<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[graphic omitted]
MFS(R) MONEY
MARKET FUND
MFS(R) GOVERNMENT
MONEY MARKET FUND
ANNUAL REPORT o AUGUST 31, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 5
Portfolio of Investments .................................................. 9
Financial Statements ...................................................... 12
Notes to Financial Statements ............................................. 16
Independent Auditors' Report .............................................. 19
Trustees and Officers ..................................................... 21
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
--------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
--------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
If you've been reading our fund reports for any length of time, you've probably
sensed the pride we have in our research process. More than anything else, we
think MFS Original Research(R) -- and the performance results it has yielded for
shareholders -- make us unique among investment management companies. We think
that uniqueness stems from three factors: philosophy, process, and people.
PHILOSOPHY
In over 75 years of managing mutual funds, we've developed a number of beliefs
about the best ways to invest over a variety of market conditions. First, we
believe in bottom-up research, which means we use a company-by-company, one-
security-at-a-time approach to building a portfolio. What we look for is the
truth about the fundamentals of a company's business -- things such as the
ability of management to execute its business plan, the ability of that plan to
be scaled up as the company grows, actual demand for the company's products and
services, cash flows, profits, and earnings.
Second, we believe that, over the long term, stock prices follow earnings. In
our view, stock prices are basically a multiple of projected earnings, with
the multiple increasing as the market perceives that a company has something
customers want and will continue to want. One of the major elements of
Original Research(SM) is doing our best to project a company's future earnings
and determine how much the market will pay for those earnings.
Third, we believe there are at least three ways to potentially achieve
competitive long-term performance: be early, uncover second chances,
and avoid mistakes. All of these are based on bottom-up research. In both
domestic and international markets, early discovery has historically been a
hallmark of our investment style. Some of the stocks with which MFS has been
most successful are those in which we've taken large positions before the
market discovered or believed in them. Similarly, some of our best fixed-
income investments have been early positions in companies or governments that
our research revealed were potential candidates for credit upgrades.
(A credit upgrade causes the value of a bond to rise because it indicates the
market has increased confidence that principal and interest on the bond will
be repaid.)
"Second-chance" opportunities are companies whose stock prices have stumbled
but that we believe still have the potential to be market leaders. For
example, a quarterly earnings shortfall of a few cents may cause the market to
temporarily lose confidence in a company. If we believe the business remains
fundamentally strong, we may use the price decline as a buying opportunity.
Avoiding mistakes is another way we feel Original Research may help
performance. In fixed-income investing this means, among other things, trying
to be better than our peers at avoiding bond issuers that may default. In
equity investing, avoiding mistakes means we strive to know a company and its
industry well enough to distinguish truth from hype.
PROCESS
We acquire our information firsthand, by researching thousands of companies to
determine which firms may make good investments. Our analysis of an individual
company may include
o face-to-face contact with senior management as well as front-line workers
o analysis of the company's financial statements and balance sheets
o contact with the company's current and potential customers
o contact with the company's competitors
o our own forecasts of the company's future market share, cash flows, and
earnings
Our analysts and portfolio managers disseminate this information in the form
of daily notes e-mailed worldwide to all members of our investment team. This
ensures that our best ideas are shared throughout the company, without
barriers between equity and fixed-income, international and domestic, or value
and growth investment areas. We believe this allows each of our portfolio
managers -- and thus each of our investors -- to potentially benefit from any
relevant item of Original Research.
John Ballen, our President and Chief Investment Officer, has often said that
the thought he hopes each manager will have when they read the daily notes is,
"I could never perform as well at any other investment company, because
nowhere else could the quality of the research be this good."
PEOPLE
Our team of research analysts and portfolio managers traces its roots back to
1932, when we created one of the first in-house research departments in the
industry. Today, we believe we have an investment team distinguished for its
unique blend of talent, continuity, and cohesiveness.
