<PAGE>
[graphic omitted] MFS(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
MFS(R) MONEY MARKET FUND
MFS(R) GOVERNMENT
MONEY MARKET FUND
SEMIANNUAL REPORT o FEBRUARY 28, 1998
<PAGE>
IN MEMORIAM
A. KEITH BRODKIN
1935 - 1998
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MFS INVESTMENT MANAGEMENT(SM)
On February 2, 1998, Keith Brodkin, a friend and
leader to everyone at MFS, died unexpectedly at
[Photo of A. Keith Brodkin] age 62. His thoughtful letters to shareholders on
the markets and economy have been an integral
part of MFS shareholder reports like this one for
many years.
Keith joined MFS in 1970 as the firm's first
fixed-income manager, managing the
bond portion of MFS(R) Total Return Fund. He went on to manage our first pure
bond fund, MFS(R) Bond Fund, when it was introduced in 1974, and he was
considered a pioneer in the art of active bond management.
Keith was named President and Chief Investment Officer of MFS in 1987 and
four years later became Chairman and Chief Executive Officer. During his
stewardship, MFS has achieved significant growth in total assets under
management, rising from some $25 billion in 1991 to the over $70 billion
today entrusted to us by three million individual and institutional investors
worldwide. Under Keith's leadership, MFS has carefully but steadily built its
domestic and international investment capabilities through the introduction
of a range of new products and a still-growing staff that now numbers over
100 equity and fixed-income professionals.
Throughout his career, Keith was very active in a wide range of charitable
endeavors. He is survived by his wife and three children.
His leadership, friendship, and wise counsel will be sorely missed.
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 2
Portfolio Manager's Overview .............................................. 4
Fund Facts ................................................................ 6
Portfolio of Investments .................................................. 7
Financial Statements ....................................................... 9
Notes to Financial Statements ............................................. 14
Trustees and Officers ..................................................... 17
- ------------------------------------------------------------------------------
HIGHLIGHTS
- ------------------------------------------------------------------------------
o THE ANNUALIZED YIELD ON AN INVESTMENT IN MFS(R) MONEY MARKET FUND FOR THE
SEVEN-DAY PERIOD ENDED FEBRUARY 28, 1998, DECLINED TO 4.86%, FROM 4.95% AT
THE END OF AUGUST 1997. DURING THE SAME PERIOD, THE ANNUALIZED YIELD ON AN
INVESTMENT IN MFS(R) GOVERNMENT MONEY MARKET FUND FELL FROM 4.87% TO 4.70%.
o AS A RESULT OF STRONG ECONOMIC GROWTH, ALONG WITH LOW INFLATION AND
UNCERTAINTY ABOUT THE EFFECT ASIA'S ECONOMIC TURMOIL MAY HAVE ON THE U.S.
ECONOMY, THE FEDERAL RESERVE BOARD DID NOT ADJUST ITS MONETARY POLICY DURING
THE PAST SIX MONTHS.
o THE FUNDS' AVERAGE MATURITIES HAVE BEEN NEUTRAL OVER THE PAST SIX MONTHS.
THE AVERAGE MATURITIES FOR MFS MONEY MARKET FUND AND MFS GOVERNMENT MONEY
MARKET FUND ON FEBRUARY 28, 1998, WERE 39 AND 45 DAYS, RESPECTIVELY, VERSUS
39 AND 41 DAYS ON AUGUST 31, 1997.
- -------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- -------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders:
As investment managers we take a long-term view of the world's economies, as
well as of the stock and bond markets, and try to avoid getting caught up in
short-term fluctuations. However, it is hard to ignore unexpected events such as
the Asian economic turmoil or closely watched companies that miss their
quarterly earnings estimates. Given the potential for these events and their
possible impact on major market indices, we think it's important to offer some
perspective about recent market behavior and to let you know what MFS is doing
in an effort to provide you with favorable long-term investment performance.
The most notable recent event affecting investment markets has been the Asian
turmoil, which began in the summer of 1997 as a result of slowing growth rates
in the region and excess speculation in real estate markets. Since then, most
countries in the region have begun to implement the economic and regulatory
restructuring needed to put themselves on a stronger financial foundation. While
it may be a few years before some of these countries return to solid economic
footing, and while there will probably be a relatively short-term impact on the
U.S. economy, we believe the long-term outlook for the region is quite positive.
