<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
----------------------------------------------------
DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 19)
----------------------------------------------------
MFS(R) MONEY MARKET FUND
MFS(R) GOVERNMENT MONEY MARKET FUND
SEMIANNUAL REPORT o FEBRUARY 28, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Portfolio of Investments .................................................. 7
Financial Statements ...................................................... 9
Notes to Financial Statements ............................................. 14
MFS' Year 2000 Readiness Disclosure ....................................... 17
Trustees and Officers ..................................................... 21
MFS CELEBRATES ITS DIAMOND ANNIVERSARY!
MARCH 21, 1999, MARKS THE 75TH ANNIVERSARY OF MFS' INVENTION OF
THE MUTUAL FUND. THE MUTUAL FUND INDUSTRY HAS BROUGHT THE POWER
OF INVESTING TO EVERY AMERICAN, OFFERING THEM THE OPPORTUNITY FOR
COLLEGE DEGREES, HOME OWNERSHIP, AND COMFORTABLE RETIREMENT.
IMAGINE TODAY'S WORLD WITHOUT MUTUAL
FUNDS. WE COULDN'T. AND WHILE THE MFS 75 YEARS
YEARS AHEAD WILL BRING A NUMBER OF [graphic omitted]
CHALLENGES, OUR 75 YEARS OF EXPERIENCE EXPERIENCE THE FUTURE(SM)
WILL HELP GUIDE A NEW GENERATION OF
INVESTORS INTO THE FUTURE.
- --------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- --------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
Since we launched Massachusetts Investors Trust, the nation's first mutual
fund, 75 years ago, MFS has weathered numerous market and economic cycles,
from the occasional recession to long periods of growth and prosperity.
Throughout that time, we have tried to give investors a realistic assessment
of the investment markets and, when necessary, to sound a note of caution --
even when market conditions appear quite favorable.
Although the equity markets have overcome last year's volatility, we still
think stocks are overdue for a correction that will rid them of the excesses
that have developed. Perhaps the most glaring measure of those excesses is the
high level of valuations, that is, the amount equity investors are paying for
each dollar of earnings. By mid-March, the price-to-earnings (P/E) ratio of
the average stock in the Standard & Poor's 500 Composite Index, a popular,
unmanaged index of common stock total return performance, was almost 28%
higher than it was a year ago. While P/E ratios keep going up, earnings have
essentially been flat, and we believe they are likely to stay that way, for a
few months at least. This leaves stock prices vulnerable to negative events
such as a domestic or international crisis, a sudden increase in interest
rates, or a slowing economy, any of which could lead to lower corporate
earnings.
While risks in the overall market have increased, one industry calls for
particular attention. For several months, Internet-related stocks have
exhibited extreme price volatility. The Internet's potential impact on the way
individuals and companies communicate and conduct business is certainly great,
but we feel that most of the recent run-up in the share prices of these
companies is unjustified. Many of them have not yet reported any profits, and
there is no way of knowing which of today's "hot" Internet stocks will be
successful -- or even in existence -- a few years from now. Therefore, we
think the frenzy surrounding even the best-known Internet stocks is purely
speculative.
However, there are some established companies offering Internet-related
products and services that may generate revenue. These include companies that
provide networking equipment, that make servers to store information, and that
help customers make better use of Internet services. Because they already have
profitable businesses as well as the potential to use the Internet to increase
their opportunities to generate revenue, these companies have been the focus
of our research efforts.
Although we think valuations for the overall equity market, and especially for
Internet stocks, are excessive, we see this situation as an opportunity for
our portfolio managers to capitalize on MFS(R) Original Research(SM). This is
a fundamental, company-by-company process that helps us find investments that
we believe are most likely to achieve long-term earnings growth, through both
negative and positive market cycles.
We also rely heavily on our research process when investing in the fixed-
income markets. Last year, turmoil in emerging markets and volatility in the
U.S. stock market helped create a "flight to quality," meaning that investors
moved toward U.S. Treasury securities, which are seen as carrying less risk,
and away from almost everything else. As a result, yields on non-Treasury
securities increased, while yields on Treasuries fell. Some of these yield
spreads, or differentials, have narrowed, but they have not returned to the
levels seen before last year's market turmoil. We think this has created
opportunities for our portfolio managers to find attractive yields in
these markets.