MFS' team culture and commitment to quality research have proven to be of
tremendous value in attracting some of the best and brightest talent from
leading business schools and from other investment management companies. Our
company culture was a key factor in our recognition by Fortune magazine in
it's January 10, 2000 issue as one of the "100 Best Companies to Work For" in
America. As befits a great team, our people tend to stick around -- the
average MFS tenure of our portfolio managers is 11 years, with over 16 years
in the investment industry. Contributing to this continuity is our policy that
all equity portfolio managers are promoted from within, after distinguishing
themselves first as research analysts. And because many of us who are now
managing funds or managing the company itself have been working together for
well over a decade, we have a cohesiveness, a shared philosophy of investing,
and a unity of purpose that we believe bodes well for the future of the
company.
We also have scale. Our research analyst team is over 35 members strong and
growing. Each analyst is our in-house expert on a specific industry or group
of industries in a specific region of the globe. In pursuing their research,
our analysts and portfolio managers each year will visit more than 2,000
companies throughout the world, meet with representatives from more than 3,000
companies at one of our four worldwide offices, attend roughly 5,000 company
presentations sponsored by major Wall Street firms, and consult with over
1,000 analysts from hundreds of U.S. and foreign brokerage houses.
All of this culminates in our analysts making buy and sell recommendations on
a wide range of potential investments for all of our portfolios. In the end,
the goal of Original Research is to try to give our portfolio managers an
advantage over their peers -- to enable our managers to deliver competitive
performance, by finding opportunities before they are generally recognized by
the market and by avoiding mistakes whenever possible. Original Research does,
we believe, make a difference.
As always, we appreciate your confidence in MFS 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)
September 15, 2000
A prospectus containing more complete information on any MFS product,
including all charges and expenses, can be obtained from your investment
professional. Please read it carefully before you invest or send money.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Jean O. Alessandro]
Jean O. Alessandro
Dear Shareholders,
During the past 12 months, short-term interest rates have been quite volatile.
The seven-day annualized yield on an investment in MFS(R) MONEY MARKET FUND for
the period ended August 31, 2000, was 6.15%, versus 4.70% for the period ended
August 31, 1999. MFS(R) GOVERNMENT MONEY MARKET FUND'S seven-day yield was
5.88%, compared to 4.51% a year ago. For the 12 months ended August 31, 2000,
MFS MONEY MARKET FUND provided a total return of 5.58%, compared to 5.32% for
the average money market fund tracked by Lipper Inc., an independent firm that
reports mutual fund performance. MFS GOVERNMENT MONEY MARKET FUND'S 12-month
total return for the period ended August 31, 2000, was 5.18%, versus 5.31% for
the average government money market fund tracked by Lipper Inc.
During most of the period, the economic environment seemed ripe for a buildup
of inflationary pressures. Economic growth was robust, unemployment reached
historic lows, and consumer spending was strong. To dampen this growth and
fight inflation, the Federal Reserve Board (the Fed) embarked on a steady
program of interest rate increases that appear to have successfully moderated
economic growth without threatening a recession.
Amid increasing evidence that the Fed may be finished raising interest rates,
the market seems to have priced in much of the good news. As a result, while we
don't anticipate a spike in short-term interest rates, we also don't expect them
to move much lower, given the Fed's bias to raise rates again if signs of
inflation reappear. During a 12-month period of generally rising interest rates,
we targeted an average maturity of roughly 25 days for the portfolios. More
recently, in light of our belief that the stable economic environment will
persist while inflation fears may diminish in the near term, we will target an
average maturity of 35 to 45 days, which is near the funds' neutral range.
The portfolio of the MFS MONEY MARKET FUND is limited to only the highest-
quality commercial paper, repurchase agreements, and U.S. Treasury and
government-agency securities in order to potentially provide investors with
maximum security against credit risk. On August 31, 2000, approximately 78% of
the fund's portfolio was invested in top-tier commercial paper, with the balance
invested in securities issued or guaranteed by the U.S. Treasury. MFS GOVERNMENT
MONEY MARKET FUND goes one step further, investing 100% of its assets in
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. With our emphasis on quality for both funds,
we believe we will be well positioned to provide current income, liquidity, and
preservation of capital.
