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[logo] MFS
THE FIRST NAME IN MUTUAL FUNDS Annual Report for
Year Ended
August 31, 1995
MFS(R) CASH RESERVE FUND
Front cover
A photo of a columned building
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<TABLE>
<S> <C>
MFS(R) CASH RESERVE FUND
TRUSTEES SECRETARY
A. Keith Brodkin* - Chairman and President Stephen E. Cavan*
Richard B. Bailey* - Private Investor; ASSISTANT SECRETARY
Former Chairman and Director (until 1991), James R. Bordewick, Jr.*
Massachusetts Financial Services Company
CUSTODIAN
Marshall N. Cohan - Private Investor State Street Bank and Trust Company
Lawrence H. Cohn, M.D. - Chief of Cardiac AUDITORS
Surgery, Brigham and Women's Hospital; Deloitte & Touche LLP
Professor of Surgery, Harvard Medical School
INVESTOR INFORMATION
The Hon. Sir J. David Gibbons, KBE - Chief For MFS stock and bond market outlooks,
Executive Officer, Edmund Gibbons Ltd.; call toll free: 1-800-637-4458 anytime from
Chairman, Bank of N.T. Butterfield & Son Ltd. a touch-tone telephone.
Abbey M. O'Neill - Private Investor; For information on MFS mutual funds,
Director, Rockefeller Financial Services, Inc. call your financial adviser or, for an
(Investment Advisers) information kit, call toll free:
1-800-637-2929 any business day from
Walter E. Robb, III - President and Treasurer, 9 a.m. to 5 p.m. Eastern time (or leave
Benchmark Advisors, Inc. (Corporate a message anytime).
Financial Consultants)
INVESTOR SERVICE
Arnold D. Scott* - Senior Executive Vice MFS Service Center, Inc.
President and Secretary, Massachusetts P.O. Box 2281
Financial Services Company Boston, MA 02107-9906
For general information,
Jeffrey L. Shames* - President, Massachusetts call toll free:
Financial Services Company 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
J. Dale Sherratt - President, Insight Resources,
Inc. (Acquisition Planning Specialists) For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business
Ward Smith - Former Chairman day from 9 a.m. to 5 p.m. Eastern time.
(until 1994), NACCO Industries; (To use this service, your phone must be
Director, Sundstrand Corporation equipped with a Telecommunications Device for
the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances and
500 Boylston Street exchanges, call toll free: 1-800-MFS-TALK
Boston, MA 02116-3741 (1-800-637-8255) anytime from a touch-tone
telephone.
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Geoffrey L. Kurinsky*
TREASURER
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
Short-term interest rates increased dramatically during the past year, despite
the last few months of lower rates. The annualized compounded yield on an
investment in Class A shares of the Fund for the seven-day period ended August
31, 1995 increased from 3.8% to 5.1%, while the annualized compounded yield on
an investment in Class B shares rose from 2.7% to 3.9%.
Economic Environment
Moderate, but sustainable, growth appears to be the hallmark of the economic
expansion's fifth year. After slowing earlier in the summer, consumer spending
and homebuying were showing renewed strength by August 31, while businesses
continued to work off excess inventories and reduce factory output. Meanwhile,
overseas economies, particularly those of Germany and Japan, have not recovered
as expected, limiting U.S. export growth. However, we believe the Federal
Reserve Board's consistent and, so far, successful efforts to fight inflation
seem to be giving consumers and businesses enough confidence to help maintain
2 1/2% to 3% real (adjusted for inflation) growth in gross domestic product, at
least through 1995.
Interest Rates
During the fiscal year ended August 31, 1995, the Federal Reserve voted to
continue to tighten monetary policy by raising the federal funds rate (the
interest rate charged by banks to other banks in need of overnight loans) two
more times. On November 15, 1994, it raised the federal funds rate 75 basis
points (0.75%). Then on February 1, 1995, an increase of 50 basis points (0.50%)
was put into effect. Most recently, however, the Federal Reserve lowered rates
25 basis points (0.25%) on July 6, 1995 (the first easing in nearly three years)
after the economy began to show signs of contracting. As a result, yields on
30-day U.S. Treasury bills rose from just over 4.2% at the end of August 1994 to
5.3% as of August 31, 1995, while yields on 30-day commercial paper increased
from 4.7% to their current level of 5.7% during the same period. With improving
inflation conditions and moderate economic growth, we believe short-term
interest rates may fall somewhat further over the next several months.
Portfolio Performance and Strategy
Because of the trend toward stable to lower short-term interest rates and in an
effort to provide a reasonable level of current income, we have lengthened
maturities in the portfolio. The average maturity of the Fund was 50 days as of
August 31, 1995 versus 30 days as of August 31, 1994.