The Asian situation has brought home the lesson that major events can quickly
impact investment markets around the world, including those of the United
States. Although U.S. equities have enjoyed a bull market lasting more than 15
years and have continued to set records in the first several weeks of 1998,
there have been brief bouts of volatility associated with the Asian turmoil, as
well as with perceived downturns for certain industries such as technology.
While we believe the long-term outlook for the equity markets is favorable,
other, unforeseen events can trigger fairly extended periods during which prices
decline or remain relatively flat. Since no one can predict market cycles, that
makes it that much more important to find companies that can keep growing in the
face of the occasional downturn and even gain market share. For us, this means
using original, bottom-up research to examine each company's earnings potential
and position as well as the overall prospects for its industry. To that end, MFS
continues to increase the research support available to portfolio managers of
MFS funds.
On the fixed-income side, MFS uses active portfolio management based on
extensive research and credit analysis to reduce the potential for price
declines and enhance the opportunity for price appreciation. For both equity and
fixed-income managers, this means visiting and meeting with thousands of
companies and issuers of credit every year, as well as attending many
presentations and closely following sources of industry research.
We believe this approach, based on thorough research, teamwork, innovative
thinking, and the free exchange of ideas, is the best way to get the most
performance for shareholders in MFS funds -- in any market environment.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management
March 16, 1998
JEFFREY L. SHAMES, A GRADUATE OF WESLEYAN UNIVERSITY AND THE MASSACHUSETTS
INSTITUTE OF TECHNOLOGY SLOAN SCHOOL OF MANAGEMENT, JOINED MFS IN 1983. AFTER
FOUR YEARS AS AN INDUSTRY ANALYST AND PORTFOLIO MANAGER, HE WAS NAMED CHIEF
EQUITY OFFICER IN 1987 AND PRESIDENT AND A MEMBER OF THE BOARD OF DIRECTORS IN
1993. MR. SHAMES WAS APPOINTED CHAIRMAN AND CHIEF EXECUTIVE OFFICER IN FEBRUARY
1998.
<PAGE>
PORTFOLIO MANAGER'S OVERVIEW
[Photo of Jean O. Alessandro]
Jean O. Alessandro
Dear Shareholders:
Except for year-end pressures, short-term interest rates have remained
relatively stable over the past six months. As a result, the annualized yield on
an investment in MFS MONEY MARKET FUND for the seven-day period ended February
28, 1998, declined to 4.86%, from 4.95% at the end of August 1997. During the
same period, the annualized yield on an investment in MFS GOVERNMENT MONEY
MARKET FUND fell from 4.87% to 4.70%.
As a result of strong economic growth, along with low inflation and uncertainty
about the effect Asia's economic turmoil may have on the U.S. economy, the
Federal Reserve Board (the Fed) did not adjust its monetary policy during the
past six months. The federal funds' rate (the interest rate charged by banks to
other banks in need of overnight loans) has remained at 5.50% for the entire
period. As a result, yields on 90-day commercial paper have stayed relatively
unchanged. In the next few months, we look for the Fed to be locked into a
neutral interest-rate posture, which should keep short-term interest rates
relatively stable.
The Funds' average maturities have been neutral over the past six months. The
average maturities for MFS MONEY MARKET FUND and MFS GOVERNMENT MONEY MARKET
FUND on February 28, 1998, were 39 and 45 days, respectively, versus 39 and 41
days on August 31, 1997. We will continue to target the 40- to 45-day average
maturity range going forward.
The portfolio of MFS MONEY MARKET FUND continues to include only the
highest-quality corporate, bank, and government securities as we seek to provide
investors with maximum security against credit risk. On February 28, 1998,
approximately 36% 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 and to the fact that
our investment guidelines are among the strictest in the industry. 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 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. 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/ Jean O. Alessandro
Jean O. Alessandro
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and are
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
Note to Shareholders: Effective January 2, 1998, the Funds are being managed by
Jean O. Alessandro, who succeeds Geoffrey L. Kurinsky. A graduate of the
University of Connecticut, Ms. Alessandro began her career at MFS in 1985 as a
fixed-income trading assistant. From 1986 to 1990, she was a money market trader
and, from 1990 to 1993, a senior money market specialist. She has been an
Investment Officer since 1993.
- ------------------------------------------------------------------------------
FUND FACTS
- ------------------------------------------------------------------------------
OBJECTIVE: EACH FUND SEEKS AS HIGH A LEVEL OF CURRENT INCOME AS IS
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND
LIQUIDITY. INVESTMENTS ARE NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO
ASSURANCE THAT EACH FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE.