Respectfully,
/s/ Jean O. Alessandro
Jean O. Alessandro
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current 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 current holdings may be different.
NOTE TO SHAREHOLDERS: Effective October 1, 2000, Terri A. Vittozzi will be
added as a portfolio manager on the fund.
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO MANAGER'S PROFILE
--------------------------------------------------------------------------------
JEAN O. ALESSANDRO IS ASSISTANT VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND PORTFOLIO MANAGER OF THE MONEY MARKET PORTFOLIOS OF
OUR MUTUAL FUNDS AND ANNUITIES.
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 ORIGINAL
RESEARCH(R), A GLOBAL, ISSUER-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 all charges and expenses, for any MFS product is available from your
investment professional, 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 -- $912.6 MILLION NET ASSETS
AS OF AUGUST 31, 2000
MFS GOVERNMENT MONEY MARKET FUND -- $44.0 MILLION
NET ASSETS AS OF AUGUST 31, 2000
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. SEE THE PROSPECTUS
FOR DETAILS.
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS -- August 31, 2000
MFS Money Market Fund
Commercial Paper - 98.6%
<CAPTION>
--------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
American General Corp., due 9/26/00 $ 15,000 $ 14,932,396
American General Finance Corp., due 11/03/00 6,000 5,931,855
Archer Daniels Midland Co., due 9/19/00 12,000 11,960,580
AT&T Corp., due 12/01/00 20,000 19,672,906
Banco De Galicia Y Buenos Aire (Barclays Bank PLC),
due 9/22/00 15,000 14,942,863
Bayerische Vereinsbank Ag, due 9/13/00 25,000 24,945,083
Bell Atlantic Financial Services, due 9/11/00 - 10/16/00 26,000 25,915,119
Bellsouth Telecommunications, Inc., due 9/27/00 9,000 8,957,880
Campbell Soup Co., due 9/07/00 - 11/28/00 35,100 34,693,602
Caterpillar Financial Services NV, due 9/11/00 9,818 9,799,728
Cemex Sa Series A (Bayer Hypo Vereinsbank), due 9/21/00 8,000 7,971,022
Chase Manhattan Corp., due 10/05/00 - 11/16/00 40,600 40,200,556
Corporacion Andina De Fomento (Barclay's Bank) due 9/22/00 15,000 14,943,125
Dow Chemical Co., due 9/01/00 45,600 45,600,000
Du Pont (E.I.) de Nemours & Co., Inc., due 10/11/00 4,930 4,894,559
Duke Power Co., due 10/19/00 - 10/26/00 21,500 21,295,025
Ford Motor Credit Corp., due 9/25/00 - 10/06/00 34,000 33,815,100
General Electric Capital Corp., due 9/07/00 - 10/25/00 28,485 28,390,687
General Motors Acceptance Corp., due 9/01/00 50,000 50,000,000
Goldman Sachs Group LP, due 11/20/00 - 11/21/00 40,000 39,420,400
Halliburton Corp., due 9/21/00 - 12/21/00 41,000 40,580,578
Heinz (H.J.) Co., due 10/11/00 6,100 6,056,080
IBM Credit Corp., due 10/18/00 - 10/20/00 40,200 39,853,244
Ing America Insurance Holdings, due 10/12/00 - 11/16/00 39,600 39,210,169
Lucent Technologies, Inc., due 10/24/00 - 10/27/00 32,200 31,882,503
May Department Stores Co., due 10/26/00 10,000 9,900,694
Metropolitan Life Funding, Inc., due 9/06/00 - 9/25/00 39,410 39,301,130
Morgan (J.P.) & Co., Inc., due 10/16/00 17,000 16,862,300
Morgan Stanley Dean Witter, due 9/14/00 3,000 2,992,850
Motorola, Inc., due 11/22/00 25,000 24,631,570
National Rural Utilities Cooperative Finance Corp.,
due 9/18/00 - 11/13/00 41,100 40,773,907
Pitney Bowes Credit Corp., due 9/26/00 12,750 12,692,625
Salomon Smith Barney Holdings, Inc., due 9/12/00 - 11/10/00 40,000 39,691,977
Societe General North America Inc., due 9/08/00 17,300 17,278,135
Southern California Edison Co., due 9/15/00 - 10/04/00 21,000 20,926,093
UBS AG (Stamford, CT), due 12/06/00 5,000 4,997,134
UBS Finance De (LLC), due 9/01/00 40,000 40,000,000
Verizon Network Fund, due 9/29/00 - 10/11/00 14,220 14,128,691
--------------------------------------------------------------------------------------------------------
Total Commercial Paper, at Amortized Cost $ 900,042,166
--------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations - 12.1%
--------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
