MFS MONEY MARKET FUND
MFS GOVERNMENT MONEY MARKET FUND
(A SERIES OF MFS SERIES TRUST IV)
500 BOYLSTON STREET o BOSTON o MASSACHUSETTS 02116-3741
617 o 954-5000
April 25, 1996
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: MFS Series Trust IV (File No. 811-2594), on Behalf of
MFS Money Market Fund and MFS Government Money Market Fund
Ladies and Gentlemen:
Pursuant to the requirements of Section 30(b) of the Investment Company Act
of 1940 and Rule 30b2-1 thereunder, we hereby file a copy of the Semiannual
Report to Shareholders dated February 29, 1996 of MFS Money Market Fund and MFS
Government Money Market Fund.
Very truly yours,
JOHN F. MCNAMARA
John F. McNamara
Production Editor
<PAGE>
[MFS Logo] SEMIANNUAL REPORT
The First Name in Mutual Funds FEBRUARY 29, 1996
MFS [Registration Mark] MONEY MARKET FUND
MFS [Registration Mark] GOVERNMENT MONEY MARKET FUND
<PAGE>
MFS [Registration Mark] MONEY MARKET FUND
MFS [Registration Mark] GOVERNMENT MONEY MARKET FUND
TRUSTEES
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Peter G. Harwood - Private Investor
J. Atwood Ives - Chairman and Chief Executive Officer, Eastern Enterprises
Lawrence T. Perera - Partner, Hemenway & Barnes
William J. Poorvu - Adjunct Professor, Harvard University Graduate School of
Business Administration
Charles W. Schmidt - Private Investor
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial Services
Company
Elaine R. Smith - Independent Consultant
David B. Stone - Chairman, North American Management Corp. (investment
adviser)
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Geoffrey L. Kurinsky*
TREASURER
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
CUSTODIAN
State Street Bank and Trust Company
INVESTOR INFORMATION
For MFS stock and bond market outlooks, call toll free: 1-800-637-4458 anytime
from a touch-tone telephone.
For information on MFS mutual funds, call your financial adviser or, for an
information kit, call toll free: 1-800-637-2929 any business day from 9 a.m. to
5 p.m. Eastern time (or leave a message anytime).
INVESTOR SERVICE
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day from 8
a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576 any
business day from 9 a.m. to 5 p.m. Eastern time.
(To use this service, your phone must be equipped with a Telecommunications
Device for the Deaf.)
For share prices, account balances and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
TOP-RATED SERVICE
For the second year in a row, MFS earned a #1 ranking in DALBAR, Inc.'s
Broker/Dealer Survey, Main Office Operations Service Quality category. The firm
achieved a 3.49 overall score - on a scale of 1 to 4 - in the 1995 survey. A
total of 71 firms responded, offering input on the quality of service they
receive from 36 mutual fund companies nationwide. The survey contained questions
about service quality in 17 categories, including "knowledge of phone service
contacts," "accuracy of transaction processing," and "overall ease of doing
business with the firm."
*Affiliated with the Investment Adviser
<PAGE>
Letter to Shareholders
DEAR SHAREHOLDERS:
Short-term interest rates decreased moderately during the past six months.
Reflecting this trend, the annualized yield on an investment in MFS Money Market
Fund for the seven-day period ended February 29, 1996 declined from 5.4% to
4.5%. During this same period, the annualized yield on an investment in MFS
Government Money Market Fund declined from 5.2% to 4.5%.
