,
"Negative", for a potential downgrade, or "Evolving", if ratings may be raised,
lowered or maintained. Rating Watch is typically resolved over a relatively
short period.

A Rating Outlook indicates the direction a rating is likely to move over a one-
to two-year period. Outlooks may be positive, stable, or negative. A positive or
negative Rating Outlook does not imply a


                                       32
<PAGE>


rating change is inevitable.  Similarly, ratings for which outlooks are "stable"
could be upgraded or downgraded  before an outlook moves to positive or negative
if circumstances  warrant such an action.  Occasionally,  Fitch may be unable to
identify the  fundamental  trend and in these cases,  the Rating  Outlook may be
described as "evolving".

8.5. Share Price Data: Inapplicable.

8.6  Business Development Companies:  Inapplicable.

Item 9.  Management:

9.1.a. General - Board of Trustees: Management of the Trust's business and
affairs is the responsibility of the Board of Trustees of the Trust.

9.1.b. General - Investment Advisers: MFS Investment Management ("MFS") is the
Trust's Investment Adviser. MFS and its predecessor organizations have a history
of money management dating from 1924, thus making MFS America's oldest mutual
fund organization. MFS is a majority owned subsidiary of Sun Life of Canada
(U.S.) Financial Services Holdings, Inc. 500 Boylston Street, Boston, MA 02116,
which in turn is an indirect majority owned subsidiary of Sun Life Financial,
Inc., (a diversified financial services organization) at the same address. The
executive officers of MFS report to the Chairman of Sun Life. The principal
business address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.

MFS serves as investment adviser to the following open-end Funds comprising the
MFS Family of Funds: Massachusetts Investors Growth Stock Fund; Massachusetts
Investors Trust; MFS Government Limited Maturity Fund; MFS Government Securities
Fund; MFS Growth Opportunities Fund; MFS Series Trust I (which has 8 series: MFS
Cash Reserve Fund, MFS Core Equity Fund, MFS Core Growth Fund, MFS New Discovery
Fund, MFS Research International Fund, MFS Strategic Growth Fund, MFS Technology
Fund and MFS Value Fund); MFS Series Trust II (which has one series: MFS
Emerging Growth Fund); MFS Series Trust III (which has three series: MFS High
Income Fund, MFS High Yield Opportunities Fund and MFS Municipal High Income
Fund); MFS Series Trust IV (which has four series: MFS Government Money Market
Fund, MFS Mid Cap Growth Fund, MFS Money Market Fund and MFS Municipal Bond
Fund); MFS Series Trust V (which has three series: MFS International New
Discovery Fund, MFS Research Fund and MFS Total Return Fund); MFS Series Trust
VI (which has three series: MFS Global Equity Fund, MFS Global Total Return Fund
and MFS Utilities Fund); MFS Series Trust VII (which has one series: MFS Capital
Opportunities Fund); MFS Series Trust VIII (which has two series: MFS Global
Growth Fund and MFS Strategic Income Fund); MFS Series Trust IX (which has seven
series: MFS Bond Fund, MFS Inflation-Adjusted Bond Fund, MFS Intermediate
Investment Grade Bond Fund, MFS Limited Maturity Fund, MFS Municipal Limited
Maturity Fund, MFS Research Bond Fund and MFS Research Bond Fund J); MFS Series
Trust X (which has 12 series: MFS Aggressive Growth Allocation Fund, MFS
Conservative Allocation Fund, MFS Emerging Markets Debt Fund, MFS Emerging
Markets Equity Fund, MFS Floating Rate High Income Fund, MFS Growth Allocation
Fund, MFS International Diversification Fund, MFS International Growth Fund, MFS
International Value Fund, MFS Moderate Allocation Fund, MFS New Endeavor Fund
and MFS Strategic Value Fund); MFS Series Trust XI (which has two series: MFS
Mid Cap Value Fund and MFS Union Standard Equity Fund); MFS Series Trust XII
(which has 5 series: MFS Lifetime Retirement Income Fund, MFS Lifetime 2010
Fund, MFS Lifetime 2020 Fund, MFS Lifetime 2030 Fund and MFS Lifetime 2040 Fund;
and MFS


                                       33
<PAGE>


Municipal  Series Trust (which has 16 series:  MFS Alabama  Municipal Bond Fund,
MFS Arkansas  Municipal  Bond Fund,  MFS  California  Municipal  Bond Fund,  MFS
Florida  Municipal  Bond Fund,  MFS Georgia  Municipal  Bond Fund,  MFS Maryland
Municipal Bond Fund,  MFS  Massachusetts  Municipal  Bond Fund, MFS  Mississippi
Municipal  Bond Fund,  MFS Municipal  Income Fund,  MFS New York  Municipal Bond
Fund, MFS North Carolina  Municipal Bond Fund, MFS  Pennsylvania  Municipal Bond
Fund, MFS South Carolina Municipal Bond Fund, MFS Tennessee Municipal Bond Fund,
MFS Virginia  Municipal Bond Fund and MFS West Virginia Municipal Bond Fund (the
"MFS  Funds").  The principal  business  address of each of the MFS Funds is 500
Boylston Street, Boston, Massachusetts, 02116.

MFS also serves as investment adviser of the following open-end Funds: MFS
Institutional Trust ("MFSIT") (which has four series) and MFS Variable Insurance
Trust ("MVI") (which has 16 series). The principal business address of each of
the aforementioned funds is 500 Boylston Street, Boston, Massachusetts, 02116.

In addition, MFS serves as investment adviser to the following closed-end funds:
MFS Charter Income Trust, MFS Government Markets Income Trust, MFS Intermediate
Income Trust, MFS Multimarket Income Trust, MFS Municipal Income Trust and MFS
Special Value Trust (the "MFS Closed-End Funds"). The principal business address
of each of the MFS Closed-End Funds is 500 Boylston Street, Boston,
Massachusetts, 02116.

Lastly, MFS serves as investment adviser to MFS/Sun Life Series Trust ("MFS/SL")
(which has 28 series), Capital Appreciation Variable Account, Global Governments
Variable Account, Government Securities Variable Account, High Yield Variable
Account, Money Market Variable Account and Total Return Variable Account
(collectively, the "Accounts"). The principal business address of MFS/SL is 500
Boylston Street, Boston, Massachusetts, 02116. The principal business address of
each of the aforementioned Accounts is One Sun Life Executive Park, Wellesley
Hills, Massachusetts, 02181.

MFS and its subsidiaries, provide investment advice to retailed institutional
clients. Net assets under the management of the MFS organization were
approximately $163 billion as of December 31, 2005.


                          INVESTMENT ADVISORY AGREEMENT

General. The Investment Adviser manages the Trust pursuant to an Investment
Advisory Agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Investment Adviser provides the Trust with overall investment advisory services.
Subject to such policies as the Trustees may determine, the Investment Adviser
makes investment decisions for the Trust. For these services and facilities, the
Investment Adviser receives an annual investment advisory fee, computed and paid
monthly.

The Investment Adviser pays the compensation of the Trust's officers and of any
Trustee who is an officer of the Adviser. The Investment Adviser also furnishes
at its own expense investment advisory and administrative services, including
office space, equipment, clerical personnel, investment advisory facilities, and
all executive and supervisory personnel necessary for managing the Trust's
investments and effecting its portfolio transactions.


                                       34
<PAGE>




The Trust pays the compensation of the Trustees who are "not affiliated" with
the Investment Adviser and all expenses of the Trust (other than those assumed
by the Investment Adviser) including but not limited to: governmental fees;
interest charges; taxes; membership dues in the Investment Company Institute
allocable to the Trust; fees and expenses of independent auditors, of legal
counsel, and of any transfer agent, registrar or dividend disbursing agent of
the Trust; expenses of repurchasing and redeeming shares and servicing
shareholder accounts; expenses of preparing, printing and mailing stock
certificates, shareholder reports, notices, proxy statements and reports to
governmental officers and commissions; brokerage and other expenses connected
with the execution, recording and settlement of portfolio security transactions;
insurance premiums; fees and expenses of the Trust's custodian for all services
to the Trust, including safekeeping of funds and securities and maintaining
required books and accounts; expenses of calculating the net asset value of
shares of the Trust; organizational and start up costs; and such non-recurring
or extraordinary expenses as may arise, including those relating to actions,
suits or proceedings to which the Trust is a party or otherwise may have an
exposure, and the legal obligation which the Trust may have to indemnify the
Trust's Trustees and officers with respect thereto. Expenses relating to the
issuance, registration and qualification of shares of the Trust and the
preparation, printing and mailing of prospectuses for such purposes are borne by
the Trust except that the Distribution Agreement with MFD requires MFD to pay
for prospectuses that are to be used for sales purposes.

The Advisory Agreement has an initial two year term and continues in effect
thereafter only if such continuance is specifically approved at least annually
by the Board of Trustees or by the affirmative vote of a majority of the
outstanding voting securities of the Trust. The Advisory Agreement terminates
automatically if it is assigned and may be terminated without penalty by the
affirmative vote of the outstanding voting securities of the Trust, or by either
party on not more than 60 days' nor less than 30 days' written notice.

The Advisory Agreement grants the Trust a non-exclusive and non-transferable
right and sub-license to use the names "Massachusetts Financial Services," "MFS"
or any derivatives or logos associated with those names. If MFS for any reason
no longer serves as investment adviser to the Trust, the Trust will promptly
cease to use these MFS marks. MFS may permit other clients to use these MFS
marks in their names or other material.

The Advisory Agreement also provides that neither the Investment Adviser nor its
personnel shall be liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in the execution
and management of the Trust, except for willful misfeasance, bad faith, gross
negligence, or reckless disregard of its or their duties and obligations under
the Advisory Agreement.

The Investment Adviser is free to render investment and/or other services to
others, but the Investment Adviser will at all times endeavor to treat all of
its clients in a fair and equitable manner. Whenever the Trust and one or more
other Trusts or accounts advised by the Investment Adviser have money available
for investment, investments or opportunities to sell investments will be
allocated in a manner believed by the Adviser to be fair and equitable to each
client. The Investment Adviser may cause the Trust to pay a broker or dealer a
higher commission than another broker or dealer might have charged for effecting
that transaction, if the Investment Adviser determines, in good faith, that the
higher commission was reasonable in relation to the value of brokerage and
research services provided by the broker or dealer.


                                       35
<PAGE>




Advisory Fee. For the services provided by MFS under the Advisory Agreement, the
Trust will pay MFS an annual fee computed and paid monthly in an amount equal to
the lesser of the sum of 0.32% of the average daily net assets of the Trust and
5.65% of the daily gross income (i.e., income other than gains from the sale of
securities, gains from options and futures transactions and premium income from
options written) or 0.85% of the average daily net assets of the Trust for the
Trust's then-current fiscal year. This advisory fee is greater than that paid by
most funds.

A discussion regarding the basis for the Board of Trustees' approval of the
Investment Advisory Agreement between the Trust and MFS is available in the
Trust's Annual Report to shareholders for the fiscal year ended October 31,
2005.

9.1.c. General - Portfolio Management: James J. Calmas and Erik S. Weisman are
the portfolio managers of the Trust. Mr. Calmas, a Senior Vice President of the
Adviser, has been employed in the investment management area of the Adviser
since 1988. Mr. Weisman, a Vice President of the Adviser, has been employed in
the investment management area of the Adviser since 2002. Prior to joining MFS,
Mr. Weisman was the Assistant to the U.S. Executive Director for the
International Monetary Fund, where he was employed from 2000 to 2002. Further
information regarding the portfolio managers, including other accounts managed,
compensation, ownership of Trust shares and possible conflicts of interest, is
available in the Trust's Statement of Additional Information. The portfolio
managers are jointly responsible for the day-to-day management of the Trust.

9.1.d. General - Administrators: Inapplicable.

9.1.e. Custodians: State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110 is the custodian and dividend disbursing agent for
the Trust. The Chase Manhattan Bank, 270 Park Avenue, New York, NY 20017 has
been employed as the global custodian as of July 2, 2001. MFS Services Center,
Inc., 500 Boylston Street, Boston, Massachusetts 02116, a wholly owned
subsidiary of MFS, is the shareholder servicing agent.

9.1.f. General - Expenses: See Item 9.1.b.


9.1.g. General - Affiliated Brokerage: Inapplicable.


9.2. Non-resident Managers: Inapplicable.

9.3. Control Persons: Inapplicable.

Item 10. Capital Stock, Long-Term Debt, and Other Securities:

10.1. Capital Stock:

a. and f. Description of Shares. The Trust's Declaration of Trust permits the
Trustees to issue an unlimited number of full and fractional Shares of
Beneficial Interest, without par value. Shareholders are entitled to one vote
for each share held and to vote in the election of Trustees and on other matters
submitted to meetings of shareholders. No material amendment may be made to the
Trust's Declaration of Trust without the affirmative vote of a majority of its
shares. Under certain circumstances, shareholders have the right to communicate
with other shareholders


                                       36
<PAGE>


and to remove Trustees.  Shares have no pre-emptive or conversion rights. Shares
when issued are fully paid and  non-assessable,  except as set forth below under
"Certain Provisions of the Declaration of Trust."

The Trust's Declaration of Trust permits the Trustees to divide or combine the
shares into a greater or lesser number of shares without thereby changing the
proportionate beneficial interests in the Trust. Each share represents an equal
proportionate interest in the Trust with each other share. The Trust has no
present intention of offering additional shares, except that additional shares
may be issued under the Trust's Dividend Reinvestment and Cash Purchase Plan.
Other offerings of its shares, if made, will require approval of the Trust's
Board of Trustees. Any additional offering will be subject to the requirements
of the Act that shares may not be sold at a price below the then-current net
asset value, exclusive of underwriting discounts and commissions, except, among
other things, in connection with an offering to existing shareholders or with
the consent of the holders of a majority of the Trust's outstanding voting
securities.

The Trust may enter into a merger or consolidation, or sell all or substantially
all of its assets, if approved by the vote of the holders of two-thirds of its
outstanding shares, except that if the Trustees recommend such transaction, the
approval by the vote of the holders of a majority of its outstanding shares will
be sufficient. The Trust may also be terminated upon liquidation and
distribution of its assets, if approved by the vote of the holders of two-thirds
of its outstanding shares. If not so terminated, the Trust will continue
indefinitely. Upon liquidation of the Trust, the Trust's shareholders are
entitled to share pro rata in the Trust's net assets available for distribution
to its shareholders.

Repurchase of Shares. The Trust is a closed-end management investment company
and as such its shareholders do not, and will not, have the right to redeem
their shares of the Trust. The Trust, however, may purchase its shares from time
to time in the open market or otherwise as and when it is deemed advisable by
the Trustees. Such repurchases will be made only when the Trust's shares are
trading at a discount of 10% or more from the net asset value of the shares.
Shares repurchased by the Trust will be held in treasury. The Trust may incur
debt to finance share repurchase transactions. Within six months preceding any
such repurchase, the Trust will notify shareholders by letter or report. See the
section "Investment Restrictions" of Items 8.2, 8.3 and 8.4.

The shares of the Trust will trade in the open market at a price which will be a
function of several factors, including their net asset value and yield. The
shares of closed-end investment companies generally sell at market prices
varying from their net asset values. When the Trust repurchases its shares for a
price below their net asset value, the net asset value of those shares that
remain outstanding will be enhanced, but this does not necessarily mean that the
market price of those outstanding shares will be affected either positively or
negatively. Further, interest on borrowings to finance share repurchase
transactions will reduce the Trust's net income.

Certain Provisions of the Declaration of Trust. The Trust is an entity of the
type commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable as partners for its obligations. However, the Declaration of
Trust contains an express disclaimer of shareholder liability for acts or
obligations


                                       37
<PAGE>


of the Trust and provides for  indemnification and reimbursement of expenses out
of the  Trust  property  for any  shareholder  held  personally  liable  for the
obligations of the Trust.  The Declaration of Trust also provides that the Trust
shall maintain appropriate  insurance (for example,  fidelity bonding and errors
and omissions  insurance)  for the  protection of the Trust,  its  shareholders,
Trustees,  officers,  employees  and  agents  covering  possible  tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder  liability is limited to  circumstances  in which both inadequate
insurance exists and the Trust itself is unable to meet its obligations.

The Declaration of Trust further provides that obligations of the Trust are not
binding upon the Trustees individually but only upon the property of the Trust
and that the Trustees will not be liable for errors of judgment or mistakes of
fact or law, but nothing in the Declaration of Trust protects a Trustee against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.

Anti-Takeover Provisions. The Trust presently has certain anti-takeover
provisions in its Declaration of Trust which could have the effect of limiting
the ability of other entities or persons to acquire control of the Trust, to
cause it to engage in certain transactions or to modify its structure. The Board
of Trustees is divided into three classes, each having a term of three years.
Each year the term of one class expires. This provision could delay for up to
two years the replacement of a majority of the Board of Trustees. In addition,
the affirmative vote or consent of the holders of 66 2/3% of the shares of the
Trust (a greater vote than that required by the 1940 Act and, in some cases,
greater than the required vote applicable to business corporations under state
law) is required to authorize the conversion of the Trust from a closed-end to
an open-end investment company, or generally to authorize any of the following
transactions:

         (i)      merger or consolidation of the Trust with or into any other
                  corporation;

         (ii)     issuance of any securities of the Trust to any person or
                  entity for cash;

         (iii)    sale, lease or exchange of all or any substantial part of the
                  assets of the Trust to any entity or person (except assets
                  having an aggregate fair market value of less than
                  $1,000,000); or

         (iv)     sale, lease or exchange to the Trust, in exchange for
                  securities of the Trust, of any assets of any entity or person
                  (except assets having an aggregate fair market value of less
                  than $1,000,000)

if such corporation, person or entity is directly, or indirectly through
affiliates, the beneficial owner of 5% or more of the outstanding shares of the
Trust. However, such vote or consent will not be required with respect to the
foregoing transactions where the Board of Trustees under certain conditions
approves the transaction. Reference is made to the Declaration of Trust of the
Trust, on file with the SEC, for the full text of these provisions.

The foregoing provisions will make more difficult a change in the Trust's
management, or consummation of the foregoing transactions without the Trustees'
approval, and could have the effect of depriving shareholders of an opportunity
to sell their shares at a premium over prevailing


                                       38
<PAGE>


market prices by  discouraging  a third party from seeking to obtain  control of
the  Trust in a tender  offer or  similar  transaction.  However,  the  Board of
Trustees has considered  these  anti-takeover  provisions and believes that they
are in the  shareholders'  best interests and benefit  shareholders by providing
the advantage of potentially  requiring  persons seeking control of the Trust to
negotiate  with its management  regarding the price to be paid and  facilitating
the continuity of the Trust's management.

b. Inapplicable.

c. Inapplicable.

d. Inapplicable.

e. Dividends and Distributions. Dividend Reinvestment and Cash Purchase Plan.
The Trust intends to distribute monthly to shareholders substantially all of its
net investment income in the manner required by Subchapter M of the Internal
Revenue Code of 1986, as amended ("the Code") and capital gains, if any, will be
distributed at least annually. Premiums from options, if any, may be distributed
at least annually. See Item 10.4.

Shareholders holding shares in their own names may elect to have all
distributions of dividends and capital gains automatically reinvested by State
Street Bank and Trust Company ("State Street"), as Plan agent, pursuant to the
Dividend Reinvestment and Cash Purchase Plan (the "Plan"), the provisions of
which are set forth below. Shareholders not making such election will receive
all such amounts in cash paid by check mailed directly to the shareholder by
State Street, as dividend paying agent.

Under the Plan, if the Trustees of the Trust declare a dividend or determine to
make a capital gain distribution, the nonparticipants in the Plan will receive
such dividend or distribution in cash and participants in the Plan will receive
the equivalent in shares of the Trust. Whenever the market price of the shares
on the payment date for the dividend or distribution is equal to or exceeds
their net asset value on that date, participants will be issued shares of the
Trust at the higher of net asset value or 95% of the market price. This discount
reflects savings in underwriting and other costs which the Trust would otherwise
be required to incur to raise additional capital. If net asset value exceeds the
market price of Trust shares at such time or if the Trust should declare a
dividend or other distribution payable only in cash, State Street, as agent for
the participants, will buy Trust shares in the open market, on the New York
Stock Exchange or elsewhere, for the participants' accounts. If, the market
price exceeds the net asset value of the Trust's shares, the average per share
purchase price paid by State Street may exceed the net asset value of the
Trust's shares, resulting in the acquisition of fewer shares than if the
dividend or distribution had been paid in shares issued by the Trust.

Participants in the Plan may withdraw from the Plan upon written notice to State
Street. When a participant withdraws from the Plan or upon termination of the
Plan as provided below, certificates for whole shares credited to his account
under the Plan will be issued and a cash payment will be made for any fraction
of a share credited to such account.



                                       39
<PAGE>





Participants in the Plan have the option of making additional cash payments to
State Street, semi-annually, for investment in the Trust's shares. Interest will
not be paid on any uninvested cash payments.

State Street maintains all shareholder accounts in the Plan and furnishes
monthly written confirmations of all transactions in the account, including
information needed by shareholders for personal and tax records. Shares in the
account of each Plan participant will be held by State Street in
non-certificated form in the name of the participant, and each shareholder's
proxy will include those shares purchased pursuant to the Plan. While the Trust
has no plans to issue additional shares other than pursuant to the Plan, if
participants in the Plan desire to exercise any rights which may be issued or
granted with respect to shares, they should request that certificates for whole
shares be issued to them. Each participant nevertheless has the right to receive
certificates for whole shares owned by him.

The Trust will distribute proxy material to nominee and record shareholders in
accordance with SEC rules and regulations.

There is no charge to participants for reinvesting dividends or distributions,
except for certain brokerage commissions, as described below. State Street's
fees for the handling of the reinvestment of dividends and distributions will be
paid by the Trust. There will be no brokerage charges with respect to shares
issued directly by the Trust as a result of dividends or distributions payable
either in stock or in cash. However, each participant will pay a pro rata share
of brokerage commissions incurred with respect to State Street's open market
purchases in connection with the reinvestment of dividends or distributions as
well as from voluntary cash payments. With respect to purchases from voluntary
cash payments, State Street will charge a service fee of $0.75 for each cash
purchase. Brokerage charges for purchasing small amounts of stock for individual
accounts through the Plan are expected to be less than the usual brokerage
charges for such transactions, as State Street will be purchasing shares for all
participants in blocks and pro-rating the lower commission thus attainable.

The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax which may be payable or required to be withheld
on such dividends or distributions.

Experience under the Plan may indicate that changes are desirable. Accordingly,
the Trust reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent to
written notice of the change sent to the participants in the Plan at least 90
days before the record date for such dividend or distribution. All
correspondence concerning the Plan should be directed to State Street at 225
Franklin Street, Boston, Massachusetts 02110.

10.2. Long-term debt: Inapplicable.

10.3. General: Inapplicable.

10.4. Taxes: The Trust has elected to be treated and intends to qualify each
year as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") by meeting all applicable
requirements, including requirements of Subchapter M as to the nature of the
Trust's gross income, the amount of Trust distributions, and the composition of
the


                                       40
<PAGE>


Trust's portfolio assets. Because the Trust intends to distribute all of its
net investment income and net realized capital gains to shareholders in
accordance with the timing requirements imposed by the Code, it is not expected
that the Trust will be required to pay any federal income or excise taxes,
although the Trust's foreign-source income may be subject to foreign withholding
taxes. If the Trust should fail to qualify as a regulated investment company in
any year, the Trust would incur a regular corporate federal income tax upon its
taxable income, and distributions received from the Trust (including
distributions of net capital gains) would generally be taxable in the same
manner as regular corporate dividends to shareholders.

Shareholders normally will have to pay federal income taxes and any state or
local taxes on the dividends and capital gain distributions they receive from
the Trust. Dividends from ordinary income and any distributions from net
short-term capital gains are taxable to shareholders as ordinary income for
federal income tax purposes. A portion of such distributions may be eligible for
the dividends-received deduction for corporate shareholders if the recipient
otherwise qualifies for that deduction with respect to its holding of Trust
shares. Deducted amounts may be subject to the alternative minimum tax and may
result in adjustments in the tax basis of a shareholder's shares. Properly
designated distributions of net capital gains (i.e., the excess of net long-term
capital gains over net short-term capital losses) are taxable to shareholders as
long-term capital gains, for federal income tax purposes, regardless of the
length of time the shareholders have held their shares. For taxable years
beginning before January 1, 2009, "qualified dividend income" received by an
individual will be taxed at the rates applicable to long-term capital gain. In
order for some portion of the dividends received by a Trust shareholder to be
qualified dividend income, the Trust must meet holding period and other
requirements with respect to some portion of the dividend-paying stocks in its
portfolio and the shareholder must meet holding period and other requirements
with respect to the Trust's shares. A dividend will not be treated as qualified
dividend income (at either the Trust or shareholder level) (i) if the dividend
is received with respect to any share of stock held for fewer than 61 days
during the 121-day period beginning on the date which is 60 days before the date
on which such share becomes ex-dividend with respect to such dividend (or, in
the case of certain preferred stock, 91 days during the 181-day period beginning
90 days before such date), (ii) to the extent that the recipient is under an
obligation (whether pursuant to a short sale or otherwise) to make related
payments with respect to positions in substantially similar or related property,
(iii) if the recipient elects to have the dividend income treated as investment
interest, or (iv) if the dividend is received from a foreign corporation that is
(a) not eligible for the benefits of a comprehensive income tax treaty with the
United States (with the exception of dividends paid on stock of such a foreign
corporation readily tradable on an established securities market in the United
States) or (b) treated as a passive foreign investment company. Distributions
that are treated for federal income tax purposes as a return of capital will
reduce each shareholder's basis in his shares and, to the extent the return of
capital exceeds such basis, will be treated as gain to the shareholder from a
sale of shares. Any dividend that is declared by the Trust in October, November
or December of any calendar year, that is payable to shareholders of record in
such a month, and that is paid the following January, will be treated as if
received by the shareholders on December 31 of the year in which the dividend is
declared. The Trust will notify shareholders regarding the federal tax status of
its distributions after the end of each calendar year.

Distributions will be taxable as described above, whether received in cash or
reinvested in additional shares under the Plan. With respect to distributions
received in cash or reinvested in shares purchased on the open market, the
amount of the distribution for tax purposes is the amount of cash distributed or
allocated to the shareholder. However, with respect to distributions made in
shares


                                       41
<PAGE>


issued by the Trust pursuant to the Plan, the amount of the distribution
for tax purposes is the fair market value of the issued shares on the payment
date and a portion of such distribution may be treated as a return of capital.
In the case of shares purchased on the open market, a participating
shareholder's tax basis in each share received is its cost. In the case of
shares issued by the Trust, the shareholder's tax basis in each share received
is its fair market value on the payment date.

Any distribution by the Trust will result in a reduction in the fair market
value of the Trust's shares by the amount of the distribution. Should a
distribution reduce the fair market value below a shareholder's cost basis, the
distribution is nevertheless taxable to the shareholder as ordinary income or
capital gain, as described above, even though, from an investment standpoint, it
may constitute a partial return of capital. Shareholders who purchase shares of
the Trust shortly before a distribution may therefore pay the full price for the
shares and then effectively receive a portion of the purchase price back as a
taxable distribution.

In general, any gain or loss realized upon a taxable disposition of shares of
the Trust by a shareholder that holds such shares as a capital asset will be
treated as long-term capital gain or loss if the shares have been held for more
than twelve months and otherwise as short-term capital gain or loss. However,
any loss realized upon a taxable disposition of shares within six months from
the date of their purchase will be treated as a long-term capital loss to the
extent of any net capital gain distributions paid by the Trust during such
six-month period. Any loss realized upon a taxable disposition of Trust shares
may be disallowed under rules relating to wash sales.

The Trust's current dividend and accounting policies will affect the amount,
timing and character of distributions to shareholders, and may, under certain
circumstances, make an economic return of capital taxable to shareholders. Any
investments in zero coupon bonds, deferred interest bonds, option notes, PIK
bonds, SMBS, inflation-indexed securities, and certain securities purchased at a
market discount will cause the Trust to recognize income prior to the receipt of
cash payments with respect to those securities. In order to distribute this
income and avoid a tax on the Trust, the Trust may be required to liquidate
portfolio securities that it might otherwise have continued to hold, potentially
resulting in additional taxable gain or loss to the Trust. A direct or indirect
investment in residual interests of a CMO that has elected to be treated as a
REMIC can create complex tax problems, especially if the Trust has state or
local governments or other tax-exempt organizations as shareholders.

The Trust's transactions in options, Futures Contracts, Options on Futures
Contracts, Forward Contracts and swaps and related transactions will be subject
to special tax rules that could affect the amount, timing and character of
distributions to shareholders. For example, certain positions held by the Trust
on the last business day of each taxable year will be marked to market (i.e.,
treated as if closed out) on that day, and any gain or loss associated with the
positions will be treated as 60% long-term and 40% short-term capital gain or
loss. Certain positions held by the Trust that substantially diminish its risk
of loss with respect to other positions in its portfolio may constitute
"straddles," which are subject to special tax rules that may cause deferral of
Trust losses, adjustments in the holding periods of Trust securities and
conversion of short-term into long-term capital losses. Certain tax elections
exist for straddles that could alter the effects of these rules. The Trust will
limit its activities in options, Futures Contracts, Options on Futures
Contracts, Forward Contracts and swaps and related transactions to the extent
necessary to meet the requirements of Subchapter M of the Code.


                                       42
<PAGE>


Special tax considerations apply with respect to foreign investments of the
Trust. Foreign exchange gains and losses realized by the Trust will generally be
treated as ordinary income and losses. Use of foreign currencies for non-hedging
purposes may be limited in order to avoid a tax on the Trust. The Trust may
elect to market any investments in "passive foreign investment companies" on the
last day of each year. This election may cause the Trust to recognize income
prior to the receipt of cash payments with respect to those investments; in
order to distribute this income and avoid a tax on the Trust, the Trust may be
required to liquidate portfolio securities that it might otherwise have
continued to hold, potentially resulting in additional taxable gain or loss to
the Trust.

Investment income received by the Trust from foreign securities may be subject
to foreign income taxes withheld at the source; the Trust does not expect to be
able to pass through to shareholders foreign tax credits with respect to such
foreign taxes. The United States has entered into tax treaties with many foreign
countries that may entitle the Trust to a reduced rate of tax or an exemption
from tax on such income; the Trust intends to qualify for treaty reduced rates
where available. It is not possible, however, to determine the Trust's effective
rate of foreign tax in advance since the amount of the Trust's assets to be
invested within various countries is not known.

Dividends and certain other payments to persons who are not citizens or
residents of the United States ("Non-U.S. Persons") are generally subject to
U.S. tax withholding at the rate of 30%. The Trust intends to withhold U.S.
federal income tax at the rate of 30% on any payments made to Non-U.S. Persons
that are subject to withholding. The Trust may withhold at a lower rate
permitted by an applicable treaty if the shareholder provides the documentation
required by the Trust. Any amounts overwithheld may be recovered by filing a
claim for refund with the U.S. Internal Revenue Service within the time period
applicable to such claims. Distributions received from the Trust by Non-U.S.
Persons may also be subject to tax under the laws of their own jurisdiction.
Capital gain dividends are generally not subject to withholding of U.S. federal
income tax. Special tax considerations may apply to distributions derived from
the sale or exchange of certain United States real property interests. Non-U.S.
shareholders are urged to consult their tax advisors to determine the
consequences of investing in the Trust in light of their own particular
circumstances.

Under the American Jobs Creation Act of 2004 (the "2004 Act"), effective for
taxable years of the Trust beginning before January 1, 2008, the Trust will not
be required to withhold any amounts (i) with respect to distributions (other
than distributions to a foreign shareholder that has not provided a satisfactory
statement that the beneficial owner is not a U.S. person, to the extent that the
dividend is attributable to certain interest on an obligation if the foreign
shareholder is the issuer or is a 10% shareholder of the issuer, that is within
certain foreign countries that have inadequate information exchange with the
United States, or to the extent the dividend is attributable to interest paid by
a person that is a related person of the foreign shareholder and the foreign
shareholder is a controlled foreign corporation) from U.S.-source interest
income that would not be subject to U.S. federal income tax if earned directly
by an individual foreign shareholder, to the extent such distributions are
properly designated by the Fund (the "interest-related dividends"), and (ii)
with respect to distributions (other than distributions to an individual foreign
shareholder who is present in the United States for a period or periods
aggregating 183 days or more during the year of the distribution) of net
short-term capital gains in excess of net long-term capital losses, to the
extent such distributions are properly designated by the Trust (the "short-term
capital gain dividends"). The Trust may opt not to designate dividends as
interest-related dividends or short-term capital gain dividends to the full
extent permitted by the Code.


                                       43
<PAGE>


The Trust is also required in certain circumstances to apply backup withholding
at the rate of 28% (the backup withholding tax rate will be 31% for amounts paid
after December 31, 2010) on taxable dividends, redemption proceeds and certain
other payments that are paid to any shareholder (including a shareholder who is
a Non-U.S. Person) who does not furnish to the Trust certain information and
certifications or who is otherwise subject to backup withholding. Backup
withholding will not be applied to payments that have been subject to the 30%
withholding tax on payments to Non-U.S. Persons.

Under present law, the Trust will not be subject to any excise or income taxes
in Massachusetts as long as it qualifies as a regulated investment company under
the Code.

Distributions of the Trust that are derived from interest on obligations of the
U.S. Government and certain of its agencies and instrumentalities (but generally
not capital gains realized upon the disposition of such obligations) may be
exempt from state and local taxes. The Trust intends to advise shareholders of
the proportion of its dividends which consists of such interest. Shareholders
should consult their tax advisers regarding the possible exclusion of such
portion of their dividends for state and local income tax purposes as well as
regarding the tax consequences of an investment in the Trust.

The Trust will send written notices to shareholders regarding the federal income
tax status of all distributions made during each calendar year.