The portfolio continues to include only the highest-quality corporate, bank
and government securities in order to provide investors with maximum security
against credit risk (although money market funds are neither insured nor
guaranteed by the U.S. government, and there can be no assurance that they will
be able to maintain a stable net asset value). On August 31, 1995, approximately
24% of the Fund's net assets was invested in commercial paper, with the balance
invested in securities issued or guaranteed by the U.S. Treasury or agencies or
instrumentalities of the U.S. government because of the very narrow yield
spreads between government agency obligations and commercial paper. This
emphasis on quality should allow the Fund to continue to help investors to
obtain current income and, at the same time, to preserve capital and liquidity.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
A photo of A. Keith Brodkin, A photo of Geoffrey L. Kurinsky,
Chairman and President. Portfolio Manager.
A. Keith Brodkin Geoffrey L. Kurinsky
Chairman and President Portfolio Manager
September 12, 1995
PORTFOLIO MANAGER PROFILE
Geoff Kurinsky began his career at MFS in 1987 in the Fixed Income Department. A
graduate of the University of Massachusetts and Boston University's Graduate
School of Management, he was named Assistant Vice President in 1988, Vice
President in 1989 and Senior Vice President in 1993. He has managed MFS Cash
Reserve Fund since 1987.
TAX FORM SUMMARY
In January 1996, shareholders will be mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1995.
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OBJECTIVE AND POLICY
The Fund's investment objective is to seek as high a level of current income as
is considered consistent with the preservation of capital and liquidity.
The Fund's investment policy is to invest in money market instruments that
mature in less than 13 months. Securities collateralizing repurchase agreements,
however, may have maturities in excess of 13 months. The Fund invests primarily
in U.S. government securities (including repurchase agreements collateralized by
such securities), obligations of the larger banks, prime commercial paper and
high-grade, short-term corporate obligations. The Fund may also invest in U.S.
dollar-denominated securities of foreign issuers.
PORTFOLIO OF INVESTMENTS - August 31, 1995
Commercial Paper - 23.7%
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Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------
American Telephone & Telegraph Co.,
due 9/14/95 $ 4,500 $ 4,490,835
Campbell Soup Co., due 10/19/95 5,000 4,962,200
Coca-Cola Co., due 11/30/95 5,000 4,929,875
Hershey Foods Corp.,
due 10/03/95 - 10/23/95 8,200 8,141,740
Hewlett Packard Co., due 10/03/95 450 447,740
PepsiCo, Inc., due 9/01/95 - 10/03/95 7,200 7,189,902
Philip Morris Cos., Inc., due 9/13/95 7,000 6,986,700
Warner-Lambert Co., due 12/29/95 5,000 4,908,271
- -----------------------------------------------------------------------------
Total Commercial Paper $ 42,057,263
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U.S. Government and Agency Obligations - 78.5%
- -----------------------------------------------------------------------------
Federal Farm Credit Bank,
due 11/16/95 - 11/28/95 $10,000 $ 9,873,795
Federal Home Loan Bank, due 9/06/95 3,100 3,097,554
Federal Home Loan Mortgage Corp.,
due 9/05/95 - 2/20/96 80,850 80,358,689
Federal National Mortgage Assn.,
due 9/15/95 - 2/12/96 43,900 43,436,039
Tennessee Valley Authority, due 10/03/95 2,500 2,487,422
- -----------------------------------------------------------------------------
Total U.S. Government and Agency Obligations $139,253,499
- -----------------------------------------------------------------------------
Total Investments, at Amortized Cost and Value $181,310,762
Other Assets, Less Liabilities - (2.2)% (3,939,175)
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Net Assets - 100.0% $177,371,587
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See notes to financial statements
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FINANCIAL STATEMENTS
Statement of Assets and Liabilities
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August 31, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at amortized cost and value $181,310,762
Cash 81,058
Receivable for Fund shares sold 1,250,741
Other assets 3,028
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Total assets $182,645,589
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Liabilities:
Distributions payable $ 62,963
Payable for Fund shares reacquired 4,971,896
Payable to affiliates -
Management fee 2,346
Shareholder servicing agent fee 1,125
Distribution fee 79,768
Accrued expenses and other liabilities 155,904
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Total liabilities $ 5,274,002
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Net assets (represented by paid-in capital) $177,371,587
============
Shares of beneficial interest outstanding 177,371,587
============
Class A shares:
Net asset value, redemption price and offering price per share
(net assets of $10,852,198 / 10,852,198 shares of beneficial
interest outstanding) $1.00
=====
Class B shares:
Net asset value, redemption price and offering price per share
(net assets of $166,519,389 / 166,519,389 shares of
beneficial interest outstanding) $1.00
=====
A contingent deferred sales charge may be imposed on
redemptions of Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- ------------------------------------------------------------------------------
Year Ended August 31, 1995
- ------------------------------------------------------------------------------
Net investment income:
Interest $11,606,334
-----------
Expenses -
Management fee $ 1,134,567
Trustees' compensation 37,510
Shareholder servicing agent fee (Class A) 7,128
Shareholder servicing agent fee (Class B) 443,375
Distribution and service fee (Class B) 2,015,342
Postage 77,236
Custodian fee 43,232
Printing 55,061
Auditing fees 29,159
Legal fees 4,200
Miscellaneous 297,000
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Total expenses $ 4,143,810
Reduction of expenses by investment adviser (206,280)
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Net expenses $ 3,937,530
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Net investment income $ 7,668,804
===========
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
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Year Ended Nine Months Ended Year Ended
August 31, 1995 August 31, 1994 November 30, 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 7,668,804 $ 2,788,904 $ 1,447,426
------------ ------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (234,719) $ (23,520) $ (819)
From net investment income (Class B) (7,434,085) (2,765,384) (1,446,607)
------------ ------------ ------------
Total distributions declared to shareholders $ (7,668,804) (2,788,904) (1,447,426)
------------ ------------ ------------
Fund share (principal)transactions at net asset
value of $1.00 per share -
Net proceeds from sales of shares $836,765,789 $514,645,780 $361,353,850
Net asset value of shares issued to shareholders
in reinvestment of distributions 6,352,846 2,337,731 1,295,224
Cost of shares reacquired (881,538,348) (456,515,148) (332,765,233)
------------ ------------ ------------
Total increase (decrease) in net assets $(38,419,713) $ 60,468,36 $ 29,883,841
Net assets:
At beginning of period 215,791,300 155,322,937 125,439,096
------------ ------------ ------------
At end of period $177,371,587 $215,791,300 $155,322,937
============ ============ ============
See notes to financial statements
</TABLE>
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FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
<CAPTION>
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Nine
Year Ended Months Ended Year Ended
August 31, August 31, November 30,
1995 1994 1993<F2>
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Class A
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Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00
------ ------ ------
Net investment income# $ 0.05 $ 0.02 $ 0.01
Less distributions declared to shareholders from net
investment income (0.05) (0.02) (0.01)
------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00
====== ====== ======
Total return 4.91% 2.89%<F1> 2.28%<F1>
Ratios (to average net assets)/Supplemental data:<F3>
Expenses 0.90% 0.86%<F1> 0.92%<F1>
Net investment income 4.94% 3.11%<F1> 2.26%<F1>
Net assets at end of period (000 omitted) $10,852 $2,156 $49
<FN>
<F1> Annualized.
<F2> For the period from the commencement of offering of Class A shares, September 7, 1993 to November 30, 1993.
<F3> The investment adviser did not impose a portion of its management fee for the periods indicated. If this fee had
been incurred by the Fund, the net investment income per share and ratios would have been:
</FN>
Net investment income $ 0.05 $ 0.02 $ 0.01
Ratios (to average net assets):
Expenses 1.00% 0.96%<F1> 1.02%<F1>
Net investment income 4.84% 3.01%<F1> 2.16%<F1>
See notes to financial statements
</TABLE>
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FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
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Nine
Year Ended Months Ended Year Ended November 30,
August 31, August 31, -------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
Class B
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<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
------ ------ ------ ------ ------
Net investment income<F2> $ 0.04 $ 0.01 $ 0.01 $ 0.02 $ 0.04
Less distributions declared
to shareholders from net
investment income (0.04) (0.01) (0.01) (0.02) (0.04)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 3.81% 1.79%<F1> 1.16% 1.79% 4.56%
Ratios (to average net assets)/Supplemental data:<F2>
Expenses 1.93% 1.94%<F1> 2.00% 2.22% 2.04%
Net investment income 3.69% 1.88%<F1> 1.19% 1.83% 4.53%
Net assets at end of period
(000 omitted) $166,519 $213,635 $155,274 $125,439 $161,040
<FN>
<F1> Annualized.