ECONOMIC OUTLOOK
We believe the U.S. economy will continue to grow in 1996 -- although "subdued"
may be the best way to describe this growth. One factor holding growth in check
is the continued sluggishness of the consumer sector, an area that represents
approximately two-thirds of the economy. Going into this year, consumers have
been left in a somewhat weakened position, due in part to an increase in
consumer installment debt of some 30% over the past two years. A second reason
for the economy's weakness is the "lag effect" of increases in short-term
interest rates by the Federal Reserve Board in 1994 and into 1995. This lag
effect can last up to two years, although a series of reductions in short-term
rates by the Fed, which began late last year, should provide some support to the
economy through 1996. A third reason for weakness is the ongoing economic
doldrums in Europe and Japan, important markets for U.S. exports. Here again, we
are seeing a few signs, particularly in Japan, of modest recoveries that could
lead to improved prospects for U.S. exporters. Also, we believe lower interest
rates will give a boost to the U.S. housing market, an important segment of the
economy since it also affects such industries as major appliances, furniture,
and building-supply companies. Finally, although the first few weeks of 1996 saw
some signs of inflationary pressures, caused primarily by rising energy prices
and followed by an upward movement in gold, we believe inflation will remain
under control this year, due mainly to the subdued level of economic growth.
INTEREST RATES
During the past six months, the Federal Reserve voted to ease monetary policy by
lowering the federal funds' rate (the interest rate charged by banks to other
banks in need of overnight loans) by 25 basis points (0.25%) on December 19,
1995, and by the same amount on January 31, 1996. As a result, yields on 90-day
U.S. Treasury bills and commercial paper fell approximately 50 basis points
(0.50%). Furthermore, with the economy showing some signs of slowing, we believe
short-term interest rates will be fairly stable to slightly lower over the next
several months.
1
<PAGE>
LETTER TO SHAREHOLDERS - continued
Portfolio Performance and Strategy
In an effort to provide a reasonable level of current income, we have continued
to maintain a relatively long maturity in both portfolios. The average maturity
of MFS Money Market Fund on February 29, 1996 was 48 days, while the average
maturity of MFS Government Money Market Fund was 45 days.
The portfolio of MFS Money Market Fund continues to include only the
highest quality corporate, bank, and government securities in order to provide
investors with maximum security against credit risk. On February 29, 1996,
approximately 26% of this Fund's assets was invested in commercial paper, with
the balance invested in securities issued or guaranteed by the U.S. Treasury or
agencies or instrumentalities of the U.S. government, because of the very narrow
yield spreads between government agency obligations and commercial paper. The
quality of MFS Government Money Market Fund's portfolio remains at the highest
practical level because its investments are limited to those securities issued
or guaranteed by the U.S. Treasury or agencies or instrumentalities of the U.S.
government, including repurchase agreements collateralized by such securities.
This emphasis on quality should allow the Fund to continue to help investors to
obtain current income and, at the same time, to preserve capital and liquidity.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
[Photo of A. Keith Brodkin, [Photo of Geoffrey L. Kurinsky,
Chairman and President] Portfolio Manager]
[Signature of A. Keith Brodkin] [Signature of Geoffrey L. Kurinsky]
A. Keith Brodkin Geoffrey L. Kurinsky
Chairman and President Portfolio Manager
March 14, 1996
2
<PAGE>
PORTFOLIO MANAGER PROFILE
Geoffrey Kurinsky began his career at MFS in 1987 in the Fixed Income
Department. A graduate of the University of Massachusetts and Boston
University's Graduate School of Management, he was named Assistant Vice
President in 1988, Vice President in 1989 and Senior Vice President in 1993. He
has managed MFS Money Market Fund and MFS Government Money Market Fund since
1992.
OBJECTIVE AND POLICY
The investment objective of each Fund is to seek as high a level of current
income as is considered consistent with the preservation of capital and
liquidity. The investment objective of a Fund will not be changed without first
obtaining shareholder approval from the shareholders of that Fund. Any
investment involves risk and there can be no assurance that either Fund will
achieve its investment objective.
Money market funds are neither insured nor guaranteed by the U.S.
government, and there can be no assurance that they will be able to maintain a
stable net asset value.