10.5. Outstanding Securities: The following information is furnished as of
January 31, 2006:
<TABLE>
<CAPTION>
 <S>                           <C>                          <C>                         <C>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
 (1)                           (2)                          (3)                         (4)
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Title of Class                 Amount                       Amount Held by              Amount
                               Authorized                   Trust or for                Outstanding
                                                            its Account                 Exclusive
                                                                                        of Amount Shown
                                                                                        Under (3)
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Shares of                      135,059,968.036              15,823,150*                 119,236,818.036
Beneficial Interest,
without par value
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>

*Treasury Shares

10.6. Securities Ratings: Inapplicable.

Item 11. Defaults and Arrears on Senior Securities:  None.

Item 12. Legal Proceedings: On March 31, 2004, MFS settled an administrative
proceeding with the Securities and Exchange Commission ("SEC") regarding
disclosure of brokerage allocation practices in connection with MFS fund sales
(the term "MFS funds" means the open-end registered management investment
companies sponsored by MFS). The brokerage allocation practices which were the
subject of this proceeding were discontinued by MFS in November 2003. In
addition, in February 2004, MFS reached agreement with the SEC, the New York
Attorney General ("NYAG") and the Bureau of Securities Regulation of the State
of New Hampshire to settle administrative proceedings alleging false and
misleading information in certain MFS open-end retail fund prospectuses
regarding market timing and related matters.


                                       44
<PAGE>


Since December 2003, MFS, MFS Fund Distributors, Inc., MFS Service Center, Inc.,
MFS Corporation Retirement Committee, Sun Life Financial Inc., various MFS
funds, certain current and/or former Trustees of these MFS funds, and certain
officers of MFS have been named as defendants in multiple lawsuits filed in
federal and state courts. The lawsuits variously have been commenced as class
actions or individual actions on behalf of investors who purchased, held or
redeemed shares of the MFS funds during specified periods, as ERISA actions by
participants in certain retirement plan accounts on behalf of those accounts, or
as derivative actions on behalf of the MFS funds. The lawsuits relating to
market timing and related matters have been transferred to, and consolidated
before, the United States District Court for the District of Maryland, as part
of a multi-district litigation of market timing and related claims involving
several other fund complexes (In re Mutual Funds Investment Litigation (Alger,
Columbia, Janus, MFS, One Group, Putnam, Allianz Dresdner), No. 1:04-md-15863
(transfer began March 19, 2004)). The market timing cases related to the MFS
complex are Riggs v. MFS et al., Case No. 04-CV-01162-JFM (direct), Hammerslough
v. MFS et al., Case No. 04-MD-01620 (derivative), Anita Walker v. MFS et al.,
Case No. 1:04-CV-01758 (ERISA), and Reaves v. MFS Series Trust I, et al., Case
No. 1:05-CV-02220-JFM (Class B Shares). The plaintiffs in these consolidated
lawsuits generally seek injunctive relief including removal of the named
Trustees, adviser and distributor, rescission of contracts and 12b-1 Plans,
disgorgement of fees and profits, monetary damages, punitive damages, attorney's
fees and costs and other equitable and declaratory relief. Two lawsuits alleging
improper brokerage allocation practices and excessive compensation are pending
in the United States District Court for the District of Massachusetts (Forsythe
v. Sun Life Financial Inc., et al., No. 04cv10584 (GAO) (a consolidated action)
and Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No.
04cv11458 (GAO)). The plaintiffs in these lawsuits generally seek compensatory
damages, punitive damages, recovery of fees, rescission of contracts, an
accounting, restitution, declaratory relief, equitable and/or injunctive relief
and attorney's fees and costs. The various lawsuits generally allege that some
or all of the defendants (i) permitted or acquiesced in market timing and/or
late trading in some of the MFS funds, inadequately disclosed MFS' internal
policies concerning market timing and such matters, (ii) received excessive
compensation as fiduciaries to the MFS funds, or (iii) permitted or acquiesced
in the improper use of fund assets by MFS to support the distribution of MFS
fund shares and inadequately disclosed MFS' use of fund assets in this manner.
The actions assert that some or all of the defendants violated the federal
securities laws, including the Securities Act of 1933 and the Securities
Exchange Act of 1934, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, as
well as fiduciary duties and other violations of common law. Insofar as any of
the actions is appropriately brought derivatively on behalf of any of the MFS
funds, any recovery will inure to the benefit of the MFS funds. The defendants
filed separate motions to dismiss all claims of the various lawsuits (except
Reaves, which has not been separately briefed). On November 3, 2005, the
district judge considering the motions to dismiss the Riggs and Hammerslough
actions issued memoranda indicating that he intends to grant in part and deny in
part defendants' motions in these actions. A formal order consistent with the
court's memoranda is forthcoming. On January 19, 2006, the district judge
considering the Forsythe and Dumond actions denied defendants' motion to dismiss
the Dumond action and granted in part (including dismissing all claims against
the Trustees and Sun Life Financial, Inc.) and denied in part defendants' motion
to dismiss the Forsythe action. Additional lawsuits based on similar allegations
may be filed in the future.

Any potential resolution of these matters may include, but not be limited to,
judgments or settlements for damages against MFS, the MFS funds, or any other
named defendant. It is not clear


                                       45
<PAGE>


whether any amounts paid in  connection  with the above  regulatory  settlements
will  be  sufficient  to  compensate  shareholders  for all of the  damage  they
allegedly sustained,  whether certain shareholders or putative class members may
have  additional  claims to  compensation,  or whether the  damages  that may be
awarded in any of the actions  will exceed these  amounts.  In the event the MFS
funds incur any losses, costs or expenses in connection with such lawsuits,  the
Boards of Trustees of the affected MFS funds may pursue claims on behalf of such
funds against any party that may have liability to the funds in respect thereof.
There can be no assurance  that these  regulatory  actions and lawsuits,  or the
adverse  publicity  associated  with  these  developments,  will not  result  in
increased  fund  redemptions,  reduced  sales of fund shares,  or other  adverse
consequences to the MFS funds.


Item 13. Table of Contents of Statement of Additional Information: Inapplicable.

                                     PART B
          INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

Item 14.  Cover Page: Inapplicable.

Item 15.  Table of Contents:  Inapplicable.

Item 16. General Information and History:  Inapplicable.

Item 17. Investment Objective and Policies:

17.1, 17.2 and 17.3:  See 8.2.

17.4. For fiscal year 2005, the Trust's portfolio turnover rate was 58%. For
fiscal year 2004, the Trust's portfolio turnover rate was 45%.

A high turnover rate necessarily involves greater expenses to the Trust and
could involve realization of capital gains that would be taxable to the
shareholders. The Trust will engage in portfolio trading if it believes that a
transaction, net of costs (including custodian transaction charges), will help
in achieving its investment objective.

Item 18. Management:

18.1 and 18.2. Trustees, Officers and Advisory Board Members: The Trustees and
officers of the Trust, as of February 1, 2006, are listed below, together with
their principal occupations during the last five years. (Their titles may have
varied during that period.) The address of each Trustee and officer is 500
Boylston Street, Boston, Massachusetts 02116.


                                       46
<PAGE>





TRUSTEES AND OFFICERS - IDENTIFICATION AND BACKGROUND
<TABLE>
<CAPTION>
         <S>                              <C>                   <C>                   <C>
- --------------------------------------- --------------------- --------------------- --------------------------------------
         Name, Date of Birth              Position(s) Held      Trustee/Officer       Principal Occupations During the
                                                                                           Past Five Years & Other
                                             with Fund              Since(1)                  Directorships(2)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
INTERESTED TRUSTEES
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Robert J. Manning(3)                          Trustee            February 2004      Massachusetts Financial Services
(born 10/20/63)                                                                     Company, Chief Executive Officer,
                                                                                    President, Chief Investment Officer
                                                                                    and Director
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Robert C. Pozen(3)                            Trustee            February 2004      Massachusetts Financial Services
(born 08/08/46)                                                                     Company, Chairman (since February
                                                                                    2004); Secretary of Economic Affairs, The
                                                                                    Commonwealth  of  Massachusetts   (January  2002
                                                                                    to December 2002);  Fidelity  Investments,  Vice
                                                                                    Chairman (June 2000 to December 2001);  Fidelity
                                                                                    Management & Research Company (investment
                                                                                    adviser), President (March 1997 to July  2001);
                                                                                    Bell Canada Enterprises (telecommunications),
                                                                                    Director; Medtronic, Inc. (medical
                                                                                    technology), Director; Telesat (satellite
                                                                                    communications), Director
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
J. Atwood Ives                           Trustee and Chair       February 1992      Private investor; Eastern
(born 05/01/36)                             of Trustees                             Enterprises (diversified services
                                                                                    company), Chairman, Trustee and
                                                                                    Chief Executive Officer (until
                                                                                    November 2000)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Robert E. Butler(4)                           Trustee             January 2006      Consultant - regulatory and
(born 11/29/41)                                                                     compliance matters(4) (since July
                                                                                    2002); PricewaterhouseCoopers LLP
                                                                                    (professional services firm),
                                                                                    Partner (November 2000 until June
                                                                                    2002)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Lawrence H. Cohn, M.D.                        Trustee             August 1993       Brigham and Women's Hospital, Senior
(born 03/11/37)                                                                     Cardiac Surgeon, Chief of Cardiac
                                                                                    Surgery (until 2005); Harvard
                                                                                    Medical School, Professor of
                                                                                    Surgery; Brigham and Women's
                                                                                    Hospital Physician's Organization
                                                                                    Chair (2000 to 2004)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
David H. Gunning                              Trustee             January 2004      Cleveland-Cliffs Inc. (mining
(born 05/30/42)                                                                     products and service provider), Vice
                                                                                    Chairman/Director  (since April 2001); Encinitos
                                                                                    Ventures (private  investment
                                                                                    company),  Principal  (1997 to April  2001);
                                                                                    Lincoln  Electric  Holdings,  Inc.
                                                                                    (welding equipment manufacturer), Director
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
William R. Gutow                              Trustee            December 1993      Private investor and real estate
(born 09/27/41)                                                                     consultant; Capitol Entertainment
                                                                                    Management Company (video
                                                                                    franchise), Vice Chairman
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
</TABLE>


                                       47
<PAGE>

<TABLE>
<CAPTION>
         <S>                              <C>                   <C>                   <C>
- --------------------------------------- --------------------- --------------------- --------------------------------------
         Name, Date of Birth              Position(s) Held      Trustee/Officer       Principal Occupations During the
                                                                                           Past Five Years & Other
                                             with Fund              Since(1)                  Directorships(2)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Michael Hegarty                               Trustee            December 2004      Retired; AXA Financial (financial
(born 12/21/44)                                                                     services and insurance), Vice
                                                                                    Chairman and Chief Operating Officer
                                                                                    (until May 2001); The Equitable Life
                                                                                    Assurance Society (insurance),
                                                                                    President and Chief Operating
                                                                                    Officer (until May 2001)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------

- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Lawrence T. Perera                            Trustee              July 1981        Hemenway & Barnes (attorneys),
(born 06/23/35)                                                                     Partner
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
J. Dale Sherratt                              Trustee             August 1993       Insight Resources, Inc. (acquisition
(born 09/23/38)                                                                     planning specialists), President;
                                                                                    Wellfleet  Investments  (investor in health care
                                                                                    companies),  Managing  General
                                                                                    Partner (since 1993); Cambridge  Nutraceuticals
                                                                                    (professional   nutritional products), Chief
                                                                                    Executive Officer (until May 2001)

- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Laurie J. Thomsen                             Trustee              March 2005       Private investor; Prism Venture
(born 08/05/57)                                                                     Partners (venture capital),
                                                                                    Co-founder and General Partner
                                                                                    (until June 2004); St. Paul
                                                                                    Travelers Companies (commercial
                                                                                    property liability insurance),
                                                                                    Director
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Robert W. Uek                                 Trustee             January 2006      Retired (since 1999);
(born 05/18/41)                                                                     PricewaterhouseCoopers LLP
                                                                                    (professional  services  firm),  Partner (until
                                                                                    1999);  Consultant to investment
                                                                                    company industry (since 2000); TT International
                                                                                    Funds (mutual fund complex),
                                                                                    Trustee (since 2000);  Hillview Investment Trust
                                                                                    II Funds (mutual fund complex),
                                                                                    Trustee (since 2000)

- --------------------------------------- --------------------- --------------------- --------------------------------------
OFFICERS
- --------------------------------------- --------------------- --------------------- --------------------------------------
Maria F. Dwyer(3)                            President           November 2005      Massachusetts Financial Services
(born 12/1/58)                                                                      Company, Executive Vice President
                                                                                    and Chief Regulatory Officer (since
                                                                                    March 2004); Fidelity Management &
                                                                                    Research Company, Vice President
                                                                                    (prior to March 2004); Fidelity
                                                                                    Group of Funds, President and
                                                                                    Treasurer (prior to March 2004)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Tracy Atkinson(3)                            Treasurer           September 2005     Massachusetts Financial Services
(born 12/30/64)                                                                     Company, Senior Vice President
                                                                                    (since September 2004);
                                                                                    PricewaterhouseCoopers LLP, Partner
                                                                                    (prior to September 2004)
- --------------------------------------- --------------------- --------------------- --------------------------------------
</TABLE>


                                       48
<PAGE>

<TABLE>
<CAPTION>
         <S>                              <C>                   <C>                   <C>
- --------------------------------------- --------------------- --------------------- --------------------------------------
         Name, Date of Birth              Position(s) Held      Trustee/Officer       Principal Occupations During the
                                                                                           Past Five Years & Other
                                             with Fund              Since(1)                  Directorships(2)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Christopher R. Bohane(3)                Assistant Secretary        July 2005        Massachusetts Financial Services
(born 1/18/74)                          and Assistant Clerk                         Company, Vice President and Senior
                                                                                    Counsel  (since April 2003);  Kirkpatrick  &
                                                                                    Lockhart LLP (law firm),  Associate
                                                                                    (prior to April 2003);  Nvest  Services Company,
                                                                                    Assistant  Vice President and
                                                                                    Associate Counsel (prior to January 2001)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Ethan D. Corey(3)                       Assistant Secretary        July 2005        Massachusetts Financial Services
(born 11/21/63)                         and Assistant Clerk                         Company, Special Counsel (since
                                                                                    December 2004); Dechert LLP (law
                                                                                    firm), Counsel (prior to December
                                                                                    2004)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
David L. DiLorenzo(3)                   Assistant Treasurer        July 2005        Massachusetts Financial Services
(born 8/10/68)                                                                      Company, Vice President (since June
                                                                                    2005); JP Morgan Investor Services,
                                                                                    Vice President (January 2001 to June
                                                                                    2005); State Street Bank, Vice
                                                                                    President and Corporate Audit
                                                                                    Manager (prior to January 2001)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Timothy M. Fagan(3)                     Assistant Secretary      September 2005     Massachusetts Financial Services
(born 7/10/68)                          and Assistant Clerk                         Company, Vice President and Senior
                                                                                    Counsel (since September 2005); John Hancock
                                                                                    Advisers,  LLC, Vice President and
                                                                                    Chief Compliance Officer (September 2004 to
                                                                                    August 2005), Senior Attorney (prior
                                                                                    to September 2004); John Hancock Group of Funds,
                                                                                    Vice  President  and Chief
                                                                                    Compliance Officer (September 2004 to December
                                                                                    2004)

- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Mark D. Fischer(3)                      Assistant Treasurer        July 2005        Massachusetts Financial Services
(born 10/27/70)                                                                     Company, Vice President (since May
                                                                                    2005); JP Morgan Investment
                                                                                    Management Company, Vice President
                                                                                    (prior to May 2005)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Brian T. Hourihan(3)                    Assistant Secretary      September 2004     Massachusetts Financial Services
(born 11/11/64)                         and Assistant Clerk                         Company, Vice President, Senior
                                                                                    Counsel and Assistant Secretary
                                                                                    (since June 2004); Affiliated
                                                                                    Managers Group, Inc., Chief Legal
                                                                                    Officer/Centralized Compliance
                                                                                    Program (January to April 2004);
                                                                                    Fidelity Research & Management
                                                                                    Company, Assistant General Counsel
                                                                                    (prior to January 2004)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Ellen Moynihan(3)                       Assistant Treasurer        April 1997       Massachusetts Financial Services
(born 11/13/57)                                                                     Company, Vice President
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
</TABLE>


                                       49
<PAGE>

<TABLE>
<CAPTION>
         <S>                              <C>                   <C>                   <C>
         Name, Date of Birth              Position(s) Held      Trustee/Officer       Principal Occupations During the
                                                                                           Past Five Years & Other
                                             with Fund              Since(1)                  Directorships(2)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Susan S. Newton(3)                      Assistant Secretary         May 2005        Massachusetts Financial Services
(born 3/7/50)                           and Assistant Clerk                         Company, Senior Vice President and
                                                                                    Associate General Counsel (since April 2005);
                                                                                    John Hancock Advisers, LLC, Senior
                                                                                    Vice  President,  Secretary and Chief Legal
                                                                                    Officer (prior to April 2005);  John
                                                                                    Hancock Group of Funds, Senior Vice President,
                                                                                    Secretary and Chief Legal Officer
                                                                                    (prior to April 2005)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Susan A. Pereira(3)                     Assistant Secretary        July 2005        Massachusetts Financial Services
(born 11/5/70)                          and Assistant Clerk                         Company, Vice President and Senior
                                                                                    Counsel (since June 2004); Bingham McCutchen LLP
                                                                                    (law firm),  Associate (January
                                                                                    2001 to June 2004); Preti, Flaherty,  Beliveau,
                                                                                    Pachios & Haley, LLC, Associate
                                                                                    (prior to January 2001)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Mark N. Polebaum(3)                     Secretary and Clerk       January 2006      Massachusetts Financial Services
(born 05/01/52)                                                                     Company, Executive Vice President,
                                                                                    General Counsel and Secretary (since
                                                                                    January 2006);  Wilmer Cutler  Pickering  Hale
                                                                                    and Dorr LLP (law firm),  Partner
                                                                                    (prior to January 2006)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
Frank L. Tarantino                       Independent Chief         June 2004        Tarantino LLC (provider of
(born 03/07/44)                          Compliance Officer                         compliance services), Principal
                                                                                    (since June 2004); CRA Business
                                                                                    Strategies Group (consulting
                                                                                    services), Executive Vice President
                                                                                    (April 2003 to June 2004); David L.
                                                                                    Babson & Co. (investment adviser),
                                                                                    Managing Director, Chief
                                                                                    Administrative Officer and Director
                                                                                    (February 1997 to March 2003)
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
- --------------------------------------- --------------------- --------------------- --------------------------------------
James O. Yost(3)                        Assistant Treasurer      September 1990     Massachusetts Financial Services
(born 06/12/60)                                                                     Company, Senior Vice President
- --------------------------------------- --------------------- --------------------- --------------------------------------

</TABLE>
- --------------------------
(1)  Date  first  appointed  to serve as  Trustee/officer  of an MFS fund.  Each
     Trustee  has  served   continuously   since  appointment  unless  indicated
     otherwise.
(2)  Directorships  or  trusteeships  of  companies  required  to  report to the
     Securities and Exchange Commission (i.e., "public companies").
(3)  "Interested  person"  of the trust  within the  meaning  of the  Investment
     Company Act of 1940  (referred to as the 1940 Act),  which is the principal
     federal law governing  investment  companies  like the fund, as a result of
     position  with MFS.  The  address of MFS is 500  Boylston  Street,  Boston,
     Massachusetts 02116.
(4)  In  2004  and  2005,  Mr.  Butler  provided   consulting  services  to  the
     independent   compliance   consultant  retained  by  MFS  pursuant  to  its
     settlement with the SEC concerning  market timing and related matters.  The
     terms of that settlement required that compensation and expenses related to
     the  independent  compliance  consultant be borne  exclusively  by MFS and,
     therefore,  MFS  paid  Mr.  Butler  for the  services  he  rendered  to the
     independent compliance consultant.  In 2004 and 2005, MFS paid Mr. Butler a
     total of $351,119.29.

The Board of Trustees is divided into three classes, each class having a term of
three years ending with the annual meeting of shareholders (or any adjournment
thereof) held in the year of expiration, or until the election of a successor.
Each year the term of office of one class expires: Messrs. Gunning, Pozen and
Sherratt will continue in office until the 2006 annual meeting, Messrs. Cohn,
Manning and Perera, and Ms. Thomsen will continue in office until the 2007
annual meeting and Messrs. Gutow, Hegarty and Ives will continue in office until
the 2008 annual meeting.

                                       50
<PAGE>

Each of the Trust's Trustees and officers holds comparable positions with
certain other funds of which MFS or a subsidiary is the investment adviser or
distributor, and, in the case of the officers, with certain affiliates of MFS.
Each Trustee serves as a board member of 98 funds within the MFS Family of
Funds.

18.3. Inapplicable.

18.4. Inapplicable.


                                       51
<PAGE>


18.5. Committees.
<TABLE>
<CAPTION>
<S>                              <C>                                  <C>                                           <C>
Name of Committee                Number of Meetings                   Functions                                     Members(1)
                                 in Last Fiscal Year
AUDIT COMMITTEE                         16           Oversees the accounting and auditing procedures of   Butler*, Ives*, Sherratt*,
                                                     the Trust and, among other things, considers the     Thomsen*  and Uek*
                                                     selection of the independent accountants for the
                                                     Trust and the scope of the audit,  and considers
                                                     the effect on the  independence
                                                     of those accountants of any non-audit  services
                                                     such accountants  provide to the
                                                     Trust and any audit or non-audit services such
                                                     accountants  provide to other MFS
                                                     Funds,  MFS and/or certain  affiliates.  The
                                                     Committee is also  responsible  for
                                                     establishing  procedures for the receipt,
                                                     retention and treatment of complaints
                                                     received by the Trust regarding  accounting,
                                                     internal accounting  controls,  or
                                                     auditing  matters  and  the  confidential,
                                                     anonymous  submission  of  concerns
                                                     regarding  questionable  Trust  accounting
                                                     matters by officers of the Trust and
                                                     employees  of  the  Trust's   investment adviser,
                                                     administrator,   principal underwriter or any other
                                                     provider of accounting related services to the Trust.

COMPLIANCE AND GOVERNANCE COMMITTEE      8           Oversees the development and implementation of the    Butler*, Cohn*, Gunning*,
                                                     Trust's regulatory and fiduciary compliance           Gutow*,  Hegarty*, Ives*
                                                     policies, procedures and practices under the 1940     (ex-officio member) and
                                                     Act and other applicable laws as well as oversight    Sherratt*
                                                     of compliance policies of the Trust's investment
                                                     adviser and certain other service providers as they
                                                     relate to Trust activities. The Trust's Independent
                                                     Chief Compliance Officer reports directly to the
                                                     Committee and assists the Committee in carrying out
                                                     its responsibilities. In addition, the Committee
                                                     advises and makes recommendations to the Board on
                                                     matters concerning Trustee practices and
                                                     recommendations concerning the functions and duties
                                                     of the committees of the Board.
</TABLE>


                                       52
<PAGE>
<TABLE>
<CAPTION>
<S>                                      <C>         <C>                                                    <C>
CONTRACTS REVIEW COMMITTEE               5           Requests, reviews and considers the information        All non-interested
                                                     deemed reasonably necessary to evaluate the terms of   Trustees of the Board
                                                     the investment advisory and principal underwriting     (Butler, Cohn, Gunning,
                                                     agreements and the Plan of Distribution under Rule     Gutow, Hegarty, Ives,
                                                     12b-1 that the Trust proposes to renew or continue,    Perera, Sherratt,
                                                     and to make its recommendations to the full Board of   Thomsen and Uek)
                                                     Trustees on these matters.

SERVICES CONTRACTS COMMITTEE             2^          Reviews and evaluates the contractual arrangements     Gunning*, Ives*
                                                     of the Trust relating to transfer agency,              (ex-officio member),
                                                     administrative services, custody, pricing and          Sherratt* and Thomsen*
                                                     bookkeeping services and lending of portfolio
                                                     securities and makes recommendations to the full
                                                     Board of Trustees on these matters.
</TABLE>


                                       53
<PAGE>

<TABLE>
<CAPTION>
<S>                                      <C>         <C>                                                    <C>

NOMINATION AND COMPENSATION COMMITTEE    1           Recommends qualified candidates to the Board in the    All non-interested
                                                     event that a position is vacated or created. The       Trustees of the Board
                                                     Committee will consider recommendations by             (Butler, Cohn, Gunning,
                                                     shareholders when a vacancy exists. Shareholders       Gutow, Hegarty, Ives,
                                                     wishing to recommend candidates for Trustee for        Perera, Sherratt,
                                                     consideration by the Committee may do so by writing    Thomsen and Uek)
                                                     to the Trust's Secretary at the principal executive
                                                     office of the Trust. Such recommendations must be
                                                     accompanied by biographical and occupational data on
                                                     the candidate (including whether the candidate would
                                                     be an "interested person" of the Trust), a written
                                                     consent of the candidate to be named as a nominee
                                                     and to serve as Trustee if elected, record and
                                                     ownership information for the recommending
                                                     shareholder with respect to the Trust, and a
                                                     description of any arrangements or understandings
                                                     regarding recommendation of the candidate for
                                                     consideration. The Committee is also responsible for
                                                     making recommendations to the Board regarding any
                                                     necessary standards or qualifications for service on
                                                     the Board.  The Committee also reviews and makes
                                                     recommendations to the Board regarding compensation
                                                     for the non-interested Trustees.

PORTFOLIO TRADING AND MARKETING REVIEW   7           Oversees the policies, procedures, and practices of    Cohn*, Gunning*, Gutow*,
   COMMITTEE                                         the Trusts with respect to brokerage transactions      Hegarty*, Ives*
                                                     involving portfolio securities as those policies,      (ex-officio member) and
                                                     procedures, and practices are                          Perera*
                                                     carried  out  by MFS  and  its  affiliates.  The
                                                     Committee  also  oversees  the
                                                     administration  of the Trusts' proxy voting
                                                     policies and  procedures by MFS. In
                                                     addition,  the  Committee  receives  reports from
                                                     MFS  regarding  the  policies,
                                                     procedures,  and practices of MFS and its
                                                     affiliates  in connection  with their
                                                     marketing and distribution of shares of the Trust.
</TABLE>


                                       54
<PAGE>



<TABLE>
<CAPTION>
<S>                                      <C>         <C>                                                    <C>
PRICING COMMITTEE                        7           Oversees the determination of the value of the         Ives* (ex-officio
                                                     portfolio securities and other assets held by the      member), Perera*,
                                                     Trust and determines or causes to be determined the    Thomsen* and Uek*
                                                     fair value of securities and assets for which market
                                                     quotations are not "readily available" in accordance
                                                     with the 1940 Act. The Committee delegates primary
                                                     responsibility for carrying out these functions to
                                                     MFS and MFS' internal valuation committee pursuant
                                                     to pricing policies and procedures approved by the
                                                     Committee and adopted by the full Board, which
                                                     include methodologies to be followed by MFS to
                                                     determine the fair values of portfolio securities
                                                     and other assets held by the Trust for which market
                                                     quotations are not readily available. The Committee
                                                     meets periodically with the members of MFS' internal
                                                     valuation committee to review and assess the quality
                                                     of fair valuation and other pricing determinations
                                                     made pursuant to the Trust's pricing policies and
                                                     procedures, and to review and assess the policies
                                                     and procedures themselves.  The Committee also
                                                     exercises the responsibilities of the Board under
                                                     the Amortized Cost Valuation Procedures approved by
                                                     the Board on behalf of each Trust which holds itself
                                                     out as a "money market fund" in accordance with Rule
                                                     2a-7 under the 1940 Act.
</TABLE>
- -----------------
(1)  The Trustees'  Identification and Background are set forth in Item 18.1 and
     18.2.
*    Non-interested or independent Trustees.
^    The Board of Trustees  established  the  Services  Contracts  Committee  on
     September 27, 2005.  For periods prior to September 27, 2005, the functions
     of the Services  Contracts  Committee  were  performed by the Trust's Audit
     Committee.


                                       55
<PAGE>


18.6. See Item 18.1.

18.7. The following table shows the dollar range of equity securities
beneficially owned by each Trustee in the Trust and, on an aggregate basis, in
all funds overseen by the Trustee in the MFS Family of Funds, as of December 31,
2005. The following dollar ranges apply:

     N. None
     A. $1 - $10,000
     B. $10,001 - $50,000
     C. $50,001 - $100,000
     D. Over $100,000
<TABLE>
<CAPTION>
<S>                        <C>                                <C>
                                                              Aggregate Dollar Range of Equity Securities in All
                                                              Funds Overseen
                           Dollar Range of Equity             by Trustee in MFS
Name of Trustee            Securities in Trust                Family of Funds

Interested Trustees
Robert J. Manning                   N                                   D
Robert C. Pozen                     N                                   D

Non-Interested Trustees
Robert E. Butler(1)                 N                                   N
Lawrence H. Cohn, M.D.              B                                   D
David H. Gunning                    A                                   D
William R. Gutow                    A                                   D
Michael Hegarty                     A                                   D
J. Atwood Ives                      A                                   D
Lawrence T. Perera                  N                                   D
J. Dale Sherratt                    B                                   D
Laurie J. Thomsen(1)                N                                   D
Robert W. Uek(1)                    N                                   N

</TABLE>
- ------------------
(1)  Ms. Thomsen became a Trustee of the Fund on March 23, 2005. Messrs.  Butler
     and Uek became Trustees of the Fund on January 1, 2006.

18.8. Inapplicable.

18.9. Inapplicable.

18.10. Inapplicable.

18.11. Inapplicable.

18.12:  Inapplicable.


                                       56
<PAGE>


18.13. A discussion regarding the basis for the Board of Trustees' approval of
the Investment Advisory Agreement between the Trust and MFS is available in the
Trust's Annual Report to shareholders for the fiscal year ended October 31,
2005.

18.14. The following table lists all Trustees of the Trust and each of the three
highest paid executive officers or any affiliated person of the Trust with
aggregate compensation from the Trust for the most recently completed fiscal
year in excess of $60,000 ("Compensated Persons").

<TABLE>
<CAPTION>
<S>                    <C>                                   <C>                   <C>                           <C>
                                                             Trustee Fees          Retirement Benefits           Trustee Fees
                                                                 From              Accrued as Part of           From Trust and
                       Trustee                                 Trust(1)               Trust Expense             Fund Complex(2)
Interested Trustees
Robert J. Manning*                                               N/A                       N/A                        N/A
Robert C. Pozen*                                                 N/A                       N/A                        N/A

Non-Interested Trustees
Robert E. Butler(3)                                              N/A                       N/A                        N/A
Lawrence H. Cohn, M.D(.)(7)                                    $12,019                    $423                     $192,518
David H. Gunning(4)                                            $12,103                     N/A                     $204,768
William R. Gutow                                               $12,019                     N/A                     $192,518
Michael Hegarty(4)                                             $10,686                     N/A                     $188,304
J. Atwood Ives                                                 $12,842                                             $275,518
Amy B. Lane(4), (5)                                            $12,225                     N/A                     $215,518
Lawrence T. Perera                                             $11,904                                             $203,304
William J. Poorvu(5)                                           $ 2,725                     N/A                        N/A
J. Dale Sherratt                                               $12,244                    $380                     $221,143
Elaine R. Smith(5)                                              $5,379                                             $ 47,334
Laurie J. Thomsen((6))                                          $9,964                     N/A                     $187,787
Robert W. Uek(3)                                                 N/A                       N/A                        N/A
</TABLE>

- -------------
*    Messrs. Manning and Pozen became Trustees of the Fund on March 23, 2005.
     Prior to March 23, 2005, Messrs. Manning and Pozen served as Trustees from
     February 2004 to December 2004 and Advisory Trustees December 2004 to March
     23, 2005 and did not receive any compensation from the Trust in either
     capacity.
(1)  For the fiscal year ended October 31, 2005.
(2)  Information provided is provided for calendar year 2005. Each Trustee
     receiving compensation from the Trust served as Trustees of 98 Funds within
     the MFS Fund complex (having aggregate net assets at December 31, 2005 of
     approximately $94 billion).
(3)  Messrs. Butler and Uek became Trustees of the Trust on January 1, 2006.
(4)  Mr. Gunning and Ms. Lane became Trustees of the Trust on January 27, 2004,
     and Mr. Hegarty became a Trustee of the Trust on December 16, 2004.
(5)  Mr. Poorvu retired as a Trustee of the Trust on December 31, 2004, and Ms.
     Smith retired as a Trustee of the Trust on March 23, 2005. Ms. Lane retired
     as a Trustee of the Trust on February 22, 2006.
(6)  Ms. Thomsen became a Trustee of the Trust on March 23, 2005. From December
     16, 2004 to March 22, 2005, Ms. Thomsen was an Advisory Trustee of the
     Trust and as such received compensation from the Trust for that period.
     This compensation is included in the amount stated in the table for the
     period covered by the table, if applicable.
(7)  The total amount of deferred compensation accrued by the Trust for Mr. Cohn
     is $3,128.

Retirement Benefit Deferral Plan. Under a Retirement Benefit Deferral Plan,
certain Trustees have deferred benefits from a prior retirement plan. The value
of the benefits is periodically readjusted as though an equivalent amount had
been invested in Class A shares of the applicable Fund. The value of the
deferred benefits will be paid to the Trustees upon retirement or thereafter.
The plan does not obligate a Fund to retain the services of any Trustee or pay
any particular level of compensation to any Trustee. The plan is not funded and
a Fund's obligation to pay the Trustee's deferred


                                       57
<PAGE>


compensation is a general unsecured obligation.

18.15. Code of Ethics: The Trust and its Adviser have adopted a code of ethics
as required under the 1940 Act. Subject to certain conditions and restrictions,
this code permits personnel subject to the code to invest in securities for
their own accounts, including securities that may be purchased, held or sold by
the Trust. Securities transactions by some of these persons may be subject to
prior approval of the Adviser's Compliance Department. Securities transactions
of certain personnel are subject to quarterly reporting and review requirements.
The code is on public file with, and is available from the SEC. Information
about the Trust (including its prospectus and shareholder reports) can be
reviewed and copied at: Public Reference Room, Securities and Exchange
Commission, Washington, DC 20549-0102. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-202-942-8090. Reports and other information about the Trust are available on
the EDGAR Database on the Commission's Internet website at http://www.sec.gov,
and copies of this information may be obtained, upon payment of a duplicating
fee, by electronic request at the following e-mail address: publicinfo@sec.gov,
or by writing the Public Reference Section at the above address.