COMMENCEMENT OF
INVESTMENT OPERATIONS: MFS MONEY MARKET FUND -- DECEMBER 19, 1975 MFS
GOVERNMENT MONEY MARKET FUND -- FEBRUARY 26, 1982
SIZE: MFS MONEY MARKET FUND -- $811.9 MILLION NET ASSETS AS OF
FEBRUARY 28, 1998
MFS GOVERNMENT MONEY MARKET FUND -- $67.1 MILLION NET
ASSETS AS OF FEBRUARY 28, 1998
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- February 28, 1998
<TABLE>
<CAPTION>
MFS Money Market Fund
- ------------------------------------------------------------------------------------------------------
Commercial Paper - 36.0%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
American Express Credit Corp., due 4/02/98 - 6/26/98 $ 20,800 $ 20,565,182
Associates Corp. of North America, due 3/25/98 - 3/30/98 23,000 22,904,955
BankAmerica Corp., due 4/08/98 10,000 9,942,261
Bankers Trust New York Corp., due 3/09/98 7,000 6,991,336
Campbell Soup Company, due 3/10/98 10,000 9,986,050
Carolina Power & Light Co., due 4/29/98 10,000 9,910,189
Consolidated Natural Gas Co., due 3/05/98 4,500 4,497,265
Disney Walt Company, due 5/18/98 10,000 9,882,133
du Pont (E. I.) de Nemours & Co., due 3/06/98 - 5/14/98 20,000 19,881,486
Duke Power Co., due 4/07/98 5,000 4,971,890
Ford Motor Credit Corp., due 4/06/98 - 5/05/98 18,500 18,361,411
General Electric Capital Corp., due 4/23/98 - 5/12/98 20,000 19,811,782
General Motors Acceptance Corp., due 5/27/98 8,500 8,388,048
Goldman Sachs Group LP, due 3/04/98 - 4/21/98 17,000 16,919,738
Heinz (H.J.) Co., due 3/26/98 - 4/16/98 19,000 18,903,237
Hershey Foods Corp., due 3/13/98 9,000 8,983,770
Hewlett-Packard Co., due 4/13/98 12,000 11,922,170
Merrill Lynch & Co., Inc., due 4/17/98 10,000 9,928,325
Morgan (J.P.) & Co., Inc., due 3/23/98 - 7/06/98 21,000 20,788,852
Nationsbank Corp., due 5/21/98 - 7/13/98 18,500 18,198,119
Procter & Gamble Co., due 4/03/98 - 4/10/98 21,000 20,885,600
- ------------------------------------------------------------------------------------------------------
Total Commercial Paper, at Amortized Cost $292,623,799
- ------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations - 27.7%
- ------------------------------------------------------------------------------------------------------
Federal Farm Credit Bank, due 5/26/98 - 8/12/98 $ 18,472 $ 18,114,179
Federal Home Loan Bank, due 4/15/98 - 5/01/98 22,000 21,827,742
Federal Home Loan Mortgage Corp., due 3/10/98 - 4/01/98 74,900 74,712,897
Federal National Mortgage Assn., due 3/02/98 - 5/20/98 111,100 110,520,251
- ------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at Amortized Cost $225,175,069
- ------------------------------------------------------------------------------------------------------
Repurchase Agreement - 12.3%
- ------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 2/27/98, due 3/02/98, total to be received
$100,047,000 (secured by various U.S. Treasury and federal
agency obligations in jointly traded accounts), at Cost $100,000 $100,000,000
- ------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost, and Value $617,798,868
Other Assets, Less Liabilities - 24.0% 194,097,404
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $811,896,272
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- February 28, 1998
<TABLE>
<CAPTION>
MFS Government Money Market Fund
- ------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations - 61.9%
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Farm Credit Bank Corp., due 3/03/98 - 8/17/98 $11,165 $11,047,622
Federal Home Loan Bank, due 3/18/98 - 4/08/98 5,600 5,576,248
Federal Home Loan Mortgage Corp., due 3/05/98 - 4/10/98 11,150 11,110,673
Federal National Mortgage Assn., due 3/27/98 - 6/12/98 10,900 10,803,260
Tennessee Valley Authority, due 3/19/98 - 3/24/98 3,000 2,990,522
- ------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at Amortized Cost $41,528,325
- ------------------------------------------------------------------------------------------------------
Repurchase Agreement - 4.5%
- ------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 2/27/98, due 3/02/98, total to be
received $3,001,410 (secured by various U.S. Treasury
and federal agency obligations in jointly traded
accounts), at Cost $ 3,000 $ 3,000,000
- ------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost and Value $44,528,325
Other Assets, Less Liabilities - 33.6% 22,560,345
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $67,088,670
- ------------------------------------------------------------------------------------------------------
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statements of Assets and Liabilities (Unaudited)
- -----------------------------------------------------------------------------------------------
MFS MONEY MFS GOVERNMENT
FEBRUARY 28, 1998 MARKET FUND MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at amortized cost and value $517,798,868 $41,528,325