Individual investors, meanwhile, should keep in mind that the tremendous
increases in the broad stock market averages of the past several years
are a historical aberration and do not necessarily indicate future market
performance. If they are not already diversified across a range of
investments, including growth stock funds, value-oriented funds, and fixed-
income funds, investors may want to talk to their financial advisers about
developing well-diversified portfolios with the potential to weather
unexpected changes in the markets. Doing so may help investors more
effectively meet their long-term financial goals. We appreciate your
confidence and welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
March 16, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Jean O. Alessandro]
Jean O. Alessandro
Dear Shareholders,
Short-term interest rates have fallen dramatically over the past six months.
As a result, the annualized yield on an investment in MFS(R) MONEY MARKET FUND
for the seven-day period ended February 28, 1999, was 4.28%, versus 5.04% on
August 31, 1998. During the same period, the annualized yield on an investment
in MFS(R) GOVERNMENT MONEY MARKET FUND fell from 4.88% to 4.08%.
Due to financial and economic crises around the globe, the Federal Reserve
Board (the Fed) lowered rates three times in the fall of 1998. Between the end
of September and mid-November, the Fed reduced the rate banks charge each
other for overnight loans (the federal funds rate) from 5.50% to 4.75%. As a
result, yields on 90-day commercial paper and government agencies have dropped
approximately 65 basis points (0.65%). The U.S. economy continues to grow
rapidly despite economic weakness abroad. In the next few months, we
anticipate no action by the Fed and short-term interest rates to remain flat
or move slightly higher.
The average maturities for MFS MONEY MARKET FUND and MFS GOVERNMENT MONEY MARKET
FUND on February 28, 1999, were 42 and 44 days, respectively, versus 42 and 45
days on August 31, 1998. Although we lengthened maturities during the fall of
1998 in expectation of lower rates, we ended the period with shorter maturities
than the average money market fund, according to IBC Financial Data, Inc., an
independent firm that reports money market fund performance. 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 in order to provide
investors with maximum security against credit risk. On February 28, 1999,
approximately 50% 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 was due to the narrow yield
differentials, or spreads, between government-agency obligations and commercial
paper and to our investment guidelines, which 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 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 Fund 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.
The portfolios are actively managed, and holdings are subject to change.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S PROFILE
- --------------------------------------------------------------------------------
JEAN O. ALESSANDRO IS ASSISTANT VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND PORTFOLIO MANAGER OF MFS(R) CASH RESERVE FUND, MFS(R)
GOVERNMENT MONEY MARKET FUND, MFS(R) MONEY MARKET FUND, THE MONEY MARKET
SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS, AND THE MFS(R)
MONEY MARKET SERIES (PART OF MFS(R) VARIABLE INSURANCE TRUST(SM)).
MS. ALESSANDRO JOINED MFS IN 1986 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 WAS NAMED INVESTMENT OFFICER IN 1993, PORTFOLIO
MANAGER IN 1998, AND ASSISTANT VICE PRESIDENT IN 1999. MS. ALESSANDRO EARNED
A BACHELOR'S DEGREE FROM THE UNIVERSITY OF CONNECTICUT.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY
AN INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS(R) ORIGINAL
RESEARCH(SM), A COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
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. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
OBJECTIVE: THE FUNDS SEEK AS HIGH A LEVEL OF CURRENT INCOME AS
IS CONSIDERED CONSISTENT WITH THE PRESERVATION OF
CAPITAL AND LIQUIDITY.