18.16. Proxy Voting Policies:


                    MASSACHUSETTS FINANCIAL SERVICES COMPANY
                      PROXY VOTING POLICIES AND PROCEDURES

                      September 17, 2003, as revised on September 20, 2004,
March 15, 2005 and February 22, 2006

Massachusetts Financial Services Company, MFS Institutional Advisors, Inc. and
MFS' other investment adviser subsidiaries (collectively, "MFS") have adopted
proxy voting policies and procedures, as set forth below ("MFS Proxy Voting
Policies and Procedures"), with respect to securities owned by the clients for
which MFS serves as investment adviser and has the power to vote proxies,
including the registered investment companies sponsored by MFS, other than the
MFS Union Standard Equity Fund (the "MFS Funds"). References to "clients" in
these policies and procedures include the MFS Funds and other clients of MFS,
such as funds organized offshore, sub-advised funds and separate account
clients, to the extent these clients have delegated to MFS the responsibility to
vote proxies on their behalf under the MFS Proxy Voting Policies and Procedures.

The MFS Proxy Voting Policies and Procedures include:

A. Voting Guidelines;

B. Administrative Procedures;

C. Monitoring System;

D. Records Retention; and

E. Reports.


                                       58
<PAGE>



A. VOTING GUIDELINES

1.       General Policy; Potential Conflicts of Interest

MFS' policy is that proxy voting decisions are made in what MFS believes to be
the best long-term economic interests of MFS' clients, and not in the interests
of any other party or in MFS' corporate interests, including interests such as
the distribution of MFS Fund shares, administration of 401(k) plans, and
institutional relationships.

MFS has carefully reviewed matters that in recent years have been presented for
shareholder vote by either management or shareholders of public companies. Based
on the overall principle that all votes cast by MFS on behalf of its clients
must be in what MFS believes to be the best long-term economic interests of such
clients, MFS has adopted proxy voting guidelines, set forth below, that govern
how MFS generally will vote on specific matters presented for shareholder vote.
In all cases, MFS will exercise its discretion in voting on these matters in
accordance with this overall principle. In other words, the underlying
guidelines are simply that - guidelines. Proxy items of significance are often
considered on a case-by-case basis, in light of all relevant facts and
circumstances, and in certain cases MFS may vote proxies in a manner different
from these guidelines.

As a general matter, MFS maintains a consistent voting position on similar proxy
proposals with respect to various issuers. In addition, MFS generally votes
consistently on the same matter when securities of an issuer are held by
multiple client accounts. However, MFS recognizes that there are gradations in
certain types of proposals that might result in different voting positions being
taken with respect to different proxy statements. There also may be situations
involving matters presented for shareholder vote that are not clearly governed
by the guidelines, such as proposed mergers and acquisitions. Some items that
otherwise would be acceptable will be voted against the proponent when it is
seeking extremely broad flexibility without offering a valid explanation. MFS
reserves the right to override the guidelines with respect to a particular
shareholder vote when such an override is, in MFS' best judgment, consistent
with the overall principle of voting proxies in the best long-term economic
interests of MFS' clients.

From time to time, MFS receives comments on these guidelines as well as
regarding particular voting issues from its clients and corporate issuers. These
comments are carefully considered by MFS, when it reviews these guidelines each
year and revises them as appropriate.

These policies and procedures are intended to address any potential material
conflicts of interest on the part of MFS or its affiliates that are likely to
arise in connection with the voting of proxies on behalf of MFS' clients. If
such potential material conflicts of interest do arise, MFS will analyze,
document and report on such potential material conflicts of interest (see
Sections B.2 and E below), and shall ultimately vote the relevant proxies in
what MFS believes to be the best long-term economic interests of its clients.
The MFS Proxy Review Group is responsible for monitoring and reporting with
respect to such potential material conflicts of interest.


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2.       MFS' Policy on Specific Issues

Election of Directors

MFS believes that good governance should be based on a board with a majority of
directors who are "independent" of management, and whose key committees (e.g.,
compensation, nominating, and audit committees) are comprised entirely of
"independent" directors. While MFS generally supports the board's nominees in
uncontested elections, we will withhold our vote for a nominee for a board of a
U.S. issuer if, as a result of such nominee being elected to the board, the
board would be comprised of a majority of members who are not "independent" or,
alternatively, the compensation, nominating or audit committees would include
members who are not "independent." MFS will also withhold its vote for a nominee
to the board if we can determine that he or she failed to attend at least 75% of
the board and/or relevant committee meetings in the previous year without a
valid reason. In addition, MFS will withhold its vote for all nominees standing
for election to a board of a U.S. issuer if we can determine: (1) if, since the
last annual meeting of shareholders and without shareholder approval, the board
or its compensation committee has repriced underwater options; or (2) if, within
the last year, shareholders approved by majority vote a resolution recommending
that the board rescind a "poison pill" and the board has failed to take
responsive action to that resolution. Responsive action would include the
rescission of the "poison pill"(without a broad reservation to reinstate the
"poison pill" in the event of a hostile tender offer), or public assurances that
the terms of the "poison pill" would be put to a binding shareholder vote within
the next five to seven years.

MFS evaluates a contested election of directors on a case-by-case basis
considering the long-term financial performance of the company relative to its
industry, management's track record, the qualifications of the nominees for both
slates and an evaluation of what each side is offering shareholders.

MFS generally votes for reasonably crafted proposals calling for directors to be
elected with an affirmative majority of votes cast and/or the elimination of the
plurality standard for electing directors (including binding resolutions
requesting that the board amend the company's bylaws), provided the proposal
includes a carve-out for a plurality voting standard when there are more
director nominees than board seats (e.g., contested elections) ("Majority Vote
Proposals").

MFS considers voting against Majority Vote Proposals if the company has adopted,
or has proposed to adopt in the proxy statement, formal corporate governance
principles that present a meaningful alternative to the majority voting standard
and provide an adequate response to both new nominees as well as incumbent
nominees who fail to receive a majority of votes cast.

MFS believes that a company's election policy should address the specific
circumstances at that company. MFS considers whether a company's election policy
articulates the following elements to address each director nominee who fails to
receive an affirmative majority of votes cast in an election:

     o    Establish  guidelines for the process by which the company  determines
          the status of nominees who fail to receive an affirmative  majority of
          votes cast and disclose the guidelines in the annual proxy statement;
     o    Guidelines should include a reasonable timetable for resolution of the
          nominee's  status and a requirement  that the  resolution be disclosed
          together with the reasons for the resolution;


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     o    Vest management of the process in the company's independent directors,
          other than the nominee in question; and

     o    Outline  the range of  remedies  that the  independent  directors  may
          consider concerning the nominee.

Classified Boards

MFS opposes proposals to classify a board (e.g., a board in which only one-third
of board members are elected each year). MFS supports proposals to declassify a
board.

Non-Salary Compensation Programs

Restricted stock plans should reward results rather than tenure. In some cases,
restricted stock is granted to the recipient at deep discounts to fair market
value, sometimes at par value. The holder cannot sell for a period of years, but
in the meantime the holder is able to vote and receive dividends. Eventually the
restrictions lapse and the stock can be sold by the holder.

MFS votes against stock option programs for officers, employees or non-employee
directors that do not require an investment by the optionee, that give "free
rides" on the stock price, or that permit grants of stock options with an
exercise price below fair market value on the date the options are granted.

MFS opposes stock option programs that allow the board or the compensation
committee, without shareholder approval, to reprice underwater options or to
automatically replenish shares (i.e., evergreen plans). MFS will consider on a
case-by-case basis proposals to exchange existing options for newly issued
options (taking into account such factors as whether there is a reasonable
value-for-value exchange).

MFS opposes stock option and restricted stock plans that provide unduly generous
compensation for officers, directors or employees, or could result in excessive
dilution to other shareholders. As a general guideline, MFS votes against stock
option and restricted stock plans if all such plans for a particular company
involve potential dilution, in the aggregate, of more than 15%. However, MFS may
accept a higher percentage (up to 20%) in the case of startup or small companies
which cannot afford to pay large salaries to executives, or in the case where
MFS, based upon the issuer's public disclosures, believes that the issuer has
been responsible with respect to its recent compensation practices, including
the mix of the issuance of restricted stock and options.

MFS votes in favor of stock option or restricted stock plans for non-employee
directors as long as they satisfy the requirements set forth above with respect
to stock option and restricted stock plans for company executives.

Expensing of Stock Options

While we acknowledge that there is no agreement on a uniform methodology for
expensing stock options, MFS supports shareholder proposals to expense stock
options because we believe that the expensing of options presents a more
accurate picture of the company's financial results to investors. We also
believe that companies are likely to be more disciplined when granting options
if the value of stock options were treated as an expense item on the company's
income statements.


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Executive Compensation

MFS believes that competitive compensation packages are necessary to attract,
motivate and retain executives. Therefore, MFS opposes shareholder proposals
that seek to set limits on executive compensation. Shareholder proposals seeking
to set limits on executive compensation tend to specify arbitrary compensation
criteria. MFS also opposes shareholder requests for disclosure on executive
compensation beyond regulatory requirements because we believe that current
regulatory requirements for disclosure of executive compensation are appropriate
and that additional disclosure is often unwarranted and costly. Although we
support linking executive stock option grants to a company's stock performance,
MFS opposes shareholder proposals that mandate a link of performance-based
options to a specific industry or peer group index. MFS believes that
compensation committees should retain the flexibility to propose the appropriate
index or other criteria by which performance-based options should be measured.
MFS evaluates other executive compensation restrictions (e.g., terminating the
company's stock option or restricted stock programs, freezing executive pay
during periods of large layoffs, and establishing a maximum ratio between the
highest paid executive and lowest paid employee) based on whether such proposals
are in the best long-term economic interests of our clients.

Employee Stock Purchase Plans

MFS supports the use of a broad-based employee stock purchase plans to increase
company stock ownership by employees, provided that shares purchased under the
plan are acquired for no less than 85% of their market value and do not result
in excessive dilution.

"Golden Parachutes"

From time to time, shareholders of companies have submitted proxy proposals that
would require shareholder approval of severance packages for executive officers
that exceed certain predetermined thresholds. MFS votes in favor of such
shareholder proposals when they would require shareholder approval of any
severance package for an executive officer that exceeds a certain multiple of
such officer's annual compensation that is not determined in MFS' judgment to be
excessive.

Anti-Takeover Measures

In general, MFS votes against any measure that inhibits capital appreciation in
a stock, including proposals that protect management from action by
shareholders. These types of proposals take many forms, ranging from "poison
pills" and "shark repellents" to super-majority requirements.

MFS will vote for proposals to rescind existing "poison pills" and proposals
that would require shareholder approval to adopt prospective "poison pills."
Nevertheless, MFS will consider supporting the adoption of a prospective "poison
pill" or the continuation of an existing "poison pill" if the following two
conditions are met: (1) the "poison pill" allows MFS clients to hold an
aggregate position of up to 15% of a company's total voting securities (and of
any class of voting securities); and (2) either (a) the "poison pill" has a term
of not longer than five years, provided that MFS will consider voting in favor
of the "poison pill" if the term does not exceed seven years and the "poison
pill" is linked to a business strategy or purpose that MFS believes is likely to
result in greater value for


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shareholders;  or (b) the  terms of the  "poison  pill"  allow MFS  clients  the
opportunity to accept a fairly  structured and attractively  priced tender offer
(e.g., a "chewable poison pill" that automatically  dissolves in the event of an
all cash, all shares tender offer at a premium price).

MFS will consider on a case-by-case basis proposals designed to prevent tenders
which are disadvantageous to shareholders such as tenders at below market prices
and tenders for substantially less than all shares of an issuer.

Reincorporation and Reorganization Proposals

When presented with a proposal to reincorporate a company under the laws of a
different state, or to effect some other type of corporate reorganization, MFS
considers the underlying purpose and ultimate effect of such a proposal in
determining whether or not to support such a measure. While MFS generally votes
in favor of management proposals that it believes are in the best long-term
economic interests of its clients, MFS may oppose such a measure if, for
example, the intent or effect would be to create additional inappropriate
impediments to possible acquisitions or takeovers.

Issuance of Stock

There are many legitimate reasons for issuance of stock. Nevertheless, as noted
above under "Non-Salary Compensation Programs", when a stock option plan (either
individually or when aggregated with other plans of the same company) would
substantially dilute the existing equity (e.g., by approximately 15% or more),
MFS generally votes against the plan. In addition, MFS votes against proposals
where management is asking for authorization to issue common or preferred stock
with no reason stated (a "blank check") because the unexplained authorization
could work as a potential anti-takeover device.

Repurchase Programs

MFS supports proposals to institute share repurchase plans in which all
shareholders have the opportunity to participate on an equal basis. Such plans
may include a company acquiring its own shares on the open market, or a company
making a tender offer to its own shareholders.

Confidential Voting

MFS votes in favor of proposals to ensure that shareholder voting results are
kept confidential. For example, MFS supports proposals that would prevent
management from having access to shareholder voting information that is compiled
by an independent proxy tabulation firm.

Cumulative Voting

MFS opposes proposals that seek to introduce cumulative voting and for proposals
that seek to eliminate cumulative voting. In either case, MFS will consider
whether cumulative voting is likely to enhance the interests of MFS' clients as
minority shareholders. In our view, shareholders should provide names of
qualified candidates to a company's nominating committee, which now for the
first time (for U.S. listed companies) must be comprised solely of "independent"
directors.


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Written Consent and Special Meetings

Because the shareholder right to act by written consent (without calling a
formal meeting of shareholders) can be a powerful tool for shareholders, MFS
generally opposes proposals that would prevent shareholders from taking action
without a formal meeting or would take away a shareholder's right to call a
special meeting of company shareholders.

Independent Auditors

MFS believes that the appointment of auditors is best left to the board of
directors of the company and therefore supports the ratification of the board's
selection of an auditor for the company. Recently, some shareholder groups have
submitted proposals to limit the non-audit activities of a company's audit firm.
Some proposals would prohibit the provision of any non-audit services by a
company's auditors to that company. MFS opposes proposals recommending the
prohibition or limitation of the performance of non-audit services by an
auditor, and proposals recommending the removal of a company's auditor due to
the performance of non-audit work for the company by its auditor. MFS believes
that the board, or its audit committee, should have the discretion to hire the
company's auditor for specific pieces of non-audit work in the limited
situations permitted under current law.

Best Practices Standards

Best practices standards are rapidly developing in the corporate governance
areas as a result of recent corporate scandals, the Sarbanes-Oxley Act of 2002
and revised listing standards on major stock exchanges. MFS generally support
these developments. However, many issuers are not publicly registered, are not
subject to these enhanced listing standards, or are not operating in an
environment that is comparable to that in the United States. In reviewing proxy
proposals under these circumstances, MFS votes for proposals that enhance
standards of corporate governance so long as we believe that - given the
circumstances or the environment within which the issuers operate - the proposal
is consistent with the best long-term economic interests of our clients.

Social Issues

There are many groups advocating social change, and many have chosen the
publicly-held corporation as a vehicle for advancing their agenda. Common among
these are resolutions requiring the corporation to refrain from investing or
conducting business in certain countries, to adhere to some list of goals or
principles (e.g., environmental standards) or to promulgate special reports on
various activities. MFS votes against such proposals unless their
shareholder-oriented benefits will outweigh any costs or disruptions to the
business, including those that use corporate resources to further a particular
social objective outside the business of the company or when no discernible
shareholder economic advantage is evident.

The laws of various states may regulate how the interests of certain clients
subject to those laws (e.g., state pension plans) are voted with respect to
social issues. Thus, it may be necessary to cast ballots differently for certain
clients than MFS might normally do for other clients.


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Foreign Issuers

MFS will evaluate items on proxies for foreign companies in the context of the
guidelines described above, as well as local market standards and best
practices. Proxies for foreign companies often contain significantly more voting
items than those of U.S. companies. Many of these items on foreign proxies
involve repetitive, non-controversial matters that are mandated by local law.
Accordingly, the items that are generally deemed routine and which do not
require the exercise of judgment under these guidelines (and therefore generally
voted in favor) for foreign issuers include the following: (i) receiving
financial statements or other reports from the board; (ii) approval of
declarations of dividends; (iii) appointment of shareholders to sign board
meeting minutes; (iv) discharge of management and supervisory boards; (v)
approval of share repurchase programs; (vi) election of directors in uncontested
elections and (vii) appointment of auditors.

In accordance with local law or business practices, many foreign companies
prevent the sales of shares that have been voted for a certain period beginning
prior to the shareholder meeting and ending on the day following the meeting
("share blocking"). Depending on the country in which a company is domiciled,
the blocking period may begin a stated number of days prior to the meeting
(e.g., one, three or five days) or on a date established by the company. While
practices vary, in many countries the block period can be continued for a longer
period if the shareholder meeting is adjourned and postponed to a later date.
Similarly, practices vary widely as to the ability of a shareholder to have the
"block" restriction lifted early (e.g., in some countries shares generally can
be "unblocked" up to two days prior to the meeting whereas in other countries
the removal of the block appears to be discretionary with the issuer's transfer
agent). Due to these restrictions, MFS must balance the benefits to its clients
of voting proxies against the potentially serious portfolio management
consequences of a reduced flexibility to sell the underlying shares at the most
advantageous time. For companies in countries with share blocking periods, the
disadvantage of being unable to sell the stock regardless of changing conditions
generally outweighs the advantages of voting at the shareholder meeting for
routine items. Accordingly, MFS generally will not vote those proxies in the
absence of an unusual, significant vote.

B.       ADMINISTRATIVE PROCEDURES

1.       MFS Proxy Review Group

The administration of these MFS Proxy Voting Policies and Procedures is overseen
by the MFS Proxy Voting Committee, which includes senior personnel from the MFS
Legal and Global Investment Support Departments. The MFS Proxy Voting Committee:

a. Reviews these MFS Proxy Voting Policies and Procedures at least annually and
recommends any amendments considered to be necessary or advisable;

b. Determines whether any potential material conflicts of interest exist with
respect to instances in which (i) MFS seeks to override these MFS Proxy Voting
Policies and Procedures and (ii) votes on ballot items not clearly governed by
these MFS Proxy Voting Policies and Procedures; and

c. Considers special proxy issues as they may arise from time to time.


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2.       Potential Conflicts of Interest

The MFS Proxy Voting Committee is responsible for monitoring potential material
conflicts of interest on the part of MFS or its affiliates that could arise in
connection with the voting of proxies on behalf of MFS' clients. Any significant
attempt to influence MFS' voting on a particular proxy matter should be reported
to the MFS Proxy Voting Committee.

In cases where proxies are voted in accordance with these MFS Proxy Voting
Policies and Procedures, no material conflict of interest will be deemed to
exist. In cases where (i) MFS is considering overriding these MFS Proxy Voting
Policies and Procedures, or (ii) matters presented for vote are not clearly
governed by these MFS Proxy Voting Policies and Procedures, the MFS Proxy Voting
Committee, or delegees, will follow these procedures:

a. Compare the name of the issuer of such proxy against a list of significant
current and potential (i) distributors of MFS Fund shares, (ii) retirement plans
administered by MFS, and (iii) MFS institutional clients (the "MFS Significant
Client List");

b. If the name of the issuer does not appear on the MFS Significant Client List,
then no material conflict of interest will be deemed to exist, and the proxy
will be voted as otherwise determined by the MFS Proxy Voting Committee;

c. If the name of the issuer appears on the MFS Significant Client List, then at
least one member of the MFS Proxy Voting Committee will carefully evaluate the
proposed vote in order to ensure that the proxy ultimately is voted in what MFS
believes to be the best long-term economic interests of MFS' clients, and not in
MFS' corporate interests; and

d. For all potential material conflicts of interest identified under clause (c)
above, the MFS Proxy Voting Committee will document: the name of the issuer, the
issuer's relationship to MFS, the analysis of the matters submitted for proxy
vote, and the basis for the determination that the votes ultimately were cast in
what MFS believes to be the best long-term economic interests of MFS' clients,
and not in MFS' corporate interests. A copy of the foregoing documentation will
be provided to the MFS' Conflicts Officer.

The members of the MFS Proxy Voting Committee are responsible for creating and
maintaining the MFS Significant Client List, in consultation with MFS'
distribution, retirement plan administration and institutional business units.
The MFS Significant Client List will be reviewed and updated periodically, as
appropriate.

3.       Gathering Proxies

Most proxies received by MFS and its clients originate at Automatic Data
Processing Corp. ("ADP") although a few proxies are transmitted to investors by
corporate issuers through their custodians or depositories. ADP and issuers send
proxies and related material directly to the record holders of the shares
beneficially owned by MFS' clients, usually to the client's custodian or, less
commonly, to the client itself. This material will include proxy cards,
reflecting the proper shareholdings of Funds and of clients on the record dates
for such shareholder meetings, as well as proxy statements with the issuer's
explanation of the items to be voted upon.


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MFS, on behalf of itself and the Funds, has entered into an agreement with an
independent proxy administration firm, Institutional Shareholder Services, Inc.
(the "Proxy Administrator"), pursuant to which the Proxy Administrator performs
various proxy vote related services, such as vote processing and recordkeeping
functions for MFS' Funds and institutional client accounts. The Proxy
Administrator receives proxy statements and proxy cards directly or indirectly
from various custodians, logs these materials into its database and matches
upcoming meetings with MFS Fund and client portfolio holdings, which are input
into the Proxy Administrator's system by an MFS holdings datafeed. Through the
use of the Proxy Administrator system, ballots and proxy material summaries for
the upcoming shareholders' meetings of over 10,000 corporations are available
on-line to certain MFS employees and the MFS Proxy Voting Committee.

4.       Analyzing Proxies

Proxies are voted in accordance with these MFS Proxy Voting Policies and
Procedures. The Proxy Administrator at the prior direction of MFS automatically
votes all proxy matters that do not require the particular exercise of
discretion or judgment with respect to these MFS Proxy Voting Policies and
Procedures as determined by the MFS Proxy Voting Committee. With respect to
proxy matters that require the particular exercise of discretion or judgment,
MFS considers and votes on those proxy matters. Representatives of the MFS Proxy
Voting Committee review, as appropriate, votes cast to ensure conformity with
these MFS Proxy Voting Policies and Procedures.

As a general matter, portfolio managers and investment analysts have little or
no involvement in specific votes taken by MFS. This is designed to promote
consistency in the application of MFS' voting guidelines, to promote consistency
in voting on the same or similar issues (for the same or for multiple issuers)
across all client accounts, and to minimize the potential that proxy solicitors,
issuers, or third parties might attempt to exert inappropriate influence on the
vote. In limited types of votes (e.g., corporate actions, such as mergers and
acquisitions), a representative of MFS Proxy Voting Committee may consult with
or seek recommendations from portfolio managers or analysts.(1) However, the MFS
Proxy Voting Committee would ultimately determine the manner in which all
proxies are voted.

As noted above, MFS reserves the right to override the guidelines when such an
override is, in MFS' best judgment, consistent with the overall principle of
voting proxies in the best long-term economic interests of MFS' clients. Any
such override of the guidelines shall be analyzed, documented and reported in
accordance with the procedures set forth in these policies.

5.       Voting Proxies

In accordance with its contract with MFS, the Proxy Administrator also generates
a variety of reports for the MFS Proxy Voting Committee, and makes available
on-line various other types of information so that the MFS Proxy Voting
Committee may review and monitor the votes cast by the Proxy Administrator on
behalf of MFS' clients.


- --------------------------
(1)  From  time to time,  due to travel  schedules  and  other  commitments,  an
     appropriate  portfolio  manager or  research  analyst is not  available  to
     provide a  recommendation  on a merger or acquisition  proposal.  If such a
     recommendation  cannot be obtained  within a few business days prior to the
     shareholder  meeting,  the MFS Proxy Review Group may determine to vote the
     proxy in what it believes to be the best  long-term  economic  interests of
     MFS' clients.


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C.       MONITORING SYSTEM

It is the responsibility of the Proxy Administrator and MFS' Proxy Voting
Committee to monitor the proxy voting process. When proxy materials for clients
are received, they are forwarded to the Proxy Administrator and are input into
the Proxy Administrator's system. Through an interface with the portfolio
holdings database of MFS, the Proxy Administrator matches a list of all MFS
Funds and clients who hold shares of a company's stock and the number of shares
held on the record date with the Proxy Administrator's listing of any upcoming
shareholder's meeting of that company.

When the Proxy Administrator's system "tickler" shows that the voting cut-off
date of a shareholders' meeting is approaching, a Proxy Administrator
representative checks that the vote for MFS Funds and clients holding that
security has been recorded in the computer system. If a proxy card has not been
received from the client's custodian, the Proxy Administrator calls the
custodian requesting that the materials be forwarded immediately. If it is not
possible to receive the proxy card from the custodian in time to be voted at the
meeting, MFS may instruct the custodian to cast the vote in the manner specified
and to mail the proxy directly to the issuer.

D.       RECORDS RETENTION

MFS will retain copies of these MFS Proxy Voting Policies and Procedures in
effect from time to time and will retain all proxy voting reports submitted to
the Board of Trustees, Board of Directors and Board of Managers of the MFS Funds
for the period required by applicable law. Proxy solicitation materials,
including electronic versions of the proxy cards completed by representatives of
the MFS Proxy Voting Committee, together with their respective notes and
comments, are maintained in an electronic format by the Proxy Administrator and
are accessible on-line by the MFS Proxy Voting Committee. All proxy voting
materials and supporting documentation, including records generated by the Proxy
Administrator's system as to proxies processed, including the dates when proxy
ballots were received and submitted, and the votes on each company's proxy
issues, are retained as required by applicable law.

E.       REPORTS

MFS Funds

MFS will report the results of its voting to the Board of Trustees, Board of
Directors and Board of Managers of the MFS Funds. These reports will include:
(i) a summary of how votes were cast; (ii) a review of situations where MFS did
not vote in accordance with the guidelines and the rationale therefor; (iii) a
review of the procedures used by MFS to identify material conflicts of interest;
and (iv) a review of these policies and the guidelines and, as necessary or
appropriate, any proposed modifications thereto to reflect new developments in
corporate governance and other issues. Based on these reviews, the Trustees,
Directors and Managers of the MFS Funds will consider possible modifications to
these policies to the extent necessary or advisable.

All MFS Advisory Clients

At any time, a report can be printed by MFS for each client who has requested
that MFS furnish a record of votes cast. The report specifies the proxy issues
which have been voted for the client


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during the year and the position taken with respect to each issue.

Generally, MFS will not divulge actual voting practices to any party other than
the client or its representatives (unless required by applicable law) because we
consider that information to be confidential and proprietary to the client.

Item 19.  Control Persons and Principal Holders of Securities:

As of January 31, 2006, Cede & Co., c/o The Depository Trust Company, P.O. Box
20, Bowling Green Station, New York, New York 10004 (a nominee for the
Depository Trust Company, 7 Hanover Square, New York, New York 10004), was the
record owner of approximately 82% of the outstanding shares of the Trust.

As of January 31, 2006, all Trustees and officers of the Trust as a group own of
record less than 1% of the outstanding shares of the Trust.

Item 20. Investment Advisory and Other Services:

Items 20.1.a. through 20.5. See Item 9.1.b. For the fiscal year ended October
31, 2005, MFS received fees under the Trust's Investment Advisory Agreement of
$5,614,315. For the fiscal year ended October 31, 2004, MFS received fees under
the Investment Advisory Agreement of $6,075,263. For the fiscal year ended
October 31, 2003, MFS received fees under the Trust's Investment Advisory
Agreement of $6,407,150.

20.6. See Item 9.1.e.

20.7. The principal business address of Deloitte & Touche LLP, the Trust's
independent registered public accounting firm, is 125 Summer Street, Boston,
Massachusetts 02110. Deloitte & Touche LLP certify financial statements of the
Trust as required to be certified by any law or regulation and provide certain
other tax-related services for the Trust (such as tax return preparation and
assistance and consultation with respect to the preparation of filings with the
SEC).

20.8. Pursuant to the Registrar, Transfer Agency and Service Agreement between
the Trust and MFS Service Center, Inc., MFS Service Center, Inc. ("MFSC") acts
as the Trust's registrar and transfer agent for the Trust's authorized and
issued shares of beneficial interest, as well as dividend disbursing agent for
the Trust, and agent in connection with the Dividend Reinvestment and Cash
Purchase Plan of the Trust. For account maintenance, the Trust currently pays
MFSC a fee based on the total number of accounts for all closed-end funds
advised by MFS for which MFSC acts as registrar and transfer agent. If the total
number of accounts is less than 75,000, the annual account fee is $9.00. If the
total number of accounts is 75,000 or more, the annual account fee is $8.00. For
dividend services, MFSC charges $0.75 per dividend reinvestment and $0.75 per
cash infusion. If the total amount of fees related to dividend services is less
than $1,000 per month for all closed-end funds advised by MFS for which MFSC
acts as registrar and transfer agent, the minimum fee for the Trust for these
services will be $167 per month. The Trust will reimburse MFSC for reasonable
out-of-pocket expenses and advances incurred by MFSC and for any other expenses
incurred by MFSC at the request, or with the consent, of the Trust.


                                       69
<PAGE>


Item 21.  PORTFOLIO MANAGERS

21.1 Other Accounts. In addition to the Fund, the Fund's portfolio managers are
responsible (either individually or jointly) for the day-to-day management of
certain other accounts, the number and total assets of which as of October 31,
2005 were as follows:
<TABLE>
<CAPTION>
         <S>             <C>              <C>                 <C>         <C>               <C>      <C>
- ------------------------ --------------------------------- -------------------------------- ----------------------------------
                                                              Other Pooled Investment
                         Registered Investment Companies              Vehicles                       Other Accounts
- ------------------------ --------------------------------- -------------------------------- ----------------------------------
- ------------------------ --------------- ----------------- ------------- ------------------ ------------- --------------------
         Name              Number of      Total Assets*     Number of      Total Assets      Number of       Total Assets
                           Accounts*                         Accounts                         Accounts
- ------------------------ --------------- ----------------- ------------- ------------------ ------------- --------------------
- ------------------------ --------------- ----------------- ------------- ------------------ ------------- --------------------
James J. Calmas                8           $3.3 billion         4          $768 million          2           $596 million
- ------------------------ --------------- ----------------- ------------- ------------------ ------------- --------------------
- ------------------------ --------------- ----------------- ------------- ------------------ ------------- --------------------
Erik S. Weisman                9           $2.1 billion         3          $1.1 billion          0                N/A
- ------------------------ --------------- ----------------- ------------- ------------------ ------------- --------------------
</TABLE>

- ----------------
*  Includes the Trust.

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

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

In certain instances there may be securities which are suitable for the Fund's
portfolio as well as for accounts with similar investment objectives of the
Adviser or subsidiary of the Adviser. Securities transactions for the Fund and
other accounts with similar investment objectives are generally executed on the
same day, or the next day. Nevertheless, it may develop that a particular
security is bought or sold for only one client even though it might be held by,
or bought or sold for, other clients. Likewise, a particular security may be
bought for one or more clients when one or more other clients are selling that
same security.

When two or more clients are simultaneously engaged in the purchase or sale of
the same security, the securities are allocated among clients in a manner
believed by MFS to be fair and equitable to each. It is recognized that in some
cases this system could have a detrimental effect on the price or volume of the
security as far as the Fund is concerned. In most cases, however, MFS believes
that the Fund's ability to participate in volume transactions will produce
better executions for the Fund.

MFS does not receive a performance fee for its management of the Fund. MFS
and/or a portfolio manager may have an incentive to allocate favorable or
limited opportunity investments or structure the timing of investments to favor
accounts other than the Fund--for instance, those that pay a higher advisory fee
and/or have a performance fee.

Item 21.2  Compensation


                                       70
<PAGE>



Portfolio manager total cash compensation is a combination of base salary and
performance bonus:

     o    Base Salary - Base salary represents a relatively  smaller  percentage
          of portfolio  manager total cash  compensation  (generally  below 33%)
          than incentive compensation.

     o    Performance  Bonus - Generally,  incentive  compensation  represents a
          majority of portfolio manager total cash compensation. The performance
          bonus  is based  on a  combination  of  quantitative  and  qualitative
          factors, with more weight given to the former (generally over 60%) and
          less weight given to the latter.
               The quantitative  portion is based on pre-tax  performance of all
               of the accounts managed by the portfolio  manager (which includes
               the Fund and any other accounts managed by the portfolio manager)
               over  a  one-,  three-  and  five-year  period  relative  to  the
               appropriate  Lipper  peer  group  universe  and/or  one  or  more
               benchmark  indices  with  respect to each  account.  The  primary
               weight is given to portfolio  performance  over a three-year time
               period with lesser  consideration given to portfolio  performance
               over one- and five-year  periods  (adjusted as appropriate if the
               portfolio manager has served for shorter periods).
               The  qualitative  portion  is based on the  results  of an annual
               internal  peer  review  process  (conducted  by  other  portfolio
               managers,  analysts and traders) and  management's  assessment of
               overall portfolio manager contributions to investor relations and
               the  investment  process  (distinct  from Fund and other  account
               performance).

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

Finally, portfolio managers are provided with a benefits package including a
defined contribution plan, health coverage and other insurance, which are
available to other employees of MFS on substantially similar terms. The
percentage of compensation provided by these benefits depends upon the length of
the individual's tenure at MFS and salary level as well as other factors.

21.3 Ownership of Fund Shares. The following table shows the dollar range of
equity securities of the Trust beneficially owned by the Trust's portfolio
managers as of October 31, 2005. The following dollar ranges apply:

         N. None
         A. $1 - $10,000
         B. $10,001 - $50,000
         C. $50,001 - $100,000
         D. $100,001 - $500,000
         E. $500,001 - $1,000,000 F. Over $1,000,000

Name of Portfolio Manager            Dollar Range of Equity Securities in Fund
- -------------------------            -----------------------------------------
James J. Calmas                                       N
Erik S. Weisman                                       N


                                       71
<PAGE>


Item 22. Brokerage Allocation and Other Practices: Specific decisions to
purchase or sell securities for the Trust are made by persons affiliated with
the Adviser. Any such person may serve other clients of the Adviser, or any
subsidiary of the Adviser in a similar capacity.