Repurchase agreements, at cost and value 100,000,000 3,000,000
------------ -----------
Total investments, at amortized cost and value $617,798,868 $44,528,325
Cash 226,560 103,458
Receivable for Fund shares sold 197,418,768 22,683,623
Interest receivable 31,333 940
Other assets 4,392 318
------------ -----------
Total assets $815,479,921 $67,316,664
------------ -----------
Liabilities:
Distributions payable $ 143,481 $ 5,920
Payable for Fund shares reacquired 3,151,215 167,424
Payable to affiliates -
Management fee 15,245 1,217
Administrative fee 481 37
Shareholder servicing agent fee 3,606 274
Accrued expenses and other liabilities 269,621 53,122
------------ -----------
Total liabilities $ 3,583,649 $ 227,994
------------ -----------
Net assets (represented by paid-in capital) $811,896,272 $67,088,670
============ ===========
Shares of beneficial interest outstanding 811,896,272 67,088,670
=========== ==========
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 (Unaudited)
- -------------------------------------------------------------------------------
MFS Money Market Fund
- -------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 28, 1998
- -------------------------------------------------------------------------------
Net investment income:
Interest income $17,567,966
-----------
Expenses -
Management fee $ 1,482,605
Trustees' compensation 25,877
Shareholder servicing agent fee 388,305
Administrative fee 40,944
Custodian fee 135,107
Postage 80,586
Auditing fees 4,366
Miscellaneous 306,671
-----------
Total expenses $ 2,464,461
Fees paid indirectly (113,170)
-----------
Net expenses $ 2,351,291
-----------
Net investment income $15,216,675
===========
MFS Government Money Market Fund
- ------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 28, 1998
- ------------------------------------------------------------------------------
Net investment income:
Interest income $ 1,286,838
-----------
Expenses -
Management fee $ 115,464
Trustees' compensation 2,583
Shareholder servicing agent fee 28,642
Administrative fee 3,010
Custodian fee 10,168
Postage 3,434
Auditing fees 3,253
Printing 572
Miscellaneous 64,848
-----------
Total expenses $ 231,974
Fees paid indirectly (9,466)
-----------
Net expenses $ 222,508
-----------
Net investment income $ 1,064,330
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------
MFS Money Market Fund
- ------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income, declared as distributions to
shareholders $ 15,216,675 $ 27,586,652
--------------- ----------------
Fund share (principal) transactions at net asset value of
$1.00 per share -
Net proceeds from sale of shares $ 6,630,478,561 $ 8,979,377,073
Net assets value of shares issued to shareholders in
reinvestment of distributions 10,939,712 21,300,694
Cost of shares reacquired (6,463,761,932) (9,010,642,758)
Increase (decrease) in net assets from Fund share
transactions $ 177,656,341 $ (9,964,991)
Net assets:
At beginning of period 634,239,931 644,204,922
--------------- ----------------
At end of period $ 811,896,272 $ 634,239,931
=============== ================
<CAPTION>
MFS Government Money Market Fund
- ------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income, declared as distributions to
shareholders $ 1,064,330 $ 1,692,545
--------------- ----------------
Fund share (principal) transactions at net asset value
of $1.00 per share -
Net proceeds from sale of shares $ 353,778,584 $ 118,706,075
Net assets value of shares issued to shareholders in
reinvestment of distributions 883,184 1,548,739
Cost of shares reacquired (325,959,615) (124,367,744)
--------------- ----------------
Total increase (decrease) in net assets from Fund
share transactions $ 28,702,153 $ (4,112,930)
Net assets:
At beginning of period 38,386,517 42,499,447
--------------- ----------------
At end of period $ 67,088,670 $ 38,386,517
=============== ================
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------
MFS Money Market Fund
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS TEN MONTHS
ENDED YEAR ENDED AUGUST 31, ENDED
FEBRUARY 28, ------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
<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 $ 0.05 $ 0.05 $ 0.02
------ ------ ------ ------ ------
Less distributions declared to
shareholders from net investment income $(0.02) $(0.05) $(0.05) $(0.05) $(0.02)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 4.87%+ 4.61% 4.86% 5.04% 2.91%+
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.79%+ 0.80% 0.79% 0.76% 0.78%+
Net investment income 4.98%+ 4.71% 4.78% 4.92% 2.95%+
Net assets at end of period (000 omitted) $811,896 $634,240 $644,205 $410,798 $435,780
+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, 1993 1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $ 1.00
------ ------ ------ ------ ------ ------ ------
Income from investment operations -