--------------------------------------------------------------------------------------------------------
Federal Farm Credit Bank, due 3/30/01 $ 2,101 $ 2,024,524
Federal Home Loan Bank, due 11/01/00 10,771 10,654,194
Federal Home Loan Mortgage Corp., due 9/01/00 - 3/29/01 88,650 87,289,844
Federal National Mortgage Assn., due 10/26/00 10,000 9,902,222
--------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at Amortized Cost $ 109,870,784
--------------------------------------------------------------------------------------------------------
Repurchase Agreement - 16.4%
--------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 8/31/00, due 9/1/00, total to be
received $150,027,625 (secured by various U.S.
Treasury and Federal Agency obligations in a
jointly traded account), at Cost $150,000 $ 150,000,000
--------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost and Value $1,159,912,950
Other Assets, Less Liabilities - (27.1)% (247,282,451)
--------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 912,630,499
--------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS -- August 31, 2000
MFS Government Money Market Fund
U.S. Government and Agency Obligations - 89.4%
<CAPTION>
--------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Agricultural Mortgage Corp., due 9/18/00 - 10/03/00 $ 6,011 $ 5,983,671
Federal Farm Credit Bank, due 9/07/00 2,000 1,997,863
Federal Home Loan Bank, due 9/01/00 - 11/17/00 9,500 9,449,679
Federal Home Loan Mortgage Corp., due 9/07/00 - 3/29/01 12,775 12,659,986
Federal National Mortgage Assn., due 9/21/00 - 11/22/00 9,350 9,262,908
--------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations, at Amortized Cost $39,354,107
--------------------------------------------------------------------------------------------------------
Repurchase Agreement - 10.1%
--------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 8/31/00, due 9/1/00, total to be
received $4,448,819 (secured by various U.S. Treasury
and Federal Agency obligations in a jointly traded
account), at Cost $ 4,448 $ 4,448,000
--------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost and Value $43,802,107
Other Assets, Less Liabilities - 0.5% 235,726
--------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $44,037,833
--------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statements of Assets and Liabilities
<CAPTION>
------------------------------------------------------------------------------------------------------------
MFS MONEY MFS GOVERNMENT
AUGUST 31, 2000 MARKET FUND MONEY MARKET FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at amortized cost and value $1,009,912,950 $39,354,107
Repurchase agreements, at cost and value 150,000,000 4,448,000
-------------- -----------
Total investments, at amortized cost and value $1,159,912,950 $43,802,107
Cash 7,599 46,509
Receivable for fund shares sold 15,346,338 282,001
Interest receivable 261,621 819
Other assets 153,138 520
-------------- -----------
Total assets $1,175,681,646 $44,131,956
============== ===========
Liabilities:
Distributions payable $ 690,613 $ 7,157
Payable for fund shares reacquired 262,112,312 43,773
Payable to affiliates -
Management fee 13,372 590
Shareholder servicing agent fee 3,038 118
Administrative fee 532 21
Accrued expenses and other liabilities 231,280 42,464
-------------- -----------
Total liabilities $ 263,051,147 $ 94,123
============== ===========
Net assets (represented by paid-in capital) $ 912,630,499 $44,037,833
============== ===========
Shares of beneficial interest outstanding 912,630,499 44,037,833
=========== ==========
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.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
Statements of Operations
MFS Money Market Fund
-------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2000
-------------------------------------------------------------------------------
Net investment income:
Interest income $77,404,356
-----------
Expenses -
Management fee $ 5,455,364
Trustees' compensation 53,600