3
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - February 29, 1996
<TABLE>
<CAPTION>
MFS MONEY MARKET FUND
Commercial Paper - 25.6%
=======================================================================================================
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
AT&T Co., due 3/05/96 - 4/08/96 $ 14,200 $ 14,138,873
American Express Credit Corp., due 6/20/96 9,100 8,958,586
Beneficial Corp., due 3/14/96 - 5/03/96 18,100 18,001,844
duPont (E.I.) de Nemours & Co., due 3/22/96 8,400 8,374,814
General Motors Acceptance Corp., due 4/15/96 6,600 6,557,100
Hewlett Packard Co., due 3/19/96 - 4/02/96 22,000 21,920,518
Kimberly-Clark Corp., due 4/12/96 9,000 8,946,345
Knight Ridder, Inc., due 3/28/96 - 5/06/96 19,700 19,562,513
Pacific Gas & Electric Co., due 3/04/96 - 3/13/96 16,050 16,028,581
Sara Lee Corp., due 3/27/96 5,000 4,980,644
Transamerica Corp., due 4/22/96 9,500 9,429,742
Warner-Lambert Co., due 3/25/96 - 6/03/96 11,700 11,586,647
- -------------------------------------------------------------------------------------------------------
Total Commercial Paper, at Amortized Cost $148,486,207
- -------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations - 49.4%
=======================================================================================================
Federal Agricultural Mortgage Corp., due 7/15/96 $ 11,000 $ 10,791,807
Federal Farm Credit Bank, due 3/06/96 - 5/05/96 27,100 26,946,039
Federal Home Loan Bank, due 3/01/96 - 7/18/96 73,745 73,195,763
Federal Home Loan Mortgage Corp., due 3/13/96 - 5/09/96 27,700 27,558,066
Federal National Mortgage Assn., due 3/05/96 - 9/05/96 121,600 119,896,405
Tennessee Valley Authority, due 4/09/96 - 7/25/96 27,900 27,660,037
- -------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at Amortized Cost $286,048,117
- -------------------------------------------------------------------------------------------------------
Repurchase Agreement - 24.2%
=======================================================================================================
Goldman Sachs, dated 2/29/96, due 3/01/96, to be received
$140,021,000 (secured by FMAC Discount Note, 5.4s,
due 3/20/96, market value $139,577,760), at Cost $ 140,000 $140,000,000
- -------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost $574,534,324
Other Assets, Less Liabilities - 0.8% 4,660,547
=======================================================================================================
Net Assets - 100.0% $579,194,871
- -------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
4
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - February 29, 1996
<TABLE>
<CAPTION>
MFS GOVERNMENT MONEY MARKET FUND
=======================================================================================================
U.S. Government and Agency Obligations - 74.5%
- -------------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Farm Credit Bank, due 3/06/96 - 5/06/96 $ 8,400 $ 8,365,984
Federal Home Loan Bank, due 4/03/96 - 8/14/96 5,200 5,131,791
Federal Home Loan Mortgage Corp., due 3/20/96 - 6/03/96 5,900 5,852,383
Federal National Mortgage Assn., due 3/28/96 - 5/30/96 8,550 8,475,584
Student Loan Marketing Assn., due 3/05/96 - 3/29/96 2,800 2,793,337
Tennessee Valley Authority, due 4/16/96 - 7/25/96 4,475 4,423,736
- -------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at Amortized Cost $ 35,042,815
- -------------------------------------------------------------------------------------------------------
U.S. Treasury Obligation - 4.2%
=======================================================================================================
U.S. Treasury Bills, due 4/18/96 $ 2,000 $ 1,986,627
- -------------------------------------------------------------------------------------------------------
Repurchase Agreement - 21.2%
=======================================================================================================
Goldman Sachs, dated 2/29/96, due 3/01/96, to be received
$10,001,500 (secured by FMAC Discount Note, 5.4s,
due 3/20/96, market value $9,969,840), at Cost $ 10,000 $ 10,000,000
- -------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost $ 47,029,442
Other Assets, Less Liabilities - 0.1% 26,098
=======================================================================================================
Net Assets - 100.0% $ 47,055,540
- -------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
5
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statements of Assets and Liabilities (Unaudited)