<F2> The investment adviser did not impose a portion of its management fee for the periods indicated. If this
fee had been incurred by the Fund, the net investment income per share and ratios would have been:
</FN>
Net investment income $ 0.04 $ 0.01 $ 0.01 $ 0.02 $ 0.04
Ratios (to average net assets):
Expenses 2.03% 2.04%<F1> 2.10% 2.32% 2.13%
Net investment income 3.59% 1.78%<F1> 1.09% 1.73% 4.44%
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
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Year Ended November 30,
----------------------------------------------
1990 1989 1988 1987<F2>
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Class B
- ------------------------------------------------------------------------------------------------------------------
<S> <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
------ ------ ------ ------
Net investment income $ 0.06 $ 0.07 $ 0.06 $ 0.04
Less distributions declared to shareholders from net
investment income (0.06) (0.07) (0.06) (0.04)
------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ======
Total return 6.12% 7.34% 5.85% 4.42%<F1>
Ratios (to average net assets)/Supplemental data:
Expenses 2.23% 2.24% 2.06% 2.06%<F1>
Net investment income 6.06% 7.10% 5.59% 5.59%<F1>
Net assets at end of period (000 omitted) $203,314 $146,885 $139,518 $83,845
<FN>
<F1> Annualized.
<F2> For the period from the commencement of investment operations, December 29, 1986 to November 30, 1987.
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Cash Reserve Fund (the Fund) is a diversified series of MFS Series Trust I
(the Trust). The Trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
(2) Significant Accounting Policies
Investment Valuations - Money market instruments are valued at amortized cost,
which the Trustees have determined in good faith constitutes fair value. The
Fund's use of amortized cost is subject to the Fund's compliance with certain
conditions as specified under Rule 2a-7 of the Investment Company Act of 1940.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The Fund requires that the
securities purchased in a repurchase transaction be transferred to the custodian
in a manner sufficient to enable the Fund to obtain those securities in the
event of a default under the repurchase agreement. The Fund 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 Fund under each such repurchase agreement.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations.
Tax Matters and Distributions - The Fund'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 net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided. The Fund files 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. Distributions to
shareholders are recorded on the ex-dividend date.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A and
Class B shares. The two classes of shares differ in their respective shareholder
servicing agent, distribution and service fees. All shareholders bear the common
expenses of the Fund pro rata, based on the average daily net assets of each
class, without distinction between share classes. Dividends are declared
separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed and paid monthly at an annual rate of 0.55% of
average daily net assets. The investment adviser did not impose a portion of its
fee, which is reflected as a reduction of expenses in the Statement of
Operations.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain of the officers and Trustees of
the Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD) and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all of its independent Trustees. Included in Trustees' compensation is a net
periodic pension expense of $8,263 for the year ended August 31, 1995.
Distributor - The Trustees have adopted a separate distribution plan for Class A
and Class B shares pursuant to Rule 12b-1 of the Investment Company Act of 1940
as follows:
The Class A distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum of the Fund's average daily net assets attributable to Class A
shares which are attributable to that securities dealer, a distribution fee to
MFD of up to 0.10% per annum of the Fund's average daily net assets attributable
to Class A shares, commissions to dealers and payments to MFD wholesalers for
sales at or above a certain dollar level, and other such distribution-related
expenses that are approved by the Fund. Payments under the Class A distribution
plan will commence when the value of the net assets of the Fund attributable to
Class A shares first equals or exceeds $40 million.
The Class B distribution plan provides that the Fund will pay MFD a monthly
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per annum,
of the Fund's average daily net assets attributable to Class B shares. MFD will
pay to securities dealers that enter into a sales agreement with MFD all or a
portion of the service fee attributable to Class B shares. The service fee is
intended to be additional consideration for services rendered by the dealer with
respect to Class B shares. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $49,025 for Class B
shares for the year ended August 31, 1995. Fees incurred under the distribution
plan during the year ended August 31, 1995 were 1.00% of average daily net
assets attributable to Class B shares on an annualized basis.
A contingent deferred sales charge is imposed on shareholder redemptions of
Class B shares in the event of a shareholder redemption within six years of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the year ended August 31, 1995 were
$769,924.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the average daily net assets of each class of shares, at an
effective annual rate of up to 0.15% and 0.22% attributable to Class A and Class
B shares, respectively.
(4) Portfolio Securities
Purchases and sales of money market investments, exclusive of securities subject
to repurchase agreements, aggregated $1,963,560,145 and $2,008,039,485,
respectively.