Shareholder servicing agent fee 1,276,880
Administrative fee 181,685
Custodian fee 378,603
Printing 55,359
Postage 213,682
Auditing fees 18,794
Legal fees 4,195
Transfer agent systems fee 444,940
Miscellaneous 374,093
-----------
Total expenses $ 8,457,195
Fees paid indirectly (319,843)
-----------
Net expenses $ 8,137,352
-----------
Net investment income $69,267,004
===========
MFS Government Money Market Fund
-------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2000
-------------------------------------------------------------------------------
Net investment income:
Interest income $ 3,102,048
-----------
Expenses -
Management fee $ 261,537
Trustees' compensation 9,243
Shareholder servicing agent fee 52,308
Administrative fee 7,190
Custodian fee 26,496
Printing 821
Postage 7,644
Auditing fees 19,094
Legal fees 2,790
Registration fees 40,142
Miscellaneous 28,347
-----------
Total expenses $ 455,612
Fees paid indirectly (17,030)
-----------
Net expenses $ 438,582
-----------
Net investment income $ 2,663,466
===========
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Statements of Changes in Net Assets
MFS Money Market Fund
<CAPTION>
----------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2000 1999
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income, declared as distributions to
shareholders $ 69,267,004 $ 44,488,263
--------------- ---------------
Fund share (principal) transactions -
Net proceeds from sale of shares $49,630,406,834 $27,617,655,370
Shares issued in reinvestment of distributions 50,959,801 32,902,497
Shares reacquired (49,848,705,161) (27,641,701,422)
--------------- ---------------
Net increase (decrease) in net assets from fund
share transactions $ (167,338,526) $ 8,856,445
Net assets:
At beginning of period 1,079,969,025 1,071,112,580
--------------- ---------------
At end of period $ 912,630,499 $ 1,079,969,025
=============== ===============
<CAPTION>
MFS Government Money Market Fund
----------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2000 1999
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income, declared as distributions to
shareholders $ 2,663,466 $ 2,122,589
------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 128,237,629 $ 163,409,640
Shares issued in reinvestment of distributions 2,469,611 2,010,227
Shares reacquired (143,743,192) (153,189,219)
------------- -------------
Net increase (decrease) in net assets from fund
share transactions $ (13,035,952) $ 12,230,648
Net assets:
At beginning of period 57,073,785 44,843,137
------------- -------------
At end of period $ 44,037,833 $ 57,073,785
============= =============
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights
MFS Money Market Fund
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------
<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 $ 0.05 $ 0.04 $ 0.05 $ 0.05 $ 0.05
Less distributions declared to
shareholders from net investment income (0.05) (0.04) (0.05) (0.05) (0.05)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 5.58% 4.54% 5.03% 4.61% 4.86%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.66% 0.69% 0.74% 0.80% 0.79%
Net investment income 5.38% 4.38% 4.88% 4.71% 4.78%
Net assets at end of period (000,000 Omitted) $913 $1,080 $1,071 $634 $644
MFS Government Money Market Fund
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------
<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 $ 0.05 $ 0.04 $ 0.05 $ 0.05 $ 0.05
Less distributions declared to shareholders -
From net investment income (0.05) (0.04) (0.05) (0.05) (0.05)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 5.18% 4.35% 4.85% 4.81% 4.73%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.86% 0.78% 0.88% 0.85% 0.89%
Net investment income 5.05% 4.26% 4.70% 4.02% 4.64%
Net assets at end of period (000 Omitted) $44,038 $57,074 $44,843 $38,387 $42,499
## Ratios do not reflect expense reductions from certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<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 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.