======================================================================================================
MFS Money MFS Government
February 29, 1996 Market Fund Money Market Fund
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at amortized cost and value $434,534,324 $37,029,442
Repurchase agreements, at cost and value 140,000,000 10,000,000
------------ -----------
Total investments, at amortized cost and value $574,534,324 $ 47,029,442
Cash 567,304 120,267
Receivable for Fund shares sold 12,115,251 121,461
Interest receivable 21,000 1,501
Other assets 6,371 535
------------ -----------
Total assets $587,244,250 $47,273,206
------------ -----------
Liabilities:
Distributions payable $ 121,835 $ 8,652
Payable for Fund shares reacquired 7,768,585 166,988
Payable to affiliates -
Management fee 7,680 644
Shareholder servicing agent fee 2,423 193
Transfer agent fee 30,000 3,200
Accrued expenses and other liabilities 118,856 37,989
------------ -----------
Total liabilities $ 8,049,379 $ 217,666
------------ -----------
Net assets (represented by paid-in capital) $579,194,871 $47,055,540
============ ===========
Shares of beneficial interest outstanding 579,194,871 47,055,540
============ ===========
Net asset value and redemption price per share
(net assets / shares of beneficial interest outstanding) $ 1.00 $ 1.00
====== ======
</TABLE>
See notes to financial statements
6
<PAGE>
FINANCIAL STATEMENTS - continued
Statements of Operations (Unaudited)
================================================================================
Six Months Ended
MFS Money Market Fund February 29, 1996
- --------------------------------------------------------------------------------
Net investment income:
Interest income $ 12,722,316
------------
Expenses -
Management fee $ 1,085,978
Trustees' compensation 16,971
Shareholder servicing agent fee 337,063
Transfer agent fee 96,615
Custodian fee 89,642
Postage 49,500
Printing 12,969
Auditing fees 8,500
Legal fees 1,258
Miscellaneous 67,933
------------
Total expenses $ 1,766,429
Fees paid indirectly (67,775)
------------
Net expenses $ 1,698,654
------------
Net investment income $ 11,023,662
============
Six Months Ended
MFS Government Money Market Fund February 29, 1996
- --------------------------------------------------------------------------------
Net investment income:
Interest income $ 1,161,299
------------
Expenses -
Management fee $ 102,677
Trustees' compensation 2,900
Shareholder servicing agent fee 30,804
Transfer agent fee 7,038
Custodian fee 11,521
Auditing fees 8,815
Postage 3,762
Printing 2,467
Legal fees 2,034
Miscellaneous 10,260
------------
Total expenses $ 182,278
Fees paid indirectly (10,277)
------------
Net expenses $ 172,001
------------
Net investment income $ 989,298
============
See notes to financial statements
7
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
===================================================================================================================
Six Months Ended
February 29, 1996 Year Ended
MFS Money Market Fund (Unaudited) August 31, 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income, declared as
distributions to shareholders $ 11,023,662 $ 22,705,875
--------------- ---------------
Fund share (principal) transactions
Net proceeds from sale of shares $ 2,130,023,427 $ 2,481,903,487
Net asset value of shares issued to shareholders in
reinvestment of distributions 8,904,910 19,523,795
Cost of shares reacquired (1,970,531,385) (2,526,408,894)
--------------- ---------------
Increase (decrease) in net assets from
Fund share transactions $ 168,396,952 $ (24,981,612)
Net assets:
At beginning of period 410,797,919 435,779,531
--------------- ---------------
At end of period $ 579,194,871 $ 410,797,919
--------------- ---------------
Six Months Ended
February 29, 1996 Year Ended
MFS Government Money Market Fund (Unaudited) August 31, 1995
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets:
From operations -
Net investment income, declared as
distributions to shareholders $ 989,298 $ 1,862,594
--------------- ---------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 217,367,074 $ 130,386,802
Net asset value of shares issued to shareholders in
reinvestment of distributions 825,923 1,692,388
Cost of shares reacquired (209,577,239) (131,986,405)
--------------- ---------------
Increase in net assets from
Fund share transactions $ 8,615,758 $ 92,785
Net assets:
At beginning of period 38,439,782 38,346,997
--------------- ---------------
