<PAGE>
[LOGO] M F S(SM) Annual Report
INVESTMENT MANAGEMENT August 31, 1997
MFS(R) MONEY MARKET FUND
MFS(R) GOVERNMENT MONEY MARKET FUND
[Graphic Omitted]
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Portfolio Manager's Overview .............................................. 2
Portfolio Manager's Profile ............................................... 3
Tax Form Summary .......................................................... 3
Fund Facts ................................................................ 4
Portfolio Concentration ................................................... 4
Portfolio of Investments .................................................. 6
Financial Statements ...................................................... 8
Notes to Financial Statements ............................................. 13
Independent Auditors' Report .............................................. 16
Trustees and Officers ..................................................... 17
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HIGHLIGHTS
o THE ANNUALIZED YIELD ON AN INVESTMENT IN MFS() R MONEY MARKET FUND FOR
THE SEVEN-DAY PERIOD ENDED AUGUST 31, 1997, WAS 4.95%, VERSUS 4.72% AT
THE END OF AUGUST 1996. DURING THE SAME PERIOD, THE ANNUALIZED YIELD ON
AN INVESTMENT IN MFS() R GOVERNMENT MONEY MARKET FUND ROSE TO 4.87% FROM
4.51%.
o ON MARCH 25, 1997, THE FEDERAL RESERVE BOARD RAISED THE FEDERAL FUNDS
RATE 0.25%, FROM 5.25% TO 5.50%. AS A RESULT, YIELDS ON 90-DAY COMMERCIAL
PAPER HAVE RISEN APPROXIMATELY 20 BASIS POINTS (0.20%) OVER THE PAST
YEAR.
o THE FUNDS' AVERAGE MATURITIES HAVE BEEN RELATIVELY NEUTRAL TO SHORT OVER
THE PAST 12 MONTHS TO TRY TO TAKE ADVANTAGE OF THE HIGHER YIELDS THAT
WILL RESULT IF THE ECONOMY BEGINS TO ACCELERATE.
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
Dear Shareholders:
An unprecedented combination of generally positive factors has helped the U.S.
economy enjoy a sustained period of relative stability and moderate growth in
which thousands of new jobs have been created every month, inflation remains
under control, and the investment climate -- at least until now -- has been
favorable. For example, the increased use of technology and other productivity
enhancements, as well as corporate restructuring and global competition, is
improving companies' balance sheets and helping control inflation. Meanwhile,
borrowing by corporations and governments continues to decline, while consumer
confidence is increasing, although consumer debt levels are still uncomfortably
high. While some lenders are beginning to tighten standards to address this
problem, consumer debt and personal bankruptcies continue to rise. The rapid
pace of growth seen in the first quarter slowed slightly in the second quarter,
to an annual rate of 3.3%. While real (inflation-adjusted) growth could moderate
further in the third quarter, we believe economic momentum will carry well into
the first quarter of 1998. The money supply is increasing at a rapid rate, the
housing and automobile markets are strengthening, and it now appears that
Christmas sales could be quite good. Because economic growth continues to be
impressive, markets are likely to begin focusing on the Federal Reserve Board's
(the Fed's) willingness to raise interest rates.
In the fixed-income markets, we have been encouraged by the Fed's decision at
its July meeting not to raise short-term interest rates. But we cannot rule out
the possibility of future monetary tightening in the second half of the year if,
as we now expect, the economy strengthens during the balance of 1997. Therefore,
our risk/reward outlook for the fixed-income markets is neutral, and we believe
that fixed-income investors should think in terms of earning the coupon income
from their investments rather than seeking possible gains from price
appreciation.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
- --------------------------
A. Keith Brodkin
Chairman and President
September 15, 1997
<PAGE>
PORTFOLIO MANAGER'S OVERVIEW
[Photo of Geoffrey L. Kurinsky]
Geoffrey L. Kurinsky
Dear Shareholders:
Since August 31, 1996, short-term interest rates have moved modestly higher. As
a result, the annualized yield on an investment in MFS MONEY MARKET FUND for the
seven-day period ended August 31, 1997, was 4.95%, versus 4.72% at the end of
August 1996. During the same period, the annualized yield on an investment in
MFS GOVERNMENT MONEY MARKET FUND rose to 4.87% from 4.51%.
On March 25, 1997, the Federal Reserve Board raised the federal funds rate (the
interest rate charged by banks to other banks in need of overnight loans) 25
basis points (0.25%), from 5.25% to 5.50%. As a result, yields on 90-day
commercial paper have risen approximately 20 basis points (0.20%) over the past
year. In the next few months, we expect short-term rates to remain stable, with
a possible tightening by year-end if the economy shows signs of inflationary
pressures.