Net investment income $ 0.02 $ 0.03 $ 0.06 $ 0.07 $ 0.08 $ 0.07 $ 0.06
------ ------ ------ ------ ------ ------ ------
Less distributions
declared to shareholders
from net investment
income $(0.02) $(0.03) $(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 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ======
Total return 2.39% 3.35% 6.07% 7.99% 8.84% 7.12% 6.06%
Ratios (to average net assets)/
Supplemental data:
Expenses 0.83% 0.87% 0.82% 0.76% 0.83% 0.83% 0.82%
Net investment income 2.39% 3.36% 5.94% 7.60% 8.45% 6.72% 5.77%
Net assets at end of
period (000 omitted) $350,316 $448,825 $541,945 $677,164 $676,382 $664,895 $716,528
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------
MFS Government Money Market Fund
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS TEN MONTHS
ENDED YEAR ENDED AUGUST 31, ENDED
FEBRUARY 28, ------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
<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 $ 0.03 $ 0.05 $ 0.05 $ 0.05 $ 0.02
------ ------ ------ ------ ------
Less distributions declared to
shareholders from net investment income $(0.03) $(0.05) $(0.05) $(0.05) $(0.02)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 4.70%+ 4.81% 4.73% 4.92% 2.64%+
Ratios (to average net assets)/
Supplemental data:
Expenses## 1.01%+ 0.85% 0.89% 0.84% 1.05%+
Net investment income 5.58%+ 4.02% 4.64% 4.82% 2.64%+
Net assets at end of period (000 omitted) $67,089 $38,387 $42,499 $38,440 $38,347
+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, 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $ 1.00
------ ------ ------ ------ ------ ------ ------
Income from investment operations -
Net investment income $ 0.02 $ 0.03 $ 0.06 $ 0.07 $ 0.08 $ 0.06 $ 0.05
------ ------ ------ ------ ------ ------ ------
Less distributions
declared to
shareholders from net
investment income $(0.02) $(0.03) $(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 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ======
Total return 2.33% 3.27% 5.68% 7.55% 8.61% 6.47% 5.73%
Ratios (to average net assets)/
Supplemental data:
Expenses 0.99% 0.87% 0.83% 0.80% 0.85% 0.74% 0.59%
Net investment income 2.20% 3.28% 5.53% 7.34% 8.29% 6.29% 5.63%
Net assets at end of
period
(000 omitted) $35,576 $47,629 $50,655 $53,701 $51,619 $50,343 $59,875
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Money Market Fund and MFS Government Money Market Fund (the Funds) are a
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 Trust may enter into repurchase agreements with
institutions that the Trust's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Trust requires
that the securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Trust to obtain those securities
in the event of a default under the repurchase agreement. The Trust monitors, on
a daily basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Trust under each such repurchase agreement. The
Trust, along with other affiliated entities of Massachusetts Financial Service
Company (MFS), may utilize a joint trading account for the purpose of entering
into one or more repurchase agreements.
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 Fund's custody fee is calculated as a percentage of
the Fund's average daily net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
Fund. 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, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Funds file a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV.
(3) Transactions with Affiliates
Investment Adviser - The Funds have 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 the following annual rates:
First $300 million of average net assets 0.50%
Next $400 million of average net assets 0.45%
Next $300 million of average net assets 0.40%
Average net assets in excess of $1 billion 0.35%
Administrator - 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 Fund's 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%
In excess of $3 billion 0.0000%
The Trust pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Trust, all of whom receive
remuneration for their services to the Trust from MFS. Certain officers and
Trustees of the Trust are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Trust has an unfunded
defined benefit plan for all its independent Trustees and Mr. Bailey. Included
in Trustees' compensation for MFS Government Money Market Fund and MFS Money
Market Fund are a net periodic pension expenses of $1,036 and $17,347,
respectively, for the period ended February 28, 1998.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. Effective January 1, 1998,
the fee is calculated as a percentage of the average daily net assets of each
Fund at an effective annual rate of 0.1125%. Prior to January 1, 1998, the fee
was calculated as a percentage of the Fund's average daily net assets at an
effective annual rate of up to 0.13%.