COMMENCEMENT OF
INVESTMENT OPERATIONS: MFS MONEY MARKET FUND -- DECEMBER 19, 1975
MFS GOVERNMENT MONEY MARKET FUND -- FEBRUARY 26, 1982
SIZE: MFS MONEY MARKET FUND -- $1.3 BILLION NET ASSETS AS
OF FEBRUARY 28, 1999 MFS GOVERNMENT MONEY MARKET FUND
-- $54.7 MILLION NET ASSETS AS OF FEBRUARY 28, 1999
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Unaudited) -- February 28, 1999
MFS Money Market Fund
Commercial Paper - 49.2%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
AIG Funding, due 3/31/99 $ 8,908 $ 8,872,517
American General Finance Corp., due 5/07/99 - 5/21/99 20,000 19,802,295
Archer Daniels Midland Co., due 5/06/99 - 5/18/99 20,000 19,808,433
Bank of America, FSB, due 7/27/99 10,000 9,805,133
BankAmerica Corp., due 7/26/99 - 11/02/99 20,000 19,477,358
British Columbia Province, due 8/16/99 - 8/18/99 18,500 18,084,671
Carolina Power & Light Co., due 3/11/99 10,000 9,986,639
Caterpillar Financial Services Corp., due 4/05/99 10,000 9,953,139
CIT Group Holdings, Inc., due 3/01/99 60,000 60,000,000
Coca-Cola Co., due 4/16/99 - 4/29/99 22,000 21,845,830
Daimler Chrysler North America, due 4/08/99 6,000 5,969,537
Deutsche Bank Finance, due 4/15/99 10,000 9,939,750
Dow Chemical Co., due 3/01/99 - 3/26/99 60,000 59,966,667
Du Pont (E. I.) de Nemours & Co., due 4/09/99 - 6/25/99 30,000 29,708,689
Duke Energy Co., due 3/01/99 50,000 50,000,000
General Electric Capital Corp., due 5/04/99 12,000 11,897,600
General Motors Acceptance Corp., due 4/13/99 12,000 11,930,483
Goldman Sachs Group LP, due 3/01/99 - 3/25/99 74,000 73,947,200
IBM Credit Corp., due 3/01/99 10,000 10,000,000
Lucent Technologies, Inc., due 3/22/99 - 5/11/99 28,000 27,833,373
McGraw Hill, Inc., due 5/20/99 12,000 11,873,333
Metropolitan Life Funding, Inc., due 3/12/99 10,000 9,985,303
Morgan (J.P.) & Co., Inc., due 7/13/99 - 7/15/99 16,000 15,712,360
National Rural Utilities Cooperative Finance Corp.,
due 3/30/99 - 4/22/99 22,000 21,885,039
Salomon Smith Barney Holdings, Inc., due 3/16/99 - 4/28/99 30,000 29,836,808
Southern California Edison Co., due 3/11/99 - 4/06/99 22,000 21,928,734
UBS Finance Delaware, Inc., due 3/08/99 - 8/09/99 30,000 29,750,923
Wachovia Corp., due 5/19/99 12,000 11,873,600
- ------------------------------------------------------------------------------------------------------
Total Commercial Paper, at Amortized Cost $ 641,675,414
- ------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations - 49.2%
- ------------------------------------------------------------------------------------------------------
Federal Agricultural Mortgage Corp., due 3/23/99 $ 6,000 $ 5,981,630
Federal Farm Credit Bank, due 5/18/99 9,000 8,906,790
Federal Home Loan Bank, due 3/03/99 - 7/09/99 40,000 39,687,272
Federal Home Loan Mortgage Corp., due 3/01/99 - 8/10/99 345,238 343,774,823
Federal National Mortgage Assn., due 3/04/99 - 9/03/99 115,135 114,132,026
Student Loan Marketing Assn., due 3/01/99 129,670 129,670,000
- ------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at Amortized Cost $ 642,152,541
- ------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost and Value $1,283,827,955
Other Assets, Less Liabilities - 1.6% 20,909,344
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,304,737,299
- ------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations - 98.0%
Federal Agricultural Mortgage Corp.,
due 3/01/99 - 4/05/99 $ 5,200 $ 5,193,792
Federal Farm Credit Bank, due 3/10/99 - 6/28/99 7,100 7,053,402
Federal Home Loan Bank, due 3/03/99 - 7/07/99 10,300 10,227,661
Federal Home Loan Mortgage, due 3/04/99 - 8/10/99 11,100 11,045,617
Federal National Mortgage Assn., due 4/26/99 - 5/17/99 7,000 6,939,502
Student Loan Marketing Assn., due 3/01/99 - 6/30/99 11,230 11,181,441
Tennessee Valley Authority, due 3/09/99 2,000 1,997,902
- ------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at Amortized Cost and Value $ 53,639,317
- ------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 2.0% 1,079,754
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 54,719,071
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
MFS MONEY MFS GOVERNMENT
FEBRUARY 28, 1999 MARKET FUND MONEY MARKET FUND
- ------------------------------------------------------------------------------
Assets:
Investments, at amortized cost and
value $1,283,827,955 $53,639,317
Cash 54,301 10,007
Receivable for Fund shares sold 49,008,802 1,198,015
Other assets 9,690 520
-------------- -----------
Total assets $1,332,900,748 $54,847,859
-------------- -----------
Liabilities:
Distributions payable $ 308,603 $ 5,407
Payable for Fund shares reacquired 27,699,651 94,122
Payable to affiliates -
Management fee 46,705 2,209
Shareholder servicing agent fee 11,980 497
Administrative fee 1,597 66
Accrued expenses and other liabilities 94,913 26,487
-------------- -----------
Total liabilities $ 28,163,449 $ 128,788
-------------- -----------
Net assets (represented by paid-in
capital) $1,304,737,299 $54,719,071
============== ===========
Shares of beneficial interest outstanding 1,304,737,299 54,719,071
============= ==========
Net asset value, offering price, and