The Funds' average maturities have been relatively neutral to short over the
past 12 months. The average maturities for MFS MONEY MARKET FUND and MFS
GOVERNMENT MONEY MARKET FUND on August 31, 1997, were 39 and 41 days,
respectively, versus 42 and 35 days on August 31, 1996. The Funds are positioned
to try to take advantage of the higher yields that will result if the economy
begins to accelerate.
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 August 31, 1997, approximately 49%
of this Fund's net assets were 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. The large position in
government-guaranteed paper is due to the narrow yield spreads between
government-agency obligations and commercial paper. At the same time, the
quality of MFS GOVERNMENT MONEY MARKET FUND'S portfolio remains at the highest
practical level because its investments are limited to 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.
We believe
this emphasis on quality should allow the Funds to continue to help investors
obtain current income and, at the same time, preserve capital and liquidity.
Respectfully,
/s/ Geoffrey L. Kurinsky
Geoffrey L. Kurinsky
Portfolio Manager
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PORTFOLIO MANAGER'S PROFILE
GEOFFREY L. KURINSKY BEGAN HIS CAREER AT MFS IN 1987 IN THE FIXED INCOME
DEPARTMENT. A GRADUATE OF THE UNIVERSITY OF MASSACHUSETTS AND THE BOSTON
UNIVERSITY 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.
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TAX FORM SUMMARY
IN JANUARY 1998, SHAREHOLDERS WILL BE MAILED A TAX FORM SUMMARY
REPORTING THE FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE
CALENDAR YEAR 1997.
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FUND FACTS
OBJECTIVE: 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. MONEY MARKET FUNDS SEEK TO MAINTAIN A
CONSISTENT NET ASSET VALUE, ALTHOUGH THIS IS NOT
GUARANTEED.
COMMENCEMENT OF
INVESTMENT OPERATIONS: MFS MONEY MARKET FUND - DECEMBER 19, 1975
MFS GOVERNMENT MONEY MARKET FUND - FEBRUARY 26, 1982
SIZE: MFS MONEY MARKET FUND - $634.2 MILLION NET ASSETS AS
OF AUGUST 31, 1997
MFS GOVERNMENT MONEY MARKET FUND - $38.4 MILLION NET
ASSETS AS OF AUGUST 31, 1997
- --------------------------------------------------------------------------------
PORTFOLIO CONCENTRATION AS OF AUGUST 31, 1997
MFS MONEY MARKET FUND
[GRAPHIC OMITTED]
Commercial Paper 48.1%
U.S. Government & Agency Obligations 35.4%
Repurchase Agreements 16.5%
For a more complete breakdown, refer to the Portfolio of Investments.
MFS GOVERNMENT MONEY MARKET FUND
[GRAPHIC OMITTED]
U.S. Government & Agency Obligations 84.5%
Repurchase Agreements 15.5%
For a more complete breakdown, refer to the Portfolio of Investments.
<PAGE>
PORTFOLIO OF INVESTMENTS - August 31, 1997
MFS Money Market Fund
Commercial Paper - 48.9%
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Abbott Laboratories, due 9/09/97 $ 10,000 $ 9,987,889
American Express Credit Corp., due 9/19/97 - 10/08/97 19,100 19,021,190
American Telephone & Telegraph Co., due 9/23/97 12,000 11,959,887
Associates Corp. of North America, due 9/29/97 - 10/17/97 20,750 20,636,601
Bank America National Trust & Savings Assn., due 10/10/97 10,000 10,000,000
Bank of America Federal Savings Bank, due 9/25/97 10,000 9,963,400
Bankers Trust New York Corp., due 1/12/98 7,500 7,345,942
Beneficial Corp., due 9/22/97 - 10/20/97 19,800 19,682,283
Carolina Power & Light Co., due 9/03/97 15,000 14,995,375
du Pont (E.I.) de Nemours & Co., due 9/24/97 - 12/05/97 25,000 24,822,822
Ford Motor Credit Corp., due 9/09/97 - 9/18/97 22,000 21,952,063
General Electric Capital Corp., due 10/06/97 - 11/21/97 16,000 15,843,358
General Mills, Inc., due 9/19/97 7,200 7,180,380
Goldman Sachs Group LP, due 9/10/97 - 10/07/97 21,600 21,521,049
GTE Funding, Inc., due 9/12/97 6,000 5,989,917
Merrill Lynch & Co., Inc., due 9/02/97 - 12/02/97 20,800 20,653,185
Morgan (J.P.) & Co., Inc., due 9/16/97 - 11/10/97 18,000 17,891,164
Pacific Gas & Electric Co., due 9/16/97 - 10/22/97 17,095 17,018,355
Pfizer, Inc., due 10/09/97 10,000 9,942,155
Procter & Gamble Co., due 10/02/97 - 12/19/97 20,000 19,787,450
Transamerica Co., due 9/22/97 4,000 3,987,167
- ---------------------------------------------------------------------------------------------------------
Total Commercial Paper, at Amortized Cost $310,181,632
- ---------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations - 35.4%
- ---------------------------------------------------------------------------------------------------------