(4) Portfolio Securities
Purchases and sales of money market investments, exclusive of securities subject
to repurchase agreements for MFS Money Market Fund, aggregated $3,630,719,538
and $6,526,558,947, respectively.
Purchases and sales of government money market investments, exclusive of
securities subject to repurchase agreements for MFS Government Money Market
Fund, aggregated $435,233,568 and $431,616,556, 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).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
MFS Money Market Fund
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 6,630,478,561 8,979,377,073
Shares issued to shareholders in reinvestment of
distributions 10,939,712 21,300,694
Shares reacquired (6,463,761,932) (9,010,642,758
-------------- --------------
Net increase (decrease) 177,656,341 (9,964,991
============== ==============
<CAPTION>
MFS Government Money Market Fund
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 353,778,584 118,706,075
Shares issued to shareholders in reinvestment of
distributions 883,184 1,548,739
Shares reacquired (325,959,615) (124,367,744)
-------------- --------------
Net increase (decrease) 28,702,153 (4,112,930)
============== ==============
</TABLE>
(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 $400 million, collectively. 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 $1,727 and $135, respectively, for the period
ended February 28, 1998.
--------------------------------------------
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
TRUSTEES CUSTODIAN
State Street Bank and Trust Company
Richard B. Bailey* - Private
Investor; Former Chairman and INVESTOR INFORMATION
Director (until 1991), MFS For MFS stock and bond market
Investment Management outlooks, call toll free:
1-800-637-4458 anytime from a
Peter G. Harwood - Private Investor touch-tone telephone.
J. Atwood Ives - Chairman and Chief For information on MFS mutual funds,
Executive Officer, Eastern call your financial adviser or, for
Enterprises an information kit, call toll free:
1-800-637-2929 any business day from
Lawrence T. Perera - Partner, 9 a.m. to 5 p.m. Eastern time (or
Hemenway & Barnes leave a message anytime).
William J. Poorvu - Adjunct INVESTOR SERVICE
Professor, Harvard University MFS Service Center, Inc.
Graduate School of Business P.O. Box 2281
Administration Boston, MA 02107-9906
Charles W. Schmidt - Private For general information, call toll
Investor free: 1-800-225-2606 any business
day from 8 a.m. to 8 p.m. Eastern
Arnold D. Scott* - Senior Executive time.
Vice President, Director, and
Secretary, MFS Investment Management For service to speech- or
hearing-impaired, call toll free:
Jeffrey L. Shames* - Chairman, Chief 1-800-637-6576 any business day from
Executive Officer, and Director, MFS 9 a.m. to 5 p.m. Eastern time. (To
Investment Management use this service, your phone must be
equipped with a Telecommunications
Elaine R. Smith - Independent Device for the Deaf.)
Consultant
For share prices, account balances, and
David B. Stone - Chairman, North and exchanges, call toll free:
American Management Corp. 1-800-MFS-TALK (1-800-637-8255)
(investment advisers) anytime from a touch-tone telephone.
INVESTMENT ADVISER WORLD WIDE WEB
Massachusetts Financial Services www.mfs.com
Company 500 Boylston Street
Boston, MA 02116-3741 [Dalbar logo] For the fourth year
in a row, MFS earned a #1 ranking
DISTRIBUTOR in the DALBAR, Inc. Broker/Dealer
MFS Fund Distributors, Inc. Survey, Main Office Operations
500 Boylston Street Service Quality Category. The firm
Boston, MA 02116-3741 achieved a 3.42 overall score on a
scale of 1 to 4 in the 1997
PORTFOLIO MANAGER survey. A total of 111 firms
Jean O. Alessandro* responded, offering input on the
quality of service they received
TREASURER from 29 mutual fund companies
W. Thomas London* nationwide. The survey contained
questions about service quality in
ASSISTANT TREASURERS 11 categories, including "knowledge
Mark E. Bradley* of operations," "keeping you
Ellen Moynihan* informed," and "ease of doing
James O. Yost* business" with the firm.
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
<PAGE>
MFS(R) MONEY MARKET FUND ------------
MFS(R) GOVERNMENT MONEY MARKET FUND BULK RATE
U.S. POSTAGE
[graphic omitted] MFS(SM) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(SM) ------------
500 Boylston Street
Boston, MA 02116-3741
[DALBAR Logo]
(C)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MCM-3 4/98 53M 10/310/22