redemption price per share
(net assets / shares of beneficial
interest outstanding) $1.00 $1.00
===== =====
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statements of Operations (Unaudited)
- -------------------------------------------------------------------------------
MFS Money Market Fund
- -------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 28, 1999
- -------------------------------------------------------------------------------
Net investment income:
Interest income $24,007,155
-----------
Expenses -
Management fee $ 2,119,005
Trustees' compensation 28,359
Shareholder servicing agent fee 526,235
Administrative fee 49,953
Transfer agent fee 136,083
Custodian fee 140,851
Printing 18,049
Postage 82,882
Auditing fees 9,680
Legal fees 1,325
Registration fees 168,420
-----------
Total expenses $ 3,280,842
Fees paid indirectly (128,339)
-----------
Net expenses $ 3,152,503
-----------
Net investment income $20,854,652
===========
MFS Government Money Market Fund
- -------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 28, 1999
- -------------------------------------------------------------------------------
Net investment income:
Interest income $ 1,145,126
-----------
Expenses -
Management fee $ 111,251
Trustees' compensation 4,311
Shareholder servicing agent fee 18,930
Administrative fee 2,260
Custodian fee 9,658
Printing 827
Postage 3,617
Auditing fees 9,267
Registration fees 17,011
-----------
Total expenses $ 177,132
Fees paid indirectly (7,031)
-----------
Net expenses $ 170,101
-----------
Net investment income $ 975,025
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statements of Changes in Net Assets
- -------------------------------------------------------------------------------
MFS Money Market Fund
- -------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
(UNAUDITED)
- -------------------------------------------------------------------------------
Increase in net assets:
From operations -
Net investment income, declared as
distributions to shareholders $ 20,854,652 $ 34,084,999
-------------- --------------
Total increase in net assets from
Fund share transactions $ 233,624,719 $ 436,872,649
Net assets:
At beginning of period 1,071,112,580 634,239,931
-------------- --------------
At end of period $1,304,737,299 $1,071,112,580
============== ==============
MFS Government Money Market Fund
- -------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
(UNAUDITED)
- -------------------------------------------------------------------------------
Increase in net assets:
From operations -
Net investment income, declared as
distributions to shareholders $ 975,025 $ 2,240,221
-------------- --------------
Total increase in net assets from
Fund share transactions $ 9,875,934 $ 6,456,620
Net assets:
At beginning of period 44,843,137 38,386,517
-------------- --------------
At end of period $ 54,719,071 $ 44,843,137
============== ==============
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 YEAR ENDED
FEBRUARY 28, ----------------------------------------------- AUGUST 31, OCTOBER 31,
1999 1998 1997 1996 1995 1994 1993
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
<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 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.02 $ 0.02
Less distributions
declared to
shareholders
from net investment
income (0.02) (0.05) (0.05) (0.05) (0.05) (0.02) (0.02)
------ ------ ------ ------ ------ ------ ------
Net asset value - end
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ======
Total return 4.62%+ 5.03% 4.61% 4.86% 5.04% 2.91%+ 2.39%
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.70%+ 0.74% 0.80% 0.79% 0.76% 0.78%+ 0.83%
Net investment
income 4.45%+ 4.88% 4.71% 4.78% 4.92% 2.95%+ 2.39%
Net assets at
end of period
(000 omitted) $1,304,737 $1,071,113 $634,240 $644,205 $410,798 $435,780 $350,316
+ Annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained by
the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for this expense offset arrangement.
</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 YEAR ENDED
FEBRUARY 28, ----------------------------------------------- AUGUST 31, OCTOBER 31,
1999 1998 1997 1996 1995 1994 1993
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
<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 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.02 $ 0.02
Less distributions
declared to
shareholders from
net investment
income (0.02) (0.05) (0.05) (0.05) (0.05) (0.02) (0.02)
------ ------ ------ ------ ------ ------ ------
Net asset value -
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ======
Total return 4.42%+ 4.85% 4.81% 4.73% 4.92% 2.64%+ 2.33%
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.75%+ 0.88% 0.85% 0.89% 0.84% 1.05%+ 0.99%
Net investment
income 4.12%+ 4.70% 4.02% 4.64% 4.82% 2.64%+ 2.20%
Net assets at end of
period (000 omitted) $54,719 $44,843 $38,387 $42,499 $38,440 $38,347 $35,576
+ Annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained by
the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for this expense offset arrangement.