At end of period $ 47,055,540 $ 38,439,782
--------------- ---------------
</TABLE>
See notes to financial statements
8
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
===========================================================================================================================
Six Months Ended Year Ended August 31, Year Ended October 31,
February 29, 1996 ---------------------- -----------------------
MFS Money Market Fund (Unaudited) 1995 1994* 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations -
Net investment income $ 0.02 $ 0.05 $ 0.02 $ 0.02 $ 0.03
-------- -------- -------- -------- --------
Less distributions declared to shareholders
from net investment income $ (0.02) $ (0.05) $ (0.02) $ (0.02) $ (0.03)
-------- -------- -------- -------- --------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Total return 4.98%+ 5.04% 2.91%+ 2.39% 3.35%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.79%+ 0.76% 0.78%+ 0.83% 0.87%
Net investment income 4.91%+ 4.92% 2.95%+ 2.39 3.36%
Net assets at end of period (000 omitted) $579,195 $410,798 $435,780 $350,316 $448,825
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------------
MFS Money Market Fund 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from investment operations -
Net investment income $ 0.06 $ 0.07 $ 0.08 $ 0.07 $ 0.06 $ 0.06
-------- -------- -------- -------- -------- --------
Less distributions declared to shareholders
from net investment income $ (0.06) $ (0.07) $ (0.08) $ (0.07) $ (0.06) $ (0.06)
-------- -------- -------- -------- -------- --------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Total return 6.07% 7.99% 8.84% 7.12% 6.06% 6.80%
Ratios (to average net assets)/Supplemental data:
Expenses 0.82% 0.76% 0.83 0.83% 0.82% 0.78%
Net investment income 5.94% 7.60% 8.45% 6.72% 5.77% 6.53%
Net assets at end of period (000 omitted) $541,945 $677,164 $676,382 $664,895 $716,528 $623,568
<FN>
* For the ten months ended August 31, 1994.
+ Annualized.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction
for fees paid indirectly.
</FN>
</TABLE>
See notes to financial statements
9
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
Six Months Ended Year Ended August 31, Year Ended October 31,
February 29, 1996 ------------------------- ----------------------
MFS Government Money Market Fund (Unaudited) 1995 1994* 1993 1992
- -------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Income from investment operations -
Net investment income $ 0.02 $ 0.05 $ 0.02 $ 0.02 $ 0.03
------ ------ ------ ------ ------
Less distributions declared to shareholders
from net investment income $(0.02) $(0.05) $(0.02) $(0.02) $(0.03)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 4.86%+ 4.92% 2.64%+ 2.33% 3.27%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.89%+ 0.84% 1.05%+ 0.99% 0.87%
Net investment income 4.82%+ 4.82% 2.64%+ 2.20% 3.28%
Net assets at end of period (000 omitted) $47,056 $38,440 $38,347 $35,576 $47,629
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------------------------------------
MFS Government Money Market Fund 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Income from investment operations -
Net investment income $ 0.06 $ 0.07 $ 0.08 $ 0.06 $ 0.05 $ 0.06
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders
from net investment income $(0.06) $(0.07) $(0.08) $(0.06) $(0.05) $(0.06)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return 5.68% 7.55% 8.61% 6.47% 5.73% 6.33%
Ratios (to average net assets)/Supplemental data:
Expenses 0.83% 0.80% 0.85% 0.74% 0.59% 0.66%
Net investment income 5.53% 7.34% 8.29% 6.29% 5.63% 6.07%
Net assets at end of period (000 omitted) $50,655 $53,701 $51,619 $50,343 $59,875 $63,331
<FN>
* For the ten months ended August 31, 1994.
+ Annualized.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction
for fees paid indirectly.
</FN>
</TABLE>
See notes to financial statements
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Business and Organization
MFS Money Market Fund and MFS Government Money Market Fund (the Funds) are each
a separate diversified series of MFS Series Trust IV (the Trust). The Trust is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
(2) Significant Accounting Policies
Investment Valuations - Money market instruments are valued at amortized cost,
which the Trustees have determined in good faith constitutes fair value. The
Trust's use of amortized cost is subject to the Trust's compliance with certain
conditions as specified under Rule 2a-7 of the Investment Company Act of 1940.