Federal Farm Credit Bank, due 9/15/97 - 2/23/98 $ 24,600 $ 24,338,167
Federal Home Loan Bank, due 9/17/97 - 2/20/98 34,500 34,128,082
Federal Home Loan Mortgage Corp., due 9/11/97 - 12/01/97 71,053 70,613,711
Federal National Mortgage Assn., due 9/04/97 - 1/05/98 96,250 95,549,596
- ---------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at
Amortized Cost $224,629,556
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Repurchase Agreement - 16.5%
- ---------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 8/29/97, due 9/02/97 total to be received
$104,694,522 (secured by various U.S. Treasury and federal
agency obligations in jointly traded accounts), at Cost $104,630 $ 104,630,000
- ---------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost and Value $ 639,441,188
Other Assets, Less Liabilities - (0.8)% (5,201,257)
- ---------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 634,239,931
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS - August 31, 1997
MFS Government Money Market Fund
U.S. Government and Agency Obligations - 104.9%
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Farm Credit Bank, due 9/15/97 - 1/06/98 $ 6,910 $ 6,841,670
Federal Home Loan Bank, due 9/12/97 - 10/03/97 5,330 5,313,831
Federal Home Loan Mortgage Corp., due 9/05/97 - 10/14/97 8,680 8,647,804
Federal National Mortgage Assn., due 9/04/97 - 11/24/97 11,000 10,914,751
Student Loan Marketing Assn., due 9/19/97 - 12/31/97 5,225 5,178,499
Tennessee Valley Authority, due 9/08/97 - 10/22/97 3,400 3,384,586
- ---------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at
Amortized Cost $ 40,281,141
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Repurchase Agreement - 15.5%
- ---------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 8/29/97, due 9/02/97, total to be
received $5,953,669 (secured by various U.S. Treasury
and federal agency obligations in jointly traded
accounts), at Cost $ 5,950 $ 5,950,000
- ---------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost and Value $ 46,231,141
Other Assets, Less Liabilities - (20.4)% (7,844,624)
- ---------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 38,386,517
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
- -----------------------------------------------------------------------------------------------
MFS MONEY MFS GOVERNMENT
AUGUST 31, 1997 MARKET FUND MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------
Assets:
<S> <C> <C>
Investments, at amortized cost and value $534,811,188 $40,281,141
Repurchase agreements, at cost and value 104,630,000 5,950,000
------------ -----------
Total investments, at amortized cost and value $639,441,188 $46,231,141
Cash 428,933 24,368
Receivable for Fund shares sold 57,241,669 71,279
Interest receivable 130,688 2,752
Other assets 4,392 318
------------ -----------
Total assets $697,246,870 $46,329,858
------------ -----------
Liabilities:
Distributions payable $ 132,399 $ 10,341
Payable for Fund shares reacquired 62,626,140 7,908,418
Payable to affiliates -
Management fee 22,803 1,731
Administrative fee 719 52
Shareholder servicing agent fee 6,231 450
Accrued expenses and other liabilities 218,647 22,349
------------ -----------
Total liabilities $ 63,006,939 $ 7,943,341
------------ -----------
Net assets (represented by paid-in capital) $634,239,931 $38,386,517
============ ===========
Shares of beneficial interest outstanding 634,239,931 38,386,517
============ ===========
Net asset value, offering price and redemption price
per share (net assets / shares of beneficial
interest outstanding) $1.00 $1.00
===== =====
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statements of Operations
MFS Money Market Fund
- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 1997
- ------------------------------------------------------------------------------
Net investment income:
Interest $32,078,081
-----------
Expenses -
Management fee $ 2,793,401
Trustees' compensation 39,566
Shareholder servicing agent fee 799,586
Administrative fee 45,890
Custodian fee 258,075
Transfer agent fee 253,010
Postage 145,626
Printing 113,857
Auditing fees 27,200
Legal fees 6,000
Miscellaneous 224,665
-----------
Total expenses $ 4,706,876
Fees paid indirectly (215,447)
-----------
Net expenses $ 4,491,429
-----------
Net investment income $27,586,652
===========
MFS Government Money Market Fund
- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 1997
- ------------------------------------------------------------------------------
Net investment income:
Interest $2,034,085
----------
Expenses -