</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 each
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 approximates market 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 collateral 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 collateral to ensure that its
value, including accrued interest, is greater than amounts owed to the Funds
under each such repurchase agreement. The Funds, along with other affiliated
entities of Massachusetts Financial Services Company (MFS), may utilize a
joint trading account for the purpose of entering into one or more repurchase
agreements.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All discount is
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' month end net assets. The fees are reduced according to
arrangements that 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. The Funds
distinguish between distributions on a tax basis and a financial reporting
basis and require that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a tax return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or net realized gains.
(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%
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 their 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 $9,556 and
$1,525, respectively, for the six months ended February 28, 1999.
Administrator - The Funds have an administrative services agreement with MFS
to provide the Fund 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:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
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 0.1125%.
(4) Portfolio Securities
Purchases and sales of money market investments, exclusive of securities
subject to repurchase agreements for MFS Money Market Fund, aggregated
$21,942,647,726 and $21,603,404,000, respectively.
Purchases and sales of money market investments, exclusive of securities
subject to repurchase agreements for MFS Government Money Market Fund,
aggregated $132,462,069 and $120,206,000, respectively.
(5) Shares of Beneficial Interest
The Funds' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest ($1.00 par value).
Transactions in Fund shares were as follows:
<PAGE>
MFS Money Market Fund
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
- --------------------------------------------------------------------------------
Shares sold 12,078,724,069 17,538,171,079
Shares issued to shareholders in
reinvestment of distributions 15,505,874 24,382,673
Shares reacquired (11,860,605,224) (17,125,681,103)
--------------- ---------------
Net increase 233,624,719 436,872,649
=============== ===============
MFS Government Money Market Fund
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
- --------------------------------------------------------------------------------
Shares sold 82,718,461 669,593,096
Shares issued to shareholders in
reinvestment of distributions 911,009 1,902,955
Shares reacquired (73,753,536) (665,039,431)
--------------- ---------------
Net increase 9,875,934 6,456,620
=============== ===============
(6) Line of Credit
The Funds and other affiliated funds participate in an $805 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 for the six
months ended February 28, 1999, were $4,163 and $55, respectively.
<PAGE>
<TABLE>
MFS(R) Money Market Fund
MFS(R) Government Money Market Fund
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
CUSTODIAN
J. Atwood Ives - Chairman and Chief Executive State Street Bank and Trust Company
Officer, Eastern Enterprises (diversified services
company) INVESTOR INFORMATION
For MFS stock and bond market outlooks,
Lawrence T. Perera - Partner, Hemenway call toll free: 1-800-637-4458 anytime from
& Barnes (attorneys) a touch-tone telephone.
William J. Poorvu - Adjunct Professor, Harvard For information on MFS mutual funds, call your
University Graduate School of Business financial adviser or, for an information kit, call
Administration toll free: 1-800-637-2929 any business day from
9 a.m. to 5 p.m. Eastern time (or leave a message
Charles W.Schmidt - Private Investor anytime).
Arnold D. Scott* - Senior Executive Vice INVESTOR SERVICE
President, Director, and Secretary, MFS Service Center, Inc.
MFS Investment Management P.O. Box 2281
Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman, Chief Executive
Officer, and Director, MFS Investment Management For general information, call toll free:
1-800-225-2606 any business day from
Elaine R. Smith - Independent Consultant 8 a.m. to 8 p.m. Eastern time.
David B. Stone - Chairman and Director, For service to speech- or hearing-impaired, call
North American Management Corp. toll free: 1-800-637-6576 any business day from
(investment advisers) 9 a.m. to 5 p.m. Eastern time. (To use this service,
your phone must be equipped with a
INVESTMENT ADVISER Telecommunications Device for the Deaf.)
Massachusetts Financial Services Company
500 Boylston Street For share prices, account balances, and exchanges,
Boston, MA 02116-3741 call toll free: 1-800-MFS-TALK (1-800-637-8255)
anytime from a touch-tone telephone.
DISTRIBUTOR
MFS Fund Distributors, Inc. WORLD WIDE WEB
500 Boylston Street www.mfs.com
Boston, MA 02116-3741
PORTFOLIO MANAGER
Jean O. Alessandro*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
MFS(R) MONEY MARKET FUND ------------
MFS(R) GOVERNMENT MONEY MARKET FUND BULK RATE
U.S. POSTAGE
[logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
WE INVENTED THE MUTUAL FUND(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MCM-3 4/99 52M 10/310/22