In connection with the selection of broker dealers and the placing of Trust
portfolio transactions, the Adviser seeks for the Trust the best overall price
and execution available from responsible brokerage firms, taking account of all
factors it deems relevant, including by way of illustration: price; the size of
the transaction; the nature of the market for the security; the amount of the
commission; the timing and impact of the transaction taking into account market
prices and trends; the reputation, experience and financial stability of the
broker or dealer involved; and the quality of services rendered by the broker or
dealer in other transactions.

In the case of securities traded in the over-the-counter market, portfolio
transactions may be effected either on an agency basis, which involves the
payment of negotiated brokerage commissions to the broker-dealer, including
electronic communication, networks, or on a principal basis at net prices
without commissions, but which include compensation to the broker-dealer in the
form of a mark-up or mark-down, depending on where the Adviser believes best
execution is available. In the case of securities purchased from underwriters,
the cost of such securities generally includes a fixed underwriting commission
or concession. From time to time, soliciting dealer fees are available to the
Adviser on tender or exchange offers. Such soliciting or dealer fees are, in
effect, recaptured by the Funds.

Under the Advisory Agreement and as permitted by Section 28(e) of the Securities
Exchange Act of 1934, the Adviser may cause the Trust to pay a broker-dealer
which provides brokerage and research services to the Adviser, an amount of
commission for effecting a securities transaction for the Trust in excess of the
amount other broker-dealers would have charged for the transaction, if the
Adviser determines in good faith that the greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker-dealer viewed in terms of either a particular transaction or
its overall responsibilities to the Trust or to its other clients.
"Commissions," as interpreted by the SEC, include fees paid to brokers for
trades conducted on an agency basis, and certain mark-ups, mark-downs,
commission equivalents and other fees received by dealers in riskless principal
transactions placed in the over-the-counter market.

The term "brokerage and research services" includes advice as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or of purchasers or sellers of securities;
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto, such as clearance and settlement.

Although commissions paid on every transaction will, in the judgment of the
Adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Trust and the Adviser's other clients in part for providing advice as to the
availability of securities or of purchasers or sellers of securities and
services in effecting securities transactions and


                                       72
<PAGE>


performing functions incidental thereto, such as clearance and settlement.

Broker-dealers may be willing to furnish statistical, research and other factual
information or services ("Research") for example, investment research reports;
access to analysts; execution systems and trading analytics; reports or
databases containing corporate, fundamental, and technical analyses; portfolio
modeling strategies; and economic research services, such as publications, chart
services and advice from economists concerning macroeconomics information, and
analytical investment information about particular corporations to the Adviser
for no consideration other than brokerage or underwriting commissions.
Securities may be bought or sold from time to time through such
brokerage-dealers, on behalf of the Trust. The Adviser may use brokerage
commissions from the Fund's portfolio transactions to acquire Research, subject
to the procedures and limitations described in this discussion.

The advisory fee paid by the Trust to the Adviser is not reduced as a
consequence of the Adviser's receipt of Research. To the extent the Trust's
portfolio transactions are used to obtain Research, the brokerage commissions
paid by the Trust might exceed those that might otherwise be paid. The Research
received may be useful and of value to the Adviser in serving both the Trust and
other clients of the Adviser; accordingly, not all of the Research provided by
brokers through which the Trust effects securities transactions may be used by
the Adviser in connection with the Trust. While the Research is not expected to
reduce the expenses of the Adviser, the Adviser would, through the use of the
Research, avoid the additional expenses which would be incurred if it should
attempt to develop comparable information through its own staff.

From time to time, the Adviser prepares a list of broker-dealer firms that have
been deemed by the Adviser to provide valuable Research as determined
periodically by the investment staff ("Research Firms"), together with a
suggested non-binding amount of brokerage commissions ("non-binding target") to
be allocated to each of these research firms, subject to certain requirements.
All trades with Research Firms will be executed in accordance with the Adviser's
obligation to seek best execution for its client accounts. Neither the Adviser
nor the Fund has an obligation to any Research Firm if the amount of brokerage
commissions paid to the research firm is less than the applicable non-binding
target. The Adviser reserves the right to pay cash to the Research Firm from its
own resources in an amount the Adviser determines in its discretion.

If the Adviser determines that any service or product has a mixed use, (i.e., it
also serves functions that do not assist the investment decision-making or
trading process), the Adviser will allocate the costs of such service or product
accordingly in its reasonable discretion. The Adviser will allocate brokerage
commissions to Research Firms only for the portion of the service or product
that the Adviser determines assists it in the investment decision-making or
trading process and will pay for the remaining value of the product or service
in cash.

Certain Funds entered into an arrangement under which, with respect to certain
brokerage transactions directed to certain broker-dealers, the Funds received a
credit for part of the brokerage commission paid, which was applied against
expenses of the Funds. In addition, the Funds have an expense offset arrangement
that reduces the Funds' custodian fees based upon the amount of cash maintained
by the Funds with their custodian and dividend disbursing agent, State Street
Bank and Trust Company.


                                       73
<PAGE>



In effecting portfolio transactions on behalf of the Fund and the Adviser's
other clients, the Adviser from time to time may instruct the broker-dealer that
executes a transaction to allocate, or "step out," a portion of such transaction
to another broker-dealer. The broker-dealer to which the Adviser has "stepped
out" would then settle and complete the designated portion of the transaction,
and the executing broker-dealer would settle and complete the remaining portion
of the transaction that has not been "stepped out." Each broker-dealer may
receive a commission or brokerage fee with respect to that portion of the
transaction that it settles and completes.

In certain instances there may be securities which are suitable for the Trust's
portfolio as well as for that of one or more of the other clients of the Adviser
or any subsidiary of the Adviser. Investment decisions for the Trust and for
such other clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. The Adviser has adopted
policies that are reasonably designed to ensure that when two or more clients
are simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed by the Adviser to be
fair and equitable to each. Among other things, these policies prohibit
allocations of equity initial public offerings, equity limited offerings or
fixed income new issues to, among others: (1) private funds or accounts
principally owned by the Adviser's officers and/or employees or the Trust's
employees or Trustees; and (2) any accounts owned beneficially solely by the
Adviser or any direct or indirect subsidiary of the Adviser. However, these
policies do not prohibit allocations to funds or accounts owned beneficially by
Sun Life of Canada (U.S.) Financial Services Holdings, Inc. or Sun Life
Financial, Inc. or their affiliates other than the Adviser and its direct and
indirect subsidiaries.

It is recognized that in some cases this system could have a detrimental effect
on the price or volume of the security as far as the Trust is concerned. In
other cases, however, the Trust believes that its ability to participate in
volume transactions will produce better executions for the Trust.

For the fiscal year ended October 31, 2005, the Trust paid brokerage commissions
of $0. For the fiscal year ended October 31, 2004, the Trust paid brokerage
commissions of $0 and for the fiscal year ended October 31, 2003, the Trust paid
brokerage commissions of $0.

During the fiscal year ended October 31, 2005, the Trust purchased securities
issued by the following regular broker-dealers of the Trust, which had the
following values as of October 31, 2005:

- ------------------------------------------------------------------------------
      Broker Dealer                 Value of Securities as of October 31, 2005
      -------------                 ------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.                         $20,367
- ------------------------------------------------------------------------------

Item 23. Tax Status:  None.

Item 24. Financial Statements: The following are incorporated herein by
reference to the Trust's Annual Report to its shareholders, for its fiscal year
ended October 31, 2005, copies of which have been filed with the SEC:


                                       74
<PAGE>


Portfolio of Investments at October 31, 2005 Statement of Assets and Liabilities
at October 31, 2005 Statement of Operations for the year ended October 31, 2005
Statement of Changes in Net Assets for the years ended October 31, 2005 and
2004. Financial Highlights for the years ended October 31, 2005, 2004, 2003,
2002 and 2001. Notes to Financial Statements and Report of Independent
Registered Public Accounting Firm



                                       75
<PAGE>

                                     PART C
                                OTHER INFORMATION
Item 25. Financial Statements and Exhibits:

         1.       Financial Statements:

                  The following have been incorporated by reference in
                  Item 24:

                  Portfolio of  Investments at October 31, 2005
                  Statement of Assets and  Liabilities  at October 31, 2005
                  Statement of Operations for year ended  October 31, 2005
                  Statement  of Changes in Net Assets for  the  years  ended
                    October  31,  2005  and  2004
                  Financial Highlights for the years ended October 31, 2005,
                    2004, 2003, 2002 and 2001
                  Notes to  Financial  Statements  Independent  Auditors'
                    Report

        2. Exhibits:

        (a)    Amended and Restated  Declaration  of Trust,  dated  December 16,
               2004;  filed herein.  (b)(1) Master Amended and Restated  By-Laws
               dated January 1, 2002, as revised June 23, 2004; filed herein.

        (b)(2) Appendix A, as revised February 21, 2006, to the Master Amended
               and Restated By-Laws,  dated January 1, 2002, as revised June 23,
               2004; filed herein.

        (c)    Inapplicable.

        (d)    Specimen certificate for Shares of Beneficial  Interest,  without
               par value  (previously filed as Exhibit 2(d) to Amendment No. 9);
               incorporated herein by reference.

        (e)    The section  "Dividend  Reinvestment  and Cash Purchase  Plan" on
               page 4 of the Trust's Annual Report to its Shareholders,  for its
               fiscal  year  ended  October  31,  1997;  incorporated  herein by
               reference.

        (f)    Inapplicable.

        (g)(1) Investment  Advisory  Agreement,  dated January 1, 2002;  filed
               herein.

        (g)(2) Master Administrative Services Agreement,  dated March 1, 1997,
               as  amended  April  1,  1999,  between  Massachusetts   Financial
               Services Company and the Trust; filed herein.


                                       76
<PAGE>


        (h)    Omitted pursuant to General Instruction G.3. to Form N-2.

        (i)(1) Retirement  Plan for  Non-Interested  Person  Trustees,  dated
               February 17, 1999  (previously  filed as Exhibit (8) to Amendment
               No. 39 to the Registration Statement for MFS Growth Opportunities
               Fund on Form N-1A, File Nos. 2-36431 and 811-2032, filed with the
               SEC  on  February  26,  1999  ("MFS  Growth   Opportunities  Fund
               Amendment No. 29")) incorporated herein by reference.

        (i)(2) Amendment,  dated December 11, 2001, to the Retirement Plan for
               Non-Interested  Person Trustees (previously filed as Exhibit 6(b)
               to MFS Series Trust V Amendment  No. 51)  incorporated  herein by
               reference.

        (j)(1) Custodian  Agreement  between  Registrant and State Street Bank
               and  Trust  Company,  dated  July 2,  2001  (previously  filed as
               Exhibit (7)(a) to Amendment No. 34 to the Registration  Statement
               for MFS  Series  Trust X, on Form  N-1A,  File Nos.  33-1657  and
               811-4492  filed with the  Securities  and Exchange  Commission on
               July  30,  2001  ("MFS  Series   Trust  X  Amendment   No.  34"))
               incorporated herein by reference.

        (j)(2) Global Custody Contract between  Registrant and Chase Manhattan
               Bank, dated July 2, 2001 (previously filed as Exhibit 7(b) to MFS
               Series  Trust  X  Amendment  No.  34)   incorporated   herein  by
               reference.

        (j)(3) Exhibit A, as revised April 26, 2005,  to the Master  Custodian
               Agreement  between  Registrant  and State  Street  Bank and Trust
               Company,   and  the  Master  Global  Custody   Contract   between
               Registrant  and Chase  Manhattan  Bank,  each dated July 2, 2001;
               filed herein.

        (j)(4) Form of Amended  Amendment No. 3, dated  September 30, 2004, to
               the Master  Custodian  Agreement with State Street Bank and Trust
               Company (previously filed in Amendment No. 37 to the Registration
               Statement  for MFS  Series  Trust III,  on Form  N-1A,  File Nos.
               2-60491  and  811-2794  filed  with  the SEC on March  31,  2005)
               incorporated herein by reference.

        (j)(5) Amendment  No. 2, dated May 2, 2003,  to the Master  Custodian
               Agreement  with State Street Bank and Trust  Company  (previously
               filed in Amendment No. 42 to the  Registration  Statement for MFS
               Series  Trust I, on Form N-1A,  File Nos.  33-7638  and  811-4777
               filed with the SEC on October 30,  2003)  incorporated  herein by
               reference.


                                       77
<PAGE>


        (j)(6) Amendment,  dated  December 28, 2004,  to the Master  Custodian
               Agreement  with State Street Bank and Trust  Company  (previously
               filed in Amendment No. 22 to the  Registration  Statement for MFS
               Series  Trust XI, on Form N-1A,  File Nos.  33-68310 and 811-7992
               filed with the SEC on January 28,  2005)  incorporated  herein by
               reference.

        (j)(7) Amendment,  dated  December  31,  2004,  to the JP Morgan Chase
               Global Custody Contract  (previously filed in Amendment No. 59 to
               the Registration Statement for MFS Series Trust IX, on Form N-1A,
               File Nos.  2-50409  and  811-2464  filed with the SEC on June 29,
               2005)  incorporated   herein  by  reference.   (k)(1)  Registrar,
               Transfer  Agency  and  Service  Agreement  between  Trust and MFS
               Service Center,  Inc., dated August 15, 1994 (previously filed as
               Exhibit  (k)(2)  to  Amendment  No.  8);  incorporated  herein by
               reference.

        (k)(2) Amendment,   dated  February  22,  2005,  to  the  Shareholder
               Servicing Agreements; filed herein.

        (k)(3) Loan  Agreement by and among the Banks named  therein,  the MFS
               Funds named therein, and The First National Bank of Boston, dated
               as of February 21, 1995 (previously  filed with Amendment No. 8);
               incorporated herein by reference.

        (l)    Omitted pursuant to General Instruction G.3 to Form N-2.

        (m)    None.

        (n)    Omitted pursuant to General Instruction G.3 to Form N-2.

        (o)    Omitted pursuant to General Instructions G.3 to Form N-2.

        (p)    Form of Purchase  Agreement  (previously filed as Exhibit 2(p) to
               Amendment No. 9); incorporated herein by reference.

        (q)    Inapplicable.

        (r)(1) Code of Ethics as amended  and  restated  effective  January 1,
               2005,  pursuant to Rule 17j-1 under the Investment Company Act of
               1940  (previously  filed as Exhibit  16(a) to Amendment No. 45 of
               the  Registration  Statement on Form N-1A for MFS Series Trust I,
               File Nos.  33-7638 and  811-4777,  filed with the SEC on December
               29, 2004 ("MFS Series Trust I Amendment No. 45").

        (r)(2) Code  of  Ethics  for   Personal   Trading   and  Conduct  for
               Non-Management  Directors  of  MFS,  effective  October  6,  2004
               (previously  filed as Exhibit  16(b) to  Amendment  No. 44 of the
               Registration  Statement on Form N-1A for MFS Series Trust I, File
               Nos.  33-7638 and  811-4777,  filed with the SEC on December  29,
               2004 ("MFS Series Trust I Amendment No. 44").


                                       78
<PAGE>


        (r)(3) Code  of  Ethics  for  Non-MFS  Management  Trustees  effective
               January 1, 2005  (previously  filed as Exhibit 16(c) to Amendment
               No. 45 of the Registration  Statement on Form N-1A for MFS Series
               Trust I, File Nos.  33-7638 and  811-4777,  filed with the SEC on
               December 29, 2004 ("MFS Series Trust I Amendment No. 45").

Item 26. Marketing Arrangements:  Inapplicable.

Item 27. Other Expenses of Issuance and Distribution:  Inapplicable.

Item 28. Persons Controlled by or Under Common Control with Trust: Inapplicable.

Item 29. Number of Holders of Securities:

- ---------------------------------- ---------------------------------------------
           (1)                                    (2)
     Title of Class                     Number of Record  Holders
- ---------------------------------- ---------------------------------------------
Shares of Beneficial Interest                    7,196
    (without par value)                 (as at January 31, 2006)
- ---------------------------------- ---------------------------------------------

Item 30. Indemnification:

         Article V of the Trust's Declaration of Trust provides that the Trust
will indemnify its Trustees and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved because of
their offices with the Trust, unless as to liabilities to the Trust or its
shareholders, it is finally adjudicated that they engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in their offices, or with respect to any matter unless it is
adjudicated that they did not act in good faith in the reasonable belief that
their actions were in the best interest of the Trust. In the case of a
settlement, such indemnification will not be provided unless it has been
determined in accordance with the Declaration of Trust that such officers or
Trustees have not engaged in misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in their offices.

         The Trustees and officers of the Trust and the personnel of the Trust's
investment adviser are insured under an errors and omissions liability insurance
policy. The Trust and its officers are also insured under the fidelity bond
required by Rule 17g-1 under the Investment Company Act of 1940.

Item 31. Business and Other Connections of Investment Adviser:

MFS serves as investment adviser to the following open-end Funds comprising the
MFS Family of Funds: Massachusetts Investors Growth Stock Fund; Massachusetts
Investors Trust; MFS


                                       79
<PAGE>


Government  Limited  Maturity Fund; MFS Government  Securities  Fund; MFS Growth
Opportunities  Fund;  MFS Series  Trust I (which has 8 series:  MFS Cash Reserve
Fund, MFS Core Equity Fund,  MFS Core Growth Fund,  MFS New Discovery  Fund, MFS
Research  International Fund, MFS Strategic Growth Fund, MFS Technology Fund and
MFS Value Fund); MFS Series Trust II (which has one series:  MFS Emerging Growth
Fund);  MFS Series Trust III (which has three series:  MFS High Income Fund, MFS
High Yield  Opportunities  Fund and MFS Municipal High Income Fund);  MFS Series
Trust IV (which has four series:  MFS Government  Money Market Fund, MFS Mid Cap
Growth Fund,  MFS Money  Market Fund and MFS  Municipal  Bond Fund);  MFS Series
Trust V (which has three  series:  MFS  International  New Discovery  Fund,  MFS
Research Fund and MFS Total Return  Fund);  MFS Series Trust VI (which has three
series:  MFS Global Equity Fund,  MFS Global Total Return Fund and MFS Utilities
Fund);  MFS Series  Trust VII (which has one series:  MFS Capital  Opportunities
Fund);  MFS Series Trust VIII (which has two series:  MFS Global Growth Fund and
MFS  Strategic  Income Fund);  MFS Series Trust IX (which has seven series:  MFS
Bond Fund, MFS Inflation-Adjusted  Bond Fund, MFS Intermediate  Investment Grade
Bond Fund, MFS Limited  Maturity Fund, MFS Municipal  Limited Maturity Fund, MFS
Research  Bond Fund and MFS Research Bond Fund J); MFS Series Trust X (which has
13 series:  MFS Aggressive Growth  Allocation Fund, MFS Conservative  Allocation
Fund,  MFS Emerging  Markets Debt Fund,  MFS Emerging  Markets  Equity Fund, MFS
Floating Rate High Income Fund, MFS Growth  Allocation  Fund, MFS  International
Diversification  Fund, MFS International  Growth Fund, MFS  International  Value
Fund,  MFS Moderate  Allocation  Fund,  MFS New Endeavor  Fund and MFS Strategic
Value Fund);  MFS Series Trust XI (which has two series:  MFS Mid Cap Value Fund
and MFS Union Standard  Equity Fund);  MFS Series Trust XII (which has 5 series:
MFS Lifetime  Retirement  Income Fund, MFS Lifetime 2010 Fund, MFS Lifetime 2020
Fund,  MFS Lifetime  2030 Fund and MFS  Lifetime  2040 Fund;  and MFS  Municipal
Series Trust (which has 16 series: MFS Alabama Municipal Bond Fund, MFS Arkansas
Municipal Bond Fund, MFS California  Municipal Bond Fund, MFS Florida  Municipal
Bond Fund, MFS Georgia  Municipal  Bond Fund, MFS Maryland  Municipal Bond Fund,
MFS Massachusetts  Municipal Bond Fund, MFS Mississippi Municipal Bond Fund, MFS
Municipal  Income Fund,  MFS New York  Municipal  Bond Fund,  MFS North Carolina
Municipal  Bond Fund, MFS  Pennsylvania  Municipal Bond Fund, MFS South Carolina
Municipal Bond Fund, MFS Tennessee  Municipal Bond Fund, MFS Virginia  Municipal
Bond Fund and MFS West  Virginia  Municipal  Bond Fund  (the "MFS  Funds").  The
principal  business  address  of each of the MFS Funds is 500  Boylston  Street,
Boston, Massachusetts, 02116.

MFS also serves as investment adviser of the following open-end Funds: MFS
Institutional Trust ("MFSIT") (which has four series) and MFS Variable Insurance
Trust ("MVI") (which has 16 series). The principal business address of each of
the aforementioned funds is 500 Boylston Street, Boston, Massachusetts, 02116.

In addition, MFS serves as investment adviser to the following closed-end funds:
MFS Charter Income Trust, MFS Government Markets Income Trust, MFS Intermediate
Income Trust, MFS Multimarket Income Trust, MFS Municipal Income Trust and MFS
Special Value Trust (the "MFS Closed-End Funds"). The principal business address
of each of the MFS Closed-End Funds is 500 Boylston Street, Boston,
Massachusetts, 02116.

Lastly, MFS serves as investment adviser to MFS/Sun Life Series Trust ("MFS/SL")
(which has 28 series), Capital Appreciation Variable Account, Global Governments
Variable Account, Government Securities Variable Account, High Yield Variable
Account, Money Market Variable Account and Total Return Variable Account
(collectively, the "Accounts"). The principal business address of MFS/SL is 500
Boylston Street, Boston, Massachusetts, 02116. The principal business address of
each of the aforementioned Accounts is One Sun Life Executive Park, Wellesley
Hills, Massachusetts, 02181.


                                       80
<PAGE>


The Directors of MFS are Robert J. Manning, Martin E. Beaulieu, Robin A.
Stelmach, Donald A. Stewart, C. James Prieur, William W. Stinson, James C.
Baillie, Ronald W. Osborne and William K. O'Brien. Robert C. Pozen is the
Chairman, Mr. Manning is Chief Executive Officer, Chief Investment Officer and
President, Mr. Beaulieu is Executive Vice President and the Director of Global
Distribution, Robin A. Stelmach is Executive Vice President and Chief Operating
Officer; Maria D. Dwyer is Executive Vice President and Chief Regulatory
Officer, [TBA] is an Executive Vice President, General Counsel and Secretary,
Mitchell C. Freestone and Brian T. Hourihan are Assistant Secretaries, Michael
W. Roberge is an Executive Vice President, Chief Fixed Income Officer and
Director of Fixed Income Research, David A. Antonelli is an Executive Vice
President and Chief Equity Officer, Deborah H. Miller is an Executive Vice
President and Director of Equity Quantitative Research, Paul T. Kirwan is an
Executive Vice President and Chief Financial Officer, Thomas B. Hastings is a
Senior Vice President and Treasurer, Michael H. Whitaker is a Senior Vice
President and Chief Compliance Officer and Joseph E. Lynch is the Assistant
Treasurer.

Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
MFS Growth Opportunities Fund
MFS Government Securities Fund
MFS Government Limited Maturity Fund
MFS Series Trust I
MFS Series Trust II
MFS Series Trust III
MFS Series Trust IV
MFS Series Trust V
MFS Series Trust VI
MFS Series Trust VII
MFS Series Trust VIII
MFS Series Trust IX
MFS Series Trust X
MFS Series Trust XI
MFS Series Trust XII
MFS Municipal Series Trust
MFS Variable Insurance Trust
MFS Institutional Trust
MFS Municipal Income Trust
MFS Multimarket Income Trust
MFS Government Markets Income Trust
MFS Intermediate Income Trust
MFS Charter Income Trust
MFS Special Value Trust

J. Atwood Ives is the Chair, Maria F. Dwyer is President,  Tracy A. Atkinson,  a
Senior Vice  President of MFS, is Treasurer,  James O. Yost,  Ellen M. Moynihan,
David L. DiLorenzo and Mark Fischer,  Vice  Presidents of MFS, are the Assistant
Treasurers,  Mark N.  Polebaum,  Senior  Vice  President,  General  Counsel  and
Secretary of MFS, is the Secretary, Brian T. Hourihan, Vice President and Senior
Counsel,  Christopher  R. Bohane,  Susan A.  Pereira and Timothy M. Fagan,  Vice
Presidents and Senior Counsels of MFS and Ethan D. Corey, Special Counsel of MFS
are Assistant Secretaries and Assistant Clerks.


                                       81
<PAGE>


MFS/Sun Life Series Trust

J. Kermit Birchfield is Chairman, Maria F. Dwyer is President, Tracy A. Atkinson
is the Treasurer,  James O. Yost, Ellen M. Moynihan, David L. DiLorenzo and Mark
Fischer are the Assistant Treasurers,  Mark N. Polebaum is the Secretary,  Brian
T. Hourihan is the Assistant Secretary and Assistant Clerk.

Money Market Variable Account
High Yield Variable Account
Capital Appreciation Variable Account
Government Securities Variable Account
Total Return Variable Account
Global Governments Variable Account

J. Kermit  Birchfield  is Chairman,  Maria F. Dwyer is President and a Director,
Tracy A. Atkinson is Treasurer,  Jim Yost, Ellen M. Moynihan, David L. DiLorenzo
and Mark Fischer are the Assistant Treasurers, Mark N. Polebaum is the Secretary
and Brian T. Hourihan,  Christopher R. Bohane,  Ethan D. Corey, Susan A. Pereira
and Timothy M. Fagan are the Assistant Secretaries.

MFS Floating Rate Income Fund - (Cayman Islands Registered Fund)
MFS Meridian Funds, SICAV

Martin E. Beaulieu, Maria F. Dwyer and Robin A. Stelmach are Directors, Tracy A.
Atkinson is  Treasurer,  James O. Yost and Ellen M.  Moynihan are the  Assistant
Treasurers, and Christopher R. Bohane is the Assistant Secretary.

MFS International Ltd. ("MIL Bermuda"), a limited liability company organized
under the laws of Bermuda and a subsidiary of MFS, whose principal business
address is Canon's Court, 22 Victoria Street, Hamilton HM 12 Bermuda, serves as
investment adviser to and distributor for MFS Floating Rate Income Fund and the
MFS Meridian Funds, SICAV ("SICAV Funds"). The SICAV Funds are organized in
Luxembourg and qualify as an undertaking for collective investments in
transferable securities (UCITS). The principal business address of the Funds is
47, Boulevard Royal, L-2449 Luxembourg. The SICAV Funds include Asia Pacific
Ex-Japan Fund, Continental European Equity Fund, Emerging Markets Debt Fund,
Emerging Markets Equity Fund, Euro Reserve Fund, European Bond Fund, European
Equity Fund, European Growth Fund, European High Yield Bond Fund, European
Smaller Companies Fund, European Value Fund, Global Balanced Fund, Global Equity
Fund, Global Growth Fund, Global Value Fund, Inflation-Adjusted Bond Fund, Japan
Equity Fund, Limited Maturity Fund, Research Bond Fund, Research International
Fund, Strategic Income Fund, Technology Fund, UK Equity Fund, US Dollar Money
Market Fund, US Emerging Growth Fund, US Equity Fund, US Government Bond Fund,
US High Yield Bond Fund, US Research Fund, US Strategic Growth Fund and US Value
Fund. The MFS Floating Rate Income Fund is organized as an exempt company under
the laws of the Cayman Islands. The principal business address for the MFS
Floating Rate Income Fund is P.O. Box 309, Grand Cayman, Cayman Islands, British
West Indies.

Mark C. Rogers is Director and President,  Paul T. Kirwan is the Treasurer, Mark
N. Polebaum is the  Secretary,  Mitchell C.  Freestone,  Ethan D. Corey,  Jeremy
Kream, Mark D. Kaplan,  Suzanne Michaud,  Susan Newton and Brian T. Hourihan are
Assistant Secretaries and Thomas B. Hastings is the Assistant Treasurer. Timothy
F. Tierney is the Tax Officer.


                                       82
<PAGE>


MFS International (U.K.) Ltd. ("MIL-UK"), a private limited company registered
with the Registrar of Companies for England and Wales whose current address is
Eversheds, Senator House, 85 Queen Victoria Street, London, England EC4V 4JL, is
involved primarily in marketing and investment research activities with respect
to private clients and the Cayman Islands Registered Fund and the MFS Meridian
Funds, SICAV.

Olivier Lebleu is Managing Director, Mitchell C. Freestone is a Director and
Assistant Secretary and Barnaby Wiener is a Director. Paul T. Kirwan is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer, Mark N. Polebaum is
the Secretary, Ethan D. Corey, Jeremy Kream, Mark D. Kaplan, Suzanne Michaud,
Susan Newton and Brian T. Hourihan are Assistant Secretaries. Timothy F. Tierney
is the SICAV Tax Officer.

MFS International S.C. LTDA ("MIL Brazil"), a private commercial limited
liability quota company organized under the laws of Brazil whose current address
is Al Campinas, 1070, 7 andar, Sala 15, Sao Paulo, Sao Paulo, Brazil, is
primarily involved in providing market development services to increment the use
of MFS products and services in Brazil as well as being a distributor of the MFS
Floating Rate Income Fund and MFS Meridian Funds, SICAV.

Robert J. Manning is the President and Advisory Board Member,  Paul T. Kirwan is
Treasurer and Thomas B. Hastings is Assistant Treasurer,  Mitchell C. Freestone,
Ethan D.  Corey,  Jeremy  Kream,  Suzanne  Michaud,  Susan  Newton  and Brian T.
Hourihan are Assistant Secretaries. Timothy F. Tierney is the Tax Officer.

MFS Institutional Advisors (Australia) Ltd. ("MFSI-Australia"), a private
limited company organized under the Corporations Law of New South Wales,
Australia whose current address is Level 27, Australia Square, 264 George
Street, Sydney, NSW2000, Australia, is involved primarily in investment
management and distribution of Australian superannuation unit trusts and acts as
an investment adviser to institutional accounts.

Graham E. Lenzner is the Director and Chairman of the Board, Loretta Lenzner,
Robert J. Manning and Sheldon Rivers are Directors, Paul T. Kirwan is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer, Mark N. Polebaum is
the Secretary and Mitchell C. Freestone, Ethan D. Corey, Jeremy Kream, Suzanne
Michaud, Susan Newton and Brian T. Hourihan are Assistant Secretaries. Timothy
F. Tierney is the Tax Officer.

MFS Fund Distributors, Inc. ("MFD"), a wholly owned subsidiary of MFS, serves as
distributor for the MFS Funds, MVI and MFSIT.

Robert J. Manning is the Director, Martin E. Beaulieu is a Director and Chairman
of the Board, James A. Jessee is President, Randolph J. Verzillo is the
Treasurer, Mark N. Polebaum is the Secretary, Mitchell C. Freestone and Brian T.
Hourihan are Assistant Secretaries, Thomas B. Hastings is the Assistant
Treasurer, Sharon A. Brovelli is Senior Vice President and Director of
Administration/Operations, Paul F. Fichera is Senior Vice President and Director
of Product Development, William H. Finnegan is Senior Vice President and
Director of Market Development, Michael D. Fitzgerald is Senior Vice President -
Bank Marketing Group, Joseph A. Kosciuszek is Senior Vice President - Support
Services MFSI/International, Larry I. Milder is Senior Vice President - FIAD
Sales, Thomas A. Jessee is Senior Vice President - Broker/Dealer Sales, Bill C.
Taylor is Senior Vice


                                       83
<PAGE>


President and Director of PPS, Susan G. Fowler is Senior
Vice President - Fulfillment/PPS and Brendan K. Nolan is Senior Vice President.

MFS Service Center, Inc. ("MFSC"), a wholly owned subsidiary of MFS, serves as
shareholder servicing agent to the MFS Funds, the MFS Closed-End Funds, MFSIT
and MVI.

Robert J. Manning is Director and Chairman of the Board. Maureen Leary-Jago is a
Director. Ms. Leary-Jago is also the President, Mark N. Polebaum is the
Secretary, Mitchell C. Freestone and Brian T. Hourihan are Assistant
Secretaries, Paul T. Kirwan is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer, and Robert W. Green is Senior Vice President - Dealer
Services, Gloria E. Schmid is Senior Vice President - Operations David G.
Rainville is Senior Vice President.

MFS Institutional Advisors, Inc. ("MFSI"), a wholly owned subsidiary of MFS,
provides investment advice to substantial private clients.

Robert J. Manning is Chairman and Chief Investment Officer, Martin E. Beaulieu
is a Director, Carol Geremiah is the President, [TBA] is the Secretary, Mitchell
C. Freestone and Brian T. Hourihan are Assistant Secretaries, Paul T. Kirwan is
the Treasurer, Thomas B. Hastings is the Assistant Treasurer.

MFS Retirement Services, Inc. ("RSI"), a wholly owned subsidiary of MFS, markets
MFS products to retirement plans and provides administrative and record keeping
services for retirement plans.

Robert J. Manning is the Director and Chairman of the Board, Martin E. Beaulieu
is the Director, Carol W. Geremia is the President, Paul T. Kirwan is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer, Mark N. Polebaum is
the Secretary, Mitchell C. Freestone and Brian T. Hourihan are Assistant
Secretaries Matthew D. Gannon is Senior Vice President - Retail Marketing,
Director of RSI Marketing, William F. Shaw is Senior Vice President - Marketing
and George C. Sutherland is Senior Vice President - Sales.

MFS Investment Management K.K. ("MIMKK"), a wholly owned subsidiary of MFS, is a
corporation incorporated in Japan. MIMKK, whose address is 16F Daido Seimei
Kasumigaseki Bldg., 1-4-2- Kasumigaseki, Chiyoda-ku, Tokyo Japan 100 0013, is
involved in investment management activities.

Joseph A. Kosciuszek and Carol W. Geremia are Directors, Takafumi Ishii is a
Director and Representative Director, Yasuyuki Hirata is Director -Corporate
Planning and Paul T. Kirwan is Statutory Auditor. Ethan D. Corey, Jeremy Kream,
Suzanne Michaud, Susan Newton and Brian T. Hourihan are Assistant Secretaries.
Timothy F. Tierney is the Tax Officer.