Repurchase Agreements - The Trust may enter into repurchase agreements with
institutions that the Trust's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Trust requires
that the securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Trust to obtain those securities
in the event of a default under the repurchase agreement. The Trust monitors, on
a daily basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Trust under each such repurchase agreement.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations.
Fees Paid Indirectly - The Trust's custodian bank calculates its fee based on
the Trust's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the
Trust. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Trust's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income. Accordingly, no provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date.
(3) Transactions with Affiliates
Investment Adviser - The Trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate of
0.48% and 0.50% of average daily net assets for MFS Money Market Fund and MFS
Government Money Market Fund, respectively.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
The Trust pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Trust, all of whom receive
remuneration for their services to the Trust from MFS. Certain of the officers
and Trustees of the Trust are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Trust has an
unfunded defined benefit plan for all of its independent Trustees and Mr.
Bailey. Included in Trustees' compensation for the MFS Money Market Fund and MFS
Government Fund is a net periodic pension expense of $4,544 and $927,
respectively, for the period ended February 29, 1996.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the average daily net assets of each Fund at an effective annual
rate of up to 0.15%.
(4) Portfolio Securities
Purchases and sales of money market investments, exclusive of securities subject
to repurchase agreements, for MFS Money Market Fund aggregated $2,689,883,569
and $2,674,884,752, respectively. Purchases and sales of money market
investments, exclusive of securities subject to repurchase agreements, for MFS
Government Money Market Fund aggregated $153,175,487 and $151,054,517,
respectively.
(5) Shares of Beneficial Interest
The Trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value)
of each Fund.
(6) Line of Credit
The Trust entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Trust shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to MFS Money Market Fund and MFS
Government Money Market Fund was $2,634 and $221, respectively, for the period
ended February 29, 1996.
------------------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
12
<PAGE>
THE MFS FAMILY OF FUNDS [Registration Mark]
America's Oldest Mutual Fund Group
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-637-2929
any business day from 9 a.m. to 5 p.m. Eastern time (or leave a message
anytime). This material should be read carefully before investing or sending
money.
Stock
================================================================================
Massachusetts Investors Trust
- --------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Capital Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Emerging Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Gold & Natural Resources Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Growth Opportunities Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Managed Sectors Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] OTC Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Research Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Value Fund
- --------------------------------------------------------------------------------
Stock and Bond
================================================================================
MFS [Registration Mark] Total Return Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Utilities Fund
- --------------------------------------------------------------------------------
Bond
================================================================================
MFS [Registration Mark] Bond Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Mortgage Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Securities Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] High Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Intermediate Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Strategic Income Fund
- --------------------------------------------------------------------------------
Limited Maturity Bond
================================================================================
MFS [Registration Mark] Government Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal Limited Maturity Fund
- --------------------------------------------------------------------------------
World
================================================================================
MFS [Registration Mark]/Foreign & Colonial Emerging Markets Equity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark]/Foreign & Colonial International Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark]/Foreign & Colonial International Growth and Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Asset Allocation Fund [Service Mark]
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Equity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Governments Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Total Return Fund
- --------------------------------------------------------------------------------
National Tax-Free Bond
================================================================================
MFS [Registration Mark] Municipal Bond Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal High Income Fund
(closed to new investors)
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal Income Fund
- --------------------------------------------------------------------------------
State Tax-Free Bond
================================================================================
Alabama, Arkansas, California, Florida, Georgia, Louisiana, Maryland,
Massachusetts, Mississippi, New York, North Carolina, Pennsylvania, South
Carolina, Tennessee, Texas, Virginia, Washington, West Virginia
- --------------------------------------------------------------------------------
Money Market
================================================================================
MFS [Registration Mark] Cash Reserve Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Money Market Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Money Market Fund
- --------------------------------------------------------------------------------
<PAGE>
MFS [Registration Mark] [Dalbar Logo]
Money Market Fund Bulk Rate
U.S. Postage
MFS [Registration Mark] PAID
Government Money Market Fund Permit #55638
Boston, MA
500 Boylston Street
Boston, MA 02116
[MFS Logo]
The First Name in Mutual Funds
MCM-3-4/96 38M 22/10/310