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 distributions from paid-in 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 pays 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, and MFS Service Center,
Inc. (MFSC). The funds have an unfunded defined benefit plan for all of its
independent Trustees. Included in Trustees' compensation for MFS Money Market
Fund and MFS Government Money Market Fund are net periodic pension expenses of
$18,079 and $3,278, respectively, for the year ended August 31, 2000.
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 fund's average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 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 0.10%.
(4) Portfolio Securities
Purchases and sales of money market investments, exclusive of securities subject
to repurchase agreements for MFS Money Market Fund, aggregated $85,862,792,000
and $86,141,827,000, respectively.
Purchases and sales of money market investments, exclusive of securities subject
to repurchase agreements for MFS Government Money Market Fund, aggregated
$874,338,000 and $889,529,000, 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).
(6) Line of Credit
The funds and other affiliated funds participate in a $1.1 billion 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 year
ended August 31, 2000, were $9,821 and $383, respectively.
<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, 2000, the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the years in the five-year period
ended August 31, 2000. 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 auditing standards generally accepted
in the United States of America. 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, 2000 by correspondence with the custodian and
brokers. 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, 2000, the results of
their operations, the changes in their net assets, and their financial
highlights for the respective stated periods in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 5, 2000
<PAGE>
-------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
-------------------------------------------------------------------------------
IN JANUARY 2001, SHAREHOLDERS WILL BE MAILED A TAX FORM SUMMARY OR FORM
1099-DIV, IF APPLICABLE, REPORTING THE FEDERAL TAX STATUS OF ALL
DISTRIBUTIONS PAID DURING THE CALENDAR YEAR 2000.
<PAGE>
<TABLE>
MFS(R) MONEY MARKET FUND
MFS(R) GOVERNMENT MONEY MARKET FUND
<S> <C>
TRUSTEES SECRETARY
J. Atwood Ives - Chairman and Chief Stephen E. Cavan*
Executive Officer, Eastern Enterprises
(diversified services company) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Lawrence T. Perera - Partner, Hemenway
& Barnes (attorneys) CUSTODIAN
State Street Bank and Trust Company
William J. Poorvu - Adjunct Professor, Harvard
University Graduate School of Business AUDITORS
Administration Deloitte & Touche LLP
Charles W. Schmidt - Private Investor INVESTOR INFORMATION
For information on MFS mutual funds, call your
Arnold D. Scott* - Senior Executive investment professional or, for an information
Vice President, Director, and Secretary, kit, call toll free: 1-800-637-2929 any
MFS Investment Management business day from 9 a.m. to 5 p.m. Eastern time
(or leave a message anytime).
Jeffrey L. Shames* - Chairman and Chief
Executive Officer, MFS Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Elaine R. Smith - Independent Consultant P.O. Box 2281
Boston, MA 02107-9906
David B. Stone - Chairman, North American
Management Corp. (investment adviser) For general information, call toll free:
1-800-225-2606 any business day from
INVESTMENT ADVISER 8 a.m. to 8 p.m. Eastern time.
Massachusetts Financial Services Company
500 Boylston Street For service to speech- or hearing-impaired,
Boston, MA 02116-3741 call toll free: 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time. (To use
DISTRIBUTOR this service, your phone must be equipped with
MFS Fund Distributors, Inc. a Telecommunications Device for the Deaf.)
500 Boylston Street
Boston, MA 02116-3741 For share prices, account balances, exchanges,
or stock and bond outlooks, call toll free:
CHAIRMAN AND PRESIDENT 1-800-MFS-TALK (1-800-637-8255) anytime from a
Jeffrey L. Shames* touch-tone telephone.
PORTFOLIO MANAGER WORLD WIDE WEB
Jean O. Alessandro* www.mfs.com
TREASURER
James O. Yost*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
+ Independent Trustee
* MFS Investment Management
</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)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MCM-2 10/00 74.3M 10/310/810/22