MFS Heritage Trust Company ("MFS Trust"), a New Hampshire-chartered
limited-purpose trust company whose current address is 650 Elm Street, Suite
404, Manchester, NH 03101, provides directed trustee services to retirement
plans.

Eric G. Burns is Director and President,  Paul F. Fichera,  Carol W. Geremia and
Joseph A. Kosciuszek are Directors.  Paul T. Kirwan is the Treasurer,  Thomas B.
Hastings is Assistant  Treasurer,  Brian T. Hourihan is Assistant Clerk and Mark
D. Kaplan is Clerk and Trust Officer.

MFS Japan Holdings, LLC, a private limited liability company organized under the
laws of Delaware whose address is 500 Boylston Street, Boston, MA 02116, is
primarily a holding company and is 50%


                                       84
<PAGE>


owned by  Massachusetts  Financial  Services  Company  and 50% owned by Sun Life
Financial (Japan), Inc.

Robert J. Manning and Donald A. Stewart are Managers, Mark N. Polebaum is the
Secretary, Paul T. Kirwan is Treasurer and Thomas B. Hastings is Assistant
Treasurer, Mitchell C. Freestone, Ethan D. Corey, Jeremy Kream, Suzanne Michaud,
Susan Newton and Brian T. Hourihan are Assistant Secretaries. Timothy F. Tierney
is the Tax Officer.

Sun  Life  of  Canada  (U.S.)  Financial  Services  Holdings,  Inc.,  a  company
incorporated  under the laws of Delaware  whose address is 500 Boylston  Street,
Boston,  Massachusetts  02116,  is the direct  parent  company of  Massachusetts
Financial Services Company.

Robert J.  Manning is the  Director  and  Chairman of the Board,  Eric G. Burns,
Donald A. Stewart and C. James  Prieur are  Directors,  Mark N.  Polebaum is the
Secretary,   Mitchell  C.   Freestone   and  Brian  T.  Hourihan  are  Assistant
Secretaries,  Paul T. Kirwan is the  Treasurer and Joseph Lynch is the Assistant
Treasurer.

MFS Investment Management (LUX) S.A., a joint stock company organized under the
laws of Luxembourg whose registered office is 49, Avenue J.F. Kennedy, L-1855,
Kirchberg, Luxembourg, is the management company of the MFS Investment Funds,
which has 3 portfolios: MFS Investment Funds-Global Equity Ex-Japan Fund, MFS
Investment Funds-Global Equity Fund and MFS Investment Funds-Global Equity
Eurozone Bias Fund.

Maria F. Dwyer, Martin E. Beaulieu and Robin A. Stelmach are Directors,  Paul T.
Kirwan is Treasurer, Thomas B. Hastings is Assistant Treasurer, Mark N. Polebaum
is the  Secretary  and  Mitchell C.  Freestone,  Ethan D. Corey,  Jeremy  Kream,
Suzanne Michaud,  Susan Newton and Brian T. Hourihan are Assistant  Secretaries.
Timothy F. Tierney is the Tax Officer.

MFS/Sun Life  Financial  Distributors,  Inc., a Delaware  broker dealer  jointly
owned by MFS and Sun Life of Canada (U.S.) Financial  Services  Holdings,  Inc.,
whose  address  is  131  Oliver  Street,  Boston,   Massachusetts  02110,  is  a
distributor of variable annuity products.

Martin E. Beaulieu and Robert C. Salipante are the  Directors,  Kevin J. Hart is
the  President,  Trevor V. Graham is Director & Divisional  Controller;  Jane F.
Jette is Financial/Operations  Principal and Treasurer,  George E. Maden is Vice
President and Chief  Compliance  Officer,  Ellen B. King is Secretary and Amy E.
Mihaich is Assistant Secretary.

In addition, the following persons, Directors or officers of MFS, have the
affiliations indicated:

Donald A. Stewart   Chief  Executive  Officer,  Sun Life  Assurance  Company  of
                    Canada,  Sun Life  Centre,  150 King Street  West,  Toronto,
                    Ontario,  Canada  (Mr.  Stewart  is also an  officer  and/or
                    Director of various subsidiaries and affiliates of Sun Life)

C. James Prieur     President  and a  Director,  Sun Life  Assurance  Company of
                    Canada,  Sun Life  Centre,  150 King Street  West,  Toronto,
                    Ontario,  Canada  (Mr.  Prieur  is  also an  officer  and/or
                    Director of various subsidiaries and affiliates of Sun Life)


                                       85
<PAGE>


William W. Stinson  Non-Executive  Chairman,  Sun  Life  Financial  and Sun Life
                    Assurance  Company  of  Canada,  Sun Life  Centre,  150 King
                    Street West, Toronto,  Ontario, Canada; Chairman,  Westshore
                    Terminals   Income  Fund,   Vancouver,   British   Columbia;
                    Director,  Grant Forest Products Inc.,  Ontario,  Canada and
                    Trustee, Fording Canadian Coal Trust, Calgary, Alberta

James C. Baillie    Counsel,   Torys,  Ontario,   Canada;   Chair,   Independent
                    Electricity Market Operator,  Ontario,  Canada; Chair, Corel
                    Corporation,  Ontario, Canada; Director, Sun Life Financial,
                    Ontario Canada; Director, FPI Ltd., Newfoundland, Canada


                                       86
<PAGE>


Item 32. Location of Accounts and Records:

         The accounts and records of the Trust are located, in whole or in part,
at the office of the Trust and the following locations:

                NAME                                 ADDRESS

     Massachusetts Financial                  500 Boylston Street
      Services Company                        Boston, Massachusetts 02116

     State Street Bank and                    State Street South, 5-West
      Trust Company                           North Quincy, Massachusetts 02171

     JP Morgan Chase Bank                     270 Park Avenue
                                              New York, NY  10017

     MFS Service Center                       500 Boylston Street
      (transfer agent)                        Boston, Massachusetts  02116

     Ropes & Gray                             One International Place
      (counsel)                               Boston, MA 02110

Item 33. Management Services:  Inapplicable.

Item 34. Undertakings:  Inapplicable.



                                       87
<PAGE>


                                   SIGNATURES



         Pursuant to the requirements of the Investment Company Act of 1940, the
Trust has duly caused this Amendment to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston and Commonwealth of Massachusetts on the 28th day of February, 2006.



                                        MFS INTERMEDIATE INCOME TRUST





                                        By: SUSAN S. NEWTON
                                            ------------------------------------
                                            Susan S. Newton
                                            Assistant Secretary


                                       88
<PAGE>


                                INDEX TO EXHIBITS


Exhibit No.                                      Description of Exhibit

   2(a)      Amended and Restated Declaration of Trust, dated December 16, 2004.

   2(b)(1)   Master  Amended and  Restated  By-Laws  dated  January 1, 2002,  as
             revised June 23, 2004.

   2(b)(2)   Appendix A, as revised  February 21, 2006, to the Master Amended
             and Restated By-Laws, dated January 1, 2002, as revised June
             23, 2004.

  2(g)(1)    Investment Advisory Agreement, dated January 1, 2002.

  2(g)(2)    Master Administrative Services Agreement, dated March 1,
             1997, as amended April 1, 1999, between Massachusetts
             Financial Services Company and the Trust.

  2(j)(3)    Exhibit A, as revised April 26, 2005, to the Master
             Custodian Agreement between Registrant and State Street
             Bank and Trust Company, and the Master Global Custody
             Contract between Registrant and Chase Manhattan Bank,
             each dated July 2, 2001.

 2(k)(2)     Amendment, dated February 22, 2005, to the Shareholder
             Servicing Agreements.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>2
<FILENAME>min2a.txt
<DESCRIPTION>AMENDED AND RESTATED DECLARATION OF TRUST
<TEXT>
                                                             EXHIBIT NO. 99.2(a)













                              AMENDED AND RESTATED
                              DECLARATION OF TRUST

                                       OF

                          MFS INTERMEDIATE INCOME TRUST



                          Dated as of December 16, 2004


<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>        <C>               <C>                                                                 <C>
                                                                                                 PAGE

ARTICLE I--Name and Definitions                                                                     1
           --------------------

         Section 1.1         Name                                                                   1
         Section 1.2         Definitions                                                            1

ARTICLE II--Trustees                                                                                3

         Section 2.1         Number of Trustees                                                     3
         Section 2.2         Term of Office of Trustees                                             3
         Section 2.3         Resignation and Appointment of Trustees                                5
         Section 2.4         Vacancies                                                              5
         Section 2.5         Delegation of Power to Other Trustees                                  5

ARTICLE III--Powers of Trustees                                                                     6
             ------------------

         Section 3.1         General                                                                6
         Section 3.2         Investments                                                            6
         Section 3.3         Legal Title                                                            8
         Section 3.4         Issuance and Repurchase of Securities                                  8
         Section 3.5         Borrowing Money; Lending Trust Property                                8
         Section 3.6         Delegation                                                             8
         Section 3.7         Collection and Payment                                                 8
         Section 3.8         Expenses                                                               9
         Section 3.9         Manner of Acting; By-Laws                                              9
         Section 3.10        Miscellaneous Powers                                                   9

ARTICLE IV--Investment Adviser, Distributor, Custodian and
                    Transfer Agent                                                                 10
                    --------------

         Section 4.1         Investment Adviser                                                    10
         Section 4.2         Distributor                                                           11
         Section 4.3         Custodian                                                             11
         Section 4.4         Transfer Agent                                                        11
         Section 4.5         Parties to Contract                                                   11


ARTICLE V--Limitations of Liability of Shareholders, Trustees and
           ------------------------------------------------------
</TABLE>
                                        -i-
<PAGE>
<TABLE>
<CAPTION>
         <S>       <C>       <C>                                                                   <C>

                   Others                                                                          12

         Section 5.1         No Personal Liability of Shareholders                                 12
         Section 5.2         Limitation of Liability of Trustees and Others                        12
         Section 5.3         Mandatory Indemnification                                             13
         Section 5.4         No Bond Required                                                      15
         Section 5.5         No Duty of Investigation; Notice in Trust
                             Instruments                                                           15
         Section 5.6         Good Faith Action; Reliance on Experts                                16
         Section 5.7         Derivative Actions                                                    16

ARTICLE VI--Shares of Beneficial Interest                                                          17
            -----------------------------

         Section 6.1         Beneficial Interest                                                   17
         Section 6.2         Rights of Shareholders                                                17
         Section 6.3         Trust Only                                                            18
         Section 6.4         Issuance of Shares                                                    18
         Section 6.5         Register of Shares                                                    18
         Section 6.6         Transfer of Shares                                                    19
         Section 6.7         Notices                                                               19
         Section 6.8         Voting Powers                                                         19

ARTICLE VII--Determination of Net Asset Value, Net Income and
             ------------------------------------------------
                      Distributions                                                                20
                      -------------

ARTICLE VIII--Duration; Termination of Trust; Amendment;
                    Mergers, etc.                                                                  21
                    -------------

         Section 8.1         Duration                                                              21
         Section 8.2         Termination of Trust                                                  21
         Section 8.3         Amendment Procedure                                                   21
         Section 8.4         Merger, Consolidation and Sale of Assets                              23
         Section 8.5         Incorporation, Reorganization                                         23
         Section 8.6         Conversion                                                            24
         Section 8.7         Certain Transactions                                                  24

ARTICLE IX--Miscellaneous  26

         Section 9.1         Filing                                                                26
         Section 9.2         Governing Law                                                         26
         Section 9.3         Principal Office                                                      26
         Section 9.4         Counterparts                                                          27
         Section 9.5         Reliance by Third Parties                                             27
         Section 9.6         Provisions in Conflict with Law or Regulations                        27

Signature Page                                                                                     28
</TABLE>
                                        -ii-

<PAGE>



                              AMENDED AND RESTATED
                              DECLARATION OF TRUST

                                       OF

                          MFS INTERMEDIATE INCOME TRUST


                          Dated as of December 16, 2004


         WHEREAS, MFS Intermediate Income Trust was established pursuant to a
Declaration of Trust dated December 30, 1987, as amended (the "Original
Declaration"), for the investment and reinvestment of funds contributed thereto;

         WHEREAS, the Trustees desire that the beneficial interest in the Trust
assets continue to be divided into transferable Shares of Beneficial Interest
(without par value), as hereinafter provided;

         WHEREAS, the Trustees wish to amend and restate the Original
Declaration in its entirety, and hereby certify that this Amended and Restated
Declaration of Trust has been amended and restated in accordance with the
provisions of the Original Declaration;

         NOW THEREFORE, the Trustees hereby confirm that all money and property
contributed to the Trust hereunder shall be held and managed in trust for the
benefit of holders, from time to time, of the Shares of Beneficial Interest
(without par value) issued hereunder and subject to the provisions hereof, and
that the Original Declaration, including all appendices, is amended and restated
in its entirety as follows.

                                    ARTICLE I

                              NAME AND DEFINITIONS

          Section 1.1.  Name. The name of the Trust is MFS  Intermediate  Income
Trust.

          Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:

         (a) "Advisory Trustee" means any person, which may include a former
Trustee, appointed by resolution of the Trustees to serve the Board in an
advisory capacity, for such period and in accordance with such terms and
conditions as are determined by the Trustees. An Advisory Trustee shall serve

                                       1
<PAGE>

at the  pleasure of the  Trustees and may be removed by the Trustees at any time
and for any  reason,  with or  without  cause,  and may resign at any time by an
instrument  in writing  signed by that  Advisory  Trustee and  delivered  to the
Trust.  Advisory  Trustees,  in their  capacity  as such,  are not  Trustees  or
officers of the Trust for any  purpose and shall have no legal,  voting or other
powers or obligations of Trustees or officers  hereunder,  and shall not perform
the functions of the Trustees or officers in any manner.

         (b) "By-Laws" means the By-laws referred to in Section 3.9 hereof,  as
from time to time amended.

         (c) "Commission" has the meaning given that term in the 1940 Act.

         (d)  "Declaration"  means this  Amended and  Restated  Declaration  of
Trust, as amended from time to time. Reference in this Declaration of Trust
to  "Declaration,"  "hereof,"  "herein" and "hereunder"  shall be deemed to
refer to this Declaration  rather than the article or section in which such
words appear.

         (e)  "Distributor"  means a party  furnishing  services  to the  Trust
pursuant to any contract described in Section 4.2 hereof.

         (f) "Interested Person" has the meaning given that term in the 1940
Act.

         (g)  "Investment  Adviser"  means a party  furnishing  services to the
Trust pursuant to any contract described in Section 4.1 hereof.

         (h) "Majority Shareholder Vote" has the same meaning as the phrase
"vote of a majority of the outstanding voting securities" as defined in the 1940
Act.

         (i) "1940 Act" means the Investment Company Act of 1940 and the Rules
and Regulations thereunder, as amended from time to time, and as such Act or the
Rules and Regulations thereunder may apply to the Trust pursuant to any
exemptive order or similar relief or interpretation issued by the Commission
under such Act.

         (j) "Person" means and includes individuals, corporations, limited
liability companies, partnerships, trusts, associations, joint ventures and
other entities, whether or not legal entities, and governments and agencies and
political subdivisions thereof, whether domestic or foreign.

         (k) "Shareholder" means a record owner of outstanding Shares.

                                       2
<PAGE>

         (l) "Shares" means the Shares of Beneficial Interest into which the
beneficial interest in the Trust shall be divided from time to time. The term
"Shares" includes fractions of Shares as well as whole Shares.

         (m) "Transfer Agent" means a party furnishing services to the Trust
pursuant to any transfer agency contract described in Section 4.4 hereof.

         (n) "Trust" means the trust hereunder.

         (o) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.

         (p) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be duly elected or appointed,
qualified and serving as Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to such person or
persons in their capacity as trustees hereunder. For the avoidance of any doubt,
an "Advisory Trustee" as defined in Section 1.2(a) is not a Trustee for any
purpose hereunder.


                                   ARTICLE II

                                    TRUSTEES

         Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a majority of the Trustees,
provided, however, that the number of Trustees shall in no event be less than
three (3) nor more than fifteen (15). No reduction in the number of Trustees
shall have the effect of removing any Trustee from office prior to the
expiration of his or her term unless the Trustee is specifically removed
pursuant to Section 2.2 hereof at the time of the decrease.

         Section 2.2. Term of Office of Trustees. The Board of Trustees shall be
divided into three classes. Within the limits above specified, the number of
Trustees in each class shall be determined by resolution of the Board of
Trustees. The term of office of the first class shall expire on the date of the
first annual meeting of Shareholders or special meeting in lieu thereof
following January 1, 2002. The term of office of the second class shall expire
on the date of the second annual meeting of Shareholders or special meeting in
lieu thereof. The term of office of the third class shall expire on the date of
the third annual meeting of Shareholders or special meeting in lieu thereof.
Upon expiration of the term of office of each class as set forth above, the
number of Trustees in such class, as determined by the Board of Trustees, shall
be elected for a term expiring on the date of the third annual meeting of
Shareholders or special meeting in lieu thereof following such expiration to
succeed the Trustees whose terms of office expire. The Trustees shall

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be elected at an annual meeting of the  Shareholders  or special meeting in lieu
thereof called for that purpose, except as provided in Section 2.3 hereof.

         Each Trustee shall hold office until the earlier of his or her death or
the election and qualification of his or her successor; except that:

         (a) any Trustee may resign his or her trust (without need for prior or
subsequent accounting) by an instrument in writing signed by that Trustee and
delivered to the Trust, which shall take effect upon such delivery or upon such
later date as is specified therein;

         (b) any Trustee may be removed at any time, with or without cause, by
written instrument signed by at least three-quarters of the Trustees, specifying
the date when such removal shall become effective;

         (c) any Trustee who has attained a mandatory retirement age established
pursuant to any written policy adopted from time to time by at least two-thirds
of the Trustees shall, automatically and without action of such Trustee or the
remaining Trustees, be deemed to have retired in accordance with the terms of
such policy, effective as of the date determined in accordance with such policy;
and

         (d) a Trustee may be removed at any meeting of Shareholders by a vote
of Shares representing two-thirds of the outstanding Shares of the Trust
entitled to vote for the election of such Trustee.

Upon the resignation, retirement or removal of a Trustee, or his or her
otherwise ceasing to be a Trustee, that individual shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in the
name of the resigning, retiring or removed Trustee. Upon the incapacity or death
of any Trustee, that Trustee's legal representative shall execute and deliver on
his or her behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.

         Except to the extent expressly provided in a written agreement to which
the Trust is a party or in a written policy adopted by the Trustees, no
resigning or removed Trustee shall have any right to any compensation for any
period following his or her resignation or removal, or any right to damages on
account of such removal.

         Section 2.3. Resignation and Appointment of Trustees. In case of the
declination, death, resignation, retirement or removal of any of the Trustees,

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or in case a vacancy shall, by reason of an increase in number of Trustees, or
for any other reason, exist, a majority of the remaining Trustees may fill such
vacancy by appointing such other individual as they in their discretion shall
see fit. Any such appointment shall not become effective, however, until the
person appointed shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of the Declaration. An appointment of a Trustee
may be made by the Trustees then in office in anticipation of a vacancy to occur
by reason of retirement, resignation, removal or increase in number of Trustees
effective at a later date, provided that said appointment shall become effective
only at or after the effective date of said retirement, resignation, removal or
increase in number of Trustees. The power of appointment is subject to all
applicable provisions of the 1940 Act.

         Section 2.4. Vacancies. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any of them, shall not
operate to annul the Trust or to revoke any existing agency created pursuant to
the terms of the Declaration. Whenever a vacancy in the number of Trustees shall
occur, until such vacancy is filled as provided in Section 2.3, or while any
Trustee is incapacitated, the other Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by the Declaration, and only such other
Trustees shall be counted for the purposes of the existence of a quorum or the
taking of any action to be taken by the Trustees. A written instrument
certifying the existence of such vacancy or incapacity signed by a majority of
the Trustees shall be conclusive evidence of the existence thereof.

         Section 2.5. Delegation of Power to Other Trustees. Subject to
requirements imposed by the 1940 Act and other applicable law, any Trustee may,
by power of attorney, delegate his power for a period not exceeding six months
at any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two Trustees personally exercise the powers granted to the Trustees
under the Declaration except as otherwise expressly provided herein.

                                   ARTICLE III

                               POWERS OF TRUSTEES

         Section 3.1. General. Subject to the provisions of the Declaration, the
Trustees shall have exclusive and absolute control over the Trust Property and
over the business of the Trust to the same extent as if the Trustees were the
sole owners of the Trust Property and business in their own right, but with such
powers of delegation as may be permitted by the Declaration. The Trustees shall
have power to conduct the business of the Trust and carry on its operations in
any and all of its branches and maintain offices both within and without The
Commonwealth of Massachusetts, in any and all states of the

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United  States of  America,  in the  District  of  Columbia,  and in any and all
commonwealths,  territories,  dependencies,  colonies, possessions,  agencies or
instrumentalities  of the United  States of America and of foreign  governments,
and to do all such other things and execute all such instruments as the Trustees
deem  necessary,  proper or desirable  in order to promote the  interests of the
Trust  although  such  things  are  not  herein  specifically   mentioned.   Any
determination  as to what is in the  interests of the Trust made by the Trustees
in  good  faith  shall  be  conclusive.  In  construing  the  provisions  of the
Declaration,  the  presumption  shall  be in  favor  of a grant  of power to the
Trustees.

         The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power or any other power of the Trustees hereunder. Such
powers of the Trustees may be exercised without order of or resort to any court.

         Section 3.2.  Investments.  (a) The Trustees shall have the power:

         (i) to conduct, operate and carry on the business of an investment
company;

         (ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of securities of every nature and kind, U.S. and
foreign currencies, any form of gold or other precious metal, commodity
contracts, any form of option contract, contracts for the future acquisition or
delivery of fixed income or other securities, derivative instruments of every
kind, "when-issued" or standby contracts, and all types of obligations or
financial instruments, including, without limitation, all types of bonds,
debentures, stocks, negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or indebtedness, commercial
paper, repurchase agreements, bankers' acceptances, and other securities of any
kind, issued, created, guaranteed or sponsored by any and all Persons,
including, without limitation,

         (A) states, territories and possessions of the United States and the
District of Columbia and any political subdivision, agency or instrumentality of
any such Person,

         (B) the U.S. Government, any foreign government, or any political
subdivision or any agency or instrumentality of the U.S. Government or any
foreign government,

         (C) any international instrumentality,

         (D) any bank or savings institution, or

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<PAGE>

         (E) any corporation or organization organized under the laws of the
United States or of any state, territory or possession thereof, or under any
foreign law;

to retain Trust assets in cash and from time to time to change the investments
in which the assets of the Trust are invested; and to exercise any and all
rights, powers and privileges of ownership or interest in respect of any and all
such investments of every kind and description, including, without limitation,
the right to consent and otherwise act with respect thereto, with power to
designate one or more Persons to exercise any of said rights, powers and
privileges in respect of any of said investments; and

         (iii) to carry on any other business in connection with or incidental
to any of the foregoing powers, to do everything necessary, proper or desirable
for the accomplishment of any purpose or the attainment of any object or the
furtherance of any power hereinbefore set forth, and to do every other act or
thing incidental or appurtenant to or connected with the aforesaid purposes,
objects or powers.

         (b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust, nor shall the
Trustees be limited by any law limiting the investments which may be made by
fiduciaries.

         (c) Notwithstanding any other provision of the Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by Shareholders to either invest all or a portion of the
Trust Property, or sell all or a portion of such Trust Property and invest the
proceeds of such sales, in one or more other investment companies to the extent
not prohibited by the 1940 Act.

         Section 3.3. Legal Title. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person or nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each person who may hereafter become a Trustee. Upon the
resignation, retirement, removal or death of a Trustee, such Trustee shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.

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<PAGE>

         Section 3.4. Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII and VIII hereof, to apply to
any such repurchase, redemption, retirement, cancellation or acquisition of
Shares any funds of the Trust or other Trust Property, whether capital or
surplus or otherwise.

         Section 3.5. Borrowing Money; Lending Trust Property. The Trustees
shall have power to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the Trust
Property, to endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other Person and to lend Trust Property.

         Section 3.6. Delegation. The Trustees shall have power to delegate from
time to time to such of their number or to officers, employees, any Investment
Adviser, Distributor, custodian, agent or independent contractor of the Trust
the doing of such things and the execution of such instruments either in the
name of the Trust or the names of the Trustees or otherwise as the Trustees may
deem appropriate or expedient.

         Section 3.7. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.

         Section 3.8. Expenses. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees, Trustees and
Advisory Trustees.

         Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein, in the 1940 Act or in the By-Laws, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees at which a quorum is present, including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or by
written consents of two-thirds of the Trustees. The Trustees may adopt By-Laws
not inconsistent with the Declaration to provide for the conduct of the business
of the Trust and may amend or repeal such By-Laws to the extent permitted
therein at any time.

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<PAGE>

          Section 3.10.  Miscellaneous  Powers.  Without limiting the foregoing,
the Trustees shall have the power to:

         (a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust;

         (b) enter into joint ventures, partnerships and any other combinations
or associations;

         (c) elect and remove such officers and appoint and terminate such
agents or employees as they consider appropriate, in each case with or without
cause, and appoint and terminate any one or more committees which may exercise
some or all of the power and authority of the Trustees as the Trustees may
determine;

         (d) purchase, and pay for out of Trust Property, such insurance as they
may deem necessary or appropriate for the conduct of the business of the Trust,
including, without limitation, insurance policies insuring the assets of the
Trust and payment of distributions and principal on its portfolio investments,
and insurance policies insuring Shareholders, any administrator, Trustees,
Advisory Trustees, officers, employees, agents, any Investment Adviser, any
Distributor, selected dealers or independent contractors of the Trust against
all claims arising by reason of holding any such position or by reason of any
action taken or omitted by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability;

         (e) establish pension, profit-sharing, Share purchase, deferred
compensation, and other retirement, incentive and benefit plans for any
Trustees, officers, employees or agents of the Trust;

         (f) to the extent permitted by law, indemnify any person with whom the
Trust has dealings, including any Investment Adviser, administrator, custodian,
Distributor, Transfer Agent, shareholder servicing agent and any dealer, to such
extent as the Trustees shall determine;

         (g) guarantee indebtedness or contractual obligations of others;

         (h) determine and change the fiscal year of the Trust and the method by
which its accounts shall be kept; and

         (i) adopt a seal for the Trust, provided that the absence of such seal
shall not impair the validity of any instrument executed on behalf of the Trust.

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<PAGE>

                                   ARTICLE IV

          INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT

         Section 4.1. Investment Adviser. Subject to applicable requirements of
the 1940 Act, the Trustees may in their discretion from time to time enter into
one or more investment advisory or management contracts whereby the other party
to each such contract shall undertake to furnish the Trust such management,
investment advisory, statistical and research facilities and services,
promotional activities, and such other facilities and services, if any, as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine. Notwithstanding
any provision of the Declaration, the Trustees may delegate to the Investment
Adviser authority (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales, loans or
exchanges of assets of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of the Investment Adviser (and all without further
action by the Trustees). Any of such purchases, sales, loans or exchanges shall
be deemed to have been authorized by all the Trustees. Such services may be
provided by one or more Persons.

         Section 4.2. Distributor. Subject to applicable requirements of the
1940 Act, the Trustees may in their discretion from time to time enter into one
or more exclusive or non-exclusive distribution contracts providing for the sale
of Shares, whereby the Trust may either agree to sell the Shares to the other
party to any such contract or appoint any such other party its sales agent for
such Shares. In either case, any such contract shall be on such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of the Declaration
or the By-Laws; and such contract may also provide for the repurchase or sale of
Shares by such other party as principal or as agent of the Trust and may provide
that such other party may enter into selected dealer agreements or agency
agreements with securities dealers or other Persons to further the purpose of
the distribution or repurchase of the Shares. Such services may be provided by
one or more Persons.

         Section 4.3. Custodian. The Trustees may in their discretion from time
to time enter into one or more contracts whereby the other party to each such
contract shall undertake to furnish such custody services to the Trust as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of the 1940 Act,
the Declaration or the By-Laws. The Trustees may authorize any custodian to
employ one or more sub-custodians from time to time to perform such of the
services of the custodian as the Trustees shall from time to time consider

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<PAGE>

desirable. Services described in this Section may be provided by one or more
Persons.

         Section 4.4. Transfer Agent. The Trustees may in their discretion from
time to time enter into one or more transfer agency or sub-transfer agency and
shareholder servicing contracts whereby the other party to each such contract
shall undertake to furnish such transfer agency and/or shareholder services to
the Trust as the Trustees shall from time to time consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine, provided that such terms and conditions are not inconsistent with the
provisions of the Declaration or the By-Laws. Such services may be provided by
one or more Persons.

         Section 4.5. Parties to Contract. Any contract of the character
described in any Section of this Article IV may be entered into with any Person,
although one or more of the Trustees or officers of the Trust may be an officer,
partner, director, trustee, shareholder, or member of such other party to the
contract, and no such contract shall be invalidated or rendered voidable by
reason of the existence of any such relationship; nor shall any Person holding
such relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of any such contract or accountable
for any profit realized directly or indirectly therefrom, provided that the
contract when entered into was not inconsistent with the provisions of this
Article IV or the By-Laws. The same Person may be the other party to contracts
entered into pursuant to Sections 4.1, 4.2, 4.3 and 4.4 above, and any
individual may be financially interested or otherwise affiliated with Persons
who are parties to any or all of the contracts mentioned in this Section 4.5.

                                    ARTICLE V

                    LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
                               TRUSTEES AND OTHERS

         Section 5.1. No Personal Liability of Shareholders. No Shareholder or
former Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs of
the Trust solely by reason of being or having been a Shareholder. The Trust
shall indemnify and hold each Shareholder and former Shareholder harmless from
and against all claims and liabilities to which such Shareholder may become
subject solely by reason of his or her being or having been a Shareholder (other
than taxes payable by virtue of owning Shares), and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. The rights accruing to a
Shareholder or former Shareholder under this Section 5.1 shall not exclude any
other right to which such Shareholder may be lawfully

                                       11
<PAGE>

entitled, nor shall anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder or former  Shareholder  in any  appropriate
situation even though not specifically  provided herein.  The Trust shall,  upon
request by a Shareholder or former Shareholder,  assume the defense of any claim
made against such Shareholder for any act or obligation of the Trust and satisfy
any judgment thereon from the assets of the Trust.

         Section 5.2. Limitation of Liability of Trustees and Others. (a) No
Trustee, Advisory Trustee, officer or employee or agent of the Trust shall be
subject to any liability whatsoever to any Person in connection with Trust
Property or the affairs of the Trust, and no Trustee or Advisory Trustee shall
be responsible or liable in any event for any neglect or wrongdoing of any
officer, employee or agent of the Trust or for the act or omission of any other
Trustee or Advisory Trustee. For the sake of clarification and without limiting
the foregoing, the appointment, designation or identification of a Trustee as
the Chair of the Trustees, the lead or assistant lead independent Trustee, a
member or Chair of a committee of the Trustees, an expert on any topic or in any
area (including an audit committee financial expert) or any other special
appointment, designation or identification given to a Trustee, shall not (a)
impose on that person any duty, obligation or liability that is greater than the
duties, obligations and liabilities imposed on that person as a Trustee in the
absence of the appointment, designation or identification or (b) affect in any
way such Trustee's rights or entitlement to indemnification, and no Trustee who
has special skills or expertise, or is appointed, designated or identified as
aforesaid, shall (x) be held to a higher standard of care by virtue thereof or
(y) be limited with respect to any indemnification to which such Trustee would
otherwise be entitled. Notwithstanding anything to the contrary in this Section
5.2(a) or otherwise, nothing in the Declaration shall protect any Trustee,
Advisory Trustee, officer, employee or agent of the Trust against any liability
to the Trust or its Shareholders to which he, she or it would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his, her or its
office or position with or on behalf of the Trust.

         (b) All persons extending credit to, contracting with or having claim
against the Trust shall look solely to the assets of the Trust for payment under
such credit, contract or claim; and neither any Trustee or Advisory Trustee, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.

         Section 5.3. Mandatory Indemnification.  (a) Subject to the exceptions
and limitations contained in paragraph (b) below:

         (i) every person who is or has been a Trustee, Advisory Trustee or
officer of the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust against all liability and against all expenses

                                       12
<PAGE>

reasonably incurred or paid by him or her in connection with any claim, action,
suit or proceeding in which that individual becomes involved as a party or
otherwise by virtue of being or having been a Trustee, Advisory Trustee or
officer and against amounts paid or incurred by that individual in the
settlement thereof;

         (ii) the words "claim," "action," "suit" or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, administrative or
other, including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement or compromise, fines, penalties and other
liabilities.

         (b) No indemnification shall be provided hereunder to a Covered Person:

         (i) against any liability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding was
brought that the Covered Person engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of that
individual's office;

         (ii) with respect to any matter as to which the Covered Person shall
have been finally adjudicated not to have acted in good faith in the reasonable
belief that that individual's action was in the best interest of the Trust; or

         (iii) in the event of a settlement involving a payment by a Trustee,
Advisory Trustee or officer or other disposition not involving a final
adjudication as provided in paragraph (b)(i) or (b)(ii) above resulting in a
payment by a Covered Person, unless there has been either a determination that
such Covered Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of that
individual's office by the court or other body approving the settlement or other
disposition or by a reasonable determination, based upon a review of readily
available facts (as opposed to a full trial-type inquiry) that that individual
did not engage in such conduct:

                  (A) by vote of a majority of the Disinterested Trustees (as
defined below) acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter); or

                  (B) by written opinion of (i) the then-current legal counsel
to the Trustees who are not Interested Persons of the Trust or (ii) other legal
counsel chosen by a majority of the Disinterested Trustees (or if there are no
Disinterested Trustees with respect to the matter in question, by a majority of

                                       13
<PAGE>

the Trustees who are not Interested Persons of the Trust) and determined by them
in their reasonable judgment to be independent.

         (c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such person. Nothing contained herein shall limit the Trust from entering into
other insurance arrangements or affect any rights to indemnification to which
Trust personnel, including Covered Persons, may be entitled by contract or
otherwise under law.