Management fee $ 188,007
Trustees' compensation 5,479
Shareholder servicing agent fee 51,333
Administrative fee 2,916
Auditing fees 26,152
Custodian fee 21,574
Postage 6,811
Printing 4,250
Legal fees 3,230
Registration fee 46,503
----------
Total expenses $ 356,255
Fees paid indirectly (14,715)
----------
Net expenses $ 341,540
----------
Net investment income $1,692,545
==========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
MFS Money Market Fund
- ------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income, declared as distributions to
shareholders $ 27,586,652 $ 23,365,808
-------------- --------------
Fund share (principal) transactions at net asset value of
$1.00 per share -
Net proceeds from sale of shares $8,979,377,073 $5,311,229,990
Net asset value of shares issued to shareholders in
reinvestment of distributions 21,300,694 18,551,363
Cost of shares reacquired (9,010,642,758) (5,096,374,350)
-------------- --------------
Increase (decrease) in net assets from Fund share
transactions $ (9,964,991) $ 233,407,003
Net assets:
At beginning of period 644,204,922 410,797,919
-------------- --------------
At end of period $ 634,239,931 $ 644,204,922
============== ==============
<CAPTION>
MFS Government Money Market Fund
- ------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income, declared as distributions to
shareholders $ 1,692,545 $ 1,896,221
-------------- --------------
Fund share (principal) transactions at net asset value
of
$1.00 per share -
Net proceeds from sale of shares $ 118,706,075 $ 476,964,289
Net asset value of shares issued to shareholders in
reinvestment of distributions 1,548,739 1,585,296
Cost of shares reacquired (124,367,744) (474,489,920)
-------------- --------------
Total increase (decrease) in net assets from Fund
share
transactions $ (4,112,930) $ 4,059,665
Net assets:
At beginning of period 42,499,447 38,439,782
-------------- --------------
At end of period $ 38,386,517 $ 42,499,447
============== ==============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
MFS Money Market Fund
- ------------------------------------------------------------------------------------------------------------------------------
TEN MONTHS YEAR ENDED
YEAR ENDED AUGUST 31, ENDED OCTOBER 31,
-------------------------------------------- AUGUST 31, -------------------------
1997 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
<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 $ 0.05 $ 0.05 $ 0.05 $ 0.02 $ 0.02 $ 0.03
Less distributions declared to
shareholders from net
investment income $(0.05) $(0.05) $(0.05) $(0.02) $(0.02) $(0.03)
------ ------ ------ ------ ------ ------
Net asset value - end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return 4.61% 4.86% 5.04% 2.91%+ 2.39% 3.35%
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.80% 0.79% 0.76% 0.78%+ 0.83% 0.87%
Net investment income 4.71% 4.78% 4.92% 2.95%+ 2.39% 3.36%
Net assets at end of period
(000 omitted) $634,240 $644,205 $410,798 $435,780 $350,316 $448,825
+ Annualized.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
<CAPTION>
MFS Money Market Fund
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------
<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 $ 0.06 $ 0.07 $ 0.08 $ 0.07 $ 0.06
Less distributions declared to shareholders
from net investment income $(0.06) $(0.07) $(0.08) $(0.07) $(0.06)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 6.07% 7.99% 8.84% 7.12% 6.06%
Ratios (to average net assets)/Supplemental data:
Expenses 0.82% 0.76% 0.83% 0.83% 0.82%
Net investment income 5.94% 7.60% 8.45% 6.72% 5.77%
Net assets at end of period (000 omitted) $541,945 $677,164 $676,382 $664,895 $716,528
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
MFS Government Money Market Fund
- ------------------------------------------------------------------------------------------------------------------------------
TEN MONTHS YEAR ENDED
YEAR ENDED AUGUST 31, ENDED OCTOBER 31,
-------------------------------------------- AUGUST 31, ------------------------
1997 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
<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 $ 0.05 $ 0.05 $ 0.05 $ 0.02 $ 0.02 $ 0.03
Less distributions declared to
shareholders from net
investment income $(0.05) $(0.05) $(0.05) $(0.02) $(0.02) $(0.03)
----- ----- ----- ----- ----- -----
Net asset value - end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===== ===== ===== ===== ===== =====
Total return 4.81% 4.73% 4.92% 2.64%+ 2.33% 3.27%
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.85% 0.89% 0.84% 1.05%+ 0.99% 0.87%