(5) Shares of Beneficial Interest
The Fund'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 at net asset value of $1.00 per share, were as
follows:
Class A Shares
Year Ended Nine Months Ended Year Ended
August 31, 1995 August 31, 1994 November 30, 1993*
- ------------------------------------------------------------------------------
Shares sold 21,839,588 5,460,125 137,859
Shares issued to
shareholders in
reinvestment of
distributions 211,125 20,023 197
Shares reacquired (13,354,949) (3,372,483) (89,287)
----------- ---------- -------
Net increase
(decrease) 8,695,764 2,107,665 48,769
=========== ========== =======
<PAGE>
Class B Shares
Year Ended Nine Months Ended Year Ended
August 31, 1995 August 31, 1994 November 30, 1993
- ------------------------------------------------------------------------------
Shares sold 814,926,201 509,185,655 361,215,991
Shares issued to
shareholders in
reinvestment of
distributions 6,141,721 2,317,708 1,295,027
Shares reacquired (868,183,399) (453,142,665) (332,675,946)
------------ ------------ ------------
Net increase
(decrease) (47,115,477) 58,360,698 29,835,072
============ ============ ============
*For the period from commencement of offering of Class A shares, September 7,
1993 to November 30, 1993.
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of 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 fee allocated to the Fund for the year ended August 31,
1995 was $2,118.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Series Trust I and Shareholders of MFS Cash Reserve Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Cash Reserve Fund (one of the series
constituting MFS Series Trust I) as of August 31, 1995, the related statement of
operations for the year then ended, the statement of changes in net assets for
the year ended August 31, 1995, the nine months ended August 31, 1994 and the
year ended November 30, 1993, and the financial highlights for the year ended
August 31, 1995, the nine-months ended August 31, 1994 and for each of the years
in the seven-year period ended November 30, 1993. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
August 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Cash Reserve
Fund at August 31, 1995, the results of its operations, the changes in its net
assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 6, 1995
---------------------------------------------
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>
THE MFS FAMILY OF FUNDS(R)
America's Oldest Mutual Fund Group
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-637-2929
any business day from 9 a.m. to 5 p.m. Eastern time (or, leave a message any
time). This material should be read carefully before investing or sending money.
<TABLE>
<S> <C>
STOCK LIMITED MATURITY BOND
- ---------------------------------------------------- ----------------------------------------------------
Massachusetts Investors Trust MFS(R) Government Limited Maturity Fund
- ---------------------------------------------------- ----------------------------------------------------
Massachusetts Investors Growth Stock Fund MFS(R) Limited Maturity Fund
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Capital Growth Fund MFS(R) Municipal Limited Maturity Fund
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Emerging Growth Fund
- ---------------------------------------------------- WORLD
MFS(R) Gold & Natural Resources Fund ----------------------------------------------------
- ---------------------------------------------------- MFS(R) World Asset Allocation Fund
MFS(R) Growth Opportunities Fund ----------------------------------------------------
- ---------------------------------------------------- MFS(R) World Equity Fund
MFS(R) Managed Sectors Fund ----------------------------------------------------
- ---------------------------------------------------- MFS(R) World Governments Fund
MFS(R) OTC Fund ----------------------------------------------------
- ---------------------------------------------------- MFS(R) World Growth Fund
MFS(R) Research Fund ----------------------------------------------------
- ---------------------------------------------------- MFS(R) World Total Return Fund
MFS(R) Value Fund ----------------------------------------------------
- ----------------------------------------------------
NATIONAL TAX-FREE BOND
STOCK AND BOND ----------------------------------------------------
- ---------------------------------------------------- MFS(R) Municipal Bond Fund
MFS(R) Total Return Fund ----------------------------------------------------
- ---------------------------------------------------- MFS(R) Municipal High Income Fund
MFS(R) Utilities Fund (closed to new investors)
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Municipal Income Fund
BOND ----------------------------------------------------
- ----------------------------------------------------
MFS(R) Bond Fund STATE TAX-FREE BOND
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Government Mortgage Fund Alabama, Arkansas, California, Florida,
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Government Securities Fund Georgia, Louisiana, Maryland, Massachusetts,
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) High Income Fund Mississippi, New York, North Carolina,
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Intermediate Income Fund Pennsylvania, South Carolina, Tennessee,
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Strategic Income Fund Texas, Virginia, Washington, West Virginia
(formerly MFS(R) Income & Opportunity Fund) ----------------------------------------------------
- ----------------------------------------------------
MONEY MARKET
----------------------------------------------------
MFS(R) Cash Reserve Fund
----------------------------------------------------
MFS(R) Government Money Market Fund
----------------------------------------------------
MFS(R) Money Market Fund
----------------------------------------------------
</TABLE>
<PAGE>
MFS(R) CASH -----------------
RESERVE FUND
BULK RATE
U.S. POSTAGE
500 Boylston Street P A I D
Boston, MA 02116 PERMIT #55638
BOSTON, MA
-----------------
[MFS LOGO]
THE FIRST NAME IN MUTUAL FUNDS
MCR-2 10/95 17M 01/201