         (d) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the Covered Person to repay
such amount if it is ultimately determined that the Covered Person is not
entitled to indemnification under this Section 5.3, provided that either:

         (i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or

         (ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or legal counsel meeting the requirement in Section 5.3(b)(iii)(B)
above in a written opinion, shall determine, based upon a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the Covered Person ultimately will be found entitled to
indemnification.

         As used in this Section 5.3 a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.

         (e) With respect to any such determination or opinion referred to in
clause (b)(iii) above or clause (d)(ii) above, a rebuttable presumption shall be
afforded that the Covered Person has not engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office in accordance with pronouncements of the
Commission.

                                       14
<PAGE>

         Section 5.4. No Bond Required. No Trustee, Advisory Trustee or officer
shall be obligated to give any bond or other security for the performance of any
of his or her duties hereunder.

         Section 5.5. No Duty of Investigation; Notice in Trust Instruments. No
purchaser, lender, shareholder servicing agent, Transfer Agent or other Person
dealing with the Trustees or any officer, employee or agent of the Trust shall
be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent or
be liable for the application of money or property paid, loaned, or delivered to
or on the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking, and every other act or thing whatsoever executed in
connection with the Trust shall be conclusively presumed to have been executed
or done by the executors thereof only in their capacity as Trustees under the
Declaration or in their capacity as officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees or officers
shall recite that the same is executed or made by them not individually, but as
or on behalf of Trustees under the Declaration, and that the obligations of any
such instrument are not binding upon any of the Trustees, officers or
Shareholders individually, but bind only the Trust estate, and may contain any
further recital deemed appropriate, but the omission of such recital shall not
operate to bind any of the Trustees, officers or Shareholders individually. The
Trustees may maintain insurance for the protection of the Trust Property,
Shareholders, Trustees, Advisory Trustees, officers, employees and agents in
such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment shall
deem advisable.

         Section 5.6. Good Faith Action; Reliance on Experts. The exercise by
the Trustees or the officers of the Trust of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances then
prevailing shall be binding upon everyone interested. The Trustees or the
officers of the Trust shall not be liable for errors of judgment or mistakes of
fact or law. Each Trustee and officer or employee of the Trust shall, in the
performance of his or her duties, be under no liability and fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon advice of counsel, or upon reports made to the Trust by any of its
officers or employees or by the Investment Adviser, the Distributor, Transfer
Agent, custodian, any shareholder servicing agent, selected dealers,
accountants, appraisers or other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.

                                       15
<PAGE>

         Section 5.7. Derivative Actions. No Shareholder shall have the right to
bring or maintain any court action, proceeding or claim on behalf of the Trust
without first making demand on the Trustees requesting the Trustees to bring or
maintain such action, proceeding or claim. Such demand shall be excused only
when the plaintiff makes a specific showing that irreparable injury to the Trust
would otherwise result, or if a majority of the Board of Trustees, or a majority
of any committee established to consider the merits of such action, has a
material personal financial interest in the action at issue. A Trustee shall not
be deemed to have a personal financial interest in an action or otherwise be
disqualified from ruling on a Shareholder demand by virtue of the fact that such
Trustee receives remuneration from his or her service on the Board of Trustees
of the Trust or on the boards of one or more investment companies with the same
or an affiliated investment adviser or underwriter, or the amount of such
remuneration.

         Such demand shall be mailed to the Secretary or Clerk of the Trust at
the Trust's principal office and shall set forth in reasonable detail the nature
of the proposed court action, proceeding or claim and the essential facts relied
upon by the Shareholder to support the allegations made in the demand. The
Trustees shall consider such demand within 45 days of its receipt by the Trust.
In their sole discretion, the Trustees may submit the matter to a vote of
Shareholders of the Trust, as appropriate. Any decision by the Trustees to
bring, maintain or settle (or not to bring, maintain or settle) such court
action, proceeding or claim, or to submit the matter to a vote of Shareholders,
shall be made by the Trustees in their business judgment and shall be binding
upon the Shareholders. Any decision by the Trustees to bring or maintain a court
action, proceeding or suit on behalf of the Trust shall be subject to the right
of the Shareholders under Section 6.8 of the Declaration to vote on whether or
not such court action, proceeding or suit should or should not be brought or
maintained.

                                   ARTICLE VI

                          SHARES OF BENEFICIAL INTEREST

         Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder may be divided into transferable Shares of Beneficial Interest
(without par value). The number of Shares authorized hereunder is unlimited. All
Shares issued hereunder including, without limitation, Shares issued in
connection with a dividend in Shares or a split of Shares, shall be fully paid
and non-assessable.

         Section 6.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest

                                       16
<PAGE>

conferred  by  their  Shares,  and  they  shall  have no  right  to call for any
partition or division of any property, profits, rights or interests of the Trust
nor can they be  called  upon to  assume  any  losses  of the Trust or suffer an
assessment of any kind by virtue of their ownership of Shares.  The Shares shall
be  personal  property  giving  only the  rights  specifically  set forth in the
Declaration. The Shares shall not entitle the holder to preference,  preemptive,
appraisal,  conversion  or  exchange  rights.  By  becoming a  Shareholder  each
Shareholder  shall be held  expressly to have assented to and agreed to be bound
by the provisions of the Declaration.

         Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.

         Section 6.4. Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times, and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with, the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares. The Trustees may from time to time divide or combine the
Shares into a greater or lesser number without thereby changing their
proportionate beneficial interests in Trust Property. Contributions to the Trust
may be accepted for whole Shares and/or 1/1,000ths of a Share or integral
multiples thereof.

         Section 6.5. Register of Shares. A register or registers shall be kept
at the principal office of the Trust or at an office of the Transfer Agent which
shall contain the names and addresses (which may be addresses for electronic
delivery) of the Shareholders and the number of Shares held by them respectively
and a record of all transfers thereof. Such register shall be conclusive as to
who are the holders of the Shares and who shall be entitled to receive dividends
or distributions or otherwise to exercise or enjoy the rights of Shareholders.
No Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to that Shareholder as provided herein or
in the By-Laws, until the Shareholder has given his or her address to the
Transfer Agent or such other officer or agent of the Trustees as shall keep the
said register for entry thereon. The Trustees, in their discretion, may
authorize the issuance of Share certificates and promulgate appropriate rules
and regulations as to their use.

                                       17
<PAGE>

         Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by the record holder's
agent thereunto authorized in writing, upon delivery to the Trustees or, if
there is a Transfer Agent with respect to such Shares, the Transfer Agent of a
duly executed instrument of transfer together with any certificate or
certificates (if issued) for such Shares and such evidence of the genuineness of
each such execution and authorization and of other matters as may reasonably be
required. Upon such delivery the transfer shall be recorded on the register of
the Trust. Until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer, employee or agent
of the Trust shall be affected by any notice of the proposed transfer.

         Any Person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent; but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.

         Section 6.7. Notices. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
(i) if mailed, postage prepaid, addressed to any Shareholder of record at the
Shareholder's last known address as recorded on the register of the Trust, (ii)
if sent by electronic transmission to the Shareholder of record at the
Shareholder's last known address for electronic delivery as recorded on the
register of the Trust, (iii) if mailed or sent by electronic delivery to one or
more members of the Shareholder's household in accordance with applicable law or
regulation, or (iv) if otherwise sent in accordance with applicable law or
regulation.

         Section 6.8. Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees when that issue is submitted to
Shareholders, and for the removal of Trustees as provided in Section 2.2 hereof,
(ii) with respect to any investment advisory or management contract on which a
shareholder vote is required by the 1940 Act, (iii) with respect to termination
of the Trust to the extent and as provided in Section 8.2 hereof, (iv) with
respect to any amendment of the Declaration to the extent and as provided in
Section 8.3 hereof, (v) with respect to any merger, consolidation, or sale of
assets to the extent and as provided in Sections 8.4 and 8.7 hereof, (vi) with
respect to any conversion of the Trust to an "open-end company" to the extent
and as provided in Section 8.6 hereof, (vii) to the same extent as

                                       18
<PAGE>

the stockholders of a Massachusetts  business corporation as to whether or not a
court action,  proceeding or claim should or should not be brought or maintained
derivatively  or as a class  action on behalf of the Trust or the  Shareholders,
and (viii) with respect to such additional  matters relating to the Trust as may
be required by the  Declaration,  the By-Laws,  or any registration of the Trust
with the  Commission  (or any successor  agency) or any other  regulator  having
jurisdiction  over the Trust,  or as the  Trustees  may  consider  necessary  or
desirable.

         A Shareholder shall be entitled to one vote for each Share owned by
such Shareholder on each matter on which such Shareholder is entitled to vote
and each fractional Share shall be entitled to a proportionate fractional vote.
Shares held in the treasury of the Trust shall not be voted.

         Except when a larger vote is required by applicable law or by any
provision of the Declaration or the By-Laws, if any, Shares representing a
majority of the Shares voted in person or by proxy shall decide any questions
and a plurality shall elect a Trustee, provided that abstentions and broker
non-votes shall not be counted as votes cast but shall be counted as being
present for purposes of determining the existence of a quorum.

         There shall be no cumulative voting in the election of Trustees. Until
Shares are issued and during any period when no Shares are outstanding, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, the Declaration or the By-Laws to be taken by Shareholders. The
By-Laws may include further provisions for Shareholder votes and meetings and
related matters.

                                   ARTICLE VII

                        DETERMINATION OF NET ASSET VALUE,
                          NET INCOME AND DISTRIBUTIONS

         The Trustees, in their absolute discretion, may prescribe and shall set
forth in the By-Laws or in a duly adopted vote of the Trustees such bases and
times for determining the per Share net asset value of the Shares or net income,
or the declaration and payment of dividends and distributions, as they may deem
necessary or desirable.

                                  ARTICLE VIII

                         DURATION; TERMINATION OF TRUST;
                            AMENDMENT; MERGERS, ETC.

          Section 8.1. Duration.  The Trust shall continue without limitation of
time but subject to the provisions of this Article VIII.

                                       19
<PAGE>

          Section 8.2.  Termination of Trust. (a) The Trust may be terminated at
any time  (i) by the  affirmative  vote of the  holders  of not  less  than
two-thirds  of the Shares  outstanding  and  entitled  to vote at any meeting of
Shareholders,  or (ii) by the  Trustees by written  notice to the  Shareholders.
Upon the termination of the Trust:

         (i) The Trust shall carry on no business except for the purpose of
winding up its affairs;

         (ii) The Trustees shall proceed to wind up the affairs of the Trust and
all the powers of the Trustees under the Declaration shall continue until the
affairs of the Trust shall have been wound up, including the power to fulfill or
discharge the contracts of the Trust, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the remaining
Trust Property to one or more Persons at public or private sale for
consideration which may consist in whole or in part of cash, securities or other
property of any kind, discharge or pay its liabilities, and to do all other acts
appropriate to liquidate its business; and

         (iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly in cash
and partly in kind, among the Shareholders of the Trust according to their
respective rights.

         (b) After termination of the Trust and distribution to the Shareholders
of the Trust as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties hereunder with respect to the Trust, and the
rights and interests of all Shareholders of the Trust shall thereupon cease.

         Section 8.3. Amendment Procedure. (a) Except as specifically provided
herein, the Trustees may, without any Shareholder vote, amend or otherwise
supplement the Declaration by making an amendment, a Declaration of Trust
supplemental hereto or an amended and restated Declaration. Without limiting the
foregoing power reserved to the Trustees, the Trustees may, without any
Shareholder vote, amend the Declaration to change the name or principal office
of the Trust, to supply any omission, to cure, correct or supplement any
ambiguous, defective or inconsistent provision hereof, or if they deem it
necessary or advisable, to conform the Declaration to the requirements of
applicable law, including the 1940 Act and the Internal Revenue Code of 1986, as
amended, but the Trustees shall not be liable for failing to do so. Shareholders
shall have the right to vote on (i) any

                                       20
<PAGE>

amendment that would affect their right to vote granted in Section 6.8; (ii) any
amendment to Section  8.3(a) or (b);  (iii) any  amendment as may be required by
law or by the Trust's registration statement to be approved by Shareholders; and
(iv) any  amendment  submitted  to them by the  Trustees.  Except  as  otherwise
provided in Section 8.3(c),  any amendment on which  Shareholders have the right
to vote shall require a Majority  Shareholder  Vote of the  Shareholders  of the
Trust,  or the  written  consent,  without a meeting,  of the  holders of Shares
representing  not less than a majority of the voting  power of the Shares of the
Trust.

         (b) Nothing contained in the Declaration shall permit the amendment of
the Declaration to impair the exemption from personal liability of the
Shareholders, former Shareholders, Trustees, Advisory Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders or
former Shareholders. Notwithstanding anything else herein, any amendment to
Section 5.3 shall not limit the rights to indemnification or insurance provided
therein with respect to actions or omissions of persons entitled to
indemnification under such Section prior to such amendment.

         (c) No amendment may be made which shall amend, alter, change or repeal
any of the provisions of Section 2.2, Section 8.2, this Section 8.3(c), Section
8.4, Section 8.6 and Section 8.7 unless the amendment effecting such amendment,
alteration, change or repeal shall receive the affirmative vote or consent of
sixty-six and two-thirds percent (66 2/3%) of the Shares outstanding and
entitled to vote. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of Shares otherwise required by law or by the
terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Trust and any national securities
exchange.

         (d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders (if
applicable) or by the Trustees as aforesaid or a copy of the Declaration, as
amended, and executed by a majority of the Trustees, shall be conclusive
evidence of such amendment when lodged among the records of the Trust.

         Section 8.4. Merger, Consolidation and Sale of Assets. Subject to
applicable law and except as otherwise provided in Section 8.5 hereof, the Trust
may merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property including its good will, upon such terms and conditions and for
such consideration when and as authorized (a) at any meeting of Shareholders
called for the purpose by the affirmative vote of the holders of not less than
two-thirds of the Shares outstanding and entitled to vote, or (b) by the written
consent, without a meeting, of the holders of not less than two-thirds of such
Shares, provided, however, that if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, the vote or written consent of the
holders of a majority of Shares outstanding and entitled to vote, shall be
sufficient authorization. Any such merger, consolidation,

                                       21
<PAGE>

sale,  lease  or  exchange  shall  be  deemed  for all  purposes  to  have  been
accomplished  under  and  pursuant  to  the  statutes  of  The  Commonwealth  of
Massachusetts.   Such  transactions  may  be  effected  through  share-for-share
exchanges,  transfers or sales of assets,  in-kind  redemptions  and  purchases,
exchange offers, or any other method approved by the Trustees. Nothing contained
herein shall be construed as requiring  approval of Shareholders for any sale of
assets  in  the  ordinary  course  of the  business  of the  Trust,  or for  any
transaction, whether deemed a merger, consolidation,  reorganization or exchange
of shares or otherwise,  whereby the Trust issues shares in connection  with the
acquisition of assets  (including  those subject to liabilities)  from any other
investment company or similar entity.

         Section 8.5. Incorporation, Reorganization. The Trustees may, without
the vote or consent of Shareholders, cause to be organized or assist in
organizing a corporation or corporations under the laws of any jurisdiction, or
any other trust (or series or class of a trust), unit investment trust,
partnership, limited liability company, association or other organization to
acquire all or a portion of the Trust Property or to carry on any business in
which the Trust shall directly or indirectly have any interest, and to sell,
convey and transfer such Trust Property to any such corporation, trust (or
series or class of a trust), partnership, limited liability company, association
or organization in exchange for the shares or securities thereof or otherwise,
and to lend money to, subscribe for the shares or securities of, and enter into
any contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any other
interest. The Trustees may also, without the vote or consent of Shareholders,
cause a merger or consolidation between the Trust or any successor thereto and
any such corporation, trust (or series or class of a trust), partnership,
association or other organization if and to the extent permitted by law. The
Trustees shall provide written notice to affected Shareholders of each
transaction pursuant to this Section 8.5. Such transactions may be effected
through share-for-share exchanges, transfers or sales of assets, in-kind
redemptions and purchases, exchange offers, or any other method approved by the
Trustees.

         Section 8.6. Conversion. Notwithstanding any other provision of this
Declaration, the conversion of the Trust from a "closed-end company" to an
"open-end company," as those terms are defined in the 1940 Act, shall require
the affirmative vote or consent of the holders of sixty-six and two-thirds
percent (66 2/3%) of the Shares outstanding and entitled to vote. Such
affirmative vote or consent shall be in addition to the vote or consent of the
holders of the Shares otherwise required by law or by the terms of any class or


                                       22
<PAGE>

series of preferred stock, whether now or hereafter authorized, or any agreement
between the Trust and any national securities exchange.

         Section 8.7. Certain Transactions. (a) Notwithstanding any other
provision of this Declaration and subject to the exceptions provided in
paragraph (d) of this Section, the types of transactions described in paragraph
(c) of this Section shall require the affirmative vote or consent of the holders
of sixty-six and two-thirds percent (66 2/3%) of the Shares outstanding and
entitled to vote, when a Principal Shareholder (as defined in paragraph (b) of
this Section) is a party to the transaction. Such affirmative vote or consent
shall be in addition to the vote or consent of the Shareholders otherwise
required by law or by the terms of any class or series of preferred stock,
whether now or hereafter authorized, or any agreement between the Trust and any
national securities exchange.

         (b) The term "Principal Shareholder" shall mean any corporation, person
or other entity which is the beneficial owner, directly or indirectly, of more
than five percent (5%) of the outstanding Shares and shall include any affiliate
or associate, as such terms are defined in clause (ii) below, of a Principal
Shareholder. For the purposes of this Section, in addition to the Shares which a
corporation, person or other entity beneficially owns directly, (a) any
corporation, person or other entity shall be deemed to be the beneficial owner
of any Shares (i) which it has the right to acquire pursuant to any agreement or
upon exercise of conversion rights or warrants, or otherwise (but excluding
share options granted by the Trust) or (ii) which are beneficially owned,
directly or indirectly (including Shares deemed owned through application of
clause (i) above), by any other corporation, person or entity with which its
"affiliate" or "associate" (as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
Shares, or which is its "affiliate" or "associate" as those terms are defined in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934 as in effect on December 1, 1986, and (b) the outstanding Shares
shall include Shares deemed owned through application of clauses (i) and (ii)
above but shall not include any other shares which may be issuable pursuant to
any agreement, or upon exercise of conversion rights or warrants, or otherwise.

         (c) This Section shall apply to the following transactions:

         (i) the merger or consolidation of the Trust or any subsidiary of the
Trust with or into any Principal Shareholder;

         (ii) the issuance of any securities of the Trust to any Principal
Shareholder for cash;

                                       23
<PAGE>

         (iii) the sale, lease or exchange of all or any substantial part of the
assets of the Trust to any Principal Shareholder (except assets having an
aggregate fair market value of less than $1,000,000, aggregating for the purpose
of such computation all assets sold, leased or exchanged in any series of
similar transactions within a twelve-month period);

         (iv) the sale, lease or exchange to the Trust or any subsidiary
thereof, in exchange for securities of the Trust of any assets of any Principal
Shareholder (except assets having an aggregate fair market value of less than
$1,000,000, aggregating for the purposes of such computation all assets sold,
leased or exchanged in any series of similar transactions within a twelve-month
period).

         (d) The provisions of this Section shall not be applicable to (i) any
of the transactions described in paragraph (c) of this Section if the Board of
Trustees of the Trust shall by resolution have approved a memorandum of
understanding with such Principal Shareholder with respect to and substantially
consistent with such transaction, or (ii) any such transaction with any
corporation of which a majority of the outstanding shares of all classes of
stock normally entitled to vote in elections of directors is owned of record or
beneficially by the Trust and its subsidiaries.

         (e) The Board of Trustees shall have the power and duty to determine
for the purposes of this Section on the basis of information known to the Trust,
whether (i) a corporation, person or entity beneficially owns more than five
percent (5%) of the outstanding Shares, (ii) a corporation, person or entity is
an "affiliate" or "associate" (as defined above) of another, (iii) the assets
being acquired or leased to or by the Trust or any subsidiary thereof,
constitute a substantial part of the assets of the Trust and have an aggregate
fair market value of less than $1,000,000, and (iv) the memorandum of
understanding referred to in paragraph (d) hereof is substantially consistent
with the transaction covered thereby. Any such determination shall be conclusive
and binding for all purposes of this Section.

                                   ARTICLE IX

                                  MISCELLANEOUS

         Section 9.1. Filing. The Declaration and any subsequent amendment
hereto shall be filed in the office of the Secretary of The Commonwealth of
Massachusetts and in such other place or places as may be required under the
laws of The Commonwealth of Massachusetts and may also be filed or recorded in
such other places as the Trustees deem appropriate, provided that the failure to
so file shall not invalidate this instrument or any properly authorized
amendment hereto. Each amendment so filed shall be accompanied by a certificate
signed and acknowledged by an officer or Trustee stating that such

                                       24
<PAGE>

action was duly taken in a manner provided herein,  and unless such amendment or
such  certificate  sets  forth some  other  time for the  effectiveness  of such
amendment,  such  amendment  shall be  effective  upon its  filing.  A  restated
Declaration,  integrating into a single  instrument all of the provisions of the
Declaration which are then in effect and operative, may be executed from time to
time by a majority of the Trustees and shall,  upon filing with the Secretary of
The  Commonwealth  of  Massachusetts,  be conclusive  evidence of all amendments
contained  therein and may  thereafter  be  referred to in lieu of the  original
Declaration and the various amendments thereto.

         Section 9.2. Governing Law. The Declaration is executed by the Trustees
and delivered in The Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust,
and the absence of a specific reference herein to any such power, privilege, or
action shall not imply that the Trust may not exercise such power or privilege
or take such action.

         Section 9.3. Principal Office. The principal office of the Trust is 500
Boylston Street, Boston, Massachusetts. The Trustees, without a vote of
Shareholders, may change the principal office of the Trust.

         Section 9.4. Counterparts. The Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.

         Section 9.5. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, appears to be an officer
or Trustee hereunder, certifying to: (i) the number or identity of Trustees or
Shareholders, (ii) the due authorization of the execution of any instrument or
writing, (iii) the form of any vote passed at a meeting of Trustees or
Shareholders, (iv) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
the Declaration, (v) the form of any By-Laws adopted by or the identity of any
officers elected by the Trustees, or (vi) the existence of any fact or facts
which in any manner relates to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.

         Section 9.6.  Provisions in Conflict with Law or Regulations.

                                       25
<PAGE>

         (a) The provisions of the Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company or
other provisions of the Internal Revenue Code of 1986, as amended, or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of the Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.

         (b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.


                                       26
<PAGE>

         IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the day and year first written above.



LAWRENCE H. COHN
- --------------------------------------------
Lawrence H. Cohn
As Trustee and Not Individually
45 Singletree Road
Chestnut Hill MA  02467


DAVID H. GUNNING
- ------------------------------------
David H. Gunning
As Trustee and Not Individually
2571 N. Park Blvd.
Cleveland Heights OH  44106


WILLIAM R. GUTOW
- --------------------------------------------
William R. Gutow
As Trustee and Not Individually
3 Rue Dulac
Dallas TX  75230


MICHAEL HEGARTY
- --------------------------------------------
Michael Hegarty
As Trustee and Not Individually
177 Old Briarcliff Road
Briarcliff Manor NY  10510


J. ATWOOD IVES
- --------------------------------------------
J. Atwood Ives
As Trustee and Not Individually
17 West Cedar Street
Boston MA  02108


AMY B. LANE
- --------------------------------------------
Amy B. Lane
As Trustee and Not Individually
9716 S.E. Sandpine Lane
Hobe Sound FL  33455


LAWRENCE T. PERERA
- --------------------------------------------
Lawrence T. Perera
As Trustee and Not Individually
18 Marlborough Street
Boston MA  02116


WILLIAM J. POORVU
- --------------------------------------------
William J. Poorvu
As Trustee and Not Individually
975 Memorial Drive  Apt. 710
Cambridge MA  02138


J. DALE SHERRATT
- --------------------------------------------
J. Dale Sherratt
As Trustee and Not Individually
86 Farm Road
Sherborn MA  01770


ELAINE R. SMITH
- --------------------------------------------
Elaine R. Smith
As Trustee and Not Individually
75 Scotch Pine Road
Weston MA  02493


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>3
<FILENAME>min2b1.txt
<DESCRIPTION>AMENDED AND RESTATED BY-LAWS
<TEXT>
                                                          EXHIBIT NO. 99.2(b)(1)

                              AMENDED AND RESTATED

                                     BY-LAWS

                                       OF

                   THE TRUSTS IDENTIFIED ON APPENDIX A HERETO




                                    ARTICLE I

                                   DEFINITIONS

            The terms "Commission", "Declaration", "Distributor", "Interested
Person", "Investment Adviser", "Majority Shareholder Vote", "1940 Act",
"Shareholder", "Shares", "Transfer Agent", "Trust", "Trust Property" and
"Trustees" have the respective meanings given them in the Amended and Restated
Declaration of Trust of the Trusts identified on Appendix A hereto. References
to a "Trust" mean each Trust severally and not jointly. These By-Laws shall be
subject to the Declaration for all purposes.



                                   ARTICLE II

                                     OFFICES

           SECTION 1. PRINCIPAL OFFICE.  Until changed by the Trustees,  the
principal office of the Trust in The  Commonwealth of Massachusetts  shall be in
the City of Boston, County of Suffolk.

           SECTION 2. OTHER OFFICES. The Trust may have offices in such other
places without as well as within The Commonwealth of Massachusetts as the
Trustees may from time to time determine.



<PAGE>

                                   ARTICLE III

                                  SHAREHOLDERS

            SECTION 1. MEETINGS. Meetings of the Shareholders may be called at
any time by a majority of the Trustees. Meetings of the Shareholders for the
purpose of considering the removal of a person serving as Trustee shall be
called by the Trustees if they are requested in writing to do so by Shareholders
holding in the aggregate Shares representing not less than ten percent (10%) of
the voting power of the outstanding Shares of the Trust having voting rights.
Any such meeting shall be held within or without The Commonwealth of
Massachusetts on such day and at such time as the Trustees shall designate.


            SECTION 2. NOTICE OF MEETINGS. Notice of all meetings of
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees in accordance with the Declaration, mailed or sent at
least (ten) 10 days and not more than ninety (90) days before the meeting. Only
the business stated in the notice of the meeting shall be considered at such
meeting. Any adjourned meeting may be held as adjourned without further notice,
even if the date of such adjourned meeting is more than 90 days after the notice
of the meeting was mailed or sent. Notwithstanding the foregoing, if either the
President or Clerk of the Trust, or in the absence or unavailability of the
President and the Clerk, any officer of the Trust, determines that as a result
of force majeure or an act of God or war, the date, time or place designated for
a meeting or adjourned meeting of Shareholders is not reasonably practicable or
available, such officer may, without further notice to Shareholders, designate
such other date, time or place for such meeting or adjourned meeting as such
officer shall, in his or her sole discretion, determine. No notice need be given
to any Shareholder who shall have failed to inform the Trust of his current
address or if a written waiver of notice, executed before or after the meeting
by the Shareholder or his attorney thereunto authorized, is filed with the
records of the meeting.


         SECTION 3. RECORD DATE FOR MEETINGS. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding thirty (30) days, as the Trustees may determine; or without closing
the transfer books the Trustees may fix a date not more than ninety (90) days
prior to the date of any meeting of Shareholders or distribution or other action
as a record date for the determination of the persons to be treated as
Shareholders of record for such purpose. The Trustees also may select the time
of day as of which the calculations for determining how many votes each
Shareholder is entitled to pursuant to the Declaration shall be performed.

         SECTION 4. PROXIES. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the Clerk,
or with such other officer or agent of the Trust as the Clerk may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
vote of a majority of the Trustees, proxies may be solicited in the name of one
or more

                                       1
<PAGE>



Trustees or one or more of the officers of the Trust. When any Share is
held jointly by several persons, any one of them may vote at any meeting in
person or by proxy in respect of such Share (and a proxy shall be valid if
executed by any one of them), but if more than one of them shall be present at
such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. The placing
of a Shareholder's name on a proxy pursuant to telephonic or electronically
transmitted instructions obtained pursuant to procedures reasonably designed to
verify that such instructions have been authorized by such Shareholder shall
constitute execution of such proxy by or on behalf of such Shareholder. If the
holder of any such Share is a minor or a person of unsound mind, and subject to
guardianship or to the legal control of any other person as regards the charge
or management of such Share, he may vote by his guardian or such other person
appointed or having such control, and such vote may be given in person or by
proxy. Any copy, facsimile telecommunication or other reliable reproduction of a
proxy may be substituted for or used in lieu of the original proxy for any and
all purposes for which the original proxy could be used, provided that such
copy, facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original proxy or the portion thereof to be returned
by the Shareholder.

         SECTION 5. QUORUM AND ADJOURNMENT. Except when a larger quorum is
required by any provision of law, Shares representing a majority of the voting
power of the outstanding Shares entitled to vote shall constitute a quorum at
any meeting of Shareholders, except that where any provision of law, the
Declaration or these By-laws requires that holders of any series or class shall
vote as a series or class, then Shares representing a majority (unless a larger
quorum is required as specified above) of the voting power of the aggregate
number of Shares of that series or class entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that series or class. In
the absence of a quorum, Shareholders entitled to cast votes representing a
majority of the voting power of the outstanding Shares entitled to vote present
in person or by proxy, or, where any provision of law, the Declaration or these
By-laws requires that holders of any series or class shall vote as a series or
class, Shareholders entitled to cast votes representing a majority of the voting
power of the outstanding Shares of that series or class entitled to vote present
in person or by proxy, may adjourn the meeting from time to time until a quorum
shall be present. Only Shareholders of record shall be entitled to vote on any
matter.

         SECTION 6. INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.

         SECTION 7. ACTION WITHOUT MEETING. Any action which may be taken by
Shareholders may be taken without a meeting if Shareholders holding Shares
representing a majority of the voting power of the Shares entitled to vote on
the matter (or such larger proportion thereof as shall be required by law, the
Declaration or these By-Laws for approval of such matter) consent to the action
in writing and the written consents are filed with the records of


                                       2
<PAGE>

the meetings of Shareholders.  Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.


                                   ARTICLE IV

                                    TRUSTEES

         SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the Chair of
the Trustees or by any one of the Trustees at the time being in office. Notice
of the time and place of each meeting other than regular or stated meetings
shall be given by the Secretary or an Assistant Secretary, or the Clerk or an
Assistant Clerk or by the officer, Chair of the Trustees or other Trustee
calling the meeting and shall be mailed to each Trustee at least two days before
the meeting, or shall be telegraphed, cabled, or wirelessed or sent by facsimile
or other electronic means to each Trustee at his usual or last known business or
residence address, or personally delivered to him at least one day before the
meeting. Such notice may, however, be waived by any Trustee. Notice of a meeting
need not be given to any Trustee if a written waiver of notice, executed by him
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him. A notice or waiver of notice need not
specify the purpose of any meeting. Except as provided by law the Trustees may
meet by means of a telephone conference circuit or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, which telephone conference meeting shall be deemed to have been held
at a place designated by the Trustees at the meeting. Participation in a
telephone conference meeting shall constitute presence in person at such
meeting.

         SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees
shall be present at any regular or special meeting of the Trustees in order to
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Declaration or these By-Laws) the act of a
majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.


                                    ARTICLE V

                          COMMITTEES AND ADVISORY BOARD

         SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) Trustees to hold office at the
pleasure of the Trustees which shall have


                                       3
<PAGE>


the power to conduct the current  and  ordinary  business of the Trust while the
Trustees are not in session,  including the purchase and sale of securities  and
the  designation of securities to be delivered upon  redemption of Shares of the
Trust,  and such other powers of the Trustees as the Trustees  may, from time to
time,  delegate to the Executive Committee except those powers which by law, the
Declaration or these By-Laws they are prohibited from  delegating.  The Trustees
may also elect other  Committees  from time to time,  the number  composing such
Committees,  the powers conferred upon the same (subject to the same limitations
as with respect to the Executive  Committee)  and the term of membership on such
Committees to be determined by the Trustees.  The Trustees may designate a Chair
of any such Committee.  In the absence of such designation a Committee may elect
its own Chair.

         SECTION 2. MEETING, QUORUM AND MANNER OF ACTING. The Trustees may:

                  (i)      provide for stated meetings of any Committee;

                  (ii)     specify the manner of calling and notice required for
                           special meetings of any Committee;

                  (iii)    specify the number of members of a Committee required
                           to constitute a quorum and the number of members of a
                           Committee required to exercise specified powers
                           delegated to such Committee;

                  (iv)     authorize the making of decisions to exercise
                           specified powers by written assent of the requisite
                           number of members of a Committee without a meeting;
                           and

                  (v)      authorize the members of a Committee to meet by means
                           of a telephone conference circuit or similar
                           communications equipment by means of which all
                           persons participating in the meeting can hear each
                           other.

         Each Committee shall keep and maintain regular minutes of its meetings
and records of decisions taken without a meeting.

         SECTION 3. ADVISORY BOARD. The Trustees may appoint an Advisory Board
to consist in the first instance of not less than three (3) members. Members of
such Advisory Board shall not be Trustees or officers and need not be
Shareholders. A member of such Advisory Board shall hold office for such period
as the Trustees may by resolution provide. Any member of such board may resign
therefrom by a written instrument signed by him which shall take effect upon
delivery to the Trust. The Advisory Board shall have no legal powers and shall
not perform the functions of Trustees in any manner, such Advisory Board being
intended merely to act in an advisory capacity. Such Advisory Board shall meet
at such times and upon such notice as the Trustees may by resolution provide.


                                       4
<PAGE>


                                   ARTICLE VI

                       OFFICERS AND CHAIR OF THE TRUSTEES

         SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a
President, a Treasurer and a Clerk, who shall be elected by the Trustees. In
addition, there shall be an Independent Chief Compliance Officer, who shall be
elected or appointed by a majority of the Trustees, including a majority of the
Trustees who are not Interested Persons of the Trust ("Interested Trustees"),
and otherwise in accordance with rule 38a-1 (or any successor rule) under the
1940 Act, as such rule may be amended from time to time ("Rule 38a-1"). The
Trustees may elect or appoint such other officers or agents of the Trust as the
business of the Trust may require, including one or more Vice Presidents, a
Secretary and one or more Assistant Secretaries, one or more Assistant
Treasurers, and one or more Assistant Clerks. The Trustees may delegate to any
officer of the Trust or Committee the power to appoint any subordinate officers
or agents. In addition, there shall be an office of Chair of the Trustees, which
shall serve on behalf of the Trustees, but shall not be an office of the Trust.
The office of Chair of the Trustees may be held by more than one person. Any
Chair of the Trustees shall be elected by a majority of the Trustees, including
a majority of the Independent Trustees.

         SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise
provided by law, the Declaration or these By-Laws, the Chair of the Trustees,
the President, the Treasurer, the Clerk and the Independent Chief Compliance
Officer shall hold office until his resignation has been accepted by the
Trustees or until his respective successor shall have been duly elected and
qualified, or in each case until he sooner dies, resigns, is removed or becomes
disqualified. All other officers shall hold office at the pleasure of the
Trustees. Any two or more offices may be held by the same person. Any officer of
the Trust may be, but none need be, a Trustee or Shareholder. Any Chair of the
Trustees shall be an Independent Trustee, shall not be an officer of the Trust
and may be, but need not be, a Shareholder.

         SECTION 3. REMOVAL AND RESIGNATION. The Trustees, at any regular or
special meeting of the Trustees, may remove any officer of the Trust with or
without cause by a vote or consent of a majority of the Trustees, provided that
any removal of the Independent Chief Compliance Officer shall also require the
vote or consent of a majority of the Independent Trustees and otherwise be in
accordance with the provisions of Rule 38a-1. The Trustees may at any time
remove any Chair of the Trustees with or without cause by a vote or consent of a
majority of the Trustees, including a majority of the Independent Trustees. Any
officer or agent appointed by any officer or Committee may be removed with or
without cause by such appointing officer or Committee (subject to the provisions
of Rule 38a-1 in the case of the Independent Chief Compliance Officer). Any
officer of the Trust or Chair of the Trustees may resign at any time by written
instrument signed by him and delivered to the Trust. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no officer of the Trust or Chair of the Trustees resigning or removed shall have
any right to any compensation for any period following his resignation or
removal, or any right to damages on account of such removal.


                                       5
<PAGE>


         SECTION 4. POWERS AND DUTIES OF THE CHAIR OF THE TRUSTEES. The powers
and duties of the Chair of the Trustees shall include (i) calling meetings of
the Trustees when deemed necessary, (ii) setting the agenda for meetings of the
Trustees with input from officers of the Trust and, as necessary or appropriate,
the Trust's Investment Adviser and other service providers, (iii) presiding at
all meetings of the Trustees, (iv) presiding at all meetings of Shareholders,
except that the Chair of the Trustees may appoint the President or another
officer of the Trust to preside at such meetings in place of the Chair of the
Trustees, (v) acting as a liaison between the Board of Trustees and the Trust's
officers, Investment Adviser and other service providers and (vi) exercising
such other powers and duties relating to the operations of the Trustees as, from
time to time, may be conferred upon or assigned to such office by the Trustees,
provided that the Chair of the Trustees shall have no individual authority to
act for the Trust as an officer of the Trust. In carrying out the
responsibilities and duties of the office, the Chair of the Trustees may seek
assistance and input from other Trustees or Committees of the Trustees, officers
of the Trust and the Trust's Investment Adviser and other service providers, as
deemed necessary or appropriate. In the absence or disability of the Chair of
the Trustees, a majority of the Trustees, including a majority of the
Independent Trustees, shall appoint an Independent Trustee to perform the duties
and exercise the powers of the Chair of the Trustees, provided that, unless and
until such appointment is made, all of the Independent Trustees shall
collectively perform such duties and exercise such powers.

         SECTION 5. POWERS AND DUTIES OF THE PRESIDENT. Subject to the control
of the Trustees, the Chair of the Trustees and any Committees of the Trustees,
the President shall at all times exercise a general supervision and direction
over the affairs of the Trust, including the power to employ attorneys and
counsel for the Trust and to employ such subordinate officers, agents, clerks
and employees as he may find necessary to transact the business of the Trust.
The President shall be the chief executive officer of the Trust. The President
shall have the power to grant, issue, execute or sign such powers of attorney,
proxies or other documents as may be deemed advisable or necessary in
furtherance of the interests of the Trust. The President shall perform such
other duties as may be assigned to him from time to time by the Trustees or the
Chair of the Trustees.

         SECTION 6. POWERS AND DUTIES OF VICE PRESIDENTS. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.

         SECTION 7. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be
the principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ. The Treasurer shall render a statement of condition
of the finances of the Trust to the Trustees as often as they shall require the
same and shall in general perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the

                                       6
<PAGE>

Trustees. The Treasurer shall give a bond for the faithful discharge of his
duties, if required to do so by the Trustees, in such sum and with such surety
or sureties as the Trustees shall require.

         SECTION 8. POWERS AND DUTIES OF THE CLERK. The Clerk shall keep the
minutes of all meetings of the Shareholders in proper books provided for that
purpose; he shall have custody of the seal of the Trust; he shall have charge of
the Share transfer books, lists and records unless the same are in the charge of
the Transfer Agent. He or the Secretary, if any, shall attend to the giving and
serving of all notices by the Trust in accordance with the provisions of these
By-Laws and as required by law; and subject to these By-Laws, he shall in
general perform all duties incident to the office of Clerk and such other duties
as from time to time may be assigned to him by the Trustees.

         SECTION 9. POWERS AND DUTIES OF THE SECRETARY. The Secretary, if any,
shall keep the minutes of all meetings of the Trustees. He shall perform such
other duties and have such other powers in addition to those specified in these
By-Laws as the Trustees shall from time to time designate. If there be no
Secretary or Assistant Secretary, the Clerk shall perform the duties of
Secretary.

         SECTION 10. POWERS AND DUTIES OF ASSISTANT TREASURERS. In the absence
or disability of the Treasurer, any Assistant Treasurer designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Treasurer. Each Assistant Treasurer shall perform such other duties as from
time to time may be assigned to him by the Trustees. Each Assistant Treasurer
shall give a bond for the faithful discharge of his duties, if required to do so
by the Trustees, in such sum and with such surety or sureties as the Trustees
shall require.

         SECTION 11. POWERS AND DUTIES OF ASSISTANT CLERKS. In the absence or
disability of the Clerk, any Assistant Clerk designated by the Trustees shall
perform all the duties, and may exercise any of the powers, of the Clerk. The
Assistant Clerks shall perform such other duties as from time to time may be
assigned to them by the Trustees.

         SECTION 12. POWERS AND DUTIES OF ASSISTANT SECRETARIES. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all of the duties, and may exercise any of the powers, of
the Secretary. The Assistant Secretaries shall perform such other duties as from
time to time may be assigned to them by the Trustees.

         SECTION 13. POWERS AND DUTIES OF THE INDEPENDENT CHIEF COMPLIANCE
OFFICER. The Independent Chief Compliance Officer shall perform the duties and
have the responsibilities of the chief compliance officer of the Trust in
accordance with Rule 38a-1, and shall perform such other duties and have such
other responsibilities as from time to time may be assigned to him by the
Trustees. The Independent Chief Compliance Officer shall report directly to the
Trustees or a Committee of the Trustees in carrying out his functions.

                                       7
<PAGE>

         SECTION 14. COMPENSATION OF OFFICERS AND TRUSTEES AND MEMBERS OF THE
ADVISORY BOARD. Subject to any applicable law or provision of the Declaration,
the compensation of the officers of the Trust and Trustees (including the Chair
of the Trustees) and members of the Advisory Board shall be fixed from time to
time by the Trustees or, in the case of officers, by any Committee or officer
upon whom such power may be conferred by the Trustees, provided that any
compensation of the Independent Chief Compliance Officer shall be approved by a
majority of the Trustees, including a majority of the Independent Trustees. No
officer shall be prevented from receiving such compensation as such officer by
reason of the fact that he is also a Trustee.


                                   ARTICLE VII

                                   FISCAL YEAR

         The fiscal year of the Trust shall be as specified on Appendix A
hereto, provided, however, that the Trustees may from time to time change the
fiscal year of the Trust or any series.


                                  ARTICLE VIII

                                      SEAL

         The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.


                                   ARTICLE IX

                                WAIVERS OF NOTICE

         Whenever any notice is required to be given by law, the Declaration or
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed or sent by facsimile or other electronic means for the
purposes of these By-Laws when it has been delivered to a representative of any
telegraph, cable or wireless company with instruction that it be telegraphed,
cabled or wirelessed or when a confirmation of such facsimile having been sent,
or a confirmation that such electronic means has sent the notice being
transmitted, is generated. Any notice shall be deemed to be given at the time
when the same shall be mailed, telegraphed, cabled or wirelessed or when sent by
facsimile or other electronic means.

                                       8
<PAGE>


                                    ARTICLE X

                           SALE OF SHARES OF THE TRUST

         The Trustees may from time to time issue and sell or cause to be issued
and sold Shares for cash or other property. The Shares, including additional
Shares which may have been repurchased by the Trust (herein sometimes referred
to as "treasury shares"), may not be sold at a price less than the net asset
value thereof (as defined in Article XI hereof) determined by or on behalf of
the Trustees next after the sale is made or at some later time after such sale.

         No Shares need be offered to existing Shareholders before being offered
to others. No Shares shall be sold by the Trust (although Shares previously
contracted to be sold may be issued upon payment therefor) during any period
when the determination of net asset value is suspended. In connection with the
acquisition by merger or otherwise of all or substantially all the assets of an
investment company (whether a regulated or private investment company or a
personal holding company), the Trustees may issue or cause to be issued Shares
and accept in payment therefor such assets valued at not more than market value
thereof in lieu of cash, notwithstanding that the federal income tax basis to
the Trust of any assets so acquired may be less than the market value, provided
that such assets are of the character in which the Trustees are permitted to
invest the funds of the Trust.

                                   ARTICLE XI

                            NET ASSET VALUE OF SHARES

         The term "net asset value" per Share of any class or series of Shares
shall mean: (i) the value of all assets of that series or class; (ii) less total
liabilities of such series or class; (iii) divided by the number of Shares of
such series or class outstanding, in each case at the time of such
determination, all as determine by or under the direction of the Trustees. Such
value shall be determined on such days and at such time as the Trustees may
determine. Such determination shall be made with respect to securities for which
market quotations are readily available, at the market value of such securities;
and with respect to other securities and assets, at the fair value as determined
in good faith by or pursuant to the direction of the Trustees or a Committee
thereof, provided, however, that the Trustees, without shareholder approval, may
alter the method of appraising portfolio securities insofar as permitted under
the 1940 Act, including use of the amortized cost method. The Trustees may
delegate any powers and duties under this Article XI with respect to appraisal
of assets and liabilities. At any time the Trustees may cause the value per
share last determined to be determined again in a similar manner and may fix the
time when such predetermined value shall become effective. Determinations of net
asset value made by the Trustees or their delegates in good faith shall be
binding on all parties concerned.

                                       9
<PAGE>


                                   ARTICLE XII

                           DIVIDENDS AND DISTRIBUTIONS

         SECTION 1. LIMITATIONS ON DISTRIBUTIONS. The total of distributions to
Shareholders of a particular series or class paid in respect of any one fiscal
year, subject to the exceptions noted below, shall, when and as declared by the
Trustees, be approximately equal to the sum of:

                    (i)  the net  income,  exclusive  of the  profits  or losses
                         realized upon the sale of securities or other property,
                         of  such  series  or  class  for  such   fiscal   year,
                         determined  in  accordance   with  generally   accepted
                         accounting   principles  (which,  if  the  Trustees  so
                         determine,  may be adjusted for net amounts included as
                         such  accrued net income in the price of Shares of such
                         series or class issued or repurchased),  but if the net
                         income  of such  series  or class  exceeds  the  amount
                         distributed by less than one cent per share outstanding
                         at the record date for the final  dividend,  the excess
                         shall be treated as distributable income of such series
                         or class for the following fiscal year; and

                    (ii) in the discretion of the Trustees, an additional amount
                         which  shall not  substantially  exceed  the  excess of
                         profits  over  losses on sales of  securities  or other
                         property allocated or belonging to such series or class
                         for such fiscal year.

The decision of the Trustees as to what, in accordance with generally accepted
accounting principles, is income and what is principal shall be final, and
except as specifically provided herein the decision of the Trustees as to what
expenses and charges of the Trust shall be charged against principal and what
against income shall be final, all subject to any applicable provisions of the
1940 Act. For the purposes of the limitation imposed by this Section 1, Shares
issued pursuant to Section 2 of this Article XII shall be valued at the amount
of cash which the Shareholders would have received if they had elected to
receive cash in lieu of such Shares.

         Inasmuch as the computation of net income and gains for federal income
tax purposes may vary from the computation thereof on the books of the Trust,
the above provisions shall be interpreted to give to the Trustees the power in
their discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes. Any payment made to
Shareholders pursuant to clause (ii) of this Section 1 shall be accompanied by a
written statement showing the source or sources of such payment, and the basis
of computation thereof.

         SECTION 2. DISTRIBUTIONS PAYABLE IN CASH OR SHARES. The Trustees shall
have power, to the fullest extent permitted by the laws of The Commonwealth of
Massachusetts but subject to the limitation as to cash distributions imposed by
Section 1 of this Article XII, at any time or from time to time to declare and
cause to be paid distributions payable

                                       10
<PAGE>

at the election of any  Shareholder  of any series or class  (whether  exercised
before or after the declaration of the distribution) either in cash or in Shares
of such series, provided that the sum of:

                  (i)      the cash distribution actually paid to any
                           Shareholder, and

                  (ii)     the net asset value of the Shares which that
                           Shareholder elects to receive, in effect at such time
                           at or after the election as the Trustees may specify,
                           shall not exceed the full amount of cash to which
                           that Shareholder would be entitled if he elected to
                           receive only cash.

In the case of a distribution payable in cash or Shares at the election of a
Shareholder, the Trustees may prescribe whether a Shareholder, failing to
express his election before a given time shall be deemed to have elected to take
Shares rather than cash, or to take cash rather then Shares, or to take Shares
with cash adjustment of fractions.

         The Trustees, in their sole discretion, may cause the Trust to require
that all distributions payable to a shareholder in amounts less than such amount
or amounts determined from time to time by the Trustees be reinvested in
additional shares of the Trust rather than paid in cash, unless a shareholder
who, after notification that his distributions will be reinvested in additional
shares in accordance with the preceding phrase, elects to receive such
distributions in cash. Where a shareholder has elected to receive distributions
in cash and the postal or other delivery service is unable to deliver checks to
the shareholder's address of record, the Trustees, in their sole discretion, may
cause the Trust to require that such Shareholder's distribution option be
converted to having all distributions reinvested in additional shares.

         SECTION 3. STOCK DIVIDENDS. Anything in these By-Laws to the contrary
notwithstanding, the Trustees may at any time declare and distribute pro rata
among the Shareholders of any series or class a "stock dividend" out of either
authorized but unissued Shares of such series or class or treasury Shares of
such series or class or both.


                                  ARTICLE XIII

                                   AMENDMENTS

         These By-Laws, or any of them, may be altered, amended, repealed or
restated, or new By-Laws may be adopted, at any time by the Trustees. Action by
the Trustees with respect to the By-Laws shall be taken by an affirmative vote
of a majority of the Trustees.

                                       11
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>4
<FILENAME>min2b2.txt
<DESCRIPTION>APPENDIX A TO AMENDED AND RESTATED BY-LAWS
<TEXT>
                                                        EXHIBIT NO. 99.2(b)(2)

Master Amended and Restated By-Laws, January 1, 2002, as revised June 23, 2004

                                                                     APPENDIX A
                                                    Revised:  February 21, 2006


<TABLE>
<CAPTION>
<S>                                                                                        <C>
- ------------------------------------------------------------------------------------------------------------------------
                                                                                           FISCAL
TRUST                                                                                      YEAR END
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------

MFS Series Trust I                                                                         08/31
MFS Series Trust II                                                                        11/30
MFS Series Trust III                                                                       01/31
MFS Series Trust IV                                                                        08/31
MFS Series Trust V                                                                         09/30
MFS Series Trust VI                                                                        10/31
MFS Series Trust VII                                                                       11/30
MFS Series Trust VIII                                                                      10/31
MFS Series Trust IX                                                                        04/30*
MFS Series Trust XI                                                                        09/30
MFS Series Truist XII                                                                      4/30
MFS Series Trust XIII (formerly MFS Government Securities Fund)                            2/28
</TABLE>

- -----------------

* The fiscal year end is 4/30 for the following series of MFS Series Trust IX:
<TABLE>
<CAPTION>
              <S>                                           <C>
              --------------------------------------------- ----------------------------------
              MFS Bond Fund                                 MFS Municipal Limited Maturity
                                                            Fund
              --------------------------------------------- ----------------------------------
              --------------------------------------------- ----------------------------------
              MFS Emerging Opportunities Fund               MFS Research Bond Fund
              --------------------------------------------- ----------------------------------
              --------------------------------------------- ----------------------------------
              MFS Intermediate Investment Grade Bond Fund   MFS Research Bond Fund J
              --------------------------------------------- ----------------------------------
              --------------------------------------------- ----------------------------------
              MFS Limitied Maturity Fund
              --------------------------------------------- ----------------------------------
</TABLE>

** The fiscal year end is 10/31 for the following series of MFS Series Trust IX:
<TABLE>
<CAPTION>
              <S>                                      <C>
              --------------------------------------------------------------------------------
              MFS Inflation Adjusted Bond Fund
              --------------------------------------------------------------------------------
</TABLE>


***The fiscal year end is 5/31 for the following series of MFS Series Trust X:
<TABLE>
<CAPTION>
              <S>                                      <C>
              ---------------------------------------- ---------------------------------------
              MFS Aggressive Growth Allocation Fund    MFS International Growth Fund
              ---------------------------------------- ---------------------------------------
              ---------------------------------------- ---------------------------------------
              MFS Conservative Allocation Fund         MFS International Value Fund
              ---------------------------------------- ---------------------------------------
              ---------------------------------------- ---------------------------------------
              MFS Emerging Markets Equity Fund         MFS Moderate Allocation Fund
              ---------------------------------------- ---------------------------------------
              ---------------------------------------- ---------------------------------------
              MFS Gemini U.K. Fund                     MFS International Diversification Fund
              ---------------------------------------- ---------------------------------------
              ---------------------------------------- ---------------------------------------
              MFS Growth Allocation Fund
</TABLE>

****The fiscal year end is 7/31 for the following series of MFS Series Trust X:
<TABLE>
<CAPTION>
             <S>                                       <C>
              ---------------------------------------  ---------------------------------------
              MFS Emerging Markets Debt Fund           MFS New Endeavor  Fund
              ---------------------------------------  ----------------------------------------
              MFS Global Value Fund                    MFS Strategic Value Fund
                                                                                           07/31
              ---------------------------------------- ---------------------------------------
</TABLE>

*****The fiscal year end is 8/31 for the following series of MFS Series Trust X:
<TABLE>
<CAPTION>
              <S>                                      <C>
              ---------------------------------------- ---------------------------------------
              MFS Floating Rate High Income Fund
</TABLE>



<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                        <C>
- ------------------------------------------------------------------------------------------------------------------------
                                                                                           FISCAL
TRUST                                                                                      YEAR END
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
MFS Growth Opportunities Fund                                                              12/31
Massachusetts Investors Growth Stock Fund                                                  11/30
MFS Government Limited Maturity Fund                                                       12/31
Massachusetts Investors Trust                                                              12/31
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
MFS Municipal Income Trust                                                                 10/31
MFS Multimarket Income Trust                                                               10/31
MFS Government Markets Income Trust                                                        11/30
MFS Intermediate Income Trust                                                              10/31
MS Charter Income Trust                                                                    11/30
MFS Special Value Trust                                                                    10/31
MFS Municipal Series Trust                                                                 03/31
MFS Institutional Trust                                                                    06/30
MFS Variable Insurance Trust                                                               12/31
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>5
<FILENAME>min2g1.txt
<DESCRIPTION>INVESTMENT ADVISORY AGREEMENT
<TEXT>
                                                         EXHIBIT NO. 99.2(g)(1)

                          INVESTMENT ADVISORY AGREEMENT


         INVESTMENT ADVISORY AGREEMENT, dated this 1st day of January, 2002, by
and between MFS INTERMEDIATE INCOME TRUST, a Massachusetts business trust (the
"Trust"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation
(the "Adviser").

                                   WITNESSETH:

         WHEREAS, the Trust is engaged in business as an investment company
registered under the Investment Company Act of 1940; and

         WHEREAS,  the  Adviser is willing to provide  services to the Trust on
the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:

         Article 1. Duties of the Adviser. (a) The Adviser shall provide the
Trust with such investment advice and supervision as the latter may from time to
time consider necessary for the proper supervision of its assets. The Adviser
shall act as investment adviser to the Trust and as such shall furnish
continuously an investment program and shall determine from time to time what
securities or other instruments shall be purchased, sold or exchanged and what
portion of the assets of the Trust shall be held uninvested, subject always to
the restrictions of the Trust's Amended and Restated Declaration of Trust, dated
January 1, 2002, and By-Laws, each as amended from time to time (respectively,
the "Declaration" and the "By-Laws"), to the provisions of the Investment
Company Act of 1940 and the Rules, Regulations and orders thereunder and to the
Trust's then-current Prospectus and Statement of Additional Information. The
Adviser also shall exercise voting rights, rights to consent to corporate
actions and any other rights pertaining to the Trust's portfolio securities in
accordance with the Adviser's policies and procedures as presented to the
Trustees of the Trust from time to time. Should the Trustees at any time,
however, make any definite determination as to the investment policy and notify
the Adviser thereof in writing, the Adviser shall be bound by such determination
for the period, if any, specified in such notice or until similarly notified
that such determination shall be revoked.

         (b) The Adviser shall take, on behalf of the Trust, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities or other instruments for the Trust's account with brokers
or dealers selected by it, and to that end, the Adviser is authorized as the
agent of the Trust to give instructions to the Custodian of the Trust as to the
deliveries of securities or other instruments and payments of cash for the
account of the Trust. In connection with the selection of such brokers or
dealers and the placing of such orders, the Adviser is directed to seek for the
Trust the best overall price and execution available from responsible brokerage
firms,
<PAGE>

taking  account  of  all  factors  it  deems  relevant,   including  by  way  of
illustration:  price; the size of the transaction;  the nature of the market for
the  security;  the  amount of the  commission;  the  timing  and  impact of the
transaction  taking  into  account  market  prices and trends;  the  reputation,
experience  and financial  stability of the broker or dealer  involved;  and the
quality of services rendered by the broker or dealer in other  transactions.  In
fulfilling  this  requirement,  the  Adviser  shall not be deemed to have  acted
unlawfully or to have breached any duty, created by this Agreement or otherwise,
solely  by reason of its  having  caused  the Trust to pay a broker or dealer an
amount of  commission  for effecting a securities  transaction  in excess of the
amount of commission  another  broker or dealer would have charged for effecting
that  transaction,  if the Adviser  determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services  provided  by such  broker or  dealer,  viewed in terms of either  that
particular transaction or the Adviser's overall responsibilities with respect to
the Trust and to other clients of the Adviser as to which the Adviser  exercises
investment  discretion.  Subject to  seeking  the best  price and  execution  as
described above,  and in accordance with applicable  rules and regulations,  the
Adviser also is authorized to consider  sales of shares of the Trust or of other
funds or  accounts of the  Adviser as a factor in the  selection  of brokers and
dealers.

         (c) The Adviser may from time to time enter into sub-investment
advisory agreements with respect to the Trust with one or more investment
advisers with such terms and conditions as the Adviser may determine, provided
that such sub-investment advisory agreements have been approved in accordance
with applicable provisions of the Investment Company Act of 1940 and any rules,
regulations or orders of the Securities and Exchange Commission thereunder.
Subject to the provisions of Article 6, the Adviser shall not be liable for any
error of judgment or mistake of law by any sub-adviser or for any loss arising
out of any investment made by any sub-adviser or for any act or omission in the
execution and management of the Trust by any sub-adviser.

         Article 2. Allocation of Charges and Expenses. (a) The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Trust and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Trust. The Adviser
shall arrange, if desired by the Trust, for directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law.

     (b) It is  understood  that  the  Trust  will  pay all of its own  expenses
incurred in its operations and the offering of its shares,  unless  specifically
provided  otherwise  in this  Agreement or except to the extent that the Adviser
agrees in a written instrument executed by the Adviser  (specifically  referring
to this Article 2(b)) to assume or otherwise  pay for specified  expenses of the
Trust, including, without limitation:  compensation of Trustees "not affiliated"
with the Adviser; governmental fees; interest charges; taxes; membership dues in
the Investment  Company  Institute  allocable to the Trust; fees and expenses of
independent auditors, of legal counsel, and of any transfer agent,  registrar or
dividend  disbursing agent of the Trust;  expenses of repurchasing and redeeming
shares and servicing shareholder accounts;  expenses of

                                       2
<PAGE>

preparing,  printing  and  mailing  stock  certificates,   shareholder  reports,
notices,  proxy statements and reports to governmental officers and commissions;
brokerage  and  other  expenses  connected  with the  execution,  recording  and
settlement of portfolio  security  transactions;  insurance  premiums;  fees and
expenses of the custodian for all services to the Trust,  including  safekeeping
of funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Trust; organizational and start
up costs; such non-recurring or extraordinary  expenses as may arise,  including
those relating to actions, suits or proceedings to which the Trust is a party or
otherwise  may have an exposure,  and the legal  obligation  which the Trust may
have to indemnify the Trust's  Trustees and officers with respect  thereto;  and
expenses  relating to the issuance,  registration and qualification of shares of
the Trust and the  preparation,  printing and mailing of  prospectuses  for such
purposes  (except to the extent  that any  Distribution  Agreement  to which the
Trust  is a party  provides  that  another  party  is to pay some or all of such
expenses).

         (c) The payment or assumption by the Adviser of any expenses of the
Trust that the Adviser is not obligated by this Agreement or otherwise to pay or
assume shall not obligate the Adviser to pay or assume the same or any similar
expenses of the Trust on any subsequent occasion.

         Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Trust shall pay to the Adviser an investment
advisory fee computed and paid monthly as set forth in Appendix A attached
hereto. If the Adviser shall serve for less than the whole of any period
specified in this Article 3, the compensation paid to the Adviser will be
prorated.

         Article 4. Additional Services. Should the Trust have occasion to
request the Adviser or its affiliates to perform administrative or other
additional services not herein contemplated or to request the Adviser or its
affiliates to arrange for the services of others, the Adviser or its affiliates
will act for the Trust upon request to the best of its ability, with
compensation for the services to be agreed upon with respect to each such
occasion as it arises. No such agreement for additional services shall expand,
reduce or otherwise alter the obligations of the Adviser, or the compensation
that the Adviser is due, under this Agreement.

         Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, as principals in making purchases or sales of securities or
other property for the account of the Trust, except as permitted by the
Investment Company Act of 1940 and any rules, regulations or orders of the
Securities and Exchange Commission thereunder, will not take a long or short
position in the shares of the Trust except as permitted by the applicable law,
and will comply with all other provisions of the Declaration and the By-Laws and
the then-current Prospectus and Statement of Additional Information of the Trust
relative to the Adviser and its directors and officers.

         Article 6. Limitation of Liability of the Adviser. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Trust, except for willful misfeasance,

                                       3
<PAGE>

bad faith,  gross negligence or reckless disregard of its duties and obligations
hereunder.  As used  in  this  Article  6,  the  term  "Adviser"  shall  include
directors,  officers and  employees  of the Adviser as well as that  corporation
itself.

         Article 7. Activities of the Adviser. (a) The Trust acknowledges that
the services of the Adviser are not exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Trust further
acknowledges that it is possible that, based on their investment objectives and
policies, certain funds or accounts managed by the Adviser or its affiliates may
at times take investment positions or engage in investment techniques which are
contrary to positions taken or techniques engaged in on behalf of the Trust.
Notwithstanding the foregoing, the Adviser will at all times endeavor to treat
all of its clients in a fair and equitable manner.

         (b) The Trust acknowledges that whenever the Trust and one or more
other funds or accounts advised by the Adviser have available monies for
investment, investments suitable and appropriate for each shall be allocated in
a manner believed by the Adviser to be fair and equitable to each entity.
Similarly, opportunities to sell securities or other investments shall be
allocated in a manner believed by the Adviser to be fair and equitable to each
entity. The Trust acknowledges that in some instances this may adversely affect
the size of the position that may be acquired or disposed of for the Trust.

         (c) It is understood that the Trustees, officers and shareholders of
the Trust are or may be or become interested in the Adviser, as directors,
officers, employees, or otherwise and that directors, officers and employees of
the Adviser are or may become similarly interested in the Trust, and that the
Adviser may be or become interested in the Trust as a shareholder or otherwise.

         Article 8. MFS Name. The Trust acknowledges that the names
"Massachusetts Financial Services," "MFS" or any derivatives thereof or logos
associated with those names (collectively, the "MFS Marks") are the valuable
property of the Adviser and its affiliates. The Adviser grants the Trust a
non-exclusive and non-transferable right and sub-license to use the MFS Marks
only so long as the Adviser serves as investment adviser to the Trust. The Trust
agrees that if the Adviser for any reason no longer serves as investment adviser
to the Trust, and the Adviser so requests, the Trust promptly shall cease to use
the MFS Marks and promptly shall amend its registration statement to delete any
references to the MFS Marks. The Trust acknowledges that the Adviser may permit
other clients to use the MFS Marks in their names or other material. For
purposes of this Article, the Trust shall be deemed to have taken the required
action "promptly" if such action is taken within 90 days of the Adviser no
longer serving as the investment adviser to the Trust, or from the date of the
Adviser's request, as the case may be.

         Article 9. Duration, Termination and Amendment of this Agreement. (a)
This Agreement shall become effective with respect to the Trust on the date
first written above. Thereafter, this Agreement will remain in effect with
respect to the Trust for a period of two years from the date first written
above, on which date it will terminate for the Trust unless its continuance is
"specifically approved at least annually" (i) by the vote of a majority of the

                                       4
<PAGE>


Trustees of the Trust who are not "interested persons" of the Trust or of the
Adviser at a meeting specifically called for the purpose of voting on such
approval, and (ii) by the Board of Trustees of the Trust, or by "vote of a
majority of the outstanding voting securities" of the Trust.

         (b) This Agreement may be terminated as to the Trust at any time
without the payment of any penalty by the Trustees or by "vote of a majority of
the outstanding voting securities" of the Trust, or by the Adviser, in each case
on not more than sixty days' nor less than thirty days' written notice to the
other party. This Agreement shall automatically terminate in the event of its
"assignment".

         (c) This Agreement may be amended with respect to the Trust only if
such amendment is in writing signed by or on behalf of the Trust and the Adviser
and is approved by "vote of a majority of the outstanding voting securities" of
the Trust (if such shareholder approval is required by the Investment Company
Act of 1940).

         Article 10. Scope of Trust's Obligations. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's Trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust.

         Article 11. Definitions and Interpretations. The terms "specifically
approved at least annually," "vote of a majority of the outstanding voting
securities," "assignment," "affiliated person," and "interested person," when
used in this Agreement, shall have the respective meanings specified, and shall
be construed in a manner consistent with, the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Securities Act of 1933, or the Securities
Exchange Act of 1934 (collectively, the "Federal Securities Acts") shall be
resolved by reference to such term or provision of the Federal Securities Acts
and to interpretations thereof, if any, by United States federal courts or, in
the absence of any controlling decisions of any such court, by rules or
regulations of the Securities and Exchange Commission. Where the effect of a
requirement of the Federal Securities Acts reflected in any provision of this
Agreement is revised by rule or regulation of the Securities and Exchange
Commission, such provisions shall be deemed to incorporate the effect of such
rule or regulation.

         Article 12. Record Keeping. The Adviser will maintain records in a form
acceptable to the Trust and in compliance with the rules and regulations of the
Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.

         Article 13.  Miscellaneous.  (a) This  Agreement  contains  the entire
understanding  and  agreement  of the parties  with  respect to the subject
matter hereof.

                                       5
<PAGE>

         (b) Headings in this Agreement are for ease of reference only and shall
not constitute a part of the Agreement.

         (c) Should any portion of this Agreement for any reason be held void in
law or equity, the remainder of the Agreement shall be construed to the extent
possible as if such voided portion had never been contained herein.

         (d) This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions thereof,
except that questions of interpretation shall be resolved in accordance with the
provisions of Article 11 above.



                                       6
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned
officers thereunto duly authorized, all as of the day and year first above
written. The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Trust, individually, but bind only the trust estate.


                                        MFS INTERMEDIATE INCOME TRUST





                                        By:  JAMES R. BORDEWICK, JR.
                                             -----------------------
                                      Name:  James R. Bordewick, Jr.
                                     Title:  Assistant Secretary



                                        MASSACHUSETTS FINANCIAL SERVICES COMPANY


                                        By:   JEFFREY L. SHAMES
                                              -----------------
                                      Name:   Jeffrey L. Shames
                                      Title:  Chairman




                                       7
<PAGE>


                                   Appendix A

                           Compensation to the Adviser


The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of 0.32% of the Trust's average daily net
assets plus 5.65% of the Trust's gross income (i.e., income other than gains
from the sale of securities, gains from options and futures transactions and
premium income from options written), in each case on an annual basis for the
Trust's then-current fiscal year.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>6
<FILENAME>min2g2.txt
<DESCRIPTION>MASTER ADMINISTRATIVE SERVICES AGREEMENT
<TEXT>
                                                          EXHIBIT NO. 99.2(g)(2)

                    MASTER ADMINISTRATIVE SERVICES AGREEMENT


MASTER ADMINISTRATIVE SERVICES AGREEMENT dated this 1st day of March, 1997, as
amended effective April 1, 1999, by and among Massachusetts Financial Services
Company, a Delaware corporation (the "Administrator"), and each of the funds (or
trusts acting on behalf of their series) identified from time to time on Exhibit
A hereto (each a "Fund" and collectively the "Funds").