Net investment income 4.02% 4.64% 4.82% 2.64%+ 2.20% 3.28%
Net assets at end of period
(000 omitted) $38,387 $42,499 $38,440 $38,347 $35,576 $47,629
+ Annualized.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
<CAPTION>
MFS Government Money Market Fund
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------
<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 $ 0.06 $ 0.07 $ 0.08 $ 0.06 $ 0.05
Less distributions declared to shareholders
from net investment income $(0.06) $(0.07) $(0.08) $(0.06) $(0.05)
----- ----- ----- ----- -----
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===== ===== ===== ===== =====
Total return 5.68% 7.55% 8.61% 6.47% 5.73%
Ratios (to average net assets)/Supplemental data:
Expenses 0.83% 0.80% 0.85% 0.74% 0.59%
Net investment income 5.53% 7.34% 8.29% 6.29% 5.63%
Net assets at end of period (000 omitted) $50,655 $53,701 $51,619 $50,343 $59,875
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 Funds may enter into repurchase agreements with
institutions that the Funds' investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The Funds' require that the
securities purchased in a repurchase transaction be transferred to the custodian
in a manner sufficient to enable the Funds' to obtain those securities in the
event of a default under the repurchase agreement. The Funds' monitor, 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 Funds' under each such repurchase agreement.
The Funds', along with other affiliated entities of Massachusetts Financial
Service Company (MFS), may utilize a joint trading account for the purpose of
entering into one or more repurchase agreements.
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 is amortized or accreted for financial statement and tax
reporting purposes as required by federal income tax regulations.
Fees Paid Indirectly - The Funds' custody fee is calculated as a percentage of
the Funds' average daily net assets. The fees are reduced according to fee
arrangements which measure the value of cash deposited with the custodian by the
Funds. These amounts are shown as a reduction of expenses on the Statements of
Operations.
Tax Matters and Distributions - The Funds' 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 their taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Funds' file tax
returns annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Funds' tax returns and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV. Distributions to
shareholders are recorded on the ex-dividend date.
(3) Transactions with Affiliates
Investment Adviser - The Funds have an investment advisory agreement with
Massachusetts Financial Services (MFS) to provide overall investment advisory
and administrative services and general office facilities. The management fee is
computed and paid monthly at an annual rate of 0.48% and 0.45% of average
aggregate daily net assets for the MFS Money Market and MFS Government Money
Market Fund, respectively.
Administrator - Effective March 1, 1997, the Funds have an administrative
services agreement with MFS to provide the Funds with certain financial, legal,
shareholder servicing, compliance, and other administrative services. As a
partial reimbursement for the cost of providing these services, the Funds pay
MFS an administrative fee at the following annual percentages of the Funds'
average daily net assets, provided that the administrative fee is not assessed
on Fund assets that exceed $3 billion:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
The Funds pay no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Funds, all of whom receive
remuneration for their services to the Funds from MFS. Certain officers and
Trustees of the Funds are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Funds have an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation for MFS Money Market Fund and MFS Government
Money Market Fund are net periodic pension expenses of $14,159 and $9,087 for
the year ended August 31, 1997.
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 each Fund's average daily net assets at an effective annual rate
of 0.13%. Prior to January 1, 1997, the fee was 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 $4,856,040,101
and $4,858,027,699, respectively.
Purchases and sales of money market investments, exclusive of securities subject
to repurchase agreements for MFS Government Money Market Fund, aggregated
$252,735,883 and $248,379,729, 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 ($1.00 par value).