                              W I T N E S S E T H:

WHEREAS, the Funds have entered into Investment Advisory Agreements with the
Administrator (the "Advisory Agreements") pursuant to which the Administrator
provides investment advisory services to the Funds;

WHEREAS, the Advisory Agreements recite that the Administrator will bear certain
expenses associated with the provision of investment advisory services and that
the Funds will bear their own expenses, including expenses of legal counsel to
the Funds, expenses connected with the execution, recording and settlement of
the Funds' portfolio security transactions and expenses of calculating the
Funds' net asset values;

WHEREAS, the Administrator, at its expense, has provided a variety of
administrative services to the Funds for the benefit of the Funds and their
shareholders; and

WHEREAS, the Funds desire to retain the Administrator to render certain legal,
financial administration and other administrative services to the Funds in the
manner and on the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto and hereinafter set forth, the parties covenant and agree as
follows:

1. Administrative Services. Subject to the limitations set forth in the second
paragraph of Section 3 of this Agreement, the Administrator shall render to each
Fund the financial administration services set forth on Exhibit B hereto (the
"Financial Administration Services"), the legal services set forth on Exhibit C
hereto (the "Legal Services") and the other administrative services set forth on
Exhibit D hereto ("Other Administrative Services") (the Financial Administration
Services, Legal Services and Other Administrative Services are collectively
referred to as the "Administrative Services").

         The Administrative Services provided by the Administrator to each Fund
may not include all Administrative Services required by the Fund, due to a
number of considerations, including, without limitation, the Administrator's
level of work flow, staffing and resources, the specialized or unique nature of
the Administrative Services and the relative priorities of such Administrative
Services. The Administrator may, on behalf of each Fund, arrange for or engage
outside legal

                                       2
<PAGE>

counsel,  accounting or auditing firm or any other outside  service  provider or
vendor (collectively,  "third party vendors") to perform Administrative Services
for the  Fund,  and the Fund  will  bear the  expense  of any such  third  party
vendors;  provided  however,  that the  Administrator  shall promptly inform the
Fund's governing board in the event any third party vendor is engaged to perform
Administrative  Services  for a Fund on a basis  that is  expected  to  generate
significant expenses for a Fund.

2. Maintenance of Books and Records. With respect to the provision of
Administrative Services, the Administrator will preserve for each Fund that is
registered as a registered investment company with the Securities and Exchange
Commission (the "SEC") all records required to be maintained as prescribed by
the rules and regulations of the SEC in the manner and for the time periods
prescribed by such rules. The Administrator agrees that all such records shall
be the property and under the control of each Fund for which they are maintained
and shall be made available, within five business days of any request therefor,
to the Fund's Board of Trustees or auditors during regular business hours at the
Administrator's offices. In the event of termination of this Agreement for any
reason, all such records shall be returned, without charge, promptly to the
appropriate Fund, free from any claim or retention of rights by the
Administrator, except that the Administrator may retain copies of such records.

3. Administrative Fee. Each Fund shall pay the Administrator a fee as agreed to
from time to time and as set forth in Exhibit E hereto (the "Administrative
Fee"). The Administrative Fee shall be accrued for each calendar day and the sum
of the daily fee accruals shall be paid monthly to the Administrator on the
second to last business day of each calendar month. If this Agreement becomes
effective or terminates before the end of any calendar month, the Administrative
Fee for the period from the effective date to the end of such calendar month or
from the beginning of such calendar month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.

         The governing board of each Fund will, on an annual basis, review the
services provided, the Administrator's costs in providing such services, amounts
paid to third party vendors pursuant to the arrangement described in Section 1
and the amount paid by the Fund to the Administrator pursuant to this Agreement
(including the extent to which such amount is greater or lesser than the
Administrator's costs in providing such services) and such other information as
such board may reasonably request.

4. Scope of Administrative Services; Regulatory and Business and Industry
Practice Developments. The Administrative Services to be furnished by the
Administrator include only those services required by a Fund or which are being
furnished by the Administrator at March 1, 1997. In the event that, subsequent
to March 1, 1997, because of regulatory developments, or new or modified
business or industry practices, the Fund requires services in addition to the
Administrative Services, at the request of the Fund, the Administrator will
consider furnishing such additional services, with compensation for such
additional services to be agreed upon with respect to each such occasion as it
arises.

                                       3
<PAGE>

5. Non-Exclusivity. The services of the Administrator to the Funds hereunder are
not to be deemed exclusive and the Administrator shall be free to render similar
services to others.

6. Standard of Care. Neither the Administrator, nor any of its directors,
officers, stockholders, agents or employees, shall be liable or responsible to
any Fund or its shareholders for any error of judgment, mistake of law or any
loss arising out of any act or omission in the performance by the Administrator
of its duties under this Agreement, except for liability resulting from (a)
willful misfeasance, (b) bad faith, (c) in the case of Financial Administration
Services, negligence, and, in the case of Legal Services and Other
Administrative Services, gross negligence, in each case on the Administrator's
part or (d) from reckless disregard by the Administrator of its obligations and
duties under this Agreement.

7. Term, Termination, Amendment and Assignment. This Agreement shall begin on
the date first written above and shall continue indefinitely. The Agreement may
be terminated at any time, without payment of any penalty, by the Board of
Directors/Trustees which oversees the Fund upon sixty (60) days' written notice
to the Administrator. This Agreement may be terminated by the Administrator with
respect to any Fund at any time upon sixty (60) days' written notice to the
Fund. This Agreement may be amended at any time by a written agreement executed
by each party hereto and may be assigned with respect to any Fund only with the
written consent of the Fund and the Administrator.

8. Miscellaneous.

         a.       Captions. The captions in this Agreement are included for
                  convenience of reference only and in no way define or
                  delineate any of the provisions hereof or otherwise affect
                  their construction or effect.

         b.       Governing Law. The provisions of this Agreement shall be
                  construed and interpreted in accordance with the domestic
                  substantive laws of The Commonwealth of Massachusetts, without
                  giving effect to any conflicts or choice of laws rule or
                  provision that would result in the application of the domestic
                  substantive laws of any other jurisdiction.

         c.       Counterparts. This Agreement may be executed simultaneously in
                  two or more counterparts, each of which shall be deemed an
                  original, but all of which together shall constitute one and
                  the same instrument.

         d.       Joinder of Funds. In the event that additional funds are
                  created from time to time which desire to retain the
                  Administrator to provide them with Administration Services
                  pursuant to this Agreement, the Administrator and the
                  additional fund may jointly amend Schedule A hereto to add the
                  additional fund, and the additional fund shall thereafter be
                  deemed a "Fund" for all purposes of this Agreement. The
                  consent of the other parties to this Agreement shall not be
                  required to amend Schedule A hereto.

                                       4
<PAGE>

        e.        Scope of Fund's  Obligations.  A copy of the Declaration of
                  Trust of each  Fund (or trust of which the Fund is a series)
                  organized  as  a   Massachusetts   business  trust  (each  a
                  "Trust"),  is on file  with  the  Secretary  of State of The
                  Commonwealth    of    Massachusetts.    The    Administrator
                  acknowledges  that the obligations of or arising out of this
                  Agreement  are not binding  upon any of a Trust's  trustees,
                  officers,  employees,  agents or shareholders  individually,
                  but are binding  solely upon the assets and  property of the
                  Trust  in  accordance   with  its   proportionate   interest
                  thereunder and  hereunder.  If this Agreement is executed by
                  the Trust on behalf of one or more series of the Trust,  the
                  Administrator  further  acknowledges  that  the  assets  and
                  liabilities  of each  series of the Trust are  separate  and
                  distinct and that the  obligations of or arising out of this
                  Agreement are binding  solely upon the assets or property of
                  the  series on whose  behalf  the Trust  has  executed  this
                  Agreement.   The   Administrator   also   agrees   that  the
                  obligations of each Fund hereunder  shall be several and not
                  joint,  in  accordance  with  its   proportionate   interest
                  hereunder,  and  agrees  not to  proceed  (by way of  claim,
                  set-off or otherwise)  against any Fund for the  obligations
                  of another Fund.


                                       5
<PAGE>


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affiliated, as of the date first written above.

                                        On behalf of the MFS Family
                                        of Funds, MFS Closed-End
                                        Funds and MFS Institutional
                                        Funds listed on Exhibit A
                                        hereto


                                        By:  ARNOLD D. SCOTT
                                             Arnold D. Scott
                                             Trustee

                                        On behalf of the MFS/Sun
                                        Life Series Trust and
                                        Compass Products listed on
                                        Exhibit A hereto


                                        By:  JOHN D. MCNEIL
                                             John D. McNeil
                                             Chairman

                                        MASSACHUSETTS FINANCIAL SERVICES COMPANY


                                        By:  JEFFREY L. SHAMES
                                             Jeffrey L. Shames
                                             Chairman
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>7
<FILENAME>min2j3.txt
<DESCRIPTION>EXHIBIT A TO CUSTODIAN CONTRACT
<TEXT>
                                                         EXHIBIT NO. 99.2(j)(3)
                                                         As of: 26 April 2005

                         Exhibit A to Custodian Contract
<TABLE>
<CAPTION>
                  <S>                                           <C>                           <C>
                  --------------------------------------------- ------------------------- -------------------------


                            Name of Trust/Portfolio              State Street Portfolio       Chase Portfolio
                  -------------------------------------------------------------------------------------------------

                  I.   MFS Family of Funds
                       MFS Series Trust I:
                  -------------------------------------------------------------------------------------------------
                       Cash Reserve Fund (MCF)                          X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Core Equity Fund (RGI)                           X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Core Growth Fund (CGF)                           X>
                  -------------------------------------------------------------------------------------------------
                       Managed Sectors Fund (MMS)                                                 X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       New Discovery Fund (NDF)                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research International Fund (RIF)                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Strategic Growth Fund (AGF)                      X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Technology Fund (SCT)                            X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Value Fund (EIF)                                 X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust II:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Emerging Growth Fund (MEG)                                                 X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Large Cap Growth Fund (MCG)                                                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust III:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       High Income Fund (MFH)                                                     X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       High Yield Opportunities Fund (HYO)              X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Municipal High Income Fund (MMH)                 N/A                      N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust IV:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Gov't. Money Mkt. Fund (MMG)                      X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Mid Cap Growth Fund (OTC)                                                  X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Money Market Fund (MMM)                          X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Municipal Bond Fund (MMB)                        N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust V:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       International New Discovery Fund (MIO)           X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research Fund (MFR)                                                        X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Total Return Fund (MTR)                                                    X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust VI:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Global Equity Fund (MWE)                                                   X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Global Total Return Fund (MWT)                                             X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Utilities Fund (MMU)                                                       X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust VII:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                         Capital Opportunities Fund (MVF)                                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust VIII:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                         Strategic Income Fund (MSI)                                              X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                         Global Growth Fund (WGF)                       X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                         MFS Tax Managed Equity Fund (TME)              X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust IX:
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                 <S>                                                   <C>                       <C>
                 -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Bond Fund (MFB)                                                            X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Emerging Opportunities Fund (MCV)                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Inflation-Adjusted Bond Fund (IAB)               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Intermediate Inv. Grade Bond Fund                X
                  (IBF)
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Limited Maturity Fund (MLM)                                                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Municipal Ltd. Maturity Fund (MML)               N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research Bond Fund (RBF)                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research Bond Fund J  (RBJ)                      X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust X:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Aggressive Growth Allocation Fund (AGG)          X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Conservative Allocation Fund (CON)               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Emerging Markets. Debt Fund (EMD)                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Emerging Markets Equity Fund (FEM)               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Floating Rate High Income Fund (FRH)             X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Gemini U.K. Fund (GKF)                           X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Global Value Fund (GOF)                                                    X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Growth Allocation Fund (GRO)                     X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       International Diversification Fund               X
                  (MDI)
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       International. Growth Fund (FGF)                 X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       International Value Fund (FGI)                   X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Moderate Allocation Fund (MOD)                   X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       New Endeavor Fund (NEF)                          X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Strategic Value Fund (SVF)                       X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Series Trust XI:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Mid Cap Value Fund (MDF)                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Union Standard Equity Fund (UNE)                 X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Municipal Series Trust:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       AL Municipal Bond Fund (MAL)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       AR Municipal Bond Fund (MAR)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       CA Municipal Bond Fund (MCA)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       FL Municipal Bond Fund (MFL)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       GA Municipal Bond Fund (MGA)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MD Municipal Bond Fund (MMD)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MA Municipal Bond Fund (MMA)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MS Municipal Bond Fund (MMP)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       NY Municipal Bond Fund (MNY)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       NC Municipal Bond Fund (MNC)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       PA Municipal Bond Fund (MPA)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       SC Municipal Bond Fund (MSC)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       TN Municipal Bond Fund (MTN)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       VA Municipal Bond Fund (MVA)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       WV Municipal Bond Fund (MWV)                       N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Municipal Income Fund (MMI)                        N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Stand-Alone Funds:
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Government Limited Maturity Fund (MGL)             N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                         Government Securities Fund (MGS)                 N/A                       N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Growth Opportunities Fund (MGO)                                              X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MA Investors Growth Stock Fund (MIG)                                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MA Investors Trust (MIT)                            X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                  <S>                                                      <C>                     <C>
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                  II.  MFS Closed-End Funds
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Charter Income Trust (MCR)                          X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Government. Markets. Income Trust (MGF)             X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Intermediate Income Trust (MIN)                     X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Multimarket Income Trust (MMT)                                             X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Municipal Income Trust (MFM)                       N/A                    N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Special Value Trust (MFV)                                                  X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                  III. MFS Institutional Funds
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Institutional Trust (MFSIT):
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Inst. International Equity Fund (IIE)               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Inst. Large Cap Growth. Fund (ILC)                  X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Inst. Large Cap Value Fund (ILV)                    X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Inst. Int'l Research Equity Fund (IRE)              X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       MFS Variable Insurance Trust (MVI):
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Capital Opportunities Series (VVS)                                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Emerging Growth Series (VEG)                                               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Global Equity Series (VGE)                       X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       High Income Series (VHI)                                                   X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Investors Growth Stock Series (VGS)              X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Investors Trust Series (VGI)                                               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Mid Cap Growth Series (VMG)                      X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Money Market Series (VMM)                        X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       New Discovery Series (VND)                       X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research Bond Series (VFB) (fka Bond                                       X
                  Series)
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research Series (VFR)                                                      X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research International Series (VRI)              X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Strategic Income Series (VWG) ( fka                                        X
                  Global Governments Series)
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Total Return Series (VTR)                                                  X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Utilities Series (VUF)                                                     X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Value Series (VLU)                                                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                  IV.  MFS/Sun Life Series Trust
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Bond Series (BDS)                                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Capital Appreciation Series (CAS)                                          X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Capital Opportunity Series (VAL)                 X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Emerging Growth Series (EGS)                                               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Emerging Markets Equity Series (FCE)             X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Global Governments Series (WGS)                                            X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Global Growth Series (WGO)                       X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Global Total Return Series (WTS)                                           X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Government. Securities Series (GSS) N/A N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       High Yield Series (HYS)                                                    X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       International. Growth Series (FCI)                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       International Value Series (FCG)                  X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Mass. Inv. Growth Stock Series (MIS)              X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Mass. Investors Trust Series (CGS)                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Mid Cap Growth Series (MCS)                                                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Mid Cap Value Series (MVS)                        X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                  <S>                                                    <C>
                       Money Market Series (MKS)                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       New Discovery Series (NWD)                        X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Res. Gr. and Inc. Series (RGS)                    X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research International Series (RSS)               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Research Series (RES)                                                      X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Strategic Growth Series (SGS)                     X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Strategic Income Series (SIS)                     X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Strategic Value Series (SVS)                      X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Technology Series (TKS)                           X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Total Return Series (TRS)                                                  X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Utilities Series (UTS)                                                     X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Value Series (EIS)                                X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                  V.   Compass Products
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Cap. Appreciation Var. Acct. (CAVA)               X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Gov't. Securities Var. Acct. (GSVA)              N/A                     N/A
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Global Gov'ts. Var. Acct. (WGVA)                                          X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       High Yield Variable Acct. (HYVA)                                          X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Managed Sectors Var. Acct. (MSVA)                                         X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Money Mkt. Variable Acct.(MMVA)                  X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                       Total Return Variable Acct. (TRVA)                                        X
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------

                  -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
         <S>                                                           <C>
         MFS Funds Listed in this Exhibit A                            State Street Bank and Trust Company



         By:                                                           By:
            -----------------------------------------                     -----------------------------------------
                Name: James F. DesMarais                                   Name:
                Title:  Assistant Secretary and Assistant Clerk            Title:


                                                                       JPMorgan Chase Investor Services Co.

                                                                       By:
                                                                          -----------------------------------------
                                                                           Name:
                                                                           Title:
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>8
<FILENAME>min2k2.txt
<DESCRIPTION>AMENDMENT TO SHAREHOLDER SERVICING AGREEMENT
<TEXT>
                                                         EXHIBIT NO. 99.2(k)(2)



                  AMENDMENT TO SHAREHOLDER SERVICING AGREEMENTS

         WHEREAS, each of the investment companies listed on Annex A hereto
(each a "Fund" and collectively the "Funds") is a party to a Shareholder
Servicing Agreement (the "Agreements") with MFS Service Center, Inc. ("MFSC");
and

         WHEREAS, the Funds and MFSC wish to clarify MFSC's responsibilities in
implementing and monitoring compliance with policies adopted by the Funds to
seek to detect and deter late trading, market timing and excessive trading; and

         NOW, THEREFORE, MFSC and each of the Funds listed on Annex A agree to
amend their respective Agreements as follows:

Section 1. Section 3 of each Agreement is amended to add the following to the
end of that Section:

         "Without limiting its duties as set forth above, you agree to use your
         commercially reasonable efforts to implement any short-term trading
         fees, exchange limitations and any other restrictions intended to limit
         or prevent late trading, market timing or excessive or short-term
         trading in the Fund that the Board of Trustees may adopt. The Fund
         agrees to discuss with you the technical feasibility and related
         expenses of any such restrictions prior to their adoption. You and the
         Board of Trustees shall review from time to time appropriate procedures
         that should be implemented by the Fund's service providers to monitor
         for and to seek to prevent late trading and seek to limit or prevent
         market timing or excessive trading. You shall implement and shall
         cooperate with other service providers in implementing such policies
         and procedures. You shall also cooperate with and take such measures as
         the Board of Trustees may reasonably request to monitor the adherence
         by financial intermediaries which have entered into omnibus account or
         network arrangements with the Fund's policies and procedures regarding
         late trading, market timing or excessive trading and the implementation
         of any short-term trading fees, exchange limitations and any other
         restrictions intended to prevent excessive or short-term trading in the
         Fund.

         In carrying out its responsibilities under this Section 1, MFSC agrees
         to coordinate with such fund trade monitoring or similar groups or
         committees established from time to time by Massachusetts Financial
         Services Company ("MFS"), the sponsor, investment adviser and
<PAGE>

         administrator of the Funds and the parent of MFSC. As of the date of
         this amendment, MFS has established a Fund Trade Monitoring Committee
         ("FTM Committee") and a Fund Trade Monitoring Group ("FTM Group"). The
         FTM Group searches for potential violations of any limitations on
         exchanges established from time to time and for potential market timing
         and late trading activity. The FTM Committee supervises the activities
         of the FTM Group. As of the date of this amendment, the procedures that
         are in effect are attached as Annex B; Annex B to amendment shall be
         updated to reflect such procedures as in effect from time to time. MFSC
         shall make such periodic reports to the Board of Trustees (or a
         committee thereof) as reasonably requested from time to time.

Section 2. Subject to such oversight and authorization as the Board of Trustees
deems appropriate, the Funds shall bear such sub-accounting and networking fees
as agreed to from time to time with MFSC.

Section 3. This Amendment shall be construed under and shall be governed by the
laws of The Commonwealth of Massachusetts, and the parties hereto agree that
proper venue of any action with respect hereto shall be Boston, Massachusetts.

Section 4. This Amendment may be executed in any number of counterparts, each of
which shall be deemed to be an original.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed in duplicate original by its officers thereunto duly authorized, as of
February 22, 2005.

                                        MFS SERVICE CENTER, INC.

                                        By: MAUREEN LEARY-JAGO
                                            Maureen Leary-Jago, President


                                        Each of the Funds listed on Annex A


                                        By: JAMES R. BORDEWICK, JR.
                                            James R. Bordewick, Jr.
                                            Assistant Secretary



                                       2
<PAGE>
              ANNEX A TO AMENDMENT TO SHAREHOLDER SERVING AGREEMENT




<PAGE>


MFS Series Trust I

      MFS Cash Reserve Fund                 ("MCF")
      MFS Core Equity Fund                  ("RGI")
      MFS Core Growth Fund                  ("CGF")
      MFS Managed Sectors Fund              ("MMS")
      MFS New Discovery Fund                ("NDF")
      MFS Research International Fund       ("RIF")
      MFS Strategic Growth Fund             ("AGF")
      MFS Technology Fund                   ("SCT")
      MFS Value Fund                        ("EIF")


MFS Series Trust II

      MFS Emerging Growth Fund              ("MEG")
      MFS Large Cap Growth Fund             ("MCG")


MFS Series Trust III

      MFS High Income Fund                  ("MFH")
      MFS High Yield Opportunities Fund     ("HYO")
      MFS Municipal High Income Fund        ("MMH")


MFS Series Trust IV

      MFS Government Money Market Fund      ("MMG")
      MFS Mid Cap Growth Fund               ("OTC")
      MFS Money Market Fund                 ("MMM")
      MFS Municipal Bond Fund               ("MMB")


MFS Series Trust V

      MFS International New Discovery Fund  ("MIO")
      MFS Research Fund                     ("MFR")
      MFS Total Return Fund                 ("MTR")


MFS Series Trust VI

      MFS Global Equity Fund                ("MWE")
      MFS Global Total Return Fund          ("MWT")
      MFS Utilities Fund                    ("MMU")


MFS Series Trust VII

      MFS Capital Opportunities Fund        ("MVF")

MFS Series Trust VIII

      MFS Global Growth Fund                ("WGF")
      MFS Strategic Income Fund             ("MSI")
<PAGE>

MFS Series Trust IX

      MFS Bond Fund                         ("MFB")
      MFS Inflation-Adjusted Bond Fund      ("IAB")
      MFS Intermediate Investment
          Grade Bond Fund                   ("IBF")
      MFS Limited Maturity Fund             ("MLM")
      MFS Municipal Limited Maturity Fund   ("MML")
      MFS Research Bond Fund                ("RBF")
      MFS Research Bond Fund J              ("RBJ")


MFS Series Trust X

      MFS Aggressive Growth Allocation Fund ("AGG")
      MFS Conservative Allocation Fund      ("CON")
      MFS Emerging Markets Debt Fund        ("EMD")
      MFS Emerging Markets Equity Fund      ("FEM")
      MFS Floating Rate High Income Fund    ("FRH")
      MFS Growth Allocation Fund            ("GRO")
      MFS International Growth Fund         ("FGF")
      MFS International Value Fund          ("FGI")
      MFS Moderate Allocation Fund          ("MOD")
      MFS New Endeavor Fund                 ("NEF")
      MFS Strategic Value Fund              ("SVF")


MFS Series Trust XI

      MFS Mid Cap Value Fund                ("MDV")
      MFS Union Standard Equity Fund        ("UNE")

MFS Municipal Series Trust ("MST")
      MFS Alabama Municipal Bond Fund       ("MAL")
      MFS Arkansas Municipal Bond Fund      ("MAR")
      MFS California Municipal Bond Fund    ("MCA")
      MFS Florida Municipal Bond Fund       ("MFL")
      MFS Georgia Municipal Bond Fund       ("MGA")
      MFS Maryland Municipal Bond Fund      ("MMD")
      MFS Massachusetts Municipal Bond Fund ("MMA")
      MFS Mississippi Municipal Bond Fund   ("MMP")
      MFS Municipal Income Fund             ("MMI")
      MFS New York Municipal Bond Fund      ("MNY")
      MFS North Carolina Municipal Bond Fund("MNC")
      MFS Pennsylvania Municipal Bond Fund  ("MPA")
      MFS South Carolina Municipal Bond Fund("MSC")
      MFS Tennessee Municipal Bond Fund     ("MTN")
      MFS Virginia Municipal Bond Fund      ("MVA")
      MFS West Virginia Municipal Bond Fund ("MWV")

MFS Variable Insurance Trust ("MVI")
      MFS Bond Series                       ("VFB")
      MFS Capital Opportunities Series      ("VVS")
      MFS Emerging Growth Series            ("VEG")
      MFS Global Equity Series              ("VGE")
      MFS High Income Series                ("VHI")
      MFS Investors Growth Stock Series     ("VGS")
      MFS Investors Trust Series            ("VGI")
      MFS Mid Cap Growth Series             ("VMG")
      MFS Money Market Series               ("VMM")
<PAGE>

      MFS New Discovery Series              ("VND")
      MFS Research Series                   ("VFR")
      MFS Strategic Income Series           ("VWG")
      MFS Total Return Series               ("VTR")
      MFS Utilities Series                  ("VUF")
      MFS Value Series                      ("VLU")


MFS Institutional Trust

      MFS Institutional International Equity("IIE")
          Fund
      MFS Institutional International
          Research Equity Fund              ("IRE")
      MFS Institutional Large Cap Growth    ("ILC")
          Fund
      MFS Institutional Large Cap Value Fund("ILV")

Massachusetts Investors Trust               ("MIT")

Massachusetts Investors Growth Stock Fund   ("MIG")

MFS Growth Opportunities Fund               ("MGO")

MFS Government Securities Fund              ("MGS")

MFS Government Limited Maturity Fund        ("MGL")

MFS Government Markets Income Trust         ("MGF")

MFS Intermediate Income Trust               ("MIN")

MFS Charter Income Trust                    ("MCR")

MFS Special Value Trust                     ("MFV")

MFS Municipal Income Trust                  ("MFM")

MFS Multimarket Income Trust                ("MMT")


<PAGE>

                                                                        ANNEX B










                      MFS Fund Trade Monitoring Procedures


      Adopted by the Fund Trade Monitoring Committee on September 29, 2004


<PAGE>





                               TABLE OF CONTENTS

A.   MONITORING AND ENFORCEMENT PROCEDURES.........................
        1. Nature of Fund Trading Policies.........................
        2. Monitoring for Compliance with Fund Trading Policies....
        3. Enforcement of Fund Trading Policies....................
        4. Recordkeeping and Reporting.............................
        5. Monitoring and Enforcement Limitations..................

B.   RECORDKEEPING AND ONGOING REVIEW..............................
        1. Record keeping..........................................
        2. Ongoing Review of Appropriateness of Procedures.........

C.   APPENDICES....................................................

Appendix                                          A              -Enforcement
Actions............................................................




<PAGE>


                      MFS Fund Trade Monitoring Procedures

The MFS Fund Trade Monitoring Committee ("Committee") has adopted these
Procedures which are designed to address trade monitoring and enforcement
functions performed by MFS on behalf of open-end funds sponsored by MFS or one
of its controlled affiliates (the "Funds"). Pursuant to these Procedures, MFS
seeks to monitor and enforce Fund policies concerning: (i) excessive shareholder
trading of Fund shares; (ii) redemption fees imposed on exchange and redemption
transactions by certain Funds; (iii) late trading in Fund shares (collectively
referred to as "Fund Trading Policies"); and such other activities as deemed
necessary by the Committee.

 A. MONITORING AND ENFORCEMENT PROCEDURES

1. Nature of Fund Trading Policies.

     The Funds have, and from time to time will change, their Fund Trading
     Policies. As noted earlier, these Fund Trading Policies are designed to
     limit or prevent excessive shareholder trading in Fund shares and late
     trading, and certain Funds have adopted redemption fees. Certain Funds have
     adopted defined limitations on the frequency and dollar amount of permitted
     exchanges over a certain time period ("Specific Limitation Policies") while
     reserving the right to reject, restrict or cancel any purchase or exchange
     request that is, or may be considered, harmful to the best interests of
     Fund shareholders ("General Limitation Policies"), while other Funds have
     not adopted Specific Limitation Policies but have adopted General
     Limitation Policies, as disclosed in their prospectuses as updated from
     time to time.

2. Monitoring for Compliance with Fund Trading Policies.

     A group of MFS employees called the Fund Monitoring Group ("FMG") is
     responsible for the day-to-day monitoring of Fund share transactions and
     for determining whether these transactions are in accordance with Fund
     Trading Policies, subject to oversight by and reporting to the Committee.

3. Enforcement of Fund Trading Policies.

     The FMG is responsible for the day-to-day enforcement of Fund Trading
     Policies, subject to oversight by and reporting to the Committee. Where the
     FMG detects share trading activity which violates or may violate a Fund's
     Specific Limitation Policies or General Limitation Policies or otherwise is
     determined by the FMG to be suspicious, the FMG is authorized by the
     Committee to take certain enforcement actions, as outlined on Appendix A
     ("Enforcement Actions").

4. Recordkeeping and Reporting.
<PAGE>

     The FMG maintains a daily log identifying transactions that the FMG has
     determined are or may be in violation of Fund Trading Policies, as well as
     a variety of reports showing the levels of various share transaction
     activities, and where appropriate the assessment of redemption fees. Where
     the FMG takes Enforcement Action, it maintains records of the Enforcement
     Action taken. These various records and reports are summarized or provided
     by the FMG to the Committee for its review at the Committee's regular
     meetings, as well as communicated to Committee members as deemed necessary
     or appropriate by the FMG between meetings.

5. Monitoring and Enforcement Limitations.

     The Committee's and FMG's ability to effectively limit or prevent trading
     activity in contravention of Fund Trading Policies is performed in good
     faith on a best efforts basis, but is subject to certain limitations. These
     limitations include the fact that Fund shares may be held on an omnibus
     accounts basis by retirement plans, through variable annuity or other
     insurance contracts or by financial intermediaries which provide
     participant-level recordkeeping services, where MFS does not have direct
     access to underlying account activity and is therefore not in a position to
     monitor this activity (or where applicable assess redemption fees)
     directly. In addition, operating systems used by MFS and/or the industry in
     some cases do not have the capability to systematically monitor trading
     activity or assess redemption fees. While financial intermediaries are
     required to submit Fund trade orders in accordance with the Funds' policies
     and Securities and Exchange Commission rules, there does not currently
     exist a systematic way to ensure that those orders are received by the
     financial intermediary prior to the Funds' trade order cut-off time for
     receiving that days' net asset value. The Securities and Exchange
     Commission has proposed rules to address some of these limitations, and the
     Committee expects that over time and with the adoption of these rules it
     will be in a better position to effectively limit or prevent trading
     activity in contravention of Fund Trading Policies.


B. RECORDKEEPING AND ONGOING REVIEW

1. Record Keeping

All records required to be maintained under these Procedures must be retained
for a period not less than 6 years, the first two years in an easily accessible
place.

2. Ongoing Review of Appropriateness of Procedures
<PAGE>

These Procedures will be reviewed periodically by the Committee and revised as
deemed necessary or appropriate. Any material changes to these Procedures shall
be reported to the MFS Risk and Compliance Committee at its next regularly
scheduled meeting.

<PAGE>


                                                                     APPENDIX A

                              Enforcement Actions


a)            Stop - If the FMG determines that trading violates Fund Trading
              Policies, a Stop will be placed on the account preventing the
              accountholder from making further purchases into the account. The
              accountholder will be sent a letter explaining the actions that
              have been taken on the account. In the case where an intermediary
              services the account, such as an omnibus account, the intermediary
              will be requested to take action on the account and supply MFS
              with proof that the action has been taken.

b)            Cancel - If the FMG determines that trading violates Fund Trade
              Policies, any additional purchases that are made prior to stops
              being placed on accounts will be cancelled.

c)            Warning  -  Accountholders  will  generally  be  sent  warning
              letters on transactions  prior to reaching a Specific  Limitation
              Policy,  unless  determined  unnecessary by the Committee.  These
              letters will explain that they will be allowed one more  exchange
              out prior to having a stop purchase  placed on their account.  In
              the case where an intermediary  services the account,  such as an
              omnibus  account,  the  intermediary  will be  requested  to take
              action on the  account  and supply MFS with proof that the action
              has been taken.  Additionally,  for trading activity that the FMG
              determines   may   violate  a  General   Limitation   Policy,   a
              determination  will  be made on  whether  to  place a stop on the
              account or send a warning letter to the accountholder.

d)            Watch - In certain situations it may not be determinable if
              trading in violation of Fund Trading Policies is occurring. In
              these cases the FMG will take no action on the account but will
              watch the account for a period of time to gain more evidence on
              whether it believes timing is taking place.

e)            Passed Activity - Suspicious activity identified, through one of
              the monitoring tools, and determined not to be in violation of
              Fund Trading Policies, is considered "Passed activity."

<PAGE>
                                                                     APPENDIX B
                         Definitions for Matrix Report


Watch - Fund/Account has been placed on watch list for at least 60 days due to
activity that may be suspicious. Subsequent activity for these accounts is
reviewed daily on the ACS Watch and Warning Accounts with Activity report.

Warn - Warning letter has been generated to shareholder upon approaching
exchange limit or trading excessively. Broker is copied on letter. For TRAC
plans, the plan sponsor is copied on the letter.

Stop - Shareholder is stopped from future purchases and exchange purchases into
the fund for the specified time period (may be due to exchange limits or
excessive trading). Stop letter is generated to the shareholder with a cc to the
broker. For TRAC plans, the plan sponsor is copied on the letter.

Prevent - Trade is rejected or canceled on day-one prior to confirmation. This
may be due to frequency limits, excessive trading, or protection of the Fund.
For example, the Fund Trade Monitoring Group may reject a trade from a
shareholder if it is decided that the trade would be harmful to the Fund(s).

Cancel - Trade is reversed after confirming on day-two. This may be due to
frequency limits, excessive trading, or protection of the Fund. For example, if
a shareholder attempts to circumvent policy by establishing a duplicate
fund/account, the exchange purchase into that account would be canceled the
following day.

Non-omnibus - Accounts for which MFS directly assesses redemption fees at the
account level.

Omnibus - Accounts that are excluded from the direct assessment of redemption
fees based on social code. Because we do not receive the underlying shareholder
detail on these accounts, we rely on the omnibus partner firms with systematic
capability to assess and remit redemption fees to us.

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