MFS Money Market Fund
YEAR ENDED YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996
- -------------------------------------------------------------------------------
Shares sold 8,979,377,073 5,311,229,990
Shares issued to shareholders in
reinvestment of distributions 21,300,694 18,551,363
Shares reacquired (9,010,642,758) (5,096,374,350)
-------------- --------------
Net increase (decrease) (9,964,991) 233,407,003
============== ==============
MFS Government Money Market Fund
YEAR ENDED YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996
- -------------------------------------------------------------------------------
Shares sold 118,706,075 476,964,289
Shares issued to shareholders in reinvestment of
distributions 1,548,739 1,585,296
Shares reacquired (124,367,744) (474,489,920)
------------ ------------
Net increase (decrease) (4,112,930) 4,059,665
============ ============
(6) Line of Credit
The Funds and other affiliated funds participate in a $400 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Fund
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 fees allocated to
MFS Money Market Fund and MFS Government Money Market Fund were $5,060 and $309,
respectively, for the year ended August 31, 1997.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Series Trust IV and Shareholders of MFS Money Market
Fund and MFS Government Money Market Fund:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of MFS Money Market Fund and MFS Government Money
Market Fund (two of the series constituting MFS Series Trust IV) as of August
31, 1997, the related statements of operations for the year then ended, the
statements of changes in net assets for the years ended August 31, 1997 and
1996, and the financial highlights for each of the years in the three-year
period ended August 31, 1997, the ten months ended August 31, 1994 and for each
of the years in the seven-year period ended October 31, 1993. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
August 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Money Market
Fund and MFS Government Money Market Fund at August 31, 1997, the results of
their operations, the changes in their net assets, and their financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 3, 1997
--------------------------------------------
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.
<PAGE>
MFS(R) MONEY MARKET FUND
MFS(R) GOVERNMENT MONEY MARKET FUND
<TABLE>
<S> <C>
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor; AUDITORS
Former Chairman and Director (until 1991), Deloitte & Touche LLP
Massachusetts Financial Services Company;
Director, Cambridge Bancorp; Director, Cambridge INVESTOR INFORMATION
Trust Company For MFS stock and bond market outlooks, call toll
free: 1-800-637-4458 anytime from a touch-tone
Peter G. Harwood - Private Investor telephone.
J. Atwood Ives - Chairman and Chief Executive For information on MFS mutual funds, call your
Officer, Eastern Enterprises financial adviser or, for an information kit, call
toll free: 1-800-637-2929 any business day from 9
Lawrence T. Perera - Partner, Hemenway & Barnes a.m. to 5 p.m. Eastern time (or leave a message
anytime).
William J. Poorvu - Adjunct Professor, Harvard
University Graduate School of Business INVESTOR SERVICE
Administration MFS Service Center, Inc.
P.O. Box 2281
Charles W. Schmidt - Private Investor Boston, MA 02107-9906
Arnold D. Scott* - Senior Executive Vice For general information, call toll free:
President, Director and Secretary, Massachusetts 1-800-225-2606 any business day from
Financial Services Company 8 a.m. to 8 p.m. Eastern time.
Jeffrey L. Shames* - President and Director, For service to speech- or hearing-impaired, call
Massachusetts Financial Services Company toll free: 1-800-637-6576 any business day from 9
a.m. to 5 p.m. Eastern time. (To use this service,
Elaine R. Smith - Independent Consultant your phone must be equipped with a
Telecommunications Device for the Deaf.)
David B. Stone - Chairman, North American
Management Corp. (investment advisers) For share prices, account balances, and exchanges,
call toll free: 1-800-MFS-TALK (1-800-637-8255)
INVESTMENT ADVISER anytime from a touch-tone telephone.
Massachusetts Financial Services Company
500 Boylston Street WORLD WIDE WEB
Boston, MA 02116-3741 www.mfs.com
DISTRIBUTOR [DALBAR For the fourth year in a row,
MFS Fund Distributors, Inc. LOGO] MFS earned a #1 ranking in the
500 Boylston Street DALBAR, Inc. Broker/Dealer Survey,
Boston, MA 02116-3741 Main Office Operations Service Quality
Category. The firm achieved a 3.42
PORTFOLIO MANAGER overall score on a scale of 1 to 4 in
Geoffrey L. Kurinsky* the 1997 survey. A total of 111 firms
responded, offering input on the
TREASURER quality of service they received from
W. Thomas London* 29 mutual fund companies nationwide.
The survey contained questions about
ASSISTANT TREASURERS service quality in 11 categories,
Mark E. Bradley* including "knowledge of operations
Ellen Moynihan* contact," "keeping you informed,"
James O. Yost* "ease of doing business" with the firm.
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
-------------
MFS(R) MONEY MARKET FUND BULK RATE
MFS(R) GOVERNMENT MONEY MARKET FUND U.S. POSTAGE
PAID
MFS
-------------
500 Boylston Street
Boston, MA 02116-3741
[LOGO] M F S(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
[DALBAR
LOGO]
TOP-RATED SERVICE
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MCM-2 10/97 55M 10/22
